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Lord Falconer of Thoroton: I confirm that the regulations are not intended to define "misconduct". Thus, the assumption on which my noble friend is proceeding is correct.

5.30 p.m.

Lord Wedderburn of Charlton: I am delighted but also disappointed. I am delighted to have made the right assumption; I am disappointed because I thought my noble and learned friend was intervening to accept the amendment and to cut short our debate. Unhappily, the second was wrong and so I proceed to move the amendment.

The word "misconduct" is peculiarly uncertain. I want to be careful because obviously the word has been chosen deliberately and on careful advice and it is not intended that regulations should in any way affect its meaning. In some debates, and indeed in some amendments, the words "gross misconduct" are used. The phrase "gross misconduct" is not used and that is not to be its meaning. Lord Justice Scrutton spoke of "gross negligence" as negligence merely with a vituperative epithet, therefore "gross misconduct" is misconduct with a vituperative epithet.

It arises in the civil law, where "gross neglect" or "gross fault", lata culpa, is contrasted with levis culpa and levissima culpa at the other end of the scale: in other words, slight fault, ordinary fault and gross

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fault. "Misconduct" for civil lawyers would include all three. Although the common law has been more sensible in not adopting those three as legal categories, it nevertheless reflects a similar difficulty in respect of what is meant by "misconduct".

It has been a matter of great debate in various circles, but most people have assumed that

"misconduct which has led to the dismissal"—

I quote from the schedule—means "misconduct that justified the dismissal". Of course, not all misconduct justifies the dismissal. If the meaning is "misconduct that did justify but other misconducts that did not justify the dismissal", the provision will not apply in every case where the employee has been properly dismissed. The modified procedure then becomes even more extraordinary.

On the basis of it meaning "misconduct which justified the dismissal", we have to look at the provision even more carefully. There has been a whole list of cases where the courts have, very sensibly, gradually modified their approach to what kind of misconduct justifies a dismissal. In 1845, in the case of Turner v Mason, a maid, who against her employer's express order left the house to visit her dying mother, was held to be properly dismissed for misconduct. In the robust manner of judges of the day, Baron Alderson said that the pleadings did not even show that the mother was likely to die that night and that it was most improper misconduct to leave the house.

In dealing with employment law, I am always insistent to say that the courts should move on. Although they still cite Turner v Mason, they do move on. But the question is—one could put it as a sort of quiz—in which of the following cases in 1969 and 1974 did the misconduct justify the dismissal? I see that Members of the Committee are agog to know the answer. It is the case of two swearing gardeners.

In 1969, an employer and his wife returned from abroad and found that the garden was in a terrible state. The gardener was in a rebellious mood and the law report discloses that he refused to obey any of their orders, saying, "I couldn't care less about your bloody greenhouse or your sodding garden". In Pepper v Webb, was that sufficient in the light of all the circumstances to justify his dismissal? "Yes", said the Court of Appeal.

That precedent was cited and relied upon in 1974, in the case of Wilson v Racher, where the head gardener, the law report discloses, gave vent to oaths which were even more fearsome. I spare noble Lords' blushes by saying the most quotable response to the employers' instructions was, "Get stuffed". He was at the time working with an electric hedge cutter in the rain and feared for his electrocution. He was goaded and shouted at and his language, said the Court of Appeal, was grossly improper. But, it said, it was not something which deliberately flouted the contract's essential conditions. And that, of course, has become the modern test.

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I have used the alternative phrase because I think it is clearer in a statute; that is, a fundamental breach of the obligations in the contract. If that is what the Government mean, they must say so in this minimum set of procedures; in other words, someone who has committed a fundamental breach of his contractual obligations, which gave rise to his dismissal. First, even that, the modern test, is rather more uncertain than the old one—but that in this case is an advance—and, secondly, it can give rise to enormous difficulties of decision.

As Mr John Bowers says in his admirable little book on employment law:

"Dismissals relating to misconduct cover a multitude of sins".

He continues with pages of cases, of which I will mention two. The first is the case of Macari v Celtic Football and Athletic Co Ltd, that great Scottish football team now at the head of the Scottish league, reported in 1999 in the Industrial Relations Law Reports, page 787. Macari was given a variety of instructions by his employers, including an instruction to attend more regularly at the football ground and to report to the managing director on a weekly basis. For all sorts of reasons, all of which he claimed were quite justifiable, he was alleged not to have done that. The question arose whether he had engaged in breaches by way of misconduct, which led to the repudiation by the employers properly of his contract.

One of the advantages of the law in this area is that Scottish law and English law have proceeded to march hand in hand, without any great difference of principle on the contract of employment. The Court of Session said he had. Lord Caplan said this at page 798:

"The employee has a duty to accept the directions of the employer, if such directions are not illegal, are within the scope of the employment and are reasonable. Thus, to take an extreme example, if the managing director had ordered the football manager to polish the players' boots this would not have been within the scope of the manager's employment. Indeed, if he had ordered the pursuer to reside for an extended period outside Scotland that would not have been an enforceable instruction".

He continues:

"The instruction must be reasonable and not result in undue exploitation of the employee. A direction that the employee perform work that would result in him working 48 hours without sleep"—

and this is, I pause to say, before the maximum working hours regulations—

"may not be reasonable. However, these qualifications to the validity of an employer's directions must be assessed objectively".

I cite that because it gives the flavour of the problem of what is meant by misconduct that justifies a dismissal.

Of course, when we come to industrial action, or the consequences of industrial action, industrial action is always a breach of the contract of employment as English law stands—a matter to which this Bill gives an added importance and to which we shall return in the light of a future amendment.

In the case of British Telecommunications plc v Ticehurst, 1992, Industrial Cases 383, a manager had joined—as some junior managers and even middle managers often do these days—in industrial action, and had come back and was not, in the eye of the

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employer, sufficiently willing to give an undertaking properly to supervise the work of her staff. Was this misconduct? Was it misconduct to the extent that it allowed the employer to stop paying the wages and, in effect, dismiss the manager? A court of appeal held it was a fundamental breach of contract that allowed the employer to withhold the pay, which was the issue on which the case was fought.

I cite these cases as it is about time that some real cases were cited on this matter of Schedule 2 because these are the sorts of dispute that trades unions face every day, that lawyers have to advise on and which Schedule 2 does not face. Schedule 2 is not a part of real life. It uses phrases and words which, once again, those who put forward the Bill think will be obvious in application and have not thought through in terms of their problems.

The length of the list of the problems of misconduct has not been adequately represented in my submissions. The noble and learned Lord looks at me to suggest that it has, because he knows. He is privy to the legal secrets of the problem. I am very glad that he has joined us in the Committee but it does not make it unnecessary for me to explain the matter to other noble Lords who may not have the great advantage that he had, and that I had, to join in a common collegiate background of our learning in a particular university where we had the advantage of seeing all the detail of this. It is important that other people should understand just how difficult it is.

So, it is our submission that "misconduct" is not an appropriate legal word in this schedule. If it means misconduct for which you are lawfully dismissed and also misconduct for which you need not lawfully be dismissed, then it is peculiarly inappropriate and it vitiates the notion that the noble and learned Lord and the Minister in another place put forward—that it will always be the former employee who is involved. The employee may insist on coming to work and it may be that it is held that his dismissal was wrongful, that the repudiation was wrongful and, indeed, as in that small percentage of cases in a tribunal, it may be that his reinstatement is ordered. I know that it does not happen often. It happens regularly in Italy, and that is why Mr Berlusconi is proposing that rights to reinstatement should be cut down and slashed. We do not have to bother with that here because employers scarcely ever get an order for reinstatement against them. It is the primary remedy in Britain that does not work.

If the measure means both misconduct that can lawfully give rise to dismissal and misconduct that cannot lawfully give rise to dismissal, it is peculiarly inapt. If, however, it means misconduct that can give rise lawfully to a dismissal, it is even more inapt because it is impossible to know what it means in the schedule, and it should be replaced by a term of art. It is supposed to be a term of art. I am sure the Minister will reply but he shakes his head. I say that "misconduct" here presumably is a term of art. If it is not meant to be a term of art, I do not know what it is meant to be at all. If it is meant to be a term of art, it is a badly constructed term of art and should be

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replaced by a proper legal category. This is bad law. It will give rise to bad practice; it will give rise to confusion; it will give rise to uncertainty. Nobody knows what misconduct in Schedule 2 under the modified procedure Step 4 means.

The Government really should look at the terms that they use in the Bill, and if they want to put in new law as the basis of an imposed procedure, they must do so. After all, there are further dimensions to the uncertainty; I mention one of them.

The employer in unfair dismissal law does not need to prove in the ordinary case of unfair dismissal—and this is on a disciplinary procedure—that what he did is objectively justified. He needs to prove that objectively what he did was reasonable in the sense that it will fall within the band of reasonable responses of all sorts of different managers of the day. We should have moved an amendment scrapping that test, but we have not done so because we have been so modest in our amendments. It is a matter of straight law that the courts have said that what the Act means is that the employer must dismiss where a manager falling within the band of managers of the day might well have done so. I refer to good managers, bad managers and middle managers.

This extraordinary test, which has been much discussed in recent cases but has been revived in the Court of Appeal in the last two years, would mean that misconduct would be even less certain as we do not know at all what it means in terms of a particular set of facts. It is in the application of the legal concept to the set of facts that it should be replaced in Schedule 2. I beg to move.

5.45 p.m.

Lord Gladwin of Clee: I am no expert on law, but I would just remind my noble friend that the Minister talks about 600,000 workplaces that have no procedure at all. In my experience, many of them do not have any contract of employment either. Therefore, the requirement of the Bill that calls for a contract which sets out the rules for an employee does not exist. For there is no assumption of what misconduct is.

In the sophisticated places where they have a fairly lengthy process and procedure for dealing with discipline, dismissal and, on the other hand, grievance procedures, there is usually a paragraph or a page which describes conduct and misconduct.

I believe that to use the word "misconduct" here is unwise. I do not quite understand why we talk about conduct in the standard procedure. Paragraph one states:

"The employer must set out in writing the employee's alleged conduct or characteristics, or other circumstances, which lead him to contemplate dismissing or taking disciplinary action against the employee".

That is fair enough, but the modified procedure states:

"The employer must set out in writing the employee's alleged misconduct."

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That leads us into all kinds of highways and byways which, if the procedure is set out on the face of the Bill, will cause problems. I consider either the amendment proposed by my noble friend or the phrase used in the standard procedure to be far better than the use of the word "misconduct", which means different things to different people.

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