The origins of unfair dismissal law – the Donovan Commission

by Laurie Anstis on May 21, 2012

Donovan Report and the Industrial Relations Act 1971

The Donovan Report, and the resulting Industrial Relations Act 1971

The current system of unfair dismissal law can trace its origins back to the report of the Donovan Commission or, to give it its full title, the Royal Commission on Trade Unions and Employers’ Associations, which was published in 1968.

As the title suggests, individual employment rights were not the focus of the report. Its terms of reference were:

“to consider relations between managements and employees and the role of trade unions and employers’ associations in promoting the interests of their members and in accelerating the social and economic advance of the nation …”

At the time, individual employment rights were very limited, and, as the report noted:

“In the period 1964-66 some 276 unofficial strikes took place each year on average as a result of disputes about whether individuals should or should not be employed, suspended, or dismissed.”

It was in that context – troubled industrial relations – that the commission made its recommendations on unfair dismissal.

These are the recommendations in full, with my commentary:

“It is desirable that satisfactory voluntary procedures governing dismissal should be developed and extended.

A majority of the Commission recommend early legislation to establish statutory machinery to safeguard employees against unfair dismissal. This will encourage employers to improve their arrangements for handling dismissals, and may well spur employers and trade unions to establish satisfactory volutary joint procedures which can be exempted from the coverage of legislation.

The Secretary of State for Employment and Productivity should have power, on the recommendation of the Industrial Relations Commission, to exempt from the statutory machinery industries or undertakings which apply an agreed voluntary procedure, provided it reaches satisfactory standards.”

The statutory right to claim unfair dismissal was to be a fall-back procedure, to be used in industries which did not have voluntary procedures.

This idea continues to this day – section 110 of the Employment Rights Act 1996 exempting industries which have a “dismissal procedure agreement”. Harvey’s reports that only one procedure was ever agreed. Now defunct, it  applied in the electrical contracting industry.

“The legislation should state that dismissal is justified only if there is a valid reason for it connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service, and that in the absence of such valid reason it it unfair. Certain specific reasons which are not valid should be specified, namely trade union membership or activity, race, colour, sex, marital status, religious or political opinion, national extraction or social origin.”

The first sentence will be recognisable to modern employment lawyers as being very close to the concept of unfair dismissal we have today, although it is surprising to see the progressive attitudes displayed in the second sentence, several years before sex and race discrimination were specifically outlawed in employment. Religious discrimination was only outlawed in mainland Britain in 2006, and “social origin” is still not dealt with by modern employment law.

The commission recommended that unfair dismissal rights should apply from the first day of employment, without a qualifying period, although the fact that an employee was within their probationary period would be something that a tribunal could take into account. The eventual implementation of unfair dismissal law, in the Industrial Relations Act 1971, had a qualifying period of 104 weeks.

“An employee who considers himself unfairly dismissed would have a right to complain within five working days of dismissal to the labour tribunal … seeking either compensation or, if both parties agree, reinstatement. No scale of compensation would be fixed, but there would be a ceiling of an amount equal to the employee’s wages or salary for two years, wages or salary in excess of £40 a week being ignored.”

The five-day limit on bringing claims would shock modern lawyers, used to having three months in which to bring most employment claims. A five-day limit applies in rare cases of “interim relief”, but these are not often used. Although reinstatement or re-engagement are today notionally the primary remedies available for unfair dismissal, in practice compensation is far more often the remedy. The commission said that compensation should be the primary remedy, with an option for both parties to agree reinstatement as an alternative.

Apart from special cases, there has always been a cap on compensation for unfair dismissal. In the case of the compensatory award this is not linked to the individual’s salary, but a limit on the weekly wage that can be awarded applies in respect of the basic award.

So far as industrial tribunals were concerned, the report recommended them being renamed as “labour tribunals” (which never happened) and said that “it should be the primary duty of the tribunal to bring about an amicable settlement … Each hearing should be proceeded by a ’round table’ meeting in private between the parties and the tribunal … in order to settle the case.” This role was later taken on by ACAS.

[Note: there is more on the Donovan Commission’s deliberations on unfair dismissal in David Renton’s book, Struck Out.]

One comment

[…] some extent this echoes the original ideas of compensation from the Donovan report in 1968. It is not immediately clear to me whether the “week’s pay” would be […]

by The Enterprise and Regulatory Reform Bill | Work/Life/Law on 23 May 2012 at 5:45 pm. #