Employment Bill 2007: proposed repeal of the statutory dispute resolution procedures
January 2008
In this article...
The Employment Bill 2007 (“the Bill”) had its first reading on 6 December 2007 and marks the beginning of the end of the somewhat fraught history of the statutory dispute resolution procedures. Amongst other changes, as currently drafted, the Bill would repeal the statutory procedures in their entirety and almost rewind the clock to the position before 12.00 midnight on Thursday 30 September 2004. What are the key proposals?
In theory, a ‘code of practice’ could be any statutory code but, in practice, would probably almost always be the Acas Code of Practice on disciplinary and grievance procedures. Acas are revising their codes for reissue when the new legislation is in force.
There will also be additional inspection powers conferred on the Employment Agency Standards Inspectorate to see records and documents kept by agencies or their banks.
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Repeal of the statutory dispute resolution procedures (sections 29 – 33 and schedules 2 to 4 of the Employment Act 2002); | |
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repeal of section 98A of the Employment Rights Act 1996 (relating to procedural unfairness of a dismissal); |
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statutory procedures replaced by codes of practice; |
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employment tribunal awards to be adjusted by up to 25% where a party fails to comply with a code of practice; | |
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fixed conciliation periods repealed; | |
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compensation available for associated losses caused by non-payments to employees; | |
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fast track procedure for simple monetary claims; and | |
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various new provisions relating to the national minimum wage, employment agencies and trade unions |
Statutory dispute resolution procedures
Contrary to some suggestions during the consultation process that the statutory dispute resolution procedures be amended rather than repealed, the government proposes to do away with the procedures altogether. Furthermore, if the Bill is implemented as currently drafted, section 98A of the Employment Rights Act 1996 (regarding the procedural fairness of dismissals) would also repealed in its entirety. This means that we would revert to reliance on the pre-2004 Polkey v AE Dayton Services Limited line of cases, which established that a procedurally flawed dismissal will be unfair but compensation may be reduced according to the likelihood that the employee would have been dismissed in any event.Adjustment of awards
Tribunals will have discretion to increase / decrease any compensation by up to 25% for an unreasonable failure by an employer or employee to follow a relevant code of practice.In theory, a ‘code of practice’ could be any statutory code but, in practice, would probably almost always be the Acas Code of Practice on disciplinary and grievance procedures. Acas are revising their codes for reissue when the new legislation is in force.
Compensation for losses caused by non-payment
Compensation will be payable for losses caused in relation to non-payment of redundancy payments and unlawful deductions from wages, whether the employee is still in the employment of the company or not. For example, this could cover losses such as bank overdraft fees, or interest on loans, caused by a failure by an employer to make a relevant payment. Although this type of loss is currently recoverable, for ex-employees this is only available through a County Court claim for breach of contract. The new proposals would mean that employees could recover those losses through the employment tribunals.Fast track procedure for simple monetary claims
On the agreement of both parties, a new procedure will be available for simple monetary claims, such as unlawful deductions from wages. The hearings will be conducted on the basis of documentation only. The details will be introduced via secondary legislation.Conciliation
The fixed conciliation periods would be repealed under the proposals set out in the Bill, and Acas officers given greater powers to decide whether or not to conciliate pre-tribunal claims, without having to provide any justification. This is intended to allow Acas to prioritise cases and to relieve them of the obligation to offer conciliation where they believe there is no prospect of success.National minimum wage
The Bill proposes a new formula for calculating compensation for non payment of the minimum wage. Enforcement officers will be able to issue “notices of underpayment” to employers requiring them to pay compensation to employees within 28 days. There will also be the power to require employers to pay a financial penalty of 50% of the total underpayment, with a minimum payment of £100 and maximum payment of £5000, with a discount for early payment. There will be a right of appeal to employment tribunals against notices of underpayment.Employment agencies
Enforcement under the Employment Agencies Act is strengthened by making offences under the Act ‘either way’ offences (i.e. triable on indictment in the County Court or summarily in the magistrates’ court).There will also be additional inspection powers conferred on the Employment Agency Standards Inspectorate to see records and documents kept by agencies or their banks.
Trade unions
Trade unions will have the power to refuse membership to individuals due to their political affiliation, not just their political activities (as the law currently stands). This is to reflect the decision of the European Court in ASLEF v the United Kingdom.Future developments
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The Bill had its second reading in the House of Lords on 7 January 2008 and there may be amendments to the proposals as the Bill is debated over the coming months. | |
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Acas are working on revising their codes of practice in time for implementation and these will be published for consultation in due course. No date for publication has been set yet, but commencement of the Bill will not be able to take place until the procedures have been finalised. |
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There is no definite commencement date for the repeal of the dispute resolution procedures. The DBERR say that the aim is for this part of the Bill to come into force this summer. However, given the need for Acas to amend their codes of practice, it seems more likely that this part of the Bill will be implemented in April 2009. |
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The employment agencies provisions will come into force in October 2008, or if the Bill is enacted after that date, 6 April 2009. |
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Whilst these changes are likely to be welcomed with open arms by most HR professionals, the current statutory procedures will remain in force for the foreseeable future; no doubt we will continue to see a steady stream of decisions being handed down into 2008 on the interpretation of those procedures. |
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