Mr Tony Lloyd (Manchester Central, Labour)

We have had an interesting debate on clause stand part. The hon. Member for Runnymede and Weybridge (Mr. Hammond) took an interesting line and I would be pleased if my hon. Friend the Minister would respond to that because there is genuine concern about the gap between schedule 2, which becomes the basic minimum standard of disciplinary and grievance procedures, and the Advisory, Conciliation and Arbitration Service's existing code of conduct. That code of conduct does not have statutory backing, but has similar force in that any industrial tribunal would consider itself bound by it.

The hon. Member for Runnymede and Weybridge referred to the legitimacy or otherwise of secondary legislation being used to introduce amendments to the schedule. I hope that my hon. Friend the Minister will resist the temptation to say that it is illegitimate to make changes in that way. I heard that argument deployed many times when my party were the Opposition, only to be rebuffed, and probably more casually rebuffed than the way in which my hon. Friend will rebuff the hon. Gentleman.

It is right and proper that there should be parliamentary scrutiny and the interesting question is whether that should be done in secondary legislation or in a similar way to the ACAS code, which has no backing from debate in the House. Most people believe that the ACAS code was well discussed and I am the first to argue that it is not always necessary for such matters to go through the House, but it would be an improvement for the provision to be discussed through the secondary legislation mechanism.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

The hon. Gentleman is addressing the question of whether secondary legislation is more or less legitimate than primary legislation and I shall not pretend that I have never argued that case. However, my specific point to the Minister was that it would be dishonest to introduce a schedule if the Minister intended soon to use his powers to amend it by order to change it radically and fundamentally. I was asking for an assurance that he had no such intention and, for example and specifically, that he was not minded to replace the schedule before us with the ACAS code as an amended schedule 2.

Mr Tony Lloyd (Manchester Central, Labour)

The hon. Gentleman made precisely that point earlier and I am not trying to impute words to him. I had hoped that, as with our debate on workers and employees, when the hon. Gentleman seemed to be moving our way, he was urging the Government to go beyond the schedule towards the ACAS code, as I shall urge the Minister to do.

It is absolutely legitimate for my hon. Friend to place before us the opportunity to debate changes. The hon. Gentleman was a little dismissive as to whether 90 minutes' scrutiny in Committee would make a difference, but the important point with majority governance, as in this country, is not whether Governments get their business through—they do, as they should, because they have a majority—but whether they must put it to proper scrutiny with the possibility of full public knowledge of what has taken place. That is the important issue and the Minister has ensured that there will be adequate opportunity for the Opposition to pick up any sleight of hand. Changes will not simply slip through bureaucratic mechanisms. The hon. Member for Runnymede and Weybridge will have every opportunity to debate them.

The important issue is the disparity between the new schedule and the existing ACAS code. As the Committee is aware, the ACAS code has an effective force and the tribunals are presently bound by it. It has what is tantamount to legal status. There is certainly a gap between the present schedule 2 and the ACAS code. I would be grateful if the Minister could tell us why that gap exists, and why the code was not adopted as schedule 2. Many of us would argue the code has provided the status quo in tribunals in the past, so why not simply lift it across so that everyone knew where they stood.

We could have had a debate with Opposition Members about how they wanted to diminish the ACAS code. It would have seemed right to me to have had a debate that looked at the ACAS code, and to have said where it was too luxurious and where it was too protective of employers or employees. We could have also considered where we needed to reduce the code. Instead, we got something rather different.

The fundamental point is that, if it is legitimate to offer something different to the existing code, the change will, for the first time—and I applaud it—oblige all employers to offer a disciplinary grievance system to their employees. Our concern, however, is that not only does it fail to come up to the ACAS standard, but that it may be used in place of the ACAS code before the tribunal. Anybody arguing for either party in the tribunal is bound to argue that Parliament has decreed that schedule 2 is the basic standard. They will say that the ACAS code goes beyond that standard, and it is no longer legitimate. Yet the tribunal must now be bound by the ACAS code, and that is a real concern.

My overall point, then, is to ask why the ACAS code has not been put into the Bill. Will that not result in the erosion of use of the ACAS code before the tribunal?

My final point, as I promised the hon. Member for Runnymede and Weybridge, is that I must urge the Minister to make it clear to the hon. Member for Runnymede and Weybridge that he will introduce the ACAS code at the earliest opportunity in place of the existing schedule.

Mr George Osborne (Tatton, Conservative)

May I say, Mr. Conway, what a delight it is to serve under your chairmanship in this Committee? No doubt, I shall serve under your chairmanship on many more Standing Committees during my career.

I wanted to pick up on some of the points that the hon. Member for Manchester, Central (Mr. Lloyd) made about the ACAS code, and to expand on the points made by my hon. Friend the Member for Runnymede and Weybridge. No doubt the Minister has received the briefing notes sent to the Standing Committee, so he will know that the Engineering Employers Federation says:

''As currently drafted, the proposals are unclear, complicated and might prove counter productive. For example, the relationship between the new statutory procedures, the existing law on unfair dismissal and existing ACAS Codes of Practice is confusing and therefore unsatisfactory.''

The Law Society said:

''We are concerned that the new procedures . . . will undermine the ACAS Disciplinary and Grievance Procedure Code.''

The Trades Union Congress expresses its concern, with others,

''about the confusion between the proposed minimum standards and the widely supported ACAS Code.''

In my view when the Engineering Employers Federation, the Law Society and the TUC agree on something, the Government have a problem. I would be very interested to hear how the Minister proposes to reconcile the problems with the ACAS code.

That does not necessarily mean that I agree with the hon. Member for Manchester, Central, that the ACAS code should take the place of schedule 2. In fact, I welcome the more streamlined approach set out in schedule 2.

I have other specific questions on schedule 2, the first of which concerns cases of sexual harassment. Figures from the Equal Opportunities Commission—I am relying on my memory here—suggest that 30 per cent. of sexual harassment cases involve a case against the individual's line manager and a further 30 per cent. of cases involve the boss of the company against whom the person is bringing a sexual harassment case. Are the Bill's procedures correct for such cases? It would be distressing for someone bringing such a case to find themselves going over the mechanics of what had happened with the very person against whom the case had been brought.

Later, we shall discuss how the Bill will apply to small businesses. How would schedule 2 operate for a company of only two people? Many small businesses are that size—one employer and one employee. A person could be a situation in which he or she had a grievance, discussed it with the employer and had to go through the charade of a formal dispute resolution process with the person against whom the complaint had been brought. Although schedule 2 may be applicable to larger companies, how can it possibly work for very small ones?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

I welcome you, Mr. Conway, to Standing Committee F for fun, and look forward to serving under your chairmanship. I am pleased that the hon. Member for Tatton (Mr. Osborne) raised such an important point. As my hon. Friend the Member for Manchester, Central said, many hon. Members have raised concerns about how the basic three-step procedure will sit alongside the ACAS code.

We are introducing basic discipline and grievance procedures for every workplace in the country. As the hon. Member for Tatton said, the workplace with one employee would be covered. In that circumstance, we believe that setting minimum standards is right. The ACAS code has 66 clauses as opposed to the Bill's 53 and currently, 48 per cent. of employers who go to an employment tribunal do not have internal procedures. Jumping straight from that situation to the best practice of the Bill would be wrong and difficult for small business to cope with. We have set out a minimum three-step procedure because that is the right direction in which to move; it provides a minimum standard, just as the minimum wage sets a minimum yet is not intended to bring everyone down to that wage. There is no evidence that setting a minimum wage or any other minimum standard drags everything down to the minimum.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Having listened to my hon. Friend the Member for Tatton, the hon. Member for Manchester, Central and the Minister, I want to ask whether the Government have considered, at any stage, whether a different minimum procedure should exist for larger employers than for smaller ones. Has the Minister considered that the ACAS code could be appropriate for larger employers, but schedule 2 would be more so for smaller ones?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

We considered that, but it would be unnecessary because employment tribunals draw such a distinction. At the moment, we have a best practice code. My hon. Friend the Member for Manchester, Central said that there was no parliamentary element to that, but the regulations are laid before Parliament and must go through the affirmative procedure. That happened as recently as last September for the revised code. We live in a world where many employers do not have basic minimum standards. The employment tribunals service makes a distinction between large or medium-sized employers, which should have recourse to best practice, and small employers, which it understands move in a different world for the reasons mentioned by the hon. Member for Tatton. There is no need for us to take a sledgehammer to crack that particular nut.

The hon. Member for Runnymede and Weybridge asked about secondary legislation, and I am glad that my hon. Friend the Member for Manchester, Central picked up the point. It is the Opposition's job to bemoan the fact that the Government introduce so much secondary legislation, and I have no doubt that they will continue to do so for many years.

The hon. Member for Runnymede and Weybridge said that his point occurred to him after business closed last night, which is why there is no amendment, but it would have been impossible for us, as I am sure that he will accept, to set down a power to make minor changes because we either have the power or we do not.

The hon. Gentleman asked whether we have plans to change the minimum standards to the ACAS code once the Bill is through. We have no such plans. We have consulted widely and we believe the minimum standards to be correct and fair because they resolve the lacuna in the legislation concerning the right to be accompanied. We are dealing with that issue in a way that is fair to all sides, provides a light touch and takes small businesses' problems in account. The Bill will not undermine the ACAS code, which will continue to be the benchmark for companies in cases in which the employment tribunal believes it to be appropriate.

Mr Tony Lloyd (Manchester Central, Labour)

That is one of the nubs of my concern. I am proud to say that I am not a lawyer, but I have been briefed by my hon. Friend the Member for Wolverhampton, South-West on the intricacies of the case. The Law Society brief on the matter states:

''A failure on the part of any person to observe any provision of this Code of Practice does not of itself render that person liable to any proceedings. In any proceedings before an employment tribunal any Code of Practice issued under sections 199 and 201 of the Trade Union and Labour Relations (Consolidation) Act 1992 is admissible in evidence and any provision of the Code which appears to the tribunal to be relevant to any question arising in the proceedings is required to be taken into account in determining that question.''

My hon. Friend the Minister tells us that there is no evidence that minimum standards erode better standards, and that many good employers will continue to operate the ACAS code. The question is whether the tribunal, which has a responsibility to consider the ACAS code, will be supplanted by a new Act of Parliament that will make it explicit that the tribunal must consider schedule 2 as the minimum standard. It seems obvious to me as a non-lawyer that people will argue that the tribunal must ignore the ACAS code and instead operate schedule 2.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

That is an important point, and the Government will ask ACAS to revise its code, which will be set before the House and be subject to affirmative procedures, to take account of that development. We must do that because many aspects of the ACAS code must be changed as a result of the Bill. ACAS draws up its code in absolute independence, which is an important element that must be preserved. When the Bill becomes law, it will significantly change the legal framework within which the code is set. It will therefore be essential to revise the code to reflect that new framework.

I envisage the revised code providing practical advice on these three issues. First, it can give practical advice on how to follow the statutory procedures on, for example, ensuring that meetings are reasonably conducted.

Secondly, ACAS guidelines can identify where other procedural actions might be beneficial, for example, how informal discussions can be handled or investigations instigated. Thirdly, I hope that the code can be revised to give more tailored advice to small organisations entering the field for the first time.

Mr Norman Lamb (North Norfolk, Liberal Democrat)

From the description that the Minister has given of what he envisages the amended code as containing, it seems that it will in many ways amount to a downgrading of what is presently in the ACAS code. Does he agree that it is bound to be downgraded given that, in future, a failure to follow procedural steps beyond the basic statutory ones will not render a dismissal unfair unless it would have made a difference to the outcome? That reverse of the Polkey point must be a downgrading of the ACAS code.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

I do not accept that at all. That point refers to clause 34, but it is relevant. I would turn it round the other way. To dismiss without recourse to the three basic steps under the Bill will automatically be unfair. Those steps cover the major reasons why the Polkey case is used at the moment: there was not an appeal or an explanation of what the offence was. This is only a partial change of Polkey, but we will debate that when we come to clause 34.

I do not accept at all that this will drag everyone down to the minimum standard. I can understand the concern, or I would understand it were ACAS to have no further role, but it will have a role. It will revise the code of practice that will come before this House. The ACAS advice is still relevant to consideration of disciplinary issues, and the tribunals can take the code into account when assessing the fairness of dismissals.

Had we tried to introduce the ACAS code as the basic three-step procedure, it would have caused a great deal of concern. Businesses, to a large extent, accept that. They are not pleading it as another burden on business. They understand the point but they need some help with the issues because they too often end up in front of an employment tribunal when they could have sorted matters out domestically. To start with the basic minimum three-step procedure, to continue to have ACAS involvement and to have the best practice guidance for the new situation drawn up by ACAS will pull things up to the best practice, not drag them down to the minimum standard. I do not think that we should be concerned.

Mr Mark Prisk (Hertford & Stortford, Conservative)

I want to clarify something. From what the Minister says, do I understand that any small employer—we have talked about small businesses, but there are many small employers such as small charities that are not commercial businesses—will have to comply both with the procedure under the Act and with the code? The Law Society briefing states:

''Given that in any proceedings before an employment tribunal any code of practice issued is admissible in evidence''.

Any small employer must therefore make sure that they comply with both the proposals before us and the code as it may, or may not, be changed.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

That is an important point although, again, more relevant to clause 34. The hon. Member for Tatton had a touching faith in my having read all the briefs, and perhaps I should have done, but I tend to stick to the briefs that I receive from the people who know about such things.

On the point made by the hon. Member for Hertford and Stortford (Mr. Prisk), there would be a danger, in terms of Polkey, if we did not include clause 34 and this change, that employers who decided to move beyond the minimum—small employers just coming to terms with the brave new world—and wanted a more sophisticated grievance and discipline procedure, would be disencouraged from doing so because any minor procedural error above the minimum could lead to their losing the case outright. The two things must be seen together in providing protection.

Mr Tony Lloyd (Manchester Central, Labour)

I take it that when the ACAS code last went through Parliament, on 7 June 2000, it was my hon. Friend the Minister who introduced the relevant statutory instrument. I ask him something, which is a trick question. I have not had the chance to read the relevant Committee Hansard, but an important point arises. Given that all employers taken before a tribunal up till now have gone before one that had to take account of the ACAS code, and given that that applied to small employers with or without disciplinary and grievance procedures of their own, the category of employers that the Minister seeks to protect in schedule 2 would have been, potentially, called before a tribunal by the ACAS code in the past.

The Minister must accept from me that, given that tribunals could have considered the ACAS code in the past, he is diluting the impact of tribunals on that class of employers, who will use schedule 2 as their baseline. I do not think that there is any other interpretation, but does he agree with it?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

I am getting trick questions from my own side now. As it is a trick question, I will be very careful how I answer it. There are many jurisdictions, but dealing, for the moment, with discipline procedures, the point about the ACAS code in relation to tribunals is that employment tribunals do not apply it to every dismissal in every company, large, small or indifferent. They take into account all circumstances, including the nature of the business with which they are dealing.

On what happens after the Bill becomes effective, an employer who simply follows the procedures and minimum standards rather than the relevant provisions of the ACAS code will not necessarily be held to have dismissed fairly. The statutory procedures are a minimum that ought to be applied to every formal complaint. However, we recognise that they might not be sufficient in all cases to ensure fair treatment. Additional procedural steps, tailored to particular circumstances, might sometimes be necessary.

I believe that the employment tribunal service and ACAS will, between them, reach a position where the implementation of minimum procedures alongside best practice will meet the concerns that we all have to ensure that people are treated fairly, whatever their workplace.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I am conscious that we are straying into the territory of clause 34, but this is an important point. The Minister appears to be saying that an employer, however well meaning, might not know whether he has conducted the procedure fairly until he gets to a tribunal and finds out whether it regards him as someone who should have followed something more than the minimum procedure set out in the schedule.

The Minister seems to be saying that following the procedure in the schedule will be all right for some employers but not others and that tribunals will decide which employers fall into which category. As a general principle, I do not like the idea that a well-intentioned, law-abiding person cannot determine a priori whether his behaviour will comply with the requirements of law and procedures. Does that not concern the Minister?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

It is not a concern in the sense that currently, an employment tribunal takes into account the ACAS code of practice when reaching its decisions. It does not suggest that the corner shop with one employee should have followed every dot and comma of the ACAS code, and we do not intend to make that the case. We intend the ACAS code to be best practice guidance, as at the moment.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I accept what the Minister says, but he is being slightly disingenuous in using the extreme example. We all understand that the corner shop with one employee falls into the category of an employer who, by following the minimum procedure, does what he is supposed to. Equally, we understand that Rolls-Royce or BAE Systems will have to do something much more substantial, but where is the cut-off point? Is it five employees, 10, 25, 50 or 100? How does the person running a small or medium-sized business find out what he has to do to comply with the requirements of the legislation?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

The employment tribunal will take into account all the circumstances. In a sense the hon. Member is right. The one thing that will be absolutely clear from this Bill is that if the basic minimum procedures have not been followed, dismissal is automatically unfair. Lots of other elements apply, such as whether the case was investigated properly. That is not part of the minimum procedures, but it would be something that an employment tribunal would take into account. Unless the hon. Gentleman is suggesting that every dot and comma of every eventuality should be covered, I am afraid that employers will to a certain extent be required to follow the basic three-step procedure and, since every case is different and involves different elements, employers will know whether they have carried out the procedures properly only when they get to a tribunal.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

May I take a different tack? I understand what the Minister is saying, but it seems to me that there is a danger here of an unintended consequence, in that employers may believe that what is being introduced is an absolute standard and they will be in the clear if they comply with it. Indeed, I suspect that many employers who are aware of the Bill already believe that. Larger employers may understand that they will have to behave somewhat differently, but I am concerned that many smallish firms with 10 or 20 employees will believe that they will henceforth have a very clear set of obligations to comply with and, provided they do that, they will have met their obligations. It would be unfortunate if they were misled by the Bill into finding that when they got to a tribunal they were then penalised for not having complied with something that, on the face of the Bill, they did not think they had to comply with.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

The problem is that the hon. Gentleman suggests that some employers could think that if they just go through the motions, they will be okay at an employment tribunal.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

No.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

The hon. Gentleman shakes his head, but the point about the ACAS best practice guide and the point about the employment tribunal looking at all the circumstances in every individual case, is that it is not just about going through the motions. It will not be a case of, ''I sent the letter at the right time, I had the appeal, and it did not investigate''. The circumstances of an incident will be considered. I do not think that there is any way to cater for all eventualities in the Bill. What we can do, and are doing, is to ensure a basic minimum standard and to ensure that the ACAS code of practice sits alongside it.

Mr Tony Lloyd (Manchester Central, Labour)

My hon. Friend should be pleased: he has managed to unite the Opposition with at least some Government Back Benchers. The hon. Member for Runnymede and Weybridge has a legitimate concern.

Perhaps the Minister can help us in another way. Can he talk us through the discretion that the tribunal will have? It seems to me that the tribunal will be faced with what will be extant on the face of the Bill. It will also have to take account of the ACAS code of conduct. My hon. Friend is saying that somewhere in between, the tribunal will be able to negotiate which parts of the ACAS code and which parts of the Act are relevant. Frankly, that seems unclear to me and the hon. Member for Runnymede and Weybridge. The Minister would help enormously if he clarified how the tribunal will be charged. It must rely on the force of law in making its decisions, but where will its discretion kick in? Both sides of the tribunals, the applicants and the respondents, are entitled to know where that discretion lies.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

At the moment, the discretion of employment tribunals is wide. They have to take into account the size and resources of the employer. They have to take into account the different circumstances of every individual case. There is not a procedure for every case. We cannot devise a procedure that provides complete certainty for employers in all circumstances, because this is a matter of individual incidents and they vary greatly with different circumstances applying to them all. Although I am uniting a coalition of forces both in front of and behind me, we cannot give absolute certainty to employers that if they follow whatever mechanism we set out in this schedule they will, no matter what the circumstances, be all right at an employment tribunal. The code of practice is important and so will be the revised code of practice once the Bill has been taken into account. However, we are labouring under a misapprehension if we think that the employment tribunal does not currently have the discretion to take into account the size of the company and the resources available to it. It has that discretion now, and that will still be the case when the Bill is enacted.

Mr Rob Marris (Wolverhampton South West, Labour)

Welcome, Mr. Conway. The point being made on both sides is that if schedule 2 goes through as the minimum, some employers will end up with what might be termed a double vagueness. First, are they subject to ACAS at all and secondly, if they are, which bits of it are they subject to? I appreciate the Minister's point that we cannot introduce certainty, but I should prefer a single vagueness, which is what currently exists with ACAS, rather than a double vagueness.

We can cut that Gordian knot by introducing the ACAS code as the statutory minimum under amended schedule 2, which clause 29 would give us power to do. However, the Minister is clear that he has no plans to do that. Is he prepared to say that after a specified period he and his Department will review the operation of the double vagueness and other aspects to see whether the Bill is leading to better industrial relations or to more confusion?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

I do not accept that single vagueness is better than double vagueness. We are providing a procedure for every work place in the country—900,000 micro-businesses. The people in each company will have a basic three-step procedure. Most of the problems that occur at the moment, as my hon. Friend the Member for Wolverhampton, South-West knows, are due to people not having the chance to appeal, not being told clearly what offence they are supposed to have committed and not having a meeting face to face with a manager.

To pick up the point made by the hon. Member for Tatton, we recognise that if there is only one manager, the meeting will be that with manager at both stages of the procedure. To cover those circumstances, we have introduced the enormously beneficial concept that not following those minimum standards means that dismissal is automatically unfair. Employers therefore know where they stand. However, they should not then think that the process is mechanistic. We need the ACAS code of practice to sit alongside that. I do not think that that will introduce a double vagueness. My problem is that although it would be useful if I could give an example, I cannot, because no two cases are alike.

My hon. Friend asked whether we would review the change shortly. We have no plans to do so. We plan to ask ACAS to draw up the code of practice and to put the revised code, including the new circumstances included in the Bill, before Parliament for affirmative procedure. Who knows whether we shall need to review the length of time over which it will be allowed to operate?

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Will the Minister give way?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

I do not want to give the hon. Gentleman any fresh fears. He is looking quite calm at the moment; I want him to think that there is going to be an immediate change. When we have introduced the procedures and have had an opportunity to see how the two elements sit alongside each other, we shall be better placed to deal with the issue. However, at the moment we are looking at shadows that do not exist.

Mr George Osborne (Tatton, Conservative)

The Minister referred to the corner shop situation. Would we not end up with a farce, where there were two people behind a counter, one employing the other, but where the employer would still be obliged to send the employee a letter, passing it across the counter, to invite him to a meeting that would take place in the shop, behind the counter? The employee would then have to take all reasonable steps to attend the meeting, even though it would take place behind the little shop counter. Endless procedures would be conducted in writing, with two people playing an elaborate charade because one was trying to take disciplinary action against the other.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

If it were an elaborate charade, my hon. Friends would not be raising the points that they are raising. The hon. Gentleman is arguing against the basis of the schedule, which has been widely welcomed. One has to take account of the circumstances. The ACAS code does, and I believe that the schedule does, too. If there is no manager at a higher level, it is clear that one should not be appointed just for the purposes of the Bill.

The hon. Gentleman also referred to an amendment concerning how much of the procedure is to be conducted in writing, which the Committee will discuss later. I am not sure which party is behind that amendment, so I will not comment on it now. In the circumstances that the hon. Gentleman suggests, it would be sensible for the employer to tell the corner shop employee what the offence is in writing. If the employer is considering dismissing the employee, they should sit down and talk about the issue, and the same manager must make the final decision. When the company has another manager higher up the line, the second manager should deal with the appeal.

Mr Norman Lamb (North Norfolk, Liberal Democrat)

I certainly would not describe this as an elaborate procedure, and I think that there are advantages to introducing something so basic into many workplaces that have no such procedure. I accept the principle, but I would like to ask about the impact of compensation. The Minister is effectively introducing automatic unfair dismissal. If a person does not follow the basic procedure, the dismissal is automatically unfair. At the moment, if there were a failure to follow procedure, there would be an unfair dismissal finding; but the tribunal has the power to reduce compensation to take into account the fact that, had the proper procedure been followed, the dismissal would still have occurred. Often, tribunals reach findings of unfair dismissal, but end up imposing very little compensation because, apart from its procedural weakness, the dismissal was fair.

What will happen under the new provisions? A finding of unfair dismissal may be automatic because the basic procedure has not been followed, but perhaps in all other respects the basis for dismissal was fair. In that situation, will the tribunal be able to reduce compensation as it does now, or will it have to award the full amount against the employer for failing to follow the basic standard procedure?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

The hon. Gentleman is on the wrong clause. I have said enough about that clause and I do not want to steal anybody's thunder for when we get on discussing those matters. His point is relevant, but not to this clause.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I have not forgotten the point that I was going to make, although I wanted to intervene rather a long time ago. Our debate shows that there is a real issue here. The Minister will not be surprised to hear that I am not tempted by the solution of the hon. Member for Wolverhampton, South-West. He suggested that the ACAS code should be imposed in all cases. The alternative extreme would be to impose the minimum procedure in all cases.

That brings me back to the suggestion that I made to the Minister half an hour ago. I asked whether he had considered the possibility of different procedures for different sizes of employer. At the time, he said that that was unnecessary. I suggest to him that our debate since then implies that it is necessary, and that such variation might be a way of resolving the issues raised without going to the extreme advocated by the hon. Member for Wolverhampton, South-West of imposing something like the ACAS contract on micro-businesses?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

These are my last remarks on the issue, because we have spent a long time on it. The hon. Gentleman's suggestion would make matters much more complex and much worse for employers. By law, tribunals are required to take into account the size and resources of the employer. That is an important discretion of the tribunal. If we stipulated different procedures for companies with 100 employees as against those with 90, 11 redundancies would mean adopting a different procedure, as would the recruitment of 10 more staff. That is not a solution.

We have had an interesting and wide-ranging debate, and some important points were raised. However, the employment tribunal service and ACAS do a splendid job. I believe that when we look back in our dotage, we will say that we did the right thing, and that although it was right to express those fears and to say those things, the envisaged scenarios did not emerge. I hope that the Committee will agree to the clause standing part.

Question put and agreed to.

Clause 29 ordered to stand part of the Bill.