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Lord McIntosh of Haringey: My Lords, I appreciate that the intention behind the amendment is compromise and that the noble Lord, Lord Wedderburn, introduces it in a spirit of compromise. I recognise that his preferred option would be that which he pursued in Committee.
Amendment No. 93 seeks to define the operation of Clause 34 by preventing the employer successfully pleading that not following a procedure beyond the statutory minima would have made no difference to his decision to dismiss if the procedure is a requirement or recommendation of an ACAS code. My understanding is that the code that is relevant here is the code of practice on disciplinary and grievance procedures. That code, in its own words, is about good employment practice and it is central to the decent treatment of employees. We would always encourage employers to follow its recommendations; indeed, many are so fundamental to fair treatment that it is difficult to see how an employer could rationally claim that omitting them made no difference to his decision to dismiss. To that extent, there is no necessity to state that they are excluded from procedures in respect of which an employer could plead "no difference".
But good practice guidance is necessarily general. The code itself acknowledges that disciplinary rules will vary according to circumstances. The noble Lord, Lord Wedderburn, acknowledged that each case would have to be decided in the light of its own circumstances. It would be wrong to make it an absolute that no recommendation of the code could
ever be followed less than fully, even if it would have made no difference to the outcome. What we are addressing in this clause is the concern of employers that they can be tripped up by minor procedural irregularities in an otherwise sound case. Our policy is that if following a procedure beyond the new statutory minima would have made a difference, new Section 98A(2) of the Employment Rights Act 1996 will not apply. The noble Lord, Lord Lea, asked me whether that was subordinate to the 1996 Act; of course, Section 98 in the 1996 Act still stands. This is an additional procedure in new Section 98A. If doing so would not have made a difference, it will apply. It is as simple as that. It would be wholly unhelpful to this policy to dictate that some procedures beyond the minima count and some do not. Where following what it recommends would have made a difference to the outcome, the code will remain paramount, which is entirely right. I believe that that is what my noble friends want. They want to ensure that where it makes a difference to the outcome, the code remains paramount.Of course, there is already a link between the ACAS code and the tribunals' consideration of unfair dismissal cases. It is admissible in evidence, and the tribunals are required to take its provisions into account if they consider them relevant to any proceeding before them. The tribunals already recognise that, where employers have not followed procedures, the employee might still have been dismissed even if the procedures had been followed; in other words, there are procedures which can be omitted without making a difference. Where a dismissal is unfair solely on procedural grounds, tribunals can, and do, reduce an employee's compensation, perhaps to nothing, if they believe that he or she would still have been dismissed if the procedure had been followed.
Therefore, tribunals are trusted now to make judgments about whether following procedures would have made a difference, and they continue to be trusted to do so in the new context. It would be wrong to fetter their judgment in the way that the amendment proposes. Individual cases vary enormously, and it is only in relation to individual cases that it is possible to say whether following any procedure would have made a difference. The tribunals surely know how to make such judgments. I am sure that neither my noble friend Lord Wedderburn nor my noble friend Lord Lea are suggesting that they do not trust them to use their discretion wisely.
We are not undermining or belittling the ACAS code by opposing the amendment. I have stressed the value of the code and I have stressed that failing to follow its core recommendations is very unlikely to allow an employer to plead "no difference". But to prevent employers ever arguing that following any part of it would have made no difference to their decision to dismiss would needlessly hamper the operation of the clause. Surely the real absurdity would be to insist that an employer with a perfectly valid reason for dismissing an employee who has
followed procedures in all important respects—in other words, all respects which could have had an effect on the decision to dismiss—should nevertheless be held to have dismissed him unfairly because of a slip-up which was irrelevant to the outcome. I hope that the amendment will not be pressed.
Lord Wedderburn of Charlton: My Lords, that may be one of the most important, obdurate government responses made in the course of this Bill. It is extraordinary that the Government do not wish to make the employer satisfy the requirements of fundamental fair procedures, as expressly suggested in the ACAS code. There is nothing new about this. As a matter of fact, the relevant matters were first addressed in the industrial relations code of 1972, which accompanied the Industrial Relations Act 1971. There is no question about whether a set of fundamental fair procedures exists. The Government have not previously advanced those as the things to which this section relates.
My noble friend said that there is no real necessity to state that. He seems to have forgotten that the Polkey case concerned just such a matter. That case did not involve an internal procedure specially agreed by the employer; it was a decision to make redundant three employees, of whom Polkey was one, without any warning or individual consultation. It would have been decided in the previous mistaken case law under the no difference procedure. As both the noble and learned Lords, Lord Mackay of Clashfern and Lord Bridge of Harwich, pointed out, that was a failure to satisfy the basic rules of fairness in redundancy. The noble and learned Lord, Lord Mackay, also said that it was a failure to satisfy the basic code of consultation.
As the clause stands, that failure by the employer, which, contrary to previous case law, the House of Lords Judicial Committee decided was wrong and should be the basis of unfair dismissal, would not now be the basis of unfair dismissal. I do not know how my noble friend can refer to "minor procedural irregularities", which I wrote down as what he said. I also wrote down that the Government are not concerned with mere slip-ups. He called the failure to warn an employee purportedly made redundant in the Polkey case a mere "slip-up". And, in the most recent case on the matter—that of Whitbread v. Hall in 2001—the Court of Appeal made clear that under the Polkey judgment the same principle applied to misconduct cases. In that case, a manager dealt with misconduct with her mind made up. In hearing the case, she did not properly go through the basic procedures of fairness; nor, indeed, did she go through an appeal procedure properly, as the employee could have requested. That is neither a slip-up nor a minor procedural irregularity.
The Government are in deep trouble on this matter. With the greatest respect, if they continue to misrepresent what the clause will do, there will be wrath to come. Workers will not simply ignore this because they will be the ones who suffer. They will be the people who are dismissed without proper procedures or even without the basic fairness of the
ACAS code procedures. They will be told, "Oh well, it makes no difference that we did not satisfy that. We would have dismissed you anyway. So don't come to us complaining about basic failure of natural justice because the Government have given us—the manager and the employer—the right to get rid of you and not to satisfy these basic procedures". The previous case law shows perfectly well how the clause will apply.Therefore, when we read it in Hansard, the reply from the Government today will be a manifesto to workers to take action in other ways. If that is what the Government want, they will be as obdurate at Third Reading as they are now. I cannot understand how a Labour Government can fail to understand the lack of balance, the unfairness and the lack of even-handedness of the clause as it stands. We offered a compromise to get them out of perhaps the worst of the clause, but they will not take it. We can only hope that more sensible thoughts will overcome them before they are overtaken by Third Reading. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.45 p.m.
Baroness Turner of Camden moved Amendment No. 94:
- Page 39, line 18, after "unreasonable" insert ", provided that the dismissal is in all procedural respects fair,".
The noble Baroness said: My Lords, we debated the Polkey decision during discussion on the previous amendment. I shall not go over that area again because my noble friend Lord Wedderburn has explained in great detail what the Polkey judgment meant and what the Government's attitude to it has been.
In the Bill the Government appear to be accepting the line, which is perhaps advanced by the CBI, that tribunals put too much weight on trivial breaches of procedure rather than on the actual reasons for dismissal. Therefore, this amendment seeks to reverse the House of Lords Polkey judgment. There was a long debate on this issue in Committee during which the Minister was frequently challenged to produce evidence of cases in which trivial breaches of procedure had been held by tribunals to render unfair dismissals which otherwise would have been regarded as fair. I believe that it is right to say that no such evidence was produced. The one case quoted—that of British Airways—did not seem to me or to my noble friends to establish the point which the Government were endeavouring to make. Against that, we have evidence from Judge Prophet, the president of the employment tribunals, to the effect that he believes that the change proposed by the Government could be potentially disastrous.
There does not appear to be any real evidence that tribunals have been in the habit of finding against employers simply because of a trivial failure in procedure in a situation in which a dismissal would otherwise be regarded as fair. During debate in Committee, I and my noble friends endeavoured to explain to the Minister from the employee's point of view the importance of procedures being followed
properly prior to any action, such as dismissal. For an employee, dismissal is a matter of great and serious concern. But the procedures are important to an employer as well if he wants to maintain reasonable industrial relations in his company. The problem is that the Government's attempt to reverse the Polkey judgment will send out the wrong signals. It will indicate to employers the opposite of what the Government want employers to understand. It will suggest that it is not important to follow procedures. That is why I find it difficult to understand the Government's stance.We have been told throughout our discussion at this stage of the Bill that, if possible, the Government want industrial relations issues to be dealt with internally, and that, for that reason at least, minimal procedures must be established in the many small companies that do not have them at present. Yet the clause states that if they are not followed, it would not matter; that one could still win in the event of a case proceeding to a tribunal.
The Government's Explanatory Notes state, and the Minister has repeated today, that the main issue is whether or not the dismissal is fair. In that case, I urge the Government to accept our amendment, which puts the issue of fairness beyond doubt. We simply seek to add to this clause the fact that the dismissal is in all other procedural respects fair. I beg to move.
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