Clause
2Procedural
fairness Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: This is the second part of looking over our
shoulder in the sense that the clause will return us to what we call
the Polkey line in unfair dismissal cases. The House of Lords judgment
in the 1987 Polkey case established the precedent that dismissal could
be unfair purely on procedural grounds. However, the judgment also
provided that in those circumstances the tribunal could reduce the
compensation to the claimant, or eliminate it completely, in proportion
to the likelihood that the dismissal would have gone ahead even if the
correct procedure had been
followed. Why
do we need to take such action? Having decided to repeal the statutory
procedures, which we discussed under clause 1, we had to reconsider the
procedural fairness provisions that went alongside them. That question
was raised in the Government’s consultation on the Gibbons
review and an additional detailed review of the different options was
issued alongside the main consultation. One option—the one we
have chosen—was to revert to the Polkey case law.
Another
option was the no difference rule. Where a dismissal was unfair,
provided that it could be shown that the failure to follow procedures
made no difference to the decision, it would not need to be taken into
account. Employees, in particular, felt that that was unfair because it
gave employers a blank cheque to ignore procedures in these cases. On
balance, we decided to recommend returning to the Polkey
line—and, indeed, more people involved in the consultation
supported returning to Polkey than to the no difference rule.
Therefore, we propose to repeal section 98A of the Employment Rights
Act 1996 to revert to the Polkey line of
cases. Question
put and agreed
to. Clause
2 ordered to stand part of the
Bill.
Clause
3Non-compliance
with statutory Codes of
Practice
Mr.
Djanogly: I beg to move amendment No. 14, in
clause 3, page 1, line 11, after
‘subsections’, insert
‘(1A),’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 11, in
clause 3, page 1, line 11, at
end insert— ‘(1A) In section
199 (Issue of Codes of Practice by ACAS) at the end of subsection (2)
there is inserted— (ca)
discipline and grievance procedure,
and’. No.
5, in
clause 3, page 2, line 2, after
‘with’, insert
‘the’. No.
6, in
clause 3, page 2, line 9, leave
out ‘a relevant’ and insert
‘the’. No.
8, in
clause 3, page 2, line 10, leave
out ‘that’ and insert
‘the’. No.
7, in
clause 3, page 2, line 19, leave
out ‘a relevant’ and insert
‘the’. No.
9, in
clause 3, page 2, line 20, leave
out ‘that’ and insert
‘the’. No.
10, in
clause 3, page 2, line 26, leave
out from ‘(3),’ to end of line 28 and
insert— ‘“the Code of
Practice” means any Code of Practice issued by ACAS under
section
199(2)(ca)’.
Mr.
Djanogly: Although there are many amendments, they all do
pretty much the same thing. They look at what constitutes the defined
code of practice in dispute resolution. I shall consider some of the
wider issues in the code in the stand part debate. I direct the
Committee to the debate in the other place on this matter. Lord Bach,
the then Minister, confirmed that six codes were currently issued under
chapter 3 of the Trade Union and Labour Relations (Consolidation) Act
1992. By his own admission, the drafting of the clause was deliberately
wide to allow for flexibility to cover other present or future
codes. While
I agree that we have no interest in hamstringing ACAS, there is a need
for certainty on this front. Employers are placed in a
disproportionately burdensome position whereby they are forced to
comply with broadly defined procedures. To prevent undue expense and
time-consuming second-guessing of the legislative intention by
employers, would it not be prudent to specify the relevant code from
the outset as the ACAS code of practice on discipline and grievance
procedures? Would that not be preferable to a definition that
encompasses six separate procedures but expects compliance with only
one? There is a need to give employers a clear, well sign-posted route
for dealing fairly and efficiently with disciplinary procedures. It is
a course of action that, for most, is a last resort. It benefits
neither the employer nor employee to have an opaque legislative
procedure, which leaves both parties in the dark. This is especially
true given the financial penalties for
non-compliance.
John
Hemming: We broadly support the amendment. When there are
statutory codes and a process that people need to follow, clarity is
greater and things are
easier.
Mr.
McFadden: I thank the hon. Member for Huntingdon for the
spirit in which he moved the amendment. My response is about
future-proofing the Bill. The clause is important and goes
wider than the subject matter of the amendments. I am sure that we will
return to that on clause stand part. The clause is about the balance
between content and merit, which I mentioned
in my opening remarks. It includes the capacity to vary awards based on
the degree of adherence to the codes issued under
it. The
definition of a relevant code of practice was, as the hon. Gentleman
pointed out, discussed in the other place. A relevant code of practice
is one issued under the Trade Union and Labour Relations
(Consolidation) Act 1992, which relates exclusively or primarily to
procedures for resolving disputes. The hon. Gentleman correctly said
that there was more than one code. There are currently six codes, some
relating to disclosure of information to trade unions for collective
bargaining purposes and others relating to industrial action, picketing
and so on. Those matters need not concern us here and are not covered
by the clause.
Of the
existing codes, the definition of a relevant code of practice in the
clause would apply only to the ACAS code of practice on disciplinary
and grievance procedures. I endorse what my hon. Friend the Member for
Hastings and Rye said a few moments ago about the valuable work that
ACAS does and its expertise in these areas. The clause will also allow
the application of adjustment in the context of future relevant codes
issued by ACAS or the Secretary of State under the 1992
Act. The
amendments would have two effects. First, they would tie the definition
of “relevant Code of Practice” to a code on discipline
and grievance procedure issued by ACAS and not the Secretary of State.
Secondly, they would provide expressly in the 1992 Act that
ACAS’s power to issue codes encompasses codes on discipline and
grievance
procedure. On
the first point, ACAS certainly plays a crucial and valuable role in
the resolution of workplace disputes, as I have said. In my time as
employment relations Minister, I have valued my working relationship
with ACAS. That organisation is sometimes in a strange position because
its successes do not reach the news. It resolves many issues without
their spilling over into a wider problem of industrial relations. The
drafting of the clause to refer to codes issued by ACAS or the
Secretary of State is therefore not intended to belittle or downgrade
the role of ACAS. However, under the amendments, it would not be open
to the Secretary of State to issue additional codes if he or she so
wished. While there is currently no intention for the Secretary of
State to issue a code of practice under this provision, the power
exists and the Government do not wish to exclude the possibility that
it might be used. It would therefore not make sense for tribunals to be
unable to take account of the provisions of such a code, were it to be
issued. We
believe the second proposal to be unnecessary. Under section 199 of the
1992 Act, ACAS has the power to issue codes of practice as it thinks
fit to promote the improvement of industrial relations. That covers the
issue that we are
discussing. We
believe that the first effect of the amendments would be to tie the
hands of future Secretaries of State in issuing codes alongside the
ACAS codes. The second effect is unnecessary. On that basis, I hope
that the hon. Gentleman will not press the
amendment.
John
Hemming: Does the Minister accept that employers and
employees both need certainty and that the Department should be guided
by that need when issuing guidance and identifying what is and is not
relevant?
Mr.
McFadden: I accept that clarity is needed for employers
and employees. I do not believe that building in the possibility for
the Secretary of State to issue a code detracts from that clarity. I
have been quite clear that the code we are talking about in the Bill is
the ACAS
code. Mr.
Brian Binley (Northampton, South) (Con): May I add my
expressions of pleasure at serving under your chairmanship,
Mr. Bercow? It is always clear, with no confusion
whatsoever, and we are grateful for
that. May
I, too, question the Minister about simplicity? The Bill was originally
intended to be a simplification of what is pretty complicated law for
laymen to deal with. That is what matters. We are dealing in many cases
with very small business people who cannot afford recourse to the law
on such issues. They try to do their best, but find it a nightmare. The
complication that we create in this law leads to a compensation
culture, which is not healthy, especially for small businesses. Over
the next two years, it will be particularly unhealthy because, as we
all recognise, such businesses face massive
strains. Having
represented my company in days gone by in three tribunals, I know how
much the law has been misunderstood. I know also how effective ACAS is
in helping with these matters, particularly in supporting both sides in
such disputes. To complicate the law beyond that process seems to me
simply to add further problems, not only for small businesses that deal
with these matters from an employer side, but for
employees. I
would like to make one further point. Employees often have recourse to
Citizens Advice and receive legal representation as a result, but many
employers are unable to do that. There must be a balance. Establishing
one code of practice is an important part of that balance because
everybody knows where to go. Everybody knows in the first instance that
ACAS is the authority. To complicate that particular trend seems
unhelpful. I urge the Minister to think
again. 11
am
Mr.
Djanogly: I had intended the amendment to be probing, but
I will have to go away and think further about it. Having heard the
Minister, I am not totally satisfied. I always feel rather
uncomfortable when I hear a Minister say that we need to legislate for
what might need dealing with in the future, and that the Secretary of
State might need such powers. I get the same chilly feeling that I had
yesterday evening when I heard the Home Secretary say that she was
going to put her draft Bill in the
Library. I
agree with my hon. Friend the Member for Northampton, South. Businesses
expect clarity. They will want at the very least a full explanation of
what this legislation means for them. There is potential for things to
be changed and for them not to hear about it, and to therefore be
confused as a
result. Mr.
Hugo Swire (East Devon) (Con): Does my hon. Friend agree
that in the present economic climate, it is even more important to be
clear about what we are asking businesses to do and how they should
change? The cost implications of those changes will not be
inconsequential, at a time when most companies are struggling to
survive.
Mr.
Djanogly: My hon. Friend makes an important point that I
will use when discussing other aspects of the Bill. I thank him for
making it now as it is
relevant. We
will go away and think about this matter further. In the meantime, I
beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn.
Mr.
Djanogly: I beg to move amendment No. 3, in
clause 3, page 2, line 15, leave
out ‘25%’ and insert
‘50%’.
The
Chairman: With this it will be convenient to discuss
amendment No. 4, in
clause 3, page 2, line 25, leave
out ‘25%’ and insert
‘50%’.
Mr.
Djanogly: This is another probing amendment, which
attempts to discover the Government’s reasoning behind the
reduction in the power of employment tribunals to vary awards for
non-compliance from 50 to 25 per
cent. The
first question we must ask is whether this is yet another example of
the Government tinkering with regulation unnecessarily. Section 31 of
the Employment Act 2002 provided employment tribunals with the power
effectively to punish employers or employees who failed to comply with
the statutory disciplinary and grievance procedures. That Act
enabled—indeed, obliged—employment tribunals to vary
awards made to employees by anywhere between 10 and 50 per cent.,
depending on what they considered just and equitable. I confess that I
am no statistician, but I have trouble seeing how reducing the maximum
figure from 50 to 25 per cent. does anything other than blunt the teeth
of the employment tribunals and reduce the scope for dealing with
vexatious
claims. Furthermore,
by reducing the penalties for non-compliance, could it not be said that
the suggestion to employers is that compliance with the new ACAS code
of practice for discipline and grievance is somehow less important than
compliance with the previous code? In the other place, Lord Jones of
Birmingham, then a Minister, stated that the power to adjust awards up
and down
was “an
incentive mechanism to encourage parties to follow good
practice.”—[Official Report, House of Lords, 4
February 2008; Vol. 698, c.
GC465.] Furthermore,
Michael Gibbons in his report recommended that there be an incentive to
comply with the code. While I agree that those are laudable aims, I
cannot help feeling that the incentive has had its legs cut from under
it and become half the incentive that it could have
been. With
that in mind, I ask the Minister two simple questions. What is the
Government’s rationale for changing the figures? Secondly, why
choose 25 per cent.? I am also curious as to how the Minister and the
Government envisage employment tribunals enforcing a non-statutory,
principle-based procedure for dispute
resolution. The
2006 consultation on the Employment Act 2002
stated: “The
Employment Tribunal Service will be able to monitor the number of cases
where failure to comply with the procedural elements becomes an issue,
including the number of cases where awards are adjusted because of
procedural failings.”
Yet from what I have
been able to discover—I would appreciate it if the Minister put
me right—no such figures have been produced. Can he tell us why
and give us those figures now? Without knowing how the existing system
has been working, how can we get the system right with this
Bill?
| 
