Employment Bill

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Alan Johnson: We went through the issue this morning. The Polkey judgment was made in 1979 and reversed in 1988. The question is whether the employer would have made the same decision had the procedures been followed. We cannot get away from that.

As I went to great lengths this morning to explain, the words ''not automatically unfair'' do not mean the same as ''fair''. If an employer says at an employment tribunal that they would have made the same decision anyway, the tribunal will not say, ''Okay, that is fine''. The employer must prove that the procedural errors, which by definition will be procedural errors over and above the basic minimum, would have made no difference to their decision to dismiss.

An employer may say that their failure to follow an investigation set out in the disciplinary code of the Post Office made no difference to their decision, but they are hardly likely to get away with that at an employment tribunal. Indeed, we said this morning that in most cases that we have seen, the failure was in carrying out the basic three steps. An appeal was not held, the employee was not told of what they were accused and so on. We also said that if we did not have a change to Polkey and introduce the no-difference test over and

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above the minimum standards, we would be discouraging employers from having more elaborate and sophisticated procedures than the basic minimum.

The fear that the hon. Gentleman raises has been expressed to me many times, but is not well founded. The Bill will ensure what we mean it to ensure. The basic minimum standards must be met, otherwise the dismissal is automatically unfair. We take a judgment on procedural issues over and above the minimum. That in no way detracts from the need for the employment tribunal to judge that the dismissal was fair in all other respects.

I hope that I have reassured hon. Members that the amendment is unnecessary. I ask the hon. Member for Weston-super-Mare to withdraw it.

Brian Cotter: On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Hammond: I beg to move amendment No. 64, in page 38, line 26, leave out 'be required to'.

The Chairman: With this we may discuss the following amendments: No. 66, in page 38, line 28, at end insert

    'and in determining whether such an award would result in injustice the tribunal shall have regard to the resources available to the employer to enable him to ensure compliance with statutory procedures'.

No. 67, in page 39, line 10, at end add

    'and in determining whether such an award would result in injustice the tribunal shall have regard to the resources available to the employer to enable him to ensure compliance with statutory procedures'.

Mr. Hammond: Clause 34(3) states:

    ''An employment tribunal shall not be required to make an award under subsection (5) if it considers that such an award would result in injustice to the employer.''

The tribunal will therefore not be required to make an unjust award, but it will not be prevented from making one. Removing the words ''be required to'' would make it clear that the tribunal would not make an award if it would result in injustice to the employer. It is difficult to imagine how the Minister will justify leaving in words that will allow a tribunal to make an award that would explicitly result in injustice to the employer. I hope that he recognises the need to deal with that.

If I may stretch the scope of my amendment, the same point applies to new subsection (1B), where the words ''shall not be required'' are found again. An amendment that dealt with that subsection was technically imperfect and was not selected, so if the Minister deals with the substantive point, I will be happy to withdraw the amendment and see if it can be covered later.

5.15 pm

Amendments Nos. 66 and 67 would add to the definition of injustice to the employer. I seek an assurance that there will still be a size or sophistication test and that when the tribunal examines questions of injustice to an employer in making an award, it will take into account the size of the employer and the

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resources that are available. It would not necessarily have to judge the size of the employer. A small law firm that specialised in employment law might be expected to have the resources, but a motor repair workshop, to use an example that we have used before, that employed three people might not have enough resources to ensure compliance.

Again, these are probing amendments. I will be happy to hear the Minister tell us—as I believe that he may—that the existing procedures will remain unaltered and that size, sophistication and employer resources will be taken into account. I should be grateful for that confirmation.

Alan Johnson: As the hon. Gentleman explained, amendment No. 64 is designed to ensure that tribunals will never give a financial award on reinstatement or re-engagement if they believe that it would result in injustice to the employer. Subsection (3) already states that tribunals are not required to give the award if it would result in injustice to the employer. It is almost impossible to imagine a situation in which the tribunal would make an award that it considers to be unjust when it is under no statutory obligation to do so. I fail to see the necessity for such a change.

Amendment Nos. 66 and 67 would appear to lessen any burden on a small employer by directing tribunals to have regard to the resources available when deciding whether applying either the minimum award or award on reinstatement or re-engagement would result in injustice. It would be wrong to attempt to guide tribunals on what constitutes injustice. Circumstances will vary enormously, and tribunals will want to consider all relevant factors when considering whether it is just to make the award. I would not want to fetter their discretion, but it is likely that they might want to take into account the potentially greater impact of a fixed award on a business of limited resources. I repeat that it is right that tribunals should decide.

The suggestion that small employers—including our famous garage in Hull—will struggle to put the core procedures in place and follow them whenever necessary underestimates small firms and overestimates the complexity of the procedure. We have ensured that the statutory procedures represent basic and fundamental fair minimums and are not pitched at a level where following them will create difficulties for any employer of any size. Small employers that do not use procedures can only benefit from adopting the statutory minimums, because doing so will increase the likelihood of resolving a dispute before it reaches a tribunal.

I acknowledge that there clearly will be circumstances in which it will be reasonable for the employer not to follow the minimum procedures, or not to follow all of them, as we have discussed on various occasions during the Bill's consideration. We will make provision in regulations to ensure that employers will not be penalised in such circumstances, but in the vast majority of cases it is right that employers who do not meet their obligations to complete the basic procedures should face a penalty, except when a tribunal considers that such an award

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would be unjust. That may well have taken into account a minor breach of the statutory procedures that apply to small businesses, whose resources would be severely affected by the penalties in the clause. I therefore invite the hon. Member for Runnymede and Weybridge to withdraw the amendment.

Mr. Hammond: For two and a half weeks I have listened to the Minister handing himself enormous powers by regulation to fetter the discretion of the tribunal in every imaginable direction. It is therefore a bit rich for the hon. Gentleman now to say that he would not want to fetter the discretion of the tribunal. That is not the tenor of what the Government propose to do with the regulation powers they are giving themselves in this part of the Bill.

I am not persuaded by the Minister's argument. I am anxious about the direction and the packaging of clause 34, which is perhaps the most sensitive clause in the Bill. Some Back Bench amendments have been accepted and the Minister said that others need to be made, but unfortunately he did not tell us precisely what those amendments will be. I had hoped that the Minister would be more robust in suggesting that he would not expect small and less competent employers to be treated harshly and that the provisions would take into account a genuine lack of capacity and the innocent failure to comply, as we discussed earlier.

In view of the Minister's determined resistance to the uncontroversial proposal that the words ''be required to'' be taken out, I will not press the amendment to a vote. We shall return to the matter when we discuss the general issues in the clause stand part debate.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause, as amended, stand part of the Bill.

Mr. Hammond: The Question before the Committee should include the words ''and as to be amended''. At the risk of repetition, which does not worry me much, I say that clause 34 is a sensitive part of the Bill and I am surprised that the Government have accepted amendments that may upset its delicate balance. It was not apparent to me that the hon. Member for Wolverhampton, South-West (Mr. Marris) tabled a Government-planted amendment or, indeed, one that the Government agreed to in advance. I am not sure that that was understood outside the House, although it may have been understood by the TUC.

The hon. Member for Manchester, Central (Mr. Lloyd), who is back in his place, urged the Minister to go still further and revisit some of the essential issues in clause 34 at a later stage of the Bill. The Minister has already embarked on the slippery road of accepting amendments and he has been urged by his hon. Friend to make more changes. The slightly grudging consensus about this part of the Bill will be

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undermined if changes are slipped in now as a result of pressure from Government Back-Bench Members or from outside bodies.

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