There may be trouble ahead …

26 02 2009

And whilst there may well be music and moonlight and love and romance somewhere,  HR bods and employment lawyers probably won’t  be looking forward to facing the music (or dancing for that matter) when it comes to dealing with the Employment Act 2008.  It comes into force (or should that be farce?) on the 6th April and repeals the hugely criticised Employment Act 2002.   In fact, there definitely will be trouble ahead.

Before I get into the nuts and bolts of the new legislation though, how did we get into this situation for those who haven’t been keeping up, or haven’t had the misfortune to get entangled in the current web of appeals, grievances, rights of appeal, extendable deadlines and percentage uplifts/reductions  for non-compliance?  Simply because the government became concerned in the closing years of the last century and the early ones of this that the number of cases being filed at Employment Tribunals (E.T) was increasing rapidly, threatening to swamp the system (see footnote below on this).   So they decided, not unreasonably, that it would be better if employers and employees could settle their differences without needing to bother the E.Ts.  Additionally, many smaller employers did not have grievance or disciplinary procedures in place, so the introduction of statutory disciplinary and grievance procedures helped to establish necessary internal procedures for dealing with disputes was a good plan. It was stipulated that in any disciplinary situation there would be a three stage process – a letter from the employer setting out the alleged disciplinary fault, a meeting to discuss and then a right of appeal.  A grievance by an employee would follow the same basic process but at the employee’s instigation.  So far so good.

Unfortunately, the system introduced with this laudable aim, by the Employment Act 2002, and the Employment (Dispute Resolution) Regulations 2004 made the whole situation much more complicated than it needed to be.  There have been two central difficulties.  Firstly, the rules allowed for an extension of time for issuing ET proceedings, in certain cases, up to six months from the usual three. This seemed simple until you were faced with a claimant with multiple claims.  Secondly, if an employer did not follow the disciplinary process religiously then they risked a finding of automatically unfair dismissal if the claim ever got to an ET which could result in the ET increasing the award it made to the employee by between 10 – 50%, depending on the heinousness of the procedural failure.  The end result of all this was that lawyers on both sides got involved much sooner, disputes became more entrenched and the number of cases filed at ETs kept on rising.

The government commissioned the Gibbons review, which led to the Employment Simplification Bill, which itself became simplified to the Employment Act 2008. It  relies heavily on a new ACAS Code of Practice, which will be legally binding, albeit it is still in draft form.  In turn the Code of Practice is supplemented by a Guide (called “Discipline and grievances at work: The ACAS Guide”) which is purely a guide and not law.  The main changes this structure brings about are as follows:  Firstly the extendable limitation periods for issuing claims will go.  From the 6th April 2009 in the vast majority of cases, there will only be three months from the dismissal or the event giving rise to the claim in which to issue proceedings at the ET. Extensions will only be possible if “just and equitable” (for discrimination claism) or “not reasonably practical” (for unfair dismissal claims), both of which are stiff tests.  Also, the automatic increase in ET awards for failure to follow the correct procedure will also be replaced by a discretionary system.  The ET will be able to award up to a 25% increase if it considers it just and equitable to do so if the Code of Practice applies and either the employer or employee has unreasonably failed to comply with the terms of the code. 

This will lead to confusion as ETs around the country decide on what act or omission was a failure to comply and, whether the offending party had a reasonable excuse.  This is further complicated by the ET being allowed to take into account the size of the employer when considering what it would be reasonable for them to do.  In other words a failure to comply with a provision of the Code  may be unreasonable for, say, a company with of the size and resources of BP, but not for a small firm of builders without any HR or legal resources.  On the face of it this is common sense, but it does mean that advising clients in the future will become harder and advice necessarily more uncertain.

My favourite amendment though concerns the new Grievance procedures. Under the rules currently in force, a grievance must be submitted in writing and failure to follow the grievance process can lead to increased/reduced awards as with the disciplinary process.  It is also necessary for 28 days to have passed between the grievance being lodged with the employer and filing proceedings at the ET (failing which the claimant cannot proceed).  The new Act sweeps all this away and doesn’t even provide that a grievance must now be in writing.   Madness! The new Code defines a grievance as any “concerns, problems, or complaints that employees raise with their employers”. The effect of this is that the system will be open to abuse from all sides: employees will be able to claim that the conversation with their line manager by the coffee machine at 4.55 one Friday afternoon x weeks ago was, in fact, a grievance.  Unscrupulous employees can then “reverse engineer” history to suit themselves.  Similarly employers will be able to claim never to have been made aware of the grievance.  In one sense this doesn’t have the impact that it would if the statutory uplift for non-compliance was still in force, but it will lead to a good deal of confusion and dispute and will do nothing to promote harmony in the workplace. 

There are many other aspects to the new rules which I shall write about in the forthcoming weeks as issues arise and get resolved, or as major confusion arises.  Watch this space. 

 

 

 

 

 Footnote

In 1999-2000 according to the ET’s own figures, 104,000 cases were filed.  There was a slight dip (bizzarely) in 2002/03 to 98,617 and then an increase to 115,039 in 2005/2006 after the new system was brought in.  In 2006/07, the last year for which figures are available there were 132,577.  Even the ETs own figures don’t show a relentless year on year rise – in 2004/05 the numbers declined to 86,181.

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2 responses

27 02 2009
Peter Lawton

Thank you for unveiling the forthcoming changes.

I have heard that the proposed ACAS orientated process will fall under the banner of ADR? So am I right in thinking that employee and employer will apply their respective resources and minds to settling their differences by following a non-legal procedure that obviates the need for a pesky judgment? Surely there is a risk that one party will always stand to lose more than the other if fairness cannot be absolutely guaranteed? Remind me, exactly how is ACAS funded?

Should we worry that the perceived solution to a capacity planning issue is being foist on a quango in order to give the judicial process a bit of a breather?

I wonder if there may be a ‘blip’ in your next set of statistics as we look back on the lead-up to the 6th of April??

P¬)

27 02 2009
michaelscutt

Peter, I absolutely agree with you. ADR, or Mediation in particular, is seen as the way forward, both in employment law and in civil litigation (or dispute resolution as it is now rather trendily called). You’ve just given me an idea for another post! Many thanks.

Jobsworth

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