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You dont have to wash your dirty linen in public

A review of the system for settling employment disputes is under way. Janet Gaymer explains the implications

No one wants to end up in an employment tribunal. According to the Government, the average cost to an employer of each tribunal application is around 2,000 and recruiting a new employee may cost 3,500. And these figures dont take account of other consequences such as the effect on reputation and business objectives.

The most recent report of the Employment Tribunals Service for 2000/2001 notes that applications to employment tribunals have risen by over 60% in the past three years and by 25% in the past year. It is perhaps not surprising, therefore, that a review of the system is under way. The Department of Trade and Industry has issued a consultation document, requesting responses by 8 October 2001. It is accessible on www.dti.gov.uk/er/individual/et.htm

Although the document deals with the reform of tribunals, human resources professionals will be particularly interested in its proposals for resolving complaints in the workplace. The reasoning is simple. Employers who have written procedures are more likely to reach a settlement than employers who havent. Therefore, the Government wishes to encourage employers and employees to deal with a complaint as soon as it arises. It believes that this need is particularly acute in relation to employers with fewer than 250 employees 29% of applications to tribunals are brought by individuals who work in companies with fewer than 10 employees.

The consultation document proposes two very simple procedures for dealing with disciplinary problems and employee grievances. Most employers with HR departments are already likely to have complied with the guidance issued by ACAS in its Code of Practice on Disciplinary and Grievance Procedures issued in September 2000. However, the Government seeks views on the suggestion that, where a matter cannot be settled in the workplace, alternative dispute resolution should be the next step.

Apart from seeking views on ACASs current responsibilities in relation to conciliation, the document notes that there may be scope for other organisations to act alongside ACAS because greater capacity to engage in conciliation should increase settlement rates. While noting that the quality and impartiality of conciliation is key, it suggests that ACAS could play a role in kite marking conciliation providers and being the intelligent gateway which links alternative providers to the tribunals.

The US has already been experimenting in this field. The Supreme Court and other courts have continued to clarify the right of employers to implement mandatory arbitration schemes in order to resolve employment disputes before reaching court. US lawyers offer guidance to clients on assessing what type of alternative scheme is appropriate for the particular issue.

The two main types of alternative dispute resolution are arbitration and mediation. Arbitration depends upon two parties having an agreement which must be conducted in accordance with the principles set out in the Arbitration Act 1996 (as is the case in relation to the recently launched ACAS Arbitration Scheme which only deals with unfair dismissal complaints). There is no such condition for mediation which simply requires that two parties agree to a mediator being appointed who tries to find a middle way between them. This is a very different approach from that of an employment tribunal which is required to rule as to whether one party wins or not.

Clearly, these different approaches to resolving disputes in the workplace cost money and, very often, it is the employer who foots the bill. However, in cases where a potentially large employment tribunal award may be reduced or there are particular sensitivities, a process of mediation may be preferable to a very public tribunal case.

Although disciplinary and grievance procedures will continue to play a role in resolving disputes in the workplace, HR professionals should consider whether they will be sufficient, if the Government implements fully its pledge, made in March 2001, to use alternative methods to settle disputes where appropriate. If so, those working in HR will need to understand the difference between different types of dispute resolution. They will also need to be able to access quickly expertise in a new area of the law.


Janet Gaymer is senior partner at Simmons & Simmons