The Employment Act 2002 (2)
In part 1 of our two-part series on the Employment Act 2002, we examined in detail the family-friendly provisions, namely the new statutory rights to paid parental and paid adoption leave and pay, the changes to existing law on maternity rights, and the new statutory right to request flexible working. In part 2, we focus on the procedural provisions, covering changes to the employment tribunal rules and the introduction of statutory dispute resolution procedures. We also look at new rights to time off for union learning representatives and for the protection of fixed-term employees.
Click here to view part 1 of our two-part series on the Employment Act 2002.
"More disputes between employers and employees are ending up in litigation, as shown in the three-fold rise of applications to employment tribunals over the past decade. Recourse to litigation as a first resort is neither good for the individual nor the business. The government is convinced that many of these disagreements could be resolved successfully in the workplace, if employers and employees work together. But, equally, the tribunal system has to be able to deal with increased caseload in the future." (Routes to Resolution consultation document.)1
The government published its consultation document, Routes to Resolution, in July 2001. In its response2 to the document, published in October 2001, the government estimated that the combined effect of its proposals on employment tribunal procedure, along with the introduction of the new statutory dispute resolution procedures, would be an estimated reduction of between 30,000 to 40,000 tribunal applications compared with current levels.
EMPLOYMENT TRIBUNAL PROCEDURE
Part 2 of the Employment Act 2002 ("the EA 2002") (ss.22-28) deals with changes to employment tribunal procedure. Routes to Resolution highlighted the need for change based on "the fundamental principles of access to justice, fair and efficient tribunals, a modern and user-friendly public service, and well-informed users" (para. 5.6).
Much of the detail remains to be fleshed out in regulations. The government has announced that the changes will come into effect in autumn 2003, following a period of consultation.
Costs and expenses
Section 22(1) of the EA 2002 replaces the existing power under s.13(1)(a) of the Employment Tribunals Act 1996 ("the ETA") by providing that regulations may allow for the award of costs or expenses, and for the award of allowances for attending an employment tribunal, or for preparing a report in an equal value claim. A new s.13A(1) of the ETA provides that the regulations may authorise an employment tribunal to have regard to a person's ability to pay in considering whether to make an award. At the moment, tribunals must not take into account ability to pay (Kovacs v Queen Mary & Westfield College3 ).
In addition, regulations may now authorise a tribunal to order a party's representative to meet all or part of the costs or expenses of another party, or to meet all or part of any allowances paid by the secretary of state. A tribunal may also disallow all or part of the costs or expenses of a party's representative. In each case, the power is to be exercised by reason of the representative's conduct of the proceedings.
At present, there is no power to make a wasted costs order against a representative as there is in the civil courts4. However, reg. 14(1) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001 ("the 2001 ET Rules") allows a representative's conduct of the proceedings to be taken into account in deciding whether to make an order for costs against a party.
The government has indicated that the regulations will "not apply the measure to not-for-profit organisations"5, and that this will cover lawyers engaged by a trade body or professional association, as well as trade union officers6. Orders may now be made against representatives acting under contingency fee arrangements7.
The government stated that it was not intended "to allow tribunals to penalise representatives simply because they have taken on a case which has no reasonable prospect of success". Further, it confirmed that "a wasted costs order may not be made by the tribunal unless the representative has been afforded an opportunity to put his or her case to the tribunal on any such award"8.
Regulations may also provide for taxing or otherwise settling costs or expenses, including, in England and Wales, provision for detailed assessment of costs in a county court.
Preparation time
Section 22(2) of the EA 2002 introduces a new s.13A to the ETA. This contains a power to make regulations authorising a tribunal to order a party to pay for another party's preparation time. As with awards of costs or expenses, such regulations may authorise a tribunal to have regard to a person's ability to pay when considering making an order. However, a party cannot receive a payment for preparation time if there is an award of costs or expenses in his or her favour.
The government stated that it "will lay down guidelines for the tribunals and will consider a ceiling on case preparation awards"9. It also stated that it did "not believe that, in practice, the provision for preparation time would lead to a big rise in the level of costs awards"10.
Preparation time is not defined, but, according to the Explanatory Notes to the EA 200211, it is intended that awards for preparation time will only be made in circumstances where costs awards can be made.
Costs in the EAT
Section 23 of the EA 2002 replaces s.34 of the ETA which authorises the Employment Appeal Tribunal Rules 1993 ("the EAT Rules") to make provision for the award of costs. According to the Explanatory Notes, the intention is to align this power with that of employment tribunals. However, there is no power for the EAT Rules to cover awards for preparation time. Currently, rule 34 of the EAT Rules only allows costs to be awarded in the EAT where it appears that proceedings were unnecessary, improper or vexatious, where there has been unreasonable delay, or other unreasonable conduct in bringing or conducting the proceedings.
The EAT Rules will in future be able to provide for the award of costs or expenses, and may authorise the EAT to have regard to a person's ability to pay when considering the making of an award.
The rules may also provide for a representative to pay all or part of the costs or expenses of another party, or for a representative to have all or part of his or her costs or expenses disallowed. In both cases, the power is to be exercised by reason of the representative's conduct of the proceedings.
The rules may provide for taxing or settling of costs or expenses, including, in England and Wales, for detailed assessment in the High Court.
Conciliation
Section 24 of the EA 2002 amends ss.7, 18 and 19 of the ETA and allows the 2001 ET Rules to provide for postponing a hearing date, or postponing the fixing of a hearing date, in order to allow for settlement by conciliation. The period of such postponement will be determined by regulations.
A new s.18(2A) of the ETA provides that, after the end of such period, an Acas conciliation officer will now have the power to promote a settlement. At present, under s.18(2) of the ETA, the officer has a duty to promote a settlement, where he or she is either requested to do so by one of the parties, or where the officer considers that there is a reasonable prospect of success. Regulations will provide that the parties are to be informed that the services of a concilation officer may no longer be available after the period of postponement. The Explanatory Notes state that the purpose of these provisions is to encourage earlier settlement of cases. The intention is that settlement should take place as far as possible during the period of the postponement. The government stated that the period of postponement should not be longer than three months, and would normally be much shorter. However, if Acas considered "a settlement to be imminent, there will be provision for a limited extension to complete its work"12.
Prescribed forms
Section 25 amends s.7 of the ETA to give the secretary of state power to prescribe the form of an originating application ("the ET1") and notice of appearance ("the ET3"), or requirements in relation to them. There is also power to prescribe requirements relating to documents to be supplied with such forms, and to provide for publication of prescribed forms and documents.
At present, it is not compulsory to use the ET1 form13. Rule 1(1) of the 2001 ET Rules provides only that the applicant shall set out in writing: his or her name and an address for service, the names and addresses of the persons against whom relief is sought, and particulars of the grounds on which relief is sought. Rule 3(1) provides that the respondent shall enter a notice of appearance in writing, stating his or her name and an address for service, whether the application is resisted and, if so, setting out sufficient particulars of the grounds for doing so.
The government stated that regulations would address the question of an application that was submitted in writing, other than on the prescribed form, just before the relevant time limit expired14. It also confirmed that "the application form will be simple to complete" and that there is "no intention of deterring applicants by asking numerous questions or complicated questions about the use of procedure or any other matter"15.
Determination without a hearing
Section 26 amends s.7 of the ETA to provide that the 2001 ET Rules may authorise the determination of proceedings without a hearing in prescribed circumstances. The parties will have to give written consent to such a determination, except where the case is uncontested. The government has said that the parties "will have to seek advice on the consequences of consenting, and regulations will specify those who may provide such advice". In addition, there will be a requirement that "the tribunal itself agrees that the case is suitable for determination without a hearing"16.
Given the requirements that must be satisfied before there can be a determination without a hearing, it must be doubted whether this provision will produce any significant saving in tribunal time. A party will still be able to appeal on a question of law as s.21 of the ETA, on the jurisdiction of the EAT, allows an appeal against "any decision" of an employment tribunal.
Practice directions
Section 27 amends s.7 of the ETA to provide that the 2001 ET Rules may enable the Presidents of the Employment Tribunals, for England and Wales, and for Scotland, to make procedural directions; make directions for securing compliance with them; and arrange for the publication of such directions. The procedure rules may, instead of providing for any matter, refer to a provision made in such directions about the matter.
The President of the EAT may issue practice directions as s.30(3) of the ETA enables the EAT to regulate its own procedure. However, the Presidents of the Employment Tribunals have no such power17.
The Explanatory Notes state that the objective is to ensure that tribunals adopt a consistent approach to procedural issues and to the interpretation of their powers. At the moment, different employment tribunals may adopt different practices and procedures.
Pre-hearing reviews
Section 28 amends s.9(1)(a) of the ETA to remove the requirement that pre-hearing reviews are only for "preliminary consideration" of the proceedings and, therefore, are necessarily followed by a full hearing. The Explanatory Notes clarify that the intention is to allow cases to be struck out at a pre-hearing review under rule 15(2) of the 2001 ET Rules.
A new s.9(2A) of the ETA provides that regulations for striking out at a pre-hearing review may not provide wider grounds for striking out than if the matter were not dealt with at a pre-hearing review.
Sections 29 to 34 of the EA 2002 set out the new statutory dispute resolution procedures and the consequences of failure to comply with them. Much of the detail will be implemented by regulations. The government has announced that the changes will come into effect in late 2003, following a period of consultation.
For the first time, employers will be required to have procedures for dealing with disciplinary matters and employee grievances. According to the Explanatory Notes, the provisions aim to encourage parties to avoid litigation by resolving differences through proper internal procedures.
Application to "employees"
The statutory procedures will apply to an "employee". Section 40 of the EA 2002 applies the interpretation contained in s.230(1) of the Employment Rights Act 1996 ("the ERA"), that is, "an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment". The government was pressed by its own backbenchers to extend this and other provisions of the EA 2002 to the wider category of "workers". It responded: "We shall shortly embark on a review of the provisions of general employment law that relate to the distinction between an employee and a worker."18 A discussion document entitled Employment Status in Relation to Statutory Employment Rights has now been issued, with a period of consultation lasting until 11 December 2002.
The statutory dispute resolution procedures are set out in Schedule 2 to the EA 2002. The secretary of state has power to amend the Schedule by order, and to provide that the Schedule, with or without modifications, is to apply to an individual who is not an employee, or as if a person specified in the order was the individual's employer. Acas must be consulted before such an order is made.
Dismissal and disciplinary procedures
Part 1 of Schedule 2 provides for two types of dismissal and disciplinary procedure: a standard one, and a modified one intended to be used in cases of gross misconduct.
Standard procedure
Under the standard procedure, there are three steps to be undertaken:
(1) The employer must set out in writing the employee's alleged conduct, characteristics or other circumstances, that led it to contemplate dismissing or taking disciplinary action against the employee. The employer must send the statement or a copy to the employee and invite the employee to attend a meeting to discuss the matter.
(2) A meeting must take place before action is taken, except in a case where the disciplinary action consists of suspension. The meeting must not take place unless the employer has informed the employee of the basis for the grounds contained in the written statement contained in step 1, and the employee has had a reasonable opportunity to consider his or her response to that information. The employee must take reasonable steps to attend the meeting, although there is little detail of what will constitute reasonable steps. After the meeting, the employer must inform the employee of its decision and notify him or her of the right of appeal if dissatisfied.
(3) An employee who wishes to appeal must inform the employer of this. In such a case, the employer must invite the employee to attend a further meeting which the employee must take reasonable steps to attend. The appeal meeting need not take place before the dismissal or disciplinary action takes effect. After the appeal meeting, the employer must inform the employee of its final decision.
It is intended that the standard procedure "will apply in all circumstances, including individual redundancies. It will not apply to collective redundancies or to other collective procedures".19
Under s.188 of the Trade Union and Labour Relations (Consolidation) Act 1992 ("the TULR(C)A"), where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within 90 days or less, the employer must consult appropriate representatives of the employees who may be affected. The standard procedure will not therefore apply in such a case.
Modified procedure
The modified procedure is intended to apply only to cases where the employee has already been dismissed. Under the modified procedure there are two steps:
(1) The employer must set out in writing the employee's alleged misconduct that has led to the dismissal, the basis for thinking that, at the time of the dismissal, the employee was guilty of the alleged misconduct, and the employee's right to appeal against dismissal. The employer must send the statement or a copy of the statement to the employee. The employer will therefore have to provide reasons for dismissal and inform the employee of the right to appeal.
(2) An employee who wishes to appeal must inform the employer of this. In such a case, the employer must invite the employee to attend a meeting which the employee must take all reasonable steps to attend. After the appeal meeting, the employer must inform the employee of its final decision.
The government has stated that "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."20 Whether the standard or modified procedure is appropriate will therefore be determined by the action taken by the employer, rather than by the seriousness of the employee's conduct.
Part 2 of Schedule 2 sets out the statutory grievance procedures. Again, there are two forms: a standard procedure, and a modified procedure to be used where the dismissal has already occurred.
Grievance procedure and protected disclosures
Paragraph 15(2) of Schedule 2 to the EA 2002 provides that the statutory grievance procedure applies only to protected disclosures of information under Part IVA of the ERA, where the information relates to a matter that the employee could raise as a grievance with the employer, and it is the intention of the employee that the disclosure should constitute the raising of the matter with his or her employer as a grievance. This means that a "whistleblowing" employee will not be penalised for failing to use the statutory grievance procedure where he or she did not intend the protected disclosure to constitute the raising of a grievance.
Standard procedure
The standard procedure has three steps:
(1) The employee must set out the grievance and the basis for the grievance in writing and send the statement or a copy to the employer.
(2) The employer must invite the employee to a meeting to discuss the grievance. The meeting must not take place unless the employee has informed the employer of the basis for the grievance when the written statement under step 1 was made. The employer must have had a reasonable opportunity to consider its response to that information before the meeting. The employee must take all reasonable steps to attend the meeting. After the meeting, the employer must inform the employee of its decision in response to the grievance and notify the employee of the right to appeal against the decision if not satisfied.
(3) If the employee wishes to appeal, he or she must inform the employer. In such a case, the employer must invite the employee to attend a further meeting which the employee must take reasonable steps to attend. After the appeal meeting, the employer must inform the employee of its final decision.
Modified procedure
The modified procedure is intended to apply where a dismissal has already occurred. An employee aggrieved by his or her dismissal will have to use the disciplinary and dismissal procedure above. The modified grievance procedure has two steps:
(1) The employee must set out the grievance and the basis for it in writing, and send the statement or a copy to the employer.
(2) The employer must set out its response in writing and send the statement or a copy to the employee.
The government has stated that the modified procedure is intended to apply to circumstances where a former employee has a grievance against his or her employer following the termination of employment. Examples given were of employees believing they had not received their correct holiday or redundancy pay21.
Provisions common to all statutory procedures
In addition, there are general requirements contained in Part 3 of Schedule 2 to the EA 2002 which apply to all the statutory procedures.
Each step and action under the procedure must be taken without unreasonable delay.
The timing and location of meetings must be reasonable.
Meetings must be conducted in a manner that enables both employer and employee to explain their cases.
In the case of appeal meetings that 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 meeting, unless the most senior manager attended that meeting.
The EA 2002 does not provide any guidance as to what is reasonable for the purposes of these general requirements. Unless the requirements are amended by the secretary of state by order (under s.29), reasonableness will have to be determined by the employment tribunal.
Right to be accompanied
Paragraph 14 of Schedule 2 to the EA 2002 also provides that a "meeting" for the purposes of the statutory procedures is a "hearing" for the purposes of s.10 of the Employment Relations Act 1999 ("the ERelA"). Section 10 requires an employer to permit a worker to be accompanied to a disciplinary or grievance hearing if the worker reasonably requests to be represented. An employee will therefore have the right to be accompanied to a disciplinary or grievance meeting held under the statutory procedures.
As s.13(5) of the ERelA defines "a grievance hearing" as a hearing that concerns the performance of a duty by an employer in relation to the worker, there will be cases under the statutory procedure where there is no right to be accompanied because there is no statutory or contractual duty owed by the employer. However, it should be borne in mind that the employer's contractual obligations will include the duty of trust and confidence implied by law, so that any complaint relating to such a duty will carry the right to be accompanied.
Statutory procedures incorporated into contracts
Section 30 of the EA 2002 provides that every contract of employment shall have effect to require employers and employees, in relation to any matter to which a statutory procedure applies, to comply with the requirements contained in Schedule 2. The procedures are therefore incorporated into contracts of employment. A contract of employment has the same meaning as in s.230(2) of the ERA, namely, "a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing".
It is not possible to contract out of this provision, although contractual procedures that are additional to, and not inconsistent with, the statutory procedures will be unaffected.
The secretary of state is given power to make regulations for the purposes of this section in relation to the application of the statutory procedures.
Adjustment of awards if statutory procedures not followed
Section 31 of the EA 2002 provides that, where employment tribunal proceedings relate to a claim under any of the jurisdictions listed in Schedule 3, then any compensation award is to be adjusted if the statutory procedures apply but are not followed.
The conditions to be fulfilled for such an adjustment are that:
the claim concerns a matter to which one of the statutory procedures under Schedule 2 applies;
the statutory procedure was not completed before the proceedings were begun; and
the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer or employee to comply with a requirement of the procedure or, in the case of the employee, to exercise a right of appeal under it.
In the case of failure by the employee, the tribunal must reduce any award by 10%, and may, if it considers it just and equitable, reduce it by up to 50%. In the case of failure by the employer, the tribunal must increase any award by 10%, and may, if it considers it just and equitable, increase it by up to 50%. However, the duty to decrease or increase the award by 10% does not apply if there are exceptional circumstances that would make such an adjustment unjust or inequitable. In such a case, the tribunal may make no, or a lesser, adjustment. Where there is an adjustment to compensation under s.31 and s.38 (employer's failure to provide written particulars), the adjustment under s.31 is to be applied first.
Section 39 of the EA 2002 inserts a new s.124A into the ERA. It provides that, where an award of compensation for unfair dismissal is varied under s.31, the adjustment shall be applied to the compensatory award, before any reduction for contributory fault, and before any reduction for a redundancy payment paid in excess of the basic award.
The existing power under s.127A of the ERA to increase or reduce the compensatory award for unfair dismissal by up to two weeks' pay - for, in the case of an employer, preventing an employee from appealing or, in the case of an employee, for failure to utilise an appeal procedure - is thereby repealed.
The secretary of state is given wide powers to make regulations about the application of the statutory procedures under s.31(6) of the EA 2002. These may specify when a statutory procedure is to be taken to be completed or complied with, and when a person is to be treated as not subject to, or as having complied with, a requirement of a statutory procedure. They may also provide for a statutory procedure to be modified in certain circumstances, and as to when an employee may be required to exercise a right of appeal under a statutory procedure. Under s.31(7), the secretary of state is also given power by order to amend the list of jurisdictions contained in Schedule 3 and to provide that s.31 may apply to an individual who is not an employee, or as if a person specified in the order was the individual's employer.
The government gave examples of cases where it would not be appropriate for a party to use the statutory procedures. These include: harassment; where the complaint would have to be made to the person implicated; the threat of violence by either party; serious illness; and an issue that has been handled as a collective process22. It also gave an example of a case where the 10% adjustment might not be applied. This would be where a small employer had breached a minor part of the statutory procedure. Such cases would be very rare23.
Grievance procedure to be used before complaint to tribunal
Section 32 of the EA 2002 applies to the jurisdictions listed in Schedule 4. Section 32(2) provides that where a complaint to a tribunal concerns a matter in relation to which the statutory grievance procedures apply, an employee may not present a complaint if he or she has not complied with step one of the grievance procedure contained in Schedule 2 (sending written notice of a grievance to the employer); or 28 days have not expired since they did so. This applies to both the standard and modified procedures.
In addition, an employee may not present a complaint if the written notice of a grievance is sent to the employer more than a month after the end of the time limit for bringing the complaint (s.32(4)). This also applies to both the standard and modified procedures. The secretary of state may make regulations specifying circumstances when this last provision shall not apply (s.32(5)).
An employment tribunal is not prevented from considering such a complaint unless (a) the breach is apparent from information supplied by the employee, or (b) the tribunal is satisfied that there has been a breach as a result of the employer raising the issue (s.32(6)). This means the tribunal will have jurisdiction to determine the complaint unless the failure is obvious or raised as an issue.
The secretary of state is given wide powers to make regulations about the application of the statutory grievance procedures. The regulations may specify the circumstances in which a person is treated as having complied with step one, as to what constitutes compliance with that step, and when the procedures may be modified (s.32(7)). There is also a wide power to make orders to amend the requirements to be met before a complaint may be presented, to amend the list of jurisdictions contained in Schedule 4, and to provide that s.32 may apply to an individual who is not an employee, or as if a person specified in the order was the individual's employer. (s.32(8)). Acas must be consulted before any such order is made.
The government has indicated24 that it is not the intention to apply s.32 to unfair dismissal, or to cases where there is the threat of violence or serious personal harassment such as to make it dangerous or intimidating for applicants to take step 1. However, it confirmed that the requirements of the section will apply to cases of constructive dismissal25.
Power to extend time limits where statutory procedures apply
Section 33 of the EA 2002 gives the secretary of state power to make regulations about the time limit for beginning certain tribunal proceedings where the claim concerns a matter to which a statutory procedure applies and which are listed in Schedules 3 or 4. The time for beginning proceedings may be extended, discretion may be granted to extend that time, or proceedings begun out of time may be treated as begun in time.
The Explanatory Notes indicate that the purpose of the power is to allow time for the statutory procedures to be completed before a complaint is presented to a tribunal.
The government stated: "We propose that complaints should not be regarded as out of time if a statutory procedure was begun within the normal period for complaining, but the application is made later, during an extended period of a further three months. We want to consider whether there should be any provision for extending the time limit if it was not reasonably practicable to have started the procedure within the time limit, for example, if the employee concerned was seriously ill."26
Failure to follow the statutory disciplinary procedure
Section 34(2) of the EA 2002 inserts a new s.98A into the ERA, under which an employee is to be regarded as automatically unfairly dismissed if: the statutory dismissal and disciplinary procedures apply to the dismissal; the procedure has not been completed; and the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.
As the new right is contained in Part X of the ERA, the employee will have to fulfil the usual qualifying requirements of one year's continuous service, and be below the normal retirement age.
Compensation
In a case to which s.98A(1) applies, s.112 ERA is amended, and the employment tribunal shall award four weeks' pay to the employee if an order is made for reinstatement or re-engagement, unless the tribunal considers that such an award would result in injustice to the employer (s.34(3)). The award of four weeks' pay is to be deducted from any compensation under s.117(1) or s.117(3)(a) of the ERA in respect of failure to comply, in whole or in part, with an order for reinstatement or re-engagement (s.34(4) and (5)).
In a case where s.98(A)(1) applies but no order is made for reinstatement or re-engagement if, before any deduction for a redundancy payment is awarded or paid to the employee, the basic award is less than four weeks' pay, it will be increased to that sum. No such increase need be made if the tribunal considers that such an award would result in injustice for the employer (s.34(6)).
Non-statutory procedural failures do not make dismissal unfair
Section 34(2) also provides, by inserting s.98A(2) into the ERA, that, subject to s.98(A)(1) (the statutory dismissal procedure), failure by an employer to follow a procedure in the dismissal of an employee shall not be regarded by itself as making the employer's action unreasonable, if the employer shows that it would have decided to dismiss the employee even if the procedure had been followed. In other words, the failure to follow a disciplinary procedure other than the statutory procedure will not by itself make the dismissal unfair.
This provision will reverse the current rule laid down in Polkey v AE Dayton Services Ltd27 which held that, in general, failure to follow appropriate procedures cannot be justified on the basis that it would have made no difference to the decision to dismiss. However, in assessing compensation, the tribunal could take into account that dismissal would have been the likely result if the procedure had been properly applied. According to the consultation document Routes to Resolution, "many employers claim that the present state of the law encourages employees to make claims, and allows them to succeed, for trivial reasons" (para. 3.22).
Employers will now have to show that if procedures, other than those under Schedule 2, had been applied properly, the decision to dismiss would still have been made. The President of the Employment Tribunals, His Honour Judge Prophet, in commenting on the Bill, said that he believed that clause 34 "will undoubtedly produce considerable litigation in itself"28.
It is important to note that, even if the employer can show that it would have dismissed in any event, the tribunal will still have to assess whether the decision to dismiss was within the band of reasonable responses29.
WRITTEN PARTICULARS
Sections 35 to 38 of the EA 2002 contain changes in the law setting out the written employment particulars that must be supplied to employees under s.1 of the ERA, extend the manner in which they may be provided, and introduce a power to award compensation for failure to provide the particulars.
Particulars to include disciplinary procedures
Section 3 of the ERA provides that the written statement of terms and conditions required under s.1 must include a note of disciplinary rules. It must also specify the person to whom the employee can apply if dissatisfied with a disciplinary decision, or for the purpose of redressing a grievance. The note must contain any procedures relating to such applications.
Section 35(2) of the EA 2002 inserts s.3(1)(aa) into the ERA, requiring that the note must now specify any procedure applicable to the taking of disciplinary decisions relating to the employee, or to a decision to dismiss the employee, or refer to a document specifying such a procedure that is reasonably accessible to the employee.
Section 35(3) inserts into s.3(1)(b)(i) of the ERA a provision that the statement must specify a person to whom the employee may apply if he or she is dissatisfied with a decision to dismiss, or with a disciplinary decision.
By s.35(4), s.3(2) of the ERA is also amended so that decisions to dismiss that relate to health and safety at work are treated in the same way as rules, disciplinary decisions, grievances or procedures that are related to health and safety, and need not be included in the note.
The employer will therefore be required to include details of the statutory dismissal and disciplinary procedures, or of any contractual procedure, providing that its requirements are additional to those under the statutory procedure. The statutory grievance procedure will also have to be contained in the written statement by virtue of s.3 of the ERA as presently worded.
Section 36 of the EA 2002 removes the exemption contained in s.3(3) of the ERA, by virtue of which employers with less than 20 employees do not have to supply details of disciplinary rules and procedures.
Use of alternative documents for particulars
Section 37 inserts s.7A into the ERA. Section 7A applies where:
(a) an employer gives the employee a document in the form of a contract of employment or a letter of engagement;
(b) the document contains all the information required by s.1 of the ERA; and
(c) the document is given after the beginning of the employment and not later than two months afterwards (the period within which the s.1 statement must be given by virtue of s.1(2) of the ERA).
By s.7A(2), such a document will be treated as meeting the employer's duty under s.1 of the ERA to supply a statement of employment particulars. By s.7A(3), such a document will also be treated as meeting the employer's duty under s.3 of the ERA to supply a note of disciplinary procedures, providing it contains the information required by s.3. The date the document is given to the employee is the date at which the prescribed information applies (s.7A(4), and also the date for determining whether a written statement of changes is required under s.4 of the ERA (s.7A(5) and (6).
Section 7A(7) provides that in s.4(6) of the ERA, which deals with technical name changes of the employer, the reference to a statement under s.1 shall be treated as including a contract of employment or letter of engagement which meets the employer's duty under s.1.
By s.7B, a contract of employment or letter of engagement will fulfill the requirements of the ERA if given before the employment starts. In this case, the particulars shall be treated for the purposes of s.7A as having been given at the time the employment begins.
Failure to provide written statement
Section 38 of the EA 2002 introduces, for the first time, a power for an employment tribunal to award compensation for failure to provide a written statement of employment particulars or particulars of change. However, by s.38(1), there will have to be a claim by an employee before the tribunal under one of the jurisdictions listed in Schedule 5.
If the tribunal finds in favour of the employee but makes no award of compensation, and the employer was in breach of its duty to provide the written particulars when the proceedings were begun, the tribunal must make an award of two weeks' pay. If the tribunal considers it just and equitable, it may award four weeks' pay (s.38(2)). By s.38(3), where the tribunal makes an award to the employee on his or her claim, and the employer was in breach of its duty to provide the written particulars when the proceedings were begun, the tribunal must increase the award by two week's pay, or, if it considers it just and equitable, by four weeks' pay. The duty to make or increase an award under s.38 does not apply if there are exceptional circumstances that would make it unjust or inequitable to do so (s.38(5)).
A week's pay is to be calculated in accordance with ss.220-229 of the ERA. It is subject to the cap laid down in s.227, which is, at present, £250 (s.38(6)). The calculation date will be the date proceedings were begun if the employee was then employed by the employer, otherwise it will be the effective date of termination under s.97 of the ERA (s.38(7)).
The secretary of state is given extensive power to amend the list of provisions under Schedule 5, and to remove the application of s.38 to a particular type of claim. Section 38 may be applied to an individual specified in an order who is not an employee, or as if a person specified in the order was an employee.
Section 39 of the EA 2002 inserts a new s.124A into the ERA which provides that, where an award of compensation for unfair dismissal is increased under s.38 for failure to give a statement of employment particulars, the adjustment shall be made to the compensatory award, before any reduction for contributory fault by the employee, and before any reduction for redundancy payments paid by the employer in excess of the basic award.
UNION LEARNING REPRESENTATIVES
Union learning representatives are a new type of lay union representative, whose main function is to advise union members about their training, educational and developmental needs. Their advice is usually provided direct to union members at their place of work and sometimes through face-to-face meetings with individuals. According to the Explanatory Notes to the Bill, there are currently around 3,000 such representatives.
Under s.168 of the TULR(C)A, officials of an independent trade union that is recognised by their employer are permitted reasonable time off during working hours to carry out certain trade union duties, and to undergo training relevant to those duties. Section 169 of TULR(C)A provides that an employer who permits officials to take such time off must pay them for that time. Section 170 of TULR(C)A provides that employees who are members of recognised independent trade unions are permitted to have reasonable time off during working hours to take part in the activities of the union. The employer is not required to pay its employees when it permits them to take such time off.
Union learning representatives are not trade union officials. Currently, they have no clear entitlement to paid time off to undertake their duties, or to be trained as such. Other union members have no clear right to time off work to access representatives' services. Section 43 of the EA 2002 now rectifies this, and adds a new s.168A to TULR(C)A. It provides that an employer shall permit an employee who is a member of a recognised independent trade union and a learning representative of that union to take time off for specified purposes. The representative is appointed or elected in accordance with the trade union's rules.
The specified purposes are as set out in s.168A(2):
analysing learning or training needs;
providing information and advice about learning or training matters;
arranging learning or training;
promoting the value of learning or training;
consulting the employer in relation to such activities; and
preparation in relation to such activities.
However, the activities must be carried out on behalf of "qualifying members of the trade union", that is, employees who are members of a recognised trade union and for whom the representative's function is to act (s.168A(10)). The government has confirmed that "union learning representatives could provide advice to union members on learning needs that may not have a direct bearing on their work"30.
The trade union must give the employer written notice that the employee is the learning representative of the union, and that the employee has met the training condition (s.168A(3)). The training condition is met if either:
the employee has undergone sufficient training to carry out his or her activities and the union has given the employer notice to this effect;
the trade union has given the employer written notice in the last six months that the employee will be undergoing such training, although only one such notice may be given for any one employee; or
within six months of the employer giving written notice that the employee will be undertaking such training, the employee has done so, and the union has given notice to the employer to this effect (s.168A(4) and (5)).
Whether training is sufficient will be determined with regard to any Code of Practice issued by Acas or the secretary of state (s.168A(6)). An employee who is entitled to time off as a representative is also entitled to time off for training relevant to the functions of the position (s.168A(7)). The amount of, and the purposes, occasions and conditions for, time off must be reasonable in all the circumstances, having regard to any Code of Practice (s.168A(8)).
By s.168A(9), an employee may bring a complaint to an employment tribunal that the employer has not allowed time off as required. In addition, para. 34 of Schedule 7 to the EA 2002 adds dismissal for asserting a right to time off as a learning representative to the categories of automatically unfair dismissal under s.104 of the ERA.
Section 169 of TULR(C)A is amended to provide that an employer who permits an employee to take time off under s.168A as a union learning representative must pay him or her for the time taken off.
Section 170 of TULR(C)A is amended to require an employer to allow unpaid time off to an employee who is a member of a recognised independent trade union for the purpose of having access to the services of a learning representative of that union. However, this requirement only applies if the learning representative is entitled under s.168A of TULR(C)A to time off for the specified purposes in relation to learning or training. The government has stated that the right is "to consult and to take advantage of the services that their union learning representatives can provide. It creates no right to unpaid time off to take advantage of training."31
The secretary of state is given power to amend the list of purposes for which a representative may take time off. By amendment to ss.199(1) and 203(1) of TULR(C)A, the secretary of state and Acas are given power to issue Codes of Practice in relation to union learning representatives. The draft has to be approved by both Houses of Parliament before a Code can be issued by Acas (s.200(3) TULR(C)A). The government has confirmed that the power to amend the list of purposes "could not be used to create an entitlement for a trade union to bargain collectively on training"32.
DISMISSAL PROCEDURES AGREEMENTS
Section 110 of the ERA allows the secretary of state to designate certain agreements as dismissal procedures agreements. This has the effect of replacing the right to claim unfair dismissal before an employment tribunal with the procedures set out in the agreement. Such an agreement must meet specific criteria. For example, the scheme must offer remedies that are on the whole as beneficial as the statutory right to claim unfair dismissal.
Section 44 of the EA 2002 allows the secretary of state, in general terms, to amend the criteria set out in s.110 of the ERA by order. According to the Explanatory Notes, the intention is to ensure that agreements comply with the Human Rights Act 1998.
FIXED-TERM WORK
The European Directive concerning the framework agreement on fixed-term work, (No.99/70/EC) ("the Fixed-Term Work Directive"), was due to be implemented in the UK by 10 July 2002 with the coming into force of the EA 2002. However, the government has taken the view that the Directive does not apply to pay and pensions, but considers that employees in fixed-term work should be protected in respect of these matters. Primary legislation is therefore required.
Section 45 of the EA 2002 provides the secretary of state with power to make regulations to ensure that employees in fixed-term employment are not treated less favourably than employees in permanent employment, and to prevent abuse arising from the use of successive periods of fixed-term employment. The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 are now due to come into force on 1 October 2002. Section 46 of the EA 2002 provides a similar power for the Department for Employment and Learning in Northern Ireland to make regulations on fixed-term work.
The government was pressed in parliament to apply the regulations to "workers", rather than the narrower category of "employees", but it stated that it was "confident that we are complying with the Directive"33. It relied upon the scope of the Directive, as set out in clause 2 of the framework agreement, which states: "This agreement applies to fixed-term workers who have an employment contract or employment relationship as defined by law, collective agreement or practice in each member state." Note, however, that the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 are applied to "workers", although it applies the same wording as the Fixed-Term Workers Directive.
References
1
(DTI 01/1031)
2 (DTI 01/1233)
3 [2002] IRLR 415
4 Omar v Worldwide News Inc [1998]
IRLR 291
5 6.12.01, Hansard (HC) Standing
Committee F col. 13
6 6.12.01, Hansard (HC) Standing
Committee F col. 20
7 6.12.01, Hansard (HC) Standing
Committee F col. 20
8 14.3.02, Hansard (HL) Grand Committee
col. 83
9 30.5.02, Hansard (HL) Grand Committee
col. 1526
10 30.5.02, Hansard (HL) Grand Committee
col. 1534
11 Explanatory Notes to the EA 2002
12 11.12.01, Hansard (HC) Standing
Committee F col. 91
13 Smith v Automobile Proprietary Ltd
[1973] ICR 306
14 11.12.01, Hansard (HC) Standing
Committee F col. 103
15 30.5.02, Hansard (HL) Grand Committee
col. 1552
16 11.12.01, Hansard (HC) Standing
Committee F col. 105
17 Eurobell Holdings Plc v Barker
[1998] ICR 299
18 27.11.01, Hansard (HC) col. 865
19 13.12.01, Hansard (HC) Standing
Committee F col. 159
20 20.3.02, Hansard (HL) Grand Committee
col. 239
21 20.3.02, Hansard (HL) Grand Committee
col. 225
22 18.12.01, Hansard (HC) Standing
Committee F col. 180
23 18.12.01, Hansard (HC) Standing
Committee F col. 187
24 18.12.01, Hansard (HC) Standing
Committee F col. 196
25 25.3.02, Hansard (HL) Grand Committee
col. 344
26 18.12.01 Hansard (HC) Standing
Committee F cols. 189-190
27 [1987] IRLR 503
28 Para. 11, Appendix to 12th Report of
Joint Committee on Human Rights
29 Foley v Post Office [2000] IRLR
827
30 17.1.02, Hansard (HC) Standing
Committee F col. 461
31 17.1.02, Hansard (HC) Standing
Committee F col. 499
32 22.1.02, Hansard (HC) Standing
Committee F col. 529
33 22.1.02, Hansard (HC) Standing
Committee F col. 543
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Changes to employment tribunal procedure may require a party's representative to pay costs or expenses, or may disallow a representative's costs or expenses.
A tribunal may order a party to pay for another party's preparation time, and orders for costs, expenses or preparation time may take into account a party's means.
The fixing of a hearing date may be postponed to allow for conciliation, after which period Acas will have a power, rather than a duty, to conciliate.
A form for originating applications and notices of appearance may be prescribed.
Tribunal proceedings may be determined without a hearing in prescribed circumstances.
A new requirement upon employers to apply new statutory dispute resolution procedures, incorporated into every contract of employment, to disciplinary matters and employee grievances.
A tribunal must generally adjust an award by between 10% and 50% for failure to complete the statutory procedures before a claim is begun.
Time limits for bringing claims may be extended where the statutory procedures apply.
It will be automatically unfair to dismiss an employee in breach of the statutory dismissal and disciplinary procedures.
In a reversal of the rule in Polkey v AE Dayton Services Ltd, failure by an employer to follow procedures, other than the statutory procedures, will not by itself make the dismissal unfair if the employer can show that the employee would have been dismissed in any event.
Employers with fewer than 20 employees will now have to provide details of their disciplinary rules and procedures.
A new power for a tribunal to award two or four weeks' pay, up to a maximum of £250 per week, if there is a prescribed claim before it, and the employer has failed to provide written particulars to the employee when the proceedings were begun.
An employer must allow an employee who is a member of a recognised independent trade union and a learning representative to take paid time off for specified purposes relating to the learning or training needs of union members.
An employer must allow an employee of a recognised independent trade union unpaid time off to have access to the services of a union learning representative.
Regulations may be made preventing less favourable treatment of fixed-term employees.
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Schedule 4: Tribunal jurisdictions to which section 32 applies Section 2 Equal Pay Act 1970 (equality clauses)
Section 63 Sex Discrimination Act 1975 (discrimination in employment)
Section 54 Race Relations Act 1976 (discrimination in employment)
Section 146 Trade Union and Labour Relations (Consolidation) Act 1992 ("TULR(C)A") (detriment in relation to trade union membership and activities)
Paragraph 156 of Schedule A1 to TULR(C)A (detriment in relation to union recognition rights)
Section 8 Disability Discrimination Act 1995 (discrimination in employment)
Section 23 Employment Rights Act 1996 ) ("ERA") (unauthorised deductions and payments)
Section 48 ERA (detriment in employment)
Section 111 ERA (unfair dismissal)
Section 163 ERA (redundancy payments)
Section 24 National Minimum Wage Act 1998 (detriment in relation to minimum wage)
Schedule 3 Tax Credits Act 1999 (detriment in relation to tax credits)
Regulation 30 of the Working Time Regulations 1998 (breach of regulations)
Regulation 32 of the Transnational Information and Consultation of Employees Regulations 1999 (detriment relating to European Works Councils)
Adjustment of awards for non-completion of statutory procedure Schedule 3: Tribunal jurisdictions to which section 31 applies The jurisdictions contained in Schedule 4 and in addition: Employment Tribunal Extension of Jurisdiction (England and Wales) Order 1994 (breach of employment on termination)
Employment Tribunal Extension of Jurisdiction (Scotland) Order 1994 (corresponding provision for Scotland)
Compensation for failure to give employment particulars Schedule 5: Tribunal jurisdictions to which section 38 applies The jurisdictions contained in Schedule 4 and in addition: Employment Tribunal Extension of Jurisdiction (England and Wales) Order 1994 (breach of employment on termination)
Employment Tribunal Extension of Jurisdiction (Scotland) Order 1994 (corresponding provision for Scotland)
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