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Lord Lea of Crondall moved Amendment No. 182:
- Page 39, line 14, leave out from "that" to end of line 15 and insert "the fairness of the dismissal was not affected by his failure to follow the procedure"
The noble Lord said: This amendment concerns the Bill's provisions to overturn the House of Lords' judgment in the Polkey case. This case was originally judged in a lower court in 1979 and reversed in the House of Lords in 1988. The judgment stated that procedural failings could render a dismissal unfair but that if following them would have made no difference, compensation should be reduced or eliminated. My noble friends will say more about the details of the judgment; let me simply say that it was a very reasoned—and indeed reasonable—judgment. There is no independent evidence to show that it has been operated since then in a capricious or unreasonable way.
The Government appear to argue that, nevertheless, that places too much weight on minor procedural breaches, creating havoc with the real intentions of the law. That in turn is hotly disputed in relation to the debate which has been going backwards and forwards about Routes to Resolution and so on. Some of us had the impression that some of the arguments are just being straightforwardly taken from employer representations.
In committee in the other place on 18th December, Mr Alan Johnson agreed to an amendment tabled by Mr Rob Marris, with the result that new Section 98A(2) of the Employment Rights Act 1996, which is about unfair dismissal, appears as it now does in lines 11 to 15 on page 39 of the Bill. The burden of that provision, I think, is that failure to follow a procedure would not by itself make action by the employer unreasonable. However, Mr Marris would be the first to say that that does not go very far in addressing the problem. The fact is that procedural niceties are at the heart of the Bill.
Moreover, this matter involves not only the question of the scope and interpretation of the statutory default procedure in Part 2 but also the scope and interpretation of enhanced voluntary procedures, including the vital question of the ACAS code and the danger of the statutory procedure now being a safer bet for the employer than the ACAS code.
In using such language—"a safer bet for the employer"—some Members of the Committee may ask whether that is just a product of a rather fevered imagination. Let me quote Alan Johnson. In the other place, he argued:
- "If we did not reverse the no-difference test, employers would rightly wonder why they should move to a more sophisticated code if they could be found to be wrong".—[Official Report, Commons Standing Committee F, 18/12/01; col. 228.]
- "If we did not reverse the no-difference test, employers would rightly wonder why they should move to a more sophisticated code if they could be found to be wrong on a minor error of procedure, irrespective of the fundamentals of the case".
We cannot reiterate too often that the best way to reduce the gap between the default procedure and the ACAS procedure is to introduce the major benchmarks of the ACAS code into the default procedure. It is a dangerous path down which we would be treading if we were to juxtapose, as did Alan Johnson—and perhaps he would not wish to repeat what he said word for word but he juxtaposed in a slightly unfortunate way—the statutory code and the ACAS code. Indeed, it is that gap which I and many of us find the most worrying feature of the Bill as a whole.
Perhaps we should take some comfort from the thought that this will be easier when we have a sight of the promised, or hinted at, amendment to the statutory procedure on the examination of the facts of the case and so forth. Be that as it may, Amendment No. 182 cuts through some of the ambiguity and clearly states
that the employer would have to show that the fairness of the dismissal was not affected by his failure to follow the procedure. That, as we understand it, is precisely what the Government are aiming at, and we cannot see why we cannot say so on the face of the Bill. I beg to move.5.45 p.m.
Lord McCarthy: I intervene early in what will undoubtedly be a prolonged debate because I want to widen the considerations that should govern the Government's approach towards procedure and the whole issue of deciding discipline and grievance applications. More detailed arguments will subsequently be put forward by my noble friend Lord Wedderburn in relation Amendments Nos. 183 and 184.
The point I am trying to make is that the Government are misunderstanding the function and role of procedures in doing the two things which the noble Lord, Lord Sainsbury, said were the central criteria that he wanted; namely, fairness and improvement in industrial relations. Fairness and improvement in industrial relations are closely bound up with the provision of adequate procedures.
The trouble is that the whole debate about the amendment of Polkey has become highly politicised and highly divisive. It would be impossible for anybody who had not studied this subject in considerable detail to understand the position taken, for example, by the CBI.
The CBI sees this once again as a crucial change. It states in its evidence to us that it is essential that we should clear away the procedural considerations. It states that all procedural failings, no matter how minor, could lead to a finding of unfair dismissal. That is not true, but that is what the CBI believes.
The CBI states that this change will enable firms to introduce internal procedures beyond the statutory procedure without leaving themselves open to a finding of unfair dismissal based on a minor technical error. Again, I suggest that that is not true. It even states that it is not in the interests of the worker that there should be a procedural element. They will disadvantage employees who are able to bring successful cases under the current law, but under the current rules successful claimants typically receive little benefit. They are awarded minimum compensation since they have suffered no loss and are often confused about whether they have won or lost. That is a very extreme view to take of the significance and importance of the procedural element, saying that it is absolutely essential to get rid of the procedural element in this context.
One cannot square what the CBI says with what Judge Prophet said—the man who is supposed to know what goes on in tribunals. In his evidence to the Minister in another place, he said that the Government are putting in a potentially disastrous clause, and he goes on and on about the consequences of that.
It seems to me that what is being lost in all this is the function of procedure in deciding between workers on the basis of fairness, and on the basis of a desire to
improve industrial relations. They are the two important elements which the Minister earlier told us he was concerned about and what he wanted to see.It seems to me that the opposite is the case. This element of employment protection law has no downside. There is no disadvantage in encouraging an employer to go through a procedure, even if he were to come to exactly the same result if he had not gone through a procedure. Going through a procedure is an educated element; it is an educated process. There is no downside.
It is right and proper that an employer should be encouraged to see whether he is being fair, and to let the worker see that he is being fair. It is right and proper that an employer should give dismissal on the grounds provided by the legislation. There is nothing wrong with sacking people on grounds of conduct and capacity rather than anything else, and there is nothing wrong in asking people to use the procedure in order to demonstrate to the worker that they are being fair.
I would have thought that the amendment would particularly lend itself to the Government at this time. They would want to accept it especially because of what they want to do; they want to discourage people going to tribunals. I want to discourage people going to tribunals, if I can provide them with a satisfactory alternative.
We disagree about the elements of the satisfactory alternative; we want to see other measures put into the statutory procedure. However, there is one thing that will make some workers—I do not say large numbers—see the point of staying within their domestic procedure; it is because in some way they have a fair investigation of the kind they believe they might receive if they go to a tribunal.
Let us suppose that the employer says to the workers, "We are going to have a hearing. You are going to have somebody who represents you, and we are only going to dismiss you if we have clear legal grounds. We do not dismiss anybody in this organisation illegally because we want to obey the law—in fact we want to go further than the law". If the employer takes that approach to the organisation, if he takes that approach in his industrial relations, if he is manifestly fair and if he makes a point of being fair, that will encourage workers not to go to tribunals. Inside their organisation they will be getting the full rigour of an adequate procedure.
I do not care whether it turns out to be that the employer might find that it was an unfair dismissal even in some significant aspect or if, on other grounds, there would not have been an unfair dismissal. This is not important. What is important is that employers should be seen to be fair. They should be seen to practise what is a small shadow, sign or example of the kind of practice one receives in tribunals. In such circumstances ACAS can say, "Well, you seemed to have the elements of a fair procedure when you reached this point. The employer was there and you had an opportunity of making your case. Do you think you will get anything different if you go to a tribunal?
You have had a fair crack of the whip". That is what people want—a fair crack of the whip. They do not want to be told, "Because you could have been sacked anyway, we are not bothering with the procedure". That is not good industrial relations, it is not equity and it is not fair. On the basis of their own beliefs and their own statements to us this afternoon, it is not what the Government should want.
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