Citizens Advice is the national body for Citizens Advice Bureaux (CABx) in England, Wales and Northern Ireland. The CAB service is the largest independent network of free advice centres in Europe, with 430 main bureaux in England, Wales and Northern Ireland. Bureaux provide advice from over 3,300 outlets, including bureaux in the high street, community centres, health settings, courts and prisons. All CABx are registered charities.
The CAB service has twin aims: to ensure that individuals do not suffer through a lack of information about their rights; and equally to exercise a responsible influence on the development of policies and practices, both at a local and national level.
In 2006/07 bureaux in England and Wales advised around two million people with new or ongoing problems.
Employment is the third largest area of work for the Citizens Advice service. In 2006/07 and a total of 276,000 individuals received some form of employment advice from us – around the same as in the previous year.
Advice on pay and entitlements, dismissal and terms and conditions together comprise about half of employment issues. Advice about dispute resolution and employment tribunals increased significantly during 2006/07 (35% and 23% respectively).
Key points:
- Citizens Advice welcomes this Bill and supports the proposed changes to both the dispute resolution procedures and to the enforcement of the National Minimum Wage.
- However, we regret that the Bill does not address a flaw in the current employment tribunal system which allows unscrupulous employers to avoid paying awards made against them with virtual impunity.
General remarks
Citizens Advice welcomes and supports all the key provisions of this Bill. We believe that the provisions in clauses 1 to 7 will improve both access to and the effectiveness of the employment tribunal system. And we believe that the provisions in clauses 8 to 16 will significantly strengthen enforcement of both National Minimum Wage and employment agency legislation by the relevant statutory enforcement bodies. Citizens Advice is disappointed that Government has not taken the opportunity presented by this Bill to improve the system for the enforcement of unpaid employment tribunal awards.
A lack of measures to address the problem of unpaid employment tribunal awards
The Bill contains no measures to make it easier for successful claimants to enforce employment tribunal awards made in their favour. Our research has shown that at least one in 20 of the awards made by an employment tribunal are simply not paid by the employer.1 In England and Wales the tribunals themselves have no powers to enforce such unpaid awards. Instead, if the employer has not paid the award within 42 days it is the successful claimant who must enforce the award themselves through the civil courts (County or High Court depending on the value of the award).
At the outset of their attempt to enforce their award through the civil courts the claimant will need to take a decision about which enforcement method to use from a range of methods, potentially using some court processes to obtain information. Depending on the method of enforcement chosen the individual will have to pay up front fees to start the process, and these vary according to the value of the award. Although some of the fees and costs of debt recovery will be recoverable from the employer, since there is no guarantee that payment will be made the individual runs the risk that they will spend money at the start of the process which they will not get back. Fees involved range from £45 for obtaining information from the debtor about their assets – which may be needed to help decide how to enforce the debt, £55 - £95 to issue a warrant of execution (involving bailiffs possessing assets for sale to pay debts); £55 to take out a charging order on the debtors assets or property; £55 to order a third party, such as a bank or building society with access to the debtors funds to pay the debt directly and £190 to declare a company bankrupt as a means of recovering the debt. When faced with the task of initiating enforcement proceedings, and paying fees, individuals are in our experience quite daunted – particularly where there is no guarantee they will be paid. Many do not even try, whilst others initially try but soon give up. This lack of teeth undermines the credibility of both the employment tribunal system as a whole, and the otherwise very welcome reforms of that system contained in this Bill. For it means that, in the relatively rare event that a claim is brought (and successfully pursued) against a deliberately exploitative (or ‘rogue’) employer, he or she can ignore it – and so profit from exploitation – with near impunity. This is grossly unfair not only to those claimants who do not receive the monies due to them, but also to the majority of employers who abide by the rules and pay the awards made against them.
To some extent, the Government has recognised this, and indeed the Tribunals, Courts and Enforcement Act 2007 provides for some welcome but relatively minor reform of the process for enforcing an unpaid employment tribunal award in the County Court system. However, we believe that the Government needs to go much further, and to establish a system under which unpaid awards are enforced by the State on behalf of the claimant. This would be a relatively straightforward undertaking, as such State-led enforcement could be conducted by a new or existing statutory enforcement body through the existing County Court system. We urge the Government to add provisions to this Bill creating the necessary powers of enforcement for such a statutory body.
A CAB in Hertfordshire advised a client who had won his employment tribunal case for racial discrimination. The tribunal had ordered his employer to pay him £10,780 in compensation. Three months later the client sought advice from the bureau as his employer had still not paid him the money. Although the client had found other employment and had previously completed an application for enforcement of the award through the county court he was not in a financial position to enforce the order. The bureau adviser noted that the employer can therefore ignore the order as the client has little effective redress.
A CAB in Somerset advised a married client with young children. The client was in full time employment. He had not been paid his wages over a period of months by his previous employer and took the matter to an employment tribunal. The tribunal awarded him £4,578 but the client has not been able to recover this as the employer has ignored the judgement. Issuing a statutory notice and file for bankruptcy against his employer will involve a substantial initial financial outlay which the client cannot afford.
Dispute resolution (clauses 1 – 7)
We welcome the proposed repeal of the 2004 statutory dispute resolution procedures (Clause 1). In the experience of Citizens Advice Bureaux, the procedures tend to formalise rather than help resolve ‘disputes’ at an early stage, and the 2004 Regulations are so complex that they are beyond the comprehension of many workers, employers, and even advisers. This is supported by the substantial increase in enquiries about dispute resolution and employment tribunals seen by the Citizens Advice service in 2006/07 (35% and 23% respectively). Most importantly, in our view, the statutory grievance procedures act as a barrier to justice for the most vulnerable workers needing to assert their rights.
We support the Government’s decision, after consultation, to revert to the situation which applied prior to 2004 with regard to procedural unfairness in unfair dismissal (Clause 2).
We welcome the proposed discretionary power to increase or decrease an award by up to 25 per cent where the tribunal finds that a party has unreasonably failed to comply with the (substantially revised) Acas Code of Practice (Clause 3).
We support the proposed new fast track mechanism, based on existing legal powers, for settling simple monetary disputes, (Clause 4).
We welcome the proposed discretionary power (as opposed to obligation) to conciliate, and the abolition of the fixed periods for conciliation (Clauses 5 and 6).
National Minimum Wage etc (clauses 8 – 13)
We welcome and strongly support the provisions set out in clauses 8 to 13, which we believe will further enhance enforcement of the National Minimum Wage (NMW). We believe that these stronger measures are necessary as CABx continue to advise clients who are caused hardship as a result of being paid below the minimum wage by their employer. It is not just employees who are affected as the businesses of reputable employers are also damaged by those employers who flout the minimum wage law.
A CAB in Kent reports being approached by a married couple who are joint owner/managers of a small contract cleaning company. The couple’s company had recently lost a number of contracts to competitors they knew to be paying illegally low wages (i.e. less than the NMW) to migrant workers, and turn over is now so low that there is no profit to cover the couple’s basic needs. The bureau reports the couple being in “great distress due to the looming loss of their business, their accumulating debts and their sense of unfairness”.
We share the Government’s view that the work of HM Revenue & Customs in enforcing the NMW since 1999 amounts to “a well-established success”. In 2005, the House of Commons Trade and Industry Committee concluded that this enforcement regime “would seem a model that might be extended beyond enforcement of the NMW to other areas of regulation”. We agree, and have repeatedly urged the Government to establish a ‘fair employment commission’ with the legal powers and resources to secure individual vulnerable workers all their basic statutory employment rights, and to close down the rogues.2 However, we accept that this is a long-term undertaking, and that this Bill is not the appropriate legislative vehicle for such a wide ranging initiative.
Employment agencies (clauses 14 – 16)
We have long considered the powers and resources of the Employment Agency Standards Inspectorate (EASI) to be inadequate to deal with the evident extent of exploitation of vulnerable workers (and especially low skilled migrant workers) by rogue employment agencies. Accordingly, we have warmly welcomed the Government’s recent announcement of a doubling of the number of EASI inspectors (from 12 to 24). And we welcome the provisions of clauses 14 to 16.
Trade union membership (clause 17)
We have no firm view on this clause.
Parliamentary Officer: Bethan Collins Parliamentary
Social Policy contact: Richard Dunstan Richard Dunstan
1. See our reports Empty justice (September 2004) and Hollow victories (March 2005).
2. See our report Rooting out the rogues: why vulnerable workers and good employers need a ‘fair employment commission (December 2007).
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