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Lord Rennard: My Lords, I shall also be very succinct, as I was rather less so in Committee. The Minister has been kind enough to reply to various points I made then. He has picked up the point that the timing of the parliamentary by-election lies, by convention, with the Chief Whip of the party whose member has died or resigned. I hope the noble Lord will take note of some of the points I made in Committee about whether a by-election should arise during that time.

I still foresee a degree of chaos in overlapping between a parliamentary by-election and a pilot with all-postal voting. The postal voting regulations will be so different between the two elections that people who might want to vote by post in a parliamentary by-election a week or two before or after the pilots for the European and local elections may be rather confused. I fear they may think they will be sent a postal vote automatically. I think it would be much more satisfactory to have a two-week gap on either side, rather than one week. It is only by convention that our elections are held on a Thursday—elections are occasionally held on a Wednesday or Friday.

I note the Minister's remark that these points should be considered by Chief Whips at the appropriate time. At least we will not have the complete confusion of two elections under two systems on the same day.

Lord Norton of Louth: My Lords, I rise to add my support, because I attached my name to government Amendment No. 59, and I welcome the fact that the Government have brought it forward. I support fully what the noble Lord, Lord Filkin, said.

As the noble Lord said, the Constitution Committee, in its report on the Bill, drew attention to this provision. The committee did not offer a judgment on the provision. The purpose of the report was to call it to the attention of the House because it raised an

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important issue of principle affecting a principal part of the constitution. We must be extremely wary about any provision that has the effect of limiting the rights of electors. There is the danger of a range of disparate provisions being introduced over time that have the effect of limiting the capacity of electors to choose a representative. I raised that matter recently in a different context—that of the prohibition of the dual mandate for members of the European Parliament, which constitutes a limitation on the freedom of choice of electors. Any provision that affects the rights of electors must be subject to the most rigorous scrutiny and it must prove not simply desirable or convenient but essential. The case has to be compelling.

I do not think that the case for banning parliamentary by-elections for a number of weeks either side of the June elections is compelling. Holding a parliamentary by-election within a week or so of the elections held by postal ballot may prove, as the noble Lord, Lord Rennard, indicated, an administrative nightmare. It may induce voter fatigue. I appreciate that. That recognition was at the heart of what the noble Lord, Lord Rennard, said in Committee. However, in practice, as is generally recognised—and the Minister has referred to it—the situation is not likely to arise. It would not be the end of the world were it to happen, but the chances of a seat becoming vacant between now and June—in a seat falling within the territory of the European Parliamentary constituencies chosen for postal elections— and the party holding the seat opting for a Thursday just before or after the June elections are slim to say the least, as the Minister said.

However, I would rather run the risk of it happening than set a legislative precedent. I appreciate the point made in Committee by the noble Lord, Lord Rennard, that there are problems with the existing provisions for holding by-elections. That, though, is an argument for addressing those problems. It is not an argument for retaining this particular provision.

The Government are absolutely right to move this amendment. The Minister, the noble Lord, Lord Evans of Temple Guiting, put it forward in Grand Committee and I am very pleased that the Government are persisting with it today. It has my full support.

On Question, amendment agreed to.

[Amendments Nos. 60 and 61 not moved.]

Lord Filkin moved Amendments Nos. 62 to 67:

Page 7, line 15, leave out paragraph 2.

Page 7, line 33, leave out from "a" to end of line 34 and insert "pilot region"

Page 8, line 10, leave out "an order under this Act" and insert "a pilot order"

Page 8, line 19, leave out from "a" to end of line 20 and insert "pilot region"

Page 8, line 35, leave out paragraph 5.

Page 8, line 43, leave out "an order under section 2" and insert "a pilot order"

On Question, amendments agreed to.

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Employment Act 2002 (Dispute Resolution) Regulations 2004

7.42 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville) rose to move, That the draft regulations laid before the House on 20 January be approved [7th Report from the Joint Committee].

The noble Lord said: My Lords, disputes at work are expensive, stressful and disruptive for all parties involved. But everyone agrees that early, constructive discussion can produce solutions before problems escalate and working relationships break down. With that in mind, the Government introduced, in the Employment Act 2002, new measures to improve the handling of individual disciplinary and grievance issues in the workplace. The main aim of those provisions can be simply put. It is to encourage employers and employees to resolve disputes through workplace dialogue, rather than through litigation.

The new procedures are minimum standards. We are, of course, aware that many employers already operate more comprehensive procedures, and it is not our intention to undermine such existing good practice—far from it. The Advisory Conciliation and Arbitration Service has for many years offered advice and guidance on this matter, in particular through its code of practice on discipline and grievance issues, and that will continue to be of great importance. It is widely respected and followed, but not by all employers. At present, around 800,000 firms have either inadequate procedures in place or no procedures at all, which means up to 7.2 million employees have no clear right to discuss any grievances in the workplace.

Research undertaken by the DTI in 1998 showed that, in more than a third of cases that went to an employment tribunal there had been absolutely no prior discussion of the dispute between the claimant and his or her manager. That is why the introduction of minimum standards is warranted. Employment tribunals should not be the first resort for resolving workplace problems. They should be the last resort, when attempts by the parties to resolve a problem together in the workplace have failed. This House debated the substance of the new procedures, and the principles underlying them, at considerable length during the passage of what is now the 2002 Act, and the Government are convinced that the principles are sound. The regulations before the House today set out the detail of when and how the procedures established in the Act should apply, and it is to those details that I now turn.

The regulations establish that the standard, three step dismissal and disciplinary procedure should be used when an employer contemplates dismissing or taking relevant disciplinary action against an employee. Relevant disciplinary action is defined as

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action, short of dismissal, which the employer says is based wholly or mainly on the employee's conduct or capability. Suspension on full pay and the giving of warnings—both oral and written—will not count as relevant disciplinary action for these purposes. That is because they are part and parcel of existing workplace procedures to address disciplinary and grievance issues, not the causes of such issues, and can rarely give rise to employment tribunal cases in themselves.

The circumstances in which the modified, two step, dismissal procedure will apply are very narrowly defined. They represent a small subset of gross misconduct dismissals. It is almost always unfair for an employer to dismiss an employee instantly, without first going through some form of procedure or carrying out some form of investigation, even in a case of apparently obvious gross misconduct. That will remain the position. However, tribunals have occasionally found such dismissals to be fair, when they have concluded that prior investigation could not have affected the decision to dismiss. Regulation 3(2) will avoid the new procedures cutting across that in existing case law. However, even in that very small subset of gross misconduct dismissals, the employer will in future have to go through the modified dismissal procedure after the event—otherwise, the dismissal will be automatically unfair, and the employee will receive an enhanced award of compensation. This therefore represents a tightening of the law in relation to gross misconduct dismissals, not a relaxation of it as some might have feared.

The Government recognise that, in certain exceptional circumstances, it would be inappropriate for the parties to have to follow the statutory dismissal and disciplinary procedures. In those circumstances, set out in Regulation 4, the procedures will not apply. I will not go through them one by one, but, in summary, they cover cases when there already exists legal provision for collective dialogue about a particular issue; when the dispute or issue involved is a collective rather than individual one; or when, exceptionally, workplace dialogue may serve no useful purpose.

There are also certain circumstances, specified at Regulation 5, in which the parties will be treated as having complied with the statutory dismissal and disciplinary procedures, even if they have not. These are; first, trade union dismissal cases where the employee presents an interim relief application to an employment tribunal, within the very tight time limit for doing so, before the appeal stage of the applicable statutory procedure has been completed; and, secondly, where there exists a collectively agreed procedure for consideration of dismissal appeals at a level above that of the individual employer, and the employee has availed himself or herself of that procedure.

I turn now to the statutory grievance procedures. The standard three step grievance procedure will generally apply whenever an employee has a grievance about any action by the employer that could form the basis of a tribunal claim under a jurisdiction listed in Schedule 3 or Schedule 4 to the 2002 Act. Failure to initiate the procedure will normally mean that the employee is barred from making such a claim. The modified two step grievance procedure will be reserved

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for a very limited set of circumstances, when the employee's employment has ended and the parties mutually agree that it should be followed, in preference to the standard procedure, in relation to a particular grievance.

There are, again, a number of exceptional circumstances in which the parties will be treated as having complied with the applicable statutory grievance procedure, even if they have not. These are set out at Regulations 7 to 10. Regulation 7 deals with what have been referred to as "overlapping" disputes. On occasion, separate disputes can become intertwined. The guiding principle we have followed is to avoid the parties having to go through unnecessary multiple procedures, or iterations of procedures, in relation to "overlapping" disputes. It may be helpful if I go into this in some depth, as it is a key feature of the regulations.

When the action taken by the employer is dismissal—leaving aside constructive dismissal—the onus will be on the employer to initiate workplace dialogue under the applicable dismissal and disciplinary procedure. The employee will not, in any circumstances, have to initiate separate discussion under a statutory grievance procedure, before he or she can complain about that dismissal to an employment tribunal. Employers should know that it is incumbent upon them to have a fair reason for dismissal, untainted by any unlawful discrimination, if they contemplate such a serious step. Thus only one statutory procedure will apply where the disputed action is dismissal.

If the employer takes action short of dismissal against the employee for reasons other than the employee's conduct or capability, then the employer will not need to follow any dismissal or disciplinary procedure. Such action would not normally be recognised as disciplinary action. The employee will instead have to initiate dialogue under the applicable grievance procedure, if he or she wishes to dispute the action and it could form the substance of an employment tribunal claim. Again, only one statutory procedure will apply.

If the employer takes action short of dismissal against the employee and asserts that it is on the basis of the employee's conduct or capability, the applicable dismissal and disciplinary procedure will have to be followed, as I have previously described. The grievance procedures will not normally apply in such cases. If, however, the employee either considers that the action is unlawfully discriminatory or disputes that it is on grounds of conduct or capability, we believe that it is right, and in line with the principles underlying this legislation, that the employer should be entitled to prior notice of that before the employee can make it the basis of an employment tribunal claim. Otherwise, the issue might not be aired and there might be no opportunity to resolve it through workplace dialogue.

In such circumstances, therefore, the employee will be required to put the grievance in writing to the employer. Provided that is done before the appeal meeting under the disciplinary and grievance

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procedure, it will be sufficient, as the matter can then be discussed at that meeting. If that meeting has already taken place, however, the full grievance procedure will have to be gone through in relation to the grievance. That is the only circumstance in which two separate statutory procedures will have to be followed, arising out of the same matter.

Regulation 8 allows for the standard grievance procedure not to be completed but to be treated as such in certain circumstances when the employment has ended and the employee has put the grievance in writing to the employer, but it has since become not reasonably practicable for either the employee or the employer to attend a meeting.

Regulation 9 provides for the applicable grievance procedure not to be completed, but to be treated as such, if the substance of the grievance has been raised collectively—that is, by a trade union official or other employee representative acting on behalf of two or more employees. Furthermore, under Regulation 10, if a collectively agreed industry-level grievance procedure exists, there will be no requirement to go through the statutory procedures.

Regulation 11 provides for a number of general circumstances in which the procedures—in this instance, both the dismissal and disciplinary procedures and the grievance procedures—will either not apply at all or, when they have already been commenced, will be treated as having been completed. These are circumstances in which one of the parties reasonably believes that following the procedures would give rise to bullying, violence, harassment and other intimidation. Regulation 11 also covers cases in which it is not practicable for a party to commence a procedure or take a subsequent step within a reasonable period. That might arise, for instance, when one of the parties suffers a long-term illness or is out of the country for a prolonged time.

Regulation 12 makes clear which party is to be held at fault, and in what circumstances, when a statutory procedure is not completed. Regulation 13 makes allowance for the situation in which a meeting under one of the procedures is arranged, but it subsequently becomes not reasonably practicable for one or other of the parties—or the employee's companion, if the right to be accompanied applies—to attend. The employer will be obliged to rearrange a meeting in such circumstances, but only once. In order to allow time for the parties to go through the statutory procedures, without them being cut short by the employee making a tribunal claim simply in order to avoid being out of time, the normal time limits for making tribunal claims are to be extended by three months in certain circumstances. Those circumstances are specified in Regulation 15.

The remainder of the regulations deal with relatively minor and technical matters, and I will not go into them in detail. The regulations will apply to every employer in Great Britain. They are designed to be operable in all different types of organisation, from the largest to the smallest. Particular thought has been

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given to the special circumstances of small businesses. We know that the smallest firms are least likely to use proper procedures already.

In preparing the regulations, the DTI has carried out full and extensive public consultation. That process began with some six months of informal pre-consultation, including consultation with key organisations that represent employees and employers. A four-month formal public consultation took place between July and October 2003 on draft regulations. Before, during and after that consultation, discussions took place with an advisory group of 19 interested stakeholders established specifically for the purpose. There were also numerous bilateral discussions with stakeholders. In addition, a "roadshow" seminar event was held in various locations around the country to promote engagement in the consultation. Some focus groups were also held with representatives of small firms and others.

That was one of the most thorough and far-reaching consultations to have been conducted by the DTI, and we are satisfied that, having taken account of the many comments and representations received, we have here a set of regulations that will operate effectively. But that is only part of the picture. We recognise that employers and employees need to be aware of the new rights and responsibilities placed upon them. To ensure that they are, over the coming months, the DTI, along with ACAS, will carry out a well targeted publicity campaign aimed at all businesses and their employees, and in particular those in the small business sector.

A critical element of the campaign will be the provision of user-friendly guidance both for employers and employees. To allow time for that, the Government has laid these regulations before Parliament well before their intended coming into effect date of 1 October 2004. Also coming into effect on that date, to form a coherent package of measures, will be the revised rules of procedure for employment tribunals, revised Employment Appeal Tribunal rules, and a revised ACAS code. Together, that package of measures will, we believe, bring about the biggest improvement in the handling of workplace disputes in decades. I commend the regulations to the House, and beg to move.

Moved, That the draft regulations laid before the House on 20 January be approved [7th Report from the Joint Committee].—(Lord Sainsbury of Turville.)

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