Another step in process of change

Press interest has tended to focus on the collective rights which are contained in the Bill, particularly those set out in Schedule 1 in relation to trade union recognition.  An examination of these provisions is beyond the scope of this article and it is intended rather to consider the provisions of the Bill which will have most direct impact on individual employment security and which will therefore be of most practical significance to lawyers representing clients before employment tribunals and courts.  However, it goes without saying that the overall improvement of the position of the trade union in relation to recognition and the confidence it brings will have an effect on the way in which individual rights are enforced.

Qualifying period for unfair dismissal

Although not specifically dealt with in the Bill, it is the Government’s intention to reduce the qualifying period for the entitlement to claim unfair dismissal from two years to one year, a move which in itself will add substantially to the workload of employment tribunals.  The Secretary of State has a power to qualify or amend the qualifying period by way of Regulation and this is the intended route, although the exact date of the change is not yet known.

Unfair dismissal compensation

Prior to publication of the Bill there was a considerable amount of speculation as to what position the Government would adopt in relation to compensation for unfair dismissal.  A limit had always existed and had only been subject to modest uplifts over the years.  On the one hand, the principle of having a limit on compensation had always been enshrined in domestic employment law.  On the other hand, domestic legislation is increasingly giving way to European law, a dramatic consequence of which initially was the abolition altogether of compensation limits in relation to sex discrimination cases.  This led to the removal of the limit which had previously also existed in relation to race discrimination and no limit was introduced in relation to any compensation awarded under the Disability Discrimination Act 1995.

Rather than remove the statutory ceiling altogether, the Bill proposes a limit of £50,000 to be applied to the compensatory award in an unfair dismissal case.  This compromise would appear to reflect the objective set out in the White Paper - “to develop a culture in all organisations in which fairness is second nature and underpins competitiveness”.  The balanced approach is apparent throughout the Bill - the balance between fairness and competitiveness; the balance between employer and union; the balance between home and work; the balance between European and domestic law.  Many will argue that the new ceiling is far too high and it undoubtedly represents a massive uplift on the previous limit, making it far more difficult for employers to predict the liability involved in dismissing an employee.  Others will argue that it is inconsistent to apply any limit at all, bearing in mind the comparison with discrimination legislation.  It remains to be seen how employment tribunals will calculate awards in future, but the likelihood is that overall there will not be a significant increase in the level of awards in unfair dismissal cases.  The effect will be felt in a minority of cases involving employees generally having longer service, higher earnings and benefits, and longer periods of unemployment.  The majority of employees who are unfairly dismissed do manage to obtain alternative employment within a reasonable period of time (often by the time the employment tribunal hearing takes place) and therefore will not be in a position to justify substantial claims for compensation.

It would, however, be unwise to ignore the psychological impact of the new limit in relation to the way dismissals, settlements, and tribunal hearings will be handled.  Undoubtedly employers are likely to prepare and plan dismissals more carefully, no doubt relying increasingly on legal advice in doing so.  Settlements, by way of compromise agreement, or through ACAS, may be more difficult to achieve in view of the much wider range of awards.  Regrettably, employment tribunal hearings may become longer, not just because potential liabilities will be higher but because inevitably more time will be spent in dealing with compensation issues.  Logic would tend to suggest that these points may apply only to the small percentage of cases referred to in the previous paragraph, but as all practitioners are aware, to an applicant there can exist a considerable gap between what is desirable and what is achievable!

Disciplinary and grievance hearings

Clause 11 of the Bill proposes new rights to workers who are required or invited by the employer to attend a disciplinary or grievance hearing.  If the worker “reasonably” requests that he be accompanied at the hearing then the employer is obliged to permit him to be accompanied by a “single companion” who is chosen by the worker.  “Companion” is defined in the Bill as a trade union official or another of the employer’s workers.  The companion is to be permitted to address the hearing but not to answer questions on behalf of the worker and is also to be permitted to confer with the worker during the hearing.

By virtue of clause 11(4) if the chosen representative is not available at the time proposed by the employer for the hearing and the worker then proposes a reasonable alternative time falling within five working days of the date on which he was informed by the employer of the original date, then the employer must postpone the hearing to the time proposed by the worker.

As currently drafted the proposals do not require the employer to provide the worker with either a disciplinary or a grievance procedure in the first place and the employee’s compensation for a breach of the provisions is limited to two weeks pay.

Fixed term contracts

Fixed term contracts have long been a source of difficulty in the context of the employment relationship.  Except in very limited circumstances, such as where an employer is only in receipt of funding for a specific period of time, the use of fixed term contracts is of limited benefit to the employer and of virtually no benefit to the employee.  Section 197 of the Employment Rights Act 1996 (ERA) currently allows employees employed under fixed term contracts, provided certain conditions are met, to waive their right to claim unfair dismissal on the expiry of the contract.  Clause 17 of the Bill proposes a removal of this provision, thereby preventing the employer from relying on any such waiver.  This change, however, would only apply to waivers in respect of unfair dismissal claims - it will still be possible for employees to waive the right to claim a redundancy payment on the expiry of a fixed term contract provided the requirements set out in s197 of the 1996 Act are met.

Miscellaneous individual rights

Schedule 3 of the Bill proposes changes to a number of existing individual entitlements as well as creating new rights, most of which flow from the Government’s stated aim of promoting family friendly employment policies.

In particular some changes are proposed to existing maternity entitlements, the most notable of which are an extension of the ordinary maternity leave period from 14 to 18 weeks and a reduction in the period of qualifying service required for additional maternity leave from two years to one year.  The Bill confirms that the contract of employment will continue during all periods of statutory maternity leave.

The Bill if enacted will require the Secretary of State to make regulations governing entitlement to parental leave for the purpose of caring for a child (Schedule 3 Chapter II).Because of the terms of the Parental Leave Directive (96/34), member states require to ensure that the period of any parental leave must be at least three months.  The Secretary of State will require to cover a number of matters in any consequent regulations including whether there is to be any service qualification (likely to be one year), who may qualify, when the leave may be taken and whether it may be taken in a number of instalments.

Part II of Schedule 3 of the Bill if enacted will also create new rights for employees to take a reasonable amount of time off work for “domestic incidents” which are defined as incidents which occur in the home of the employee or affect a member of the employee’s family or a person who relies on the employee for assistance.  Again, the Secretary of State is required to make regulations setting out the scope and limits of the entitlement and these will deal with questions relating to the factors and circumstances to be taken into account in determining whether it is reasonable to take time off as well as the amount of time, notice to be given, etc.

Other legislation

In recent years we have witnessed basic legislation providing some protection against unfair dismissal being extended to cover many different types of termination, for example a dismissal is automatically unfair if it is by reason of pregnancy (s99 ERA), for one of a number of health and safety reasons (s100 ERA), for assertion of a statutory right (s104 ERA), for trade union reasons (s152 of the Trade Union and Labour Relations (Consolidation) Act 1992).  Added to this is the raft of new rights introduced to regulate the relationship while it remains alive - the most obvious recent example being the Working Time Regulations 1998.  However, more is on the way.  Employers will have to come to terms with the provisions of the Data Protection Act 1998, the National Minimum Wage Act 1998, the Public Interest Disclosure Act 1998, and the Human Rights Act 1998.  In addition to this, fundamental changes are being proposed to the equal opportunities legislation and the Acquired Rights Directive.  This is only the primary legislation and one has to take account also of subordinate legislation as well as codes of practice.  For example, a “Code of Practice for Age Diversity in Employment” is likely to be published shortly to deal with problems relating to age discrimination in the workplace.

Conclusion

During the last quarter of a century the employment relationship has been turned on its head by a combination of processes that would have been unthinkable at the time when statutory regulation of the employment relationship first began.  Employment law itself has emerged as a discipline which, depending upon one’s point of view, places obstacles in the way of business or alternatively promotes stability and fairness.  The Government advocates the concept of partnership in setting out its employee relations objectives.  The partnership concept traditionally connotes, in the business context at least, a degree of sharing of profit and risk.  To that extent the nineties concept is misleading inasmuch as it purports to describe the employment relationship, which at the moment resembles more a balancing act of rights and obligations (albeit much more finely balanced than before).  However, who knows where we may be heading? Statutory regulation of the employment relationship has had a fundamental impact on the way businesses are run and this process of change is unlikely to come to a halt in the foreseeable future.

Finally, a plea to the Government on the question of acronyms.  To employment lawyers acronyms have become important in developing our own unique language and identity.  Where would we be without TUPE, ERA, TURERA, and LIFO, not to mention CROTUM? The Employment Relations Bill will shortly become the Employment Relations Act 1999, just another ERA.  The Fairness at Work Act would have sounded better, told us more about its objectives, and distilled to the far more exotic “FAWA”.

Malcolm Mackay is a partner in Mackay Simon, a firm of employment lawyers based in Edinburgh.