Changes in tribunal practice and procedure introduced by the Employment Rights (Disputes Resolution) Act 1998

United Kingdom
Changes in tribunal practice and procedure

The Employment Rights (Dispute Resolution) Act 1998 is intended to reduce the burden on tribunals. The number of employment disputes brought before tribunals has greatly increased in the past four years, largely due to new powers allowing tribunals to hear claims for breach of contract and of disability discrimination. Having taken more than four years to reach the statute books, almost all of the major provisions of the Act are now in force.

Arbitration is designed to be a quicker, cheaper and less formal alternative to tribunal proceedings. Under the Act, the Advisory, Conciliation and Arbitration Service (ACAS) will establish and promote a voluntary, binding arbitration scheme in unfair dismissal cases and, possibly, other employment disputes as well. ACAS have published a consultation document, the key features of which are:

  • both parties would need to agree in writing to refer to arbitration,
  • an arbitrator would not be an ACAS officer but would be appointed from a panel,
  • the parties may, if they wish, be legally represented,
  • procedural matters will be decided by the arbitrator, who will not have any power to order the production of documents or the attendance of witnesses,
  • the arbitrator will only be able to rule on the fairness of the dismissal, not issues of jurisdiction such as whether the applicant is an employee or whether a dismissal took place (these issues must be determined by a tribunal),
  • oral evidence may be given, but there will be no oaths or affirmations,
  • the arbitrator will adopt an inquisitorial approach to the hearing and will address questions to the parties and their witnesses,
  • the arbitrator's powers in terms of remedies are likely to be the same as those currently held by tribunals.

There is irony in these provisions, since the tribunal system was itself introduced as a cheap, speedy and informal means of resolving employment disputes. Both the law and the facts on which employment disputes are based have become increasingly complex, and it is doubtful whether an arbitration scheme can achieve its stated aims. Major concerns are:

  • The vast majority of tribunal claims are currently heard by a panel of three members, one of whom is a legally qualified chairman. The parties may be unhappy with non-legally qualified arbitrators applying legal principles and at the prospect of losing the 'jury' style tribunal format, under which the two lay members can - and sometimes do - outvote the legally qualified chairman. Under the current ACAS proposals, the parties will only be able to appeal on the basis of a 'serious irregularity causing substantial injustice' - but not on a point of law.

There is little indication of what will constitute a 'serious irregularity' which can be appealed. Parties may be dissuaded from arbitrating if they think that the arbitrator's decision will not be the end of the matter.

  • Applicants may perceive the arbitration system as being inferior to tribunal proceedings, and insist on taking the dispute to a tribunal, where it is likely that the employer will incur increased costs.
  • It is envisaged that arbitration proceedings will take place behind closed doors. Although privacy may be welcomed by some parties, applicants who wish to have their day in court may opt for the publicity of an open tribunal hearing.

Tribunal Procedure has been amended by the new Act, which introduces the concept of a 'legal officer', who will be empowered to deal with procedural matters such as listing, applications for witness orders, and preliminary issues. The Act also extends the powers of the tribunal chairman to hear cases alone and, in certain cases, to dispense with the need for a hearing - for example where both parties have given their written consent - or by hearing only the parties themselves - for example where the tribunal is bound on undisputed facts by the decision of a higher court. This flexibility is to be welcomed if, as anticipated, it reduces the time parties spend awaiting a hearing date.

Compromise Agreements concluded under Section 203 Employment Rights Act 1996 are used as a means of averting or settling employment disputes with individual employees. Prior to the introduction of the new Act, an employee wishing to validly waive his or her employment rights had to be advised by an independent qualified lawyer covered by a policy of insurance. The Act removes the qualified lawyer's monopoly on the provision of this service, and a valid compromise agreement can be concluded where the employee has received advice from a 'relevant independent adviser'. This category covers trade union officials or a member of an advice centre certified for the purpose as well as lawyers. This relaxation of the rules is to be welcomed, and will almost certainly result in increased use of the compromise agreement as an alternative to proceedings.

Internal Appeals will gain increased significance under the new Act, which gives the tribunal discretion to increase or decrease compensation to be paid to a successful employee depending on whether the employee used an internal appeal procedure to appeal against dismissal. If the employer fails to allow access to an appeal procedure, compensation could be increased. The tribunal is specifically directed to consider the chance that an appeal under the procedure would have been successful. It is hoped that these provisions will encourage employees to pursue internal appeals and employers to provide access to such appeals.

Breach of Contract claims have been heard by tribunals since 1994. However, in the Tribunal's decision in Pendragon Plc v Jackson it was held that the EAT had no power to hear appeals arising from breach of contract claims in the tribunal. This error has been remedied by the new Act, which specifically provides the EAT with the necessary jurisdiction.

Tribunals were renamed Employment Tribunals with effect from 1st August 1998, although we will apparently continue to refer to the Notice of Application and Notice of Appearance as Form IT1 and IT3 respectively.

Although a number of these measures seem superficially to be quite sensible, there must be concern even at this stage that they will do little to stem the tide of tribunal claims, particularly in view of the current White Paper proposals to reduce the qualifying period of service for unfair dismissal claims to one year.