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Gwyneth Pitt

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Title: The Employment Act 2002: anti-worker, anti-employer or a balanced approach?

Summary of a paper given on 22 September 2002 to the Industrial Law Society Annual Conference in Oxford

Introduction

This paper will start with some comments about the process which has led to the 55 sections and 8 Schedules of the Employment Act 2002, and then move on to some observations about aspects of the content. It will finish with a few thoughts by way of conclusion, trying to address the question set by the title above.

Process

This is the Act which appeared from nowhere: it was not mentioned in the Queen’s speech and there is little in it which is compelled by external forces such as EU legislation. The contrast with the Employment Relations Act 1999 is striking: it took a year after Labour was elected in 1997 to produce the Consultation Paper, Fairness at Work and a further year before the Employment Relations Act was passed. The Government made much of the fact that it was to be the one major statute on employment law during the lifetime of that Parliament.

While this Act has not been heavily trailed, rarely can any piece of legislation have been preceded and succeeded by so much paper, in terms of the consultations on its different parts beforehand and the further consultations that are now ongoing on the sets of Regulations which will be necessary to implement it.

The Employment Act 2002 can be seen, if not as a culmination, at least as a staging post in the realisation of a number of quite different initiatives ongoing in the Government’s agenda. It cannot, however, be seen as a coherent whole, as a statute with a particular purpose or philosophy behind it. This is not particularly a criticism, more an observation. Any attempt to find a unifying philosophy underpinning the Act would be, in my opinion, doomed to failure. Rather, the Employment Act 2002 is a patchwork, consisting of a few large pieces of differently-patterned material stitched loosely together with a few scraps of contrasting fabric added in to round it off.

How have the large bits been arrived at? The provisions on paternity leave and pay, extended maternity rights, adoption leave and flexible working arise from the Work-Life Balance Campaign, launched by the Government in March 2000. Appendix 1 shows the flurry of consultation documents dealing with these issues since the Maternity and Parental Leave etc Regulations 1999. The provisions on tribunal reform also have a lengthy and somewhat confused legislative history: see Appendix 2. One can at least be fairly certain what the driving force behind these provisions are: the desire to save money by reducing the number of cases going to employment tribunals. The massive increase in numbers of applications to employment tribunals is well known: over 100,000 in 1999/2000 and up a further 25 per cent to over 130,000 in 2000/2001. There is almost an air of panic in the Government’s approach to tribunal reform. In the last couple of years there have been no fewer than three Taskforces or Review Committees, with associated consultation papers and responses, all working "alongside" each other, at least in time, but apparently in separate tramlines which do not seem to have intersected at any point. Further reform will take place before there has been any evaluation of the last set of tribunal procedure reforms which took effect in July 2001.

There is a another serious point in all this. First of all, the Employment Act 2002 is, as on MP described it, almost an empty shell. There are relatively few sections which change the employment law regime. The main thrust of the Act is to give the Secretary of State the power to make regulations on a number of important issues. While in some cases the likely content of these regulations was relatively well understood while the Act was going through Parliament, this is not the case for all of them. For example, as noted already, the amendment to include a right to ask for flexible working, one of the most controversial provisions in the Act, was only introduced on 15 January 2002 when the Bill was already well into its Committee Stage in the House of Commons.

This does raise significant issues about whether such legislation gets the Parliamentary scrutiny by our elected representatives that we as citizens are entitled to expect. It is inevitably the case that Regulations receive no real consideration by Parliament and this, it is suggested, is a most undesirable way of making major changes. There is also the question of who it is who is actually shaping the law in this regard. The Employment Act 2002 is presumably informed by the work of:

• the Work and Parents Taskforce
• the Employment Tribunals Taskforce
• the Better Regulation Taskforce
• the Leggatt Committee

- and probably many others too. While these Taskforces are no doubt composed of eminent, knowledgeable and talented people, none of them has ever been elected. Is this the right way to go about law reform?

Content

I would like to make a few comments about some aspects of the Act’s content. The first points follow from what has already been said about process.

Flexible working

The proposal as outlined in the current Consultation paper is essentially as follows:

• the right will be limited to employees with 26 weeks’ service
• they must be seeking the change in order to care for a child
• the child must be under 6 (or 18 for children with disabilities)
• agency workers and members of the armed forces are excluded.

Such employees may request:

• a change in number of hours worked
• a change in time of work
• to work from home

However, any such change is to be on a permanent basis.

This is one of the provisions of the Act which it is claimed will be most burdensome to business, especially small businesses. However, it may turn out to be less of an issue than at first appears. The major defect is that the employer need only go through the procedure of considering the employee’s request and responding to it. The employee will have no redress provided that the employer has followed the correct procedure. Employment tribunals will not be empowered to scrutinise the employer’s decision, or suggest a reasonable compromise. Also, the kind of flexible working which most employees want is usually a reduction in hours – but it is very likely that they may be unwilling or unable to ask for this on a permanent basis.

It has been suggested that the flexible working provisions may cause dissent between employees. Professor Sir George Bain, Chair of the Work and Parents Taskforce, was quoted as saying:

Two comments should be made here. First of all, it must be realised that any improvements in the rights of working parents, especially the parents of young children, and this includes the paternity leave and maternity leave changes in the Act, are not about people with children versus people without children. They are about women, and achieving real equality of opportunity for women with families. Anything which makes it easier for men to take on more childcare responsibilities is really about freeing women from the unequal burden of need to do the same as men and childless women at work and a much bigger job in the home. The provisions should be supported in that light. That said, however, the second point is that there may indeed be an issue here for unions and managers to address in terms of helping flexible working arrangements to be successful without alienating any groups of employees. In practice women bear the brunt of care for older family members as well as children and at different stages in their lives and careers may find that they need flexible working for this purpose also. Some recognition of this can be found in the right to time off for dependants introduced in 1999. There is a strong argument for giving carers of older relatives or, indeed, older children an entitlement to flexible working, and perhaps this will come in time.

Dispute resolution

It seems fairly clear that the last big idea was a failure! Although some 90-plus ACAS

arbitrators were trained, at considerable cost, since the ACAS Arbitration Procedure came into force in May 2001 there have only been a handful of cases – fewer than 20 in the first year – where the procedure has actually been used. Will the statutory requirement for contractual disciplinary and dismissal and grievance procedures bring about the hoped-for reduction in applications to employment tribunals?

Frankly, it seems unlikely; indeed, the reverse is more likely to be the case. Ever since the original ACAS Code of Practice No 1 there has been a strong indirect pressure on employers to comply with the standards of good employment practice therein, because of the risk of being found to have acted unfairly if they do not. The idea of putting this into a positive statutory obligation to have such procedures and to make them enforceable contractual terms would be the apotheosis of this development – if it had happened! But this is not the case. The requirements of the three-step and two-step statutory disciplinary and dismissal procedures included in the Act are not only much narrower and more perfunctory than the procedures recommended in the current ACAS Code of Practice, they are actually at odds with it. There is a clear danger here that the statutory procedures may undermine the requirements of the Code of Practice. Although tribunals will still be enjoined to take the Code into consideration wherever it is relevant, there are bound to be arguments from employers that they have complied with the law as laid down in the Employment Act 2002 Schedule 2 and that they cannot be said to have acted outside the range of reasonable responses if they then proceed to a dismissal decision without more.

The modified, two-stage procedure, apparently intended for serious cases of gross misconduct, conflicts directly with the ACAS Code of Practice. It assumes that a hearing is not necessary before a dismissal for gross misconduct and, in so doing, confuses the concept of summary dismissal with instant dismissal – something which the 2000 revision of the ACAS Code was at pains to clarify.

The wierdest thing about the dispute resolution provisions in the Act, however, is that, on the one hand it reverses the rule in Polkey and therefore allows an employer to argue that a failure to follow its own procedures would not have made a difference to the decision to dismiss – yet, on the other hand, it introduces a new right to claim that dismissal is automatically unfair if the statutory disciplinary and dismissal procedure has not been followed!

In relation to the exclusion of a right to make a claim to a tribunal where the employee has not first used the statutory grievance procedure, it is worth reminding ourselves that constructive dismissal cannot in any case be claimed unless the employee is able to show a fundamental breach of contract on the part of the employer. There cannot be many situations where the innocent party, faced with a fundamental breach by the other contracting party, is precluded from bringing an action because he or she has not followed some other procedure.

The argument that this provision is in any case misguided, in that the problem it purports to address is not nearly as significant as the Government claimed, has been rehearsed elsewhere.

Conclusions

The question posed in the title to this session was: is the Employment Act 2002 anti-union or anti-employer, or a fair balance? I do not think that this is the right question. The Act can certainly be seen as pro-employee (using the term "employee" advisedly). It seems likely that it will also increase burdens on employers – although not necessarily beyond what is fair and reasonable.

Will it achieve, as the Government hopes, a reduction in the number of tribunal applications? This is very unlikely, in my opinion, especially given the new statutory grievance and disciplinary procedures as well as the other new rights contained in the Act. The statutory procedures seem more likely to generate litigation in their own right rather than to contribute towards resolution of disputes in the workplace.

Overall, it feels as if legislation is being generated on a hunch rather than on the basis of solid research, and this is a concern. However, as the flow of employment legislation becomes ever faster, I would like to finish by commending an idea from the Better Regulation Task Force’s Report - namely, that there should be common implementation dates for new employment legislation. If it was known that there were two or three specific points in the year when new legislation would come into force, I imagine that that small reform would make quite a big difference to businesses faced with implementing it.

Appendix 1

Background to the Employment Act 2002 provisions on paternity and adoption leave, extended maternity rights and flexible working

Appendix 2

Background to the Tribunal Reform provisions of the Employment Act 2002

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