Managing disputes: introduction

Section 1 of the Personnel Today Management Resources one stop guide on managing disputes. Other sections.

October 2004 marks a new era for employers and employees in the field of dispute resolution. On this date, the next pieces of the Government strategy to reduce employment litigation will slip into place.

For the first time, it will become a legal requirement for both parties in the employment relationship to follow set procedures when dealing with disputes - whether for disciplinary action and/or dismissal by the employer due to unsatisfactory conduct or performance, or a grievance raised by an employee to do with their work, working conditions or relationships with colleagues.

These statutory procedures¹ set out the requirement in most cases for: a written statement (whether of the grievance or the disciplinary issue); a meeting between both parties; and a further meeting to allow the employee to appeal against the employer's decision if required. While this may not represent a huge departure for larger organisations with an HR function, the Government expects it to make a big difference to small employers whose approach to disputes can be more haphazard.

Managing discipline

Discipline and dismissal come second only to drawing up contracts in the top 10 problems with which employers contact the telephone helpline of the Advisory, Conciliation and Arbitration Service (Acas).

According to Acas: "Disciplinary rules and procedures are necessary for promoting fairness and order in the treatment of individuals and in the conduct of industrial relations. They also assist an organisation to operate effectively. Rules set standards of conduct at work; procedures help to ensure that the standards are adhered to and also provide a fair method of dealing with alleged failures to observe them."

Increasingly, the tribunals have encouraged employers to adhere to the principles of natural justice when disciplining their people - such as the fundamental human right to a fair hearing - with the emphasis on helping and encouraging improvement among those whose conduct or performance is unsatisfactory, rather than on imposing sanctions.

The last important change in the fieldtook place with the introduction, in 2000, of the employee's right to be accompanied at disciplinary and grievance hearings by a fellow worker or trade union representative.

In September 2000, Acas published its Code of Practice on Disciplinary and Grievance Procedures in light of the new law. While the code is not legally enforceable, it can be cited as evidence at an employment tribunal, and the tribunal can take into account any provisions of the code that appear to be relevant when deciding whether an employer has acted reasonably in dismissing an employee.

According to a survey of employers in 2001:²

Absenteeism and performance were the most common disciplinary offences (see figure 1 below).

Managing grievances

The draft regulations on procedures define a grievance as "a complaint by an employee about action which his employer has taken or is contemplating taking in relation to him". It also covers the actions of a third party, including other employees, in cases where the employer could be vicariously liable, such as harassment.

A survey in 2002³ among organisations with an average workforce of more than 3,000 showed:

The scale of the problem

While most employers and employees recognise that disputes are best dealt with and resolved within the workplace, research suggests this does not always translate into practice.

A study of employment tribunal applications for 1997-98⁴, for example, showed that virtually half of them had come from workplaces with no written procedures, 14 per cent from workplaces with written procedures that had not been used, and 7 per cent from workplaces where written procedures had been only 'partly' followed. This means just 30 per cent of applicants had had the benefit of a written procedure followed all the way through. Since 88 per cent of workplaces with 25 or more employees do have written procedures, the implication is that tribunal applications are disproportionately concentrated among workplaces without consistent procedures.

Benefits versus costs

The new procedures grew out of the need to take the strain off the employment tribunal system, which is ill-designed and equipped to deal with industrial disputes on the current scale. In 2002-03 there were 94,453 applications.⁵ Although this figure was lower than the 2001 figure of 104,000, it still represents a huge cost to the taxpayer, for whom each application costs an estimated £540.

If the new procedures are fully complied with, the number of tribunals would be expected to fall to 73,000 to 76,000 the year after they come into force.⁶

However, the Government has worked hard to push the benefits of the new procedures for employers and employees.

The costs, meanwhile are split between the one-off expense of introducing the new procedures or checking that existing procedures comply (thought to range from half an hour of management time to four hours) and the recurring costs of using the procedures to deal with disputes. Those that need an appeal hearing are assumed by the DTI to take four to six hours of manager time and a similar amount of employee time. A close look at the procedures, however, makes it hard to see how this could be predicted with such confidence (see Section 3 ).

The Government recognises that small firms will bear the brunt of the implementation costs, and so "recognises the need for user-friendly guidance and standard forms".

The role of Acas

The Advisory, Conciliation and Arbitration Service (Acas) has long held a key role in managing disputes and keeping employers and employees out of the tribunal. More than three-quarters of applications to tribunal are defused at the Acas conciliation stage - and the proportion is rising.⁷ And its arbitration scheme for unfair dismissal and requests for flexible working is attracting a small but increasing number of clients each year.

The Government thinks the conciliation process can be made more efficient. It has issued draft regulations that would limit the amount of Acas conciliation time in each case to seven weeks for 'fast-track' claims and 13 weeks for most others (discrimination and equal pay claims are to be excluded). Conciliation after this period would only be allowed in exceptional circumstances. This is intended to concentrate the minds of the parties on reaching an agreement as quickly as possible, and by limiting the time available, to save on tribunal resources spent preparing for hearings that are then settled at the last moment.

The Acas Code of Practice on Disciplinary and Grievance Procedures in the workplace is also of central importance in the outcome of disputes reaching tribunal - as well as providing practical guidance, whether that guidance has been followed can be taken into account by tribunals when deciding if a dismissal was fair.

In January 2004, Acas issued a new version of its code to include the statutory procedures and also to bring it up to date and make it more user friendly, with small firms specifically in mind. There are some substantive changes, too, such as making a clear distinction between disciplinary action for misconduct and that for poor performance. In the case of poor performance, it has put greater emphasis on planning to improve performance as a 'more appropriate approach'.

A significant addition is a list of 'core principles of reasonable behaviour' (see Section 5 ) to help people understand in plain language what is important for a fair and legal dismissal.

A measure of confusion

Though the Government wished to legislate with a light touch, keeping things simple and appealing to common sense, the new procedures are not without their critics.

The situation is complicated, for example, by another new statutory provision which reverses what has become known as the Polkey principle and allows for a 'no-difference' defence to unfair dismissal. This means an employer's failure to follow its own procedures, above and beyond the statutory minimum disciplinary procedure, must be disregarded by the tribunal if it makes no difference to the decision - ie, even if the employer had followed internal procedure, the employee would still have been sacked. Whether additional disciplinary actions would have prevented a dismissal is likely to be a familiar bone of contention in tribunals in the future.

One thing is clear, though: if the employer does not follow the statutory procedures in a dismissal, the tribunals will find automatic unfair dismissal. And if the employee has not written to the employer prior to presenting a complaint, he or she will not be able to take that complaint to a tribunal. Furthermore, if either party does not complete the relevant procedure - whether it be disciplinary or grievance - the tribunal must increase or decrease the compensation, depending who is at fault, by at least 10 per cent and up to 50 per cent.

Some have predicted this big-stick approach will spawn new disputes rather than resolve existing ones as employers and employees go over minute details in an effort to defend or secure a claim. Has a grievance letter been effectively submitted? What exactly constitutes legal grounds for exemption from the procedures? When is it not reasonably practicable to attend a pre-arranged meeting?

It seems unlikely that the procedures will in themselves be enough to keep the parties out of the tribunal. More crucial is that employers and employees approach the procedures, and make use of the dialogue they encourage, in a spirit of conciliation, common sense and compromise.

References

1 Employment Act 2002 (Dispute Resolution) Regulations 2004 SI 2004/752

2 Managing Discipline at work

3 Don't nurse a grievance: resolving disputes at work

4 1998 Survey of Employment Tribunal Applications (SETA98)

5 Acas Annual Report, 2002-03

6 Full Regulatory Impact Assessment of the Statutory Dispute Resolution Procedures, January 2004, DTI

7 Acas Annual Report 2002-03

Table 1: Quantified and unquantified costs and benefits