5. Letter to the Chairman from Rt Hon
Patricia Hewitt MP,|
Secretary of State for Trade and Industry,
on the Employment Bill
Thank you for your letter of 16 April. I entirely
recognise the importance that attaches to the policy justification
for the provisions of the Employment Bill which restrict access
to employment tribunals. I am pleased to give you a full recital
of the Department's policy thinking. This was rather compressed
in myalready overlongletter to you of 14 February.
I am confident that the Committee's conclusion is
right that the provisions of the Bill serve legitimate public
interest objectives. As I understand it, Lord Wedderburn's principal
objection is based on his view that the Government has a policy
goal of reducing the numbers of tribunal cases across the board,
and is using a denial of access to justice to achieve this aim.
But that is not what the Bill sets out to do. Our objective is
rather to encourage both sides in any workplace dispute to talk
to each other first, thus reducing the number of unnecessary
employment tribunal cases. This is a crucial distinction. We quoted
the SETA data in an attempt to give some idea of the scale of
the problem. But it is not the SETA data itself which provides
the policy justification. It only quantifies it, in an admittedly
imperfect way. Let me explain this in detail, with reference to
your specific questions.
It follows from this that the answer to the first
question in your letter is that the purpose which the Government
expects to advance through clause 33 has not changed since I wrote
to you. (I should point out that in the latest version of the
Bill this clause is now numbered 32. However for the purposes
of replying to your letter I shall continue to refer to it as
c33.) I do not accept that Lord McIntosh's comments as quoted
in your letter contradict my explanation of the purpose of c33.
I do not intend to give the impression that I am re-interpreting
Lord McIntosh's remarks, because I am not. It is a consequence
of quoting out of context and selectively over many hours of debate
that remarks may appear inconsistent when in fact they are not.
His point on encouraging communication and dialogue between employer
and employee is, in my view, fully compatible with the aim of
preventing unnecessary recourse to tribunals to determine issues
which are capable of being settled within the workplace. It is
simply expressed in a different way. The dispute resolution measures
in the Bill contain both 'carrots' (new statutory procedures available
in every workplace and encouragements to use them) and 'sticks'
(rules on admissibility to tribunals, and mitigation of tribunal
Because its critics have concentrated on the 'sticks'
to the exclusion of all else, Lord McIntosh was reminding the
Committee that the Bill contains 'carrots' too.
To put that another way, clause 33 is designed to
encourage both sides to talk and thus at least provide an opportunity
to find a mutually acceptable resolution of the problem. We fully
recognise this will not be possible in all cases. The requirement
to set out grievances in a letter to the employer before taking
a claim to a tribunal should not be seen as a punishment, but
as a responsibility to start a dialogue before resorting to the
Let me turn to your second question, the significance
which attaches to the survey figure I quoted. The policy objective
for clause 33 does not rest on the findings of a single survey.
The Survey of Employment Tribunal Applications 1998 is merely
one indicatorused in my letter as a shorthandof
a situation for which there is plenty of corroboration. You quote
Lord McIntosh's comment at Lords Second Reading that its findings
had little significance for policy-making. The basis for this
comment was, as I understand it, that the extra information from
this surveywhich we freely admit did not ask a direct question
on this topicis insignificant when judged against the weight
of pre-existing opinion and fact. SETA provided results which
were fully consistent with our overall judgment. Whether or not
SETA statistics are individually reliable (and we believe that,
within certain caveats, they are) does not undermine our case
that we have a legitimate policy objective to address a genuine
and widespread problem, and that we are addressing it in a proportionate
It is helpful to set the SETA findings in context.
I doubt there is much disagreement that a significant number of
workplaces in the UK do not have any form of disciplinary and
grievance procedures or have substandard procedures. We have estimated
these numbers in the Regulatory Impact Assessment of the Bill
to be around 600,000 and 340,000 respectively, leading to an estimate
that about 6 million people do not have access to procedures that
meet the standard we are introducing. These estimates are drawn
from the 1998 Workplace Employee Relations Survey and our own
estimates. It is also a commonly held view that, even where adequate
procedures are in place, in a substantial number of cases these
are not followed. This opinion is based on a multiplicity of sources
over many yearsfor example, the work of ACAS and other
employment relations agencies, the findings of employment tribunals,
and previous research carried out by the Department (Earnshaw
et al). Although a widely held view, its frequency is difficult
to quantify. We have attempted to do so using SETA, as the mostly
recently produced data. According to SETA, only 32% of applicants
and 58% of respondents said that the procedure (where there was
one) was fully followed through. SETA also showsas quoted
in my earlier letterthat in 37% of cases there was no meeting
and no procedure and no other attempt to resolve the dispute.
These findings also appear to confirm another widely held view,
that cases where procedures have not operated are over-represented
The Government believes that f fundamental tenet
of good employment relations is that there should be a proper
system whereby employees and employers discuss employment problems
in the workplace. There are a number of unwelcome consequences
when these systems do not operate. On one side, there is damage
to the employment relations and productivity of the organisation
concerned. On the other, an employee with a grievance who has
no access to a workplace grievance procedure, or who chooses not
to use it, may simply walk out of the job. Alternatively, or in
addition, he or she will take the employer straight to a tribunal.
These outcomes are not as desirable, for anyone, as a dialogue
between the parties to resolve the problem in-house. If no resolution
is possible, then the employee will of course still be able to
make a claim to the tribunal. It is this fundamental principle
which underlies my point that "the Department considers that
the aim of preventing unnecessary recourse to tribunals to determine
issues which are capable of being settled within the workplace
without recourse to the expense and formalities of tribunal proceedings
is legitimate and in the public interest."
As you know, the Bill proposes a minimum system of
dispute resolution procedures which it is incumbent on both the
employer and employee to use. These procedures are modest and
designed to be simple to operate, as discussed in my earlier letter.
They consist in essence of a written statement of the problem,
a meeting to discuss it, and an appeal stage. It is axiomatic
when creating new rights and obligations that the regulations
must be backed up with some means of enforcement. Indeed other
provisions of the Billspecifically c38are now strengthening
the penalties for non-compliance with other rights in many circumstances.
The way we have chosen to enforce the statutory procedures is
through the adjustments to awards under c31 and restrictions on
admissibility under c33.
I am confident that these clauses represent a sensible
and proportionate system of enforcement. C33 provides that individuals
in certain circumstancesnotably those still working for
the employershould not be able to take a claim to a tribunal
unless they have completed the first stage of the procedures,
ie that they have written to the employer setting out the grievance.
In this way, enforcement simply reinforces the use of the procedures.
The Government is committed to ensuring that even this modest
step is not required where the individual is at risk of harassment
or bullying. The Bill allows a second chance to those who do not
meet the requirement of c33, by extending time limits for filing
a claim so that they have extra time to meet their obligations.
Secondly, either party faces an adjustment to the aware where
they have unreasonably failed to use the procedures.
My earlier letter contained full detail of these
measures, and the Committee has accepted that they are proportionate
to the aim. I hope this further explanation has provided reassurance
that the aim itself is legitimate. I believe it has answered both
your third and forth questions.
Finally I owe both you and the Committee my sincere
apologies for missing your deadline.
7 May 2002