Enterprise Bill [HL] — House of Lords, 2015-11-30
Topic: Mixed Topics
Colin MacKenzie Low (Crossbench, Unknown): My Lords, I wish to speak to Amendments 70AA and 70AB. The noble Lord, Lord Wills, will speak to Amendment 73B, which is also in this group Amendment 70AA would remove whistleblowing settlements from the cap on exit payments and Amendment 70AB would exempt cases of discrimination, harassment and victimisation. We are all becoming increasingly aware these days that whistleblowing is in the public interest. Often, it is only as a result of the public-spirited action of a whistleblower that things like fraud and scandalous malpractice come to light, which shock us all when they do. Capping settlements in respect of whistleblowing cases could easily act as a deterrent to people blowing the whistle and, often, putting their livelihood and reputation at risk. That is why I have tabled Amendment 70AA, which seeks to remove from the cap settlements in Public Interest Disclosure Act cases A second concern is that capping settlements where there is no limit on the level of damages that may be obtained at tribunal can only operate as an incentive to go to tribunal. In Committee, the Minister sought to reassure us by saying that tribunal awards would not be capped. We had an interesting exchange, in which I was concerned to insist that that did not address the point about settlements, and the Minister kindly agreed to write to me about this. Reflecting on our exchange, I sought to clarify my position by saying that the Minister’s reassurance not only fails to address the point about settlements, but it strongly reinforces my argument that capping settlements while the amount a tribunal can award remains uncapped provides a clear incentive to people to take their cases to tribunal, rather than settle. That entails costly and contentious litigation which is in neither the employer’s nor the public’s interest In her letter, the Minister repeated that indicative regulations provide that any award directed by a court is outside the scope of the cap on exit payments. New Section 153C(1) of the Small Business, Enterprise and Employment Act 2015, which would be inserted by Clause 26 of the Bill, provides a power to "relax any restriction" of the cap in appropriate circumstances. Unlike court-directed payments, however, which involve a clear finding in respect of the claim, settlement agreements are generally made before any such finding is made. Therefore, the Minister said, if settlement agreements relating to potential whistleblowing claims were outside the scope of the cap, "I am concerned that it could encourage people to make spurious claims of public interest disclosure simply in order to avoid the effect of the cap". Furthermore, she said that the Treasury would be issuing guidance on the exercising of the power to relax the restrictions imposed by the cap. It is envisaged that the guidance will make it clear that where payments relating to potential whistleblowing claims are correct, the power to exempt exit payments from the cap could be exercised On the risk of spurious whistleblowing claims, I suggest that the introduction of the public interest test will help to mitigate this risk as it will give the employer a good argument to resist such claims during settlement negotiations. Employers will also have legal advice. This will enable them to assess the merit of a claim and make it easier for them to resist such an attempt to get round the cap. I therefore think, particularly on account of the tendency for a settlement cap to incentivise people to take their case to a tribunal, that we should seek to remove from the cap settlements in Public Interest Disclosure Act cases, as Amendment 70AA would do.