Employment Bill

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Mr. Hammond: Having listened to my hon. Friend the Member for Tatton, the hon. Member for Manchester, Central and the Minister, I want to ask whether the Government have considered, at any stage, whether a different minimum procedure should exist for larger employers than for smaller ones. Has the Minister considered that the ACAS code could be appropriate for larger employers, but schedule 2 would be more so for smaller ones?

Alan Johnson: We considered that, but it would be unnecessary because employment tribunals draw such a distinction. At the moment, we have a best practice code. My hon. Friend the Member for Manchester, Central said that there was no parliamentary element to that, but the regulations are laid before Parliament and must go through the affirmative procedure. That happened as recently as last September for the revised code. We live in a world where many employers do not have basic minimum standards. The employment tribunals service makes a distinction between large or medium-sized employers, which should have recourse to best practice, and small employers, which it understands move in a different world for the reasons mentioned by the hon. Member for Tatton. There is no need for us to take a sledgehammer to crack that particular nut.

The hon. Member for Runnymede and Weybridge asked about secondary legislation, and I am glad that my hon. Friend the Member for Manchester, Central picked up the point. It is the Opposition's job to bemoan the fact that the Government introduce so much secondary legislation, and I have no doubt that they will continue to do so for many years.

2.45 pm

The hon. Member for Runnymede and Weybridge said that his point occurred to him after business closed last night, which is why there is no amendment, but it would have been impossible for us, as I am sure that he will accept, to set down a power to make minor changes because we either have the power or we do not.

The hon. Gentleman asked whether we have plans to change the minimum standards to the ACAS code once the Bill is through. We have no such plans. We have consulted widely and we believe the minimum standards to be correct and fair because they resolve the lacuna in the legislation concerning the right to be accompanied. We are dealing with that issue in a way that is fair to all sides, provides a light touch and takes small businesses' problems in account. The Bill will not undermine the ACAS code, which will continue to be the benchmark for companies in cases in which the employment tribunal believes it to be appropriate.

Mr. Lloyd: That is one of the nubs of my concern. I am proud to say that I am not a lawyer, but I have been briefed by my hon. Friend the Member for Wolverhampton, South-West on the intricacies of the case. The Law Society brief on the matter states:

    ''A failure on the part of any person to observe any provision of this Code of Practice does not of itself render that person liable to any proceedings. In any proceedings before an employment tribunal any Code of Practice issued under sections 199 and 201 of the Trade Union and Labour Relations (Consolidation) Act 1992 is admissible in evidence and any provision of the Code which appears to the tribunal to be relevant to any question arising in the proceedings is required to be taken into account in determining that question.''

My hon. Friend the Minister tells us that there is no evidence that minimum standards erode better standards, and that many good employers will continue to operate the ACAS code. The question is whether the tribunal, which has a responsibility to consider the ACAS code, will be supplanted by a new Act of Parliament that will make it explicit that the tribunal must consider schedule 2 as the minimum standard. It seems obvious to me as a non-lawyer that people will argue that the tribunal must ignore the ACAS code and instead operate schedule 2.

Alan Johnson: That is an important point, and the Government will ask ACAS to revise its code, which will be set before the House and be subject to affirmative procedures, to take account of that development. We must do that because many aspects of the ACAS code must be changed as a result of the Bill. ACAS draws up its code in absolute independence, which is an important element that must be preserved. When the Bill becomes law, it will significantly change the legal framework within which the code is set. It will therefore be essential to revise the code to reflect that new framework.

I envisage the revised code providing practical advice on these three issues. First, it can give practical advice on how to follow the statutory procedures on, for example, ensuring that meetings are reasonably conducted.

Secondly, ACAS guidelines can identify where other procedural actions might be beneficial, for example, how informal discussions can be handled or investigations instigated. Thirdly, I hope that the code can be revised to give more tailored advice to small organisations entering the field for the first time.

Norman Lamb (North Norfolk): From the description that the Minister has given of what he envisages the amended code as containing, it seems that it will in many ways amount to a downgrading of what is presently in the ACAS code. Does he agree that it is bound to be downgraded given that, in future, a failure to follow procedural steps beyond the basic statutory ones will not render a dismissal unfair unless it would have made a difference to the outcome? That reverse of the Polkey point must be a downgrading of the ACAS code.

Alan Johnson: I do not accept that at all. That point refers to clause 34, but it is relevant. I would turn it round the other way. To dismiss without recourse to the three basic steps under the Bill will automatically be unfair. Those steps cover the major reasons why the Polkey case is used at the moment: there was not an appeal or an explanation of what the offence was. This is only a partial change of Polkey, but we will debate that when we come to clause 34.

I do not accept at all that this will drag everyone down to the minimum standard. I can understand the concern, or I would understand it were ACAS to have no further role, but it will have a role. It will revise the code of practice that will come before this House. The ACAS advice is still relevant to consideration of disciplinary issues, and the tribunals can take the code into account when assessing the fairness of dismissals.

Had we tried to introduce the ACAS code as the basic three-step procedure, it would have caused a great deal of concern. Businesses, to a large extent, accept that. They are not pleading it as another burden on business. They understand the point but they need some help with the issues because they too often end up in front of an employment tribunal when they could have sorted matters out domestically. To start with the basic minimum three-step procedure, to continue to have ACAS involvement and to have the best practice guidance for the new situation drawn up by ACAS will pull things up to the best practice, not drag them down to the minimum standard. I do not think that we should be concerned.

Mr. Mark Prisk (Hertford and Stortford): I want to clarify something. From what the Minister says, do I understand that any small employer—we have talked about small businesses, but there are many small employers such as small charities that are not commercial businesses—will have to comply both with the procedure under the Act and with the code? The Law Society briefing states:

    ''Given that in any proceedings before an employment tribunal any code of practice issued is admissible in evidence''.

Any small employer must therefore make sure that they comply with both the proposals before us and the code as it may, or may not, be changed.

Alan Johnson: That is an important point although, again, more relevant to clause 34. The hon. Member for Tatton had a touching faith in my having read all the briefs, and perhaps I should have done, but I tend to stick to the briefs that I receive from the people who know about such things.

On the point made by the hon. Member for Hertford and Stortford (Mr. Prisk), there would be a danger, in terms of Polkey, if we did not include clause 34 and this change, that employers who decided to move beyond the minimum—small employers just coming to terms with the brave new world—and wanted a more sophisticated grievance and discipline procedure, would be disencouraged from doing so because any minor procedural error above the minimum could lead to their losing the case outright. The two things must be seen together in providing protection.

Mr. Lloyd: I take it that when the ACAS code last went through Parliament, on 7 June 2000, it was my hon. Friend the Minister who introduced the relevant statutory instrument. I ask him something, which is a trick question. I have not had the chance to read the relevant Committee Hansard, but an important point arises. Given that all employers taken before a tribunal up till now have gone before one that had to take account of the ACAS code, and given that that applied to small employers with or without disciplinary and grievance procedures of their own, the category of employers that the Minister seeks to protect in schedule 2 would have been, potentially, called before a tribunal by the ACAS code in the past.

The Minister must accept from me that, given that tribunals could have considered the ACAS code in the past, he is diluting the impact of tribunals on that class of employers, who will use schedule 2 as their baseline. I do not think that there is any other interpretation, but does he agree with it?

Alan Johnson: I am getting trick questions from my own side now. As it is a trick question, I will be very careful how I answer it. There are many jurisdictions, but dealing, for the moment, with discipline procedures, the point about the ACAS code in relation to tribunals is that employment tribunals do not apply it to every dismissal in every company, large, small or indifferent. They take into account all circumstances, including the nature of the business with which they are dealing.

On what happens after the Bill becomes effective, an employer who simply follows the procedures and minimum standards rather than the relevant provisions of the ACAS code will not necessarily be held to have dismissed fairly. The statutory procedures are a minimum that ought to be applied to every formal complaint. However, we recognise that they might not be sufficient in all cases to ensure fair treatment. Additional procedural steps, tailored to particular circumstances, might sometimes be necessary.

I believe that the employment tribunal service and ACAS will, between them, reach a position where the implementation of minimum procedures alongside best practice will meet the concerns that we all have to ensure that people are treated fairly, whatever their workplace.

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Prepared 13 December 2001