Grand Committee Report of 20 March 2002

Official Report of the Grand Committee on the Employment Bill
Wednesday, 20th March 2002.
The Committee met at half-past three of the clock.
[The Deputy Chairman of Committees (Lord Dean of Harptree) in the Chair.]
Schedule 2 [Statutory dispute resolution procedures]:
Lord McCarthymoved Amendment No. 97:
Page 64, line 8, after "must" insert ", after appropriate investigation to establish the facts,"
The noble Lord said: It might be said that the amendment was debated the last time we met or that the last time we met, when I had gone, this was debated. The noble Lord, Lord Lea of Crondall, put forward his amendment suggesting that the employers should be under an obligation to investigate promptly. The Minister would not accept that for a number of reasons to which I shall turn later. Our amendments—the four with which I am concerned today. Amendments Nos. 97, 98, 106 and 110—are not quite the same. They require an appropriate investigation and for the worker to he provided with a summary of that investigation—and before the process begins. Whether or not there is a very significant difference between these different sets of amendments, not all the arguments were developed last time. That gives us an opportunity—it certainly gives me an opportunity—to see whether I understand what the Minister was telling us.
If I remember rightly, he said first that we did not need the first amendment—and he would probably say the same about ours. I hope not, but he might. Then he said that it is all in the ACAS code, and asked why we want it on the face of the Bill? The Minister said that it is, in any case, the existing law—it is practice—and that if anybody came in front of an industrial tribunal and had not had an investigation, he would lose the case. Everybody knows that existing law requires that to be done.
If that were not enough, the Minister said that the words we used were confusing: it would not be clear what the employer had to do, because he would be doing a wide range of different things and we had not specified in some way what we expected him to do. Finally—the absolute killer—he said that we would have to send for lawyers. He said that if that amendment were passed—no doubt he could say the same about ours—there would be a lawyers' paradise.
I will deal with the ACAS code. I would like to know in what way it would be unclear. It is not clear to me that our amendments in particular are unclear. Moreover, the fact is that we are not just concerned in these amendments with what goes on in tribunals. This point has been made before and has been made in particular about Clause 25. That is why Clause 25 is so
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important. It is not about what goes on in tribunals because not one dispute, not one grievance and not one disciplinary action in 500 gets in front of an industrial tribunal. It is about what employers and workers do when they do not go in front of tribunals or anything else. It is about what the ACAS conciliators say is the normal practice in cases where disputes are settled before they get to tribunals.
The first point to make is that we are not just concerned with what goes on in tribunals; we are concerned with setting out standards which can be observed and which can be accepted as being fair and reasonable to all those workers who do not even get to tribunals. We are trying to make policy. The Bill is trying to make policy. It is trying to make policy for conduct in industrial relations. That is what it is centrally about. It is what all employment protection is about. It is trying to create standards in the community, whether people go to law or not.
That is why, in our amendments, we want the worker to have an investigation. The Minister said the other day that he thought it would be ridiculous to try to take a reasonable decision without investigation. But we like employers to know that; we like to put that on the face of the Bill. And we like there to be a summary so the worker knows what he has to answer.
Once again, I am sure it will be said that these things are all in the ACAS code—at least they are in the present ACAS code. We are not certain whether they will be in the next ACAS code. I would like the Minister to tell me—perhaps to promise me—that they will he in the new ACAS code. They are certainly in the present ACAS code at paragraph 10f, i, and j of the code, and their heading is Essential Features of Disputes Procedures. All the things that we suggest and other things are there in the ACAS code.
My noble friend Lord Wedderburn of Charlton asks whether they will be amended. We do not know, and that is really what we are saying. We are saying that these are reasonable amendments. We are saying that their basic justification is the essential for natural justice. Everybody is entitled to know after an investigation what they are supposed to have done, and that should be put in any minimum procedure.
"Minimum" is a very funny word. Anybody who is told that these are the minimum criteria, particularly in respect of something which limits his opportunities and his freedom, is bound to say, "That's all I have to do then. I only have to do what's down there. If I've done that, I'm all right". There is much more in the ACAS code. In the ACAS code, for example, one is not supposed to sack people, or dismiss people, unless it is a matter of gross misconduct, and one is supposed to use suspension wherever one can. We have tabled amendments to deal with that.
However, if something is now put in law on the face of a Bill, it is perfectly reasonable for an employer to think to himself, and for some of his advisers to tell him he is perfectly justified in thinking, "This is all I have to do. This is the law. This is the minimum to which they have interfered with my managerial prerogatives.". We are saying that we want more than

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that. We are saying that some, at least, of the further things, which are essential for equity and fairness and natural justice to be carried out, ought to be on the face of the Bill. These amendments are a small example. I beg to move.
Lord Wedderburn of Charlton: In a sense, any mention of the ACAS code, or the existing case law on the outcomes of tribunal cases, is in my submission quite irrelevant to the amendment, or indeed any answer to it. This is partly because the amendment comes at this stage of the Bill.
Perhaps I may explain that submission. If one looks at Clause 34, it is very difficult to discuss the Bill without looking at its very carefully contrived machinery altogether. It is a very specific and carefully constructed machinery. If one looks at Clause 34, we find that if the employer does not complete any of the procedures in Part 1 of Schedule 2, he may be regarded—shall be regarded—as unfairly dismissed, where that is wholly or mainly attributable to failure by the employer. Clause 34 is nothing to do with the ACAS code, nothing to do with the outcome of proceedings in tribunals, or precedents in the past, or cases that my noble and learned friend may cite to me. It is to do with Part I of Schedule 2. The employer simply has to complete Part I of Schedule 2 in order to escape Clause 34, which inserts new Section 98A into the Employment Rights Act 1996.
What is Schedule 2? For the answer, we have to go back to Clause 30. Clause 30 makes Schedule 2 an implied term of the contract of employment. That is rather a bad proposition. Perhaps I may amend it. Clause 30 turns an obligation to observe the statutory disputes procedures, which of course are to be found in Schedule 2, into a term of the contract of employment. I quote Clause 30:
"Every contract of employment shall have effect to require the employer and employee to comply, in relation to any matter to which a statutory procedure applies, with the requirements of the procedure".
The procedure is in Schedule 2. It does not appear in any precedents laid down in previous cases and it is not even in the statutory code. Of course, if a case went to a tribunal and the matter was argued out to the end, then under the proposition to which my noble friend adverted in our previous arguments on 18th March—namely, that of an employer who did not investigate anything but simply dismissed an employee—an employer might well lose the case.
This is where Clause 33 is so important. The object of Clause 33 is to prevent certain types of case ever reaching a tribunal. A number of our amendments today take the answers of the Minister in another place—with which I am sure my noble and learned friend will be in agreement—for granted by hypothesis. A number of our amendments today will be moved on the basis that those arguments are right, as is this one. My noble and learned friend may well say—he would be right to do so—"Ah, but Clause 33 is about grievance procedures, and the question of an
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investigation by the employer is at least primarily about disciplinary procedures, which is not dealt with by Clause 33".
If my noble and learned friend follows me to the ACAS code—that famous document—it points out that frequently, or at any rate sometimes, a disciplinary matter raises both a disciplinary procedure and a grievance procedure. Therefore, in the course of a grievance procedure, an employee may well be saying, "But you took these steps without proper investigation—that is part of my grievance". The matter will be raised in a grievance procedure context. Therefore, whether or not an employee is prevented from ever reaching the tribunal by Clause 33 may well be inherent and central to a grievance procedure step.
As that is so, the discussion concerns whether the employee ever reaches the tribunal, not what the precedents of the case law in existence say. It is not what the ACAS code says but whether the employee is ever allowed—as Clause 33 puts it—to present a complaint to the tribunal. He is prohibited from doing so if he has not complied with the step required under Schedule 2.
As this clearly impacts upon some grievance procedure steps, it is therefore extremely relevant to both employers and employees. As my noble friend said, the employer may well be entitled to say, "I am required under Clause 32 to comply with Schedule 2". Schedule 2 does not mention any investigation. It does not even impliedly suggest an investigation; it deliberately abstains from mentioning it. That is the first reason that it should be there for the employer.
An employee, in bringing a case based on a grievance problem, may well find that he is prohibited from presenting a case even to the tribunal—he is shut out, his mouth is made dumb by Clause 33—because he has not complied with the requirement in Clause 33(2) or, indeed, the other conditions in subsections (3) and (4) to which we shall come and to which we wish to move amendments. So the arrangement applies both ways. Both an employer, who did not take advice, and an employee, who has a perfectly good grievance, may well have perfectly good grounds for saying, "Why on earth didn't you somewhere mention, at least for the avoidance of doubt and for both employer and employee, the need to investigate?". I doubt if my noble friend will argue that there is absolutely no doubt in relation to this or succeeding amendments.
3.45 p.m.
Baroness Miller of Hendon: I have listened carefully to what has been said about the amendment, which would add the phrase, "after appropriate investigation to establish the facts" to the schedule. It seems to me—I am nervous of using the word—that that smacks a little of "nannyism" or "nannying". It is such a long time since I had a nanny that I am not quite sure of the phrase. That would make that amendment prescriptive because we all know that, if an employer failed to carry out an adequate investigation, he would destroy his own case that the dismissal—or, for that

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matter, another decision depending upon the dispute—was reasonable and in good faith. The noble Lord, Lord Wedderburn, said that he did not know that and that this approach would make it clearer.
There are innumerable cases that are ruled that an employer can rely on facts which are known to him only when he makes his decision, and he cannot rely on acquired information. Therefore, it follows from prudence alone that it would require an employer to make sure that he had his facts right before he started. The idea that it must be written in that he knows he must adequately investigate, assumes that nobody knows anything about the sort of procedure that should be followed. Indeed, the noble Lord, Lord Wedderburn, himself recognised that in his Amendment No. 109, to which we shall come later, which requires a written statement to include,
"the facts known to the employer".
If we have to spoon-feed at every stage and put into it what he has to do, it follows that he must know the facts before he gets involved in this; or, if he does not, he will have to lose the case that would give grounds for dismissing his defence.
Lord McCarthy: Surely, it is a matter of who you are nannying. You are not nannying the employer if you take these things out. You may be nannying the worker and saying to the worker, "These are your rights, these are what you are entitled to have". Perhaps the employer knows more about the law. Perhaps the employer has lawyers to advise him.
On the other hand, there are many cases in tribunals in which workers win the argument because the employer has not done a proper investigation; however, you have to go all the way through. Now you are putting up a barrier to getting there and also saying, "We shall erect this thing called the statutory procedure, which we have never had before. It is the minimum procedure in relation to which the employer can reasonably say—it may not be law—'That is all that I have to do"'. You are not nannying him. You are helping the worker if you put something on the face of the Bill where the employer cannot use that device.
The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton): The noble Lord, Lord McCarthy, said in his opening remarks that the amendment is similar though not identical to the amendments that we discussed at the end of our sitting on Monday. The argument of the noble Lord, Lord McCarthy, encapsulated what the issue is between us in relation to this matter. The statutory procedures seek to set out a minimum requirement that employers (in relation to dismissal) and employees (in relation to grievance) have to go through. It is not intended to affect in any way at all the principles that govern reasonableness. As I made clear on Monday afternoon, if there is not an investigation, in virtually every case that would make the dismissal unfair under the usual provisions of the unfair dismissal law.
However., this is seeking to define a minimum requirement that has to be gone through. In order for that to be effective—in order for that effectively to give
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rise to an automatic unfair dismissal, which is what the consequence is of not complying with the minima—it must be clear what is required in relation to it.
Would Members of the Committee look at the amendments against that proposition? Amendments Nos. 97 and 106 would oblige the employer to undertake an "appropriate" investigation before instigating disciplinary action. As I said, we have tried to draft the minimum procedure in the Bill as a series of discrete concrete actions. This achieves clarity. We have kept to a minimum the qualitative tests of reasonableness or appropriateness. Both Amendments Nos. 97 and 106 would add such qualitative tests, immediately depriving the minimum standards of their efficacy, which involves making it clear whether or not there is to be an automatic unfair dismissal. It would create a new level of uncertainty in the procedures. It would cause difficulties and give extra scope for disputes to arise concerning compliance with the procedure.
The purpose of the procedure is to make clear what is required as a minimum without in any way detracting from good practice. My noble friend Lord McCarthy said that this was not just what happens in the tribunal; it is also about what happens on the ground in relation to the vast number of dismissals that never get anywhere near an industrial tribunal. Of course, the ACAS code of practice will still apply just as the statutory minima will apply, and we do not accept the proposition that if we put in a statutory minima, that is all that will happen and people will ignore the ACAS code of practice. It will become clearer and it will improve standards.
My noble friend Lord McCarthy asked if investigations in future would involve the ACAS code. He asked me to promise that they would. It is important to point out that ACAS is independent; we cannot tell ACAS what to include in the code. However, there is no reason why it should not deal with the issue on investigations in the same way as the existing code.
Amendments Nos. 98 and 100 require the step 1 letter to contain information about the investigations undertaken or the facts which have been established. Again, they are drafted in open-ended ways that make it unclear what information the letter must contain. Again, that would introduce confusion and uncertainty into the procedures. There is also a real danger that many employers would feel obliged to enlist the services of a lawyer when drafting the initial letter. The letter itself may need to be long and detailed if the amendment were agreed to, and the three-step procedure would become excessively bureaucratic if we went down that road.
I turn to the points made by my noble friend Lord Wedderburn of Charlton. There may be an overlap between discipline and grievance, as he pointed out by drawing attention to an extract from the existing ACAS code. We intend to ensure in regulations that the circumstances in which each of the statutory procedures applies is clear. With respect to my noble

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friend, he was saying that the position was not clear in the Bill. We accept that, but it will be made clear in the regulations.
My noble friend said that the purpose of Clause 33 was to prevent certain cases from reaching tribunals. That is not a fair characterisation of the arrangement; it will ensure that the grievance procedure is gone through before a tribunal case is brought.
Lord Wedderburn of Charlton: I am grateful to my noble and learned friend for giving way. I find it difficult to understand what he has just said. Clause 33 says:
"An employee shall not present a complaint to an employment tribunal under a jurisdiction to which this section applies if—

(a) it concerns a matter in relation to which the requirement in paragraph 6 or 9 of Schedule 2 applies, and

(b) the requirement has not been complied with".

So, of course, I appreciate that both points are surely equally true. The one does not exclude the other. What the Minister said is right; namely, the measure aims to try to get the requirements in paragraph 6 or 9 of Schedule 2 to be completed. But it also says that if you have not done that, you are prohibited from getting inside the door of the tribunal.
May I make the second point so that it is not inconvenient for the Minister? The point which gives rise to this is that a disciplinary procedure can give rise to the raising of a grievance— and I am referring to paragraph 48 of the ACAS code, if I may quote what it says:
"Sometimes a worker may raise a grievance about the behaviour of a manager during the course of a disciplinary case. Where this happens and depending on the circumstances, it may be appropriate to suspend the disciplinary procedure for a short period until the grievance can be considered. Consideration might also be given to bringing in another manager to deal with the".
Is the initial thinking of the Government to adopt that and put it in the schedule— that where a disciplinary procedure gives rise to a grievance the matter should be suspended? Because if that is going to be put in, it really should go in the Bill. This is a matter of primary principle, not of regulation or tittering about with the detail.
Lord Falconer of Thoroton: As regards the first point raised by my noble friend, he gives an exactly accurate account of what Clause 33 does. It sets out certain requirements that have to be complied with. If the requirements are not complied with, then the employee will not be in a position to present a complaint. That is an exactly accurate account of it. The issue is not whether that is right but what the purpose of Clause 33 is. I said that the purpose of Clause 33 is not to prevent certain cases reaching tribunals; it is to ensure that the grievance procedure is gone through before a tribunal case is brought. Therefore, that was the issue between us there.
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On the other issue about overlap between discipline and grievance, again I accept entirely the practice set out in paragraph 48 that was mentioned. To which procedures the statutory procedures in Schedule 2 apply will be determined, as I have said, by regulation.
Lord McCarthy: The Minister made two points to which I must reply. One I will not reply to at any length because it is going to run through our debate throughout the afternoon and that is the Government's refusal so far to admit that one is not just regulating and legislating for people who get to tribunals; standards are being established. Therefore, they cannot just say, "When you get to a tribunal it will be all right because they have the ACAS code and they know about all these things". That is not just what this matter is about; it is creating a completely new concept of minimum standards. We do not know how many employers will say that that is all they are going to do. We know that many employers do not do much; that is why we are having a statutory procedure in the first place because a large number of them do not have any procedures at all, do not find it necessary to have procedures and have probably never heard of the ACAS code. We are saying that this matter is not just about what happens when one gets to a tribunal. It is about the general practice of industrial relations and the principles which operate when people are dismissed or fail to get their grievances remedied. The issues involved in that, however, will come back all afternoon.
The Minister's second comment related to language. We have used three words. They are deeply ambiguous, apparently. I have no difficulty with "summary". "Appropriate" is simple enough in the sense of something being inappropriate or appropriate. The Oxford English Dictionary has no problem with that. I think we all know what "investigation" means. However, here we have a race of employers who will apparently "fall down" when faced with the unbelievably complicated words; "summary", "appropriate" and "investigate". Now look at the Bill. It mentions "conduct". I think that is a worse word; there is no definition. The Bill mentions "characteristics". What a vague word, but, apparently, they will ride round that. The Bill also uses the words "circumstances" and "contemplate"! Yet we are being told we cannot have our amendments because they are intrinsically difficult to understand. This is nonsense. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 98 not moved.]
4 p.m.
Lord McCarthymoved Amendment No. 99:
Page 64, line 10, leave out "dismissing" and insert "suspending or dismissing (and in the case of contemplation of dismissal explaining why he does not contemplate suspension)"
The noble Lord said: There are three amendments grouped together here— Amendments Nos. 99, 107 and 111. We have come to something else that we want to put on the face of the Bill. This is about suspensions.

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I suppose that the word "suspension" will probably be said to be too ambiguous to be put on the face of the Bill, but we are asking for two different things. We are asking that there should be an option. As in the ACAS code —and this is what the ACAS code suggests— it should be suggested to the employer on the face of the Bill that before he dismisses he should contemplate the possibility of suspension.
The doyen of conciliators at ACAS, Dennis Boyd, who has now long since retired, used to say that the single simple measure of employer "civilisation" was whether they knew about suspension. He said that about two-thirds of British employers never seemed to have heard of suspension but they went straight to dismissal. Suspension is the mark of a civilised dispute procedure, so we will try to put it on the face of the Bill. I refer also to Amendments Nos. 99 and 107 in this regard. At the point when he decides what to do the employer should consider what I would call the suspension option. Amendment No. 111 says something slightly different because the employer is asked to state to the worker why suspension is not an appropriate step. Nevertheless, these amendments, in their various ways, are attempts to place the suspension option in the dispute procedure.
Why do we want suspension? Why does someone like Dennis Boyd think that suspension is the mark of civilisation? The notion of suspension arises in three circumstances. First, it is where there is a prima facie reason to suppose that the worker or workers have committed some form of gross or serious misconduct or failure in performance which, if it is proved, could well justify dismissal. This is a serious issue; we have to get the investigation under way. We put the worker in a suspended condition on full pay and find out whether this prima facie case is in fact proved.
The second case, which is a very common type, is where the debate or the disagreement is not between the worker and the employer at all but between a group of workers, or two workers who have a dispute between them which may in fact have taken a physical form and they require to be separated. It is necessary to find out who started it and who said what to whom. In order to have a little time to find out such important things, instead of saying they will both be sacked at the same time—as some employers do, who say, "I am not going into this"— there should be the concept of suspension. The employer should be encouraged as an act of civilised industrial relations to consider the possibility of the suspension option.
The third type of case where suspension comes in is at a very high level in management where there are allegations which strike at the root of trust or confidence, or where there is the possibility of commercial loss and no one quite knows whether the commercial loss has taken place. Dismissal might be very expensive on the part of the management because it might turn out to be justified. Actions would be taken in courts outside the industrial tribunal courts and therefore the wise course of action is to punish nobody until there have been long and careful investigations and the use of suspension.
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This measure should be on the face of the Bill. We realise that it is not as common as it ought to be. We realise that more people investigate than use suspension in a creative form. But if you are going to put something in as a minimum, and if you are going to try to influence the conduct of industrial relations, to place the notion of suspension just as an option on the face of the Bill is the first element of civilisation in dispute procedures. I beg to move.
Baroness Turner of Camden: There are other cases where suspension is the only way in which an issue can be approached in a civilised way, and unfortunately there are often such cases nowadays. They are cases of sexual harassment where there is an allegation by one employee against another and where suspension is the only way to proceed while there is an investigation.
Lord Wedderburn of Charlton: This is a very, very serious amendment. It goes to the root of how the Government are going to approach this matter. Only two nights ago a leading scholar in the field of employment law, Professor Hepple, said at a meeting of the Industrial Law Society in regard to these parts of the Bill— not the other parts of the Bill:
"This Bill is a moment of crisis for employment law.".
The reasons he developed in his talk relate very much to what we are discussing this afternoon.
The ACAS code mentions the need to take a number of steps before the employer proceeds to anything like dismissal. There is no difficulty if one is in touch with real life in knowing the difference between dismissal and suspension; at any rate, suspension which is not a disciplinary suspension. In a dismissal, the employer creates a situation in which the worker does not take home his wages; at any rate, in dismissals for misconduct, which are the most serious issue in debate.
It could be that in a disciplinary suspension there is argument about whether any payment should be made or not. However, as the ACAS code makes clear, before any of those rather serious and savage disciplinary consequences are reached for, a number of steps should be taken. The ACAS code, in paragraph 15 for example, says:
"The worker should be given first a formal oral warning".
Then it goes on to say that secondly the worker should be given a written warning and that dismissal should be proceeded with only at the end of the road. In paragraph 13 the ACAS code states:
"In certain circumstances, for example in cases involving gross misconduct where relationships have broken down or where it is considered they are a risk to an employer's property or responsibility to other parties, consideration should be given to a brief period of suspension with pay whilst an unhindered investigation is conducted. Such a suspension should only be imposed after careful consideration and should be reviewed to ensure it is not unnecessarily protracted".
As my noble friend has said, this is a civilised approach to human relationships where the worker's family depends on him bringing home his weekly pay packet. Why should not that be mentioned in what is put forward as minimal procedures; the failure to complete which can cause a worker ever to get to a tribunal, which employers are going to rely upon for

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dismissals, as, to be fair, Clause 34 makes clear? Why should it not be part of fairness that dismissal should not come if suspension is proper?
It may be the actual words we use do not make that clear enough, but in our submission— and this is the first major point for this most important amendment—the employer and the employee should have it brought to their minds by civilised minimum procedures that suspension is something that ought to be considered and that if it is not engaged upon the employer should say why. That is all in accordance with the ACAS approach. What is wrong with that? The argument that is said to be against that is that it introduces an element of uncertainty.
I do not know what the Government think Schedule 2 has in it. What does it have in it? It has the requirement of meetings. It is not at all clear what a meeting is. We shall come the question of whether a meeting is a hearing later on but the Government seem to think that the two words mean the same thing. What is a meeting? In explaining why he chooses to contemplate or decide to dismiss, the employer will obviously have to explain, certainly in the case of a first offence where one does not normally dismiss, why he did not merely suspend.
There can be argument about a requirement in Schedule 2 statutory procedures as to what are reasonable steps to attend a meeting. It becomes an implied term of the employee's contract of employment that he must take reasonable steps to attend a meeting. The employer says, "Come on Thursday"; the employee says, "I can't come on Thursday". Do you think there will not be arguments about whether he should go or not? Do you think that is not uncertain?
The Bill then provides that he must inform the employer. What is enough for that? Can he shout at him, must he put it on paper? Do you think there will not be argument about that? Do you think that that is not uncertain? The employer must send a copy of the statement to the employee. How must he do that? Can it be by e-mail, orally or in writing? Do you think there will not be argument about that? Must it be by first-class post? Preferably not. Is it enough to give it to him, or send it? What is "send"? Do you think there will not be argument about that? The meetings must be at a time and location that are reasonable. Do you think there is not going to be argument about that; whether the meeting was set at a reasonable time and location? It is then stated that in certain appeals a manager who is more senior than the first manager has to deal with the matter. Do you think there is not going to be argument about who is senior to whom in the management structure?
All of these things are a feature of the construction of the Bill which is jurisprudentially flawed in a very fundamental way. The flaw is that throughout the Bill those who constructed it think that if they put down propositions, which will be propositions of law but propositions that have to be applied to facts, it will be obvious what they mean. When somebody introduces a different proposition, they say, "Ah, you can't tell
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how that will apply to the facts— it will be all uncertain.". It is that kind of attitude to making legislation which has crept into especially Schedule 2 but other parts of the Bill.
There will be many disputes about what is already in Schedule 2. I missed out one: steps have to be taken by both sides without delay. I cannot think of anything more open to dispute and uncertainty than the question whether someone has acted without delay. My noble friend Lord McCarthy is always late. I always say that he is in delay but he always says that he is there in good time and I am there early. We often have disputes about it and I doubt whether my noble and learned friend would say that they were disputes without any basis in facts.
The Minister must realise that the Government have put forward in Schedule 2 minimum procedures which enter into the contracts of employment of every worker in the land and which are there to guide employers. And thank goodness they are; we are all in favour of all employers being guided as to what they should do in regard to disputes. We are not against that and I have to go on saying that because it is almost misrepresented in our position.
Of course, we believe that employers should have to follow proper procedures. These are not fair procedures— that is what is wrong— and they are certainly not procedures without any element of uncertainty. I refer to procedures such as the requirement to act without delay; to have a proper time for meetings; a proper location for meetings; to send copies; and to take reasonable steps. Of course, if one wants to argue about the application of such standards to facts, one will do so— and one will do so quite reasonably from one's point of view if one feels hard done by.
First, the amendment is an attempt to put into the schedule the most elementary standards of proper procedure. We have been very modest and we have not put in a demand the employer should issue a warning. We have not put in a demand for a first warning, second warning and third warning, which one finds in the ACAS code. We have just put in suspension. He should consider suspension, and he should say why he did not operate suspension if he did not do it. What we have said is nowhere near as uncertain as things that are in Schedule 2 already.
I wish to add a further point. During the course of what I have said, Members of the Committee may have thought it rather odd that I pause to spell out words or to make clear what I am saying orally. There is a reason for that. I am not now making a complaint and above all I wish to say, in capital letters, that I am not in any way complaining about Hansard. It does us all a great service and does everything it can to report what we say. Hansard provides the record of Committees, as it should, and there are many people out there in the real world who are actually reading what is going on. Although we have been dismissed up into the Himalayas with this Grand Committee, there are those who cannot put on their cramping tools, or whatever it is, to get here, or get into the lift, and who

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cannot spend the time to come and listen as it actually happens. But they are reading it in this moment of crisis for employment law.
Now, Hansard informs me that it does not have the resources—and so this is directed through the Government in charge of this Committee to whoever is the proper authority; I am not sufficiently expert to know— that it should have to provide us with a shorthand writer— not a shorthand logger but a shorthand writer— to take down what we are actually saying.
I used in my youth here, 30 years ago, to think it was really rather absurd to have what we are saying taken on to a tape and typed up, and also to have a shorthand writer. How wrong I was. The experienced shorthand writers of Hansard are the guarantee that the next day one can make sense of what has been said.
Because we do not have a shorthand writer— and I have taken this up with my noble and learned friend's colleague, the Chief Whip, who is considering the matter, but I wish to place it on record—some of the records of the last three days' discussion have been gobbledegook. Had we had an experienced shorthand writer, it is my belief that that would not have been the case.
I am not trying to slow things down, as somebody suggested to me last time after we had risen and we had reached the lift. I am trying to say that there may be errors in the record overnight, although they will be corrected no doubt in the published volumes for years to come and historians will study them. In the overnight record, there are things which it is almost impossible to expect a shorthand typist with a tape to get right. However, had we had a shorthand writer from Hansard, with their great experience and their great ability to take what is actually said in front of their face and get it into the record, we would have been better served.
Although the Committee has no Divisions— and in that respect it is different from the Chamber— I understood that it would be served with rules that were precisely the same as the Chamber, short of Divisions. Now, that appears not to be so, and I will put it on the record, I stress again, not in any criticism of Hansard. Quite the contrary. Hansard is being prevented from doing its job properly through not having the resources of shorthand writers.
I do not expect my friend to comment on this at the moment if he does not want to. I simply place it on the record. And perhaps I may say that I have had requests from Hansard, even this afternoon, to send them up written extracts. However, I have been unable to do so because I need them for amendments which are just to come. I believe that a shorthand writer would have got them without any doubt at all because of the experience and expertise that such people have shown and have served us with so well over the years.
I hope that that will not distract from my main arguments on this amendment; namely, that this is an amendment for civilised standards and it is not uncertain, especially given the standards of uncertainty that are already in the schedule.
4.15 p.m.
Baroness Miller of Hendon: Before the noble Lord sits down—I am not going to say anything about his amendment— I would like to agree with him. I approach this matter in the same spirit as he did—with no serious sense of complaint about the Hansard writers— but what the noble Lord said is correct. In fact, Members of the Committee may have noticed that I asked my noble friend Lord Rotherwick a few moments ago to go up to Hansard. I was reading what was said on Monday about an amendment, on which I agreed with the noble Lord. There is a look of surprise on the Minister's face. I was pointing out that on the many times that the Minister had spoken, he referred to the wide powers in the Bill. I am reading Hansard now and it refers to the "wise" powers given to the Secretary of State, which completely alters what I said. I felt some sympathy with the noble Lord who was speaking a moment ago.
Lord Falconer of Thoroton: Perhaps I may agree with my noble friend on two particular points. First, it is incredibly important that the record of these proceedings is accurate. It is obviously not in my hands to deal with that hut I thoroughly endorse what my noble friend has said about the importance or the record being accurate.
Given this opportunity, I also thoroughly endorse what my noble friend said about Professor Hepple, who is an incredibly respected employment lawyer. When I was a student, he made a great difference to my knowledge of employment law.
Let me deal with the subject matter of the amendments in this group. I have no difficulty with the principle of the amendments, which is to encourage employers to suspend rather than dismiss immediately, or to encourage employers at least to focus on the possibility of suspension. I point to the link with the ACAS code, which makes it clear that in cases of gross misconduct, employers should consider a brief period of suspension before dismissing. My noble friends Lord McCarthy and Lady Turner drew attention to the circumstances in which actually using the power of suspension can be of great importance.
As Members of the Committee will know, the code does not require suspension in every case, thereby recognising that it might not be right in every circumstance. Moreover, the amendment would go beyond the good practice set out in the code, in requiring the employer to set out the reasons why suspending is not the chosen option. It would impose a new obligation on the employer to no great effect, once, that decision had been taken.
It is not the purpose of the procedures set out in Schedule 2 to act as a checklist of options for employers. These are statutory minimum procedures and they should be as clear, precise and straightforward as possible. My noble friend Lord Wedderburn is correct— no doubt there are possible disputes about such words as "conduct" or "sending". Disputes could be created about practically anything

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but we are seeking to keep the statutory procedures as clear and concrete, precise and straightforward, as possible, so that people know where they stand.
My noble friend Lord McCarthy referred to the fact that possibly as many as two-thirds of employers have never even heard of suspension. My noble friend also said, earlier in the proceedings, that a great many employers had never heard of the ACAS code. I do not know whether the two-thirds figure is correct, but I do know that a great many employers have not heard of the ACAS code. Does that not make the point for the minimum standard? It is precisely because so many employers have never even heard of the ACAS code— perhaps they have not even heard of ACAS— that bringing in basic minimum procedures which have to be followed brings, as a matter of realism, some minimum standards to employees which they do not have at the moment. We are seeking to face reality and to do something which is achievable, which will make a difference to those many employees and which will affect the ignorance of those many employers. It does not in any way detract from the standards set out in the ACAS code but it does bring some minimum standards.
Amendment No. 111 would impose a requirement on the employer to inform the employee why he was not suspended instead of dismissed. As I said, this would add an entirely new obligation on the employer. It goes well beyond existing best practice guidance. The ACAS code, which implicitly recognises that suspension may not be appropriate in all circumstances, places no similar obligation on the employer.
Amendments Nos. 111 and 107, taken together, seek to ensure that employees are never dismissed instantly. Instead, the only sanction which an employer would take before the procedure is completed is to suspend the employee. I have already explained why I believe the procedures cannot go down—
Lord Wedderburn of Charlton: With great respect, Amendment No. 111 does not say that the employer should not and cannot dismiss. It requires him to say why he has not suspended instead of dismissing, which is quite different.
Lord Falconer of Thoroton: The point that I am making is that Amendments Nos. 107 and 111, taken together, seek to ensure that employees are never dismissed instantly. I hope that I made that clear. Instead, the only sanction which an employer would take before the procedure is completed is to suspend the employee. I have already explained why I believe the procedures cannot go down this road. It is not our intention to change the law on instant dismissal. In the light of my comments, I hope that the noble Lord will feel able to withdraw the amendment.
Lord McCarthy: The Minister knows very well that one can always pick holes in a particular amendment. One can look at the words and say that they are not helpful. However, it is important to decide whether the principles— the impulse behind those amendments— are matters that one can support. We would not
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complain; we would be overwhelmed with gratitude if the Government were to say, "We don't like your words. This is not in the ACAS code". In fact, there is something very similar in the ACAS code but I shall not go into the words in that code. I am not saying that the ACAS code is perfect.
There is a difference between picking up— "nitpicking up", one might say— the way that amendments are written and combining them so that they become worse— why do we not say that one will be taken and not the other?— and simply expressing general support for the idea that placing "suspension" into the minimal procedure is a matter which the Government will consider and will try to find a way of embodying in the Bill.
That is all that we ask. We ask for that kind of consideration to be given to the amendments that we shall be moving today rather than for the Committee to focus on the precise words— that is, whether they are ambiguous or not ambiguous and whether they take us a little before or past the position of the ACAS code. After all, the ACAS code has not been changed since 1972. It has had two major revisions but all that has been done is that the apostrophes have been moved about. It has not really been changed at all. Perhaps the ACAS code is a little behind-hand.
We want Ministers to say what they think of the thrust of our amendments, what they consider to be behind the amendments and whether they believe that they can accept them. There seems to be a very real danger in the minimum procedure, which is very short. Perhaps we should have made more of that; the Government are not taking it on board at all. For example, the modified procedure on grievances— we are not really debating that matter— has no provision for appeal, and that is monstrous.
The procedure is minimal. People who have never had, or who do not believe in, procedures find that such procedures have to be included in the employment contracts of their employees. As my noble friend Lord Wedderburn is always saying, that is the great innovation in this Bill. These procedures do not have to be put in; they go in or are implied, which is very unusual. People will say, "All right, so now they're shoving things in our employment contracts, are they, without so much as a bye or leave? It is not even like the ACAS code. We shall be taken into account if we reach a tribunal".
These provisions are going to be shoved into our employment contracts without us being told what is in them and why, or why we should observe them. Many employers may quite reasonably say, "They'll get nothing more than that". There might well be a kick-back effect in which thousands of employees who have no procedure will be subject to the minimal procedure. That will in fact be a lower level of treatment than they are receiving now. That is a very real possibility and it is one of the points that we shall probably continue to make. However, for the moment, I have no alternative but to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 100 not moved.]
4.30 p.m.
Baroness Turner of Camdenmoved Amendment No. 101:
Page 64, line 16, at end insert—
"( ) At the meeting the employee should he given the chance to state his case and answer any allegations that have been made.
( ) Except in cases of gross misconduct no employee should he dismissed for a first breach of discipline."
The noble Baroness said: In the unavoidable absence of my noble friends Lord Lea of Crondall and Lord Gladwin of Clee, and at their request, I beg the leave of the Committee to move Amendment No. 101 and to speak to Amendment No. 104.
We are now discussing procedures which should be followed and which are set out in Schedule 2. We have spent a lot of time on it this afternoon already. The first part of the amendment states that an employee faced with a disciplinary charge should be given a chance to state his case and to answer the allegations. The second part stipulates that, except in cases of gross misconduct, no employee should be dismissed for a first breach of discipline.
In case it should be argued— as I think it has been already— that it is obvious that where there are disciplinary charges natural justice decrees that an individual should be able to state his or her case and to answer the charges and that there is therefore no need to put this in the Bill. I would point out— as my noble friend Lord McCarthy has already done— that we are here considering situations in which an employer has not previously had any procedures. The Government acknowledge that by saying that about 6 million employees will now have procedures where none previously existed.
The Minister accepts that we are not dealing with people who are familiar with the kind of procedures taken for granted in many large firms where there is union recognition, collective bargaining, some knowledge of ordinary industrial relations procedure and, often, a knowledge of the ACAS code. It is therefore necessary to spell out these requirements on the face of the Bill.
The second part of Amendment No. 101 makes the entirely reasonable point— already spoken to by my two noble friends— that no employee should be dismissed for a first disciplinary offence except in a case of gross misconduct. As has already been stated, that is in line with the ACAS code of practice. In case of minor infringements, it is recommended that employees should be given a formal oral warning. If the infringement is more serious, a written warning is recommended. Minor cases of misconduct and most cases of poor performance may best be dealt with by informal advice, coaching and counselling rather than through disciplinary procedures.
Those are entirely reasonable provisions set out in detail in the ACAS code. Amendment No. 104, with which Amendment No. 101 is grouped, follows naturally from what has been said. It simply states that in arranging and conducting meetings and deciding the form of any disciplinary action, the employer should have regard to the ACAS code of practice.
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I hope the Minister will agree that those are entirely reasonable propositions which are already in the ACAS code. He told us:
"We will be asking ACAS to revise the code in due course to ensure that it recognises the statutory procedures".—[Official Report, 18/3/02; col. CWH 194.]
As my noble friend Lord McCarthy has already said, I hope that in revising the code regard will be had to the very reasonable propositions set out in the amendment. It is quite reasonable for us to say that if there is to be a revised code we would like to know what is going to be in it. I beg to move.
Lord Falconer of Thoroton: Amendment No. 101 has two components. Its first element concerns the need to ensure that the employees are allowed to state their case at meetings which are held under the dismissal and disciplinary procedures. We do not need that wording. Paragraph 13(2) of the schedule already states:
"Meetings must be conducted in a manner that enables both employer and employee to explain their cases.
That requirement applies to all meetings held under the disciplinary or grievance procedure. It seems to deal adequately with the point that my noble friend Lady Turner makes on the amendment which she moved but which was tabled by the noble Lords, Lord Lea of Crondall and Lord Gladwin of Clee.
The second element of the amendment concerns imposing a new requirement on the employer not to dismiss any employee for a first breach of discipline other than in a case of gross misconduct. My noble friend rightly says that that amendment reflects the guidance in the ACAS code which encourages employers to operate a graduated system of sanctions, including oral and written warnings, before taking the ultimate step of dismissing a person.
I believe that the code is the correct place for this kind of guidance. As I explained, we are not using the statutory procedures to change by the back door the underlying law on unfair dismissal, or to alter the requirement on employers to act reasonably.
If we accepted the amendment, we would be offending against that principle. We would be creating a new rule in statute by which unfair dismissals would be judged in the future. Again, it is not an appropriate amendment to accept.
Amendment No. 104 seeks to import into the schedule a reference to the ACAS code. In this context, the ACAS code of practice on disciplinary and grievance procedures would be particularly relevant.
I have made clear again and again, as I am sure has my noble friend Lord Sainsbury of Turville, that the ACAS code will remain very important. Inevitably, the code will need some revision when the Bill becomes law, but any employer wishing to ensure that he acts fairly when following procedures that may result in the dismissal of an employee will need to take the code into account just as he needs to at present.
However, the cross-reference proposed in the amendment is unnecessary. Under Section 207 of the Trade Union and Labour Relations (Consolidation)

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Act 1992, the ACAS code may be taken into account by an employment tribunal whenever the tribunal considers that any of its provisions are relevant to any question before it. I am sure that employers and others would also turn to the codes for guidance, whether or not there is a cross-reference in the schedule.
I hope that in the light of what I have said the noble Baroness will feel able to withdraw the amendment.
Lord Wedderburn of Charlton: I will read what my noble and learned friend has said, but perhaps he could go back a little in his comments on the amendment. Did I understand him to say that he did not want to put what he objected to into Schedule 2, because what is put in Schedule 2 might govern the outcome of a decision on the fairness or unfairness of a dismissal? Is it therefore correct that what we put into Schedule 2 may be taken into account by a tribunal in judging the unfairness of a dismissal? Would that not be a good reason for including civilised standards?
Lord Falconer of Thoroton: No. I said that we would be creating a new rule in statute by which unfair dismissals would be judged in the future. We believe the right principle is that dealt with in the obligation to act reasonably, to which question the ACAS code would be relevant.
Baroness Turner of Camden: I note what the Minister has said in response to what I believe to be reasonable amendments. I still believe that we are dealing with new procedures which will apply to people who have never had any sort of procedure before. I therefore believe that it would be far more appropriate if a little more detail were included in the Bill in relation to the ACAS code. However, I will withdraw the amendment now, and it will be up to my noble friends to consider whether they wish to raise the matter at the Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCarthymoved Amendment No. 102:
Page 64, line 28, at end insert—
"( ) Where the employee does not accept the decision of the employer, at his request the issue shall be referred by the employer to an arbitrator, who shall be a person either—

(a) nominated by agreement or under the provisions of an agreement between the employer and a recognised trade union of which the employee was a member at the time of the employer's written statement, or

(b) in default of such agreement, appointed by ACAS, who shall make an award within seven days."

The noble Lord said: The group contains a vast number of amendments. They are all very similar, but not the same. I shall understand if one or two Members of the Committee have not got right to the bottom of what I am trying to do. In fact, the very excellent
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people who draw up our Marshalled List of amendments and groupings persistently refuse to put in Amendment No. 103.
Lord Wedderburn of Charlton: That may be my fault.
Lord McCarthy: It is in and I intend to speak to it because we have to have eight amendments to achieve what we want to do. They are Amendments Nos. 102, 113 to 116, 119 to 120, and then Amendment No. 123, which defines mediation. The assumption is that we all know what arbitration means.
Therefore, we have eight substantive amendments, but what are they trying to offer? They are simply offering one choice. They are extending worker rights— that is, ex parte rights— so that an individual worker, faced with attempts to progress a claim of grievance or faced with an attempt to change a decision on discipline— perhaps dismissal— will be able to say unilaterally, ex parte, at a certain stage in the proceedings, "I should like to have mediation", or "I should like to have arbitration". We need to table eight amendments because of the way in which the Bill is written. There is one set of procedures for discipline and another set for grievances— I have never understood why— and there are two forms for the standard procedure and the modified procedure. Therefore, if one wants the option of the four different types of procedure, one needs eight amendments. That is why they have been tabled.
One might ask: why are we trying to provide the worker with the option of mediation and/or arbitration; what is the idea behind it? The answer is that it arises out of desperation. It comes from someone who is committed to the belief that we have to do something about the growing number of tribunal cases. I am the last person to think that we can ignore that problem, but we have not even started to deal with it. We have yet to deal with some of the issues that are in the pipeline concerning the latest directives and the further directives. And we have yet to get the measure of what will happen because we have, quite rightly, reduced the qualification time from two years to one year. Therefore, we have not even started to deal with the growth in the number of cases going through tribunals.
As the alternative to obtaining something other than the employer's last offer declines, the number of places outside the public sector where one can obtain any form of mediation, arbitration or independent assessment on a discipline issue declines year by year. Even if in a wages case workers are convinced that their employer's last offer is a barefaced denial of their legal rights and there should be no debate about it, the only place where they can go to obtain an improvement on what the employer is offering is a tribunal. In that case, in my opinion, the problem will not be dealt with unless we do what the Government do not intend— that is, we make the provisions horrendous, particularly Clause 25, so that virtually no one is able to reach a tribunal. If we do not do that, the number of tribunal cases will rise.

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I am not, in any event, that enamoured of tribunals. They never, or very rarely— that is, in fewer than 3 per cent of cases—provide the real solution, which is suspension, re-engagement or re-employment. They rarely provide anything such as that. A tribunal will sack a person and give him compensation. When one seeks industrial justice, it is a very poor remedy to be awarded only a few pounds. Therefore, I am not a great friend of the tribunal system. It is an excellent system in the absence of anything else, but I want to try to return to domestic settlement.
Domestic settlement really can fit the case. It is very educative for employers, as it is for trade union officials, to become involved in these matters and to find out how people are disciplined, what is the best way to go about it and how to address grievances. Unfortunately, one will not turn back the growing number of tribunal cases by this one-sided system.
We have tried to make minimal improvements in what is on offer to workers outside the tribunals but have received no support from the Government. We have tried to ask, "Why not put in an investigative function?" They say, no, it is in there already, but of course it is only there when you get to tribunals. Why not put something in about suspension? We will hear what the NI mister says— that is a terrible thing. There is no attempt to put anything into this domestic system which is going to make it a real alternative where workers can feel that they might be able to get something more than the employer's last offer.
I come in desperation to some form of independent assessment, not an appeal which goes to another manager, a higher level of management, but an appeal that goes to somebody outside. In order to make it as acceptable as possible, I do not impose the need for arbitration because many employers will say that they do not want arbitration, they do not like arbitration. The Prime Minister was very much against arbitration until we had a few railway strikes and he changed his opinion. But I am not looking for arbitration because of an outburst of industrial disputes. I am saying that if the Government do not want arbitration, why not have something more modest than that such as mediation? I happen to think that mediation— not just because I have done a bit of it—is one of the best ways outside the legal procedure of dealing with the kinds of disputes that end up at tribunals because you are getting somebody outside who proposes something which at least comes somewhere between the two sides and which tries to resolve those parts of their dispute and disagreement which they feel most strongly about. They will listen to this person, partly because there is a technique involved here. They themselves are listened to by the mediator. After that mediation there is a recommendation and they can go away and think about it. Mediation very often can solve these disputes. Very often after mediation you can go on to get arbitration because three-quarters of the dispute are settled by mediation and then you can get arbitration on the rest of it.
The Government may ask, "What about ACAS; they could do that"? But ACAS offers conciliation, not mediation. It does not like making recommendations
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and it particularly does not like making recommendations which are in a sense legally binding or legally driven. So we have to have another system, a system which ACAS can run but which runs in parallel. The Government might say, "We have a mechanism where people can go out to arbitration". However, you have to get the employer to agree. This is not a case of ex parte but of joint action. That is why— as I understand it— there have only been 10 cases so far. We should give the worker an ex parte right either to mediation or to arbitration.
If the Government think I am going too far and say that my four amendments on arbitration are too extreme, I hope that they will consider my four amendments on mediation— they are alternatives. I want to make an inch of ground. I want the Government to realise— and if they do not realise, I want them to stand up and tell me that they do not realise—that they are not going to get the shift which we all want to see from a growing number of legal determinations to a workplace-based system unless they make that system more attractive. If they do not like my proposals for making it more attractive, let them think up some of their own. I beg to move.
4.45 p.m.
Lord Falconer of Thoroton: As my noble friend said, these amendments are all closely linked. They all seek to introduce a third party element into the statutory procedures. I recognise and accept that third party involvement in dispute procedures may help in some instances. They work where both the employer and the workforce are committed to them and agree there is a place for such outside involvement.
However, these amendments seek to impose such third party intervention in all procedures, wherever the employee wants it, in organisations of all sizes and in relation to each and every grievance or disciplinary issue. We have the deepest misgivings about this approach in principle.
First, it would greatly complicate the procedures, adding in effect at least one further stage to the statutory procedure. It would significantly increase the cost of operating the procedures.
Secondly, I suspect that the introduction of what would be compulsory arbitration or mediation would undermine the rest of the procedures. It would in effect reduce the incentive for parties to resolve problems bilaterally. Employees would often be tempted to invoke a third party involvement in search of a better settlement. And employers may become unwilling to make a reasonable offer because they feel the matter will, anyway, be referred to the third party.
Thirdly, I am unconvinced that compulsion produces effective arbitration or mediation. ACAS currently provides its services only where both parties voluntarily agree to its involvement. The parties are then much more likely to implement the awards of arbitrators or follow the recommendations of mediators. Those advantages might be lost if access to arbitration or mediation became a unilateral right of

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the employee. It would lead to wasteful expenditure on arbitration and mediation because the conditions for effective third party involvement are not met.
Fourthly, it is unclear how these additional procedures would fit into the legal system. These arbitrations or mediations would deal with disputes which involve legal rights, at least in some measure. I am not sure whether the noble Lord is suggesting that the acceptance of arbitration or mediation somehow ousts the freedom of employees to make tribunal applications. I would think not. This again could lead to wasteful expenditure. If an employee did not like an arbitrated award or a mediator's recommendation, there would be nothing to stop him or her making a tribunal application about the same complaint.
Finally, having set out our views in principle, there are real practical difficulties in pursuing this approach. The amendment would generate a substantial increase in the number of arbitrations or mediations which are undertaken. There are hundreds of thousands of grievances or disciplinary actions each year. In each case, the employee would be entitled to involve a third party if they did not like the employer's decision. If the employee took up this option in a tenth of cases, we would see an enormous increase in arbitrations and mediations. There simply are not enough skilled people to undertake these duties. Likewise, if my noble friend envisages that ACAS would be responsible for providing these services, the cost to ACAS of doing so could be vast.
That probably deals with all the points that were made. Arbitration, mediation and conciliation should be left firmly in the voluntary arena. Parties cannot be forced down that path without creating serious distortions and inefficiencies. In the light of what I have said, I hope that my noble friend will feel able to withdraw his amendments.
Lord Wedderhurn of Charlton: I note what my noble and learned friend says. There would be a cost but what my noble friend has said has not really been answered. This would have legal consequences. It would perhaps he otiose to try to spell them all out. The moving of these amendments does not disagree with a great deal that my noble and learned friend has said. But the central point is, do the Government really think that the end product of imposed statutory procedures should be the employer's last word? The end product is, as my noble friend has said, always the employer's last word because that is what the procedures involve. Schedule 2 leads to one result in the end always as regards both standard and modified procedures, but especially modified procedures. Modified procedures are a disgrace. In all the procedures the end product is the employer's last word. Now, is my noble and learned friend really saying that the Government considered whether something else could be added so that there would be greater confidence in these procedures, that at any rate in some kind of extreme cases there could be a stage where some other judgment was brought to bear? Or
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are they insisting, because the CBI insists, that the end of imposed procedures must always be what the employer says?
Lord Falconer of Thoroton: I hope I have made our position clear, which is that we think there should be a statutory procedure as a minimum procedure. We think as a matter of principle that it would be wrong to include in that procedure any third party intervention for the reasons set out clearly in the submissions that I made.
Lord McCarthy: It would be all right for the Minister to take that view if he did not have all his other principles. The Minister has a principle that investigations cannot be included in the Bill, or suspensions or all the other recommendations and improvements that we are trying to make. I am saying that if we cannot have any of these things, the Government cannot really, honestly, sincerely believe that they are going to turn back the flood or whatever the Minister called it. I believe that he referred to the tip of the iceberg. The Government will not be able to do anything about the tip of the iceberg; they will be like the poor old "Titanic" if they do not do something. The Government may turn down my rather more extreme ideas, but they must come up with something; otherwise, they will find, in two years' time, that the numbers are still going up. The CBI will come along and ask, "Now what you are going to do? You said you would have a significant impact, but you have had no impact". That is the problem— the Government will have to do something more.
I turn to money and how much the arrangement will cost. I do not think there would be a great deal of arbitration, but there would be much more mediation. It would not be very expensive because, with a slight change to the instructions to ACAS, it could provide mediation. It does not like to provide mediation in this context because it is very close to the legal determination produced by the courts. However, it would be quite easy for ACAS, when workers want that, to provide mediation. I am not suggesting that one should shove mediation as an instant remedy, and I am not saying that one would not want people to negotiate or to conciliate and bring ACAS in. However, before ACAS lets the matter go, there is a significant moment in every dispute of this kind; that is, when the ACAS person involved decides that there is nothing more to be done by conciliation.
Conciliation is a term of art— one is not making recommendations or proposing things. People are simply being put together to see how much common ground can be found. It is not the practice at the moment, at that stage, to say, "Would you like some other third person to come in and tell you what he thinks you should do?" That is not a vastly expensive exercise, and I do not believe that a great number of workers will want it. They might want to go on at that stage and have their day in court. However, if that is impractical and if one thinks that that is impossible—if one cannot try it out even as a kind of pilot— I say

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to the Ministers, "You had better put on your thinking caps and think of something else. I have done my best". I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 103 not moved.]
[Amendment No. 104 not moved.]
Lord Razzallmoved Amendment No. 105:
Page 64, leave out from beginning of line 29 to end of line 7 on page 65.
The noble Lord said: This amendment deals with the modified procedure in Schedule 2. I am delighted to see that I have the support of the noble Lord, Lord McCarthy, and the noble Baroness. Similarly, although it is not grouped with this amendment, Amendment No. 117, which is in the names of the noble Lord, Lord McCarthy, the noble Baroness, Lady Turner, and the noble Lord, Lord Wedderburn, also touches on the same point. My amendment touches on the deletion of the modified procedure in relation to dismissal and disciplinary procedures. Their amendment, which we support, touches on the elimination of modified procedure with regard to grievance procedures. I do not propose to trouble Hansard with rising to support Amendment No. 117, because most of the remarks that I make on this amendment will apply equally to the deletion of the modified procedure on the grievance procedure.
It is a very simple point— we do not yet know what the modified procedure will relate to. However, for the purposes of the discussion that is taking place outside the Committee, it is assumed that the arrangement is designed to apply in cases of gross misconduct. Indeed, the noble Lord, Lord McIntosh, indicated at Second Reading that he believed that the modified procedure should apply in the case of the standard procedure in the place of work and when people assaulted others and had to be immediately dismissed. He said that that was a common incident.
We take the view that in this context a sledgehammer is being used to crack a nut and that, if the procedures are to be modified in the proposed way by establishing a modified procedure, doing so to cover the limited number of dismissals in which an employee's behaviour is both flagrant and unambiguous is inappropriate in the context of the Bill. The Government should think again about the modified procedure if our suspicion is right that they intend to bring this in with a blanket application to cases of gross misconduct.
If we look at the standard procedure under dismissal and disciplinary procedures, are we really saying that an employee, even in cases of alleged gross misconduct, is not entitled to a meeting to take place before the action of dismissal is imposed upon him? Do we really not accept that, as a primary obligation of the employer— even in circumstances, as the Minister indicated at Second Reading, in which there has been a fist fight on the floor of a factory or, indeed, over a computer system— the standard procedures as set out in Chapter 1 should not apply? If the
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Government intend to introduce the modified procedure in this way, it is far too extensive; they should think again and withdraw Chapter 2.
5 p.m.
Lord McCarthy: We support the amendment and we want to extend it, as the noble Lord has said, so that it adds to the point of our amendment and so that it covers grievances as well as dismissals. The noble Lord accepts that that should be the case.
The whole issue of the modified procedure is a strange and queer one. I have read the debate in the other place on the Bill in Committee and on Report, although they were very short but I have never found a sustained defence— an explicable, clear, logical defence— of the reasons why the Government want to have a modified procedure. However, I may well have missed it.
Let us be clear about what a modified procedure is. It is sub-minimal. The minimal, God knows, is minimal enough. In the case of the grievance procedure, it is worse than sub-minimal; it practically goes through the floor. Not only do you not get a meeting, you do not get an appeal. All you get is a letter. You cannot go more sub-minimal than that—you would disappear. It has never been explained to us why we have to have this particular procedure. We have statements, instances and insinuations.
For example, people said that that would be rather useful for cases of gross misconduct. Cases of gross misconduct are usually extremely controversial and the consequences are extremely serious, because you get marched out of the firm unless suspension is used. So why you should have a shorter, briefer, sub-minimal procedure to deal with an issue of this importance and controversy, I do not understand. However, that is not really what the Government have justified.
A justification, such as it is, was set out in Committee by Mr Alan Johnson, on 13th December. He said:
"We envisage that the modified grievance"—
I stress that he uses the word "grievance" and that he is talking about the grievance procedure—
"procedure would apply to a situation where an ex-employee wants to raise a grievance with a former employer, probably in terms of a constructive dismissal case".—[Official Report, Commons Standing Committee F, 12/12/01; col. 161.]
We all know that you cannot have a constructive dismissal case unless you have been dismissed. So this worker is outside the firm; he has been sacked and he thinks that it will be proved that he has been unfairly dismissed. The practicalities of his special situation make it difficult to envisage that face-to-face communication would have much of a role. Members of the Committee can see that. The worker is annoyed. The worker believes that that is what constructive dismissal means. The worker believes that the employer has conspired to offer him or her a succession of non-jobs, and a succession of pressures, so that in the end it amounts to dismissal. It goes to the root of the contract and the employee is saying. "I

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think I've been dismissed". In that circumstance, an employee may not want to see an employer, but that is up to the employee.
The practicalities of this special situation make it difficult to envisage that face-to-face communication would have much of a role. Who are we to say what the individual worker wants to do? I know someone who is just about to bring a case for constructive dismissal. The one thing she wants to do is to get at the management who suspended her for four months. She wants to tell them what she thinks of them but they will not talk to her. She would love to have this lever. However, she would not get it because the management would shove her into the minimal procedures, or sub-minimal, and then they could say, "Oh, we're not meeting you".
I cannot see that this is a defence at all. We make no provision for meetings to occur in the modified two-step procedure on a grievance, but why not? In this context, it makes sense to require communication to be in writing. Who is the Secretary of State to require that communication should be in writing if an employee would rather go and give the employer an earful? Who are we to say, "No, no, no, go away and write it down"? In the modified grievance procedure, both those steps must be put in writing because the employee has left the company and there is no face-to-face communication.
I really do not understand that. If the Government were to say that the worker does not have to have a meeting, does not have to have a face-to-face confrontation, and can in fact make a submission in writing if he wants to, fine, but that could be done under the existing procedure. I do not see that the modified procedure gives the worker anything. I believe that it takes everything away and it does so in a way which would be very attractive to some employers. There is nothing on the face of the Bill— only a word or two that Alan Johnson said in Hansard— to indicate precisely when the employer can give sub-minimal treatment. Any employer could say, "I think this is an appropriate case to be dealt with sub-minimally". Those concerned will receive nothing more than a letter; they will not have a meeting and there will be no appeal.
That is monstrous, quite monstrous. Surely if the Government think about it, they could do away with those modified procedures and everybody could come in through the same door, minimal though it is. I beg to move.
Lord Falconer of Thoroton: If I may, I will deal with Amendments Nos. 105 and 117 together. Amendment No. 105 is the application of the noble Lord, Lord Razzall, to get rid of the modified disciplinary procedure. Amendment No. 117 tabled by my friend Lord McCarthy, is intended to get rid of the modified grievance procedure. When will the modified disciplinary procedure be needed? It will be determined by regulations, mainly made under the power provided by Clauses 30 and 31. We have made
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known our intention already as the noble Lord, Lord Razzall, said. It will apply to cases involving gross misconduct.
The wording in the modified procedure assumes that it can apply only in situations where a dismissal has already occurred. It will therefore apply only to instant, or near-instant dismissals; that is, at the time of the alleged incident of gross misconduct or very shortly thereafter.
The noble Lord, Lord Razzall, will know that instant dismissal is a relatively rare occurrence. Plainly, it is one that should not be taken lightly by the employer, but it occurs in extreme circumstances. At such times it may be inappropriate to hold the full three-step procedure before the dismissal occurs, with or without the suspension of the employee.
Cases of instant dismissal may well be judged unfair by a tribunal on procedural grounds. However, tribunals do not treat all cases of instant dismissal as axiomatically unfair. There is no golden rule of that kind. In fact, as a consequence of our proposal, dismissals will be automatically unfair if the employer has not followed in the disciplinary circumstances the two-step procedure in the modified procedure. Among other things, that would give the employee the right to a meeting to appeal against the dismissal. The practical effect of our proposals is to increase employee rights in such extreme situations. It does not take them away.
It is alleged that the modified procedure would encourage employers and the tribunals to treat all cases of gross misconduct as justifying an instant dismissal; that employers would feel free to ignore ACAS guidance on the treatment of gross misconduct. As we know, the ACAS code advises that most cases of gross misconduct should not result in instant dismissal, but should first be subject to an internal procedure before a decision is taken.
The schedule does not change the obligation on the employer to act fairly when dismissing. We are not diminishing employment rights. If it is currently unfair to dismiss an employee instantly for certain types of gross misconduct or in particular circumstances, that will remain the case in the future.
Lord McCarthy: Perhaps I did not hear the answer at ten past five, I do not know. It is a long day. Is the Minister saying that putting on the face of the Bill a statutory procedure which allows an employer instantly to dismiss an employee with no explanation, with no investigation, with no meeting and with no appeal is adding to workers' rights?
Lord Falconer of Thoroton: I am saying that the process does add to workers' rights because the position in relation to the instant dismissal is already to be judged by the normal rules in relation to unfair dismissal. By applying the modified procedure to such a dismissal, those are additional rights that would apply to the employee.
As now, the ACAS code should be taken into account by the tribunals when assessing whether the employer has acted reasonably and fairly. Though this is a matter for ACAS, we would not expect ACAS to

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revise its guidance significantly on gross misconduct, though of course it will need to refer to the enhanced rights for employees who are instantly dismissed.
In other words, the modified procedure should be viewed as underpinning reasonable behaviour. It sets out a new procedural standard below which employers should not fall in any circumstances. However, it does not absolve employers from the need to follow more elaborate procedures where necessary. This may well involve employers suspending employees while investigations take place. It may well involve meetings with the employee before a decision is taken.
The modified procedure is necessary. It deals with special cases where it may not be appropriate to follow the full procedure, requiring former employees to attend hearings. However, it does not reduce the standard and I say this again— against which tribunals will judge the fairness of employer actions in cases of gross misconduct.
It may be helpful at this point for me again to stress— and this is the strand that runs through all these debates— that so far as dismissal is concerned, the purpose of the statutory procedures is simply to require suitable minimum procedures to be followed when employees are dismissed. I fully understand that my noble friends would like us to change the law relating to unfair dismissal so that it is always unfair to dismiss instantly. However, I hope that it will be apparent to them that, much as they may regret it, that is not our intention. Rather, it is to leave the underlying law of unfair dismissal as it is while securing that procedures appropriate to the nature of the dismissal, whether it is on notice or summary or instant, are required to be followed.
I hope in the light of those comments, the noble Lord, Lord Razzall, will withdraw his amendment.
The amendment of my noble friend Lord McCarthy deals with the modified grievance procedure. The modified procedure, as my noble friend points out, places very limited obligations on employers and employees. It is entirely written and does not require the parties to meet.
The schedule does not specify the circumstances within which the modified grievance procedure would apply. That will be a matter for the regulations. However, we have stated our intention to apply the procedure to circumstances where a former employee has a grievance against his employer following the termination of employment. Grievances of that kind are by no means rare. For example, they can occur where employees think they have not received the correct holiday or redundancy pay when they have left a company.
In those circumstances we feel that it would be unrealistic to impose requirements on the parties to meet to discuss an issue. Indeed, some former employees may find it extremely expensive or practically difficult to meet their employer. Consider the case in which an employee has resigned because he or she has moved to another part of the country.
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Rather, the procedures simply require the employee to raise the grievance in writing; the employer is then required to reply in writing. Those steps should help to elucidate an issue. They might even themselves result in a resolution of the problem—for example, there might have been a misunderstanding about the facts. In some cases they might also lead to further voluntary steps by the parties to sort out the problem.
Our consultations have shown a general acceptance of the need for a modified procedure that deals with cases of that nature. In light of that explanation, which I believe meets most of the points raised by my noble friend, I hope that he will not move his amendment when the time comes.
5.15 p.m.
Lord Razzall: Before the Minister sits down, will he give us the benefit of his comments on the following matter? As I understand it, the point that is being made about Chapter 2 as regards dismissal and disciplinary procedures, which I understand, is that no change purports to be made to the law regarding unfair dismissal for gross misconduct. Indeed, no change will be made, and therefore the employee who has been dismissed is subject to modified procedure and has not had his or her rights diminished to sue the employer for unfair dismissal.
I turn to another point— if I did not raise it, I suspect the noble Lord, Lord McCarthy would. One of the problems in this regard is that if we start from the proposition that we want to encourage workplace resolution of such problems— if we want to implement the modified procedure in those circumstances rather than a standard procedure— that is likely to increase the risk that an unscrupulous employer will simply dismiss somebody, and apply the modified procedure, and therefore say, "Your remedy is simply to sue me for unfair dismissal". As we know, many people—for all sorts of perfectly understandable reasons—do not do that.
The concern that we have is that this is going to encourage the blackmail element among employers— they will seek to use this procedure and force either financially weaker or emotionally weaker employees into simply having to go to the employment tribunals to pursue their remedies. However, were the standard procedure to apply, there would be a greater application of workplace resolution to those disputes.
Before considering whether to withdraw my amendment, I would welcome the Minister's comments on that.
Lord Falconer of Thoroton: I am grateful for the fact that that question is very clearly put. The noble Lord does not deal with the case in which instant dismissal can be justified. In effect, he is suggesting that there can never be circumstances where that would be lawful. As I understand it, he is saying that before you can dismiss whatever the circumstances, unmodified—that is, Part 1— procedures have to be gone through. Therefore, he is saying that we should change the

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fundamental law because the fundamental law is not currently that instant dismissal is axiomatically unfair. It may well be in very many cases.
In effect the noble Lord is proposing in his amendment— or in the question that he asked— that you can never instantly dismiss. We are not intending to change the law to say that you can never instantly dismiss. That is the issue that he has to deal with, but he has not dealt with it in his submissions.
Lord Wedderburn of Charlton: With great respect to my noble and learned friend, the noble Lord, Lord Razzall, does not have to deal with that because it is not, in my submission, the case— I hope that my noble and learned friend will look at this very carefully— that the abolition of the modified procedures logically or necessarily entails the proposition that no instant dismissal can never be fair. The two propositions do not flow one from the other. At least, if it is said that that would be so in the context of the government schedule, it would be so only because step 2 in the standard procedure of the disciplinary procedure is that no action is to be taken except by way of suspension— suspension is the only case that is mentioned— before the meeting.
Lord Falconer of Thoroton: No instant dismissal.
Lord Wedderburn of Charlton: I shall read the passage for my noble and learned friend. In the disciplinary procedure that they constructed, it states,
"the meeting must take place before action is taken, except in the case"—
Lord Falconer of Thoroton: Exactly.
Lord Wedderburn of Charlton: But that is their construction. They cannot put a proposition in the Bill and then tell us that the logic of our propositions must be confined— must be within the propositions they have constructed. That is not the way that argument reasonably takes place. My noble and learned friend is displeased with that, I see, because, of course, they cannot think of any other reality, except what they have put in the Bill.
Let me try again. I assure my noble and learned friend that our amendments— the amendment of the noble Lord, Lord Razzall, does not involve a different case— have been constructed with very great care, both as to substance and to form. If we had meant to move an amendment that said that instant dismissal should always be unlawful, we would have done so. We have not done so, and it is not implied in the proposition that the modified procedures are some kind of cover or curious and indirect way of moving such an amendment.
Indeed, my noble and learned friend said that the modified procedure on grievances deals only with former employees. Well, it does not say so.
Lord Falconer of Thoroton: The regulations say that.
Lord Wedderburn of Charlton: Oh, so we now find that out from the regulations. For goodness' sake! We
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are fed up with this business of knowing only when we get to the regulations— we want to know from the Bill what it means. If "employee" on page 65, line 32, means "former employee", why should Parliament have to wait for a regulation to know what it is putting on the statute book? It really is intolerable that the Government should put Parliament in this position and then say, "'employee', in this particular line, means only 'former employee', but we will not put that in our Bill. We'll only tell you that when some regulation is passed at some time". What kind of Tudor state of mind have the Government got into as regards secondary legislation? That really will not do.
Those were the first and second of my four comments on what my noble and learned friend said. What he said earlier was that Schedule 2— the modified procedures— underpins reasonable procedures. In a sense, that is our objection. It is about underpinning reasonable procedures with unreasonable procedures and making them the minimum. We do not think that the minimum should involve unfair and unreasonable procedures. The core of our case is that those provisions are unfair and unreasonable. They do not even mean what they say, because "employee" means not "employee" but "former employee". They are obscure, they are uncertain and they are a disgrace.
I trust the tribunals and the courts in this regard; contrary to what some people say about me, I should trust an appellate court to do its best not to apply what the modified procedures insist are the implied terms of every contract of employment in the land.
I do not know when my noble and learned friend first came across this matter— he has had so many other things to deal with. I have a great deal of sympathy with him. However, he is quite capable of having seen the Bill in its formative days— in those days long ago when the CBI insisted that we must cut tribunal applications by 40,000. The Government then conceded that and now try to forget that they ever said it. All of this is all part of that. I do not believe that a court would think that it was reasonable that Parliament was made to pass a Bill through the apparatus that the Government control, in relation to which "employee" really means "former employee" and reasonable procedures were to be underpinned by unreasonable procedures.
I turn to increasing workers' rights in a formalistic sense. Of course, to imply any right to minimum procedures is a change in workers' rights. But if you change workers' rights with the right to have procedures completed, and those procedures are unfair and unreasonable, workers will not thank you for increasing their rights; nor will their unions be happy. If you want people to stop work instead of taking cases to tribunals, then go on with the modified procedure because that is what will happen.
People will not suffer this type of treatment at work. This is 2002. We shall be discussing previous cases in a moment. It really will not do to put on the statute book modified procedures of this kind. My noble friend Lord McCarthy explained why they are worse than

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minimal, and I plead with the Minister to take back to the department the proposition that the modified procedure should be reconsidered. If I do not misremember, when the Committee last sat, he said that Schedule 2 would be reconsidered. Would this not be a good point to reconsider?
Lord McCarthy: Perhaps I may say what I believe the Government are saying so that we may clarify the position. The other day I was forced to quote Shakespeare. Now I feel like quoting the Bible: "Forgive them, Father, for they know not what they do". On this occasion I do not believe that they know what they are doing.
The Minister said—I believe that I quote him correctly—that this is a suitable minimum procedure. A suitable minimum procedure must be an advance in some sense. It must be an attempt to improve something, not an attempt to go backwards. It is a suitable minimum procedure, just as we have a suitable minimum wage. That is what is claimed for this part of the Bill.
What does it allow the Government to do? It allows them to provide the employer with the right of instant dismissal or instant dismissal of a grievance; for example, a grievance concerning sex discrimination, because that is what that would be—the worker would be complaining about sex discrimination—or concerning race discrimination. Therefore, employees may well find themselves acting under the terms of the suitable minimum procedure whereby they would face a decision by the employer which the employer would not have to explain. No reason or explanation would need to be given and, unless it was a dismissal, and it was only a case of sex discrimination, there would be no appeal. That is what the suitable minimum procedure provides and we are told that it is an advance.
Let us suppose that an employer were to do that, or let us suppose that an employer, as often happens, does something and then someone complains, sends for a lawyer and says, "This is what I did. Tell me whether it was lawful". Let us suppose that he had a good solicitor who told him, "I don't think you would have much chance if you got to a tribunal, my dear chap, because they would say that this was not a reasonable response. You did not have an investigation; you did not do this; and you have never allowed any appeal. That is not proper". What would the employer say? Apparently, the Government believe that the employer would instantly say, "Oh I see. I am terribly sorry. Let's reverse engines". That is not what many employers do.
People who work on tribunals will tell you that there are some very distinguished, important companies which systematically break the law, systematically go to tribunals and systematically pay because they do not want the principles of justice to become the principles on which they treat their employees. I refer to very distinguished companies—public sector companies. What will they do when their lawyers say to them, "No, I am afraid that does not mean that you can ignore the ACAS code, sir. It does not mean to say
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you can take no notice because the ACAS code will still be taken into account if you get to a tribunal"? The employer will say, "I'll give the bond"-I return to Shakespeare again-"I'll give the bond and nothing but the bond. They are not getting any more out of me". That is what this Government—a Labour Government—put forward as the suitable minimum procedure. They really should think again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 106 and 107 not moved.]
Lord Wedderburn of Charltonmoved Amendment No. 108:
Page 64, line 32, leave out "misconduct" and insert "fundamental breach of his obligations".
The noble Lord said: Amendment No. 108 is somewhat technical. It centres on the word "misconduct". There has been a lot of debate in which the word "misconduct" has been used and it is used in the Schedule 2 minimum procedures. As those are suitable procedures, it seems, for imposition into every contract of employment, it is very important to know what they mean.
I appreciate that they cannot be known in full until we see the regulations, to which we have objected. My noble and learned friend will tell me whether I am wrong, but I apprehend that the regulations are unlikely to define "misconduct" further. We are then left with "misconduct" in the Bill. This amendment suggests that the word "misconduct" is unsuitable to have in the Bill because of the difficulty of knowing what it means.
Lord Falconer of Thoroton: I confirm that the regulations are not intended to define "misconduct". Thus, the assumption on which my noble friend is proceeding is correct.
5.30 p.m.
Lord Wedderburn of Charlton: I am delighted but also disappointed. I am delighted to have made the right assumption; I am disappointed because I thought my noble and learned friend was intervening to accept the amendment and to cut short our debate. Unhappily, the second was wrong and so I proceed to move the amendment.
The word "misconduct" is peculiarly uncertain. I want to be careful because obviously the word has been chosen deliberately and on careful advice and it is not intended that regulations should in any way affect its meaning. In some debates, and indeed in some amendments, the words "gross misconduct" are used. The phrase "gross misconduct" is not used and that is not to be its meaning. Lord Justice Scrutton spoke of "gross negligence" as negligence merely with a vituperative epithet, therefore "gross misconduct" is misconduct with a vituperative epithet.
It arises in the civil law, where "gross neglect" or "gross fault", lata culpa, is contrasted with levis culpa and levissima culpa at the other end of the scale: in other words, slight fault, ordinary fault and gross

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fault. "Misconduct" for civil lawyers would include all three. Although the common law has been more sensible in not adopting those three as legal categories, it nevertheless reflects a similar difficulty in respect of what is meant by "misconduct".
It has been a matter of great debate in various circles, but most people have assumed that
"misconduct which has led to the dismissal"—
I quote from the schedule—means "misconduct that justified the dismissal". Of course, not all misconduct justifies the dismissal. If the meaning is "misconduct that did justify but other misconducts that did not justify the dismissal", the provision will not apply in every case where the employee has been properly dismissed. The modified procedure then becomes even more extraordinary.
On the basis of it meaning "misconduct which justified the dismissal", we have to look at the provision even more carefully. There has been a whole list of cases where the courts have, very sensibly, gradually modified their approach to what kind of misconduct justifies a dismissal. In 1845, in the case of Turner v Mason, a maid, who against her employer's express order left the house to visit her dying mother, was held to be properly dismissed for misconduct. In the robust manner of judges of the day, Baron Alderson said that the pleadings did not even show that the mother was likely to die that night and that it was most improper misconduct to leave the house.
In dealing with employment law, I am always insistent to say that the courts should move on. Although they still cite Turner v Mason, they do move on. But the question is—one could put it as a sort of quiz—in which of the following cases in 1969 and 1974 did the misconduct justify the dismissal? I see that Members of the Committee are agog to know the answer. It is the case of two swearing gardeners.
In 1969, an employer and his wife returned from abroad and found that the garden was in a terrible state. The gardener was in a rebellious mood and the law report discloses that he refused to obey any of their orders, saying, "I couldn't care less about your bloody greenhouse or your sodding garden". In Pepper v Webb, was that sufficient in the light of all the circumstances to justify his dismissal? "Yes", said the Court of Appeal.
That precedent was cited and relied upon in 1974, in the case of Wilson v Racher, where the head gardener, the law report discloses, gave vent to oaths which were even more fearsome. I spare noble Lords' blushes by saying the most quotable response to the employers' instructions was, "Get stuffed". He was at the time working with an electric hedge cutter in the rain and feared for his electrocution. He was goaded and shouted at and his language, said the Court of Appeal, was grossly improper. But, it said, it was not something which deliberately flouted the contract's essential conditions. And that, of course, has become the modern test.
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I have used the alternative phrase because I think it is clearer in a statute; that is, a fundamental breach of the obligations in the contract. If that is what the Government mean, they must say so in this minimum set of procedures; in other words, someone who has committed a fundamental breach of his contractual obligations, which gave rise to his dismissal. First, even that, the modern test, is rather more uncertain than the old one—but that in this case is an advance—and, secondly, it can give rise to enormous difficulties of decision.
As Mr John Bowers says in his admirable little book on employment law:
"Dismissals relating to misconduct cover a multitude of sins".
He continues with pages of cases, of which I will mention two. The first is the case of Macari v Celtic Football and Athletic Co Ltd, that great Scottish football team now at the head of the Scottish league, reported in 1999 in the Industrial Relations Law Reports, page 787. Macari was given a variety of instructions by his employers, including an instruction to attend more regularly at the football ground and to report to the managing director on a weekly basis. For all sorts of reasons, all of which he claimed were quite justifiable, he was alleged not to have done that. The question arose whether he had engaged in breaches by way of misconduct, which led to the repudiation by the employers properly of his contract.
One of the advantages of the law in this area is that Scottish law and English law have proceeded to march hand in hand, without any great difference of principle on the contract of employment. The Court of Session said he had. Lord Caplan said this at page 798:
"The employee has a duty to accept the directions of the employer, if such directions are not illegal, are within the scope of the employment and are reasonable. Thus, to take an extreme example, if the managing director had ordered the football manager to polish the players' boots this would not have been within the scope of the manager's employment. Indeed, if he had ordered the pursuer to reside for an extended period outside Scotland that would not have been an enforceable instruction".
He continues:
"The instruction must be reasonable and not result in undue exploitation of the employee. A direction that the employee perform work that would result in him working 48 hours without sleep"—
and this is, I pause to say, before the maximum working hours regulations—
"may not be reasonable. However, these qualifications to the validity of an employer's directions must be assessed objectively".
I cite that because it gives the flavour of the problem of what is meant by misconduct that justifies a dismissal.
Of course, when we come to industrial action, or the consequences of industrial action, industrial action is always a breach of the contract of employment as English law stands—a matter to which this Bill gives an added importance and to which we shall return in the light of a future amendment.
In the case of British Telecommunications plc v Ticehurst, 1992, Industrial Cases 383, a manager had joined-as some junior managers and even middle managers often do these days—in industrial action, and had come back and was not, in the eye of the

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employer, sufficiently willing to give an undertaking properly to supervise the work of her staff. Was this misconduct? Was it misconduct to the extent that it allowed the employer to stop paying the wages and, in effect, dismiss the manager? A court of appeal held it was a fundamental breach of contract that allowed the employer to withhold the pay, which was the issue on which the case was fought.
I cite these cases as it is about time that some real cases were cited on this matter of Schedule 2 because these are the sorts of dispute that trades unions face every day, that lawyers have to advise on and which Schedule 2 does not face. Schedule 2 is not a part of real life. It uses phrases and words which, once again, those who put forward the Bill think will be obvious in application and have not thought through in terms of their problems.
The length of the list of the problems of misconduct has not been adequately represented in my submissions. The noble and learned Lord looks at me to suggest that it has, because he knows. He is privy to the legal secrets of the problem. I am very glad that he has joined us in the Committee but it does not make it unnecessary for me to explain the matter to other noble Lords who may not have the great advantage that he had, and that I had, to join in a common collegiate background of our learning in a particular university where we had the advantage of seeing all the detail of this. It is important that other people should understand just how difficult it is.
So, it is our submission that "misconduct" is not an appropriate legal word in this schedule. If it means misconduct for which you are lawfully dismissed and also misconduct for which you need not lawfully be dismissed, then it is peculiarly inappropriate and it vitiates the notion that the noble and learned Lord and the Minister in another place put forward—that it will always be the former employee who is involved. The employee may insist on coming to work and it may be that it is held that his dismissal was wrongful, that the repudiation was wrongful and, indeed, as in that small percentage of cases in a tribunal, it may be that his reinstatement is ordered. I know that it does not happen often. It happens regularly in Italy, and that is why Mr Berlusconi is proposing that rights to reinstatement should be cut down and slashed. We do not have to bother with that here because employers scarcely ever get an order for reinstatement against them. It is the primary remedy in Britain that does not work.
If the measure means both misconduct that can lawfully give rise to dismissal and misconduct that cannot lawfully give rise to dismissal, it is peculiarly inapt. If, however, it means misconduct that can give rise lawfully to a dismissal, it is even more inapt because it is impossible to know what it means in the schedule, and it should be replaced by a term of art. It is supposed to be a term of art. I am sure the Minister will reply but he shakes his head. I say that "misconduct" here presumably is a term of art. If it is not meant to be a term of art, I do not know what it is meant to be at all. If it is meant to be a term of art, it is a badly constructed term of art and should be
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replaced by a proper legal category. This is had law. It will give rise to bad practice; it will give rise to confusion; it will give rise to uncertainty. Nobody knows what misconduct in Schedule 2 under the modified procedure Step 4 means.
The Government really should look at the terms that they use in the Bill, and if they want to put in new law as the basis of an imposed procedure, they must do so. After all, there are further dimensions to the uncertainty; I mention one of them.
The employer in unfair dismissal law does not need to prove in the ordinary case of unfair dismissal—and this is on a disciplinary procedure—that what he did is objectively justified. He needs to prove that objectively what he did was reasonable in the sense that it will fall within the band of reasonable responses of all sorts of different managers of the day. We should have moved an amendment scrapping that test, but we have not done so because we have been so modest in our amendments. It is a matter of straight law that the courts have said that what the Act means is that the employer must dismiss where a manager falling within the band of managers of the day might well have done so. I refer to good managers, bad managers and middle managers.
This extraordinary test, which has been much discussed in recent cases but has been revived in the Court of Appeal in the last two years, would mean that misconduct would be even less certain as we do not know at all what it means in terms of a particular set of facts. It is in the application of the legal concept to the set of facts that it should be replaced in Schedule 2. I beg to move.
5.45 p.m.
Lord Gladwin of Clee: I am no expert on law, but I would just remind my noble friend that the Minister talks about 600,000 workplaces that have no procedure at all. In my experience, many of them do not have any contract of' employment either. Therefore, the requirement of the Bill that calls for a contract which sets out the rules for an employee does not exist. For there is no assumption of what misconduct is.
In the sophisticated places where they have a fairly lengthy process and procedure for dealing with discipline, dismissal and, on the other hand, grievance procedures, there is usually a paragraph or a page which describes conduct and misconduct.
I believe that to use the word "misconduct" here is unwise. I do not quite understand why we talk about conduct in the standard procedure. Paragraph one states:
"The employer must set out in writing the employee's alleged conduct or characteristics, or other circumstances, which lead him to contemplate dismissing or taking disciplinary action against the employee".
That is fair enough, but the modified procedure states:
"The employer must set out in writing the employee's alleged misconduct."

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That leads us into all kinds of highways and byways which, if the procedure is set out on the face of the Bill, will cause problems. I consider either the amendment proposed by my noble friend or the phrase used in the standard procedure to be far better than the use of the word "misconduct", which means different things to different people.
Lord Falconer of Thoroton: With the greatest respect to my noble friends, this matter is much simpler than has been suggested. The modified procedure deals with cases of instant dismissal for misconduct. Regulations will make that clear or will specify it. Therefore, Step I requires the employer to describe the misconduct which has already led to the dismissal. It does not make assumptions about whether the misconduct is a breach of contract or a fundamental breach of contract. That is for other people to decide if it becomes an issue. It is not a term of art; it simply says that the employer must set out in writing the employee's alleged—it is what the employer alleges—misconduct that led to his or her dismissal. It is as simple as that.
One may disagree with the Government about whether it is right that there should be this modified procedure. However, one matter that is critical is that it should be clear and simple with regard to what is required. I do not believe for one moment that replacing the word "misconduct" with the words "fundamental breach of his obligations" makes it clearer. I believe that it makes it much less clear and much more legalistic. I do not accept that the word "misconduct", which is not a term of art, causes difficulty in terms of comprehension.
My noble friend treated us to an incredibly impressive run-through of the cases on the issue of what constitutes gross misconduct when gross misconduct has been accepted by the courts as the test for what equals a breach of conduct justifying dismissal. That is what the cases were to which he referred. That is what the Lou Macari line was dealing with. At least, that is how I understood them.
My proposition—it is very simple—is that Step 1 should describe what is in the letter following instant dismissal; that is, the employer should explain the conduct which led to the dismissal. That is clear, straightforward and simple. The legal consequences of that can be dealt with elsewhere.
Lord Wedderburn of Charlton: I am grateful to the Minister for giving way. I interject with great respect only to correct him. The cases concerned do not relate to "gross misconduct". I imagine that that involves the civil law. The cases concerned relate to what is meant by "misconduct". The words "gross misconduct" do not appear in these judgments. The words "gross misconduct" may appear somewhere, but none of the decisions to which I have referred have anything to do with gross misconduct. They do not define the concept of "gross misconduct". The Minister really must not misrepresent those cases. They define the approach that is to be taken to a fundamental breach of contract
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which makes dismissal, or, to be more exact, which makes the employer's treatment of the breach a repudiation of the contract, lawful. The category of gross misconduct is not used. However, let us not worry about that. I interject merely to correct the Minister. I have other points to make but he has not finished yet.
Lord Falconer of Thoroton: I have finished.
Lord Davies of Coity: I share the view expressed by my noble friend Lord Gladwin of Clee when he talked about the enormous number of employees, running into millions, who have absolutely no safeguards, no internal agreements and no provisions to redress the circumstances with which they may be faced as a result of being dismissed.
The emphasis that has been placed on the amendment is the interpretation of "misconduct"; alternative words have been suggested to be used in place of that word. My understanding of the Minister's account—let us see whether I have got this right—is that the emphasis is not so much on that word in legalistic terms. Adverse action by the employer as a result of a misdemeanour or whatever could be involved; the word is there, but the essential element in this regard is not to place an employee in further difficulty but to ensure that an employer not only has to fire somebody but has to explain to him why he is doing so and to give that employee the opportunity of redress within his company.
As I see it, that may lead to two things—I hope that the Minister will correct me if I am wrong. If some employers have a knee-jerk reaction to conduct by an employee, they will dismiss. But if they know they have to justify it in that way, they will think twice before dismissing. If they have to provide an appeals procedure, that will again perhaps deter them from turning to dismissal.
That means that an obligation is placed on the employer to be much more responsible than many of them currently are. That is where I see the advantage in this regard. I turn to what the word means in legalistic terms and whether my noble friend Lord Wedderburn sees that as a disadvantage. If an internal procedure is involved, that does not necessarily impact on the legal requirements that are taken account of in industrial tribunals, to which in some cases this will lead. Of course, if it leads to an industrial tribunal case, the employer will have to demonstrate that he has gone through this exercise to get over the first hurdle. If he has failed in this regard, he will lose his case straight away.
Lord McCarthy: Will the noble and learned Lord admit that the more we discuss the detailed contents of the modified procedure, the more dubious its advantages look? I do not believe that the Government have yet explained clearly to us why we need the modified procedures at all. All the problems that have been discussed, as the noble Lord, Lord Gladwin, said, would be dealt with more easily if one had access to the standard procedure.

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The Government have now come out with the argument that the issue is not about people leaving a firm in that sense. As the Minister said in another place, it involves a combination, as I understand it, of alleged gross misconduct with a gravity and an immediacy that justifies instant dismissal. Gross misconduct to such a point where instant dismissal is discovered justifies a shortened procedure. That seems amazingly illogical to me, but never mind. The Government have not thought through why they need a modified procedure and why they now need it to deal with gross misconduct requiring instant dismissal.
In tribunals and in the legislation dealing with rights at work and unfair dismissal, a distinction is made by the tribunals between conduct and capacity. You can have a fair dismissal if your conduct is in some way wrong or lacking in what the employer is entitled to demand and you can have a fair dismissal if your capacity fails or was not adequate. Do the Government consider that this modified procedure applies to gross failures in conduct and capacity?
I give an example. Suppose—this is often the case—a worker is suddenly unable to perform in a way that he was supposed to perform and had performed in the past because of some illness or some incapacity, and the employer says, "You can no longer do the job. I am dismissing you on grounds of incapacity". Can you use the modified procedure for that, or does it involve just conduct and not capacity? If so, for goodness sake why?
Lord Falconer of Thoroton: In relation to the points made by the noble Lord, I will resist the temptation to set out my argument because he mischaracterised my argument in a number of respects. So far as the circumstances to which the modified procedure would apply, as I indicated in an earlier submission, it involves gross misconduct and instant dismissal.
6 p.m.
Lord Wedderburn of Charlton: I am grateful to my noble and learned friend but I am very sorry that he will not meet head-on my noble friend's points. We will read Hansard with interest but I do not think that he covered them.
I want to comment very briefly on four matters before I withdraw the amendment because it has been so stoutly and—I say this with great respect—stubbornly rejected by the Government. I have been looking, because I happen to have them here, at the judgments that I mentioned, but I cannot find the relevant judgment. If I am wrong in that I will write to the Minister.
Secondly, I know that I am a lawyer—I have that in common with my noble and learned friend, and we suffer the disadvantages that people refer to us in these rather unfavourable terms; people use words such as "legalistic". I would remind Members of the Committee that they are making law; they are not just drawing up some vague document. To say that one should not approach that in terms that they refer to as
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"legalistic" but which I should prefer to call "adequately legal" is a lack of responsibility towards Parliament. We need to know what the law means.
I have not injected this before, and the Minister will be able to refer to it in relation to subsequent amendments. However, to save time I will mention it now. The Government are inviting us to leave the Bill in a situation in which the courts will have to use the new principle—it is new to me but it happened a long time ago—raised in the case of Pepper v Hart. That is to say, where the courts cannot understand the law in a statute they are able to look at parliamentary debates. That used to be improper but the House of Lords in its wisdom decided that there were cases in which that could be done.
The Minister in another place kept saying, "It is all right, you will understand what this means not only because of regulations but because of what I say it means". The courts can only do that if they adopt the rare practice of going behind the Act and referring to parliamentary debates. Is it really the desire of the Government that these uncertainties should be left so that the courts have to decide by reference to parliamentary debates? I suspect that my noble and learned friend will say no to that. I suspect that because of what he said in his opening remarks—I hope that I will represent him fairly. He said, on this amendment and in regard to the notion of misconduct—my noble friend Lord Gladwin said that that could well involve conduct, but his point has not been answered—that regulations would make the position clearer.
Lord Falconer of Thoroton: Not in defining "misconduct".
Lord Wedderburn of Charlton: Not in defining "misconduct". Therefore, regulations will not tell us what "misconduct" means, but somehow they will make the general position clearer.
Lord Falconer of Thoroton: They will set what the procedures apply to—but it will not define "misconduct".
Lord Wedderburn of Charlton: They will not define "misconduct", but will tell us what the procedure will mean in its application. The procedure says:
"The employer must set out in writing the employee's alleged misconduct which has led to the dismissal".
That will not tell us anything about misconduct. I do not really understand. However, I shall understand when I see the regulations; so will the employers; so will the trades unions; and so will the employees, who are all agog to know what their new rights and obligations will be under this Bill when it is passed. However, they will not know—they will be told what the procedure means when the regulations appear. And they still will not know what is meant by "misconduct" because, as my noble friend Lord McCarthy has said, it is not at all clear that it includes lawful dismissals and unlawful dismissals. However, I understood the Minister rather differently from my noble friend. I understood the Minister to say that

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lawful dismissals and unlawful dismissals were included in this procedure. That makes the situation even worse.
There really is no case for these modified procedures. They are confusing, although the noble and learned Lord said that it was important to keep the them simple. That was his basis. So, in order to cure the confusion we must introduce another simple confusion. Simple confusions do not cure other confusions; they make them worse.
I do not say that my form of words is correct; I simply took the words from the judgments. I believed that the judges might know something about the law on this and so I thought I should do that. If the Minister does not like "fundamental breach of his obligations", which he read out in a somewhat harsh manner, perhaps he has a better phrase. But "misconduct" will not do. We are making law, and here we are making confusing and uncertain law, and we are thrusting it into the contract of employment by Parliament's diktat.
It is not good enough. However, we are in a Grand Committee and there is no point in pursuing the matter. We shall certainly come back to modified procedures at the Report stage and I hope that the review of Schedule 2 will lead the government to be more flexible. Labour markets, we are told, must be flexible, and we would add to that that governments must be flexible. They must look at Schedule 2 again and come back with something better. I give way to my noble friend.
Lord Gladwin of Clee: My noble friend is right in saying that the Minister did not answer my question. I always thought it was dangerous to have two different words that meant the same thing in legislation, because judges will say that Parliament used two different descriptions and therefore there must be two different meanings.
My understanding is that the standard procedure provides for an employer to take action against an employee for alleged conduct, but the modified procedure talks about alleged "misconduct". I really do not understand why the Government want to use two different descriptions.
Lord Falconer of Thoroton: I apologise to my noble friend if I have not specifically replied to his question. I will try to make it clear. The modified procedure will by regulations be applied in respect of cases where the dismissal has already occurred and therefore it is instant or near instant. It will therefore be applied to a case where the employer, rightly or wrongly, alleges that the employee has been guilty of conduct which justifies dismissal.
He may or may not be right in relation to it, but he has to set out in his letter what the misconduct was. It must be misconduct in order for the employer to have dismissed him. That is why, the dismissal having already occurred, in the modified procedure we use the word "misconduct", whereas in the earlier, unmodified procedure, we use the word "conduct".
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The conduct can be examined and it might all turn out to be nothing at all. The employer might say, "Nothing has gone wrong, you stay employed".
However, by the time one gets to the modified procedure, the employee has already been instantly, or near instantly, dismissed. That is why we use the word "misconduct". We believe it is simple and it is right to use a clear word like "misconduct" rather than "alleged fundamental breach of contract", which is what my noble friend Lord Wedderburn suggests. That is why we have used two different words. I hope that is comprehensible.
Baroness Turner of Camden: Before my noble and learned friend sits down, a matter has occurred to me because for many years I was a member of a social security tribunal. One of the problems was that we often received allegations that an individual had been dismissed for misconduct. That automatically meant that he—it was usually he—was liable to lose benefit. I used to insist that the person who alleged the misconduct should come along and justify it. If it was not justified, the case had not been proved and the individual had benefit restored.
The point I make is that the use of the term "misconduct" becomes important as far as the employee is concerned in a social security environment. Therefore, if it is not appropriate here, that has severe implications for an individual facing that kind of allegation. He may find himself losing benefit and then he may well be severely disadvantaged as a result of that.
Lord Falconer of Thoroton: That is why the statutory procedure uses the words "alleged misconduct".
Lord McCarthy: None of this explains why under the modified procedure the employer does not have to explain what he has done; does not have to defend what he has done; and does not need to have a meeting with the employee in order to tell him what he intends to do before he does it. That is to take one slice away from the employee. If it is a dismissal or a disciplinary case, he can say that he wants to appeal. But what does he appeal against? He appeals against the unilateral act of his employer, which has not been discussed or explained, has been done instantly and carries the penalty of instant dismissal. What is it about that difficult circumstance from the point of view of the worker which justifies shortening the standard procedure?
Lord Wedderburn of Charlton: I have been puzzling over my note of what I believe my noble and learned friend said. It seems that Step 4, which is the modified procedure on discipline, really means that the employer must set out in writing the employee's misconduct which the employer alleges is justification for a lawful dismissal. I am informed that that is wrong. He does not have to allege misconduct which makes his dismissal lawful. The employer can allege any old misconduct. I thought the Minister said that he had to allege misconduct that would ordinarily justify dismissal. If I am wrong in that, I am surprised.

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There is a second point which led to the summary dismissal. We have been using the phrase "instant dismissal", which is not normally a term of art. As I understand it, it applies to cases of summary dismissal and it does not apply to dismissals on notice. Therefore, the modified procedure should have written into it
"the employee's alleged misconduct"—
it seems uncertain what that means, or at least I am uncertain about it—
"which has led to the summary dismissal of the employee".
If that is so, the Government had better put it in. At least we make progress if that is so and we know what "dismissal" means. It does not just mean any old dismissal. It does not include a dismissal on notice; it includes only summary dismissals. That is a funny old draft that we have in front of us.
I intend, of course, to beg leave to withdraw the amendment but I shall not do so before my noble and learned friend replies. It seems he does not wish to do so. We must leave the matter there. This is eminently a case that we should come back to on Report. We cannot possibly leave the Bill like this, whatever regulations we shall get and whatever appeals to Pepper v Hart the Government will make. The idea that this will only involve the employment tribunal is, of course, absurd. This point will involve the employment appeal tribunal, the Court of Appeal, House of Lords and your Lordships' Judicial Committee. If the Government wanted to provide fees for my brethren whose practice grows in this area, they could not have done a better job. But I cannot believe that could possibly he their objective. They must look at Schedule 2 again and they must do something better than is at present in the modified procedure. Preferably, they should delete it or, if they cannot do that, they should make it clear. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.15 p.m.
Lord Wedderburn of Charltonmoved Amendment No. 109:
Page 64, line 33, after "which" insert "on the facts known to the employer at the time"
The noble Lord said: We can deal with this very quickly. It is a legal point and it is a legal point that arises very fairly, in my submission, in relation to the problems of the modified procedure. As a matter of fact, I am rather surprised that we did not table this amendment in relation to both the standard and the modified arrangements; but we have not. I am trying to find common ground in this regard. I take it to be common ground that what it means is that the employer must set out what he alleges are the incidents of misconduct that led him to dismiss—summarily dismiss, I think.
The law got itself into a sort of schizophrenic mess in this area because, this being a matter of breach of contract and of unfair dismissal, the jurisdictions of the common law courts—in the High Court and the Court of Appeal and so on—on what amounts to a
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proper dismissal in the face of misconduct, the decisions in the employment tribunals and, as it turned out, the employment appeal tribunal, Court of Appeal and House of Lords in regard to unfair dismissal of course diverged. In the former—in the High Court and the common law tests of breach of contract—since the case of Boston Deep Sea Fishing Company v Ansell in 1888 (39 Ch D 339), it was held that an employer who dismissed in ignorance of certain facts and on grounds that were not adequate to justify the dismissal, could, when he learned subsequently of other facts about the misconduct of the employee—to put it broadly—add those subsequently acquired facts to the dismissal and justify it retrospectively.
When they came to look at the law on unfair dismissal, the courts and, ultimately, the Judicial Committee of your Lordships' House decided that that common law rule really could not apply to the new law on unfair dismissal. In Devis v Atkins in 1977 (IRLR 314), the House of Lords decided that the common law principle of adding subsequent knowledge to the dismissal that had taken place before could not apply. I refer to the noble and learned Lord, Lord Simon of Glaisdale, for once, who very pithily said that the reasonableness of the employer's action could not be justified by facts subsequently acquired. Of course, there could be argument if this rule in the modified procedure applies to justifiable dismissal for misconduct, as to which of the rules applies. It could be that my noble and learned friend will say that, because this is going to be concerned primarily with unfair dismissal, the unfair dismissal precedents will apply. But I remind him that that is not concerned only with unfair dismissal; since they have put these modified procedures and the obligation to observe them into the contract of employment the employee—and, indeed, the employer—will have actions in the county court or the High Court for breach of contract under Clause 30. They will do so—I will say more about this later—because they have chosen to use (I do not criticise them for this) the mechanism of a statutorily implied term in the contract of employment by Clause 30. That was their choice and they must live with it. That could be a breach of contract that could be sued upon in the ordinary courts, and we do need to know whether the old common law test or the new unfair dismissal test, about the facts known to the employer and their effect, will be relevant in this area of the law. I beg to move.
Lord Falconer of Thoroton: The wording is clear. The employer must set out in writing the employee's alleged misconduct which has led to the dismissal. He obviously cannot write on the basis of facts that he does not know, or facts which may emerge in the future, because facts which he does not know, or facts which may emerge in the future, could not have led to the dismissal. It is as simple as that. It is confusing to bring in Boston Deep Sea Fishing and the unfair dismissal issues, which simply obscure a totally clear statutory provision.
Lord Wedderburn of Charlton: We can deal with this very quickly. I am amazed—indeed, stupefied—at the

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reply of my noble and learned friend. The misconduct paragraph does not require that he gives only the reasons that were in his mind at the second of dismissal. Suppose he dismisses on totally impossible grounds now, and then whenever this session ends in Grand Committee, goes outside and is about to write but somebody says, "You know that employee has had his hand in the till, don't you?". "No, I didn't know that. My goodness me, I'll add that".
What rule are we to apply? At the moment of dismissal—that is, the moment of statement of dismissal, which I take it this means; it means summary of dismissal, which takes effect when the dismissal is pronounced—he pronounces dismissal but does not know anything. That is monstrous. But then he may be told something that undoubtedly justifies an instant dismissal, subsequent to the moment of dismissal. He then has to set that out in writing. In real life, these things are not necessarily divided by a long time. There have been cases in which the employer discovered facts very quickly after the actual dismissal. I am very sorry I do not have them to sight, but I am sure my noble and learned friend will accept from me that there have been such cases. It is just not good enough to say, "Oh, it will never arise". Of course it could arise. He dismisses summarily and then he learns facts that could justify the dismissal. Then he sets down to doing what he has to do here and sets out in writing the employee's alleged misconduct, and he puts the subsequently acquired reasons in.
Lord Falconer of Thoroton: Which has led to the dismissal.
Lord Wedderburn of Charlton: Oh, which has led to the dismissal. The employee is being dismissed; he has not communicated it yet. He is now in the position of having to say what was in his mind, so the test is subjective. He has to say what state of mind he was in at the moment he first pronounced it. If that is so, I am very glad the Government think that they have incorporated the rule in Devis v Atkins and not the rule in Boston Deep Sea Fishing v Ansell. I am not sure a court would necessarily find that that is so, but we can reflect upon it before Report stage. I am sure that my noble and learned friend will wish to do so. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 110 to 117 not moved.]
Lord Wedderburn of Charltonmoved Amendment No. 118:
Page 65, line 32, after "send" insert "it or".
The noble Lord said: This amendment concerns purely wording but also a little substance. I hope that the Minister can accept it because the procedures state, especially at page 65, line 32, that the employee must send a copy of his written grievance to the employer. That proceeds on the bureaucratic basis that employees necessarily make copies. I do not know whether that reflects real life. I should have thought that it would be sufficient for the employee to send the
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written grievance or a copy to the employer. I hope that we can set a precedent with this amendment and get the Government to accept at least the spirit of the way in which it is put before the Grand Committee. I beg to move.
Lord Falconer of Thoroton: I believe that that is a good point and one that we should consider. It would be ridiculous if, by sending the original, the employee somehow failed to comply with the procedure. Therefore, we need to look at that matter in all four of the procedures in Schedule 2 and shall return with it on Report or at an appropriate stage.
Lord Wedderburn of Charlton: I understand what my noble and learned friend says and, expressing my joy if not stupefication, I beg leave to withdraw the amendment in the hope that the Report stage will see it cured.
Amendment, by leave, withdrawn.
[Amendments Nos. 119 and 120 not moved.]
Lord Gladwin of Cleemoved Amendment No. 121:
Page 66, line 11, at end insert—
"Procedure: consideration by employees
At the time of the introduction of the procedure, the employer should—

(a) issue to all employees in draft form the actual procedure which is to apply to the establishment.

(b) provide the opportunity for comments to be made by employees within one month, and

(c) issue the substantive version of the procedure after consideration has been given to the points submitted.".

The noble Lord said: In moving Amendment No. 121, I shall speak also to Amendment No. 121A. As I said earlier, both today, on previous Committee days and at Second Reading, and to quote the Minister, 600,000 workplaces do not have any kind of procedure. The Minister suggests that that covers 6 million workers. He says that we are not intending to reduce the number of applications to tribunals by devious means, as some of my noble friends have suggested, but that we are trying to ensure that tribunals become the first port of call rather than attempts being made to settle disputes in the workplace.
The standard and modified procedures for dealing with dismissal and discipline and the two procedures for dealing with grievance will replace nothing. They become an implied term of contract. In my submission, there must be something between nothing and this. Therefore, we can turn to the bible—that is, the ACAS code. With regard to formulating policy it states:
"Management should therefore aim to secure the involvement of workers and where appropriate their representatives and all levels of management when formulating new or revising existing rules and procedures".
Therefore, they will be formulating new rules of procedure and they will be required to follow the procedures set out in Schedule 2.
In my experience, when work people become involved in a procedure, the procedure becomes far more effective. In addition, the standard procedure is

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itself fairly skeletal. One could not enter a workplace and say, "This is the process", because one would find that the employees would ask questions, such as, "If we have a grievance, who do we write to?", or "Can we have some understanding about how the process will work, not in an academic way, but in reality?" Therefore, our amendment seeks to fill that gap.
My noble and learned friend may not like that because it is not written in legalese. It is an attempt to say that when the implied term of the contract becomes operative, the employer has a duty to carry out this procedure; to issue a draft version of how it will to apply in his workplace; to provide an opportunity for his employees to comment on it; and then to issue a substantive version of the procedure after consideration has been given to the points raised. That is the kind of measure that ought to be on the face of the Bill. As I have repeatedly said, Part 2 of the Bill is skeletal and unfair. At least the proposal would provide a procedure.
Amendment No. 121A refers to Part 3, the general requirements. Members of the Committee will see that paragraph 13(3) states:
"In the case of appeal meetings which are not the first meeting, the employer should, as far as is reasonably practicable, be represented by a more senior manager than attended the first meting (unless the most senior manager attended that meeting)".
When one looks at the standard procedure, it is clear from Step 2(1) that:
"The meeting must take place before action is taken, except in the case where the disciplinary action consists of suspension".
Therefore, at that meeting, the employee has a statutory right to be accompanied. However, when it comes to Step 3, which relates to the appeal meeting, paragraph 13(3) in Part 3 of the schedule recommends that a more senior manager should be involved in the process.
The amendment simply mirrors that. We say that if the management exercises that opportunity and carries out what is recommended—that is, bringing in a more senior manager—the employee at the appeal meeting should have the opportunity of bringing in a more senior representative.
I can weir imagine circumstances where, at the first meeting—that is, the Step 2 meeting—either the shop steward in the locality if it is organised, or the shop steward from a neighbouring plant or office, or a representative, comes in and represents the worker. However, when it reaches the appeal stage, he, like the manager, may want to have someone more senior to assist him at the appeal meeting. I beg to move.
6.30 p.m.
Baroness Miller of Hendon: I believe that Amendment No. 121 is impractical. We know that most employers are small employers, or even medium-sized ones. They cannot be expected to go through all the consultation procedure, and that is why it is proposed in the Bill that there should be a uniform code of practice.
How often does the employer have to reinitiate the consultation? After the employer has, as required by the amendment, given consideration to the points
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submitted, there is no reason why the employer should act on them. In a sense, it makes the amendment meaningless.
In this particular case, the Government have laid down a clear and unambiguous set of rules. They have also set them out in the Act itself and have not buried them in some obscure regulations. It is nice to be able to say that at this stage because so much is in the regulations. The amendment will only lead to confusion and possible delay if the employer does not draft tailor-made amendments until a dispute actually arises.
Amendment No. 121A is unnecessary. On an appeal, the employer is directed by paragraph 13(3) to be accompanied if possible by a more senior manager than attended the original hearing. The employee is allowed to be accompanied by one, and only one, representative, and there is no restriction, except for the qualification imposed by the Act, on who that representative shall be. I shall have something to say about the qualifications of the employee's representatives when we deal with that in a later amendment.
This amendment suggests that, for some reason or other, the employer's more senior manager needs to be matched by an employee's more senior representative. It is rather like the schoolboy's challenge, "My dad is bigger than your dad". From a practical point of view, as the rule itself puts it, the fact is that most disputes will involve small and medium-sized employers who probably will not have the different layers of management to which the Bill refers.
Baroness Turner of Camden: As I understand it, my noble friend in tabling the amendment thought that it should not just be the matter of an employer issuing procedures as a form of edict, with instructions to contact Mr X or Miss Y as appropriate. The employers themselves would have been involved and, in the course of being involved, would know and understand the procedures as a result. This, as my noble friend Lord Gladwin has pointed out, is fully in line with the ACAS code, which stipulates that rules and procedures need to be accepted as reasonable, both by those who are covered by them and those who operate them. Management should therefore aim to secure the involvement of workers and, where appropriate, their representatives and all levels of management in formulating new or revised rules and procedures.
I hope, therefore, that the Minister will feel that he is able to give support at least to the ideas in this amendment, even if he may not like the exact wording.
Lord Wedderburn of Charlton: I would like to speak in support of Amendment No. 121. It may be that my noble and learned friend will say that it is unnecessary, because the employer is able to agree procedures, other than the basic procedures and the statutory procedures of Schedule 2, with representatives of his employees. But if that were said, in my submission, that would be wrong, because Amendment No. 121 goes just a little further, and most valuably further.

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It requires that the employer must, in a sense, consult with his employees. He must issue a draft—the Government know all about issuing drafts now—and receive comments back. I understand from what my noble friend said in moving the amendment that the substantive version then issued would be more like an agreed version.
That would be extraordinarily valuable and it is not covered by the Bill. Although the Bill allows for other procedures to be added to the statutory procedures—and we shall want to move amendments to the way it does it—it does not require the employer to try to obtain an agreed structure at his place of work with representatives of his employees.
That notion is not so very different from the spirit in which my noble friend Lord McCarthy moved the amendments relating to third-party intervention. It was that some confidence in the workers must surely be valuable in regard to the procedures which really hit them at their place of work. After all, at the moment they are just going to be told, "Parliament imposed this and here it is. This is what I tell you you are bound by".
But the proposal gives the workers at least a voice, although it does not actually say that their voice has to be agreed to. In fact, I would wish to move on Report that some duty of consultation more formally should be added. But at least this amendment gives workers a voice. I do not see how the Government could dislike the spirit of Amendment No. 121.
Lord McCarthy: I do not want to disagree with my colleagues but I am afraid I can forecast that the Government will. What this amendment does, almost incidentally, is to destroy the whole idea that what we have here is a procedure. The standard procedure and the modified procedure in both their forms—the four different forms—do not involve what anybody outside the Government would ever call a procedure, even of the most minimal kind, because it does not deal with any of those matters. Schedule 2 contains a series of suggestions as to how the employer should deal with complaints—complaints against his use of his disciplinary functions and complaints of discrimination or anything else that might end with the employer in a tribunal. The Government are saying that that is a way of dealing with the complaints. That does not involve a procedure; there is nothing set out that all workers can be given and told, "This is the way that things are going to happen". If you had a minimum procedure, you would have some kind of process; you would know who dealt with these things and where the authority structure lay in the organisation. You would know which people had the ability to sack and which people did not have the ability to sack. You would have some idea of what warnings people would get—I refer to the ACAS informal, formal and final warnings. Those are the matters that go into procedures and, of course, they cover everybody. They are supposed to be standardised across the board. None of these things
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occurs in the standard procedure. It is simply a kind of aide memoire to employers as to how to deal with complaints.
Lord Wedderburn of Charlton: Before my noble friend sits down, is he perhaps being rather hard on the amendment? As I understood it, I am not sure he has really taken on board the full import of the procedure. I understood the amendment to involve saying, -Here are the minimum procedures in the Act but I, the employer, would like them to operate here, at this place of work, in the following actual procedure. That is, if you are going to complain about a grievance, see Joe Soap; if you are going to appeal to a manager it will probably be John Robinson. You comment on this". Then the workers comment on that, and the employer considers it—I would rather that the duty were higher—and then he puts out the substantive version at his place of work. Perhaps I have got it wrong. My noble friend seemed to see behind all that to some way in which the arrangement could not possibly affect the statutory procedures. Perhaps I have go that wrong?
Lord McCarthy: No, I am saying that they would not grant it.
Lord Gladwin of Clee: We should not encourage my noble friend.
Lord Wedderburn of Charlton: No, I do not understand his objection.
Lord Falconer of Thoroton: I am not sure whether our debate has degenerated into a private conversation between my noble friends Lord McCarthy and Lord Wedderburn. We would like the benefit of whatever they are saying, as it were, to appear on the record.
I shall deal with the two amendments proposed by my noble friend Lord Gladwin. First, Amendment No. 121 is basically saying that at the time of the introduction of the procedure, the employer should consult with his workforce about procedures and the actual procedure. The difficulty that one has with that is, as my noble friend Lord McCarthy made clear, that whatever one's reservations about it. the purpose of the Bill is that that procedure is compulsory. It applies everywhere. The employer, for example, cannot seek to vary it downwards in any way at all. I doubt whether my noble friend intended that that was what his amendment would signal but there is a danger that it might have that effect. Because the nature of the procedure is that it is going to apply to everybody, I think it gives the wrong signal. It is not right to say, "Consult about that which is coming to everybody anyway."
There is another problem. If my noble friend intends a wider consultation—namely, "Let's talk about procedures generally"-the notion that would underlie the amendment would be that employers of all sizes would be legally obliged to consult their workforce on their procedures. As my noble friend knows, many employers operate very good procedures. We hope that many will adopt their own procedures following the Bill's implementation. In

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many cases, there will be such consultation. However, we believe that such consultations are best undertaken on a voluntary basis, without imposing a legal obligation to do so. The amendment would require employers of all sizes to consult—that would be very onerous and unnecessarily prescriptive. Also, by implying a particular form of consultation, it might also cut across existing consultative arrangements. For example—I am sure this is not the intention of my noble friend—it might cut across the existing role of recognised unions in discussing internal procedures.
As my noble friend will know, the EC Directive on Information and Consultation has recently been adopted and creates a general framework for informing and consulting employees about a range of issues affecting them. We will be undertaking a wide consultation on how best to implement the directive in a way that fully reflects our industrial relations practices and traditions. It would create confusion if we were to introduce further obligations to consult within the Bill before our work on implementing the new directive was completed.
I hope that, in the light of that explanation, my noble friend will feel able to withdraw Amendment No. 121.
On Amendment No. 121A, the basic point underlying it is that, if the employer is allowed a more senior manager, the employee should be allowed one, too, in terms of who accompanies him. The position is that he is. I shall briefly explain the situation.
As noble Lords will be aware, workers have a right to be accompanied by a fellow worker or a trade union official during disciplinary and grievance hearings. Under that right, the companion can be any work colleague or a union official, where an official has to he certified in writing by his or her union as competent to act as a companion if the official is not employed by the union, or if the person to be accompanied is not a fellow worker.
There are no restrictions on the seniority of the accompanying person—they can be senior, the same grade, or even junior. So long as they are a work colleague or have fulfilled the criteria to be a companion, their seniority is not an issue and we certainly do not want it to become one. The most important issue is that they are the right person.
It is for the worker to decide who should accompany him but he, of course, cannot insist that the person he wants will accept the task, or that a union must accept his choice of official. If the person is to be a union official, it is, therefore, left to the discretion of the union and worker to decide which official would be the most appropriate. Probably, the union will be happy for the worker to be accompanied by the official of his choice, whether senior or not, but if there was any disagreement on the matter, that would have to be worked out between them.
The amendment appears to give the option of allowing a senior representative but, as I have just indicated, this option is already available to a worker. If it has been determined that the appropriate person to accompany the employee is senior, so be it.
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Therefore, I do not believe the amendment is necessary, because the right is already there as far as the employee is concerned.
I want to make one further point on the side. Paragraph 13(3), to which my noble friend referred in moving his amendment, is about a more senior manager dealing with the issue at a second stage. That was there for the employee's benefit, to ensure that the same manager who has initiated the action is not dealing with the appeal, except that there is only one layer of management. That does not detract from anything that I have said, but it may be that one is looking at it as a right for the employer to go up one level, whereas our intention was to provide a protection for the employee. It does not detract one bit from what I have said about the employee being entitled to a more senior companion or representative at the next layer up. We should regard the matter in that context.
6.45 p.m.
Lord Gladwin of Clee: I am grateful to my noble and learned friend. I shall study Hansard with great care in relation to Amendment No. 121A.
So far as Amendment No. 121 is concerned, I should understand it if the Minister said the amendment was inoperable and did not work; he would not say that it was rubbish but he might say that it was not proper to go into a piece of legislation. However—I say this with due humility—we should be missing a trick if my point is not taken. We need to consider the effect of going from nothing to this for many workplaces. The Minister talked about the corner shop. I am not really thinking about the corner shop; I am thinking about the IT company which may have a contract of employment but that is all. People will ask the employer questions. I understand that that is now our statutory procedure, as it is called. It is not one that I would sign but it is called a "procedure".
But to whom do we write and what is the process? Can it be expanded? I should have thought that, one way or another, when the contract of employment is changed—as I understand it, this is art implied term in everyone's contract of employment—employers will want to know the answer. They will say, "Give me some guidance about how I am going to apply it in my workplace". As I hope we all know, a procedure which has the understanding, and hopefully the support, of the people in the workplace has a much greater chance of being effective than if it is simply introduced as an implied term of contract as the Government have done. There must be some kind of understanding. I beg leave to withdraw Amendment No. 121, but the department should give some thought as to how it will bridge that gap.
Amendment, by leave, withdrawn.
[Amendment No. 121A not moved.]
Lord Wedderburn of Charltonmoved Amendment No. 122:
Page 66, line 19, at end insert—
"( ) In this Schedule, a meeting shall constitute a hearing within the meaning of section I0 of the Employment Relations Act 1999 (c. 26) (right to be accompanied).".
The noble Lord said: I can move this amendment in a very short compass or a medium compass—I would not dream of having a long compass. If the Minister indicates to me that the Government are prepared to accept the amendment, subject to wording, I can be very brief. He does not do so. Perhaps I may explain why we have tabled the amendment.
Lord Falconer of Thoroton: Perhaps I can be of some assistance. We have agreed to give further consideration to the case to incorporate into the statutory procedures some reference to the right to be accompanied. If we go down that path, I shall bear in mind whether we can simultaneously tackle the technical point raised by my noble friend in the amendment. On the basis of that, I earnestly suggest to my noble friend that he takes his short route. If it is too short, he can obviously return, as he has done boldly throughout the course of our debates, when he has heard my full reply.
Lord Wedderburn of Charlton: I am very grateful to my noble and learned friend. At least it allows me to approach the amendment on the basis of it being medium-rare. I must explain what we want so that the Government can consider it and decide whether it is what they want.
We want Section 10 of the Employment Relations Act 1999, and therefore Section 11 with it, to apply to what are called "meetings" in Schedule 2. If that were the case, the worker would have a statutory right to be accompanied by the union official of his choice at what are now called these "meetings". We have not tried to alter the words in the schedule, although logically I hope that the Government will do so.
In another place the Minister insisted that the word "meeting" in the schedule was the same as "hearing". I have always had a problem with that because the word "meeting" does not happen to be the same as the word "hearing". When he was asked why that was so, with the greatest respect I could not find any other reason than the Minister saying, "Because I say so". He wanted the words to be the same in law. Of course, courts have a habit of seeing the use of two different words and saying, "Perhaps you mean something different".
Therefore, we considered that the best way to represent what the Minister in another place stated that he wanted—namely, that workers should have the right to be accompanied within the compass of Section 10; I insist that we are not moving an extension or change to Section 10—was to say that the Section 10 right should apply to those meetings on the basis that they cannot constitute hearings within the meaning of the section.
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I believe that my explanation is short enough—and medium enough—for the Minister to tell me whether I am wrong on any point. I hope that that is the way in which the Government will consider the matter. I beg to move.
Lord Falconer of Thoroton: The way my noble friend put it is very helpful. We both wish the right to apply to meetings held under the statutory procedures in exactly the same way as it applies now to similar encounters under existing disciplinary and grievance procedures. That is our aim. We both have the same aim. The issue is whether the drafting of the schedule as it stands prevents or threatens the achievement of this objective.
My noble friend and others, as he has just expressed, have concerns about the wording used in the statutory procedures. As he has made clear, he thinks that the use of the word "meeting" in the statutory procedures may unintentionally limit the right for employees to be accompanied at such meetings. He points out quite rightly that the sections of the Employment Relations Act 1999 which provide for the right to be accompanied use the word "hearing" and not the word "meeting".
The question is whether the use of these different words creates a real difficulty. Our legal advice is that there is no problem. The context in which the two terms are used is clearly the same here. Both pieces of legislation deal with disciplinary and grievance procedures. We are advised that the two words in this context are synonymous. A hearing cannot be interpreted as a higher level of encounter than a meeting. There is no genuine danger that the tribunals or the courts will place other interpretations on the schedule.
My noble friend might argue that his amendment should be seen as a guarantee against mishaps or perverse judgments. What is the drawback, he might say—and indeed has said—of making the point explicit in the statutory procedures to remove all doubt?
There are drawbacks. His amendment would lengthen the procedures and make them more complicated for the non-lawyer to understand. As it happens, the procedures currently make no reference to any statute. Every word can be readily understood without consulting a dictionary or asking a lawyer's advice. If we accepted this amendment, this accessibility would be diminished. Some employers or employees would feel obliged to seek professional guidance as a result. Costs could be incurred; time could be lost.
Also, the amendment would ensure that the right to be accompanied would apply to every meeting under the statutory procedures. Section 13(5) of the Employment Relations Act 1999 in fact qualifies the circumstances under which the right applies in relation to grievance hearings. It makes it clear that the right does not apply to such hearings where no breach of a duty by the employer to the employee is involved. My noble friend's amendment makes no reference to this section. It would therefore mean that the right would apply to meetings under the statutory procedure for

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grievances where minor matters are under discussion that involve no breach of duty by the employer. I freely admit that meetings about such minor matters would probably be rare. However, they can occur. The noble Lord's amendment therefore inadvertently changes the law on the right to be accompanied. This is not something that we wish to accept.
With these thoughts in mind, we cannot accept this amendment. However, the Government have agreed to give further consideration to the case to incorporate into the statutory procedures some reference to the right to be accompanied. If we go down that path, I will bear in mind whether we can simultaneously tackle the technical point raised by my noble friend in this amendment. I have absolutely no doubt that we are both trying to reach precisely the same destination.
Lord Wedderburn of Charlton: I am very grateful to my noble and learned friend for what he said, but partly because it does exhibit the misguided way in which, in some respects, the Government are approaching this. First of all, I am not concerned primarily with non-lawyers. I say with the greatest respect to the lay members of the employment appeal tribunal that in this respect they count as lawyers. I am concerned with courts and I am concerned with what the schedule means in law. As it stands, it does not obviously, implicitly, incorporate Section 10. As it stands in the Bill, it manifestly does not. Someone will be instructed, and properly instructed, on a high fee to argue that the Act does not contain a right to be accompanied. I wonder whether my noble and learned friend would guarantee that he would not win. It will be touch and go whether the court would be bold enough to write words into the statute to provide for a right to be accompanied.
With the greatest respect, our amendment does not need to refer to Section 13. I do not know where my noble and learned friend had that idea from. It refers to Section 10, which incorporates Sections 12 and 13. There is no problem about that in statutory interpretation. Section 13 is an interpretation section for Section 10. My noble and learned friend would have been quick to take that point against me had I mentioned Section 13. One cannot win sometimes with this sort of voice.
It says that Section 10 will be read such that a meeting in this schedule constitutes a hearing. My noble and learned friend says, "Aha!"—Members of the Committee will understand that I had many years of dealing with difficult students—"you have missed Section 13(5) which limits a grievance hearing to one that does not concern the performance of a duty by an employer in relation to the worker". I assure the Minister I have not missed Section 13(5) at all.
Lord Falconer of Thoroton: Sorry!
Lord Wedderburn of Charlton: The Minister is absolutely right to take the point. He must take any point that he feels he is capable of taking. However, it raises another question. We understand that grievance meetings in Schedule 2 will mean something different from what is contained in Section 13, do we? Is the
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Minister telling me that regulations will make it clear—it is not at the moment—that grievance meetings will be wider than grievance hearings under Section 13? Is that the point? Perhaps I have misunderstood. I come to this just reading the sections in the Bill.
That raises an entirely new point which, I was about to say, was not discussed in another place. With the greatest respect to another place, scarcely anything was discussed in another place. It raises the issue of whether the Government will extend the right to be accompanied to cases of grievance meetings that are not grievance hearings within Section 13.
The noble and learned Lord will not know and other Members of the Committee may not know that the right to be accompanied has been treated with the greatest concern by all trade unions, by the TUC and by many employers. As my noble friend Lord Gladwin of Clee said about the procedures, what really matters is what happens on the day at the actual place of work. People want to know whether they can take a union official with them. Their job and their rights are at stake.
There are very few concrete examples given by the Government. That is what I do not like about their case. It is all formulae. Let us take a case of a worker who says, "You have unfairly excluded me from the overtime list."— overtime matters a lot these days—"You are not giving me any overtime. That's my grievance, and I want to be accompanied by a union official.".
In the light of what my noble and learned friend has said, the first reply is, "Ah, that is not caught by Section 13(5) because I do not have a duty in regard to overtime in respect of you.". On the other hand, I would remind my noble and learned friend that as long ago as 1972 in the Langston case—it is rare that I cite the National Industrial Relations Court—the noble and learned Lord, Lord Donaldson, or Sir John Donaldson as he then was, averted that there was a duty to act fairly on overtime.
Are we dealing with a grievance meeting or healing to which the worker can take his union representative? It matters an awful lot to him whether he can or not. We really ought to clear this up and if my noble and learned friend is saying that the Government want to put aside Section 13(5) for grievance meetings, then they certainly have to include that in the Bill. Surely they do not want more legislation changed by regulation, so the Minister had better clear that up when he is considering the matter again.
I appreciate the crumbs that I have been offered and I willingly take them in the sense that we want the same thing—although I am not sure we do want the same thing now! I do not know about grievance hearings. My noble and learned friend Lord Falconer of Thoroton clutches his head. He says we want the same thing and then he says that grievance meetings may or may not include grievance hearings which are excluded by Section 13(5). I do not know where I am with that.

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I moved a very modest amendment; simply, that Section 10 should apply to hearings as it applies to meetings, and to meetings as it applies to hearings. If the Government want to go further than that in their reconsideration, let them do so. I believe the best thing for me to do is to leave the Committee and the Government with the amendment. It is perhaps most fundamental—
Lord Gladwin of Clee: I intervene before my noble friend Lord Wedderburn of Charlton withdraws the amendment. I am confused. My understanding was that the meeting referred to in Chapter 1, paragraph 3(4) and (5), in paragraph 5(4) and in paragraph 7(3) and paragraph 8(4) —indeed all references to "meeting"—
Lord McCarthy: Meeting—
Lord Gladwin of Clee: No, let me try and get around my own confusion. Am I correct in my understanding that in respect of everything that could result in the employee being disciplined or dismissed—which can happen with a grievance—he has the right to be accompanied? If the answer is yes, at every reference to "the appeal meeting", he is entitled under the Bill to be accompanied, whether by a junior or senior representative.
Lord Falconer of Thoroton: The answer is yes.
Lord Gladwin of Clee: Thank you very much.
Lord Wedderburn of Charlton: My noble and learned friend says, "Yes". Therefore, if he is not to be subject to dismissal, there will not be a right of accompaniment. Have I misunderstood my noble and learned friend? He does not want to continue this debate at the present stage. I give way to my noble friend.
Lord McCarthy: I am not quite certain how a dismissal arises out of a grievance. Let us suppose that the employee has a grievance and is being discriminated against, or is being abused, or he is not getting the right pay, or whatever. How does it come about that he gets dismissed, let alone instantly dismissed?
Lord Wedderburn of Charlton: My noble friend Lord McCarthy asks a good question. It is not for me to answer that. My noble and learned friend Lord Falconer of Thoroton said, "Yes", but we will read Hansard. Our intention was to take the law as it is on the right to accompaniment, and say, "That applies to all the meetings in Schedule 2, just as it applies to all the hearings in Sections 10 to 13", as my noble and learned friend would prefer. Perhaps we should have excluded Section 13(5), I do not know. We will look at that again. We will both have to look at what is taking place.
My noble and learned friend will also have to take away this issue—and I have to admit this arises from what he said, not from what I thought of previously—
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that perhaps the Government will have to define more clearly what they mean by "grievance procedures" in the Bill because that has come out of our discussion.
Discussion is always useful; new points arise unexpectedly to both sides. The best thing we can do is see what the Government want to do. I hope that they will give us good notice of it because there are many people to be consulted on both sides about it. Given that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 123 not moved.]
Lord Wedderburn of Charltonmoved Amendment No. 124:
Page 66, line 19, at end insert—
"Interpretation and Miscellaneous
(1) A communication set out in writing includes those items specified in Schedule Ito the Interpretation Act 1978 (c. 30) and in section 15 of the Electronic Communications Act 2000 (c. 7).
(2) Where a party expressly states that he has sent a copy of a communication to another party it shall be presumed that he has done so.
(3) In the interpretation of this Schedule, any relevant code of practice published by the Advisory, Conciliation and Arbitration Service shall be taken into account."
The noble Lord said: If I may just recover from the excitement of the previous discussion!
We do not like Schedule 2 but we do not want to leave it as uncertain as it is, so we thought we would try and help the Government by clearing up some of the definition problems. We address three points in this amendment. First, in several places in Schedule 2, things have to be done "in writing". The definition that I could find—there may be a more modern one but the definition of what is "in writing"—is in Schedule 1 of the Interpretation Act 1978. That includes,
"typing, printing, lithography, photography and other modes of representing or reproducing words in a visible form".
That seemed to leave out e-mail. I could not find any authority on e-mail. If the noble and learned Lord has it, we shall all be instructed. We thought that the definition must be extended to include electronic communication. A large number of workers have access to e-mail, even if they do not have it in the House and, of course, most employers these days—in a year or two, by the time this legislation comes into effect—will have access to electronic communication if they do not have it already. So we tried to find—or rather, I have to admit, I tried to find—a definition that would apply to electronic communications. With the limited resources at my disposal, I only found Section 15 of the Electronic Communications Act 2000. That defines electronic communication in a way that seems to me to be satisfactory from the point of view of this Bill. However, there is a problem. The problem is that it may be that that section is not yet in effect. The regulations that I could find bringing the Act into effect did not seem to include Section 15. If that is so, my submission would be that it is still possible to refer, for definition purposes, to a section that is on the statute book, even if it is not in effect. I think that there is some authority on that. It may be that my noble and learned friend has better sources for

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definition—if he has, we will all be delighted. But some definition is surely required because there is otherwise going to be a dispute about what counts as writing.
The second point raised by the amendment relates to this question of sending things from one party to the other. This is another example of the drafters of the Bill thinking you can just put forward a formula—the following apply. The employee is going to be prevented from going to a tribunal at all where he has not sent a copy to the employer. This is, therefore, a matter of the greatest importance. It involves whether the employee is denied access to the fount of justice in the tribunal. In our submission, where a party says, expressly, that he has sent a copy of a written communication to another party, the presumption must be that he has done so. This would have the very important effect that where an employee sends a communication to an employment tribunal and says that he has sent a copy or a communication to the employer, the tribunal will have to assume that he has done so. Therefore, his complaint can be presented to the tribunal and he will have overcome the hurdle of completing that step in the procedure.
Of course, should it be proved that this is a lie, the tribunal would no doubt resile. It may be said, "Why should you wait until then?" My answer to that is: because the Minister in another place said that we could wait until then. The Minister in another place, in addressing Clause 33, said that one would know whether a person was prohibited from applying to a tribunal with a complaint by the time one had seen, first, the originating application—I am not sure that he used those words but that is what he meant—and, secondly, if one did not get it from that, one would know when one saw the notice of appearance or the reply by the respondent's employer. Therefore, the whole procedure will take in the process of going to the tribunal and the employer's response.
A party may say, "I have sent a copy of a communication". I believe that our amendment is defective in its drafting there. It occurs to me that it should state—I hope the Minister will accept it in this spirit—"where a party expressly states that he has sent a communication, or a copy of it, to another party it should be presumed that he has done so". The amendment was drafted late at night.
Thirdly, there is the question of the ACAS code which is addressed by the amendment. It is not absolutely clear that there would be an obligation on the employment tribunal and appellate courts to consider ACAS codes of practice in respect of this schedule. Of course, one might say that there is already a general consideration in the law that they can do so. But, in our submission, it would be particularly important to direct the mind of the tribunal and of appellate courts to anything that ACAS says about this very important process, especially in relation to Clause 33 but also Clause 31, under which workers can suffer a penalty for not complying with their obligations in respect of the procedures in Schedule 2, and also in regard to other clauses in the Bill, not least Clause 34 and the like.
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As we are introducing these minimum procedures on a statutory basis for implication into the contract of employment for the first time, it would, in our submission, be most important to ensure that anything that ACAS says about its application is taken into account by a tribunal and then by its appellate courts.
On that basis, I hope that the Government can accept the spirit of the three points in Amendment No. 124. I beg to move.
7.15 p.m.
Lord Falconer of Thoroton: The amendment deals with three separate issues. Paragraph (1) provides a means of defining what is meant by a communication "in writing". As ever, I do not believe that there is a disagreement between my noble friend and myself as to what we are trying to achieve. A number of different technologies can be employed when writing a text and when sending that text to others. We do not want to stop people using e-mail and other electronic forms of communication.
However, in drafting the schedule, we have tried to avoid legalistic wording wherever possible in the drafting of the procedures. That will ensure that the procedures are readily understood by employers and employees alike. Paragraph (1) is very legalistic and would not be easily understood by many employers or employees. Therefore, I am reluctant to introduce such wording into the schedule, although I share the basic aim of the amendment. We have scope to go into this level of detail in the regulations which will accompany the procedures, and we shall take into account the suggestions made in the amendment when considering how those regulations could be drafted.
Paragraph (2) deals with a situation where a party disputes whether whether written communications were sent by the other party. Such circumstances may arise in practice, not least when post gets lost. This part of the amendment tries to cut through such disagreement by stating that the sender is always right if he asserts that the relevant communication was sent.
In practice, it will be difficult for tribunals to come to any other conclusion unless there are good grounds to believe that the communication was not sent. In most cases, it would be very difficult for a party to prove that a communication was never sent, especially if a dated copy was retained by the sender. So any disputes on these points would not detain the tribunals for long. However, there may be some cases in which such evidence exists. We should not discount the existence of that possibility by introducing this rule of thumb. If we did so, we would be in a situation in which we would be rewarding a person who was telling an untruth about the sending of the letter, irrespective of the facts. That would not have a good effect on the procedures; it would bring them into disrepute.
Finally, point three involves a cross-reference to the role of any relevant ACAS code when interpreting the schedule. I have already covered this point in my comments on Amendment No. 104. The ACAS code of practice on disciplinary and grievance procedures would, of course, be relevant to the use of the statutory

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procedures. The code represents good practice and the Government fully support it. The only question is whether a specific reference to the code is necessary in the statute. I am confident that it is not: any employer wishing to ensure that he acts fairly when following procedures that may result in the dismissal of an employee will need to take the code into account, just as he needs to a present.
In light of that explanation, I hope that my noble friend will feel able to withdraw his amendment.
Lord Wedderburn of Chariton: I am disappointed by the reply of my noble and learned friend. The study of the Bill is becoming more and more a study in petrography—the study of different sorts of stone. The Government have an infinite set of stonework in the Bill and it is not to be chipped; or only very, very rarely.
Lord McIntosh of Haringey: Petrology.
Lord Wedderburn of Charlton: The word is "petrology", according to my noble friend. I looked it up actually; "petrography" is perfectly good but "petrology" if he wishes. He acknowledges petrology. We will see how petrous the Bill is. I urge the Government to reconsider particular aspects of their approach.
First, my noble and learned friend says, "Avoid legalistic wording". We should avoid legalistic wording when putting something in the place of work, but we are passing an Act of Parliament—we are passing a law—and I want to know what it means. If I were an employer, I might say, "I have to do this in writing. Does that include e-mail?". Somebody will say, "No, of course it doesn't. That is just a lot of noughts and ones—a lot of electric impulses. If you print it out it may be in writing but otherwise it will not be". Then someone will say, "I think that an Act of 1978 is relevant". He may have done a quick course for which these employment advisors charge so much.
I am disappointed by the response of my noble and learned friend, because I thought that I had it wrong; I thought that there were other Acts that defined "in writing" and "electronic communications", but his reply seemed to suggest that I have it right. Why not say in the Bill what you mean by "writing"? They want to get rid of hearings in the employment tribunals and the Court of Appeal. Why not get rid of even the possibility of an argument about e-mail by saying what you mean by "writing"? We might do that in the regulations but, it seems, not necessarily through this amendment.
It would be helpful if the Government could give us some indication of what they mean by "writing" rather than wait for their regulations. These regulations will be contained in books and loose-leaf folders and they will come in their dozens. What does he think employers in their place of work will make of them? Does he think that that will make it easier for them? Of course not. The Government should say what they mean about matters of principle and fundamental
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mechanisms in the Bill. Detail, of course, and adjustments will come in regulations. There are plenty of powers for that. But it really is not good enough just to say that the matter might be legalistic. My noble and learned friend and I know what "legalistic" really means—it is a pejorative form for bad law. If I had suggested bad law, I would not mind, but he seemed to suggest that this is good law that I am suggesting. So let us have no more nonsense about legalistic wording. Let us have the Bill saying what it means and then we can make progress.
On the second point, the Minister says I am introducing a rule of thumb and that this might lead to advantages for liars and then he said that would bring the whole schedule into disrepute. With the greatest respect to him, that misrepresents the amendment. The amendment does not produce a complete rule of thumb; it introduces a presumption. There is a big difference between a substantive rule of thumb and a presumption. The presumption is that when somebody says, "I have sent a copy", and it should read, "I have sent the document or a copy", that stands until the contrary is proved. What is wrong with that? There is nothing there to bring the schedule into disrepute. The schedule is in enough disrepute as it is. We have shown that this afternoon. This will help the schedule to say what it means and help the schedule to be applied in a sensible sort of way at the place of work which is where it is going to take effect as obligatory terms of the contract of employment.
Thirdly, I say with great respect to my noble and learned friend that I do hope he will reconsider this. The great problem with the third point is that refusing to be absolutely clear about what ACAS says on this does ACAS a disservice. Normally, of course, the matter can be left to a tribunal, especially when it is addressed by representatives of parties who may be considered competent to have looked at the codes of practice of ACAS and to take account, as invited, of relevant codes of practice. We are not concerned with irrelevant codes of practice; this amendment refers to "relevant code of practice". But, in this case, on the assumption that we are left with a Schedule 2 something like it now stands, there really must be an obligation to take judicial notice of codes of practice from ACAS.
I am assuming that as almost none of our previous amendments have been accepted, I am therefore entitled to proceed on the basis that Schedule 2 will look something like it is at the moment. In that circumstance with the sort of schedule that is put before us—this unfair and improper schedule of obligatory procedures—there at least the word of ACAS must be listened to by the tribunal. I am utterly astonished that my noble and learned friend should suggest that merely to leave the law as it is is quite adequate without further ado.
In my submission Amendment No. 124 touches upon three matters of the highest importance to the actual administration of the Government's own chosen mechanisms which, at the moment, are obscure. We do not know what is meant by "writing".

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We do not know what will happen if someone says he has sent a copy, as he is obliged to do under the schedule, and somebody else says he did not send it. We do not even know what "sent" means. We know that a tribunal will not be obliged in law to take account of the relevant codes of practice unless it wants to, as invited by the parties.
I ask the Minister: is he able to say nothing more about this? Will he not take away the matter? The first matter he is taking away, as I understand it. Something, we do not know what, is going to be said about it in a regulation. The second matter he, with great respect, derided, but by misrepresenting it. It is not a rule of thumb; it is a presumption. Will he not take away that, at least, and look at it? And will he not take away the point about ACAS? I appreciate that ACAS is an independent entity. I hope that the Government will be reminded of that in the near future.
As the Minister made perfectly clear in another place, ACAS will be asked to rewrite its codes of practice relevant to the Bill when it becomes an Act. There will be a very strong argument that ACAS must
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not have a code of practice that runs counter to the statutory law. If that is so, and ACAS is going to be put under such pressure to rewrite its codes of practice, surely it must be right that a tribunal and appellate court should be under a duty to take account of whatever code of practice it is still left for ACAS to be able to put before the administration of justice.
I hope my noble and learned friend will be able to say that he will look again at those points in Amendment No. 124 and that the Government will come forward with a proposal. The problem with Grand Committee is that one always have to end up with the same formula, and of course I will end up with it now.
As somebody has said "no"—and especially as it is the Government who have said "no"—I have no option but to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Falconer of Thoroton: I believe that this may be a convenient moment for the Committee to adjourn until tomorrow at four o'clock.
The Committee adjourned at half past seven o'clock.