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Lord Wedderburn of Charlton: I am sorry that my noble and learned friend Lord Falconer of Thoroton will not accept even the spirit of the amendment, although most of his objections were based on its form. As for it being legalistic and therefore not appropriate to Schedule 2, I will make a plea to my noble and learned friend. I plead with him not use this word "legalistic" because nobody is sure what it means. It is rather like "gross negligence", which is negligence with the addition of a vituperative epithet. "Legalistic" is "legal" with a few letters at the end to make it sound nasty.
There is much that is legal in Schedule 2. It refers to the test of conduct, characteristic or other circumstances in regard to what is to be alleged in regard to an employee's misconduct or breach of his obligations. That statement is taken straight out of Section 98 and will be interpreted by a court or tribunal quite properly by reference to the legal source from which it comes.
Similarly, almost every other phrase in Schedule 2 is couched quite properly in legal language, and so we drew up our amendment in proper legal language. Quite why the Minister thinks that it refers to Section 98A, or has somehow omitted to notice Section 98A which is introduced by Clause 34, I cannot for the life of me understand. It has nothing to do with Section 98A; it says it is to do with Section 98. I thought the Minister was going to criticise the amendment because it should have been moved in relation to Clause 29 and not to Schedule 2. That is a defect in the amendment and on Report we shall no doubt cure it by tabling a similar amendment to Clause 29, if, after reflection, we conclude that we should do so. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 30 [Contracts of Employment]: [Amendment No. 125 had been withdrawn from the Marshalled List.]
Lord McCarthy moved Amendment No. 126:
- Page 35, line 33, leave out ", and not inconsistent with,".
The noble Lord said: In moving Amendment No. 126, I shall speak also to Amendment No. 127. The amendments take us into Clause 30, which, as Members of the Committee well know, provides the mechanism for placing the statutory procedures of Schedule 2 into the individual contracts. The clause begins in a nice, unambiguous way by saying that they shall have effect notwithstanding existing agreements to the contrary. That is then reversed—I believe that in drafting terms it is a little cumbrous—by allowing the continuation of agreements,
- "not inconsistent with, the requirements of the statutory procedure".
We consider the word "inconsistent" to be rather ambiguous. In what way would the requirement be inconsistent? We prefer to make it clear that we want the requirement to be consistent only in one way; that is, not more painful to employees. In other words, we want an agreement which is more favourable to employees. We want an improvement in the dispute procedure. That is difficult to imagine, although I suppose that it is just possible to imagine many existing procedures which are less favourable than the statutory procedures as most will be rather better and certainly more comprehensive. We are saying "Well, they can stand; if they are not less favourable, they can stand". In other words, we are saying that there is an inconsistency, conflict or ambiguity which would make us prefer the word "favourable" to "inconsistent".
Obviously if one says that—it is not the only example but the most obvious example of what one means—one is referring to any procedure based upon the ACAS code. Although we have done so before, it is worth again trying to bring to the attention of the Government and the Committee the differences between the existing ACAS code—many codes and procedures are better than the ACAS code—and the statutory procedures.
As I believe I have said before, the key to the ACAS code is a paragraph, which is not very long, setting out the 11 essential features of dispute procedures. I calculate that approximately five of those are not in the statutory procedure. Therefore, we have to ask ourselves whether they are inconsistent with the statutory procedure. Might it be argued that that is the case?
The first is in many ways the most important. If I were allowed to put one thing into the statutory procedures I might consider this one. However, my colleagues might not agree, and I do not believe that
the Government would consider it for a moment. It would be the specification and limitation on the management's right to decide discipline; that is, the principle that not everybody can sack. Not everyone in a company or organisation can be allowed to sack people. There must be a specification so that we know who has the right to dismiss. There is nothing about that in the statutory procedure but it is, of course, in the ACAS procedure.Secondly, and almost as important, is the principle which is observed in most procedures that I know of; that is, the relevance of the past record of the individual worker. One asks questions about the employee such as: is this the first thing that he did; does he have nine years of exemplary conduct; is this the first offence to come to light; and, if it is, has he received an informal, formal or final warning? If it is the final warning and if the worker commits the offence persistently, then dismissal may well be the appropriate penalty. One will not find any reference to the past record of conduct. Anyone who takes the procedure seriously and says, "That's all they're getting out of me" will say that anybody can sack on the first offence. Certainly, there is nothing in the Act that suggests that that involves rather bad industrial relations. I will not go into the utility of the suspension alternative, which we have debated. Most decent procedures do something about suspension. We have tried to add to the Bill the need for investigation, examination, explanation but nobody has considered that.
I turn to the special case of gross dismissal. One of the most novel things that the Government have done is to say that where there is gross misconduct justifying dismissal, there needs to be a shortened and simplified procedure. We have asked them to justify that but they have never really done so. I do not know of a precedent. The most complicated, difficult and ambiguous set of circumstances are involved. My noble friend does not even like the phrase, "gross misconduct" but it is used in industry. Most people who use it appreciate that if they are going to sack somebody on the basis of gross misconduct, they had better investigate, take their time, look at the case in an independent way, maybe bring some third party in and use suspension. There is nothing whatever in the stated procedure—the statutory procedure.
It is worth saying, at the risk of delaying the Committee, that behind all this—behind the differences between the ACAS procedure and many other procedures and the statutory procedure—is nothing less than the philosophy of the treatment of workers. It is not an accident that the idea of a statutory procedure—the essential elements of the statutory procedure—comes from the employers. Discipline is seen as something that can be done by anybody. Discipline does not have to be consistent; it does not have to be based on your past record; and it does not have to be placed on anything else but an exercise of managerial prerogatives. That is the philosophy. The alternative is that discipline could be consistent, that it should fit itself to the individual and that as far as possible it should be remedial and
constructive. This is the philosophy of personnel management, not the philosophy of managerial prerogatives.We say, therefore, that the approach is not an accident. If the Government are not to line themselves up completely behind the philosophy that regards discipline as something that only management is entitled to do and does not have to justify the use of—if you want to get discipline justified you have to go to a tribunal, because that is the only way you can get it justified—we say that they ought to be prepared to make this significant but small change to Clause 30. In place of "inconsistent with" we should have,
- "less favourable to the employees".
Lord Falconer of Thoroton: These amendments seek to ensure that any agreed procedures must always be at least as "favourable" to the employee as the statutory procedures. Thus, the contractual or voluntary procedures can be entirely different, provided that they are at least as favourable. The existing wording of the subsection ensures that the contractual procedures must be "not inconsistent" with the statutory procedures. Both formulations are plainly seeking to achieve a similar objective, so this is purely a drafting issue. I believe that the existing wording is to be preferred. I recognise that the intention behind the amendments is to allow employers and employees a greater degree of flexibility in their choice of contractually binding procedures. However, there are problems with the amendments. Deciding whether a procedure operating in a significantly different way from a statutory procedure was or was not as favourable would be a difficult and largely subjective exercise. It would also be difficult to predict the outcome. These amendments introduce a lack of clarity and I believe they can only be undesirable here, if what one is after is clarity. Our test is significantly less subjective and ensures that the contractual procedures must be consistent with the statutory procedures, while allowing the flexibility for the procedures to contain more stages or set out more detailed requirements. I admit this test too involves an element of judgment but I believe that in practice it would be easier to apply. In the light of what I have said, I hope that my noble friend will feel able to withdraw his amendment.
4.30 p.m.
Lord Wedderburn of Charlton: I am interested in that comment by my noble and learned friend. It seems to me that he is in two difficulties. He says that judging whether something is not less favourable to an employee is far too uncertain, it lacks clarity and is subjective. My noble friend touched on one of the two answers to that; namely, that it is also a matter of judgment whether something is inconsistent with something else; it is not necessarily obvious. Of course, there is a judgment to be formed on both applications.
However, that which is not less favourable to the employee than a particular term or condition of employment has appeared in our employment law on
previous occasions. I do not know what precedent my noble and learned friend wishes to cite to show that it was so hopelessly uncertain and lacking in clarity that it could not be applied. It is applied time and again. In Section 185 of the consolidation Act 1992 we come across terms and conditions of employment in an award which must not be ousted by subsequent terms and conditions other than if they are an improvement upon those terms and conditions. That formula is not very different from terms and conditions that are not less favourable. There is nothing in the argument that Amendment No. 127 is so uncertain that it could not be applied.My noble and learned friend even appears to accept the argument that the procedures put forward and operated in a place of work by an employer could possibly be less than the statutory procedures in Schedule 2. Perhaps he will give me an example of a procedure less than the modified procedures, for example, which he believes would be a fair procedure for an employer to operate. My noble and learned friend indicates that he did not say that.
If the employer should not introduce procedures which are worse—I use the word "worse" generally—than Schedule 2, then there is nothing wrong with the formula which states that they should be not less favourable to the employee. They should be as good for the worker as the Schedule 2 procedures, which are, heaven knows, bad enough, especially in the modified procedures, and they must not be worse than the dreadfully unfair procedures that the Government are implying into every contract of employment. That is the sense of Amendment No. 127. I hope that it will be printed in Hansard that instead of the words "not inconsistent with" there should be the words "which is not less favourable to the employee". Nothing could be more just and reasonable than that.
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