The simplification of employment law

By Asha Kumar and Rebecca Conan at Watson, Farley & Williams LLP.

In October 2004 the UK implemented mandatory dispute resolution procedures, requiring employers and employees to comply with procedural steps when dealing with workplace issues.

While the procedures were intended to bring about early resolution of employment disputes they have actually resulted in greater emphasis on litigation, making employment law more complex, cumbersome and costly.

In response to this setback, a comprehensive review of the procedures by Michael Gibbons took place and in December of last year a new Employment Bill was introduced to overhaul current procedures.

The Gibbons Review states that the overhaul will result in significant administrative savings for businesses, with an estimated benefit to business of up to £180m per year.

Statutory disciplinary and grievance procedures

At present, employers must follow a three-step disciplinary or grievance procedure.

This involves a written statement of the grievance or disciplinary matter, a meeting and the opportunity for appeal.

Similar procedures apply to employees presenting grievances.

The code will assist both employers and employees to adopt a practical and cooperative approach to the difficult issues which can arise in the workplace.

This approach can unnecessarily formalise a matter, which might be more quickly and effectively resolved through informal discussion.

The bill repeals these procedures and replaces them with a new non-regulatory system.

This includes a package of measures to encourage early and/or informal resolution of employment disputes with increased support for the involvement of the UK’s Advisory, Conciliation and Arbitration Service (ACAS).

A new substantially revised ACAS Code of Practice will be prepared providing clear and practical guidance that is easier for the employer to implement.

Automatic unfair dismissal

Currently, any procedural mistakes result in an automatic verdict of unfair dismissal.

This provision is arguably extreme, as even if the employer has a valid case for dismissal, any technical irregularity will defeat his case.

Lack of consistency in the application of this provision by the tribunal has also led to uncertainty.

The new bill contains a wholesale repeal of these provisions and allows the tribunal to find that it would have made no difference to the outcome had the employer followed the correct procedure.

In this case the tribunal will still usually deem the dismissal to be unfair but will reduce the compensation payable by the employer.

"Lightening the load" for business

The bill is good news for employers and employees alike and according to the Department of Business, Enterprise & Regulatory Reform (BERR) it will result in “lightening the load for law-abiding businesses”.

The procedures contained in the bill are expected to come into force next year but in the interim ACAS will publish the Code of Practice.

In keeping with the spirit of the bill, it is expected that the code will assist both employers and employees to adopt a practical and cooperative approach to the difficult issues which can arise in the workplace.