Within the next few weeks the Advisory Conciliation & Arbitration Service (ACAS) will be producing its annual report for the year 2000/2001, showing yet further substantial increases in the number of complaints referred to it for conciliation. There was also a significant increase in applications to employment tribunals, where the number exceeded 100,000 last year for the first time.

When, in 1973, “industrial” tribunals were first given responsibility for new laws defining unfair dismissal (prior to this an employee’s only recourse was to complain of breach of contract in a civil court), they were intended to provide an alternative forum to the civil courts for the settlement of individual employment disputes that was “easily accessible, informal, speedy and inexpensive”. However, few with experience of employment tribunals would describe them in anything other than the opposite of such terms today, reflecting our increasingly legalistic society.

Good intent

Enter the new ACAS-administered scheme for the resolution of unfair dismissal disputes recently introduced in England and Wales. The guide to the scheme describes it as follows: “The intention is that the resolution of disputes under the scheme will be confidential, relatively fast and cost efficient. Procedures under the scheme are non-legalistic and far more informal and flexible than the employment tribunal. The process is inquisitorial rather than adversarial, with no formal pleadings or cross-examination by parties or representatives. Instead of applying strict law or legal tests… the arbitrator will have regard to the general principles of fairness and good conduct in employment relations including, for example, principles referred to in the ACAS code of practice ‘Disciplinary and Grievance Procedures’ (revised and re-issued in September 2000 and now including guidance on the new statutory right to be accompanied by a trade union official in such hearings) and the ACAS handbook ‘Discipline at Work’ which were current at the time of dismissal.”

Best guide

If you have not heard of this latter publication, order one now from ACAS Publications – it is not only one of the best guides they have ever produced, and a positive mine of accessible information on this fraught subject, but now one in which your failure to follow its provisions may be “taken in evidence and used against you” in this new arbitration scheme. Ignorance of its provisions will be no defence.

It should be emphasised that this is an arbitration scheme in which the arbitrator’s decision will be binding on both parties as a matter of law, having exactly the same authority as a court judgement. Entry to the scheme must be voluntary, by the agreement of both parties and such agreement must be recorded either by ACAS or by a compromise agreement.

The scheme is only intended for straightforward cases of unfair dismissal (mainly conduct, capability, and redundancy), not involving jurisdictional matters (such as whether the application is in time, or the employee has sufficient qualifying service) or complex legal issues. The employee must have an existing application to an employment tribunal, or grounds for such; complaints other than unfair dismissal will have to be pursued separately and if points of EC law or issues under the Human Rights Act 1998 do arise, the arbitrator may appoint a legal adviser to provide guidance.

The arbitration process will be confidential, relatively fast, cost-efficient, non-legalistic and informal and it is intended that hearings will normally last only half-a-day, compared to at least one day in most tribunal cases.

The confidentiality will refer both to the content of the hearing and to the award (the name given to the arbitrator’s report, whatever the outcome). ACAS will appoint the arbitrator, who will require both parties to produce a written statement of their case at least 14 days before the hearing; the hearing may be held in a local hotel, ACAS office or other agreed place. The written statement may require little more than copies of the parties’ application and response to the employment tribunal, together with any supporting documentation and a list of any witnesses.

Comprehensive list

There is a comprehensive list in the ACAS guide of those documents that should be considered for inclusion, and the parties will be expected to co-operate with any instruction given by the arbitrator in this regard. The arbitrator will set the date and location of a hearing, each party will meet their own costs, and any failure to attend a meeting without good cause may mean that the hearing continues in the absence of the employer or, in the case of an employee failing to attend, the dismissal of the case.

The process at a hearing will be

inquisitorial rather than adversarial with no swearing of oaths or cross-examination, and with the arbitrator conducting the questioning process of the parties and their witnesses to ascertain all the facts. Each party is entitled to be accompanied by a representative, legally qualified or otherwise, and will be liable for the fees and expenses incurred by any such representative they appoint. The admissibility, relevance and weight to be given to any material, whether oral or in writing, fact or opinion, will not be determined by strict rules of evidence but by the arbitrator.

Likewise, the law of legal precedent and the statutory tests of reasonableness, which are the disciplines that tribunals are required to follow, will be replaced by “general principles of fairness and good conduct in employment relations”, particularly as evidenced by the ACAS code of practice and the ACAS handbook in their current versions at the time of dismissal.

Arbitrators will be required to make use of their own experience of accepted standards in the workplace, giving the parties opportunity to comment on such standards, but will be explicitly precluded from substituting what he/she would have done for the actions taken by the employer. (To protect the reputation of employment tribunals from unwarranted criticism it should be pointed out that they too are not allowed to substitute their views of what would be fair conduct for those of the employer, unless the employer’s actions were wholly unreasonable.)

Central safeguards

In terms of justice, which for both tribunals and the new arbitration scheme must be the ultimate criterion, these safeguards are absolutely central. Otherwise, as Lord McCarthy has commented, “The great advantage of arbitration – its abiding glory – is that it is essentially hugger-mugger. No one knows what you did or why you did it for the most part and you do not even have to give your reasons.” When taken with the confidentiality of the arbitrator’s decision, and the absence of any general right of appeal on a point of law, the process will be inherently at least a little opaque.

Prior to the end of the hearing the arbitrator will seek the views of the parties on the issues of reinstatement or re-engagement, and on the information necessary to calculate an award, should such be relevant and necessary as a consequence of a finding of unfair dismissal. Having sought the views of the parties as to whether they have had sufficient opportunity to put their case and to respond to what the other party had to say, the arbitrator will probably allow a short adjournment before each party makes a short closing submission, highlighting the main points of their case. The arbitrator will not announce his/her decision at the hearing.

However, following the hearing the arbitrator will issue a binding “award” summarising each party’s case, the arbitrator’s main considerations, the decision and, where necessary, the remedy. The potential remedies are essentially the same as those available to an employment tribunal, namely reinstatement, re-engagement or compensation, and the last of these is calculated using the same rules and limits as a tribunal.

As has been indicated, other than in very limited circumstances the parties cannot appeal against an arbitrator’s decision on points of law and the only grounds on which a challenge will be entertained are if there has been a “serious irregularity” or the because the tribunal did not have substantive jurisdiction. In either event, the challenge must be made in the High Court or the Central London county court. This very limited opportunity to appeal is of course entirely in keeping with the spirit of binding arbitration.

Will this be the mechanism for reducing the tribunals’ ever-increasing workload, and will this provide the fast, informal, cost-effective and accessible process that the tribunal system now rarely can?

We shall see. There are some fascinating elements that are wholly new to this area of dispute resolution, not least the dropping of the adversarial approach and the introduction of confidentiality to both the proceedings and the decision. British and European politicians have proved very capable of providing an almost endless stream of new laws to govern working relationships, some might say providing yet more areas for dispute, so this quite radical innovation must be well worth trying.

So what of the employment tribunals? They have not been left out in this search for more efficient ways of handling their caseload and, equally as important, for increased penalties to deter weak cases and to eradicate time-wasting tactics.

Overriding objective

In changing the rules by which tribunals are required to conduct their cases perhaps the most significant innovation is the “overriding objective” to deal with cases “justly” by, wherever practicable, ensuring that the parties are on an equal footing, saving expense, dealing with cases in ways that are proportionate to the complexity of the issues and ensuring that the case is dealt with expeditiously and fairly.

This objective is to be applied when tribunals exercise any power or interpret any provisions under the rules, and the parties are under a duty to assist the tribunals in furtherance of this objective. This may all seem a little esoteric but, as a lay member sitting on employment tribunals, I can assure you that it will have a real impact on “case management” and will require both the parties and their representatives to be more disciplined in keeping to the subject at hand.

Likewise, case management will be greatly assisted by giving the tribunals more potent sanctions, including costs orders, to be applied to parties who fail to respond adequately to a tribunal chairman’s directions in the preparations prior to the hearing, on such matters as witness statements, further particulars and discovery of documents. An employee’s application to a tribunal, and an employer’s response to that application, may be struck out in whole or in part if the tribunal considers it to be “misconceived”, a new expression meaning without reasonable prospects of success.

Costs limit

The conduct of the parties or their representatives in their handling of the proceedings may in future lead to a costs order, with a limit of £10,000 on that order. The maximum deposit that can be ordered following a pre-hearing review has been increased to £500, again hopefully deterring a higher proportion of weak cases.

It is a difficult balance for any tribunal to strike between providing a genuine opportunity for a party to state their case, while doing so in a way that does not unduly delay the proceedings. This conundrum becomes of even greater significance when one realises that many applicants are only seeking for their cases to be properly heard, with an award of money often only of secondary importance.

Not satisfied with all this activity on both arbitration and employment tribunals, the government is already well advanced in the process of consulting on further radical reform in the resolution of individual employment disputes. Who said perpetual motion does not exist?