The Employment Bill

Most employers, certainly small employers, will tell you that there is simply too much employment legislation

But they may sigh with relief that at least the Employment Bill – expected to get royal assent in July – provides for employment tribunal reform designed, in part, to deter spurious claims. These claims have clogged up an over-burdened employment tribunal system to the detriment of genuine claimants and employers dealing with misconceived complaints.
But, as is often the case with recent legislation, there is a sting in the tale. All employers will have to provide a minimum statement of employment particulars to employees – even employers with less than 20 employees who were previously excluded from the requirement. Failure to do so will run the risk of an order of compensation being made by the tribunal in response to an employee's complaint, possibly giving rise to a 25 per cent increase to the compensatory award.
In addition, an employer who fails to follow a fair procedure in dealing with an employee's grievance, or in the way an employee is disciplined, will find the compensation awarded by a tribunal to a successful applicant significantly increased by 10-50 per cent.
On top of all this, the facts relied on for an increased compensation payment may lead to a penal costs order because costs orders are now going to be possible against a party's representative as well as the parties themselves.
On the face of it, this means unsuccessful applicants may be asked to contribute to the employer's costs. However, tribunals will be reluctant to make such an order where an applicant has acted in good faith. An unsuccessful employer, on the other hand, may not be treated so sympathetically.
The introduction of a statutory procedure in respect of both discipline and grievance requires a three-stage process if there is no evidence of gross misconduct. An employee needs to set out any grievance, leading to a meeting and a response by the employer giving the employee a right to appeal. The dismissal and disciplinary standard procedure requires a statement by the employer of the grounds for action and an invitation to a meeting for the employee to state his case before action is taken, plus a fair appeal where appropriate. All this is straightforward compared with the Acas Code of Practice on Discipline and Grievance Procedures followed by employment tribunals as a matter of natural justice.
If the employer does not comply with the minimum provisions set out in the bill, there will be an automatic finding of unfair dismissal and an increase in the compensatory award depending on the employer's conduct.
The tribunal will be less critical of procedural flaws (such as where the employer has a more comprehensive disciplinary procedure but failed to follow it) if minimum procedure was followed. In addition, employees may be prevented from making a claim if they fail to follow the statutory grievance procedure, or may find that their award is reduced for failure to complete the internal disciplinary and/or grievance process.
Now that the employment tribunal maximum compensatory award is £52,600, average awards will increase for employers who do not go through a fair process. All employers will have to be more concerned about dispute resolution at an earlier stage and ensure that the three-stage process is notified to an employee through a clear written statement.
How the Employment Bill will work in practice will become clear over the course of the next year but reaction to it is mixed. It has been said that the bill will reduce red tape and “is a winning ticket, delivering for individuals, business and the economy”. It has also been said that “for an increase in regulatory burden to be called a cut in red tape just goes to demonstrate the challenge we all face and how far governments can be removed from reality”. One statement was made by the Secretary of State for Trade and Industry Patricia Hewitt and the other by John Walker on behalf of the Federation of Small Businesses. No prizes for guessing who said what.
The bill has 55 sections and 8 schedules and contains some excellent changes, but also has some nasty surprises for employers along the way. Although the discipline, dismissal and grievance provisions are tucked away in the bill ,they may have the widest impact of all.