EMPLOYMENT BILL - A Long Goodbye to the Statutory Dispute Resolution Procedures

The Statutory Dispute Resolution Procedures came into force on 1 October 2004. Their days are numbered. Previously having been referred to as the Employment Simplification Bill, the Employment Bill received its first reading in the House of Lords at the beginning of December. This is the beginning of a legislative process by which the Bill will become the Employment Act. Current indications are that the new law is likely to come into force on 1 April 2009.

The Statutory Dispute Resolution Procedures provide that employers (and employees) must follow the Statutory Dismissal and Disciplinary Procedures and the Statutory Grievance Procedures failing which there will be ramifications if and when cases proceed before Employment Tribunals.

Those ramifications include:

  • whether employees can commence proceedings in the first place;
  • whether dismissals are automatically unfair;
  • and whether any compensation awarded should either be enhanced or reduced by up to 50% for failures by employers and employees respectively to adhere to those procedures.

The Statutory Dispute Resolution Procedures not only cover dismissals for misconduct but also many other scenarios including ill health terminations, certain redundancies and, in the case of the Statutory Grievance Procedures, discrimination cases where there is no dismissal.

The new legislation will abolish the Statutory Dispute Resolution Procedures in their entirety. In particular it will remove a provision stating that failure to follow the Statutory Dispute Resolution Procedures will render a dismissal automatically unfair irrespective of the reason for the dismissal or the background circumstances. Whether or not the procedures leading to a dismissal will render that dismissal unfair will fall to be determined with reference to a 1988 House of Lords decision in the case of Polkey. This is a return to the legal position prevalent prior to the introduction of the Statutory Dispute Resolution Procedures. In broad terms Polkey states that procedural failures can render a dismissal unfair but if procedures had been followed properly a fair dismissal would have ensued in any event then any compensation payable will be limited.

The Statutory Dispute Resolution Procedures were accompanied by limitations on the role of ACAS in Employment Tribunal disputes. In Employment Tribunal cases an ACAS conciliation officer is assigned to each matter. The conciliation officer acts as an intermediary with a view to the parties resolving their dispute without proceeding to an Employment Tribunal hearing. There are currently fixed conciliation periods within which conciliation officers can perform their services. For example, in an unfair dismissal case the services of the conciliation officer are not available after 13 weeks. In practice this means that many cases which would ordinarily settle do not or alternatively settle later in the day at increased cost to both parties. Having made large scale redundancies when the Statutory Dispute Resolution Procedures were introduced, ACAS is already actively recruiting and training new conciliation officers in readiness for the impending changes.

So will matters return to the pre-1 October 2004 position? Almost - but not quite. Some concepts of the Statutory Dispute Resolution Procedures are intended to be retained. The Employment Bill contains provisions allowing for an increase or decrease in any compensation awarded of up to 25% where employers or employees respectively fail to comply with the ACAS Code of Practice on dispute and grievance procedures. The current ACAS Code of Practice was redrafted in 2004 to refer to the Statutory Dispute Resolution Procedures and a new version will need to be generated in due course.

Employment Law will remain a complex area where specialist advice will still be essential. However, the new law can only be an improvement on the current position. The Statutory Dispute Resolution Procedures have in their short lifetime generated literally dozens of appeal cases. Originally intended to allow disputes to be resolved without proceeding to Employment Tribunal hearings, the Statutory Dispute Resolution Procedures have complicated matters and made litigation more expensive and uncertain for both employers and employees. They will not be missed.