Consultation on resolving workplace disputes: Has the Government finally cracked it?
The Government has published its consultation on reforming the employment tribunal system: ‘Resolving workplace disputes’. Will it work?
With rising unemployment, tribunal claims are on the increase. As a result, employers are spending more time and money resolving what can often feel like unmeritorious claims. With our economic recovery still in question and the recent announcement that our GDP for the last quarter has shrunk, the Government has been making a lot of noise recently about changes in the tribunal system and in employment legislation in order to help UK plc get back on track. According to the introduction to the consultation document, more needs to be done to ensure businesses feel more confident about hiring people. Aligned to this is a radical overhaul of the tribunal system and focus on early settlement and fees.
This Government is not the first one to tackle the increase in tribunal claims. Our previous government introduced the Statutory Disciplinary and Grievance Procedure in 2004 with exactly the same aim. The technicality and formality of the procedures led to an increased number of claims and commonly an increase in the length of hearings. As a result, it was repealed in 2009.
When the tribunal system was introduced over 30 years ago, its aim was to introduce a less formal forum enabling parties to resolve their disputes without the formality of the common law court system. When created, the tribunal system envisaged that the parties would not need to be legally represented. Because of this principle, costs awards are not the norm in the tribunals.
Will the Government’s ideas work this time? Our answer is that they may, but at the expense of employees.
The key reforms to be introduced are:
Increase in the qualifying period from one year to two.
We recently commented on this in our blog http://bit.ly/dLDo9h . It is unlikely that an increase in the qualifying period will lead to a substantial reduction in the number of claims. It is more likely that disgruntled employees and their representatives will simply look for sufficient reason to bring a more complex type of claim that does not rely on length of service, such as a discrimination or whistleblowing claim.
The simplistic message which is going to be communicated to employers is that you can sack at will up to two years. Our concern is that employers will be caught off guard when they receive notification of the more complex type of claim. Having read the headlines and duly sacked at will, there is unlikely to be much of a paper trail that will help to defend these types claims.
In effect, the proposal imposes a statutory probationary period of two years. This is also unfair on employees who, in effect have to wait a very long time to be sure that they are safe in their job and have the statutory protection.
The Government proposes to increase the use of mediation. Mediation can be effective in certain cases.
The Government proposes that each claim is sent to ACAS for preclaim conciliation for a period of up to one month.
This is a good idea in principle but it will be interesting to see how this is put into effect. The proposal is that each tribunal claim is preceded by a shortened claim form. We do not see how the claim form can be made much shorter. The longest part of filling out a tribunal claim form is setting out the grounds of claim. This is where the claimant sets out the facts and attaches legal labels to them. This information will be crucial to a preclaim conciliation, since it allows ACAS and the employer to understand what the claimant is complaining about.
One month also seems like a very short time to try to resolve a dispute. In our experience of dealing with ACAS, conciliation may take longer than a month. We believe that a rigid time limit may be counter productive and ACAS should have the power to extend the period if it feels it will enable the parties to finalise the agreement.
Tackling weaker cases
The Government proposes a number of measures under this heading that are highly political and would, if implemented, be very disadvantageous to potential claimants. Amongst them are:
Withdrawing the payment of expenses in tribunal hearings. The purpose is “to encourage the parties”to think carefully about the number of witnesses they call so potentially reducing the length of hearing.”
This places huge financial pressure on the employee, who in many cases will be unemployed and unable to pay accommodation and travel costs for his or her witnesses.
In one of our cases last year, Mr Dargo –v- Deborah Services Ltd, it was vital that we could bring a witness from Wales to give evidence at the hearing in Edinburgh. His evidence was one of the reasons why we were successful. Mr Dargo would not have had sufficient funds to pay for this witness’s expenses and the success of the claim would have been at risk without him.
Our concern is that claimants who are unable to afford the expense of bringing witnesses will lose otherwise successful claims.
Another measure is to introduce a fee to lodge a claim. In principle, this is a good idea, so long as the proposed system to protect vulnerable workers’ access to justice is sufficiently well developed.
Formalising offers to settle
This would enable the parties to make an offer of settlement lodged in the tribunal. The tribunal award would be decreased or increased if the tribunal decides that one of the parties unreasonably refused the offer.
In our experience, it is very difficult for any of the parties to establish what a reasonable offer would be well in advance of the hearing. Tribunal awards consist primarily of loss of earnings between the job the employee lost and his or her new one. When the claim is lodged, an employee may have very little view as to how long he or she will be unemployed for.
Without representation and advice, it can be very difficult for an employee to assess the extent of his contributory fault and whether there should be an adjustment made to the award to place the employee in the same position as he or she would have been in, had the procedure used to dismiss not been unfair.
Whilst this measure is set out in the proposal as a measure affecting both parties, the unrepresented employee is likely to be the one on whom pressure to accept a settlement is going to be the most felt.
In an attempt to redress the balance towards employees, the Government intends to impose an automatic financial penalty of between £100 and £5,000 to be paid to the Exchequer by employers who breach individual rights. The aim is to encourage greater compliance with legislation.
This is an interesting finance raising suggestion by the Government and is likely to penalise SMEs that are less likely to have taken legal advice than bigger organisations.
This blog has been a fast first pass through the consultation. With over sixty pages, it is likely that we will be blogging on this subject again. We will also take part in the consultation process. If you want to find out more, the consultation document can be downloaded at http://bit.ly/hgqPxi