UK: The End Is Nigh For The Statutory Dispute Resolution Procedures

Last Updated: 16 February 2008
Article by Michael McLaughlin

This article was published in the June 2007 issue of CA Magazine.

A team tasked by the DTI to review dispute resolution in the workplace has recommended the abolition of the Statutory Dispute Resolution Procedures. How did this come about and what can we expect to replace them?

The procedures were introduced in 2004 to tackle disciplinary and grievance issues. They were the government's latest measure to reduce the number of employment tribunal claims being lodged. The DTI claimed that the Employment Tribunal Service was creaking under the weight of ever increasing numbers of claims. It was also observed that where cases were settles, this often happened too late to avoid much of the costs.

Some commentators have suggested that the 'unmanageable burden' of cases has been overstated as only 1% of employment relationships resulted in a tribunal during 2005-6. Nevertheless the DTI was determined to reduce the cost burden on the system.

Initially, the procedures seemed straightforward. There were three step disciplinary and grievance procedures with simplified versions of both. However two more innovative measures were introduced. Employees were barred from raising certain claims (including constructive dismissal) if they had not first raised a written grievance with their employer. Employers who failed to follow the three steps automatically lost the subsequent tribunal claim and could be ordered to pay an extra 50% compensation.

Problems soon emerged with the Grievance Procedures. There was no specific guidance as to what was meant by raising a grievance in writing. Procedural hearings were required in many cases to establish whether or not the employee had actually put his grievance in writing thus adding an extra layer of expense to cases.

The disciplinary procedure was problematic as well. Even some diligent employers were falling foul of the rules by not properly spelling out to the employee in writing allegations that they faced. Hundreds of tribunal hours were spent arguing about whether such letters contained sufficient detail despite the fact it was clear from the subsequent disciplinary hearing that the employee clearly understood what allegations they were facing.

The upper courts were left to sort out these and other problems at great expense to all parties. The procedures had become universally unpopular with everyone. The number of tribunal claims being lodged and those requiring hearings increased. A subsequent study showed that the introduction of the procedures had led to an additional cost to employers exceeding £114 million between 2004-2006. The average cost to an employer of defending an employment Tribunal Claim had risen to £9000. It was clear that the well-intentioned procedures had failed in their aim.

So what can we expect to replace the procedures? The report has suggested a less prescriptive approach that helps parties to resolve disputes without inflexible rules. It has also proposed that Employment Tribunals be given powers to reward parties who try to resolve disputes themselves and corresponding powers to financially penalise parties who don't. The report suggests that a free mediation service be set up through ACAS to provide parties with a forum for resolving disputes in a less confrontational setting. It is proposed that Employment Tribunals be given powers to deal with weak and vexatious claims.

Some of these proposals are not new and may be difficult to implement effectively. Arbitration procedures through ACAS have been tried before but there was little demand as parties preferred to battle it out a tribunal. It is easy to see why. At the point when employers and employees fall out, emotions typically run high. Parties rarely want to sit down and settle their differences.

As for powers to deal with weak and vexatious claims, it often requires evidence at a tribunal before the spurious nature of a claim is laid bare. By that time, significant expense has been incurred and striking the claim out will only result in limited cost savings. Tribunals already have the power to strike out such claims and to order a Claimant to pay a deposit before proceeding with a claim, however they are rarely used.

It is widely agreed that the most effective way to weed out spurious cases would be to make it easier for the winning party in any claim to be awarded its costs or expenses. At the moment such awards are very unusual.

New measures are unlikely to be in force before April 2009 so the Statutory Dispute Resolution Procedures will be with us for a while yet. Employers should continue to tread warily with them. As for what is put in their place, the DTI will doubtless carry out a consultation exercise and all interested parties will be urged to make their views known to them. Given the apparent failure of the procedures, the DTI is likely to be very receptive to considered responses from employer associations, unions and lawyers alike. The time to influence the future of dispute resolution in the workplace is before any new measures come into effect.

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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