Employment Tribunals Act 1996 (Tribunal Composition) Order 2012

Lord Monks Excerpts

Monday 19th March 2012 Grand Committee

[Lord Cope of Berkeley]

It depends on what he has been dismissed for or what the argument is about. Let us not forget that he still has a lot of rights which can take him to a tribunal; for example, a whole lot of things can apply if the dismissal has anything to do with gender, sexual orientation or any of those things. But there is the question of whether an individual will fit into and is necessary to the firm. The Minister referred to training. Whether the individual concerned has worked out as both sides had hoped is also extremely relevant. All that is important. No one is taking away the ultimate right of unfair dismissal. All we are doing is shifting the one year to two years, as has been outlined.

On the composition, I entirely agree with the noble Baroness who said that originally the idea was that tribunals would be rather informal. Unfortunately, it has not quite worked out like that. This issue has become more complicated and more judicial. I disagree as regards whether having more people on the Bench, as it were, makes it more judicial or less judicial. One can look at that in different ways. However, the intention is to make it easier to arrange sittings, particularly when they have to be rearranged, as everybody knows happens from time to time. This measure will help speed up the process and in so doing reduce costs not only for the Government but for the businesses and trade unions that are involved, as they will know where they are. It is hedged about with safeguards, particularly the big safeguard that either side can request a full tribunal with appropriate lay members. That can be granted, and no doubt often will be granted when there is reason to do it. Some cases will be speeded up by this process. Therefore these two measures are small—I do not claim that they will change the world overnight—but useful improvements to the system, particularly in the interests of allowing small businesses to employ more people.

[Lord Monks]

My Lords, the UK has the third most flexible labour market among the OECD countries. I would like to explore what that means. Does it mean that we have the third best labour market in the OECD? I am afraid that it does not. Does it mean that we have the third most productive labour market in the OECD? It does not at all. Does it mean that we have the third best trained labour market in the OECD? It certainly does not. However, it does mean that we are in third place in terms of employers finding it easy to fire people unfairly and get away with it. It also means that we are in third place as regards employers being able to exploit the vulnerable and those most at risk, who often comprise young people, women and those who have the least hope of securing stable employment.

The changes that the Government are proposing in these two orders might just get us into second place in the OECD most flexible labour market league table. They will promote poor practice as opposed to good practice and encourage people to do things quickly and peremptorily rather than properly. There are a lot of myths about dismissal legislation. We should not forget that these measures are about unfair dismissal. Employers will win the cases that are taken against them if certain simple procedural rules are followed, particularly in the areas of competence and behaviour. Equality cases tend to be more complicated but if an employer warns a worker about a competence or behavioural matter, gives him a chance to improve and then takes the final decision, the employer wins. That is the reality of the case law that has developed since those provisions were introduced for the first time by Lord Carr, as the noble Lord, Lord Cope, has just reminded us. Irrespective of whether he has a small or a large firm, an employer should follow the basic procedures of giving people a warning and a chance to improve before taking a final decision. That seems to me eminently sensible good practice.

The effect of these measures will be to take thousands of workers out of scope—but for what? I simply cannot accept the argument that employers are sitting there thinking, “I am not taking on another worker because the qualifying period is too short”. I do not believe that it will lead to more recruitment and more jobs—although, as the noble Baroness, Lady Donaghy, rightly pointed out, if you are offering that to employers’ organisations they are bound to say, “Fine, it is a free gift, we will take it”.

I agree very much with what has been said on this side of the table about lay members, who have played a useful role in tempering the application of the law with some understanding of the realities of the workplace. I am glad that the employers’ organisations tend to agree with the trade unions on this. With due respect to judges, the realities of the workplace have not been their particular area of expertise, and they acknowledge that they have been helped. This order makes it a grace and favour provision for the legal chairman to choose whether he needs the lay representatives. That seems undignified and unfair, and it weakens the employment tribunal system in a way that will not be fatal but certainly will do it some harm in the eyes of many.

These measures are shabby, squalid and rather mean-spirited. They will not do anything for employment or for the British labour market, except to make it that much worse than it is at the moment.

[Lord Scott of Foscote]

I apologise to your Lordships, and to the Minister in particular, for not being here at the commencement at this debate. I intended to be, because I remember seeing this statutory instrument when it came in front of the Merits of Statutory Instruments Select Committee, of which I am a member. I made some remarks about it then and I had intended to make the same remarks here. I hope that what I am going to say has not already been said by somebody else.

The point I wanted to make does not relate to the reduction to one year for the bringing of an application for remedy for unfair dismissal. Unfair dismissal is a statutory remedy, and as the two-year period was fixed by statute it can be changed by statute—or, as here, by statutory instrument. However, I do not understand why it is thought necessary to put up to two years the right of a dismissed employee to obtain a written statement of the reasons for his dismissal.

Whoever has been unfortunate enough to be dismissed, whether or not he has a remedy to make a claim for unfair dismissal—and after this becomes law he will not have a remedy—he will want to know why he was dismissed. He is going to have to go back into the labour market and try to make himself a better employee, not so subject to dismissal as he was with his previous employer. Common courtesy ought to entitle the employee to be given the reasons for dismissal. Why has he been sacked? He needs to be given a reason. There may be other courses of action he may have against his employer for which it would be relevant for him to know why he had been dismissed. I cannot understand the policy behind requiring two years’ employment, rather than one year as previously, for the entitlement to be told why he has been dismissed.

I asked that question when the instrument was in front of the Merits Committee. Nobody knew the answer. My recollection is that the secretary of the committee went back to the department but did not get anything like a satisfactory answer. Perhaps the Minister could help with this. Why is it thought necessary to reduce the right of a sacked employee to be told why he has been sacked? Why must he be employed for two years before he is entitled to that very basic right, which ought to be a matter of common courtesy anyway?

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I think it was the noble Baroness, Lady Prosser—forgive me if I am wrong—who said that this smacked of the fight against the national minimum wage. I saw the noble Lord, Lord Monks, give me an ironic smile as she said it.

[Lord Monks]

It was a grimace.

[Lord Jones of Birmingham]

“Not on my watch, guv’nor”. I was not at the CBI when that fight went on. That was the bailiwick of the noble Lord, Lord Turner, not mine. I always said, and I stand by this today, that it was a good thing to do, but the wage should never be set so high that people felt they could not afford it or it was inflationary. Because it has always been implemented very wisely, it has never had those two problems. We were fortunate that the economy had that Goldilocks aspect to it for many years after it was introduced. Many an alarmist employer would have said, “This will be the end of life as we know it”, but certainly not this one.

I am not saying that if this measure is not introduced, inward investors will not invest or small businesses will stop employing. We are not in that alarmist territory at all. All I am saying is that making it more flexible will create some jobs. We must start looking after those out of work and getting them into work, instead of only looking after those in work.

I am in favour of judges sitting alone, but only with the caveat that it is discretionary, that it will not always apply and that it will be left in the hands of the judge to decide every day. We have to get as much value for money as possible out of the system; we must not delay, obfuscate or obstruct. I would like to think that most cases will be heard with two lay people sitting with the judge. I think that will happen a lot and I am pleased that it will. But the judge should be given discretion. I will not fall for the argument that for some reason employment law is so special, specialised and expertise-driven that judges are not qualified to do this on their own. To my knowledge, most judges are not murderers, and yet they preside over murder trials without experts on either side. This is a special field, but so are many others.

Over the past 15 years we have lived through the continuing encroachment of employment legislation. I would love to know what the increase in employment tribunal hearings has been in the past 10 years. I do not know what it is, so I hope the Minister can provide me with that information. How many of those tribunals have involved people in the first or second year of their employment? I would love to know that. However, whatever those figures are, I know that a greater number of employment cases never get to a tribunal as the parties settle. The noble Lord, Lord Monks, said that good employers who have a good case will win at a tribunal. He is right, but the problem is the employer never gets there for anyone to find out. It is in a business’s interests to settle as that stops it committing further resources, time and money to the case. That smacks of blackmail and of saying, “We won’t let the system work no matter how well meaning it is because it is in the interests of wealth creation to get rid of a case”. You thereby create a compensation culture, which is surely what we have to avoid at a time when we need to get some wonderfully skilled people into the world of work for the first time in their lives. If this provision goes just a little way down the path of doing that, it may not be an answer to a maiden’s prayer but it will help us look after those who are out of work a bit better.