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The Deputy Chairman of Committees: Would the noble Lord come to the end of his sentence quickly?
Lord Wedderburn of Charlton: I am so sorry. I was saying with the consequences not merely upon the contract of employment and his wages but also, as my noble friend Lady Turner said the other day, upon his social security provision—a matter on which she may well wish to expand to the Committee on this amendment. I beg to move.
The Deputy Chairman of Committees: A Division has been called. The Committee stands adjourned for 10 minutes until 5.8 p.m.
[The Sitting was suspended for a Division in the House from 4.58 to 5.8 p.m.]
The Deputy Chairman of Committees (Lord Geddes) : Before continuing discussions of Amendment No. 130, I have to advise the Committee that the Chief Reporter has asked me to announce that unfortunately Westminster Sound, due to a technical fault, did not record the opening speeches concerning the Statement on hunting. I will therefore, with the agreement of Members of the Committee, read back into the record the advice of the noble Lord, Lord Brougham and Vaux, regarding the procedural position: "Anyone can move to adjourn the Committee but, just as an amendment, that Motion cannot be voted on and can be agreed only if totally unopposed".
The Committee may now continue discussion on Amendment No. 130.
Lord Wedderburn of Charlton: Is it working now?
The Deputy Chairman of Committees: I am advised that the answer to the noble Lord's question is yes.
Lord Falconer of Thoroton: This amendment seeks to provide that where an employee is dismissed without notice, the "effective date of termination" shall not take effect until the applicable statutory procedure has been completed. The effective date of termination is used in a number of places in the unfair dismissal provisions of the Employment Rights Act 1996 and determines, for example, whether the employee has sufficient continuous employment to claim unfair dismissal and the date from which the time limit for making a claim runs. It is an important date.
We have already discussed gross misconduct in relation to the amendments tabled to Schedule 2 and how the procedures will apply in such cases. Where the full procedure is used, employers should not in any event dismiss until the meeting required by step 2 has taken place.
The amendment in practice is presumably aimed at the case where we intend that the modified procedure should apply; that is, where the employer dismisses more or less instantly, probably for what he believes to
be gross misconduct, without giving notice. It would artificially divorce the "effective date of termination" in such cases from the time when the dismissal really takes place. It will not have the result that the dismissal is made unfair if it would otherwise be fair. However, it would, if I understand it correctly, benefit some employees at the margins by securing that they have the necessary continuous employment to claim unfair dismissal when they would not otherwise do so. I have to say that the uncertainty generated by this amendment seems a high price to pay for that small benefit to a marginal number of employees.However, the thrust of the argument of my noble friend Lord Wedderburn is that there is uncertainty of a legal sort. He read to us an extract from the Cerberus case, which indicates that there is a doubt in the law about whether one needs to accept a repudiatory breach of a contract of employment by an employer, where one is an employee, to bring the contract to an end. That uncertainty in law, he says, means that you should bring clarity to the issue by specifying that the effective date of termination should be once the statutory procedure is completed.
In effect, that would separate the legal date of the termination of a contract from the effective date of termination in the law which, in itself, would bring additional uncertainties. Where one is dealing with summary or instant dismissal, in practice there is very rarely a difficulty about when the contract came to an end. I therefore do not think that the uncertainty which my noble friend identifies is as bad in practice as to justify what would be a quite significant change in the law. If the intention is to prevent dismissal without notice, the amendment does not succeed in that aim in any event.
On the basis, however, that it does succeed, I can only say that we have no intention of going beyond what is in the procedures and providing that the effective date of termination will be delayed until the procedure has been completed or of preventing all dismissals without notice. Our intention is not to prevent summary dismissals but to ensure that, where a dismissal takes place, suitable internal procedures are followed. In our view, different procedures are suitable where a dismissal is instant.
So far as the drafting of the amendment is concerned, as I read it, it says there is no effective date of termination before any applicable statutory procedure has been completed. This would mean that the employer could prevent there ever being an effective date of termination, thereby preventing the employee ever getting to an industrial tribunal, which cannot be the intention of my noble friend.
5.15 p.m.
Lord Wedderburn of Charlton: I was struck by my noble and learned friend's first description of the effects of the amendment; namely, that it affects matters such as continuous employment. He said that its effect would bring a small benefit to a marginal number of workers. What an unthinkable
consequence! If that is so—I adopt for the moment the hypothesis that his description is correct—I am not ashamed to move such an amendment.As my noble and learned friend explained, there are workers whose jobs are being destroyed by summary dismissal. He did not even bother to say it had to be lawful summary dismissal because, of course, the old master and servant rule treats summary dismissal as the end of the job. If that is his understanding of the law, despite the uncertainty in the case law—if the Government are suggesting to us and advising us that the rule is in summary dismissal as it was in the old master and servant cases and as it was repeated in Sanders v Neale—we have to listen very seriously to that.
It is no surprise in the light of that advice that the amendment would bring a small benefit to a marginal number of workers. If I were to exercise judgment on the proposition of the noble and learned Lord, I would think that perhaps the number would be more than marginal and there could be cases where the benefit was more than small. As for the idea that the amendment would stop a case from getting to employment tribunal, I think, with great respect, that that is quite fanciful because, where the job has purportedly been destroyed by an employer who will not go through the procedure, the employee could sue in the county court, quite apart from the tribunal and recover his wages until the end—
Lord Falconer of Thoroton: Is my noble friend saying that that would destroy the unfair dismissal claim?
Lord Wedderburn of Charlton: I do not believe that it would destroy the unfair dismissal claim, but I do not want to prolong the argument on that. I am saying that the employer would still have a remedy and he would be advised he had a remedy—if my noble and learned friend were to advise him, his advice would be that he had a remedy. It is playing about with things to suggest that that is an objection to the amendment. It really will not do to tell me that that would improve the position of workers on their continuity of employment, which is absolutely fundamental to their position at work, that it would preserve their job because the effective termination would be postponed and that these very important procedures would have that great protective effect, whether a marginal number or a large number is involved, but that it cannot be made clear in the Bill that it will have that effect. "We will imply it in your contract", say the Government or the CBI or whoever it was who first thought up this dreadful schedule and this dreadful Bill in this particular part. "We shall put it in your contract, but don't think you can come along to us and make it clear on the face of the Bill that the small benefit that it might bring you will really get to you. You're just a marginal number of workers".
The philosophy of the Bill, which has been promoted under the guise of helping industrial relations, is in fact going to help neither that marginal number of workers nor—I tell the Government about this sincerely— will it help industrial relations because
people will rumble it. Someone who is summarily dismissed is going to say, "Well what about this procedure? Why should I be thrown out on the street and thrown to the social security office, where the employer is going to inform the social security authorities that I was dismissed for misconduct, which I deny? It's no good that. I shall have benefits withdrawn from me if I'm dismissed for misconduct. What about this procedure?" "Oh no", say the Government, "Your date of termination of your employment must be immediate. We can't wait for our procedures. That might bring you a small benefit". If that is not the reason, what other reason is there? It is not that the employee cannot get to a tribunal. Here we have the Government saying, "This amendment is preposterous because it will stop a tribunal claim". They were out to stop 40,000 tribunal claims; that is the object of the Bill. My noble and learned friend shakes his head, but if he looks at the Government's response to consultation, he will see that it is stated four times that the effect of the Bill will be—with a time lag possibly of one year—the reduction of employment tribunal cases by 30,000 to 40,000. They also set out the millions of pounds that will be saved. He really cannot shake his head when I mention this inconvenient fact.This is a most serious step by the Government. Workers will blame their employers unless their unions bring to their minds the effect of a misconduct, summary dismissal, without necessary investigation. We are not now into the question of whether the tribunal finds it unfair. We are dealing with the procedure and the procedure can take place without investigation. Sometimes my noble friends and I forget that we must remind people what happened yesterday. Yesterday it was made absolutely clear that the Government would not insert into the modified procedure the principle of prior investigation. They refused and, therefore, the employer can dismiss summarily for misconduct without investigation. He need not—indeed, no one need—complete or initiate the procedures because they are no good to the employee; his job is finished and he is out on the street.
I doubt that my noble and learned friend was smiling at what I said, but something amused him. I am not amused, and I do not believe that my noble friends—both those who put their name to the amendment and those who did not—will be amused either. This is a most serious matter. At present the law is obscure, although the Government have expressed the view, through my noble and learned friend, that the principle of Sanders v Ernest A Neale Ltd applies and that Lord Justice Sedley is wrong in saying that the position is obscure and uncertain.
That is a most important statement which no doubt we shall have to consider. It will no doubt be cited in relevant cases as the Government's intention behind the Bill on this matter. First, they want Sanders v Ernest A Neale Ltd to apply; secondly, they do not want to agree to an amendment which would cure the uncertainty; and, thirdly, they do not want to cure the uncertainty in a manner which they fully admit would bring a small benefit to workers.
I do not understand why Ministers cannot simply say to us, "We shall take it away and look at it". Were it not my own Government, I would say that it was arrogant. On many occasions in the 1980s I said that propositions that were put to us were arrogant. When Ministers rejected the existence of some causes of action which were in all the books, I said that that was arrogant.
On this occasion, were it not my own Government, I believe I should have to say that it was arrogant to say, "Yes, it is an uncertainty, but we are curing it because Sanders v Ernest A Neale Ltd applies. If you had your way, you would cure the uncertainty which perhaps you say exists, and it would bring a small benefit to workers". No other reason has been given for not at least dealing with the obscurities of when the effective date of termination of contracts of employment and dismissals arises.
No doubt the Court of Appeal will one day be presented with this record. I am grateful to the Deputy Chairman of Committees for making it clear that the recording machine has not broken down again. This record will show just how clearly the Government are committed to every single line of the Bill. It is not only cast in stone; it will be a millstone around their necks unless they go away and reconsider the matter. It will be a gravestone to industrial relations in some areas because workers will know that the Government could not give them a small benefit and, as a result, they are marginalised and out on the street.
I can do nothing except beg leave to withdraw the amendment. However, I hope that the Government will consider the matter on Report, and I hope that at that stage we shall be able to present them with a more acceptable amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
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