The new Employment Act – is it really all change?

Tuesday 7th April 2009

In 2004 the Government brought in the Dispute Resolution provisions of the Employment Act 2002.  The idea was to try and resolve workplace disputes in the workplace rather than in the Employment Tribunal and, whilst we all know they meant well, it seems that only the employment lawyers could see that it was unlikely to work.

More than that, we said that the new rules were so hopelessly complicated that they would lead to an enormous amount of additional and unnecessary litigation in the Employment Tribunals.  We were right.  Regrettably, it took the government another four years to recognise this and to introduce new legislation to remove the ill-fated Regulations.

The new regime will come into force in April 2009.  It is to be hoped that it will be much more straightforward for employers because after all, it is the humble employer who will bear the burden of trying to implement the new procedures in practice.

The key changes brought about by the new rules include the following:

  • There will be no need to raise a grievance in order to bring a claim in the Employment Tribunal, making it much easier for claimants to allege constructive dismissal and discrimination
  • The so-called modified grievance procedure and standard grievance procedures will both fall away
  • Redundancy dismissals will go back to a more straightforward approach, rather than having to have a somewhat contrived final meeting situation that causes problems for so many employers and leads to ‘automatic unfairness’ in an otherwise fair process
  • The complex extensions of time provided, where the statutory procedures are being followed, created an absurd level of complexity that will revert back to the standard time limits and pre-2004 tests for whether extension should be granted or not
  • Critically, there will be no such thing as automatic unfairness for failing to follow the statutory procedure.  This removes the ludicrous situation of a dismissal becoming unfair just because, for instance, a hearing has not been convened in precisely the right way
  • Adjustment of awards for failure to complete the statutory process will no longer be so punitive.  Under the current regime uplifts of up to 50% can be made to the compensation awarded.  Under the new rules, whilst there can still be an uplift, this will be limited to a maximum of 25% uplift where there has been an unreasonable failure to follow the ACAS code.

In examining the regime we have had in place for the last four or five years, it would be easy to conclude that the whole thing was ill-conceived, that it was a waste of time and that the wholesale repeal of legislation indicates that the government recognises it got it badly wrong.  Whilst to a large extent such a conclusion would be fair, it is also true that to reach such a conclusion would ignore the fact that the legislation has had some positive effects. It would be a shame if all of those positive effects were lost.

In particular, the legislation has forced employers to pull themselves up by their bootstraps and recognise the need to adhere to a proper process when considering dismissal.  Furthermore, and of particular significance, it has forced, rather than encouraged, employers to address grievances formally because they know that if they fail to do so this can have an extremely damaging effect when compensation is awarded.

Unfortunately, the effect in some cases has been much too draconian.  Take the instance of a significant award for discrimination.  It is particularly harsh where a situation has occurred that would have led to compensation being payable to an individual, but because of an error in the grievance process that offended statutory procedures, a compensatory award is increased by between 10% and 50%.  That can in no sense be regarded as a ‘just’ outcome and its removal is to be celebrated.

The legacy of the old legislation should be that reasonably robust procedures remain in place, which for the most part will not need to be altered. Certainly it is highly unlikely that if procedures that are 2004 compliant continue to be adhered to, then employers should remain very comfortable under the new legislation.

Gordons LLP regularly advises on employment law. If you wish to discuss the issues outlined in this article, or any issues around employment law, please contact Philip Paget on 0113 227 0212 or e-mail: .