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All change for Employment Dispute Resolution

The Current System

The Employment Act 2008 received Royal Asset in November 2008 and is expected to become law on April 6th 2009.  This is of tremendous significance for employers and employees who get into arguments with each other.  In fact, it is a further step in the ongoing struggle to find a sensible and proportionate way to enable employers and employees to settle disputes with each other. 

The New Act

Employers will by now have got use to the system of dispute resolution which has been in place since October 2004.  In short, as a pre-condition for an Employment Tribunal having jurisdiction in any particular case, employers and employees have been required to show that they have followed compulsory statutory dispute resolution procedures.  These procedures were designed to help bring about an out of Tribunal settlement wherever possible.  Whilst a great idea in theory, in practice these procedures have been enormously complex and have led to many practical difficulties and problems.  Unscrupulous employees have been able to manipulate this to their advantage. 

The new 2008 Act will abolish the 2004 compulsory rules.  Instead, there will be a new semi-voluntary ACAS Code Practice.  Under this code employers will be required to raise and deal with issue promptly, not unreasonably delaying meetings or decisions and to act consistently.  If an employer fails to do these things, they will not, as is the case now, be deemed to have automatically unfairly dismissed the employee.  However, failure to observe the code will portray the employer in a bad light before the Tribunal and could lead to a finding of unfair dismissal.  The Tribunal would have to consider whether a failure to follow the code was unreasonable taking into account factors such as the size of the business thereby giving more leeway to small employers.

Extended Powers

Other changes are going to be made.  In unlawful deduction of wages or redundancy payment cases, Employment Tribunal’s powers will be significantly extended so that they can also award an additional amount to fully compensate the employee for any consequential financial loss they have incurred as a result of not receiving the original payment from their employer.  This would affect things like bank charges, interest or mortgage penalties that have to be paid by the employee. 

The enforcement regime for the National Minimum Wage Act will also be beefed up.  Enforcement officers will have new powers to compel employers to pay a financial penalty of 50% of their total underpayment of the national minimum wage.  The minimum penalty will be £100 and the maximum £5,000. This would have to be paid in addition to any arrears of wages to the employee. 

Not everyone will be pleased with the new rules when they come into force. The proposed date for their becoming law is currently April 6th 2009 and as at the time of going to press we have not heard otherwise.  However, as long as the new rules lead to greater fairness and to make the system easier to operate and understand for employers, then the new provisions are a welcome change. 

Author: David Malamatenios

Publication: London Chamber of Commerce Business Matters Magazine

Date: March 2009