E-BULLETINS

E-bulletin 22
Demise of Dispute Resolution Procedures
1)Demise of Dispute Resolution Procedures
2)Employers Beware Before Dismissing an Employee
3) Case Watch – Dismissal for Failing to Agree to Include Restrictive Covenants into an Agreement Fair or Not?
1) Demise of Dispute Resolution Procedures
    
The Employment Bill responds to the Gibbons Review of Dispute Resolution by repealing the much-maligned dispute resolution procedures.

The procedures which have bamboozled employers since their inception have precipitated calls from business groups who have warned the government must think radically to cut red tape in the employment tribunal system.  The new procedures have effectively meant that business have had to be hand held by experts when it comes to disciplining a worker or dealing with a grievance.
The Bill would also mean tougher penalties for rogue employers, and would boost the powers of employment agency inspectors.
Unlimited fines would be introduced for businesses not paying workers the minimum wage, and agencies which try to exploit workers and undercut legitimate businesses.

The Gibbons Review admired the aims of the dispute resolution procedures but labelled them ‘prescriptive’ and ‘inflexible’. Quite rightly the procedures were slated for compelling employers to use a formal procedure when informal procedures would suffice.

The Review encourages mediation and recommends that there should be new incentives to comply  with a new simple set of guidelines. Also the review suggests the ‘maintaining and expanding’ of the tribunal’s discretion to consider ‘reasonableness’ of behaviour and procedure when making awards and cost orders.  

The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001 (SI 2001/1171) dictate the present regime for costs and rule 40(2) and (3) deals with the manner in which proceedings are brought or conducted.
A two-stage test applies when a tribunal is asked to make a costs order in respect of the manner in which proceedings have been brought or conducted:
•The tribunal must consider whether the party's conduct falls within rule 40(3); either the party (in bringing proceedings) or the party or their representative (in conducting proceedings) has acted vexatiously, abusively, disruptively, or otherwise unreasonably, or that the bringing or conducting of proceedings has been misconceived.
•If it does, the tribunal must consider whether it should exercise its discretion to make a costs order.
It is possible for one side in tribunal proceedings, to make an offer to the other side and then attempt to ask for costs under the auspices of the above Rules but this is uncommon. The new proposal will perhaps make this type of requests easier to obtain and theoretically increase the number of negotiated settlements. In practice, however many of the claims which arrive at the door of the tribunal are far from clear cut and therefore, settlement is often unlikely.
The review also suggests the challenging of all employer associations to commit to internal negotiation.
Another new proposal will be a ‘fast track’ system to deal with the less complicated issues such as, redundancy payments and other monetary claims where the judge alone will sit and without the need for a full hearing.
The review also suggests an adequately resourced helpline. ACAS has recently been awarded an increase in funding in order to facilitate settlement but it is unclear how this work and whether it would give legal advice.
It has been suggested that perhaps the helpline will be part of some application to a tribunal and that the whole application process may be transformed.
Interestingly, it is suggested by the Review, that employment law in general, is too complicated but not surprisingly no suggestions are made on how to modify it.
The appeal stage of the dispute regulations has been criticised as well as the ability of employees to enter a grievance after dismissal.


 
2) Tribunal Cases up as Lawyers Blame Alan Sugar's, 'You are Fired'! Mentality
Employers Beware Before Dismissing an Employee.

Last year the original TV business guru Sir John Harvey-Jones launched a blistering attack on The Apprentice star Sir Alan Sugar.
In the ‘Western Mail’ Sir John accused Sir Alan of 'exploiting' his power on the show by humiliating contestants trying to win his approval.
The former chairman of ICI claims Sir Alan has used 'bullying' tactics to whittle down the business reality-show contestants, who compete for a six-figure salary with the entrepreneur's company, Amstrad.
Sir John bemoaned, 'It's easy [to do that]. My experience of life is that you get the best out of people by encouraging their self-belief.'
‘Sir Alan and TV gurus, such as celebrity chef Gordon Ramsay and The X Factor judge, Simon Cowell typify a growing trend of high-profile stars using aggressive management styles on TV’, said Sir John.
The Thrust of Sir John’s argument was that it is better to encourage potential rather than fire on the spot. There are other compelling reasons to avoid dismissing employees, however and the most important one is the vulnerability of the employer to unfair dismissal claims.
If an employer loses an unfair dismissal case they typically may have to pay out;
•A statutory award of £250 or more,
•A basic award comprising of, on or after February 10th 2008, a maximum of £310.
•1/2 a week's pay for each year worked before 22nd birthday;
•1 week's pay for each year worked between 22nd and 41st birthday;
•1 1/2 week's pay for each year worked after 41st birthday
•and Compensation for salary lost.
From 1st October 2004, (Dispute Resolution) Regulations introduced a new statutory minimum procedures for regulating dismissal (and also disciplinary and grievance) procedures. The rules also provide for sanctions if the specified minimum procedures are not followed - a dismissal will be automatically unfair if the employer did not adhere to, at least, the minimum specified procedures (assuming of course that the employee had sufficient continuous employment to qualify) and any compensatory award which a tribunal orders the employer to pay will be increased by between 10% and 50%.
The rules on procedure are so complicated that the employer must seek professional advice on how to deal with the procedural aspects of a disciplinary issue if he/she is not to fall foul of the law. The chances are that if advice at an early stage was not sought, the employer will have to pay something out to settle a Claim.
Considering the above factors an employer may well decide to settle any outstanding dispute rather than fight it. The Government is keen to cut back on taxpayer expenditure on employment tribunals and for that reason has thrown money at conciliation.
The Secretary of state for business and enterprise John Hutton has announced that the government will be awarding up to £37 million to employment relations specialist Acas, in an attempt to prevent workplace disputes going to employment tribunals unnecessarily.
The extra funding, spread over three years, forms part of the process designed to simplify the dispute resolution system and it is thought that it will allow Acas to improve its helpline and advice services. Acas will also look to provide more services that encourage good employment relations and prevent disputes from happening at an early stage.
These changes coincide with provisions made in the Employment Bill, currently before Parliament, which aims to cut red tape and deliver quicker decisions on more straightforward claims. Estimates show that this approach could save businesses more than £175 million a year.
<a href=http://www.hrzone.co.uk/cgi-bin/item.cgi?id=179133&d=1064&h=387&f=388&dateformat=%25o%20%25B%20%25Y.>HRZONE</a>

In all fairness the ACAS site could not offer more advice and tips for encouraging a settlement between parties. There is even a conciliation ,a href=http://www.acas.org.uk/conciliationvideo/index.htm>video</a> to be watched. One word of warning, do not take legal advice from ACAS, excellent as they may be they are not legal advisors.

It is also worth checking your company insurance policy as many contain free legal advice in the form of a call centre and often cover representation costs.

What Can You do Instead of Fighting a Draining Unfair Dismissal Claim;

a)Take legal advice
b)Mediate with Claimant
c)Offer a settlement if fair or

Think about taking some legal advice and cut your losses with an agreement – you can create an enforceable agreement by signing a  <a href=http://www.charlesprice.net/precedents.html>Compromise Agreement</a> or if ACAS have been involved a COT 3 form which can legally bind the parties. It is important that a solicitor or barrister is consulted if these agreements are to be made watertight.
As appearing on HRZone


3) Case Watch – Dismissal for Failing to Agree to Include Restrictive Covenants into an Agreement Fair or Not?

In Willow Oak Developments Ltd t/a Windsor Recruitment v Silverwood, UKEAT/0339/05/DA, 20 October 2005

An EAT had to consider whether dismissal for refusing to sign new restrictive covenants could be potentially fair for some other substantial reason. The situation was complicated by the fact that the Claimant argued that the restrictions proposed were too wide and potentially unenforceable.

The EAT gave the following guidance to assessing fairness in cases such as this:
•Where the proposed covenants are plainly unreasonable and put forward as "all or nothing", or not severable, this may make it easier for a tribunal to conclude the dismissal was unfair.
•Where the proposed covenants are arguably unenforceable and/or severable there will be a greater need to consider the employer's approach, in particular the amount of time given to consider the proposals and any opportunity for the employees to take legal advice.
•If the covenant is plainly reasonable then the tribunal will still need to consider the fairness of the procedure.
The EAT did not consider the tribunal's alternative findings on the fairness of the dismissal to be irremediably flawed by its wrong principal conclusion on SOSR. The tribunal's conclusion that the dismissal was unfair could encompass two different scenarios:
•The covenants were enforceable, but the unfairness of the procedure rendered the dismissal unfair.
•The covenants were arguably unenforceable and, this being a complex contract, it was not reasonable to ask anyone to sign it in the circumstances in which Windsor had asked its employees in this case.
The appeal would be dismissed.
Provided the employer has genuine business reasons for the change, it will be able to establish a potentially fair reason for dismissal (SOSR). The reasonableness of the proposed covenants is just one of the factors that would be looked at along with all the circumstances, including whether a fair procedure had been followed.


the EAT held that dismissal for refusing to sign new restrictive covenants could be potentially fair for some other substantial reason, notwithstanding that the covenants were unreasonably wide and potentially unenforceable. Whether the covenants were reasonable would be relevant to the fairness of the dismissal, taking account also of the employer's behaviour in seeking to introduce new terms.

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