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Employment Act 2008

6 April will see the dispute resolution provisions in the 2008 Employment Act pass into law. Whilst the possibility of amendment still exists, it is slight enough that BERR has already published guidelines for employers and we set out the following review.

Why change?

The current three stage process (set out the complaint in writing, hold a meeting, offer an appeal) has been deeply unpopular for its rigidity and the period since its introduction has seen an increasingly litigious approach from both employers and employees. Tribunal claims have increased since the new procedures were introduced in 2004 and our experience is that both sides tend to get ‘lawyered up’ early, following process because they have to rather than seeking genuine accord.

The stated aim of the change is to introduce more flexibility over alternative ways of settling disputes.

What changes?

At one level, surprisingly little is actually different.

There is a new ACAS Code of Practice on Disciplinary and Grievance Procedures which replaces the old statutory procedures. The procedures retain the three step process and offer some principles rather than prescribing a process to follow. Crucially, the new code only covers discipline and grievance situations – redundancy, retirement, ending fixed term employment, ill-health and all other dismissals are excluded.

The principles follow current best practice:

• Issues should be dealt with promptly
• Employers should act consistently
• Appropriate investigations should be made
• An employee should be informed of the basis of the complaint and allowed to put their case before a decision is made
• An employee has the right to be accompanied at any formal meeting
• An employee should be allowed to appeal against any formal decision made

Where change may take place will be that ACAS will be more active in offering to mediate disputes and there is a desire to encourage mediation (which can be managed inside the business) as an informal route to resolution but there is no compulsion on the part of either party to join any mediation process.

What do I do?

Short-term
Probably nothing. HR Consultants and lawyers may be rushing to tell clients to revise their policies, but if your old procedures followed the previous legislation you will be operating at a higher standard of process than the new code requires and are therefore likely to be OK. The liberalisation of the old rules means that employers can be a little more relaxed about process but the stages of warning and method of disciplinary dismissal remain unchanged. On grievances, the old process will serve perfectly well

Most specifically, any dispute for which the ‘trigger event’ was prior to 6 April should work under the old rules - thereafter the new code will apply.

Longer-term
There is bound to be some case law emerging over time (though given the current tribunal backlogs, that may be later rather than sooner) as the tolerances of the principles are put to test, but the main thrust of the change is about encouraging mediation and this may be the area to keep an eye on. CIPD and others are concerned that the lack of compulsion around mediated solutions will effectively mean that there is no change and its certainly hard to see why small employers would do anything differently right now.

For larger firms, investment in equipping internal mediators or retaining external firms to manage negotiated solutions may be worth exploring as a means to get out from under a rising tide of litigation.

Our view

It is debatable that the increase in litigation following the implementation of the 2004 rules was caused by the admitted inflexibilities in the system. There is plenty of evidence that UK society and culture is more litigious than it was and employment is just one aspect of that. We also take the view that discipline and grievance situations only arise when all the other good stuff about managing people in organisations goes wrong. Real solutions aren’t about changing the law, they are about changing the practice of management and to that extent, we agree with the view of the HR community that the new rules are not going to reduce tribunal claims, at least in the short-term.

What the new Act does allow, though, is a realistic assessment from businesses as to the value of mediation. Although the substantive change to the law appears slight, the flexibility that employers now have should take the enlightened into new areas of thinking about Employment Relations strategy. Mediation saves money and time for organisations and protects the people involved from the stress and distraction of disputes. Equally valuable for those businesses involved, an investment in good mediation delivers a much more positive message about the organisation to current employees and to those that might join in the future. Psychological contracting is strengthened through the positive approach to conflict that mediation represents and where the psychological contract leads, the employer brand will follow.

The time now seems gone when a passive approach to disputes or a reliance on litigation will be sufficient. Mediation represents an honest and authentic employment relations support for the honest and authentic leadership that the modern workplace requires.