Salt in the wound?
10 January 2005
On 1 October 2004, the Employment Act 2002 (Dispute Resolution) Regulations came into force. They introduced changes that affect the way all employers should deal with grievances, dismissals and certain disciplinary issues.
By placing obligations on employers and employees alike to follow certain basic procedures whenever major decisions are contemplated in relation to an employee’s continued employment, the principal objective of the new regulations is to resolve employment disputes at source. The new rules seek to ensure that the parties to a dispute have a full opportunity to conciliate their dispute before resorting to costly and time-consuming litigation. Ultimately, the Government expects to reduce the volume of employment claims brought before the employment tribunals system each year – a system which for some time now has been close to breaking point.
Recent press coverage suggests the regulations have not been greeted warmly. The Trades Union Congress criticised them, saying: “The new procedures are too complicated and are more likely to create confusion than solve workplace problems.” Similarly, the Federation of Small Businesses described them as “a potential minefield for small firms”. Employers, it would seem, are not approaching the new regulations with a great deal of enthusiasm either.
Schedule 2 of the Employment Act 2002, as implemented by the regulations, introduces two main sets of dispute resolution procedures: the statutory Dismissal and Disciplinary Procedures (DDPs) and the statutory Grievance Procedures (GPs). The DDPs and GPs are each split into two further distinct sets of procedures: the ‘standard’ three-stage procedure (applicable in the majority of cases) and a more streamlined ‘modified’ two-stage procedure.
Whenever a dispute arises, employers and employees need to consider which procedure applies to their particular circumstances. The modified procedure will apply in so few cases that employers and employees would be well advised to follow the standard three-stage procedure in all cases.
For many employers, the outlook is bleak, both in terms of the demand on resources for compliance and in terms of liability. Larger employers with dedicated HR personnel and established disciplinary and dismissal practices are unlikely to struggle with the new regime. The three-stage process of letter, meeting and appeal of the standard DDP is no more than has already been recognised as best practice. Similarly, the GPs would appear positively scant in comparison with the weighty grievance policy documents produced by many large employers.
However, the new regime gives no small employer exemption, so all employers must comply. This will inevitably cause issues for those employers who are simply not equipped to deal with disciplinary, dismissal and grievance issues in the prescribed manner. For example, the appeal hearing, now mandatory in both DDPs and GPs, would be an alien concept to a small employer who does not have sufficient managerial resources to allow for a second hearing. It will be interesting to see how tribunals reconcile the apparent conflict between the statutory regime, which appears to have no regard to the resources of the employer, and the law of procedural fairness under unfair dismissal, which does.
There is also a concern that the new regulations are too complicated for the average employee and that insufficient help and guidance will be provided to them. In larger, unionised workplaces, help will be available to an employee from their union representative, but in smaller workplaces with no union presence, it is unclear to whom the employee should turn for expert advice.
It is unreasonable to expect the employee to resort to professional legal advice in these circumstances, and that would not be in line with the Government’s objective of minimising legal involvement in employment disputes. The consequences for an employee who fails to comply with statutory procedures are particularly grave in the case of GPs, where he or she may be barred entirely from presenting a tribunal claim. Question whether in this situation the employee is being punished for a failure to comprehend, rather than a failure to comply with, the statutory procedures. This may lead to a reduction in claims, but is it at the expense of justice?
Employers feel they have been ‘ambushed’ with a set of involved and complex provisions which have wide-ranging implications. Since the regulations’ implementation, employers also feel they are playing catch-up as they try to get managerial and personnel staff well versed in the detail of the new regime. Although there was a consultation exercise in the summer of 2003, employers argue that there was very little practical guidance issued prior to the 1 October 2004 implementation date.
It has been pointed out that the Department of Trade and Industry guidance, made available through its website, contains a sufficient number of errors, and so should not be relied on too heavily. The updated Acas code on disciplinary and grievance procedures – perhaps the most useful and straightforward guidance on the new regime – was first published on 30 September 2004, the day before the regulations came into effect. That employers are having such difficulty digesting what is required of them does not bode well for employees, who also have specific duties under the statutory procedures, especially in relation to the GPs. It seems likely that a large proportion of employees will first become aware of the specific detail of the new statutory procedures when they are first subject to them, or worse still when their tribunal application is returned to them by the tribunal as rejected for non-compliance. That is not a satisfactory situation.
It is unlikely that the new statutory regime will reduce tribunals’ workloads, at least in the short term. The thinking behind the introduction of a statutory disciplinary, dismissal and grievance procedure is clear: by having prescriptive rules, a large chunk of a tribunal’s discretion on these issues is removed, and tribunal resources spent determining them should be reduced as a consequence. However, it was perhaps naive of the Government to believe that this would inevitably occur. It is still within the discretion of the tribunal to decide whether statutory procedures have been complied with, and given the significance attached to these procedures under the new regime, it seems certain that compliance will be a major battleground in future tribunal cases. Through introducing statutory procedures, the Government has merely refocused the tribunal’s inquiry. The resources spent on that inquiry shall remain the same.
Even on the most optimistic assessment, there will inevitably be a period of confusion and uncertainty until there is guidance from the decisions of tribunals and the higher courts, and it will therefore still be some months before the new regime ‘beds down’ and the key parties begin to feel comfortable with its operation. The Government has timetabled a review of this legislation for 2006. If it really is as bad as we hear, it may have a very short shelf life.
Andrew Chamberlain is head of employment and was assisted in this article by Emma Hodgson, an associate in the employment group at Addleshaw Goddard