Unfair Dismissals (Amendment) Bill, 1993: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

I welcome very much the opportunity to accede to the wishes of Senators that legislation be initiated in this House. I have come to the Seanad frequently in recent years. It has been said, quite rightly, that the Seanad wishes to be taken seriously and one of the ways in which it can be taken seriously is to have a legislation initiated here. I pushed for this Bill to be initiated in the Seanad and not in the Dáil.

I realise that Aer Lingus is an important issue, carrying with it enormous repercussions and I welcome the fact that Senators are rigorous in their pursuit of that matter. However, we must deal with this Bill this afternoon and I am glad to be here.

The Unfair Dismissals Act, 1977 was enacted by the Oireachtas in April, 1977. Prior to that time, employees had a minimal degree of protection against wrongful dismissal, principally under common law. Considerations such as lengthy delays, the expense involved and the lack of industrial relations expertise in the civil courts, deterred many aggrieved employees from using these courts.

The 1977 Act brought about a significant change in this situation. The Act provided that thereafter dismissal would be regarded as unfair unless there were substantial grounds justifying such action. It provided a system under which claims of unfair dismissal could be investigated impartially by a Rights Commissioner or by the Employment Appeals Tribunal. It also provided for redress for unfair dismissal in the form of reinstatement, re-engagement or compensation for financial loss.

The 1977 Act, therefore, protected the employee from arbitrary dismissal and it enhanced employment rights. It also provided an avenue of redress which was designed to be speedy. As such, the Unfair Dismissals Act, 1977, might be said to be one of the most significant pieces of labour law on the Statute Book. It is an important source of worker protection and provides a charter of rights for over 750,000 employees in Ireland.

The need for the type of protection provided by the Unfair Dismissals Act is illustrated by the number of cases referred under the 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.

Thus, the 1977 Act was introduced to deal with a situation where instant dismissal without reason was common and could only be challenged by trade union action. Employees in non-union or weakly-organised areas had little protection.

Even those who are critical of the Act do not seriously dispute that such employees needed some legal safeguards against the actions of a minority of employers who would have resorted to instant and unjustified dismissals. In view, however, of the length of time the Act has been on the Statute Book a review of its contents was considered necessary.

Following on in a evolutionary way, a discussion document was published in November 1987. This document outlined possible options which might be considered in three specific areas of our employment protection legislation namely, unfair dismissal, employment equality and payment of wages. As Senators will be aware, a new Payment of Wages Act was enacted in 1991 whereby workers are paid through the banks. 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 theProgramme 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, Section IX. It is important to put that on the record.

Quite obviously the two main constituents interested in this type of legislation are the workers and the owners management. However, under theProgramme for Economic and Social Progress which was a social forum whereby various social partners found their voice it was quite clear that the commitments were seriously entered into with the expectation that they would be delivered on and upheld.

In introducing 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 a Partnership Government 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.

The review falls within the brief of my colleague, the Minister for Equality and Law Reform. I have discussed with him relevant aspects of unfair dismissals legislation which already provides protection in a general way against dismissal on the grounds listed in the programme and designates some of them specifically — race, religion, colour, and now in this Bill, sexual orientation — as grounds for automatically unfair dismissal. In this context, the Minister for Equality and Law Reform has indicated to me that, following review of equality aspects of labour law, he will be promoting proposals for legislation framed to ensure full equality of opportunity for all in the workplace. If necessary, when that time comes and his legislation is ready, those proposals may incorporate suitable amendments of unfair dismissals legislation. However, that is for another day, and I know from speaking to the Minister and his staff that they are busy drafting the legislation.

Before I come to deal specifically with the contents of the Bill which is the amendment to the 1977 Unfair Dismissals Act, I would like to say a few words about the positive aspects of that Act on our system of industrial relations and to refute suggestions that it has had a negative effect on employment creation.

When the 1977 Act was being prepared it was considered that the right to secure a speedy impartial decision on a claim of unfair dismissal would help to reduce the incidence of industrial disputes related to dismissal. The success of the Act in achieving this can be seen from an examination of the relevant statistics. Since 1976, the year preceding enactment of the legislation, disputes relating to dismissals have decreased both in numerical terms and when expressed as a percentage of the total number. Statistics show that the reduction in the proportion of disputes arising from dismissal since the enactment of that Act is quite significant.

In 1976, almost 20 per cent of all disputes arose from dismissals. Since the introduction of the 1977 Act, the number has decreased to about 10 per cent a year and, in some years this statistic has been as low as 7 to 8 per cent. This fact, taken in conjunction with the number of claims made under the Act, suggests that it has played a major role in reducing industrial relations tensions. Indeed, this view is borne out by the conclusions of a study published in 1987 on "The Impact of the Unfair Dismissals Act, 1977 on Workplace Industrial Relations". The study, by the very distinguished Tom Murphy of the Department of Industrial Relations in UCD, concludes, and I quote:

The Unfair Dismissals Act may be regarded as very successful in the way in which it has contributed to an improved ability on the part of employers and trade unions to resolve dismissal issues through discussion. It has not led to the marginalisation of the significance of collective bargaining for the regulation of the dismissal issue at the workplace. The law has instead strengthened collective bargaining at workplace level by creating a closer harmony between employer and trade union views of what constitutes a fair dismissal. What has evolved under the Act's implementation is a very detailed and comprehensive code of practice relating not to the dismissal decision alone but to the whole process of disciplinary control and administration. In industrial relations terms, therefore, the Act has been a major benefit.

I am aware that in recent years there has been much emphasis in many countries on the creation of an environment where businesses can operate with the minimum of constraints consistent with good business practice and hence create maximum employment opportunities. The expression "labour market flexibility" has become common currency and questions have been posed as to how responsible the various institutions, regulations and practices are to changing conditions. In Ireland, the debate has tended to focus on one single aspect, the extent to which worker protection legislation, and particularly the Unfair Dismissals Act, constitutes a disincentive to employers to hire workers. Various commentators have advanced the argument that the Act hinders employment creation. I would like to put some facts on the record with regard to that.

A survey commissioned by the Department of Labour and carried out by the ERSI in 1986 suggested that the scale of these alleged effects is not significant. The study found that practically none of the firms surveyed saw the legislation as one of the main problems facing them, and only a small minority cited it as having caused them a problem in the previous year.

Apart from the UCD study to which I have already referred, other surveys on the operation of the 1977 Act have demonstrated that there have been beneficial effects for management flowing from the legislation since it has contributed to improved personnel practices and to a more stable industrial relations climate. In many instances, the Act has provided an impetus for the reform of disciplinary and dismissal procedures and has helped to tighten up selection procedures. This, in turn, has led to a better selected and more suitable workforce with obvious benefits to employers and a lower likelihood of industrial disputes because of dismissals.

As a final point on this issue, I think it is worth noting that the implication in repeated criticisms of the Act, that it prevents employers from letting staff go in any circumstances, does not stand up to examination. For example, if an employer takes on additional staff and subsequently finds that because of a reduction in business they must let them go, they are not inhibited from doing so by the Act which recognises an employer's entitlement to terminate employment on grounds of redundancy, or indeed, on grounds arising from the capacity, competence or conduct of the employees concerned.

The emphasis in the Unfair Dismissals Act, 1977, 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. That objective remains as valid 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 discussion document. However, the debate on that issue has, in practical terms, been overtaken by the enactment of the Worker Protection (Regular Part-time Employees) Act of 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.

Before I discuss the technicalities of the Bill I beg the indulgence of the House. While the technicalities are the nuts and bolts of legislation, they sometimes appear very complicated when taken section by section.

This Bill is about people, about workers' rights and the creation of a proper business environment. Above all, we are saying in this Bill amending the 1977 Act that, in Churchill's words, "To jaw-jaw is better than to war-war". Disputes should be resolved through discussion, wherever possible. Employee and employer relations can be fraught and difficult occasionally but in essence, discussion is a peaceful way to resolve disputes.

I turn now to the provisions in the Bill which provide for changes in the 1977 Act. While no fundamental alteration to the broad trust 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 on agriculture by amending section 2 (1) (j) of the principal Act. Maybe the committee on agriculture will return. I do not know. For the moment it is deemed to be obsolete.

Can we take that as Government statement?

Section 4 provides for certain minor amendments to section 5 (1), (2) and (3) of the principal Act, the main purpose of which is to ensure consistency of approach in relation to lock-out and dismissal 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 sexual orientation in the list of reasons for dismissal which are deemed for the purposes of the legislation to be automatically unfair. Section 5 also provides for a new section 6 (7) of the principal Act so as 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 certain 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 (2) (a) 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 (1) (a) 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; the paragraph 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 for up to 12 months in cases where exceptional circumstances have prevented the lodgment of the claim within the normal time limit of six months. It also amends section 8 (3) of the principal Act to provide a time limit of 21 days for objections by a party to the hearing of a claim by a rights commissioner and 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 so as 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 is required by the present wording of the section.

Paragraph (c) amends section 8 (9) of the principal Act so as 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, not as a penal or punitive measure.

Paragraph (d) amends section 9 (10) of the principal Act in in order to prohibit explicitly the processing of a claim or dispute both under unfair dismissal 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 so as 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 up until the point where a recommendation of a rights commissioner has issued in the case, or a hearing of the claim by the Employment Appeals Tribunal has commenced, on the one hand, or, a hearing in the courts under the common law has commenced.

Section 11 deals with appeals from and enforcement of determinations of the Employment Appeals Tribunal. The section 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 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. 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 also provides 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 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.

There was a case taken in 1986 and under the previous legislation, the employee was found not to be the responsibility fo the agency. Because of this we are changing the legislation so that the employer is the person responsible, not the agency.

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 not otherwise be covered because of their failure to satisfy the minimum one year service requirement or because of certain exclusions 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 specifies 1 July 1993 as the date for coming into operation of the legislation.

As I said this is a technical Bill and technical legislation can sometimes appear dry. Therefore it is necessary to read this legislation carefully because it relates to particular sections of the original Bill. Contrary to my practice of speaking off the cuff instead of reading from a brief, in this instance it is necessary to be precise because, the legislation, while not difficult is very technical.

I want to emphasise some points in relation to the general environment of legislation like this. Since my appointment as Minister of State with responsibility for Labour Affairs, I have become very interested in this area. I dealt with industrial relations in the Department of Education and in my short time in the Department of Health. Under the last Administration I was Minister of State at the Department of Industry and Commerce with responsibility for Trade and Marketing and I listened to the concerns expressed by business people particularly those engaged in small businesses. I saw the whole picture and could understand the concern expressed by both sides.

In times of economic difficulty, and when there is a recession, fears may arise about this sort of legislation and I want to allay these fears. I think we have achieved a good balance in the type of labour legislation passed in the Dáil and Seanad.

This Bill contains no fundamental changes to the broad intent of the original Act, its primary purpose being to address a number of issues that have arisen in connection with the operation of the Act in the past 16 years. In anticipation of this legislation, I have met with representatives of ICTU and IBEC, even though the previous Minister had consulted them when he was preparing the Bill. I thought it courteous to do this and we enjoyed the interchange. There is some agreement on various points in the legislation. Obviously, you cannot frame legislation which suits divergent views and needs, but I and my officials have sought to have produced a balanced Bill. There are necessary changes in this legislation which I will mention again. I spoke at such length that I would not blame Members for forgetting them. As regards agency workers, some people might be hired constantly on a contract basis. That in itself is all right but when these workers are hired out to two, three or four employers they cannot have their grievances redressed under the employment legislation, especially as far as the second, third and fourth contracts are concerned. In my ministerial positions I came across many such cases.

Under this legislation sexual orientation cannot be used as an excuse for dismissal. The Incitement to Hatred Act, 1989, covered sexual orientation as well as race, colour, political activity, trade union membership, pregnancy and other issues already included in the 1977 Act. I am pleased to have included it in this Bill and I hope the House will welcome it. This is a first step towards the enactment of the legislation which the Ministers, Deputy Geoghegan-Quinn and Deputy Taylor will be introducing at a later date. Where a case is deemed to be proper for decision by a tribunal, even though the person concerned may not have suffered loss of employment, up to four weeks' payment may be made. These are just some of the measures being introduced and there are many others, some of a technical nature. I want to emphasise that we aim to have a balance between the rights of employees and the rights of management and owners.

I would again like to emphasise that the Bill contains no fundamental changes to the broad intent of the original Act, its primary purpose being to address a number of issues that have arisen in connection with the operation of the Act in the past 16 years. These changes, together with a range of amendments, will serve to update and improve the operation of this legislation. We have in this House a distinguished member of the Employment Appeals Tribunal, Senator Neville, and I am glad to recognise that.

I thank the Cathaoirleach and the Members for the close attention given to the Second Stage. In this context, I commend the Bill to the House.

I compliment the Leader of the House for having this Bill initiated in the Seanad and I thank the Minister for her kind reference, which may have been prompted by Senator Hillery.

It is important at this stage that a number of issues be addressed in relation to the Unfair Dismissals Act, 1977. While I welcome the technical and administrative amendments to that Act, the basic thrust of the 1977 Act is unchanged. Dismissal is a very traumatic and stressful event in a person's life. The stress level has been compared to that experienced on the death of a spouse or close relative. It is important that the State encourages and monitors fairness and justice in the area of dismissal from employment. Employers, their representatives and the trade union movement are in full agreement with this principle. There is no disagreement between any side of the industrial relations divide with regard to the principle of fairness in dismissing employees.

Apart from the obvious impact on living standards through loss of wages or salary, dismissal often results in temporary or long term unemployment. A person's link with the workforce is broken. Valuable skills and work experience are lost and the contribution of the individual worker to the organisation is rendered valueless by the decision of the employer, for whatever reason, to dispense with a person's services. A worker's social life is also affected when he ceases to be employed. He does not have the same social opportunities with his friends during lunch breaks or at work. All those social outlets are broken.

The right to dismiss fairly is also important to an employer and he must be in a position to do so. An employer has the right to manage his or her business in an efficient and effective way. Unfortunately, this can sometimes mean dispensing with the services of an employee. A person's service may be dispensed with by way of redundancy as a result of changes in the work place or because of reorganisation or reallocation of work. The job, not the person becomes redundant. In some circumstances, an employer for the sake of efficiency and continued survival of the organisation, must dispense with employees, as the Minister said, and I quote: "on grounds arising from the capacity, competence or conduct of the employees concerned".

It is an unfortunate fact of life that employers on occasion must dispense with an employee's services. However, it is important that they do so in a fair, reasonable and just fashion. In my experience employers want to act fairly and to observe accepted fair procedures when dismissing an employee. Often it is the small employer who is responsible for unfair dismissals, because he has not the expertise or knowledge to understand the implications of his actions.

The Unfair Dismissals Act, 1977 was introduced to increase job security and limit the right of employers to dismiss workers at will. It is fair to say such an approach would be quite unusual today but was prevalent in times past. Labour legislation, especially that enacted in 1973 and 1977, makes provision for rights to protect workers in employment. As the Department of Labour discussion document states "it lays down minimum standards to which all employers and employees will adhere".

The Unfair Dismissals Act, 1977 was limited because it failed to cover certain sections of the workforce, especially those in part-time or temporary employment, or what is often referred to as flexible employment. The 1977 Act applied to full-time employees. Sadly, this is a diminishing section of the workforce. It is now estimated that less than 20 per cent of the working population come within the scope of the 1977 Act.

Since 1977 there has been a phenomenal growth in the level of part-time, temporary and casual employees. It is not acceptable that the terms of the legislation, the objective of which is to protect employees, now excludes the most vulnerable groups of workers, namely the categories to whom I referred. At the same time, we must ensure that legislation does not damage our competitiveness with our EC partners. Excess costs must not be introduced which will damage or make Irish goods less competitive in the EC or world markets. Labour legislation is not designed to do that and employers should not see it as such. However, as the Minister says and I agree with her, employers do not see it this way. Unemployment has placed a high premium on job security for all employees. Nobody should suffer the injustice of unfair dismissal because in most situations there are no opportunities for other employment. However, if it happens there should be adequate redress.

I wish to pay tribute to the work done by the Employment Appeals Tribunal since 1977. My experience of the tribunal is that it strives to be fair to all sides in a dispute. Traditionally, members of the tribunal come together to discuss each case fairly and objectively. As a member of the tribunal for over four years, I have always been impressed by my colleagues' objectivity. We are there to work as objectively and as fairly as possible, regardless of who nominated us and the low rate of minority submissions in cases is evidence of that. There is a high rate of unanimous decisions by the three members of the sections of the tribunal in all determinations. It is a credit to the nominating bodies of the employers and the trade unions that the tribunal has worked so well and that its decisions have such a high acceptability rate with both sides.

The tribunal, which is an independent body, seeks remedies for alleged breaches of an employee's statutory rights. It was designed as an inexpensive approach to deal with such disputes and for several years after its introduction that was the case. Industrial relations personnel from the FIE or other employer bodies brought claims on behalf of employers to the tribunal, while trade union officials did the same on behalf of the trade unions. Nowadays, lawyers present most of the cases. I do not think this is a healthy development because it involves unnecessary expense for the employer and especially the employee in presenting their case to the tribunal. It costs £1,000 to bring a case to the courts. This is very expensive, particularly in the context of the tribunal which was set up as an inexpensive and informal type of investigation. The tribunal has often been criticised for not taking a legalistic approach and in some ways this is true. It has a statutory function to adjudicate in disputes rather than seek to resolve them by conciliation or mediation. Inevitably a minimum of legalism is introduced as legalism aims at deciding disputes in accordance with the law laid down by the Houses of the Oireachtas and with procedures which are fair to both sides. The suggestion has been made that chairpersons of the tribunal should not be legalistic. I do not agree. The presence of a legal person on the tribunal is often a great guide to others on the tribunal without a legal background and helps with the interpretation of the Acts. The present practice, which is often criticised, should continue.

The Minister provided statistical information for 1984-91, but in 1991, the last year the Employment Appeals Tribunal published a report, 4,954 claims and appeals were referred to the tribunal. Some 987 of these, including 33 appeals from the Rights Commissioner, were appealed under the Unfair Dismissals Act, 1977. Of 872 direct claims 198 were allowed, 221 were dismissed, 168 were withdrawn during the hearing and 285 prior to the hearing. Only a minority of cases were allowed which reflects the fact that in industry the majority of dismissals are fair.

The tribunal in 1991 awarded compensation amounting to £329,838 in 124 cases. The average award was £2,660 per case, a low value to place on a job or livelihood but this has been the tribunal's decision although the legislation allows compensation payments of up to 104 weeks pay. It is significant that reinstatement was ordered in just 20 cases and re-engagement in 31 cases. One would feel — I will quote later from an ILO Convention on this — that the preferred outcome would be the reinstatement or re-engagement of the employee. In most cases reinstatement has been by agreement of both employer and employee concerned.

The tribunal plays an important part in assisting the proper management of industrial relations in the State. It is important that adequate funding is provided to ensure an efficient service and I ask the Minister to examine this area attentively.

Section 2 of the Bill clarifies that an award of reinstatement entitles an employee to benefit from any improvement in terms and conditions of employment taking place between the date of dismissal and the date of reinstatement. This provision is welcome but not significant; in 1991 just 20 cases of reinstatement were ordered by the tribunal. Since the enactment of the Unfair Dismissals Act, 1977 compensation has been the primary remedy and the preferred option of employers and employees. In most cases the previous relationship between employer and employee had deteriorated and it was not wise to order the reinstatement or re-engagement of the employee.

I refer now to the ILO Convention on Termination of Employment which includes a reference to reinstatement as a preferred remedy. Article 10 of that Convention states:

If the bodies referred to in Article 8 of this Convention find that termination is unjustified and if they are not empowered or do not find it practicable, in accordance with national law and practice, to declare the termination invalid and or order or propose the reinstatement of the worker, they shall be empowered to order payment of adequate compensation or such other relief as may be deemed appropriate.

It is implicit in that statement from the ILO that the question of compensation should only arise if reinstatement proves impracticable. In Ireland in most cases it has proved impracticable and both employers and employees at the tribunal have accepted that. As a member of the tribunal I have never experienced a difference of opinion as to what the preferred outcome should be if a dismissal were found to be unfair. The parties usually agree on redress under section 7 of the principal Act.

Section 6 of the Bill introduces a system of payment of up to four weeks remuneration as compensation where the employee incurs no financial loss. It is significant that in 1991 only five cases were recorded by the Employment Appeals Tribunal where dismissals were found to be unfair and as no financial loss was incurred no compensation was awarded.

Section 6 also excludes social welfare payments and rebates of tax from the calculation of loss. The employers' organisation, IBEC, makes the valid point that under new legislation a double payment to the employee will be financed largely by the employers. A clawback provision should be inserted in the Bill under which the Department of Social Welfare can require repayment of social welfare payments already received. This provision could require the employer to refund the Department of Social Welfare in respect of social welfare payments already paid to the employee by deducting that amount from the compensation paid to the employee.

Section 3 of the Bill inserts a proviso to exclude in that subsection from the principal Act certain fixed contracts and to allow a rights commissioner to examine second or subsequent fixed term contracts. This will help to stem the growing trend towards fixed term contract work, intended to avoid employer responsibilities imposed by labour legislation — we heard evidence of this practice at the Beef Tribunal. I strongly welcome this inclusion. I also welcome the inclusion of temporary officers of the health boards and the vocational education committees under this legislation which should be extended to all staff employed by these bodies.

The provision on procedural fairness is unnecessary. The Employment Appeals Tribunal has always concerned itself with the fairness of its procedures and this provision could reinforce a tendency on the part of the tribunal to be overly concerned with the procedural rather than the substantive issues of cases before it. The Bill's provision could make for more legalistic considerations of fairness solely on the grounds of procedure rather than the substantive reasons for the dismissal. Fair procedures are important but their absence does not always make a fair dismissal unfair. I have come across cases where the dismissal was blatantly fair, in the case of violence or whatever, although the correct procedure was not adhered to. The substantive nature of such cases, even though all procedures were not carried out, ensured the fairness of the dismissal.

With regard to section 5 of the Bill, I welcome the inclusion of sexual orientation of an employee as unfair grounds for dismissal. I strongly urge the Minister to include a clause deeming it unfair to dismiss an employee for giving sworn evidence to a Tribunal established by the State to investigate matters of public importance. It is my view that the Employment Appeals Tribunal would, if a case were presented to them, deem such a dismissal unfair. However, the Tánaiste has decided to hide behind the excuse that witnesses, if their names are given to the Beef Tribunal, may be dismissed. The Minister must use this occasion to deal with that situation. This will enable the Tánaiste, Deputy Spring, to comply with the wishes of Oireachtas Éireann and give full and frank evidence to the tribunal.

It is a fairly convoluted argument as presented by the Senator. However, I recognise it very clearly.

I do not accept that under present circumstances any employer could or would dismiss an employee for giving evidence to such a tribunal.

With regard to alternative remedies available to dismissed employees, the approach should be simplified. It should be provided that where an employee has a right to claim under unfair dismissals legislation he or she should be barred from bringing a claim based on the dismissal to the Labour Court. This would be more conducive to good industrial relations. It would not bar employees who do not have statutory rights under unfair dismissals legislation from bringing such cases under the Industrial Relations Acts. In other cases where there are alternative remedies, the employee should be required to decide on a particular remedy and having done so be barred from the alternatives. For instance, an employee should be required to decide between an unfair dismissal claim and an action for wrongful dismissal. Similarly where equality issues are concerned, the employee should be required to decide between an unfair dismissal claim, a claim for discriminatory dismissal, or penalisation under employment equality legislation, and having chosen one route should be barred from taking other routes.

The situation with regard to appeals should be examined. At present, the tribunal's decision under the Unfair Dismissals Act, 1977 can be appealed to the Circuit Court where the appeal is heard in a complete re-hearing at which both parties can give further evidence if they wish and all issues of fact are open again for discussion. A further anomaly is that the decision of the Circuit Court can then be appealed to the High Court and again the appeal takes the form of a complete re-hearing of all issues, both parties having complete freedom to call new evidence. The appeal is then determined by a full-time judge who will apply different rules of evidence to those prevailing in the tribunal which, not being a court, has always allowed strict rules of evidence to be relaxed.

It is quite anomalous to provide for appeals by way of re-hearing from a tribunal which operates one set of rules of evidence to a court which operates another set of rules of evidence. There should be a system where there is one appeal only of the decisions of the tribunal by way of a re-hearing. It should be an appeals body similarly constituted, with representatives from the workplace, and applying the same rules and standards as the original tribunal. A possibility would be for some type of division of the tribunal, presided over by a Circuit Court or High Court judge and sitting with representatives of the workplace similar to those who are at present on the tribunal.

I wish to refer to an issue not mentioned in the Act which perhaps the Minister would consider. Sometimes there is difficulty with the interaction between the Unfair Dismissals Act, 1977 and the Maternity Protection of Employees Act, 1981. The 1981 Act provides that a pregnant employee may as of right take maternity leave and the employer must keep her job open for her when she returns provided she has served the appropriate notice under section 9 of the Act. It sometimes happens that an employee takes maternity leave without serving these notices and is thus not entitled to the protection of the Act. If an employer dismisses such an employee for no other reason than that she took maternity leave, it is not clear whether this can be treated as an unfair dismissal under the 1977 Act. One view is that the Maternity Protection of Employees Act was intended to provide a minimum of rights for employees taking maternity leave. It should not, therefore, deprive employees of the right to claim under the Unfair Dismissals Act if they are dismissed for no other reason than that of pregnancy, which is automatically covered under the Unfair Dismissals Act.

The other view is that the Maternity Protection of Employees Act provides pregnant employees with a complete code of protection and they should not be allowed to use other statutes as a means of redress if they fail to comply with all the procedures under the Act. The question is, which of these views is correct. It is a matter of policy and the Minister should use the opportunity to clear up the anomaly.

There is a further anomaly in the law in that if an employer gives notice of dismissal and the employee waives his right to work out his period of notice, this nullifies the dismissal by converting it into a resignation by the employee and thereby leaves him no rights under the Unfair Dismissals Acts. There should be provision that once an employer serves notice of dismissal, any legal rights thereby vested in the employee by virtue of the fact that he is being dismissed cannot be lost by any subsequent decision by the employee to terminate his employment during the period of serving notice and thereby waive his rights under the contract of employment. We look forward to examining these matters on Committee Stage.

Like the previous speaker I welcome the fact that this Bill has been initiated in the Seanad as opposed to the other House and I thank the Minister for her support in that regard. As a former Member of the House — and I served here with her at an earlier time — she has an appreciation of the importance of having legislation initiated in this House and I thank her for that.

Before the Unfair Dismissals Act, 1977, there were minimal opportunities for employees who were wrongfully dismissed to seek redress. As the Minister pointed out in her speech, such redress was mainly through the common law which was a very expensive slow process. Since 1977, however, the Employment Appeals Tribunal and the Rights Commissioner service provide a speedy and economic service and access to justice for cases of unfair dismissal which is the nub of the matter. Furthermore, the services are available on an appropriate geographical basis and that is important. It means that where there is a case of unfair dismissal there is normally a service available in the nearest town, if not in the town itself.

I am of the view that the Unfair Dismissals Act has had a major impact on management policy and practice, and especially in larger organisations that have fully developed personnel departments. I mean by this that employers and employees now have a clearer understanding of where each stands and that is all to the good. It is more open and more transparent. There is a greater awareness of what is fair. Written procedures, for example, in the case of discipline help. It is not so much a question of the focus being on discipline or dismissal, but rather on the needs employees may have. I agree with Senator Neville that, regrettably, from time to time employees have to be dismissed. Management must have a certain scope for discretion; that is taken as a given. I have in mind cases where an employee may have gone off the rails and, because of this transparency in the arrangements, a certain amount of counselling may be appropriate. A preventative approach or a verbal warning may be justified before the legal process is activated in full.

The Act has contributed to the improvement of relationships at work between people. As the Minister pointed out, we can talk about law, regulations, procedures, institutions and so on, but ultimately we are talking about human beings in the workplace and the interaction between them. I am glad the Minister referred to the research done by my colleague in UCD, Tom Murphy. We work in the same department and I was familiar with the particular piece of research he did. He advocates a positive contribution to industrial relations rather than a preoccupation with dismissalper se. In other words, there are important advantages to building relationships in the workplace. In that context one should mention the importance of relevant research and the contribution it can make to policy formulation and legislative deliberations. This is a case in point, where university research actually informs policy making.

The Minister has said the Bill is technical and does not lend itself easily to the normal Second Stage speech of principles and so on. For all that, it is important legislation. It honours commitments in theProgramme for Economic and Social Progress and the Programme for a Partnership Government in relation to amendments to unfair dismissals legislation. This Bill is the first major range of amendments in the 16 year existence of the principal Act. Any legislation will have its imperfections. Clearly it is valid to monitor legislation and the imperfections and shortcomings of this legislation are no exception. The Bill goes a long way to meet the shortcomings that have emerged over the last 16 years in the operation of the Act.

In the time available, I will not go into every provision in detail. The scope of the Bill is extended. The question of the abuse of fixed term and specified purpose contracts is addressed. I welcome the extension of categories covered: the Bill deals with the question of redress and in particular the amount of monetary compensation and the enforcement of awards and procedural issues.

With the prevous speaker, I am glad temporary health board officers are included in this legislation. Nurses, doctors and paramedical staff of health boards are temporary officers who did not have any cover in the event of dismissal. They were not covered by Civil Service procedures or the Unfair Dismissals Act; they had no recourse. Hardship was caused in these cases and inequality was evident. This issue is tackled in the Bill.

Generally speaking, temporary agency workers are usually in one occupation or another for short periods. The Minister stated she would be concerned where this exceeds one year, as it sometimes does.

Or one contract.

Or one contract which may be even longer than a year. The hiring company, or the organisation, is the hirer. I am not fond of that term, but it is used in American literature and practice. The hirer, the person who pays the temporary agency employee, would now be liable in this case. There may be scope for teasing that out on Committee Stage but I agree with the thrust of what the Minister has in mind.

Fixed term and specified purpose contracts may suit employers and employees, depending on the circumstances. In a university context, often a specified purpose contract may have to do with a particular piece of research. For the research assistant that may mean a valuable development opportunity. That person may want to move on after the completion of that project and their prospects could be enhanced by that process. The Minister is saying it is fine if it suits both sides, but the Bill addresses where the fixed contract and its renewal is used to avoid the conditions of the legislation.

I listened with great interest to what Senator Neville said from first hand experience. In relation to fixed term and fixed contracts, people have used their discretion in totting up the periods of these contracts and giving the benefit. The Bill makes it a legal requirement to do this in future. It is reinforced and that is good.

With regard to the illegality of contracts, generally speaking employers play by the rules and deduct tax, pay it to the Revenue and do the same for PRSI, but where under-the-counter arrangements occur, that could be used by an employer to say this contract was illegal. In so doing, the employer may attempt to escape the provisions of the Bill. That is most unfair and since fairness is a common theme, I welcome the provision in the Bill whereby the reporting arrangement to the Revenue Commissioners would apply in that case.

I welcome the inclusion of sexual orientation as an additional category covered by unfair dismissal legislation. It is both reasonable and valid.

Reinstatement, re-engagement and compensation are the three main forms of award the tribunal can make. Which, type of redress should apply has been a bone of contention in practice. The tribunal has the obligation to ask the employer and the employee which redress is appropriate. In general, employees would like their job back, unless there is a complete breakdown in the relationship. The employer normally prefers compensation, monetary or otherwise. That brings one to the question of how much money should be paid. I will address that in a moment.

Where an employee desires to have the job back, the relationship can be badly broken down; there could be an alleged theft which may make a reinstatement inappropriate. I welcome the sharper focus in the Bill on the rationale as to which form of award will be made. That is a discipline for the tribunal.

The previous speaker referred to the very small compensation sums involved. It is true to say where compensation is the award, it is normally low. This is not necessarily the fault of the tribunal. It is due to the principal Act and its operation. A maximum compensation payment of two years gross will continue, but in practice to get the equivalent of two years gross pay is unusual. The computation used is to deduct tax and social welfare contributions from gross pay; the net figure after that is very small. I have no difficulty in agreeing with the Minister.

Could I interrupt the Senator to call on Senator Naughten to give the first report of the Committee of Selection.

Debate adjourned.