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Baroness Turner of Camden: My Lords, I beg leave to withdraw the amendment.

Amendment No. 10, as an amendment to Amendment No. 9, by leave, withdrawn.

[Amendment No. 11, as an amendment to Amendment No. 9, not moved.]

On Question, Amendment No. 9 agreed to.

Clause 13 [Internal appeal procedures and unfair dismissal awards]:

Lord Meston moved Amendment No. 12:

Page 11, line 8, at end insert ("but in no case shall the award be reduced if the employer's procedures fail to arrange for all internal appeals to be heard and determined, and for the complainant to be informed of the result, before the end of two months beginning with the effective date of termination").

The noble Lord said: My Lords, this is a better version of an amendment which it was not realistically possible to move and debate at Report stage. In Committee, Clause 13 was much improved by addition of the requirement for an employer to have notified the employee properly before the employer can seek the benefit of the new section to be inserted in the principal Act which allows for reduction of a compensatory award. This amendment is concerned with the circumstances in which it could be said that the dismissed employee has failed to appeal under internal procedures.

In some more sophisticated organisations there is more than one level of appeal. So an employee may be caught by the new provision if he or she appeals only to one level and does not then go on to exercise a right of further appeal internally.

Similarly, in some organisations the appeal procedure is more time-consuming and more formal than in others. Some internal appeals (including the Civil Service Appeal Board) are not completed until after expiry of the three months from dismissal allowed for applications to the tribunal. Employees can be caught out because they do not realise that the time limit is three months starting from the dismissal, or that operating an internal

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appeal after dismissal does not stop the clock. They can find that the internal appeal process has not been completed before it is too late to apply to the tribunal within the primary limitation period.

It is only the well-advised employee, following dismissal, who gives notice of internal appeal at the same time as launching tribunal proceedings to ensure that he or she is not caught out by the statutory time limit if the internal appeal is unsuccessful. Those without advice or without good advice can miss the boat by using up their three months in pursuing internal appeals, or they may apply straight to the tribunal, believing that appealing internally to unsympathetic senior management will not be worth while.

The amendment seeks to encourage the hearing and the determination of internal appeals within a reasonable time. That is desirable in itself for several reasons: first, because internal appeals can and sometimes do hold up tribunal proceedings; secondly, because evidence given at a properly conducted internal appeal is usually much fresher in everyone's minds than at a tribunal hearing months or even years later; thirdly, because the outcome of the appeal may remove the need for a tribunal hearing altogether or limit its use. It is also desirable, in the context of the new clause and the power to discount. So long as there is a relatively short period of three months to start tribunal proceedings--and now that is to be coupled with the risk of a discount--the internal appeal or appeals procedure should be prompt and should be completed in two months. That gives the employee a margin of a further month to consider whether to take the matter further, without having to depend on the discretion of the tribunal to allow an application out of time.

I should say that I am grateful to the noble Lord, Lord Wedderburn, for drawing my attention to the decision of the employment appeal tribunal in 1995 in the case of W.A. Goold (Pearmak) Limited v. McConnell. The decision was that it is an implied term of a contract of employment that the employers will reasonably and promptly afford a reasonable opportunity to their employees to obtain redress of any grievance. That case concerned grievance procedures during the employment rather than appeal procedures after employment has been terminated. However, I am sure that an analogous implied term exists. In a sense, what I seek to do in this amendment is to put it on a limited statutory basis, with specific reference to the tribunal time limits. I beg to move.

10 p.m.

Lord Wedderburn of Charlton: My Lords, with the leave of the House, I merely wish to add a sentence to what the noble Lord, Lord Meston, said in relation to the decision in 1995 on the employment appeal tribunal. Some might feel that the amendment added an unbearable burden for the employer in providing grievance procedures. It was in that respect that I ventured to draw the noble Lord's attention to the decision because we already start from a base where the employment appeal tribunal has decided that it is an implied term of the contract of employment that the employer should give proper grievance procedures to

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the employee. In a sense, that is not hostile to the amendment. On the contrary, it shows that the amendment is evolutionary rather than what might be felt by the Minister to be unfortunately revolutionary.

Lord Archer of Sandwell: My Lords, perhaps I may at the outset express my gratitude to the noble Lord, Lord Meston, for his self-denying ordinance at Report stage in not moving the amendment which then stood in his name. He took that course because we were being pressed to conclude our debates on the Bill so that the House could proceed with other business.

I have much sympathy with the point that the noble Lord seeks to make. There is indeed a danger that some employers may drag their feet over the internal appeals procedure. It is important that internal appeals should be dealt with as soon after the initial cause of complaint as possible. In any event, it should be before the dispute has had time to fester and before any possibility of reinstatement is passed.

I appreciate the danger that an employee who is using the internal procedure may lose sight of the need to lodge his appeal with the tribunal within the time limit. Of course, an employee is fully entitled to submit his application to the tribunal, as the noble Lord said, within the time limit, notwithstanding that the internal appeal is proceeding. The necessary arrangements may be made to ensure that the tribunal hearing is not listed prematurely. But the noble Lord is right, the employee may not be aware of that.

However, as I think the noble Lord recognises, the amendment which he proposes does not really address the problem. The question of whether the award is to be reduced arises only if the employee appeals to the tribunal, and does so within the time limit. Conversely, the question of reduction in compensation will arise only if the employee fails to appeal by way of internal procedure.

Having said that, I believe that the noble Lord disclosed a real problem. The question then arises as to how it should be addressed. It is difficult, by legislation, to ensure that people know their rights. The best way to achieve that is to encourage them to seek appropriate advice. As we all know, advice is available from ACAS, from CABs, from trade unions and from law centres. I hope that anything which can be done to bring that to the attention of litigants will be done whether the litigants are employees or perhaps employers who do not have the advantage of a personnel department.

Beyond that, can something be done to impose statutory time limits on internal dismissal procedures? I am grateful for the reference made by my noble friend Lord Wedderburn and to which he was kind enough to refer me. But I fear that if we are looking for a statutory answer, the reply is not in this Bill. The relationship between internal procedures and statutory appeals is a complicated one in any event. I understand that the Government take the view that any changes would require detailed consultation and consideration. I appreciate the reasons for that, although my noble friend Lord Haskel may have something to say on the matter in a moment.

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Your Lordships may recollect that at Second Reading I indicated that while I would be happy to consider amendments I would feel inhibited in introducing major revisions in the absence of appropriate consultation. But I join the noble Lord, Lord Meston, in suggesting that the Government may consider initiating such consultations. If my noble friend Lord Haskel feels able to assist us on that, I am sure we shall all be grateful. That is the best I can do.

Lord Haskel: My Lords, I repeat the gratitude expressed by my noble and learned friend Lord Archer to the noble Lord, Lord Meston, for the manner in which he dealt with his amendments on Report. We are concerned that the amendment of the noble Lord, Lord Meston, would discourage parties from using the fair procedure. That is why we feel initially that we are unable to support the amendment. Our intention is that Clause 13 should encourage parties to disputes to make use of internal appeal procedures. It seems likely that it would take more than two months to conclude them. We firmly believe that, where possible, parties should resolve their disputes voluntarily between themselves rather than by recourse to a third party or to a tribunal.

Like my noble and learned friend Lord Archer, I understand the intention behind the amendment and indeed we are sympathetic to it. The Government acknowledge that there might be a problem if an employee thought that the time limit started running only once an internal procedure had been completed. The information in guidance provided by the DTI, the employment tribunal service and ACAS makes it clear that the time limit starts running from the effective date of the termination. Although we wish to encourage parties to use internal appeal procedures, an employee who is concerned about falling foul of the time limit can always make an application to the tribunal and ask that it be stayed until the outcome of the appeal. That is perfectly normal practice and tribunals are well used to dealing with such requests. That puts a certain amount of power in the hands of the employee.

My noble and learned friend Lord Archer suggested that the Government may be reluctant to make complicated changes to time limits without extensive consultation. He is right. That is because the issue is more complex than might at first appear. While it is normally relatively simple to determine the effective date of termination, determining the date on which an internal procedure is concluded is by no means straightforward. For example, there might be disputes as to whether the internal appeal had been properly commenced or taken forward. It is also not clear what the status of dismissed employees would be during the appeal. Would they remain as employees, in effect on suspension; and if so, would they be entitled to pay? The Government would need to address those questions and consult with employers and employees before considering whether it would be feasible to make any changes to the well established way in which the time limit works.

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I would therefore urge the noble Lord, Lord Meston, to withdraw his amendment, but I can assure him that the Government have taken note of the very important point he makes.

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