Enterprise and Regulatory Reform Bill

Memorandum submitted by EEF (ERR 16)

EEF Evidence to Enterprise and Regulatory Reform Bill Committee.

EEF, the manufacturers’ organisation, is the voice of manufacturing in the UK, representing all aspects of the manufacturing sector including engineering, aviation, defence, oil and gas, food and chemicals. With 6,000 members employing almost 1 million workers, EEF members operate in the UK, Europe and throughout the world in a dynamic and highly competitive environment.

EEF has the following observations upon the Bill:

Clause 7: Conciliation before the institution of proceedings

EEF is broadly supportive of requiring most potential claimants to provide Acas with information regarding their dispute before they submit a claim to an employment tribunal, subject to Acas being provided with sufficient resources to discharge their new duty. There are, however, a number of issues which require clarification.

a. Where a prospective claimant submits the required information to Acas outside the time permitted, their subsequent ability to commence proceedings requires clarification.

b. We are concerned that clause 9(b) places emphasis on compensation being paid, and suggest that the clause would be better worded neutrally.

c. Multiple cases, which are those envisaged in the proposed new section 18A(7)(a), should always be required to be referred to Acas. They are frequently the most time consuming and costly and are likely to benefit from pre-claim intervention.

Clause 10: Decisions by legal officers.

EEF supports the introduction of rapid resolution in cases where the dispute is both straightforward and of a low monetary value. Whilst we understand why the consent of the parties may be appropriate in most cases, we believe that should one party unreasonably refuse to consent to a determination by an appointed legal officer, then this should be a specific matter which the Tribunal determining the claim should be required to take into account when considering an application for costs and that Tribunals should be empowered to award costs and expenses which may have been unnecessarily incurred. In this way, the parties will carefully consider whether the expense of an oral hearing before a Tribunal judge is required.

Clause11: Composition of the Employment Appeal Tribunal.

EEF supports the clause without amendment.

Clause 12: Unfair Dismissal.

Subject to further clarification on the meaning of the clause, EEF supports the intention behind the provision. The reference in clause 12(2)(b) to earnings should make it clear that it is referring to actual weekly earnings, which are uncapped. It should also be made clearer that the amount specified in clauses 12(2)(b) and 12(5), (that is the limit which is an amount that is at least 52 weeks actual earnings), is itself subject to the overall limit of clause 12(4)(b) (three times median annual earnings).

Clause 13: Financial Penalties

EEF does not consider that this clause will encourage greater employer compliance with their employment obligations and is likely to be a disincentive to successful pre-claim conciliation. Potential claimants may feel that the prospect of a fine being ordered will increase their negotiating position and so be less likely to settle early, instead waiting for the hearing before attempting settlement.

The lack of detail as to when such penalties will be ordered creates uncertainty which will again militate against early settlement as the parties will be unable to accurately assess the likely approach of the Tribunal.

The provisions in the clause may increase the length and complexity of litigation as claimants are encouraged to include as many heads of claim as possible, as additional heads raise the prospect of an award, a fine, and thus enhance the litigants’ negotiating position.

EEF suggests that the Bill be amended by the deletion of the clause.

Clause 14: Disclosures not protected unless believed to be made in the public interest.

EEF does not believe that this clause will achieve its aim, which is to ensure that individuals who make disclosures in the public interest are safeguarded from adverse treatment from their employer following their disclosure.

The amended provision in the Employment Rights Act must clearly state that disclosure must be necessary to protect members of the public. The amendment which would be affected by the clause would not, for example, exclude from the protection of the Act an individual who made a disclosure based on their own health and safety. This could include a complaint that an employer has failed to conduct a visual display unit assessment, which is very unlikely to be a matter of public interest.

EEF therefore proposes the following amendment, under which Section 43B of the Employment Rights Act 1996 would now read as follows:

(1) In this part a "qualifying disclosure" means any disclosure of information in the public interest which, in the reasonable belief of the worker making the disclosure, tends to show one or more of the following  -

(a) that a criminal offence has been committed, is being committed or is likely to be committed,

(b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject other than one arising out of or in connection with a contract of employment or contract for services,

(c) that the health or safety of any individual has been, is being or is likely to be endangered other than one arising out of or in connection with a contract of employment or contract for services,

(d) that information tending to show any matter falling within any one of the preceding paragraphs has been, or is likely to be deliberately concealed.

Clause 16: Renaming of "compromise agreements", "compromise contracts" and "compromises".

EEF warmly welcomes this clause which requires additional architecture to enable the change to provide an effective and swift means to resolve workplace disputes.

Settlement agreements are the conclusion of a successful process whereby disputes are settled without the need for external adjudication by a Tribunal. They are therefore to be welcomed and have advantages of speed, certainty for both parties, and do not place any burden on the state. Reaching such agreements may obviate the need for pre-claim conciliation and are likely to reduce the anxiety of claimants and reduce the burden on employers in defending claims.

Settlement agreements are, however, the successful conclusion of a process, which invariably requires a dialogue between the parties. We therefore wish to see the opportunity for successful dialogue enhanced and extend to situations where employment can continue afterwards. Currently employers may be reluctant to engage in timely discussions with employees fearing that this will increase the prospect of subsequent claims. Providing employers with the certainty that sensitive conversations can be held without increasing the risk of subsequent litigation will increase the prospects of early dispute resolution and may result in employment continuing where it might otherwise have ended.

We have seen the proposed amendment moved by Minister for Employment Relations, Consumer and Postal Affairs, and have the following observations.

The conversations which the amendment relates to should not necessarily be with a view to the termination of employment. To limit the provision to such situations creates an unnecessarily negative impression and will in practice greatly limit the usefulness of the clause. We would wish to see the amendment enlarged to cover discussions between employees and employers more generally. There are already fair and reasonable frameworks in place for workplace discussions, (for example the Acas code on discipline and grievance), which may provide the basis for such conversations.

The amendment referred to above, inserting a new section 111A into the Employment Rights Act 1996, extends to unfair dismissal claims alone and is unlikely to be sufficient to encourage early dialogue and settlement. We see no reason why, if sufficient safeguards can be put in place to ensure fairness in the context of unfair dismissal, that this should not extend to all heads of claim. Most notable would be those claims based on discrimination, for breach of contract and situations where the current law regards the reasons for dismissal as automatically unfair.

Restricting the application of the new provision will create further dispute. If for example the conversation protected under the new section 111A then gives rise to a grievance, would for example the evidence relating to the grievance (which may by implication refer to the conversation which is protected) be admissible subsequently in a claim?

We are also of the view that creating the exception to the general rule in cases which the Tribunal regards as "improper" is insufficiently precise and likely to lead to considerable legal argument.

We therefore propose that the amendment referred to above is widened so that,

i. It applies generally to all types of claim based on a contract of employment, and not only to claims for unfair dismissal,

ii. It does not require a discussion with a view to the termination of employment,

iii. It is underpinned by a code of practice or guidance, similar to that already provided by Acas in other circumstances, to ensure the fairness of the discussions.

June 2012

Prepared 29th June 2012