Explanatory Memorandum: Employment (Northern Ireland) Order 2003

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This Explanatory Memorandum refers to The Employment (Northern Ireland) Order 2003 (N.I. 15)

EMPLOYMENT (NORTHERN IRELAND) ORDER 2003

1. The Employment (Northern Ireland) Order 2003 ("the Order") was made on 13^th November 2003.

2. This Explanatory Memorandum has been prepared by the Department for Employment and Learning ("the Department") in order to assist the reader in understanding the Order. It does not form part of the Order.

3. The provisions of the Order correspond closely to measures contained in the Employment Act 2002, which received Royal Assent on 8th July 2002. These are designed to promote early resolution of disputes at work, reform the tribunal system, make statutory provision for trade union learning representatives, introduce equal pay questionnaires, and enable the Certification Officer for Northern Ireland to appoint one or more assistants. The first sets of Northern Ireland regulations outlining the detail of the new rights are expected to come into operation by Spring 2004, with more to follow in the Autumn of that year.

4. The Order contains provisions designed to encourage the early resolution of disputes that occur at work and to promote the use of conciliation, facilitated by the Labour Relations Agency ("LRA"), where employers and employees fail to reach a settlement. The Order also proposes changes to the tribunal system designed to simplify and speed up some cases. Further measures aim to encourage those with an employment complaint to attempt to resolve it first, where possible, by means of in-house procedures, so that tribunals can be free to deal with cases that cannot easily be resolved. Provision is also made for a questionnaire procedure where an equal pay claim is made at work. While employers would not legally be required to respond to a questionnaire, a tribunal will be able to draw inference from a failure to do so. The Order grants to trade union learning representatives, where the union is recognised for collective bargaining purposes, paid time off during working hours to carry out trade union learning activities. Finally, the Order also empowers the Certification Officer for Northern Ireland to appoint assistants to whom functions may be delegated.

5. The Order is 'complementary' legislation to the Employment (Northern Ireland) Order 2002 ("the 2002 Order"). It parallels a number of provisions made in Great Britain by the Employment Act 2002, which were not included in the 2002 Order. Public consultation has taken place in Northern Ireland on the issues dealt with in the Order. The Order aims to introduce most of the proposals outlined throughout the consultation process, with the aim of ensuring that Northern Ireland employers and employees enjoy the same rights as their counterparts in Great Britain.

6. In Great Britain, a consultation paper, 'Routes to resolution: improving dispute resolution in Britain', published in July 2001, presented in detail a set of proposals on improving dispute resolution mechanisms in the workplace, encouraging the use of conciliation services, and reforming the employment tribunal system. The Department of Trade and Industry also launched in Great Britain public consultations on affording to trade union learning representatives the same rights to time off as other union officials, and on the introduction of a questionnaire procedure to be used in equal pay cases. During 2001-2002, the Department published parallel consultation papers with the aim of stimulating public discussion of these issues in Northern Ireland. The consultation process confirmed that there was widespread public support for the introduction of the great majority of the measures outlined. As a result, the Order has been designed to introduce measures for resolving workplace disputes, promoting conciliation, making changes to industrial tribunals and the Fair Employment Tribunal, providing equal pay questionnaires in equal value cases, and granting time off for trade union learning representatives.

7. Full public consultation has taken place in Northern Ireland upon the Order in its draft form. The consultation process was based on the publication of four separate documents, three of these issued by the Department, and a further one by the Department in conjunction with the Office of the First Minister and deputy First Minister ("OFMDFM"). These documents were as follows:

A clear majority of those consulted welcomed those provisions which have been included in the Order.

8. Part I of the Order makes provision for the commencement of the Order and includes interpretation and definitions. Part II makes provisions for reform of the industrial tribunals, and Part III provides for analogous changes to be made to the Fair Employment Tribunal. Part IV contains provision for dispute resolution: Articles 15-23 deal with statutory procedures, and Articles 24-28 are concerned with employment particulars. Part V contains miscellaneous provisions. Article 30 provides for a questionnaire procedure where a person considers that he or she may have an equal pay claim. Article 31 provides a statutory right to time off for trade union learning representatives. Article 32 makes provision regarding dismissal procedures agreements. Article 33 enables the Certification Officer for Northern Ireland to appoint one or more assistants to whom duties may be delegated. Part VI makes supplementary provisions. Schedule 1 outlines new minimum statutory dispute resolution procedures. Schedules 2, 3 and 4 list industrial tribunal jurisdictions covered under Articles 17, 19 and 27 respectively. Schedule 5 lists consequential amendments and Schedule 6 contains repeals to existing legislation.

10. A summary of each Article follows. Comments are not given where the wording is self-explanatory.

Article 1 cites the title of the Order. This is the title by which the Order will be known. Article 1 gives the Department power to bring the provisions of the Order into operation by one or more commencement orders.

Article 2 provides for the interpretation of the Order and defines the terms used in the Order.

Article 3 provides for industrial tribunal procedure regulations to introduce a fixed period during which parties can avail of the conciliation service provided by the LRA. The aim of fixing a time period in this manner, albeit with a degree of inbuilt flexibility, is to focus the minds of disputants upon the importance of reaching agreement rather than allowing the dispute to become unduly protracted. Delayed settlements cost time, money and, on occasion, goodwill. The objective is to introduce a system that encourages earlier conciliated settlements where possible, without preventing settlements at the last minute if there seems a strong likelihood of this occurring.

The fixing of a time period is achieved by amending Article 9 of the Industrial Tribunals (Northern Ireland) Order 1996 ("ITO") to allow for regulations to be made enabling the postponement of the fixing of a time and place for a tribunal hearing to allow for proceedings to be settled through conciliation. It is intended that the regulations will set out the length of the conciliation period and will provide for its extension only in cases where the conciliator considers that settlement within a short additional timeframe is very likely. The aim is to encourage earlier settlements, where there is a present tendency towards last-minute settlements on the 'doorstep' of the tribunal. In the event of conciliation failing, the dispute will be passed back to the tribunal and a hearing date can then be fixed.

The LRA's duty to conciliate cases, by an amendment to Article 20 of ITO, reverts to a power to do so after the conciliation period has ended. The effect will be that, once the conciliation period is over, the conciliation officer can judge whether to continue to conciliate the case or to pass it back to the Office of the Industrial Tribunals and Fair Employment Tribunal.

Article 4, which inserts a new paragraph into Article 9 of ITO, provides that industrial tribunal procedural regulations may empower the Department to prescribe a form to be used for applications to institute tribunal proceedings (form IT1). This provision will create a similar power to prescribe a form for respondents to use in providing a formal response to the applicant's claim (form IT3). The rules may also empower the Department to require certain documents to accompany the forms. The aim of this provision is to bring greater consistency to the tribunal application process and to furnish tribunal panels with more comprehensive information regarding the case before them. Such information will help the tribunal in deciding whether the application would benefit from a pre-hearing review, preliminary consideration or case management hearing, and the length of time required for any hearing. An assessment of the strength of the other side's case could also be made, which in itself could encourage settlement.

Article 5 substitutes a new paragraph (3A) in Article 9 of ITO. This provides for industrial tribunal procedure regulations to authorise the determination of proceedings without a hearing of cases in certain circumstances. This is intended only where both parties agree and have had access to independent advice. This would be subject to the tribunal deciding that there should be an oral public hearing notwithstanding the parties' agreement to the contrary.

Article 6 enables industrial tribunal Rules of Procedure to be amended to enable the President to issue practice directions to Chairmen as to how procedures are to be applied. This is achieved by inserting a new Article 9A after Article 9 of ITO. The procedure regulations may contain provisions about securing compliance with practice directions and their publication. They may also make reference to provision made or to be made by practice directions, instead of making such provision themselves.

The aim of the provisions of Article 6 is to ensure that industrial tribunals adopt a consistent approach to procedural issues and to the interpretation of their powers under the Rules of Procedure. It is anticipated that this will reinforce confidence among users of industrial tribunals by demonstrating that cases are being dealt with in a uniform manner.

Article 7 amends Article 11 of ITO. It clarifies the power of industrial tribunals to strike out an originating application at the pre-hearing stage. Industrial tribunals may currently carry out preliminary considerations (pre-hearing reviews) and, if it is found at the review that the party's case has no reasonable prospect of success, a deposit can be required as a condition of proceeding to a full hearing. At present the power to strike out is limited and rarely used.

Article 7 therefore removes from Article 11 of ITO the implication that pre-hearing reviews are "preliminary" hearings. The effect of the changes is to allow rules to permit a case to be struck out at a pre-hearing review, provided this is not done on grounds which do not apply outside a pre-hearing review. Such grounds include instances where anything in the originating application or notice of appearance is scandalous, misconceived or vexatious. The objective is to improve the efficiency of case handling and restrict the amount of time that tribunals spend on considering cases which are obviously misconceived. However, the power to demand a deposit remains and is likely to continue to be the main sanction used against weak cases at pre-hearing reviews.

Examples of cases where it could be appropriate to exercise the power to strike out at pre-hearing review include:

Since evidence is not considered at the pre-hearing review, the strike-out option will only be appropriate in cases where the tribunal is satisfied that there is no need to consider the evidence, or where there is no conflict of evidence.

Article 8 extends the scope of Article 15 of ITO by substituting a new paragraph (1) specifying that regulations may provide for the award of costs or expenses or allowances. This provision enables the Department to empower industrial tribunals to award costs against a representative.

In its application, it is intended that this provision will deter vexatious or abusive behaviour on the part of paid representatives only. It could mean that the representative may not recover fees from the client, or may be required to pay costs incurred by the client or the other party to the case. It is intended that regulations will include safeguards to allow the representative the opportunity to put a case on any proposed award. Regulations will also be able to define "representative" so as to exclude the 'not-for-profit' sector from wasted costs orders.

By inserting a new Article 15A in ITO through Article 8(2) of the Order, the Department will be empowered by regulations to authorise a tribunal to order one party to pay costs in respect of the time spent by the other party in preparing a case. It is not intended that the parties should have to provide detailed evidence of the actual time they have spent preparing for a case, but that the tribunal should make an assessment based on guidelines to be set out in industrial tribunal Rules of Procedure. It is intended that the new awards could be made only in the circumstances in which a costs award may be made at present, that is, where the party's case is misconceived, or they or their representative have behaved vexatiously, abusively, disruptively or otherwise unreasonably.

The new ITO Article 15A provides that the regulations on costs and preparation time must include a provision that the tribunal may not make an award of both costs and preparation time in favour of the same person in the same proceeding.

Specific powers are included for the procedure regulations to allow tribunals to take into account a party's ability to pay when making a costs or preparation time award. It is intended that this will enable the tribunal to exercise discretion in considering a party's means, where appropriate. This will be given effect in the regulations.

Article 9 makes provision for the Fair Employment Tribunal comparable to that made for industrial tribunals by Article 4. It does so by amending Article 84 of the Fair Employment and Treatment (Northern Ireland) Order 1998 (FETO). The aims of the provision are identical to those outlined in relation to Article 4.

Article 10 inserts a new paragraph (2B) in Article 84 of FETO to provide for Fair Employment Tribunal procedure regulations to authorise the determination of cases without a hearing in certain circumstances. The purport is analogous to that of Article 5 in relation to industrial tribunals.

Article 11 substitutes a new paragraph (4) in Article 84 of FETO to provide for Fair Employment Tribunal procedure regulations to introduce a fixed period during which parties can avail of the conciliation service provided by the LRA. The fixing of a time period is achieved by amending Article 84 of FETO to allow for regulations to be made enabling the postponement of the fixing of a time and place for a tribunal hearing to allow for proceedings to be settled through conciliation. The LRA's duty to conciliate cases, by an amendment to Article 88 of FETO, reverts to a power to do so after the conciliation period has ended. The purport of the measure is comparable to that of Article 3 in relation to industrial tribunals.

Article 12 provides for Fair Employment Tribunal Rules of Procedure to enable the President to issue practice directions to Chairmen as to how procedures are to be applied. This is achieved by inserting a new Article 84A into FETO. The aim of the provisions of Article 12 is the same as that of Article 6 in relation to industrial tribunals.

Article 13 enables the Fair Employment Tribunal to carry out a pre-hearing review and to strike out an originating application at the pre-hearing stage. This replaces the existing limited power for an officer of the Fair Employment Tribunal to determine matters arising prior to a hearing. The new powers are conferred by way of a new Article 84B introduced into FETO. The purpose of the changes is analogous to that of Article 7 in relation to industrial tribunals.

Article 14 inserts new Articles 85A and 85B after Article 85 of FETO. It provides that the Fair Employment Tribunal may include in awards of costs and allowances consideration of time spent preparing a case. The Fair Employment Tribunal is also enabled to order payment of costs or allowances by a party in respect of vexatious behaviour. In making such awards, however, regard must be had to ability to pay. Article 14 has the same purport in relation to the Fair Employment Tribunal as Article 8 has with regard to industrial tribunals.

Article 15 gives effect to a set of minimum statutory disciplinary and grievance procedures in Schedule 1 to which employers and employees will be expected to adhere. Under a disciplinary procedure, an employer can complain to an employee about his conduct or performance. Such procedures are sometimes termed "dismissal procedures" where they deal with complaints or issues that can lead to the dismissal of an employee. Grievance procedures operate in the opposite direction and deal with formal complaints initiated by an employee against his employer.

Under current law, industrial tribunals consider the existence and use of disciplinary procedures in unfair dismissal cases. An employer's failure to use procedures appropriately can result in a determination by an industrial tribunal that a dismissal was unfair. Tribunals must also take account of the LRA Code of Practice on Disciplinary and Grievance Procedures and any internal procedures the employer may have, when determining the reasonableness or otherwise of the employer's decision to dismiss. The use of procedures can also affect the size of an award an employee may receive when unfairly dismissed.

Each of the new disciplinary and grievance procedures involves three standard steps, with meetings to consider complaints and appeal processes. Schedule 1 also specifies a short modified version of each procedure involving just two written steps where meetings are not feasible in the circumstances. Article 15 also contains provisions enabling the Department to amend these statutory procedures by order, following consultation with the LRA.

Article 16 implies in every contract of employment a duty to observe the statutory dispute procedures in circumstances specified by the Department in regulations. Employers and employees are prevented from contracting out of this implied term. The aim is to encourage parties to resolve their differences through the proper use of internal procedures.

Article 17: Non-completion of statutory procedure: adjustment of awards by industrial tribunals

Article 17 provides that, where the minimum statutory procedures specified under Article 15 have not been followed, an award made by an industrial tribunal may be varied. The variation in the award, upward or downward according to the source of the procedural neglect, may be between 10-50%, except where this would be inequitable. Where exceptional circumstances may make a reduction or increase inequitable, the variation may be less than 10%, or nothing at all. In cases specified by the Department, exemptions from the need to follow statutory procedures are possible. The adjustments are to be made before reductions under Article 27 for contributory fault or redundancy payments in excess of the basic award.

Together, the jurisdictions listed in Schedule 2 cover the overwhelming majority of industrial tribunal claims. Article 17 enables the Department to add to, or remove jurisdictions from the list. It also provides the Department with powers to make provision as to how the statutory procedures will apply for these purposes. These powers enable the Department in particular to specify circumstances where an employee or an employer is to be treated as having complied with a statutory procedure, even though none or only some of the required actions have been taken. Thus, the regulations could provide for exemptions from some of the requirements of the statutory procedures in particular circumstances.

The rationale behind this provision is to reduce the number of cases going forward to tribunal where employers or employees have failed to use existing internal workplace procedures. Once again, it is envisaged that costly and damaging litigation will be reduced by encouraging disputants to resolve their differences, where possible, in the workplace.

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Northern Ireland Orders in Council

EMPLOYMENT (NORTHERN IRELAND) ORDER 2003