Success at Work: Resolving disputes in the workplace: A Consultation

Response from Thompsons Solicitors - June 2007

Thompsons welcomes the publication of “Better Dispute Resolution: A review of employment dispute resolution in Great Britain” by Michael Gibbons and the DTI consultation papers “Success at Work: Resolving Disputes in the Workplace” and “Supplementary review of options for the law relating to procedural fairness in unfair dismissal”. This is our response to the two DTI consultation papers.

1. RESOLVING MORE DISPUTES IN THE WORKPLACE

Should the statutory dispute resolution procedures be repealed?

The statutory dispute resolution procedures aim to encourage employers and employees to resolve problems in the workplace, avoiding as far as possible recourse to employment tribunals. That is a proper aim. In particular, the procedures brought benefits to many employees:

• “Routes to Resolution” identified the problem of many small employers having no or inadequate procedures, leading to a disproportionate number of tribunal claims from their workforces. Dispute resolution procedures penalised those employers for that failure and encouraged them to adopt minimal standards. We are unconvinced by the sympathy shown by Gibbons [e.g. at paragraphs 2.11, 2.17] for small employers in complying with the procedures;
• paragraph 14 of the 2004 Regulations deems the procedures’ meetings to be hearings for the purposes of the right to be accompanied conferred by the Employment Relations Act 1999. This widened the scope of employers’ obligation to allow their employees to be supported by a trade union representative

However, these benefits are outweighed by the drawbacks:

• while the procedures are straightforward, their application is inordinately complex. The appendix lists (a) those jurisdictions to which the procedures apply and (b) those to which they do not apply. It is highly unlikely that the unaided employee could be sure of getting it right - in particular, if he/she wrongly thinks that the grievance procedure applies to a complaint of refusal of time off, he/she might mistakenly think that the time limit extension is available and so miss the deadline for the ET1;
• the procedures are also unduly complex in their application to common workplace scenarios:

1. complaints unconnected to any form of disciplinary action: GP only
2. complaints arising from oral/written warnings or suspension on full pay: GP only. 
3. constructive dismissal: GP only
4. direct dismissal or non-renewal of expired fixed-term contract: DDP only, regardless of the reason for dismissal
5. relevant Disciplinary Action short of dismissal (RDA): DDP but
   a. if employee complains that taking RDA is discriminatory or not based on conduct or capability, GP as well as DDP; but 
   b. if statement of grievance lodged before DDP appeal hearing, deemed compliance with remainder of GP.
6. complaints arising from operation of DDP (dismissal or RDA) but where 5. does not apply e.g. employee alleges a failure to make reasonable adjustment for disabled worker at a DDP meeting or complains of a discriminatory remark by management witness during hearing: GP in addition to DDP. 
   This is far too complicated and the price of a mistake far too high (especially when combined with the difference in application to jurisdictions). It will often be a matter of pure chance whether an unaided employee chooses the correct procedure 

• departing from decades of workplace practice and expectations, the dismissal and disciplinary procedure affords employees only the merest hint in writing of what they are supposed to have done wrong (e.g. “absence”, “conduct”). The lack of a requirement for the employer to provide written information at Stage 2 puts the employee at risk of being ambushed at the Step 2 meeting.
• section 32 of the 2002 Act locks employees out of the Employment Tribunal if they have wrongly failed to trigger the grievance procedure. This exclusion is a draconian penalty for employees, inappropriate and disproportionate for legislation intended to encourage workplace resolution of employment disputes. An employer’s failure to follow the DDP only brings a penalty of automatically unfair dismissal in dismissal cases and even then the impact is greatly lessened by the possibility of reductions in compensation. This lack of parity of penalty contrasts with -
• the false parity in the procedures themselves. In particular, each Standard Procedure distinguishes between setting out the charge or grievance (Step 1) and informing the other party of “the basis” for it (Step 2). The additional information required at Stage 2 need not be in writing. The understandably modest standard for Step 1 grievances has (because of the similar wording) set a low threshold for the amount of information an employer must give the employee at Step 1 of the Standard DDP. This despite the fact that there is no parity in industrial relations: an employer initiating disciplinary proceedings exercises power; an employee raising a grievance petitions the person holding power;
• the DDP does not apply to disciplinary action short of dismissal, suspension on full pay and/or oral or written warnings. There is no logical basis for excluding warnings. It is notable that at no stage in the pre-Bill consultation documents or during the Parliamentary stages did the Government warn that this was its intention. The result has been to complicate the application of the DDP and its interface with the GP.
• the 3-month time limit where the GP applies is triggered when the employee complies with Step 1 and this works well. But the 3-month time limit where the DDP applies is only available if, on the day the normal time limit expires, the employee has reasonable grounds for believing that any dismissal or disciplinary procedure is ongoing – reg 15(2). This encourages bad employers to string out appeal procedures in an attempt to catch the employee out. We have encountered cases of employers issuing their decision on appeal just before the normal tribunal deadline. While an experienced representative will know that this places the employer in breach of paragraph 12 of Schedule 2 (unreasonable delay) and gives grounds for using the appropriate time limit escape clause, the unaided employee risks being excluded by failure to meet the tribunal deadline;
• in unfair dismissal cases, the “range of reasonable responses” test means that only the most perverse decision to dismiss will be subject to review, leaving only procedural protection. So the partial reversal of the Polkey principle (in exchange for compliance with the minimal standards of the DDP) depended on a sympathetic interpretation by the tribunals if it was not to mark a major further weakening of protection from unfair dismissal. However, the EAT has interpreted the amended legislation as excusing non-compliance with any procedure, including informal unwritten practices and sources of the standards expected of a reasonable employer. This apparently includes even the provisions of the ACAS Code of Practice. As the editor of IRLR has commented, this goes well beyond what had been thought to be the effect of the 2002 Act, diminishes the force of the ACAS Code and is difficult to reconcile with authorities such as Devis v Atkins.
• Regulation 4(1)(f) disapplies the DDP for dismissals on the grounds that continued employment in the position held would contravene a duty or restriction imposed by/under any enactment. This exception was inserted at the insistence of construction employers in London, who argued that they risked criminal liability for breaching the Asylum and Immigration Act 1996 if they continued to employ someone whom they discovered to be an illegal immigrant. But the exclusion is much wider than necessary and catches, for example, cases of a driver who loses their driving licence.
• regulation 4(1) disapplies the DDP where there are either collective dismissals and re-engagements or collective redundancies of 20 or more (so that s.188 of the 1992 Act applies). In contrast, Reg 9 requires employee representatives to name all employees on whose behalf they raise a collective grievance. The lack of parity between collective dismissals and collective grievances contrasts with the false parity between the standards in Step 1 in the DDP and GP respectively (see above). An employee risks section 32 exclusion or a reduction in compensation if their name is left off the list of employees on whose behalf a collective grievance is raised. In cases of very large numbers (such as equal pay claimants in the public sector) the individual names of the employees are of little interest to the employer – what they really want to know is the category or description of employees on whose behalf the collective grievance is raised.

One result of these complexities and defects is that Tribunals regularly hold pre-hearing reviews on the application of the procedures. This increases costs and delays the determination of the dispute.

More seriously, there is a widespread suspicion that many employees turned away from Tribunals under section 32 of the 2002 Act are so discouraged that they rarely go back to their to try to resolve the problem and even more rarely succeed in doing so. The Annual Report of the Employment Tribunal Service contains some statistics that support to this concern.

Some of the problems and injustices identified above could be addressed by amendments to the legislation. In the event that the Government decides to retain the basic dispute resolution legislation, Thompsons would welcome the opportunity to propose specific changes.

However, the complexities of the current law, the volume of case law in the EAT (which is likely to continue to increase) and the problems faced by claimants are so wide-ranging and their impact is such that we have concluded that the only option is to repeal the legislation.

Would repealing the procedures have unintended consequences that the Government should address, in legislation or otherwise?

In the event of repeal, Tribunals will face a transitional period of increased complaints, for which resources should be made available.

Should the Government offer new guidelines on resolving disputes?

Thompsons consider that ACAS, working through consensus, remains the best source for advice on workplace disputes. Government dictat has not proved successful in this area, as the experience of the dispute resolution procedures has shown.

Revisions will in any event be needed to the ACAS Code of Practice on Disciplinary and Grievance Procedures to take account of the repeal of dispute resolution law. While ACAS will doubtless use the opportunity to make whatever improvements it considers necessary, the Government should not put pressure on it to make concessions to small employers that are incompatible with workplace fairness.

Should there be a mechanism to encourage parties to follow such guidelines?

Should the mechanism take the form of discretion for employment tribunals to impose penalties on those who have made wholly inadequate attempts to resolve their dispute?

What form should such penalties take?

The best way to secure resolution of problems in the workplace without recourse to tribunals is for employers to recognise trade unions, whose officials have demonstrated time and again their ability to find a solution to workplace problems without recourse to tribunal proceedings.

Thompsons agree with the Government that costs awards discriminate against employees, who are much less likely to use lawyers. Even when employees are legally represented, in our experience they usually incur much lower legal costs than their employers do.

Penalties in compensation are likely to be ineffective. In our experience, Tribunals are reluctant to adjust compensation to take account of matters beyond the merits of the case itself. With many tribunal claims being of modest value, there is a risk that percentage increases would bring no discernible benefit to employees and would not act as an inducement to employers to seek to resolve differences in the workplace.

There is also a fundamental difference between grievances and discipline. Raising a grievance is not an aggressive act whereas triggering disciplinary action usually is. It is wrong in principle to penalise the person without power because they have not had the confidence in their employer to believe that raising a grievance will resolve the problem they face.

If the Government introduces a penalty that would affect claimants, it would be essential that ET1 forms be amended to warn claimants and advise them what steps to take to avoid the penalty. However, given the experience of dispute resolution, excluding claimants from tribunals could not be justified.

If the statutory dispute resolution procedures are repealed, should the law relating to procedural fairness in unfair dismissal revert to the pre-2004 position; or be reviewed in order to assess whether it should be restated entirely?

If the dispute resolution procedures were revoked, it would be essential to restore the full force of Polkey to its former position. If employees are to lose the minimal standards set by the procedures and the prospect of an automatically unfair dismissal for breach of the DDP, it is only right that the status quo ante should be restored. The Government used the DDP to justify the almost total elimination of procedural shortcomings as part of the test for the fairness of a dismissal - if it is to repeal the DDP, no basis remains for the partial reversal of Polkey. We disagree with the proposals in the Supplementary paper that Tribunals should be required to make alternative findings reflecting the balance of procedural and substantive unfairness in the dismissal and, alternatively, that the Polkey decision should be reversed entirely. Each of these options would unjustifiably further weaken the protection afforded by unfair dismissal law.

It is particularly worrying that the Supplementary paper does not envisage the possibility of a complete review of the test of unfair dismissal. At the time of the 1999 Bill, the then DTI Minister assured the then General Secretaries of UNISON and GMB that his Department would commission research into the operation of the “range of reasonable responses” test, a promise that has not been delivered. The RORR has so weakened the unfair dismissal law that outside the limited categories of automatically unfair dismissal (which are extremely difficult to prove), procedure is the only significant element of protection that remains for most employees.

If the Government is to review procedural fairness, then it should review the entire test of unfair dismissal, including removal of RORR in all the areas where it has been used.

Should the Government invite the CBI, TUC and other representative organisations to produce guidelines aimed at encouraging and promoting early resolution?

Thompsons see no particular benefit to be gained by going outside the forum of ACAS for guidance on workplace employment relations and how to resolve disputes.

2. BEYOND THE WORKPLACE

Should the Government develop a new advice service with the structure and functions suggested?

It would appear more sensible and cost-effective to give additional resources and powers to ACAS, which is accepted as impartial to an extent that a new advice service might not attain.

Should the Government redesign the employment tribunal application process, so that potential claimants access the system through a new advice service and receive advice on alternatives when doing so?

If such a system were to be introduced, it would be crucial to ensure that accessing it would meet any time limit for lodging a claim. Alternatively, doing so could trigger a time limit extension such as that used for the statutory dispute resolution procedures.

Should there be a new, swift approach for dealing with straightforward claims without the need for employment tribunal hearings?

The tribunal process already allows for fast tracking cases and for Chairmen to hear classes of cases without wing members. We do not agree that further changes are necessary. Many so-called straightforward claims are either part of multi-jurisdiction cases or turn out not to be straightforward at all.

Should additional ACAS dispute resolution services be made available to the parties in potential tribunal claims, in the period before a claim is made?

Yes

If it is necessary to target these new services, should the Government set criteria to guide ACAS to prioritise particular types of dispute?
If these new services are to be targeted then, in the current circumstances, would it be appropriate for the Government to guide ACAS to prioritise the following types of dispute:

• those likely to occupy the most tribunal time and resources if they proceed to a hearing e.g. discrimination and unfair dismissal cases;

• those where the potential claimant is still employed; and

• those where the employer is a small business with fewer than 250 employees.

It would be preferable for ACAS to have a statutory discretion that would allow it to set its own priorities.

Should the fixed conciliation periods which place time limits on ACAS’ duty to conciliate employment tribunal claims be removed?

Yes. The fixed conciliation periods have not been a success. They have imposed artificial restraints on the work of ACAS’ conciliation officers and it seems likely that some claims that might have settled had ACAS intervened at an early stage have become more difficult to resolve as time has passed.

Additionally, when the fixed period is concluded and a COT3 is unavailable, respondents are increasingly demanding that compromise agreements are used. With clauses dealing with restrictive covenants, good behaviour, repayment clauses etc, the provisions of these go far beyond what is usual in COT3s and this has placed many claimants at a distinct disadvantage simply because of the fixed conciliation period system.

3. MORE EFFECTIVE EMPLOYMENT TRIBUNALS

In Thompsons’ experience, Employment Tribunals now operate in such a way that an unrepresented party is at a severe disadvantage. Given the volume and complexity of employment protection law, it is unrealistic to expect Tribunals to adhere to the vision set out in the Donovan Commission Report. Nevertheless, the original idea of a forum in which disputes could be resolved outside a court-like hearing has been overwhelmed by a damaging and unnecessary degree of procedural complexity. In our experience, Tribunals too often order PHRs, almost invariably to the detriment of claimants. We invite the Government to ask the Tribunal Service to conduct a root and branch review of how Employment Tribunals operate and to bring forward suggestions for their reform.

Should the Government simplify employment tribunal forms?

The Tribunal Service should simplify employment tribunal forms. The forms introduced to accommodate dispute resolution procedures have not been a success.

The ability to file an ET1 electronically has however been a success although the Legatio programme itself is not fit for purpose.

Should claimants be asked to provide an estimate or statement of loss when making a claim?

No. Many employees rely entirely on the Employment Tribunal to calculate their compensation, especially in unfair dismissal and discrimination cases. It is also unfair to require claimants to calculate compensation when the time limits for lodging claims are so short. An early indication of value may assist settlement if it is accurate and the parties are sufficiently clear on the evidence and law. This can rarely be said to be so until some way into the preparation of a case which is why there are so many late settlements. An unrepresented claimant is at risk of being taken advantage of if they mistakenly undervalue their claim. Respondents are rarely without receipt of informed advice from HR managers or lawyers and this is an inequality of arms that is relevant to this issue. Indeed, in employment cases it is the Respondent who almost invariably is better placed to identify how much the employee has lost. For example, in most equal pay cases, it is an easy exercise for the employer’s payroll or HR department to calculate the possible value of a claim provided they know the identity of the comparator – it is much more difficult for the claimant to do so.

Would simplifying the current time limits regime through harmonisation be a helpful additional reform, whether or not the statutory dispute resolution procedures are repealed?
If so, should the harmonised limit be three months, six months or another time period?

Would total or partial harmonisation of the grounds for extension to the extent possible subject to legal constraints, be a helpful additional reform?
If so, what should the grounds for extension be in respect of the relevant jurisdictions?

The three month time limit that applies to most tribunal jurisdictions is unjustifiably short and actually forces employees into lodging claims when they still hold out hope of resolving the problem with their employer. That in turn damages the prospects of informal settlement, precisely contrary to the thinking behind the dispute resolution procedures.

Equally, the “not reasonably practicable” escape clause frequently operates unjustly.

In order to simplify the law on time limits, it would be better to adopt a standard six-month time limit and a standard “just and equitable” escape clause.

There should be a review of the current complex position of the late claim where there has been incorrect or negligent advice from an advisor.

Thompsons further suggests that the approach taken to a series of discriminatory acts could also usefully be revisited. The short limitation period extends to make it quite easy for an employer to evade liability where an employee puts up with a series of discriminatory acts (something which usually happens for reasons other than dilatoriness). Thompsons suggests adopting the approach used in an unlawful deductions from wages context whereby acting on the last of a series brings the whole of it into the Tribunal’s jurisdiction.

Do you have views on specific ways in which employment tribunal procedures and case management could be improved?
Would it be helpful to change the case management powers available to employment tribunals in respect of multi-claimant claims?
Do Employment Tribunals provide the most appropriate way of resolving multiple-claimant claims, or could other mechanisms better serve the interests of the parties involved?

For day-to-day cases the Tribunal’s case management powers are entirely adequate. Thompsons supports firm case management in order to reduce delay and to ensure the production of discovery, witness statements etc. There is however a tension between the need to give parties adequate time to prepare a case, and the need to bring it to trial. This tension is not always successfully resolved.

One specific difficulty is the 7 day period in which a party may object to an application being made. Where that application is to enforce existing directions that have not been observed there can be an inordinate period time between the first and second dates for compliance. In a rigidly short timetable this causes prejudice to the applicant party. A solution would be either to remove the 7 day objection period entirely, or to disapply it where the application is to enforce an existing order.

Thompsons would welcome tribunals taking a stronger line on the issue of establishing disability in disability discrimination cases. Too often the existing evidence is adequate to establish disability but a respondent denies it regardless. They then seek wholly unnecessary and intrusive disclosure of medical records, or commission needless and expensive expert medical evidence which inconveniences the claimant, who is required to attend a medical consultation. No new powers are required to curb this abuse, simply the firm application of the existing ones.

More extensive use of telephone case management conferences would be welcomed in order to reduce the large amount of time wasted in waiting rooms. Additionally the approach to listing could also usefully be revisited. Thompsons would welcome the day being split into quarters for the purpose of listing interlocutory hearings.

The consistent use of avoid dates should be introduced and the Tribunal’s listing department resourced sufficiently to act on avoid dates before they become stale.

A consistent approach to the ordering and extent of further particulars would also be welcomed. Whilst the stated purpose of these is to define the issues, many chairmen order further particulars that are so extensive that they are effectively witness statements exchanged consecutively. As well as being time consuming to prepare this is unfair on the party providing the information.

The ET1 multiple function can not cope with large multiple equal pay claims. The Tribunal Service is also trying to follow the Indicative Timetable provided in Schedule 6 of the 2004 Rules of Procedure in respect of these large scale claims and it is just not realistic. The timetable sets down a 37 week time scale for equal value claims with experts involved and 25 for those without experts. The Tribunal system and the Independent Experts and the parties in these types of proceedings are just not able to meet these deadlines. For example the Joss litigation has been ongoing since 2002 and we have a Stage 3 Equal Value hearing listed for December 2007 and 5 outstanding appeals and a possible 6th depending on the yet to be handed down Remedy Judgment. Therefore, it will be 2008 at the earliest before that litigation concludes i.e. 6 years as opposed to 37 weeks. The Tribunal service needs to recognise these difficulties and adopt longer directions processes as inevitably the indicative timetable is breached and the parties have to return to the ET repeatedly for additional directions involving time and cost. Also, the need for a mandatory Stage 1 Equal Value hearing whenever equal value is pleaded (even in the alternative) should be dispensed with provided the parties consent. This is an unnecessary hearing if the parties are dealing first with claims of like work and/or work rated as equivalent.

Thompsons would welcome the introduction of powers to have proper test cases that would, in appropriate circumstances, bind all similar cases. The tribunals need empowering to impose such an approach on unwilling disparate claimants so that appropriate cases could be selected. If, where a test case was selected, limitation periods in other claims were suspended and realigned to the promulgation of the test case’s decision, there would be a significant saving in time and cost in all quarters of the dispute and the in terms of the Tribunal’s own administrative resources.

For claims with very large numbers of claimants the use of the prescribed form approach can result in massive duplication of name and address information as between the representatives’ and the Employment Tribunal’s records. It would be sensible to empower tribunals to waive certain formal requirements where there is good reason to do so.

The Legatio ET1 software cannot handle large numbers of claimants. It does not say so however. It is important for the limitations to be clearly stated.

The introduction of representative proceedings would also be welcomed where a recognised representative such as a trade union is involved.

Employment Tribunals do not provide the most desirable way of resolving multiple-claimant disputes however sometimes they are certainly the most appropriate. Thompsons would welcome an increased role for ACAS in resolving such disputes

Are the existing powers of Employment Tribunals sufficient to deal with weak and vexatious claims?

It is disappointing that the DTI refers only to “claims” and ignores the many instances of Respondents who advance defences that are wholly without merit. The procedural rules apply in both circumstances.

In any event, Tribunals’ powers are quite sufficient. Complaints of weak and vexatious claims are ‘bogey-man arguments’ raised by respondents and are not supported by any statistically significant evidence. New precedents are often created by cases which might be categorised as ‘weak’ as they do not fit the existing mould. It is therefore essential to the development and dynamism of the law that additional impediments are not placed before such cases without proper evidence that demonstrates a real need for further measures.

Do you have views on when Employment Tribunal chairs should sit alone to hear cases?
Do you have any views on how best to structure Employment Tribunal panels and use lay members more efficiently?

It is appropriate for chairs to sit alone where claims that require a simple legal analysis and would not benefit from specific workplace knowledge. Thompsons would however resist any move that would diminish the role of wing members in cases that do not fit that category. The wing member system is a cornerstone of Tribunals’ credibility and adds an indelible fairness to the proceedings.

Should the Government aim to promote employers’ compliance with discrimination law through better advice and guidance, rather than by widening the powers of Employment Tribunals to make recommendations in discrimination cases?

Whilst any improvement in compliance through advice and guidance is to be welcomed, the number of sources of advice (free or at reasonable cost) available to employers is already legion and easily accessible. To name but an illustrative few there are the ACAS helpline, the CBI, the Chambers of Commerce, the Small Business Federation, trade organisations, BusinessLink, ‘employment consultants’ and commercial providers such as solicitors and accountants. An employer’s argument that they did not know that there were obligations and did not know where to seek information and advice about them is an untenable one. Thompsons would support the further funding of ACAS to extend its capacity to provide free and impartial advice to all concerned with the proper discharge of legal duties. Extending advice through any other medium simply reinforces an adversarial and risks unwelcome inconsistency.

The key issue is willingness. If an employer is willing to meet its commitments then it will seek to do so. Conversely, for the unwilling employer, recommendations and rulings are the only method by which change can be prompted. Thompsons would welcome the extension of the Employment Tribunals’ powers to make recommendations, including the enforcement of them by either the claimants themselves, appropriate workplace representatives not otherwise directly connected with the case, or by an appropriate statutory body such as the Equality Commission.