The impact of The Employment Act 2002 (Dispute Resolution) Regulations 2004
Introduction and Contents:
In this dissertation I shall perform a rigorous analysis of the impact that the Employment Act 2002 and its 2004 Dispute Resolution Regulations has had on all parties involved in the Employment Tribunal and pre-Tribunal process.
In order to do this it will be necessary to first examine the nature of the system as it was prior to the introduction of these reforms, for only through comparison can the full effect of the impact be understood; i.e. if the new reforms have not significantly changed the legal position of each party involved, then it goes without saying that the impact will likewise be insignificant. I shall therefore dedicate a section of this essay to the study of the law pre-2004, which will necessarily include an exposition into the nature and function of Employment Tribunals more generally.
In order to assess the nature of the impact, it will also be necessary to understand and engage with the rationale behind these reforms, and it is for this reason that I shall also dedicate a section of this essay to the study of the policy paper which preceded the 2002 Act ['Routes to Resolution' 2001]. In this section I shall also engage with the question of why it has been deemed necessary by the Government to improve legislation to afford greater protection to individual employees. This latter discussion will prove very useful in our later discussion of the effects the 2002 Act and its 2004 Regulations have had on the non-legal union representatives of employee claimants.
I shall then discuss the content of the new legislation in some detail, examining the Regulations themselves, and attempting to understand how each regulation fits in with the rationale of the Act, and how on a practical level each Regulation purports to realise this aim.
Having completed all the aforementioned tasks I shall then be in a position to engage directly with the question at hand, and attempt to evaluate the impact that the Employment Act 2002 (dispute Resolution) Regulations 2004 have had on Tribunals, the higher courts, Respondents, Claimants and the Representatives of Respondents and Claimants. I shall structure this section of the essay in this order, addressing the issues involved for each of these parties in turn.
I shall also dedicate a section of this essay to a discussion of ACAS, and the role that this statutory body has played in the Tribunal process in reducing some of the aforementioned negative impacts on all the parties involved, particularly individual claimants.
Having done this, I shall then be in a position to assess to what extent I believe the 2002 Act has had a positive or negative impact on our Employment Law system as a whole, and be able to make some assertions as to future measures which will be necessary if these Regulations are to work successfully in practice without jeopardising the interests of any parties concerned.
I shall conclude by summarising the main findings of the dissertation and providing some of my own original insights into the issues of the ever changing Employment Law landscape.
The structure of this dissertation shall therefore take the following form:
- The law and procedural requirements prior to the 2002 Act.
- The nature and function of the Employment Tribunal
- Routes to Resolution
- The downfall of the Unions and the greater need for individual employee protection.
- The Employment Act 2002 (Dispute Resolution) Regulations 2004
- The impact that the Employment Act 2002 (dispute Resolution) Regulations 2004 have had on:
- Higher courts
- Representatives of Respondents and Claimants
- The role of ACAS and how, if at all, it has managed to effect the above identified impacts.
- To what extent has the 2002 Act had a positive or negative impact on our Employment Law system as a whole?
- What future reforms might be necessary to ensure the aims of the 2002 Act are realised without jeopardising the rights of any parties involved in the Employment Law dispute process.
- Summary, conclusions and original insights into the issues and complexities involved.
1] The law and procedural requirements prior to the 2002 Act:
The law prior to the Employment Act 2002 and its 2004 Dispute Resolution Regulations was not too dissimilar. The law was governed by the Employment Act 1996, and this act did impose certain procedural requirements, but not of the standard and obligatory kind which we are about to discuss. At this stage I would like to leave my discussion of the law prior to 2002 here, but I shall address this issue at great length in the forthcoming sections of this dissertation where I discuss the evolution of the Employment Tribunal Service since its inception.
2] The nature and function of the Employment Tribunal:
Employment Tribunals were originally established as a mechanism by which employment disputes could be resolved with as little legal intervention as possible. I was believed that by supporting parties to resolve their disputes in an arena which would allow each party scope to discuss their differences, better work place practice could be encouraged.
In light of the fact that it is within the workplace where these disputes arise, the government decided to introduce reforms which would encourage resolution to take place in the workplace too. In this way disputes may be settled before they escalate into arguments so acrimonious that amicable resolution would be impossible. By avoiding the need to depend upon legal mechanisms it was believed that such workplace settlement would be encouraged, and this rationale is more prevalent and important in today's modern legal climate as it was when the Tribunal Service was first introduced and implemented. Whilst I do not wish to discuss the role of ACAS at this stage, it is important to note that this statutory body was set up alongside the Tribunal Service to develop an individual conciliation and alternative dispute resolution culture which would aid the Tribunal Service to achieve its aim of shifting the focus from legal resolution to something more akin to workplace mediation.
It might be argued that the role of the employment Tribunal in its modern for has not significantly changed since its post-Donovan Commission inception in 1968, and some might argue even before. The Donovan commission was instructed to conduct a full investigation into the state of UK employment relations, with particular focus on the role Trade Unions were playing in protecting the rights of individual and collective employee rights. From their investigation the Donovan Committee concluded that collective bargaining, or the kind promoted by the strong Trade Unions of the day, was not the most suitable way of ensuring good working practice and swift dispute resolution in the workplace. It was based on these recommendations that the government of the day decided to modify the role of the Tribunal to one where dispute resolution would feature as a priority. In this way individual rights could be allowed to prevail, and individual disputes could be dealt with in a way which would be 'accessible, speedy, informal and inexpensive.' Whilst the Redundancy Payments Act 1965 and the introduction of statute to protect against unfair dismissal in 1971 provided the legal framework to introduce this change, it was certainly to findings of the Donovan Committee Report which should really be held responsible for turning the Tribunal into the adversarial system which it is today.
Employment Tribunals are therefore simply courts presided over by three 'tribunal officers' one of which, The Chair, is a legally qualified practitioner, one being someone who is biased towards the protection of the rights of employees [such as a trade union representative], and the other for the side of the employers.
With this in mind, let us now conduct a thorough analysis of the Employment Act 2002 (Dispute Resolution) Regulations 2004, and a full discussion of the social and legal circumstances surrounding the introduction of these procedural regulations.
3] Routes to Resolution and the rationale behind the new reforms.
The Employment Act 2002 (Dispute Resolution) Regulations came into force on the 1st October 2004. These regulations were the final stages in the Labour government's carefully considered plan to create a new, improved employment dispute resolution procedure here in the UK. The framework for this new dispute resolution procedure was conceptualised in 2000, drafted in 2001 in a policy paper entitled 'Routes to Resolution,' and published officially in 2002 as the Employment Act which received Royal Assent on 8 July 2002. Two years later, the regulations required to effect this framework were published as the Employment Act 2002 (Dispute Resolution) Regulations 2004.
The framework of the 2002 Act was created in direct response to the worrying statistics published in 2001 [Roads to Resolution] pertaining to the growing inefficiency of the Employment Tribunals Service [number of claims had trebled over a period of ten years], and the growing backlog of cases yet to be heard [in 2001, up to 9,000 cases]. It was therefore decided that much of this legal action could be avoided if aggrieved employees were encouraged to resolve their employment law issues through internal mediation with their employers, rather than through legal action in the Employment Tribunal. In this way it was envisaged that many of the less acrimonious disputes could be settled out of court, reserving the expertise of the Employment Tribunals service for hard cases where such mediation would be either impossible or unsuitable. By avoiding legal action wherever possible, it was envisaged that vast amounts of money and time would be saved by all parties concerned, especially for employers, who usually are forced to pay their own costs in such litigation procedures, reducing the burden on the Employment Tribunal Service, and allowing to function more efficiently and more effectively in those cases where judicial intervention is necessary. In order to achieve this, they realised that it would therefore be necessary to impose minimum procedural requirements upon all employers in order to ensure that employees had access to such internal grievance/mediation processes, and as such would not need to instantly resort to action in the Employment Tribunals. The 2004 regulations were designed to be just that.
Let us now spend some time discussing the original Policy paper which paved the way for the 2002 Act and its 2004 Regulations entitled 'Road to Resolution.'
This document was published by the government in 2001, to outline the new reforms which has been drafted so that certain representatives from different industry sectors could provide their feedback on whether the government was on the right track or not. Centre to the ideals contained within the proposed reforms was 'the fundamental principles of access to justice, fair and efficient tribunals and a modern, user-friendly public service.' The threefold rise of disputes in the workplace over the previous ten years provided the justification and the momentum for these reform suggestions, along with a strong belief that lots of these disputes could have been nipped in the bud and resolved at an earlier stage if workplace discussions and grievance procedures were established and promoted.
The cost saving was also of central importance; Tribunals are expensive to operate, and the growing number of claims each year was making the burden of this service an intolerable one on the public funds. Routes for resolution envisaged that under a new system of dispute resolution at work, less claims would reach the tribunal which would not only have the effect of saving businesses money, but would also relieve some of the financial burden which had previously been weighing down on the State.
Routes to Resolution also discussed what we now commonly refer to as 'ADR's', Alternative Dispute Resolution. The consultation document suggested that ADR's could be strengthened if financial incentives were offered to encourage out of Tribunal settlement. In effect, what this meant was not providing positive incentives, but negative ones for non-compliance. In 2004 when the Regulations came into force, fixed periods of conciliation were established, and this was envisioned by the Consultation document to be yet another way by which ADR's could be strengthened without making the process too legalized in its form.
4] The need for greater protection of individual employment rights?
As discussed in passing earlier in this essay, in order to fully understand where the 2002 Act has come from, and where it is going to, it is important to examine its surrounding legal and social landscape. In this section of the essay I would like to discuss the changing nature of the Trade Union, and the need for greater protection of individual employment rights over and above the need to maintain collective protection.
This movement has become known as the individual rights agenda, and it was recognised as important even as far back as the Donovan Commission. It was realised that whilst Trade Unions did protect the interests of a large number of employees throughout the UK, there were also a very substantial number of employees who were not members of such collective unions and therefore whose rights remained unprotected in the UK employment sector.
It was not envisaged that collective rights would be abolished, for in fact such a task would prove near impossible in light of the difficulty of separating the two from one another in practice, but it was deemed that more weight and focus should be paid to the individual rights and also to resolution mechanisms which could operate between such an individual and his or her employer. In this way negotiations could be taken away from the hands of the Unions and given to the individual employers, whether they be union members or not. The difficulty to separate the individual from the collective can be witnessed by the fact that certain jurisdictions of the employment tribunal still continue to permit trade unions to assert collective rights [e.g. consultation on redundancy schemes].
The importance of the individual rights agenda became even greater under Thatcher's government, for as the Trade Unions became weakened, it was important to ensure that a system of protection was in place for those workers who no longer found themselves under the umbrella of collective bargaining protection. In many ways I can see these changes as facilitating the weakening of the Unions; previously there was no choice but to join a Union if one felt aggrieved, as the law refused to get involved over anything other than purely contractual disputes. Also, by joining a Union one could shape the future of ones employment rights within the profession at hand. The very fact that our current labour ['socialist'] government have not amended any of the legislation that Thatcher introduced to remove the power of the Unions is a testament to our society's commitment to encourage individual right protection and dispute resolution.
Less than one third of the workforce is covered by collective bargaining, and only 20% of private sector employees are members of trade unions and with this in mind it seems more obvious than ever that attention must be paid to individual protection. This ever growing focus on the protection of the rights of individuals in the workplace has been effected not only through the commitment to it by almost every government since Thatcher, but also through European influence, where legislation has always been far more focussed on the individual than the collective. This obviously has a huge impact on government policy, and it is with this agenda in mind with which we should analyse and understand the nature of the Employment Act 2002 (dispute Resolution) Regulations 2004 and its underlying rationale. In many respects however, by encouraging protection of individual rights, one is also encouraging individuals to assert those rights, and therefore one the one hand while the 2002 Act is trying to protect such rights, it is also encouraging more claims potentially, which is counter to the other aim of the 2002 Act which is to reduce the burden on the Tribunal Service. This contradiction can only be offset by dispute resolution procedures- allow individuals to have more rights, but ensure that in the majority of cases of breach, these disputes will never reach the Tribunal as they shall be resolved at the earlier stages through statutory minimum procedure
With these important policy considerations in mind, let us now examine the content of the 2004 regulations in detail, with particular reference to the grievance procedures referred to within and how these purport to counter balance the inherent contradiction between burden reduction and the promotion of the individual rights agenda.
5] The Employment Act 2002 (Dispute Resolution) Regulations 2004:
Regulation 4 of the Employment Act 2002 (Dispute Resolution) Regulations 2004 provides that where an employer is considering the dismissal of one of their employees, or is contemplating disciplinary action against them, it is the standard three stage dismissal/disciplinary procedure which should be followed. Official warnings, either written or oral, or suspension on full pay do not come within the definition of 'dismissal' or 'disciplinary action' for the purposes of this regulation, and when one considers that these actions have rarely ever formed the basis of a successful claim in the Employment Tribunal, these exclusions seem somewhat intuitive.
The three-stage dismissal/disciplinary procedure:
The first step of this procedural requirement is for the employer to put down into writing the nature of the employees misconduct, lack of capability or other reason for dismissal/discipline. The employee must be then notified of the complaint in question, and be provided with a copy of the above written statement.
Secondly, the employer must arrange a 'hearing;' a meeting with the employee to discuss the issues contained in the written statement. Obviously, such a hearing must be held at a reasonable location and at a reasonable time. The employee will then await a decision from the employer and shall be offered a chance to appeal against it, should he/she wish to do so.
Thirdly, should appeal be requested, a subsequent hearing must be arranged with a more senior member of staff, should this prove practicable. The employee will then await the final decision.
Where the case in question involves a dismissal for gross misconduct, a modified two-stage procedure should be adopted as per Regulation 4. This modified test should be applied even where an employee has been instantly dismissed, with no prior investigation of conduct. It should be noted that the Regulations preserve the pre-existing position of the law in relation to dismissals for gross misconduct; an instant dismissal without prior investigation will generally be deemed to be unfair, although where such prior investigation would not have effected the employers decision to dismiss, a successful claim may be mounted, although such instant dismissal must still be accompanied, or followed by the modified two stage disciplinary/dismissal test, or such a dismissal will be deemed unfair automatically, regardless of the circumstances surrounding the dismissal. This procedural requirement has been viewed by some commentators [Mr. Gerry Sutcliffe] as being a tightening of the law of gross misconduct dismissals, which flies in the face of pre-2004 predictions that the new Regulations would in fact have the opposite effect in this area of employment law.
The Modified two-stage dismissal procedure:
The first step in this statutory procedure provides that the employer must put down into writing the decision of dismissal, the nature of the misconduct that the employer believes has been engaged in by the employee and has lead to such dismissal, providing evidence for this belief. The right to appeal will be explained and offered to the employee.
Should the employee with to appeal, then a hearing must be arranged, again at a reasonable time and location, and subsequent to this meeting, a final decision will be made.
Situations do exist in which rigid adherence to these procedural requirements for dismissal and disciplinary action will not be required. Such situations are provided for within regulation 4 and include certain types of collective dismissals, the ones which already have their own set of procedural requirements, such as strike dismissals or collective redundancies. Likewise, where an employer is forced to cease trade as a result of an unforeseen event, the procedural requirements contained in the Regulations will be waived.
It should be noted also that Regulation 5 provides that in some cases, an employer will be deemed as having complied with the above procedures even where it is not clear that in fact they have e.g. where an interim relief application has been lodged with the Tribunal prematurely, i.e. before the appeal stage of the appropriate procedure has been reached.
Likewise with the above procedural requirements, where an employee has a grievance against his employer, of the kind that could theoretically form the basis of a tribunal claim [as per Schedule 3 and 4 of the Employment Act 2002], he/she too must accord to the appropriate statutory procedure. As with the above procedural requirements on employers, the grievance procedures, as they are termed, also take the form of a standard three-stage process and a modified two-stage protocol. Failure to do so will, in the majority of cases, preclude the aggrieved employee from taking action in the Tribunal, although this latter procedure is only applicable where the employment of the employee has actually been terminated and all parties consent to the use of such.
The standard three-stage grievance procedure:
Stage one of the standard three stage grievance procedure provides that the employee must put into writing the grievance which he/she believes he/she has against the employer in question, and provide the employer with a copy of this written statement.
The employer is then under a duty to arrange a hearing to discuss the content of this statement, at a reasonable time and location. The employer will make a decision after the hearing, and the employee will be given the right to appeal this decision should he/she wish to do so, i.e. should the employee believe the grievance to have been unresolved by the decision which has been made.
Thirdly, should appeal be requested, a further hearing should be arranged, again at a reasonable time and location, and if possible with a more senior member of staff. Subsequent to this hearing, a final decision will be made, and shall be communicated to the employee in writing.
The modified two-stage grievance procedure:
Step one of the modified two-stage grievance procedure obligates the aggrieved employee to set out in a written statement the nature of the grievance which he/she believes she/he has suffered as a result of the employers conduct. A copy of this statement should be given to the employer for his/her consideration.
The employer is then under a duty to communicate a written response to the employee. This is the second and last stage of this modified two-stage procedure.
As noted previously, this modified procedure will be deemed applicable where 1] the employer was unaware of the alleged grievance prior to termination of employment; 2] the standard grievance procedure was not initiated prior to termination of employment; 3] where both parties have agreed to follow the modified procedure rather than the standard three stage one; or 4] where it would otherwise be wholly impractical to expect either party to engage in the standard protocol.
Likewise with our above discussion of Regulation 5, and the presumption of procedural correctness, Regulations 7, 8, 9 and 10 provide for certain circumstances where it will be deemed that an employee has followed the appropriate statutory requirements even where, in fact, they have not. I do not wish to discuss these situations in any great length at this stage in the dissertation, but it should be briefly noted that such situations include where the dispute in question is part of some other on-going dispute, and the correct procedure has been observed throughout that other dispute [Regulation 7], where no procedural cooperation has been offered to the employee by the employer [Regulation 7], where the dismissal in question was not based upon considerations of capability or conduct [Regulation 7], although this exception does not apply where the employee believes that the actual reason behind the dismissal was other than was actually declared to them by the employer or where he/she believes that the dismissal is wholly unlawful due to discrimination, in which case there is a onus on the aggrieved employee to raise their concerns in writing with their ex-employer. An exemption from these grievance procedures also exists where it would be wholly impractical to expect the procedure to have been followed in the particular case in question [Regulation 8], i.e. inability to attend the appropriate meetings. Such exemption also exists for collective grievance applications by, for example, a Trade Union [Regulation 9], or where such Unions have already agreed an acceptable grievance procedure that is different to the standard ones above, but have been followed by all parties concerned [Regulation 10].
Regulation 11 provides that where the aggrieved reasonably believes that adherence to the statutory requirements would result in intimidation, mental or physical, by the other parties concerned, then again, the statutory requirements may be waived.
Should one party fail to comply with the appropriate procedures for any reason other than those contained in the above list of exceptions, then the other party is no longer bound to insist upon continued compliance. This is provided for by Regulation 12 of the Employment Act 2002 (Dispute Resolution) Regulations 2004.
Regulation 13 of the Employment Act 2002 (Dispute Resolution) Regulations 2004 provides that where an arranged meeting has had to be cancelled to reasons of impracticality, or because the permitted accompanier of the aggrieved cannot attend, then an obligation to rearrange the meeting will be levied upon the employer. However, should this subsequent meeting require cancellation, all such burden will cease to operate.
6] The impact that the Employment Act 2002 (dispute Resolution) Regulations 2004 have had on:
(b) Higher courts
(e) Representatives of Respondents and Claimants
Having discussed the nature and content of the new regulations in detail, and understood to some extent the rationale behind these new procedural requirements, let us now proceed to examine the impact that these regulations have had on claims presented to Employment Tribunals affecting Tribunals, the higher courts, Respondents, Claimants and the Representatives of Respondents and Claimants.
(a) The impact of the Employment Act 2002 (Dispute Resolution) Regulations 2004 on the Employment Tribunal Service:
One of the secondary aims of the new regulations was to reduce the burden on the Employment Tribunals service, which existed prior to their introduction. The reason for this burden, as mentioned previously, was in part that too many cases were reaching the Tribunal involving disputes which had not been first explored through any internal workplace grievance procedures, many of which could have probably been diffused at a very early stage had the parties simply communicated with one another rather than proceeding straight to legal action. The 1998 Survey of Employment Tribunal Applications showed that in about 37% of cases that went to Employment Tribunal there was no meeting between the parties, no use of a written procedure and no other attempt made to resolve the dispute prior to engaging in full blown legal action.
The impact on the Employment Tribunal service of these new statutory-imposed procedures is therefore nothing less than intuitive; if aggrieved employees and/ or employers are forced to engage in internal dispute resolution procedures prior to seeking redress through the courts, then many of these disputes will be resolved without need for the Tribunal Service. In this way, the number of claims reaching the Tribunal Service should theoretically decrease, and the seriousness of such claims should therefore increase.
In the Department of Trade and Industries 2004 Full Regulatory Impact Assessment on the Statutory Dispute Resolution Procedures, it was predicted that the average number of claims made at the Employment Tribunal would reduce from the current estimate of 110, 000 claims per year, to between 73,000 and 76,000 claims per year; a total decrease in claims reaching the Tribunal of between 31-34%. These reductions however were not expected immediately. It was predicted that it would take some years for Regulatory compliance to reach 100%, and assuming an initial compliance of 60% for the first year while the procedures are being fully implemented across the UK, the DTI predicted that it would take five years for the reductions as predicted above to be fully realised.
In reality however there has been a rise in the number of Employment Tribunal claims by employees against employers over the last year. The Annual Report of the Employment Tribunal Service identified a rise in claims from 86,181 in 2004 to 115,039 in 2005/06, although a large part of this rise is attributable to a noticeable increase in 'multiple claims'- where employees have more than one grievance against their employers or ex-employers. The Annual Report calculated that there is now an average of 1.8 complaints per case.
Of those claims that only involve a single complaint, a decrease had previously been observed, with the number of such claims decreasing by approximately 3000 from 2004 to 2005. More recent observations however suggest that even this decrease seems to be on the reverse, with such claims rising again.
More worryingly, the number of cases being withdrawn or settled out of court seems to also have decreased, falling by 7% [from 67% to 60%] over this same period.
Whilst these statistics do suggest that the Regulations have had an opposite effect as was predicted prior to their inception, the sheer number of cases reaching the Tribunal Service is not the only indicator available to judge the success of the Regulations in their aim to increase the efficiency of the Employment Tribunal Service.
More important is the nature of the claims that are being heard; as expected the Annual Employment Tribunal Service Report identified that those claims that are being heard have increased in complexity since the introduction of the Employment Act 2002 (Dispute Resolution) Regulations 2004 into UK Employment Law. This was certainly a phenomenon to be expected- if the procedures contained within the Regulations and the Employment Act 2002 are working successfully, then the simpler claims should be less likely to reach the Tribunal, having been resolved internally under these new minimum statutory procedures. This finding does seem to suggest that this aspect of the Regulations is working successfully.
Other indicators which can be used to assess the impact that the Employment Act 2002 (Dispute Resolution) Regulations 2004 have had on the Employment Tribunal Service include speed efficiency, public opinion surveys and specialist industry surveys.
The Employment Tribunal Service claim that the fact that 79% of claims received a hearing within 26 weeks is an impressive record of their improving efficiency, it should be noted that such statistics can be misleading and confusing; firstly, 26 weeks is still a very long time to wait for your claim to be heard, and secondly, this percentage of 79% is a decrease from the 82% which was recorded in 2004. Again it would appear that the efficiency of the Employment Tribunal Service has not improved in the way which was predicted prior to the advent of the new Regulations, although one cannot expect the average time for a claim to be heard to decrease when both the number of claims and their complexity is simultaneously on the increase, as discussed above.
As for public opinion surveys/ specialist industry surveys, the Annual Report of the Employment Tribunal Service claims that of all the people who used the Tribunal Service in 2005, 96% were satisfied with the service provided. But this research seems to conflict with some of the other industry research which was conducted over this period. The Confederation of British Industry found from their own research that not only have the number of claims in the Employment Tribunal by employees against their employers/ ex-employers risen by over 33%, but also that less than one third of employers who had used the Tribunal Service believed it to be effective or efficient. This statistic does not sit easily with the findings of the Employment Tribunal Service's Annual Report. Neither are the findings of the Confederation of British Industry the only results which suggest that the conclusions of the Employment Tribunal Service's Annual Report are erroneous. A survey conducted by the Employment Lawyers Association in Spring 2006 asserted that from their findings the Employment Act 2002 (Dispute Resolution) Regulations 2004 have failed in their aim to make the Employment Tribunal Service more efficient. The survey found that 71% of Employment Lawyers in the UK believed that the Statutory grievance procedures contained in the 2004 Regulations and the Employment Act 2002 had made no positive impact on the efficiency of the Tribunal Service. 99% of those lawyers and industry professionals who represent employers were of the opinion that the new procedures proved far more expensive to their clients. This finding fits neatly with another finding by the Confederation of British Industry that 25% of employers would rather settle out of court. Susan Anderson, the current Director of Human Resources Policy at the Confederation of British Business stated that the reason for this is as follows: "The process is so expensive and time-consuming that many firms, particularly smaller ones, prefer to settle out of court even after advice they are likely to win the cases. The likelihood of employers recovering their costs when they are successful is very low."
These findings are in stark contrast to what we might have been led to expect. Whilst prima facie the new statutory grievance procedures have all the characteristics of common sense and sensible employment practice, it would seem from the empirical evidence obtained by some of the more independent surveys and studies that the 2004 Regulations and the new statutory minimum procedures contained within the Employment Act 2002 have fallen short of their goals. The Employment Tribunal Service still vehemently maintain however that they are on track to their predictions of success, stating that 5 out of the 6 key performance indicators which were established by the government in order to keep check on the Tribunal Service have been met. The truth is that the findings of the surveys conducted by the Employment Tribunal are at best unreliable. Even if their findings are correct, and five out of six targets have been achieved, the lack of popular opinion towards the new Tribunal Service cannot be ignored. There is no doubt that it is still early days, and that any conclusions at this stage must be gauged with this fact in mind, but the increase in the number of claims, the decreasing public and industry perception of the Service's efficiency, and the decreasing proportion of cases being settled out of court, do inspire one with any confidence. The fact is that from the information available so far, one must conclude that if in three years time the predictions of success by the Tribunal Service become a reality, it will be a huge surprise.
Let us now examine what impact the Employment Act 2002 (Dispute Resolution) Regulations 2004 has had on claims presented to Employment Tribunals affecting the higher courts:
(b) The impact of the Employment Act 2002 (Dispute Resolution) Regulations 2004 on claims presented to Employment Tribunals affecting the higher courts.
The first point which can be noted in relation to the impact of the Employment Act 2002 (Dispute Resolution) Regulations 2004 on the higher courts of England and Wales is the fact that, as with all new legislation, there will always remain unresolved technicalities which will require investigation at the highest judicial levels in order to clarify the correct position of the law.
In this section of this dissertation I would like to discuss several such cases which have reached the higher courts in which issues pertaining to the Employment Act 2002 (Dispute Resolution) Regulations 2004 have come into question. By examining some of the more recent case law in this area not only will we be able to glean somewhat of a greater understanding of the impact that this legislation has had on the higher courts of England and Wales, but also will give us some insight into the way the legislation has been interpreted by the courts, to in turn give us a greater insight into the prospective impact that such interpretations of this law may have on respondents, claimants and their representatives, the focus of which will form the main body of the remainder of this dissertation.
The first such case I wish to discuss is that of Shergold v Fieldway Medical Centre  IRLR 76. In this case, the claimant resigned from her job, not through choice, but because she did not find the actions of her practice manager acceptable. Upon resignation she informed her employers of this reason, at which point they suggested that she write a formal letter in accordance with the formal statutory grievance procedures. She failed to do so, but instead launched an action against her employees for constructive dismissal at the Employment Tribunal. As discussed earlier, a claimant is normally precluded from making such a claim at the Tribunal without first having engaged in the internal grievance procedures as laid out in the Employment Act 2002 and Regulated by the Employment Act 2002 (Dispute Resolution) Regulations 2004. The court of first instance rejected her claim on the basis that step one of the standard grievance procedure as set out as a requirement in the above legislation had not been complied with. The claimant appealed to the higher courts, and her claim was upheld. The Appeal Tribunal held that her resignation letter satisfied the 'minimum requirements' of the statutory grievance procedures, and that this is how these requirements should be interpreted; they are not rigid and formal rules demanding formal complaint letters, but rather a stipulation that the employer should at some stage be informed of the employee's grievances. In this case they therefore held that as the claimant had in fact informed her ex-employees of her complaints in her resignation letter, then her claim could be allowed access to the courts for full hearing. This decision was similar to that in the case of Thorpe & Another v Poat & Another, and this case was cited by their lordships in reaching their decision.
This case is an example of the necessity for the higher courts to involve themselves in the interpretation of the Dispute Resolution process in a way which will yield results in greatest accordance to the aims of the relevant legislation.
Another case which we should discuss on this point is that of Holc-Gale v Makers UK Ltd  IRLR 178. In this case the claimant failed to comply with the grievance procedures as set out in the Employment Act 2002 (Dispute Resolution) Regulations 2004. The claim regarded a grievance under the Equal Pay legislation. The claimant argued that an Equal Pay questionnaire she had submitted should constitute compliance with the step-one grievance procedures, but the Court dismissed her claim as 'such an assumption is specifically precluded by the legislation.' Whilst this was a simple case in which the correct application of the law was clear and obvious, it does go to show that under these new statutory procedures, the higher courts continue to be inundated with appeals for interpretation, even where interpretation is prima facie, self-explanatory, as in this case.
In the case of Mark Warner Ltd v Aspland  IRLR 87, the claimant did not personally contact his employers to initiate the internal grievance procedures, but rather instructed solicitors to act on his behalf in this respect. The solicitors wrote to the employers outlining their client's complaints, but they did not specifically request invocation of the grievance procedures. The Defendants tried to argue in court that the claimant had not complied with step-one of the correct grievance procedures, but the court held that it was irrelevant whether or not it was the claimant or her representatives who had written the letter of complaint, and that the letter of complaint should be deemed to constitute step-one as such a letter effectively meets the 'minimum requirements' of the Employment Act 2002 (Dispute Resolution) Regulations 2004.
From these three cases we can make two observations. Firstly, unless specifically precluded by the legislation, step one of the standard grievance procedures does not need to take any particular form, but must rather met the minimum requirements, i.e. communicate the grievances of the employee to the employers. Secondly, it can be noted that the impact of these Regulations on the higher Courts is one of increased interpretive burden. On this second point, it is however important to note that such an obligation is to be expected at this early stage in the development of these new statutory procedures, but is something which only serves to, in the short-term, slow down the very process which is purportedly being streamlined and made more efficient by these new legislative procedural reforms of Employment law in the UK.
With this in mind, let us now turn our attention to the impact the Employment Act 2002 (Dispute Resolution) Regulations 2004 has had on the Respondents to such employment claims.
(c) What impact has the Employment Act 2002 (Dispute Resolution) Regulations 2004 had on the Respondents to employment disputes?
At the outset of this discussion it should be noted that on the 16th May 2006 the Government published a consultation document outlining their intention to amend the Employment Act 2002 at some point in the near future to extend the jurisdictions affected by the statutory dispute resolution procedure. In this dissertation however we are not concerned with these proposed changes, as interesting as they may well be, but rather we shall concentrate on only those disputes which fall within the scope of schedules 3, 4 and 5 of the 2002 Act.
The first thing to note is that it is obligatory for a business that employs personnel in the course of that business to develop an internal dispute resolution procedure in accordance with the minimum statutory requirements. It therefore also follows that it is a good idea for a company to run training workshops to teach its managers how to handle a dispute within this mechanism, for failure to comply may have serious adverse effects on a business; e.g. if a claim for unfair dismissal reaches the Employment Tribunal and it becomes clear that the statutory grievance procedures had not been followed, and that the reason for the failure of this process is wholly due to the employer, then, regardless of the substantive merits of the claim, it will be automatically held that the dismissal was unfair, and an increased award will be available to the claimant of between 10 and 50% plus four weeks pay depending upon the circumstances of the particular case. This particular aspect of the Employment Act 2002 and its 2004 Regulations has been referred to as Polkey reversal; prior to the 2002 Act, it was the position of the law that in order for a dismissal to be deemed fair an employer must demonstrate the existence of a potentially fair reason for dismissal, i.e. must be reasonable in the circumstances. This rule was enshrined in s98(1) and (2) of the Employment Rights Act 1996, and was the subject of much debate. Practitioners and commentators alike argued over whether or an employer who has dismissed an employee is under a duty to follow an internal disciplinary process in order to establish the reasonableness of his or her decision to dismiss the employee. Eventually in the case of Polkey vs A E Dayton Services, 1988, the question was put to rest, and their Lordships decided that an employer is under such a duty and that breach of this duty cannot generally be explained or justified by asserting that such a process would have made no difference to the decision to dismiss. Many commentators argued that this decision was erroneous as it forced the Tribunals of the day to focus their deliberations on questions of procedure rather than the substantive reasons for the dismissal itself.
S34 of the 2002 Act changes this position, as we have mentioned above, and the current position is that employers must adhere to procedure or the Tribunal will not hear the substance of the claim and awards will automatically be awarded to the claimant.
I shall discuss the full implications of this Polkey reversal in greater depth later in this essay, but at this stage I would simply like to make the point that one of the most substantial impacts the Employment Act 2002 (Dispute Resolution) Regulations 2004 has had on employer respondents is the sheer fact that non compliance can result in serious financial penalty, and findings of liability even where a dismissal, for example, would otherwise have been deemed valid.
It should also be noted that it is prudent for employers to prepare standard step one letters so that they are ready when a grievance/dispute arises.
Likewise employers should check and amend where necessary their contracts of employment to ensure that the provisions contained within comply in full with the new procedural requirements of the 2002 Act and it 2004 Regulations.
It should also be noted that another impact to the 2002 Act and its 2004 Regulations on employer respondents is the fact that this legislation imposes upon employers a duty to inform prospective, new and existing employees of the company's internal dispute resolution procedures. A written statement must be prepared and presented to all new employees within their first two months of employment [s1-7 Employment Act 1996] with the company/employer. The written statement must contain a detailed summary of the company's internal dispute resolution procedures, and may include all the terms and conditions of employment but is not itself a contract of employment. Whilst this duty existed under the earlier 1996 Act, this duty was merely to inform the employee of what he or she must do if she feels aggrieved by any disciplinary or dismissal decision taken against him or her. The new Act however makes this duty more comprehensive, and demands full communication of all aspects of the company's disciplinary and dismissal procedures.
This duty to include all the company's disciplinary rules and procedures in a written statement applies to all sizes of employer, large and small, and whilst the duty has been extended under the 2002 Act, it should also be noted that employers will be given a greater degree of flexibility in the mode by which they choose to communicate this information to their employees. For example, this information may be included in the contract of employment itself, or even in a welcome pack which may be presented to new employees before they commence their employment with the company. In this way, paperwork can be reduced as existing documents will no longer need to supplied more than once under this new legislation. It does go without saying that there is of course an initial administrative cost of preparing these written statements, but once this has been done it is a simple matter of just printing it out and handing it to prospective employees.
The implications for a company who has not provided such a written statement or has done so but in a way which is incomplete or inaccurate are severe; if an employee brings an action at the tribunal against a Company for any of the reasons stipulated in Schedule 5 of the Act, then the Tribunal may very well bring into question the nature of the written statement. Where the statement is incomplete and or inaccurate, the Tribunal will award the claimant with compensation. The amount of this compensatory award is within the discretion of the Tribunal but will be in the region of two to four weeks pay and can be increased, again at the sole discretion of the Tribunal by the same again. If the Tribunal however considers that in the circumstances of the particular case in question it would be unfair or inequitable to award compensation to the claimant for the respondents breach of duty to prepare and communicate a complete and accurate written statement, then no award need be made. The implications of all this for an employer is therefore that they must be especially careful to ensure that a written statement is prepared and that it is in compliance with the 2002 Act and its 2004 Regulations.
Let us also raise the issue of cost; we have seen previously in this essay that information taken from a survey of industry professionals found that 99% of those lawyers who represent respondents/employers on a regular basis are of the opinion that the new statutory procedures enshrined within the 2002 Act and its 2004 Regulations make the employment dispute process far more expensive for their clients. On the one hand this therefore means that employers are more likely to wish to settle out of court, which is a good thing for the purposes of reducing the burden on the Tribunal Service, but may not be so good for the interests of equity and fairness. Does this extra cost mean that in practice an employer will simply pay compensation to any employee who becomes aggrieved upon dismissal? If this is the case this would encourage a new breed of litigious employees who might as well try their luck and see if they can force out of court settlement. The answer to this question depends also upon the costs structure that exists within the Tribunal process itself; can employers who successfully defend a case against them for constructive or unfair dismissal win back their costs? It was estimated by the Annual Report of the Employment Tribunal Service 2005 that the average cost to an employer to defend a claim in the tribunal is in the region of £2000. It also asserted that in the vast majority of cases employers would not get their costs refunded even where successful. The impact of the compulsory dispute procedure therefore is to encourage employers to settle out of court, even if this means that they will have to buy out an employee who is being dismissed on exceptionally reasonable grounds.
In respect of both of these arguments above, the position is not the same for the small business employer as it is for the large corporation. For the large corporation there is no problem with instigating the statutory procedures and ensuring that their personnel managers are fully trained to deal with grievances etc, whereas the smaller company may not have sufficient resources to do so in the same way, or have access to the same level of legal advise as to their company's compliance with the statutory regulations.. Likewise, a corporation will not feel obliged to settle out of court to save costs, but will worry rather about maintaining a company position on certain employee behaviors. In this way employees of the large corporation may feel less inclined to simply 'try it on' with their employers, whereas the smaller employers may have no option but to come to some sort of arrangement in order to avoid the extensive costs of defending a case in the tribunal. Whilst a service, the Small Business Service website [www.businesslink.gov.uk/bdotg/action/layer?r.l2 =1074207487&r.l1= 1073858787&r.s=tl&top icId=1075122891] has been established to try to establish a balance between the large firm and the small business by providing guidance to the latter about ways of dealing with disputes in order to avoid automatic loss [through failure to comply with the statutory minimum grievance procedures] and as such avoid expensive litigation in the Tribunal itself, a disparity will continue to exist, and therefore the impact of the Employment Act 2002 (Dispute Resolution) Regulations 2004 is not the same for small business respondents as it is for the larger firm employers.
The impact of the Employment Act 2002 (Dispute Resolution) Regulations 2004 on employers will vary depending upon the company involved. Larger firms will have no hesitation in ensuring that their legal obligations are complied with, introducing their own internal grievance procedures and training their managers and personnel staff in the correct methodology where appropriate. Smaller firm employers may simply not have the resources to explore every legal avenue in full, but may resort to seeking advice from the Business Link Small Business Advice Service which has been set up to advise small scale employers of their new legal obligations under the 2002 Act and its 2004 Regulations. Whatever the size of the employer, there is no doubt however that when an issue does proceed to the Tribunal, not only will they have to face increased cost under this new system, but the complexity of the new legal considerations involved, first to work out and then argue over whether any extension of the time limit applies and second to convince the tribunal that adjustments to any award should (or should not) be made will make the whole process far more burdensome and complicated. We have already commented upon the increased unwillingness of employers to take disputes to the Tribunal Service under this new regime, and It would not surprise me to see that this is trend which becomes more prominent over the next few years. On a positive note however, this does mean that respondents are far less likely to ever receive claims against them out of the blue; disputes will be raised through the grievance procedures and employers will therefore have a good chance to resolve some difficulties before they escalate to a level of animosity at which point non-acrimonious resolution would be impossible.
Let us now focus our attention upon the claimants themselves, and address the question of what impact the Employment Act 2002 (Dispute Resolution) Regulations 2004 will have on aggrieved employees who wish to claim for unfair or constructive dismissal via these new procedural requirements.
(d) What impact has the Employment Act 2002 (Dispute Resolution) Regulations 2004 had on claimants of the Tribunal?
One of the impacts of the 2002 Act and its 2004 Regulations on prospective claimants is the fact that they too must be aware of their rights and their procedural obligations under these minimum statutory requirements. For example, on the issue of admissibility of a claim at the Tribunal over a grievance with an employer, the employee claimant must prepare a step one letter in accordance with the standard or modified grievance procedures as set out in the above legislation. The claimant must then wait twenty-eight days for the response, whether or not the employee is still engaged in employment or not. As long as the claimant has adhered to the standard grievance procedures then a claim may be made [subject to the time limit stipulations, as shall be discussed below]. The implications for failure to adhere to this procedure is the fact that any award which the Tribunal may eventually award the claimant can be adjusted, i.e. reduced, by up to 50%, in exceptional circumstances, for failure to adhere to statutory procedure. It should however be noted that where the claimant is claiming against an employer for their breach of his or her rights of employment through an action involving the standard dismissal/disciplinary procedures, then none of the above admissibility requirements will apply, unless the claim involves other overlapping claims, as discussed previously in this dissertation.
Let us now discuss the time limit requirements and the rules of extension that exist under the 2002 Act and its 2004 Regulations. There is a duty on an employee who wishes to make a claim against their employer/ex-employer at the employment Tribunal to commence the claim within a certain stipulated time limit. The typical limit that is stipulated is three months from the date of the event that gave rise to the complaint or grievance. The 2004 Dispute Resolution Regulations do however provide for certain situations where an employee claimant will be allowed a time limit extension. The rationale for permitting such extensions is straightforward; by allowing extra time to submit the employment tribunal claim it may be possible for workplace discussions to continue to resolution rather than forcing them to terminate prematurely simply to meet the rigid application deadlines. The Tribunal may also simply extend a time limit for the reason that it is not, in the case at hand, reasonably practicable for it to be met, or for the reason that not to permit such an extension would be unjust and inequitable.
It should also be noted in relation to time limit extensions that where an employee claimant is of the reasonable belief that the dispute procedure is still in progress, even though in fact it is not and the time limit has expired, then a three month extension will usually be granted automatically, although the employee must show that he or she had reasonable grounds to hold that belief. In practice this is not of huge impact to a claimant, as this extension will only be available in those cases where discussions could still be deemed to be in progress, and in the vast majority of cases this is not the case.
A note should be made at this point about the grievance procedures contained within the Regulations; Part 3 of Schedule 2 of the 2002 Act establishes a general requirement to extend the normal time limit for lodging a claim against an employer at the Employment Tribunal where a claimant has attempted to lodge such a claim without following the standard grievance procedures, and has therefore failed to complete step one of this obligatory process. As discussed previously, such failure to comply with the procedure of the 2002 Act and Regulations will result in the claim being denied a hearing at the Tribunal [for failure of the admissibility requirements of such a claim]. However, a three month extension will be granted for the claimant to go back and complete step one of the procedure, although this must be done within the first month of the extension, in order to give the employer adequate time to respond and/or engage in hearings with the claimant to attempt resolution without redress to the Courts. In this way, claimants are given a second chance to comply with the statutory procedure, their preliminary failure appearing to have no adverse effects on their chances of a successful claim or full award. This seems somewhat unfair, when an employer has not only informed them of the correct procedure in the compulsory written statement, but an employer who fails to adhere to correct procedure is penalized instantly and given no further chances. One might argue that employees have fewer resources available to them than companies, but this is not always the case with small businesses. Whatever the ethical considerations, the fact is that the Regulations do in effect allow claimants a second chance should they in first instance fail to comply. Should the claimant fail on the second chance, then subject to the normal rules of discretion [i.e. as long as it would not be inequitable to deny a third chance], the claimant will be barred from pursuing the claim at the Tribunal.
This automatic time limit extension is also available to any claimant who has completed and submitted a step one grievance letter within the time limit. The three months time is added to the existing period, i.e. the claimant will have an additional three months from the date that the initial time limit would have otherwise expired. This extension is automatic and it is therefore unnecessary for either party to have contacted the Tribunal to inform them off their position at this stage.
We have discussed previously the discretion and the duty of the Tribunal to adjust the awards of one party where the failure to comply with the correct statutory procedure is wholly or in main part attributable to them [Section 31]. It should be noted however that where a claimant has exceptional circumstances for having failed to comply with the appropriate procedure, the Tribunal may decide not to apply this duty, and my therefore choose not to adjust the awards in that case, i.e. where it would be unjust or inequitable for such an adjustment to be made in light of the exceptional circumstances of the case at hand.
If it is the respondent who has failed to complete the necessary procedure, or has been at fault in contributing to such failure, then the court will not deem it necessary for the claimant to have continued with the procedure, i.e. there will be no further procedural requirements imposed on the claimant. This is established by Regulation 12 of the Employment Act 2002 (Dispute Resolution) Regulations 2004. Also, where prima facie it appears that the failure to comply is wholly or in main part attributable to the claimant, but it later materializes that the reason for this non-compliance was due to harassment or threats from the respondent, the it goes without saying that the Tribunal will hold the respondent responsible for the failure, and award adjustments will be made in the favour of the claimant, unless it is inequitable to do so in the particular case at hand.
Let us briefly also make a point about dismissals and disciplinary decisions against an employee: If an employer dismisses or takes disciplinary action against an employee without adhering to his statutory obligations under the 2002 Act and its 2004 Regulations, and this failure is wholly or at least partially attributable to him, then four weeks pay will be awarded to the claimant as an automatic minimum level of compensation. This amount only applies where the Tribunal has ordered reinstatement/ re-engagement. If the claimant has not requested reinstatement/ re-engagement, and as such is only seeking compensation, and the amount awarded is less than four weeks pay, then the Tribunal is under a duty to increase the amount to at least this level.
The claimant however cannot rely on adjustment, nor can he or she expect it, where the Tribunal finds the employers actions to have been unfair but statutory procedure has been followed. Conversely, where the dismissal or disciplinary actions of the respondent are held to be unfair, but procedure was not adhered to through fault of the employee, then the award will, as discussed previously, be reduced by 10 to 50%, or by less than 10% should the Tribunal deem it equitable and fair in the particular case in question.
It should also be noted that the new regulations do not alter the statutory limit of compensation available to an employee claimant claiming against his or her employer for unfair dismissal. Section 124(1) of the Employment Act 1996 still sets this limit at £55,000.
We should also remind ourselves that the 2002 Act and its 2004 Regulations imposes upon employers a duty to inform prospective, new and existing employees of the company's internal dispute resolution procedures. As mentioned previously, a written statement must be prepared and presented to all new employees within their first two months of employment [s1-7 Employment Act 1996] with the company/employer. The written statement must contain a detailed summary of the company's internal dispute resolution procedures, and may include all the terms and conditions of employment but is not itself a contract of employment. Whilst this duty existed under the earlier 1996 Act, this duty was merely to inform the employee of what he or she must do if she feels aggrieved by any disciplinary or dismissal decision taken against him or her. The new Act however makes this duty more comprehensive, and demands full communication of all aspects of the company's disciplinary and dismissal procedures.
The implications for a company who has not provided such a written statement or has done so but in a way which is incomplete or inaccurate are severe; if an employee brings an action at the tribunal against a Company for any of the reasons stipulated in Schedule 5 of the Act, then the Tribunal may very well bring into question the nature of the written statement. Where the statement is incomplete and or inaccurate, the Tribunal will award the claimant with compensation. The amount of this compensatory award is within the discretion of the Tribunal but will be in the region of two to four weeks pay and can be increased, again at the sole discretion of the Tribunal by the same again. If the Tribunal however considers that in the circumstances of the particular case in question it would be unfair or inequitable to award compensation to the claimant for the respondent's breach of duty to prepare and communicate a complete and accurate written statement, then no award need be made. The impact of this on a claimant is that where no written statement has been given to them, there is an automatic route to claim compensation against their employers through the Tribunal, although the amount remains limited to four weeks. A claimant may therefore be tempted to use this as a method for leveraging their employer into out of court settlement, especially where the level of compensation is very small but is almost certainly going to awarded to the claimant by the Tribunal should it reach that stage; an employer might just prefer to pay the compensation to the employer without going to the Tribunal, and this gives an aggrieved employee a good avenue to seek quick compensation from him.
(e) The impact that the Employment Act 2002 (dispute Resolution) Regulations 2004 have had on the Representatives of Respondents and Claimants:
Let us now turn our attention to the issue of the representatives of the claimants and respondents in such employment disputes.
The role of the representatives will become decreasingly important as the reforms kick in and prove to be more successful. At the moment their role is crucial. Employers must employ representatives to ensure their business is compliant with the legislation and its statutory minimum procedures. Should a dispute arise they will also require representation to litigate with the aggrieved employee, and should a claim reach the Courts, then they will require defence representation. If the reforms prove successful in the future however, less and less claims will be brought, and therefore less representation will be needed. Such lawyers will therefore lose work and business, their services being reserved for those disputes where resolution proved ineffective.
For claimants, representation is barely necessary. The claim for is free to submit, and the procedures will be informed to them in the written statement which it is obligatory for their employer to provide within their first two months of employment. ACAS also provide an excellent service, although should resolution prove ineffective, a claimant may choose to be represented by either a union official, if he is one of the 20% of workers who is protected by such collective bargaining, or by a lawyer.
In essence the role of representatives is becoming more and more obsolete even though the law in this area is becoming ever more complex and multi-jurisdictional.
7] The role of ACAS and how, if at all, it has managed to effect the above identified impacts.
ACAS is the statutory body which was established under the Employment Protection Act 1975 to provide independent assistance to almost every aspect of the Employment Tribunal procedure. As a non-departmental government body independence is created through the use of representatives from across the board; i.e. those whose main interest is the protection of employees and those whose main interest is the protection of employers. The ACAS mission statement is as follows: 'to improve organisations and working life through better employment relations.'
As mentioned previously, one of the main roles of ACAS is to provide individual conciliation, and over the past thirty one years since ACAS was established, ACAS has successfully conciliated over two million disputes between individuals and their employers.
Whilst the focus must predominantly lie with the individual, it is not true to say that the role of ACAS does not also involve a certain degree of collective conciliation. S18 of the Employment Tribunal Act 1996 however does define the duty of an ACAS conciliation officer as being "to endeavour to promote a settlement of the proceedings without their being determined by an employment tribunal."
Once the purpose of conciliation is understood correctly as being the attempt to resolve differences without the need to result to the legal channels of the Tribunal then it becomes clear why impartiality is essential. The conciliation officer will not take a side, but will rather help each side to full see the issues involved and understand their own position. In this way disputes can be resolved through acceptance of ones own position and negotiation with the other party, who is also aware of their position should the dispute ever reach the Tribunal. There is no point going to the Tribunal when the outcome of that process can be predicted. Out of court settlement can therefore be encouraged through this process, unless one party to the dispute really is unprepared to budge on certain aspects of the dispute. It is important to note that it is not the role of ACAS to predict such an outcome, but merely to inform each party of the prospective strengths and weaknesses of their arguments so that they can themselves work out what the best course of action will be, or at least what they would be prepared to concede in order to settle the dispute as swiftly and as cheaply as possible.
One might ask whether there really is a distinction between these two approaches, especially when the ACAS officer will almost certainly refer to case law and inform each party how such case law may prove relevant to their position. The ACAS officer will encourage the parties to think about settlement and will outline all the benefits of this course of action to each party at every stage in the conciliation process.
Any decision to settle through this ACAS process will be kept confidential, and this is yet another bonus of settlement through this procedure rather than via the Tribunal Service where decisions become public knowledge. This is especially important for large companies who do not want to open the floodgates of litigation through bad publicity in the media.
Most of the contact between the ACAS officers and the parties to the dispute is by telephone, although wherever they feel that face to face meetings may help to resolve issues, then such meetings will be arranged. The role of the ACAS officer is a very sophisticated one. The ACAS officer will literally use all his or her better judgment to remain impartial and to resolve the issues wherever possible.
The role of ACAS is without doubt an essential one to the functioning of the Employment Act 2002 (Dispute Resolution) Regulations 2004, and is for this reason that any dissertation pertaining to a discussion of the impacts of the above legislation would be incomplete without such a discussion. Without ACAS even more claims would reach the Tribunal than there are already, and this should be borne in mind when we later discuss the statistics about the changes in the number of claims which have occurred since 2004.
The annual statistics of ACAS are remarkable and praise-worthy. Its expertise is recognized across the board, and its pioneering work in the field of alternative dispute procedures is to be welcomed beyond doubt. In 2004/5 ACAS conciliated over 85,000 claims or potential claims/applications to employment tribunals, with only 23% of these actually remaining unresolved and reaching the Tribunal [although some may have been discontinued as some claimants lose interest in pursuing these matters]. Particular success has been noted in the field of discrimination claims where only 16 % of such claims ever reached the tribunal in this year.
Presently we are seeing a huge rise in the number of claims being taken. The statistics which have been previously discussed have demonstrated this without doubt. The reasons for this may be the increase in the number of jurisdiction where employment rights are being protected by UK statute. Compared to the time where even unfair dismissal was not a valid jurisdiction [pre 1971], it is now astonishing that there are over 80 jurisdictions by which a claimant can make a claim against an employer. As discussed previously, both quantity and complexity of cases have increased, with far more cases being multi-jurisdictional in nature than ever before.
The job of the ACAS conciliators has therefore never been more difficult, and as a result we should not be surprised to see that over the next few years, while they are finding their feet in this new and complex employment law minefield, their success rates do not continue to grow with the rates with which we have come to expect and admire.
8] To what extent has the 2002 Act had a positive or negative impact on our Employment Law system as a whole?
The fact is that the title of this dissertation is somewhat premature. At this very early stage in the development and application of the initiatives introduced by the Employment Act 2002 (Dispute Resolution) Regulations 2004 is very hard to say with any certainty what the full affects of this legislation are or indeed will be on all the parties who may potentially be involved.
A vast amount of attention and significance has been placed on the statistical findings, but as I have shown throughout this dissertation, even these changes are not easily attributable to any one aspect of the legislation.
The fact that the number of single claims has been falling quite consistently does imply that in one respect the measures are working, but this must be seen in light of the rise in the number of multi-jurisdictional claims, the increasing number of jurisdictions available, and the increasingly efficient work of ACAS in its role a mediation conciliator.
It is far too simplistic to take these statistics and draw from them any reliable conclusion about the successful, or even failing impact of these 2004 Regulations. Further empirical evidence is needed and this will take years. Such evidence must take account of all the variables involved, or which, as I have shown throughout this dissertation, are multifarious and complex in nature.
It must also be understood that there are many other pieces of relevant statutory regulation which will impact upon any such results, such as the new procedural Tribunal Code of Practice, and the complete overhaul which was due in 2006 of this year.
This does not however mean that research at this stage is futile; any results obtained help to build up a clearer image of what is going on, and in this respect much praise and encouragement should be given to ACAS who often conduct research, and the DTI's Employment Market Analysis and Research Team (EMAR).
More research should also be done into some of the reasons why claimants choose not to resubmit claims at the appropriate stage, and it is quite possible that the procedural requirements have gone too far; the new ET1 claim form is over 20 pages long, and this may prove a daunting prospect for many potential claimants. One might argue that as we want to reduce the burden on the Tribunals, such deterrents are a good thing, but this is a stupid point of view. At the end of the day, where a claimant has a grievance and is entitled to have that grievance resolved, they must be encouraged to do so, even if this does in effect mean adding another claim to the Employment Tribunal's waiting lists.
What needs to be promoted is a culture where disputes can be resolved at a very early stage in the workplace, and in this way, the Tribunal can be reserved for those cases which no amount of alternative resolution procedure would solve.
Employment law has never been such a minefield of unanswered questions, and there is little doubt that the next few years will show some surprising results. Let us for now embrace the fact that it seems like we have got the right idea at last, and acknowledge that the road to get there will be a very long and thorny one.
9] What future reforms might be necessary to ensure the aims of the 2002 Act are realised without jeopardising the rights of any parties involved in the Employment Law dispute process.
Let us now turn our attention to the future of employment law and dispute resolution in Britain and ask the question, what needs to be done in the future to ensure that the aims of individual protection, alternative dispute resolution and the disburdening of the Tribunal service can all succeed hand in hand? In other words, let us now turn our attention to a discussion of the future of employment relations in the UK.
As was noted so eloquently by the 2001 policy paper Roads to Resolution, 'recourse to litigation as a first resort to solve workplace disputes is neither good for business nor the individual...By the time the hearing is reached, it is common for the employment relationship to have broken down irretrievably.' This statement highlights the fact that it was never really the purpose of the Tribunal Service to improve the relations between employees and their employers, even though it is now an option on the ET1 claim for to request 'reinstatement' or 're-engagement.' The aim is simply to encourage a culture whereby disputes between such parties can be resolved more readily without recourse to the Tribunals.
The policies contained in the Employment Act 2002 (Dispute Resolution) Regulations 2004 do not privatize dispute resolution, but remain progressive in that they not only encourage, but actually in effect demand compliance with statutory minimum procedures. Disputes must be dealt with where they arise; it is intuitive. The problem with insisting on procedure however is that this too may have the effect of allowing certain disputes to escalate- parties simply engaging with the standard grievance procedures as a formality in the eventual aim to pursue compensation in the Courts. Upper limits on compensation may help to achieve a counter effect, but then again, compensation by its very definition cannot be justifiably limited- damage has no limit, so how can the money awarded to compensate for that damage?
Possibly intervention at an even earlier level by bodies such as ACAS will encourage disputes to become resolved before anyone even realizes that they are disputes at all. ACAS should force their guidance upon businesses and employers in an attempt to encourage alternative dispute solutions at an earlier stage, teaching companies and their managers/ personnel how to preemptively spot potential disputes and quash them before they materialize. The money, time and resources which would be saved by the UK's business sector should such practice become commonplace would be phenomenal, and this should provide incentive enough for compliance.
ACAS describes this as the 'missing link' in the current dispute resolution practice in the UK. Businesses must adopt many different levels of alternative dispute procedures, ranging from simple and informal to the complex. This point was raised in the 2001 policy paper 'Road to Resolution', and in fact a whole section of this paper was dedicated to that very discussion.
It is still early days, but whatever the solution, I have no doubt that it is not the policies themselves which will primarily prove a success or failure, but their implementation, and without statutory bodies like ACAS, such implementation will prove very difficult. At these early stages we can encourage better resolution practice, and perhaps in tomorrows world it will be the norm, but we must expect that with all the increasing jurisdictions on employment law, we will not see actual decreases in thee number of claims, nor their complexity, but rather, much smaller increases compared to the size of the legal developments which have occurred.
10] Summary, conclusions and original insights into the issues and complexities involved.
Let us now assess everything that we have discussed within this dissertation, and attempt to draw some conclusions about the impact that the Employment Act 2002 (Dispute Resolution) Regulations have had on all the parties involved, including the Tribunal Service, the higher courts and the representatives of the claimants and respondents.
The impact on the Employment Tribunal service of these new statutory-imposed procedures might at first seem nothing less than intuitive; if aggrieved employees and/ or employers are forced to engage in internal dispute resolution procedures prior to seeking redress through the courts, then many of these disputes will be resolved without need for the Tribunal Service. In this way, the number of claims reaching the Tribunal Service should theoretically decrease, and the seriousness of such claims should therefore increase. In reality however, as we have discussed earlier, there has been a rise in the number of Employment Tribunal claims by employees against employers over the last year. The Annual Report of the Employment Tribunal Service identified a rise in claims from 86,181 in 2004 to 115,039 in 2005/06, although a large part of this rise is attributable to a noticeable increase in 'multiple claims'- where employees have more than one grievance against their employers or ex-employers. The Annual Report calculated that there is now an average of 1.8 complaints per case.
More important is the nature of the claims that are being heard; as expected the Annual Employment Tribunal Service Report identified that those claims that are being heard have increased in complexity since the introduction of the Employment Act 2002 (Dispute Resolution) Regulations 2004 into UK Employment Law. This was certainly a phenomenon to be expected- if the procedures contained within the Regulations and the Employment Act 2002 are working successfully, then the simpler claims should be less likely to reach the Tribunal, having been resolved internally under these new minimum statutory procedures. This finding does seem to suggest that this aspect of the Regulations is working successfully.
The impact of these Regulations on the higher Courts is one of increased interpretive burden, as we have seen from our earlier discussion and analysis of some of the most recent case law. It is however important to note that such an obligation is to be expected at this early stage in the development of these new statutory procedures, but is something which only serves to, in the short-term, slow down the very process which is purportedly being streamlined and made more efficient by these new legislative procedural reforms of Employment law in the UK.
The impact of the Employment Act 2002 (Dispute Resolution) Regulations 2004 on employers will vary depending upon the company involved. Larger firms will have no hesitation in ensuring that their legal obligations are complied with, introducing their own internal grievance procedures and training their managers and personnel staff in the correct methodology where appropriate. Smaller firm employers may simply not have the resources to explore every legal avenue in full, but may resort to seeking advice from the Business Link Small Business Advice Service which has been set up to advise small scale employers of their new legal obligations under the 2002 Act and its 2004 Regulations. Whatever the size of the employer, there is no doubt however that when an issue does proceed to the Tribunal, not only will they have to face increased cost under this new system, but the complexity of the new legal considerations involved, first to work out and then argue over whether any extension of the time limit applies and second to convince the tribunal that adjustments to any award should (or should not) be made will make the whole process far more burdensome and complicated. We have already commented upon the increased unwillingness of employers to take disputes to the Tribunal Service under this new regime, and it would not surprise me to see that this is trend which becomes more prominent over the next few years. On a positive note however, this does mean that respondents are far less likely to ever receive claims against them out of the blue; disputes will be raised through the grievance procedures and employers will therefore have a good chance to resolve some difficulties before they escalate to a level of animosity at which point non-acrimonious resolution would be impossible. Employers should work closely with the ACAS service who will offer them nothing but assistance in any compliance issues or potential disputes etc they may face.
One of the impacts of the 2002 Act and its 2004 Regulations on prospective claimants is the fact that they too must be aware of their rights and their procedural obligations under these minimum statutory requirements. There is a duty on an employee who wishes to make a claim against their employer/ex-employer at the employment Tribunal to commence the claim within a certain stipulated time limit. The Tribunal may also simply extend a time limit for the reason that it is not, in the case at hand, reasonably practicable for it to be met, or for the reason that not to permit such an extension would be unjust and inequitable.
There is also duty on an employee who wishes to make a claim against their employer/ex-employer at the employment Tribunal to commence the claim within a certain stipulated time limit, although as we have seen, the time extensions available make it easy for a claimant to overcome these requirements, the Tribunal being able to simply extend a time limit for the reason that it is not, in the case at hand, reasonably practicable for it to be met, or for the reason that not to permit such an extension would be unjust and inequitable.
It seems that throughout these reforms, the claimant is treated in a very forgiving way. For example, as discussed, where a claimant has applied to the Tribunal without having first adhered to the standard obligatory procedure, a three month extension will be granted for the claimant to go back and complete step one of the procedure, although this must be done within the first month of the extension, in order to give the employer adequate time to respond and/or engage in hearings with the claimant to attempt resolution without redress to the Courts. In this way, claimants are given a second chance to comply with the statutory procedure, their preliminary failure appearing to have no adverse effects on their chances of a successful claim or full award. This seems somewhat unfair, when an employer has not only informed them of the correct procedure in the compulsory written statement, but an employer who fails to adhere to correct procedure is penalized instantly and given no further chances.
In conclusion it does not seem odd that the claimants are given such extensive rights under the Employment Act 2002 (dispute resolution) Regulations 2004, as after all, part of the rationale of the reforms was to promote an individual rights agenda, and to do this it is of course therefore necessary to extend the rights of individual claimants, and also to develop a procedure which will allow such individual claimants to realize those rights in an easy and practicable way. Whilst this does in effect mean that more claim may be made, it also means that in the long run the system will work more efficiently and will evolve to protect the rights of the individual without need for recourse to collective bargaining or other union strategies.
In regards to the impact that these reforms have had and will continue to have on the representatives of claimants and respondents, it should be concluded that these parties will continue to make lots of money out of the increasingly complex system. Never has it been so important for respondents to seek legal representation, both at the pre-dispute stage [in order to establish internal procedures which adhere to the legislation and will therefore not yield financial penalties in the Tribunal for failure to comply] and in the litigation and Tribunal stages of the process. In the future however, if the alternative dispute procedures become more successful, the role of the representative should diminish with less and less disputes even reaching stages of litigation. The role of ACAS a free advisor should be used more often by employers, and in this way the future of representation in these matters may become a thing of the past. For employees, representation becomes increasingly superfluous. The rights are clear, having been provided in a written statement by their employers, and the Tribunal service, should it be required, are free. Therefore the eventual impact upon those representatives of claimants and respondents is that eventually their services will only be required in the most complex of employment disputes.
The conclusions however must be understood and read with the following in mind: At this very early stage in the development and application of the initiatives introduced by the Employment Act 2002 (Dispute Resolution) Regulations 2004 is very hard to say with any certainty what the full affects of this legislation are or indeed will be on all the parties who may potentially be involved.
Let us sit back and wait for more reliable empirical evidence which can give us greater insight into all the variables involved in any discussion of the impacts of these procedural reforms.
Below is a list of all the publications, journals, websites and articles which were used in the construction of this dissertation.
- ACAS www.acas.org.uk
- Small Business Service website
- www.businesslink.gov.uk/bdotg/action/layer?r.l2=1074207487&r.l1=1073858787&r.s=tl&top icId=1075122891
- Polkey vs A E Dayton Services, 1988
- Mark Warner Ltd v Aspland  IRLR 87
- Holc-Gale v Makers UK Ltd  IRLR 178
- Thorpe & Another v Poat & Another
- Shergold v Fieldway Medical Centre  IRLR 76
- Survey of the Employment Lawyers Association 
- Confederation of British Industry Survey 2005
- Annual Report of the Employment Tribunal Service 2005/6
- Department of Trade and Industries 2004 Full Regulatory Impact Assessment
- 1998 Survey of Employment Tribunal Applications
- 2001 Government Consultation Paper 'Roads to Resolution'
- Redundancy Payments Act 1965
- The Report of the Donovan Commission 
- Employment Act 1996
- Employment Act 2002 (Dispute Resolution) Regulations 2004
- Linda Dickens. 2000. Doing more less: Acas and individual conciliation from Employment Relations in Britain: 25 years of the Advisory, Conciliation and Arbitration Service. Blackwell, Oxford
- Gill Dix. 2000. Operating with Style: the work of the Acas conciliator in individual employment rights cases from Employment Relations in Britain: 25 years of the Advisory, Conciliation and Arbitration Service. Blackwell, Oxford