On 6 December 2007, the Government introduced its latest Employment Bill into the House of Lords. On...
On 6 December 2007, the Government introduced its latest Employment Bill into the House of Lords. One of the major aims of the Bill is to repeal the statutory dispute resolution procedures (SDPs) introduced in October 2004. It is the Government's hope that this will reduce the administrative burden on businesses by up to £180m per year. The key changes introduced by the Bill are summarised below.
Statutory dispute resolution procedures. Michael Gibbons was commissioned by the DTI in March 2007 to review current employment dispute resolution. He found that while the intentions of the SDPs were sound, they have failed to produce the desired policy outcome. The clear message from the report that followed is that the measures introduced in October 2004 - the SDPs, new claim forms, fixed Acas conciliation periods - have failed to reduce the number of disputes and their related costs for employers, employees and the tribunal system. The Bill therefore proposes to repeal the SDPs in their entirety.
Procedural fairness in unfair dismissal. The Government has decided to repeal section 98A of the Employment Rights Act (1996), which provides a dismissal is automatically unfair where an employer does not comply with the SDPs. Instead, it is likely we will return to a similar system to the one in place prior to October 2004, in which compensation for breaches of procedure in unfair dismissal cases was based purely on case law.
Following the 1988 House of Lords judgment in Polkey v A E Dayton Services Ltd, a dismissal could be unfair purely on procedural grounds but that, in such circumstances, the tribunal should reduce or eliminate the compensation payable to reflect the likelihood that the dismissal would have gone ahead anyway if the correct procedures had been followed.
Failure to comply with statutory codes of practice. The Bill proposes to introduce a statutory code as an alternative mechanism to promote good practice in place of the repealed statutory dispute resolution procedures and procedural fairness provisions. Compliance with a statutory code on disciplinary, dismissal and grievance procedures (to be developed by Acas) will be encouraged by means of discretionary powers for tribunals to increase or decrease awards by up to 25% where the employer or the employee has unreasonably failed to comply with the code.
Tribunal proceedings without a hearing. The Bill proposes a new fast-track procedure for settling monetary disputes in certain limited cases. The new procedure will permit cases to be decided without a hearing, instead relying on written submissions by the parties, providing they both consent to it.
Conciliation before institution of proceedings. The Bill proposes the removal of the requirement for an Acas officer to justify the reasons for deciding whether or not to offer conciliation. The intention of the amendment is to enable Acas to prioritise cases where demand for conciliation exceeds resources available for conciliation and to relieve Acas of the obligation to offer conciliation in pre-tribunal disputes where there is no prospect of success. Alongside this, Acas's duty to conciliate in employment throughout the proceedings will be restored by removing fixed periods for conciliation introduced in October 2004.
Compensation for financial loss. The Bill will provide employment tribunals with the power to order employers to compensate workers for any financial loss sustained as a result of unlawful deductions from wages, or non-payment of redundancy awards. There is currently no provision for the employer to compensate the worker for losses arising from the deduction or payment, such as additional bank charges or interest charges, thereby requiring the worker to issue a separate county court claim to recover these losses.
At the time of writing it is unclear what the position will be once the new Bill has gone through Parliament and become law. What is certain is that employment law will remain a complex area where specialist advice will still be essential. The general view is that the changes can only improve on the current position, as the SDPs created confusion and increased both the number of cases and the cost of litigation.
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