Changing times

The reason is that the main aim behind introducing the statutory dispute resolution procedures in October 2004 was to encourage employers and employees to resolve disputes within the workplace, so the Employment Tribunal would only be used as a last resort. But that has not worked in practice.

A review headed by Michael Gibbons identified several problems with the current dispute resolution system in Great Britain.

It was found the 2004 changes had the effect of exacerbating and accelerating employment disputes and, in many cases, formalising disputes that could have been dealt with informally.

It also resulted in harsher awards against employers for procedural flaws - the opposite of what the Government had intended.

According to the DTI (now the Department for Business, Enterprise and Regulatory Reform), the 2004 procedures carry a high administrative burden for employers and staff.

It has been estimated the average cost to businesses to defend an employment claim is about £9,000.

While the statutory dispute resolution procedures have brought more clarity on how to deal with a dispute using the three step procedures, every set of circumstances is different.

It is estimated that about 75 per cent of claims made to the employment tribunals are resolved without the need for a hearing.

While this would suggest the new system is fairly successful, many settlements occur after a lengthy, unnecessary procedure and had the potential of being settled without the tribunal's involvement at all.

So what now? The DTI announced in December 2007 that a new Bill had been proposed which would abolish the statutory dispute resolution procedures, probably by October 2009.

This must inevitably be good news from the point of view of employers, as it should reduce the number of automatic findings of unfair dismissal based on a procedural technicality.

On the whole it seems as though we may go back to the pre October 2004 regime in the main. So, if an employer failed to comply with a procedure in dismissing, the dismissal would be unfair, even if the employer could show the failure did not affect the decision to dismiss.

The decision also provided that the compensation awarded could be reduced, or eliminated entirely, to reflect the likelihood that the employee would have been dismissed anyway, even if the correct procedures had been followed. This was known as a Polkey reduction.

This was partially reversed by the introduction of section 98A into the Employment Rights Act 1996, so a dismissal is now automatically unfair if the statutory dispute resolution procedures are not followed.

The repeal of section 98A would allow tribunals to make the nature of the finding clearer by distinguishing between dismissals which were unfair on procedural and substantive grounds.

So there could be a finding that a dismissal was procedurally unfair but fair overall, so the compensation would be greatly reduced, potentially to zero.

The Employment Bill also says that failure to follow a proper procedure will bring the possibility of a maximum 25 per cent uplift or reduction (as opposed to a current maximum uplift or reduction of 50 per cent) in the tribunal award.

The same applies to the uplifts/reductions in relation to the statutory grievance procedures.

Currently, statutory procedures mean that if there is any technical procedural failing in relation to a grievance made, then there is the provision of a hike in compensation of between ten and 50 per cent.

This means there is an onus on the employer to treat every grievance in a formal manner regardless of its severity. The reduction to a maximum 25 per cent could result in a great saving overall.

The unexpected and unforeseen hazards created by the 2004 legislation means that we are welcoming the repeal of the 2004 statutory dispute resolution procedures.

Sometimes, change is simply more trouble than it's worth!

o Contact: Michelle Morgan 01295 661459.