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Society of Labour Lawyers’ Employment Group met on the top floor of Congress House and heard from guest speaker SHANTHA DAVID of UNISON.

Labour had a manifesto pledge to abolish tribunal fees in May 2017. Only 2 months later the Supreme Court struck them down as unlawful.

 

Shantha questioned how we got to a position where Supreme Court had to lecture government on the rule of law. To explain, she set out a history of employment tribunals (beginning with the Donovan report) and emphasised their importance as generally the only forum in which an employee can vindicate their rights. Some cases may not attract an award (for example a failure to provide terms and conditions of employment) and compensation in most cases is surprisingly modest. The background was bleak enough before fees: tribunal claims were falling, and shockingly only 35% of successful claimants were being paid compensation awarded to them!

 

The Tory government’s consultation in 2013 received overwhelming reception that the introduction of fees would be inherently unfair. UNISON’s formal challenge began with a letter in April 2013, which was ignored: the fees came into force on 29 July 2013. UNISON were in Court that day. The High Court gave them permission to proceed and after the hearing, Grayling gave an undertaking he would reimburse any fees if successful (how the Ministry of Justice must regret that now!).

 

The ‘logic’ for the change, as explained by Chris Grayling, was to shift the costs to users: to combat a “technical ‘deadweight’ loss”. For Shantha, this assisted her challenge, as she could use statistics to prove that this was completely incorrect. To to find evidence, she used FOI requests and tried to persuade the government to publish statistics. There was an 81% drop in claims following the fees. It was also clear low paid and female claimants were particularly adversely affected (of interest to UNISON, who have an approx. 80% female membership). The remission scheme intended to help 53% of claimants in fact only helped 18%.

 

The road was a long one: the first JR on sex discrimination was rebuffed by LJ Moses as premature, as they could only rely on interim statistics. By the time of the second JR, UNISON could rely on statistics showing the extraordinary fall in claims, which labelled as ‘striking’. The Court of Appeal found that fall must not only mean many claimants refused to pay, but also some who “can’t pay”. LJ Underhill requested an example of one affected person, but UNISON decided to hold their line. In hindsight this did well to avoid a Gina Miller-style press inquisition, and it also highlights the role of Trade Unions: tackling systemic problems where single claimants might be induced to settle.

 

4 years on from the beginning of their challenge, the Supreme Court heard form UNISON that the fees were denying a remedy to the wronged, and particularly affecting women. In eventually condemning the then Lord Chancellor’s approach came Lord Reed’s famous words: “the rule of law is not always understood. Indications of a lack of understanding include the assumption that the administration of justice is merely a public service like any other, that courts and tribunals are providers of services to the “users” who appear before them, and that the provision of those services is of value only to the users themselves and to those who are remunerated for their participation in the proceedings.” The Court invoked magna carta (only in the supreme court!) and found a breach of the constitutional right to access to justice.

 

Going forward, the MoJ are administering refunds of up to 32million (although this only covered 9% of the cost of running the system). They have now undertaken to contact every person affected. Claims postponed or avoided due to fees ought to be reinstated and in Shantha’s experience Judges have been very accommodating so far. Since fees, claims have gone up by 90%. In practical terms it is near impossible to get a hearing date, and access to justice is (ironically) extremely slow.

 

The House of Lords have been debating shocking delays in the system. Clearly simply getting rid of fees was not enough. The government are now recruiting 54 judges but it will take time to train them. What will be done about closed Court buildings? Even those buildings there are are unfit for purpose: with barely 1 plug-socket per room! How can Labour attempt to speed up the process while retaining focus on justice? Early conciliation is currently treated (by employers) as little more than a procedural step. Could we put forward an early arbitration, or interim award scheme to be decided on the papers? For Shantha, this would not do, as oral evidence is crucial in complex cases such as unfair dismissal, and an assessment of oral evidence is vital in discrimination claims.

 

In questions, Shantha was sure that the judgment will retain its potency post-Brexit because it is couched in common-law terms. And for the field of employment law as a whole, If Judges continue to owe a duty to interpret in line with ECJ jurisprudence, the ECJ will in reality remain supreme. Shantha particularly expressed concerns that the government may be targeting a repeal of the TUPE Regulations, as information consultation rights are seen as onerous and might be the easiest to get rid of.

 

Group chair Tom Jones highlighted the wider applicability of such quotes as: “Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced. That role includes ensuring that the executive branch of government carries out its functions in accordance with the law. In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access, laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of Members of Parliament may become a meaningless charade”. The case has already been quoted in the Bach review: could it be used to challenge the legal aid cuts; or even changes to the small claims limit?

 

The Employment Group are keen to engage in future meetings and particularly find employment lawyers who would like to share their experience and discuss future Labour policy. If you have any ideas or questions, please email Tom Jones at tom.jones@societyoflabourlawyers.org.uk.

Employment Group UNISON meeting

Society of Labour Lawyers’ Employment Group met on the top floor of Congress House and heard from guest speaker SHANTHA DAVID of UNISON. Labour had a manifesto pledge to abolish...

The new Labour City Lawyers network was launched on Wednesday 21 March 2018. Over 20 SLL members joined Jonathan Reynolds MP, the shadow City minister, for a round-table discussion.
On Brexit, attendees were keen to obtain assurances on maintaining passporting rights for the financial services. Jonathan was keen to stress that Labour cannot reject the referendum and that there must be a change to our regulatory model to reflect a rejection of the ‘four freedoms’ of the EU. However, an obvious priority in his role as a shadow treasury minister will be maintaining financial stability during a transition, and decisions affecting market access ought to be ‘at the easier end of the scale’.
                                                                                                     
Jonathan criticised the government’s approach to enforcement of anti-money laundering laws, arguing that they talk a good game but are unwilling to move at the scale required, as exemplified by their lack of action against Russian nationals in the wake of the Salisbury nerve-agent scandal. Daniel Jones, who we thank for hosting this meeting, asked what Labour would do to clamp down on the illicit use of British Overseas Territories. In response, Johnny outlined a policy of registration of beneficial ownership, saying that ‘clearly the time for transparency has come’.
 
On diversity and Equal Pay, YLL chair Deeba Syed pointed out recent statistics showing a ‘staggering’ gender pay-gap in the disclosed wages of employees City law firms, and noted that the figures are skewed by excluding equity partners. Jonathan agreed that the current voluntary reporting regime is non-proportionate and ineffective. He sign-posted Dawn Butler’s International Women’s Day policy announcement that Labour will impose a requirement on employers to take action in closing their gender pay-gaps. He heard suggestions from SLL chair Kate O’Rourke on how to obtain usable and comparable statistics by ordering them to be published in a compulsory format, broken down to show those at newly qualified or partner level separately. 
 
We thank Jonathan for helping launch the group. In return, members of SLL have the opportunity to assist the shadow treasury team. As Jonathan put it, the current government could collapse in 4 years or 4 days: Labour’s government in waiting need expert legal advice and honest feedback to form robust, workable policies.
 
If you have an expertise in a particular area of commercial law, this is a perfect time to become more involved with SLL by: 1) contributing policy ideas through the City group or 2) emailing your CV to our executive committee and making yourself available to give advice to the PLP as and when requested.  

Labour City Lawyers Launch

The new Labour City Lawyers network was launched on Wednesday 21 March 2018. Over 20 SLL members joined Jonathan Reynolds MP, the shadow City minister, for a round-table discussion.

SLL co-hosted an event at the House of Commons on 27 March 2018 with Labour Business to discuss the outsourcing of public services (which is coming under greater media and public scrutiny than ever with expensive private sector failures) and Private Finance Initiatives (PFI), a topic of particular importance to Labour, as our current policy is to “look to” take control of PFI contracts, review all of them and “if necessary” take them back in-house.

 

The first expert speakers were John Tizard and David Walker, authors of the recent Smith Institute paper: “Out of Contract: Time to move on from the ‘love in’ with outsourcing and PFI” (which can be read here). Walker called for a review of contracts and particularly noted the lack of hard data about existing contracts. He called for information about their costs and duration to be collected and published to government and the public. Tizard summarised their recommendations as 1) setting up a ‘Domesday Book’, a central repository of data on public sector contracts, beginning with the most central and least risky contracts. At very least this will improve sharing of information and should reduce duplication of work; 2) a review on the impact of outsourcing policy, including how procurement relationships are managed post-contract; 3) a default of public ownership and management of public services. Any change to this should be after a test of public value, encompassing environmental and external factors, not simply price!

 

Simon Taylor, a barrister at Keating Chambers specialising in EU Competition law, explained the legal constraints on taking private contracts back in house, concluding that these were not insurmountable. The general principle of the EU is neutrality on public or private ownership (Article 345 TFEU) but this includes a requirement for transparent, fair procedures which do not discriminate against foreign providers.  There is a mechanism in the rules specifically enabling public bodies to award in-house contracts to another public undertaking that it owns, provided this subsidiary body derives at least 80% of its income from its parent. Taking cleaning contracts as an example, a public body could directly hire cleaners to the work or could establish a subsidiary company, provided that this subsidiary doesn’t then go out into market and win lots of contracts; within EU law. This is tempered by Article 106 & 102, which allows the EC to intervene where special rights are granted to a public undertaking that could lead to abuse of dominance. In our example this could apply for instance if the cleaning contract established a monopoly to one undertaking for cleaning the entire City of London.  Finally, Article 1 of the First Protocol of the Human Rights Act (protection of property) may prove an additional constraint on removing existing contracts from private, although public bodies could attempt to rely on the public interest exception.

 

Melanie Pears, Head of Public Sector at Ward Hadaway solicitors, a leading provider of legal services for NHS Trusts and other state entities administering PFI contracts, has worked in the sector for over two decades. She drew on her experience to outline how to make the most of PFI contracts from the perspective of the state employer and how they can be lawfully terminated.

These contracts are unusually long in their duration: quite normally 25-30 years; and often become unfit for purpose at some point during that term. This can lead to absurd inefficiency: for example, construction contracts often include a standard 12-year limitation of liability, which in a 30-year contract leaves the public body to find more funds to deal with any maintenance issues caused by flaws in the original construction that arise in the thirteenth year and onwards. Contract management teams quickly evaporate and are replaced by professional managers, whose incentive is to run the contract in the interest of the private sector, not always aligned with the public interest. From the public body’s point of view, few and low-grate professionals are often assigned to monitor these contracts. PFI contracts should be independently or jointly monitored and supported.

In practice, it may not be economically sensible to renationalise many PFI contracts, as they often include swap arrangements (insurance rate protections) that can cost huge sums (£25million for example) to cancel. However, there is a clear need for a review of each operational PFI scheme, looking behind the veil of intra-company loans to discover how profitable they are and undercover overcharging and inefficiency. It may be possible to exit failing contracts on the basis of default.

 

Samuel Townend, Vice-Chair of SLL closed the event with case studies of a poorly executed PFI contract and the negative external impact of outsourcing on public services. It is clear we must abandon unaccountable commissioning bodies and focus on improving in house skills at local authorities. With the saved time and money, we could establish programs to innovate and improve services and lost management skills to avoid ‘producer capture’.  

 

(The above is produced by the author for interested members of the Society of Labour Lawyers who could not attend and reflects their own personal views, not necessarily those of the speakers)

Outsourcing and Labour's PFI review. Where next?

SLL co-hosted an event at the House of Commons on 27 March 2018 with Labour Business to discuss the outsourcing of public services (which is coming under greater media and...


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