I move: "That the Bill be now read a Second Time".
The Unfair Dismissals Act, 1977 was enacted by the Oireachtas in April, 1977. The Act provides that dismissal is unfair unless there are substantial grounds which would justify such dismissal. It provides a system under which claims of unfair dismissal can be investigated impartially by a Rights Commissioner or by the Employment Appeals Tribunal. It also provides for redress for unfair dismissal, reinstatement, re-engagement or compensation for financial loss. The Bill before this House today amends the 1977 Act.
The Bill contains the following main changes to the 1977 Act: extension of the coverage of the Act to include persons employed through employment agencies; access to protection under the Act in the case of the termination of certain second or subsequent fixed term and fixed purpose employment contracts; a new basic award of up to four weeks' pay where the dismissal of an employee is found to have been unfair but where no financial loss has been incurred; extension of the list of grounds for dismissal which are deemed to be automatically unfair to include the sexual orientation of the employee, the age of the employee and the employee's membership of the travelling community; improved claims and appeal procedures with the Employment Appeals Tribunal and clarification of the role of the Circuit Court in relation to the enforcement of tribunal determinations.
I will deal with each of these changes in more detail in the course of my introductory remarks. The commitment to bring forward this Bill formed part of the Programme for a Partnership Government. I am pleased, so early in the term of the Government, to be able to introduce it in the House. The review of the Unfair Dismissals Act, 1977 has shown it to be a most effective piece of legislation. The legislation continues, in the main, to meet the need for a fair, inexpensive and relatively speedy remedy for employees who have suffered unfair dismissal.
Prior to 1977 there were, basically, two avenues open to employees for resolving the issue of an unfair dismissal. One route was the invariably costly and characteristically tardy legal remedy at common law. The other avenue of redress was instant industrial action, repeated recourse to which obviously was prejudicial not only to the enterprise involved but also to the public good.
This was the context within which the Unfair Dismissals Act of 1977 — referred to throughout the Bill as the Principal Act — was set. The introduction of that legislation reduced significantly the number of days lost due to industrial disputes arising from unfair dismissal. The proportion of such disputes as a percentage of all disputes has fallen from 20 per cent in 1976, the year before the introduction of the Act, to about 10 per cent a year since then and, in some years, the statistic has been as low as 7 or 8 per cent. This fact, taken in conjunction with the number of claims made under provisions of the Act, suggests that the Act has played a major role in reducing industrial relations tensions. Those who criticise the provisions of the Act seldom advert to this positive impact the Act has had on industrial relations.
Listening to some of the commentators in this field one might get the impression that, prior to enactment of the 1977 Act, there had been no legal framework governing the termination of employment contracts. This, of course, was not the actual state of affairs. The contract between the parties in the employment relationship was and, indeed, continues to be governed by the common law rules relating to contract. The difficulty of employees in exercising such rights had more to do with the problem of access to the common law courts than with any lack of clarity about their entitlements. Indeed, as headline cases in the employment law area in this country have shown in recent years, employees — even in the public service — have been able to secure judgments and significant financial compensation for wrongful dismissal through the courts. Unfamiliarity with court practice and precedents and, most importantly, the likely costs involved have in the past acted as effective barriers to many employees, especially to those on low wages, in pursuing their rights by this avenue.
The 1977 unfair dismissals legislation modified and enhanced existing common law rights but, more importantly, gave ready access to redress for the broad range of employees who had formerly been intimidated by the intricacies and economics of the common law process. Thus, the greater degree of access to redress afforded by the Unfair Dismissals Act, 1977, is the main factor that distinguishes it from the historically available common law remedy.
The need for the type of protection provided by the Unfair Dismissals Act is illustrated by the number of cases referred under the 1977 Act to the Employment Appeals Tribunal for adjudication. In the period 1984-91, inclusive, a total of 7,751 direct claims of alleged unfair dismissal was dealt with by the Employment Appeals Tribunal. Of these, the appeal was allowed in 1,734 cases and disallowed in 2,414 cases. The balance was made up of cases which were either disposed of without a hearing or withdrawn during a hearing. In cases where dismissal has been found to be unfair — and compensation has been decided upon as the remedy — the average amount of such compensation has risen from £1,864 in 1984 to £2,660 in 1991. In 1991, the size of such awards ranged from less than £100 to £15,000 in the light of the circumstances of individual cases.
The 1977 Act is not concerned with all dismissals but is focused on unfair dismissals. An unfair dismissal is one where no substantial grounds can be shown as justifying the dismissal. This point was raised in the Seanad, in the context of possible amendments. Let us be clear that dismissals arising because of redundancy, rationalisation or other organisational reasons fall outside the scope of the legislation. Similarly, the dismissal by an employer of employees because of incompetence, serious misconduct, inefficiency etc., is not restricted by the legislation — as all these are substantial grounds which justify termination of employment. In addition, all dismissals in the case of employees with less than one year's service, with the exception of dismissals based on grounds of pregnancy or trade union activity, are excluded from the coverage of the Act.
Having said that, everyone — employee or not — has a right to be treated in a reasonable and evenhanded manner. As we are all aware, there is a contract between the parties to an employment relationship which is governed by the rules relating to contract law. As with contract law generally, a contract of employment cannot, without penalty, be terminated by one party without the consent of the other. Both parties have obligations under a contract of employment, one of the most important being that the parties must act in a fair and reasonable way towards one another. Indeed — as the unfair dismissals legislation recognises — summary dismissal of an employee by an employer is permissible where the conduct of the employee has been so extreme as to irreparably damage the employment relationship. In general, however, the 1977 Act imposes an obligation on an employer to deal with an unsatisfactory employee in a manner which is procedurally fair and reasonable. This ethos in the legislation reflects the common law rule of natural justice which applies in the courts of the land in regard to contract law generally. It may seem that I am covering ground already covered in the 1977 Act but as I am outlining the amendments to that Act it is useful to go over it again.
The Unfair Dismissals Act has had an impact on employers and on how they manage the conflict that is likely to arise in dealing with an unsatifactory employee. Since 1977, there has been evidence of increased codification of disciplinary procedures which have no small part to play in the sensitive handling of dismissals which may be necessary from time to time. These changes will, no doubt, have had financial implications for employers. I suggest, however, that such costs have been well outweighed by the resultant benefits in industrial relations terms. An important benefit, too, for employees flowing from such improved systems is the realisation that they need not fear the possibility of arbitrary unfair dismissal.
As I said at the outset while the 1977 Act has been working satisfactorily, the length of time it has been on the Statute Book suggested that a review of its contents would be worthwhile. In this context a discussion document was published in November 1987. The document outlined possible options which might be considered in three specific areas of our employment protection legislation namely: (i) unfair dismissal, (ii) employment equality and (iii) payment of wages. In relation to (iii), as Deputies will be aware, a new Payment of Wages Act was enacted in 1991. As regards (ii) the present Bill results from consultations and discussions with both sides of industry and other organisations interested in the operation of our unfair dismissals legislation.
The Bill is in line with an undertaking in the Programme for a Partnership Government 1993-1997“to amend and improve the working of the Unfair Dismissals legislation” and also fulfils a commitment in the Programme for Economic and Social Progress.
In promoting this legislation, I am conscious that the Programme for a Partnership Government commits this Administration to a review of labour legislation to ensure that it extends full protection against discrimination to a range of minority and disadvantaged groups. Among the possible grounds for discrimination listed in the programme for inclusion in the review are parental status, religion, age, handicap, race, colour, sexual orientation and national or ethnic origin, including membership of the travelling community.
That review falls within the brief of my colleague, Deputy Taylor, Minister for Equality and Law Reform. I have discussed with him relevant aspects of unfair dismissals legislation which already provide protection in a general way against dismissal on the grounds listed in the programme and designates some of them specifically — for example, race, religion, colour — as grounds for automatically unfair dismissal. Indeed, in the course of passage of this Bill through the Seanad I was pleased to accept amendments which added age and membership of the travelling community to the list of reasons for dismissal which are deemed for the purposes of the legislation to be automatically unfair.
In this context, the Minister for Equality and Law Reform has indicated to me that, following the review of the equality aspects of labour law, he will promote proposals for legislation framed to ensure full equality of opportunity for all in the workplace. If necessary, those proposals may incorporate suitable amendments of unfair dismissals legislation.
Another issue raised in the Seanad — and which has perplexed us for some time — is the practice in drafting legislation of using words such as "he" and "him" when references to "she" and "her" are also intended. I am advised that this approach is dictated by the provisions of the Interpretation Act, 1937. On this issue, I and I am sure other Members in the House strongly support the recommendation in the report of the Second Commission on the Status of Women that this Act be reviewed and amended as soon as possible. I understand that this will be examined in the context of the Equal Status Bill which is being considered by my colleague, the Minister for Equality and Law Reform, Deputy Taylor.
The emphasis in the Unfair Dismissals Act, 1977, and in the Bill before us is on the protection of employees from being unfairly dismissed from their jobs by setting down criteria by which dismissals are to be judged unfair and by providing an adjudication system and redress for an employee whose dismissal has been found to be unjustified. This objective remains as valid and worthy today as it was in 1977.
Before proceeding to the sections of the Bill, I should mention that the question of the optimum hours threshold for eligibility for protection under the 1977 Act, set at 18 hours per week in that Act, was a matter of major concern at the time of publication of the 1987 discussion document. The debate on this issue however has, in practical terms, been overtaken by the enactment of the Worker Protection (Regular Part-time Employees) Act, 1991. That Act extended the protection of the 1977 Act to regular part-time employees i.e. defined as those who, subject to the one year service requirement, have been in the continuous service of an employer for at least 13 weeks and are normally expected to work for that employer for not less than eight hours a week.
That is the background or a quick overview of the 1977 Act and the matters which have arisen since then. I have also outlined the main changes to that Act contained in this Bill, the Unfair Dismissals (Amendment) Bill, 1993. I will now go on to deal with the Bill section by section. Members realise that this, by its nature, will be very technical. I find the technical pieces difficult to come to grips with, particularly in the context of legislation such as this which is essentially concerned with people's rights.
I now turn to the provisions in the Bill which provide for changes in the 1977 Act. While no fundamental alteration to the broad thrust and purpose of the 1977 Act is proposed the Bill addresses a number of important issues of substance relating to the Act and effects a range of technical and administrative amendments.
Section 1 is a standard interpretation section. Section 2 makes technical amendments to the definitions of "trade union" and "the Tribunal" in the principal Act, the Unfair Dismissals Act, 1977, and clarifies that an award of reinstatement entitles an employee to benefit from any improvement in terms and conditions of employment which may occur between the date of dismissal and the date of reinstatement.
Section 3 amends section 2 (2) of the principal Act by inserting a proviso to the exclusion in that subsection from coverage by the Act of certain fixed term or fixed purpose contracts of employment. The proviso will allow a rights commissioner — the Employment Appeals Tribunal or the Circuit Court, as the case may be — to examine any second or subsequent fixed term or fixed purpose contract of employment and to take a view as to whether the fixed nature of the contract was wholly or partly for or connected with the avoidance of liability under unfair dismissals legislation. In such circumstances, a claim for unfair dismissal at the expiry of the contract may be heard in the normal way. The section also broadens the scope of the legislation to include temporary officers of health boards and deletes the obsolete reference to a committee of agriculture by amending section 2 (1) (j) of the principal Act.
Section 4 provides for certain minor amendments to subsections (1), (2) and (3) of section 5 of the principal Act, the main purpose of which is to ensure consistency of approach in relation to lockout and dismissal as between the principal Act and paragraph 2 of the First Schedule to the Minimum Notice and Terms of Employment Act, 1973.
Section 5 extends the scope of section 6 (2) of the principal Act to include three circumstances: (i) sexual orientation, (ii) age and (iii) membership of the travelling community in the list of reasons for dismissal which are deemed to be automatically unfair for the purposes of the legislation. Section 5 also provides for a new section 6 (7) of the principal Act to reinforce the concept of procedural fairness by providing that a rights commissioner, the Employment Appeals Tribunal or the Circuit Court, as the case may be, in deciding whether a dismissal is an unfair dismissal, may have regard to the reasonableness or otherwise of the conduct of the employer and to compliance, or failure to comply, by the employer with dismissal procedures or codes of practice.
Section 6 alters section 7 of the principal Act as follows: paragraph (a) amends section 7 (1) of the principal Act to provide for a new basic financial award for unfair dismissal in certain circumstances. The amendment will allow a rights commissioner — the Employment Appeals Tribunal or the Circuit Court, as the case may be — to award compensation — of up to four weeks' pay — for unfair dismissal in cases where no financial loss has been incurred by the employee. Paragraph (b) amends section 7 (2) of the principal Act by clarifying some of the considerations that are required to be taken into account in calculating the amount of compensation payable to an employee who has been unfairly dismissed. Paragraph (c) inserts a new subsection (2A) in section 7 of the principal Act to provide that, in calculating financial loss, for the purpose of compensation, payments to an employee under the social welfare and income tax codes which arise from an unfair dismissal shall be disregarded.
Section 7 alters section 8 of the principal Act as follows: paragraph (a) inserts a new subsection (1A) in section 8 of the principal Act which requires that, henceforth, a rights commissioner, the Employment Appeals Tribunal or the Circuit Court, as the case may be in awarding reinstatement, re-engagement or financial compensation in respect of an unfair dismissal must state why either of the other two forms of redress are not awarded; amends section 8 (2) of the principal Act to allow flexibility to a rights commissioner — the Employment Appeals Tribunal or Circuit Court, as the case may be — to extend the time limit for hearing a claim for redress for unfair dismissal to up to 12 months in cases where exceptional circumstances have prevented the lodgment of the claim within the normal time limit of six months; amends section 8 (3) of the principal Act to provide a time limit of 21 days for objections by a party to a hearing of a claim by a rights commissioner; amends section 8 (4) of the principal Act to allow the Employment Appeals Tribunal to issue a determination confirming the recommendation of a rights commissioner in circumstances where the employer concerned has neither implemented the recommendation nor appealed the case.
Paragraph (b) amends section 8 (5) of the principal Act to permit a party to make a claim directly to the Employment Appeals Tribunal without reference, in the first instance, to a rights commissioner as required by the present wording of the section. Paragraph (c) amends section 8 (9) of the principal Act to increase the fine from £20 — as set in 1967 under redundancy legislation — to £1,000 for failure to attend before the Employment Appeals Tribunal, refusal to give evidence or failure or refusal to produce documents. It is necessary that the fine should be sufficiently high to act as a deterrent. Quite obviously the deterrent set in 1967 is completely out of date.
Paragraph (d) amends section 9 (10) of the principal Act to prohibit explicitly the processing of a claim-dispute both under unfair dismissals legislation and by a rights commissioner or the Labour Court under industrial relations legislation. The paragraph also inserts new subsections (11) and (12) into section 8 of the principal Act. These subsections provide that in the case of a contract of employment tainted with illegality the employee shall, nonetheless, be entitled to redress for unfair dismissal. In such cases the rights commissioner — the Employment Appeals Tribunal or the Circuit Court, as the case may be — shall notify the Revenue Commissioners or the Minister for Social Welfare, as appropriate, of the matter.
Section 8 amends section 9 (2) of the principal Act by increasing from six weeks to seven weeks the time within which a copy of a notice of appeal must be given by the Employment Appeals Tribunal to the other party to the appeal. Administrative problems have been encountered by the tribunal under the existing provision in the case of appeals lodged at the last minute.
Section 9 provides for some minor technical amendments to section 14 of the principal Act.
Section 10 amends section 15 of the principal Act to allow flexibility to an employee in changing a claim as between redress in common law or under unfair dismissals legislation. The amendment will allow a claimant flexibility as to which avenue of redress to pursue — without losing his-her right to proceed under the alternative avenue — up until the point where, on the one hand, a recommendation of a rights commissioner has issued in the case — or a hearing of the claim by the Employment Appeals Tribunal has commenced — or, a hearing in the courts under the common law has commenced.
Section 11 provides an avenue of appeal to the Circuit Court from a determination of the tribunal. In cases where an employer fails to implement an order made by the Circuit Court on appeal or a determination of the tribunal — which has not been appealed — the section allows the employee concerned, or the Minister on behalf of the employee, to apply to the Circuit Court for an order directing the employer to implement the determination. In such circumstances, the Circuit Court is empowered to make an order against an employer which would include interest on the amount of any financial compensation awarded. In cases where an order for reinstatement or re-engagement is concerned, the Circuit Court may direct the employer to pay to the employee financial compensation in respect of the period during which the employer failed to implement the order of re-instatement or re-engagement. The section provides also that the Circuit Court may change the nature of an award from re-engagement or reinstatement to financial compensation.
Section 12 deals with evidence in relation to the prosecution of a person for failure to attend before the Employment Appeals Tribunal or refusal to give evidence or failure or refusal to produce necessary documents. The section specifies that a document signed by the chairman or a vice-chairman of the tribunal, stating details of the alleged offence, shall be admitted by the court as evidence of the matters so stated without further proof.
Section 13 extends the scope of the unfair dismissals legislation to include persons employed through employment agencies. For the purposes of the legislation, the organisation where the person works is deemed to be the employer of the agency worker.
Section 14 replaces section 6 (7) of the principal Act. In an effort to respond to difficulties identified in relation to the understanding and identification in the Act of this section, the provision has been redrafted. As before, the purpose of the section remains to confirm the application of the protection of the legislation to employees dismissed for trade union activity who would otherwise not be covered because of their failure to satisfy the minimum one year service requirement or because of certain exclusion relating to training, probation and apprenticeship.
Section 15 provides that in cases where a business is transferred to another owner, the acceptance and retention of a redundancy payment on the part of an employee will break that employee's continuity of service.
Section 16 repeals section 10 of the principal Act, which is overtaken by the provisions of section 11 of the Bill.
Section 17 is a standard provision dealing with the short title, collective citation, construction, commencement and application of the Bill. The Bill now specifies 1 October, 1993 as the date for coming into operation of the legislation. We had hoped that the operative date would have been 1 July 1993.
Before concluding, I would like to make a few comments on what I see as a moral issue at the heart of the Unfair Dismissals Act. The legislation allows for third party scrutiny of the fairness, or otherwise, of the treatment of employees by employers in the matter of dismissal. The availability of such independent scrutiny in dispute situations is, I believe, the mark of a civilised society. I would be surprised if, in this day and age, there are many who would support the former practice of employers to hire and fire, virtually at will. Indeed, the evidence is there that, even before the 1977 Act, industrial muscle and the common law process had been utilised successfully to ensure, as far as possible, an effective means of redress where unfair dismissal was concerned. The 1977 Act placed a greater emphasis on the achievement of a resolution of these difficulties by more peaceful means. It is my strong view in industrial relations matters that, at all times "jaw jaw" is better than "war war".
It is central to our industrial policy that we have a fair and acceptable code of employment rights legislation. The existence of satisfactory statutory unfair dismissals machinery is an important element in this context. We should not expect our workforce to accept arbitrary dismissal without an effective means of redress while, at the same time, remaining as committed, flexible and motivated producers of the wealth on which the future of our country depends.
Accordingly, I commend the Bill to the House.
I look forward to the contributions of Members on all sides. We debated this Bill in the Seanad during past weeks where it provoked very lively and stimulating debate. I look forward to the same in this House. I intend to be present up to midday tomorrow for Seanad Stage and for the entire Committee Stage.
There are always people who will say that legislation such as this is weighted in favour of one side and there will be people who will take opposing points of view. I hold the view, as I know most Members do, that it is correct and proper that we enact labour legislation because we always seek a proper balance. I do not hold the view that legislation which gives decent rights to people should not be enacted when times are difficult. A workforce is better motivated, more productive and in better tune with the realities of the day when they know their proper rights are guaranteed; likewise employers knowing the scope of legislation and all the principal features of it are more assured in an industrial relations climate. Accordingly I commend the Bill to the House and I look forward to the contributions.