Employment Relations Act 1999: the deluge begins
An analysis of provisions that came into force on 25 October.
"There will not be a continuous drip, drip of employment legislation throughout this Parliament. We have no plans to bring forward further measures. We intend this industrial relations settlement to last for the remainder of this Parliament."
(Secretary of State for Trade and Industry, Stephen Byers MP, moving the Second Reading debate on the Employment Relations Bill in the House of Commons, 9.2.99, Hansard (HC), col. 134)
Based largely on proposals contained in the Fairness at work White Paper1, the Employment Relations Act 1999 ("the 1999 Act") represents the centrepiece of the Government's programme of employment law reform. According to the Government2, there are "three fundamental strands" running through the legislation: "The first is to promote family-friendly policies. The second is to promote a new culture of partnership in the workplace. The third is to ensure equal and fair treatment for all in the workplace."
PROVISIONS IN FORCE
In this feature, we analyse the first major tranche of the 1999 Act's provisions that came into force on 25 October 19993. The substantive provisions and amendments now in force, together with related transitional provisions, are considered in the order in which they appear in the Act. Miscellaneous order- and regulation-making powers which came into effect at the same time are noted below. The remaining provisions of the 1999 Act are expected to be brought into force in the course of the coming year (see the Government's projected timetable, below), and will be covered in future issues of IRLB.
Detrimental treatment on union grounds
In Associated British Ports v Palmer and another and Associated Newspapers Ltd v Wilson4, the House of Lords held, among other things, that an employee's right under s.146(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 ("the TULR(C)A") "not to have action short of dismissal taken against him [or her] as an individual" (emphasis added) for specified prohibited purposes relating to his or her union membership or activities, or non-membership of a union, did not cover omission(s) taking the form of a failure to act. It did not, therefore, cover a failure to award an employee a pay rise or some other benefit or advantage afforded to others.
Section 2 and Schedule 2 of the 1999 Act are intended to reverse the restrictive effect of their Lordships' ruling in this respect5. To achieve that aim, s.146(1) of the TULR(C)A now reads: "An employee has the right not to be subjected to any detriment as an individual by any act, or any deliberate failure to act, by his or her employer if the act or failure takes place [for one of the prohibited purposes]." Subsections 146(3), (4) and (5) are amended accordingly, and a new s.146(6) provides that, for the purposes of s.146, "detriment" means "detriment short of dismissal". Further consequential amendments are made to s.147 of the TULR(C)A (on the time limit for bringing proceedings), s.148 (on consideration of complaints), s.149 (on remedies) and s.150 (on awards against third parties).
The structure and wording of the amended ss.146-150 - in particular in relation to the definition of detrimental treatment and time limits - is thus modelled on, and broadly mirrors, that with which we are familiar under a number of existing detrimental treatment provisions6. We considered such provisions in detail most recently in our Guidance Note on the Public Interest Disclosure Act 1998. In addition, it is worth noting that when the present amendments were considered in Committee in the House of Commons, Minister for Small Firms, Trade and Industry Michael Wills stated7: "The Government believe that - for the purposes of the legislation - 'deliberate' is a perfectly good word for signifying intent. That is the key test. It covers both conscious and unconscious failures to act."
The amended provisions apply only in relation to an act or failure to act which takes place on or after 25 October 1999. For these purposes, where an act extends over a period, the reference to the date of the act is a reference to the last day of the period; and a failure to act is to be treated as done when it was decided on. In the absence of evidence establishing the contrary, an employer will be taken to decide on a failure to act when it does an act inconsistent with doing the failed act; or if it has done no such inconsistent act, when the period expires within which it might have been expected to do the failed act if it was to be done8 (on this form of words, which also appears in the new s.147(2) of TULR(C)A, see again our Guidance Note).
Unfair dismissal waivers go
Since 25 October, it has been impermissible for employees working under fixed-term contracts of one year or more in duration to enter into written agreements (whether or not contained in their contracts of employment) to waive their right to complain of unfair dismissal on the expiry of the fixed term. Section 18(1) of the 1999 Act accordingly repeals s.197(1) of the Employment Rights Act 1996 ("the ERA"). It also repeals s.197(2), which disapplied s.197(1) in relation to shop workers and betting workers dismissed for refusing to work on Sundays, which is no longer necessary.
Other provisions of the ERA are amended to ensure that dismissal by way of the expiry of a fixed-term contract to which a valid waiver applies is no longer to be regarded as a "detriment". These are: s.44(4) (health and safety matters); s.45A(4) (working time matters); s.46(2) (pension scheme trustees); s.47(2) (employee representatives for purposes of information and consultation on redundancy and business transfers); s.47A(2) (exercise of right to time off for study or training); and s.47B(2) (protected public interest disclosures). Amendments having the same effect are also made to s.23(4) of the National Minimum Wage Act 1998 ("the NMW Act") and para. 1(3) of Schedule 3 of the Tax Credits Act 1999 (see generally s.18(2)-(5) of the 1999 Act).
All of the amended provisions apply in principle to dismissals to which s.197(1) would previously have applied where the effective date of termination ("EDT"), within the meaning of s.97 of the ERA, falls on or after 25 October 1999. However, transitional provisions provide that waivers will remain valid (and the old provisions therefore operative) even in respect of dismissals after that date where both the relevant fixed-term contract (or the last or most recent renewal thereof) and the waiver itself were entered into before 25 October. For these purposes, "renewal" includes "extension" 9.
Note: Section 18(6) of the 1999 Act (disapplying s.197(1) of the ERA in cases relating to assertion of statutory rights and pregnancy and maternity) came into force on 30 September 1999, and is not affected by the transitional provisions outlined above.
Minimum wage: intentional communities
Section 22 of the 1999 Act amends the NMW Act to exempt residential members of intentional religious and other similar communities from the national minimum wage. The exemption was recommended by the Low Pay Commission in its report The national minimum wage accommodation offset - a review by the Low Pay Commission10 (see the National Minimum Wage Regulations 1999). There was concern that some such communities issue members with contracts of employment "as best practice", thus (potentially) bringing individuals within the general definition of "worker" contained in s.54 of the NMW Act11.
A new s.44A of the NMW Act therefore provides:
(1)A residential member of a community to which the section applies does not qualify for the national minimum wage in respect of employment by the community.
(2)Subject to subsection (3) [see immediately below], this section applies to a community if -
(a)it is a charity or is established by a charity,
(b)a purpose of the community is to practise or advance a belief of a religious or similar nature, and
(c)some or all of its members live together for that purpose.
By virtue of subsection (3), the exclusion does not apply to a community which is an independent school, or provides a course of further or higher education.
Introducing the provision in the House of Lords, Lord Sainsbury made the Government's position clear12: "This exemption is about [residential] members of genuine intentional communities. Workers who are not 'members' will be protected by the NMW Act and will benefit from the protection in that Act against detriment and dismissal. We do not wish any establishments which are not intentional in this sense to be included." He assured the House that the Government sees this "as a specific and tightly constrained provision to deal with a small group of 1,000 individuals in particular circumstances" 13.
Speaking on the amendment in the House of Commons, Stephen Byers confirmed that the minimum wage will not in any event apply to volunteers, or to nuns and monks in traditional religious communities. He said that examples of the type of communities intended to be covered by the s.44A exclusion "are the Iona Community, the Society of Mary and Martha, the Community for Reconciliation, and the Quiet Waters Christian Retreat", and the provision had been drawn up in consultation with those groups14.
These are, Mr Byers continued, communities with a "common religious or spiritual aim". In the Government's view, the reference in s.44A(2)(b) to practices or beliefs of a "similar nature" will be constrained by the use of the word "religious" 15. People have to be residents of intentional communities, "sharing accommodation and tasks" with the purpose of advancing such aims16. Mr Byers further suggested17 that the word "some" in the phrase "some or all of its members live together" (see s.44A(2)(c) above) "means more than one ... there will be circumstances in which 50 people may be engaged, but only 35 are living together ... In that context, those 35 will be the ones who come within the provisions of the exemption ..."
ACAS general duty amended
The general statutory duty imposed on the Advisory, Conciliation and Arbitration Service ("ACAS") in s.209 of the TULR(C)A is amended by s.26 of the 1999 Act to read simply: "It is the general duty of ACAS to promote the improvement of industrial relations."
Addressing this provision in Commons Committee, Michael Wills said that the amended wording was in line with the Government's "wish to enhance the standing of ACAS's work on dispute prevention". In the Government's view, the previous wording, which since 1993 had made particular reference to dispute resolution, gave priority "to fire-fighting rather than fire prevention" 18.
Annual reporting periods
The annual reports of ACAS and the Central Arbitration Committee must now be produced "as soon as practicable after the end of each financial year" (see ss.253(1) and 265(1) of the TULR(C)A as amended by s.27 of the 1999 Act), rather than the calendar year as previously. This means that the periods covered by the bodies' annual reports and their accounts will be the same. Note that the period covered by the annual report of the Certification Officer ("the CO") is similarly amended by para. 24 of Schedule 6 of the 1999 Act.
Abolition of Commissioners
Section 28 of the 1999 Act abolishes the offices of Commissioner for Protection against Unlawful Industrial Action ("CPUIA") and Commissioner for the Rights of Trade Union Members ("CROTUM"). The former has supported only one case since its establishment in 1993, while CROTUM has assisted, on average, only 10 applications a year since 1988. Relevant provisions of the TULR(C)A and related legislation are, subject to the transitional provisions outlined below, accordingly repealed (in particular, ss.266-271, Chapter VIII of Part I (ss.109-114), and ss.235B and 235C of the TULR(C)A).
The transitional provisions permit CROTUM to continue to provide assistance for legal proceedings under Chapter VIII of Part I of the TULR(C)A (in relation to any of the matters listed in s.109) after 25 October 1999 where:
In these circumstances, the operative provisions "remain in force to the extent necessary to enable the Commissioner (if he has not already done so) to decide whether to provide assistance and to provide it until the date ('the final date') when all of the assistance which the Commissioner decides to provide has been given" 19.
As soon as is practicable after the final date, CROTUM must prepare "a report on his activities from 1 April 1999 until the final date", together with a statement of accounts. The CPUIA must, as soon as practicable after 25 October 1999, prepare "a report on his activities" between 1 April 1999 and that date, as well as a statement of accounts20.
Extension of CO's powers
Section 29 and Schedule 6 of the 1999 Act amend and extend the powers of the CO under the TULR(C)A to enable him to determine and make orders in relation to many of the complaints about breaches of trade union rules and legislation in respect of which CROTUM was previously empowered to provide assistance. In these areas, the CO will now act as an effective alternative to the courts, with complainants being precluded from bringing parallel complaints in both forums (as has hitherto been possible in many circumstances). They must now generally make a choice of forum.
On matters where the CO already had powers to make declarations, he now has power to make orders. These matters include:
Matters in respect of which the CO has powers to investigate, determine complaints and issue declarations and/or orders for the first time include:
The CO may also now refuse to entertain any application or complaint made to him under any of the above provisions (or any other provision contained in Parts III-VIIA of the TULR(C)A, except s.37E) by a "vexatious litigant". This is defined as a person who is subject to orders made under s.33(1) of the Employment Tribunals Act 1996; or a "civil proceedings" or "all proceedings" order made under s.42(1) of the Supreme Court Act 1981 and which remains in force (or its Scottish or Northern Irish equivalent - see the new s.256A of the TULR(C)A).
Broadly speaking, all of the above provisions apply to applications or complaints made to the CO on or after 25 October. Exceptionally, complaints under the new s.72A (illegitimate application of funds for political objects) and Chapter VIIA (breach of union rules) have effect in relation to breaches which took place (or, in the case of threatened breaches, were threatened) on or after 27 July 1999. But where application was made to a court in respect of those matters before 25 October, recourse to the CO is precluded. The amendments to s.31 apply to requests for access to accounting records made on or after 27 July 199921.
Partnerships at work
Under s.30 of the 1999 Act, the Secretary of State "may spend money or provide money to other persons for the purposes of encouraging and helping employers (or their representatives) and employees (or their representatives) to improve the way they work together".
Addressing the provision in Committee in the House of Commons, Michael Wills said the Government intended "to develop a scheme, which will include projects that address not only employment relations but training, development and business issues through the development of partnerships at work" 22. The result is the £5 million Partnership Fund, which is also intended to encourage the dissemination of information on best practice. A first call for applications was made in September, and applications must be submitted by 26 November 199923.
Employment agencies: offences
A new s.11A is added to the Employment Agencies Act 1973 ("the EAA") by s.31 and para. 5 of Schedule 7 of the 1999 Act. This extends the time for prosecuting offences under the following sections of the EAA, for which proceedings are instituted by the Secretary of State: s.3B (failure to comply with prohibition orders); s.5(2) (breach of regulations made under the EAA); s.6(2) (breach of restrictions on charging persons seeking employment); s.9(4)(b) (contravention of prohibition on disclosing information obtained in the course of inspection); and s.10(2) (fraudulent entries in records or documents kept in pursuance of the EAA and related Regulations).
The offences specified may now be tried by a magistrates' court (in England and Wales) or a sheriff's court (in Scotland) if the information is laid or proceedings are commenced at any time within three years after the date of the commission of the offence, and within six months after the date on which evidence that is "sufficient", in the opinion of the Secretary of State (or the Lord Advocate in Scotland), to justify the proceedings came to his knowledge, whichever is the earlier (s.11A(2) and (3) of the EAA). Proceedings for such offences previously had to be commenced within six months of the commission of the offence. The new provisions apply to offences committed on or after 25 October 199924.
Repeal of territorial limitation
Section 32(3) of the 1999 Act repeals s.196 of the ERA, which has hitherto excluded from the rights conferred by that legislation those who work wholly or mainly outside Great Britain (see s.196(1)), or those who under their contracts of employment ordinarily work outside Great Britain (see s.196(2)-(4)). We considered the reasoning behind, and consequences of, this change at length in Kelvin International Services Ltd v Walker. In essence, normal principles of domestic and international law now apply in determining territorial jurisdiction.
As we also reported, however, the position of mariners (formerly covered by s.196(5)) remains substantially unchanged owing to the insertion of a new s.199(7) and (8) of the ERA. Section 199(7) provides, in effect, that the provisions previously listed in s.196(3) (including the unfair dismissal provisions of Part X of the ERA):
... apply to employment on board a ship registered in the register maintained under s.8 of the Merchant Shipping Act 1995 if and only if -
(a)the ship's entry in the register specifies a port in Great Britain as the port to which the vessel is to be treated as belonging,
(b)under his contract of employment the person employed does not work wholly outside Great Britain, and
(c)the person employed is ordinarily resident in Great Britain.
For most purposes the above changes took full effect on 25 October 1999, with the following modifications25:
Note: Section 32(1) of the 1999 Act also amends s.285(1) of the TULR(C)A to remove the territorial restrictions contained in that Act in respect solely of employers' duties to consult appropriate employee representatives on collective redundancies under s.188 and related provisions. This amendment applies "in relation to an employer who dismisses 20 or more employees at one establishment within a period of 90 days where 20 or more (or as the case may be 100 or more) dismissals took effect on or after 25 October 1999" 26. Paradoxically, employers' duties to inform the Secretary of State of certain redundancies under ss.193 and 194 of the TULR(C)A are unaffected by this jurisdictional change.
Consolidated additional award
The system of additional and special awards of compensation for unfair dismissal has been "simplified" and consolidated into a single additional award in respect of dismissals where the EDT falls on or after 25 October27 (see s.33 of the 1999 Act).
This has been done by abolishing the special awards hitherto available in cases of automatically unfair dismissal relating to trade union membership or activities, the activities of safety representatives (or others with designated health and safety functions), elected employee representatives for the purposes of concluding workforce agreements under Schedule 1 of the Working Time Regulations 1998, employee pension fund trustees, and elected employee representatives for the purposes of consultation on redundancies or business transfers. Sections 157, 158 and 159(1)(b) of the TULR(C)A and ss.117(4)(b) and 118(2) and (3) of the ERA consequently cease to have effect.
A single additional award is now available, as before, in cases where an employer fails to comply with a reinstatement or re-engagement order previously made by an employment tribunal, unless the employer can demonstrate that it was "not practicable" to comply with the order. The amount of such an award is increased to "an amount not less than 26 nor more than 52 weeks' pay" (s.117(3)(b) of the ERA as amended), and the "higher" additional award previously available in sex and race discrimination cases is consequently also abolished (with the repeal of s.117(5) and (6) of the ERA).
Note: In Pittaway v Street to Street Ltd28, the EAT has recently pointed to an error in the transposition of s.157(1)(a) of the TULR(C)A. The word "complaint" in that subsection should read "complainant" (followed by "does not request the tribunal to make an order for reinstatement or re-engagement"). This correction remains relevant in relation to the making of special awards for dismissals on union grounds where the EDT was before 25 October.
Compensation up to £50,000
The maximum compensatory award for unfair dismissal that may be made by employment tribunals under s.124(1) of the ERA rose from £12,000 to £50,000 on 25 October 1999, but only in respect of dismissals where the EDT falls on or after that date29 (see s.34(4) of the 1999 Act).
Guarantee payment time limits
Guarantee payments may at present be made for up to five days in any three-month period (see s.31(2)-(4) of the ERA) where employees are laid off, provided certain conditions are met. It has hitherto been possible to vary those time periods only by an order made in accordance with s.208 of the ERA, following an annual review of limits under that section (see s.31(7)). Section 35 of the 1999 Act effectively removes this review requirement, and amends s.31(7) of the ERA to provide simply that the time periods and limits specified in s.31(2)-(4) may be varied by the Secretary of State by order, subject to the negative resolution procedure.
Removal of limit in certain cases
A new s.124(1A) of the ERA provides that the limit on the compensatory award contained in s.124(1) (see above ) does not apply to compensation awarded, or a compensatory award made, in cases of automatically unfair dismissal or selection for redundancy for health and safety reasons (under ss.100 or 105(3) of the ERA) or on public interest disclosure grounds (under ss.103A or 105(6A)). Section 127B of the ERA consequently ceases to have effect, and the Public Interest Disclosure (Compensation) Regulations 1999 30 fall.
These changes - made by s.37 of the 1999 Act - are not the subject of any special transitional provisions, and therefore apply to any relevant case where compensation is determined by an employment tribunal on or after 25 October.
Minimum wage: information
Section 39 of the 1999 Act permits Inland Revenue tax and national insurance data to be used for the enforcement of the national minimum wage.
It provides that information obtained by a "revenue official" in the course of carrying out a function of the Commissioners of the Inland Revenue may be: supplied by the Commissioners to the Secretary of State for any purpose relating to the NMW Act; supplied by the Secretary of State with the authority of the Commissioners to any person acting under s.13(1)(b) of the NMW Act (that is, at present, the national minimum wage enforcement section of the Inland Revenue); or supplied by the Secretary of State to any person with the authority of the Commissioners to an officer acting for the purposes of any of the agricultural wages legislation.
Introducing s.39 on Report in the House of Lords, Lord Sainsbury pointed out that, although the Inland Revenue has overall responsibility for the enforcement of the national minimum wage, revenue officers could not previously pass on information about national minimum wage abuses obtained in the course of carrying out their tax and national insurance duties to colleagues in the dedicated national minimum wage enforcement team. In the Government's view, said Lord Sainsbury, the new provision merely introduces "common-sense arrangements to allow one part of a government department to exchange data with other parts of that department, and with other departments for national minimum wage purposes". It does not, he asserted, "set a precedent for ever-widening exchange [of information] across government; it is limited and specific". He gave assurances that all other existing Inland Revenue safeguards on confidentiality and disclosure of information remain in place31.
School standards legislation
Schedules 16 (para. 27(3)(b)) and 17 (para. 24(4)(b)) of the School Standards and Framework Act 1998 on the treatment of school staff on fixed-term contracts whose contracts will not be renewed are amended by s.40 of the 1999 Act to reflect the reduction in the unfair dismissal qualifying period to one year.
References
1 Cm 3968, May 1998.
2 9.2.99, Hansard (HC), col. 134.
3 The Employment Relations Act 1999 (Commencement No.2 and Transitional and Saving Provisions) Order 1999, SI 2830 ("the Commencement (No.2) Order"), available from the Stationery Office, price £2.50. On the first Commencement Order .
4 [1995] IRLR 258.
5 See para. 4.24 of the "Fairness at work" White Paper.
6 See House of Commons Official Report, Standing Committee E, 18.3.99, col. 447.
7 ibid, col. 445.
8 See the Commencement (No.2) Order, para. 1 of Schedule 3.
9 ibid, para. 2 of Schedule 3.
10 Cm 4321, March 1999.
11 21.7.99, Hansard (HC), col. 1285.
12 8.7.99, Hansard (HL), col. 1115.
13 ibid, col. 1118.
14 21.7.99, Hansard (HC), col. 1286.
15 ibid.
16 ibid, col. 1287.
17 ibid, col. 1286.
18 4.3.99, House of Commons Official Report, Standing Committee E, col. 267.
19 See the Commencement (No.2) Order, para. 4(2) and (3)(a) of Schedule 3.
20 ibid, para. 4(3)(b) and (4).
21 ibid, see generally para. 5.
22 18.3.99, House of Commons Official Report, Standing Committee E, col. 481.
23 For further information contact the Partnership Fund Helpline on 020 7215 6252 or write to The Partnership Fund, Employment Relations Directorate, Department of Trade and Industry, Bay 148, 1 Victoria Street, London SW1H 0ET, or visit the DTI web site on www.dti.gov.uk/partnershipfund
24 See the Commencement (No.2) Order, Schedule 3, para. 6.
25 ibid, para. 7(2).
26 ibid, para. 7(1).
27 ibid, para. 8.
28 23.8.99 EAT 1467/98.
29 See the Commencement (No.2) Order, Schedule 3, para. 8.
30 SI No.1548.
31 8.7.99, Hansard (HL), cols. 1138-1139.
The 1999 Act: timetable for implementing remaining provisions32
(1) Miscellaneous powers in force
The following powers came into force on 25 October:
(2) Maternity, parental leave and time off for dependants
The Secretary of State's regulation-making powers in relation to maternity and parental leave (s.7 and Part I of Schedule 4 of the 1999 Act) and the substantive right to time off for domestic incidents (s.8 and Part II of Schedule 4 of the 1999 Act, amending and adding new provisions to the ERA) will come into force on 15 December 1999. Following a consultation exercise which finished on 4 October (see IRLB 623), Regulations on maternity and parental leave were laid before Parliament in draft form on 4 November and - subject to parliamentary approval - will also come into force on 15 December. The amended provisions on maternity leave will have effect only in relation to employees whose expected week of childbirth begins on or after 30 April 2000 (see the Commencement (N0.2) Order, Schedule 3, para. 10 and the Maternity and Parental Leave etc Regulations 1999 (draft)).
(3) Remaining provisions of the Act
It is intended that the Act's remaining provisions "should" be brought into force over the coming year, including:
By Easter 2000:
Shortly thereafter:
32 The projected timescales for implementation and/or consultation set out here are culled primarily from a DTI letter of 14 October 1999, outlining the contents of the second Commencement Order. Note that the Employment Relations (Northern Ireland) Order 1999 (SI No.2790 (NI9)) was made on 12 October. This contains provisions broadly mirroring those in the 1999 Act, and a Commencement Order similar to that considered in this feature is expected to be made in the course of this month.
