My Lords, Amendments 81D and 92 are in my name and that of the noble Lord, Lord Adonis. They are in the first of a series of groups of amendments which address Clause 27. As your Lordships know, Clause 27 allows employers to buy off employment rights otherwise enjoyed by employees. Under this clause, employees can agree to receive shares worth at least £2,000, in return for which they will lose the right to claim unfair dismissal, the right to claim statutory redundancy pay, the right to request flexible working and the right to request time off for training.
What is so objectionable about Clause 27 is that these employment rights were conferred by Parliament over the past 50 years and have been protected by Governments—both Conservative and Labour—precisely because the inequality of bargaining power between employee and employer means that freedom of contract is quite insufficient to protect the employee or the prospective employee. Therefore, to allow these basic employment rights to be traded as some form of commodity frustrates the very purpose of these entitlements as an essential protection in the employment context.
The concept contained in Clause 27 is especially bizarre when there appears to be no demand whatever from employers for such protection and when responsible employers are introducing genuine share ownership schemes. I can think of only one precedent for Clause 27. It is in Genesis, chapter 25, where Jacob refuses to let his famished brother Esau eat some of the broth he has made until he sells him his rights as the first born. Esau agrees because he is famished and says, “What use is my birthright to me?”, compared to the mess of pottage of which he has immediate need. Your Lordships will come in due course to consider whether the correct response from your Lordships’ House to this mess of pottage is to reject it in its entirety—for all the reasons so powerfully outlined at Second Reading by the noble Lord, Lord Adonis, in particular.
Amendments 81D and 92 seek to ensure that if we are to have Clause 27 at all, the employee and the prospective employee must at the very least be given the minimum necessary protection to understand what it is that they are giving up. The minimum necessary protection that Amendments 81D and 92 would provide is that the statutory rights could be lost only if the agreement satisfies three essential conditions.
The first is that any agreement in this context must be in writing and must set out the rights being traded and the value of the shares that are to be received. One of the surprising features of Clause 27 is that it does not even require the agreement to be in writing—an invitation to subsequent litigation if ever I saw one. Secondly, the individual must receive legal advice on the consequences of the agreement from an independent lawyer. These matters are surely too important for Parliament to allow employees and prospective employees to give up those basic rights without the legal implications being fully explained to them. The third essential protection is that the individual must have received financial advice from an independent adviser—who must be a regulated person—as to the value and the prospects of the shares that he or she is about to receive and for which they are giving up those basic employment rights
The detail of Amendment 92 is modelled on Section 288 of the Trade Union and Labour Relations (Consolidation) Act 1992. Section 288 is a vital provision. It makes an agreement void if it purports to contract out of the employment rights that Parliament has conferred. At the moment, employees and employers simply cannot contract out of employment rights. Clause 27 conflicts with that basic and fundamental principle. However, Section 288 allows for compromise agreements to settle specific employment disputes in individual cases in employment tribunals. That is a very different concept and entirely acceptable in principle.
Section 288 states that one of those compromise agreements in the context of an individual employment dispute is valid only if it is in writing and if the employee who is settling the case has received independent advice on the terms of the agreement by which he or she is settling the claim—advice from a lawyer, a trade union official or an advice centre worker. Clause 27 involves an agreement much more fundamental in its implications for the individual, who is not just settling an individual employment claim in the tribunal but is generally giving up important employment rights for the future. Therefore, in the Clause 27 context—if we are to have Clause 27 at all—the procedural protection that Parliament confers on the employee must be at least as strong as that which Parliament itself has conferred on the employee who is settling a specific employment claim.
The Equality and Human Rights Commission has helpfully addressed that very issue. It has expressed concern that Clause 27 may indirectly and unlawfully discriminate, contrary to EU law, against those workers and prospective workers whose first language is not English, those with learning disabilities or young workers. Therefore, the commission says that a proper justification is required and that depends, in its view, on safeguards such as the receipt of informed and independent advice.
I emphasise that Amendments 81D and 92 would not make Clause 27 acceptable. Clause 27 would remain a provision that knows the price of statutory employment rights but ignores the value of those rights. However, because the amendments would make Clause 27 marginally less objectionable, I beg to move.