UK: Dispute Resolution Rules Not Working

Last Updated: 22 June 2006
Article by Christopher Booth

The statutory dismissal and grievance procedures introduced in October 2004 were intended to promote the resolution of disputes within the workplace. At the same time, new tribunal rules of procedure were brought into force which were designed to filter out weak claims and to make the tribunal process more efficient.

However, opinion is growing that the reforms have not achieved their stated aims and bodies on both sides of industry are now calling for a rethink. In this respect two recent reports are likely to be particularly influential, one issued by ACAS and the other by the Employment Lawyers Association.

ACAS Discussion Paper

This is primarily concerned with the changes made to ACAS's role in the conciliation of disputes. Before the reforms, ACAS had a duty to conciliate right up to the final hearing. Now there are fixed periods of conciliation (of either seven or thirteen weeks) in most cases.

This paper questions whether fixed periods promote the early settlement of disputes as the Government hoped. It points out that the fixed periods expire too far ahead of the hearing, when parties are not in a mindset to settle and then leave them in limbo. In addition, the seven week period (which applies to claims such as breach of contract and redundancy) is too short for many large organisations, as papers may not get to the right desk until well into the seven week period.

ELA Report

Whilst highlighting some improvements made by the new rules (such as the fact that tribunals are now more willing to make costs awards) this report is just as pessimistic. Particular concerns include:-

  • worries about the statutory grievance procedure, with widespread scepticism as to whether this is leading to early resolution of claims;
  • a belief that fixed conciliation periods are not working, confirming the view put forward in the ACAS paper; and
  • unhappiness over the new acceptance of claim/response procedure.

Practical Implications

The Government has promised a review of the rules in Autumn 2006 and it is hoped that significant changes will be made. In the meantime, the resolution of workplace disputes is a legal minefield for employers which needs to be negotiated with great care.

Imposing Restrictive Covenants

When a key employee joins an organisation, the employer should consider whether to include restrictive covenants in the employment contract. Properly drafted, such covenants offer the employer some measure of protection if the employee subsequently goes to work for a competitor and/or tries to poach customers or staff. However, if they are too wide they will be unenforceable.

What are the options if this was never done or if the business has changed so that covenants entered into years ago are no longer adequate? One solution is to try to agree covenants with the employee. If this is not possible another option is to terminate the employee's existing contract on notice and offer a new contract containing the covenants. Such a termination does not involve a breach of contract by the employer but does amount to a dismissal. So if the employee rejects the new terms and decides to leave, there is the risk of an unfair dismissal claim.

The Willow Oak case

How will a tribunal determine such a claim, particularly if the employee argues that the new covenants are too wide to be unenforceable? The recent case of Willow Oak Developments v Silverwood confirms that a dismissal for failing to sign a new covenant can be for ‘some other substantial reason’ and so potentially fair, regardless of whether the covenant is enforceable. On the other hand, enforceability of the covenant will be relevant when the tribunal goes on to consider the general issue of fairness of the dismissal, but at that stage procedural matters such as whether there has been adequate consultation and whether the employee had time to take legal advice will also be taken into account. Practical Implications Considering whether to impose new restrictive covenants on an employee is, like any other unilateral change of terms, a difficult question.We recommend that employers take advice before taking such action, particularly as there are some difficult issues surrounding the application of the statutory dismissal procedures in this area and possible collective consultation obligations.

Do You Need To Know…?

Factsheets on Age Discrimination

Hot on the heels of the ACAS Guide on Age Discrimination, published last month, the DTI has now issued 8 ‘age legislation factsheets’ in anticipation of the new age discrimination rules which come into force on 1 October 2006. These summarise the impact the age regulations will have on a number of key areas such as redundancy, retirement and service related benefits.

On the plus side the factsheets are short, easy to read and draw attention to some of the more difficult issues for employers, such as the special procedures which will apply to retirements between 1 October 2006 and 31 March 2007. However, they are light on detail and are no substitute for the in depth training managers will need if they are to avoid falling foul of the new rules. To view the fact sheets go to http://www.dti.gov.uk/employment/discrimination/agediscrimination/age-legislation/page29258.html.

EAT Considers Injury to Feelings awards

In contrast to unfair dismissal cases, a tribunal has power in a discrimination case to award compensation for injury to the claimant's feelings. Such an award must not be so low as to trivialise the issue (less than £500 is unusual). However, in an appropriate case a tribunal can award as much as £25,000, particularly if there has been a campaign of harassment.

Although it is rare for the EAT to overturn an injury to feelings award, it did so recently where the tribunal had fixed the size of the award by reference to the respondent's conduct. In doing so, the EAT emphasised that the award is compensatory rather than punitive. By the same token, the tribunal had been wrong to take the employer's size into account when making the award.

World Cup Fever

With the World Cup upon us, ACAS has issued timely guidance on the problems this may create in the workplace. Written in a straightforward question and answer style, the guidance gives useful advice on a number of matters. These include how to deal with employees who phone in sick when there is a key match, the factors employers should bear in mind if they offer flexible working during the tournament and the problems created where employees have internet access to matches on their worktop PCs.

ACAS concludes by advising employers to be ‘flexible but firm… investigate circumstances before imposing any disciplinary sanctions and try not to act differently simply because it is World Cup fever.’ To view the guidance go to http://www.acas.org.uk/index.aspx?articleid=1083.

Cases referred to in this update:

Willow Oak Developments v Silverwood [2006] EWCA Civ 660; Corus Hotels PLC v Woodward EAT/0536/05

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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