Cheap and cheerful

first_imgAfter a three-year wait, the Acas arbitration scheme hasarrived to resolve unfair dismissal cases without the need for costlylitigation. But, according to Stefan Martin and Lucy Baldwinson, there are anumber of reasons why it is only likely to have a limited impactThe DTI finally launched its new Advisory, Conciliation and ArbitrationService (Acas) arbitration scheme on 21 May, promising to put an end to costlyunfair dismissal cases. It was published alongside various changes to theemployment tribunal rules of procedure, as part of a package to improvetribunal case management and to deter spurious claims. However, there are someserious limitations. Scope of the scheme First, it is important to note that only unfair dismissal cases will beeligible for arbitration. The scheme does not extend to any related oradditional claims that may form part of the same tribunal application. In, forexample, an unfair dismissal case on the grounds of sexual harassment, anyclaim under the Sex Discrimination Act 1975 would need to be settledseparately, referred to the employment tribunal, or be withdrawn. So, although unfair dismissal claims are the most common type of claim madeto the tribunal, they are often combined with other types of claim, which meansthat in many cases they’ll not even qualify for the scheme. Also, the scheme is not designed to resolve disputes concerningjurisdictional issues – for example, if a claim is out of time or if adismissal has taken place. It is also inappropriate in cases involving complexlegal issues or questions of EC law. Entry into the scheme The scheme is voluntary and will only apply if both parties have enteredinto a written “arbitration agreement”, either under a conciliatedagreement through Acas or a statutory compromise agreement. In addition to anarbitration agreement, the parties must sign a “waiver form”, whichrequires them to waive any rights they would have had if they had referredtheir dispute to an employment tribunal. And, importantly, once the parties havereferred their dispute to arbitration, they cannot return to the employmenttribunal. The arbitration agreement (together with the waiver form and any forms IT1or IT3) must be notified to Acas within six weeks of its conclusion. When avalid arbitration agreement has been accepted by Acas, the employer cannotunilaterally withdraw from the scheme, while any withdrawal by the employeewill constitute a dismissal of the claim. Alternatively, the parties can settle the claim at any stage of theproceedings. However, although the result of the procedure is binding, once theparties have agreed to use it, neither applicants nor respondents can becompelled to enter into it. Unfortunately, in many cases, relations between theparties may be such that agreement to use the scheme will be a remotepossibility. Pre-hearing procedure Following the acceptance of an arbitration agreement, Acas will appoint anarbitrator to the case. The arbitrator will arrange for a hearing to take placewithin two months of the initial notification (unless an agreement has beenmade between the parties to a purely written procedure). The parties must lodge a written statement of case with Acas at least 14days before the hearing, along with supporting documentation and, whereappropriate, a list of persons who will accompany each party or be called aswitnesses. The statement of case is intended to briefly set out the main particulars ofeach party’s case, which can then be expanded upon at the hearing. Thearbitrator has no power to order the disclosure of documents or the attendanceof witnesses but it can call the parties to a preliminary hearing to giveprocedural directions. Arbitration hearing One significant difference in using arbitration, rather than a tribunal, isthat an arbitration hearing and all associated procedures are confidential andconducted in private. Only the arbitrator, the parties, their legal advisersand witnesses may attend an arbitration hearing. In some cases, where applicant and respondent are keen to keep details oftheir dispute private, this fact is likely to provide a strong incentive to usethe procedure. However, in many situations, the threat of adverse publicity for an employercould give the applicant a powerful bargaining tool in negotiations, makingarbitration an unattractive option. At the hearing, the arbitrator will take the initiative in eliciting thefacts of the case and addressing questions to the parties directly. Again,unlike a tribunal hearing, there is no cross-examination and strict rules ofevidence and procedure do not apply. When deciding whether or not a dismissal is unfair, the arbitrator willadhere to the general principles of fairness and good conduct in employmentrelations (including, for example, the principles set out in the Acas”Disciplinary and Grievance Procedures” code of practice) rather thanby applying legal tests or rules. However, the scheme does provide for the arbitrator to refer to part X ofthe Employment Rights Act 1996, when deciding cases where it has been allegedthat dismissal is for an automatically unfair reason. Although these provisionsare intended to make the procedure less legalistic, in practice the arbitrator willusually rely on similar principles to those applied by an employment tribunalwhen deciding a case. Remedies It is here that the arbitration route is very similar to an employmenttribunal, as the remedies available and relevant conditions for their award arealmost identical to those of an employment tribunal. So, if the arbitratorfinds that a dismissal was unfair, he or she can make an order forreinstatement or re-engagement, if appropriate, or, make a compensation award. This will consist of a basic amount and a compensatory amount, which aresubject to the limits on a week’s pay (currently £240 per week) and the maximumcompensatory award (currently £51,700), which also apply to compensation forunfair dismissal in an employment tribunal. The arbitrator may also include a supplementary amount (not exceeding theequivalent of two weeks’ pay) in any award of compensation, where the employerprovided a procedure for appealing against dismissal but prevented the employeefrom exercising the right to appeal. If a dismissal is found to be unfair underEC law, the arbitrator will apply the relevant remedies under English law,where they differ from those set out in the scheme. Awards made by the arbitrator are sent to the parties after the hearing. Detailsof any award are kept confidential, although a general summary of cases heardunder the scheme will be published by Acas without identifying individualparties. Appeals There is no right of appeal from an arbitration decision, save in limitedcircumstances, including cases of serious irr- egularity, in relation to aquestion of EC law or concerning the application of the Human Rights Act 1998. In a recent survey conducted by IRS, almost half of the 62 employersquestioned welcomed the introduction of the scheme and stated they were likelyto use it as a means of resolving unfair dismissal claims. When the scheme was delayed last year (it was originally due to be inoperation by last summer), the overall reaction from both employee andemployers’ representative organisations such as the TUC and the IoD was one ofdisappointment. The main advantage of the scheme, as identified by employers in the IRSsurvey, was the possibility of a quicker and cheaper alternative to theemployment tribunal. The informality of proceedings and the confidentiality ofthe overall process are also thought to be advantageous in sensitive cases andwhere the parties are keen to avoid publicity. However, the scheme has been met with a mixed response from some quarters. Areport published by the Industrial Society suggests that the scheme may notoffer consistency or guarantee fairness in outcomes. The limited right of appeal and the lack of any power to order discovery orcompel witness attendance have been highlighted as disadvantages of the scheme.There is also uncertainty as to how claims will be dealt with, given thatarbitrators are not required to follow legal precedent or the statutory testsof unfairness. Also, as we have outlined above, the fact that the scheme only applies to”pure” unfair dismissal cases and is voluntary is likely to limit itsimpact. In terms of the cost of pursuing arbitration, there is a danger that thescheme could become as expensive for the parties involved as a tribunal case.This is because the parties are permitted to have legal representation atarbitration hearings and cases still involve preparing a written statement ofcase with supporting documentation, as well as organising witness attendance,where appropriate. How will scheme work in practice? Acas estimated that the scheme would deal with 1,000 unfair dismissal casesin its first year of operation. Comparing this figure with the 52,791 cases ofunfair dismissal that were reported by Acas for 1999-2000, it looks as if thescheme will only be able to relieve the tribunal system of just less than 2 percent of claims. This is a disappointing figure in terms of the Government’s intentions forthe scheme to help unburden employment tribunals. Recent press releases issued by Acas have highlighted the scheme’s successesin terms of public satisfaction, highlighting its advisory function and its keyrole in assisting trade unions and employers to achieve voluntary unionrecognition agreements. It remains to be seen how popular its arbitration scheme will be now it hascome into force. Employers’ enthusiasm for an alternative to the tribunalsystem should be tempered with a degree of realism. At first sight, the scheme appears a good option for small, straightforwardclaims where both parties are keen to avoid the publicity and formality of atribunal hearing. But, bear in mind that some applicants are unlikely to giveup the leverage of potentially embarrassing publicity. However, employers must not lose sight of the disadvantages: – Limited predictability, due to the lack of any requirement to follow legalprecedent – Expense – potentially as costly as the tribunal system – No right of appeal. In this light, the case for Acas arbitration appears weak. Stefan Martin is a partner and Lucy Baldwinson a professional supportlawyer at Allen & Overy Acas and tribunal main differencesThe main differences between the Acas arbitration scheme and employmenttribunal procedure:– Arbitration only covers unfair dismissal cases with no jurisdictionalpoints to be resolved– Arbitration is entirely voluntary– Arbitration hearings are conducted in private, whereas tribunal hearingscan be heard in public– Arbitration hearings are inquisitorial in approach, with no scope forcross-examination, unlike the adversarial system in the tribunal– Strict rules of evidence and the application of legal precedent andlegislation, as applied in tribunal cases, do not apply to arbitration– Unlike the tribunal, arbitrators have no power to order interim relief orcompel discovery of documents or the attendance of witnesses– Right of appeal in arbitration cases is limited compared with tribunalcases.The changing role of AcasAcas was established in 1974 as an independent industrial relationsorganisation (originally known as the Conciliation and Arbitration Service) andlater became a statutory body under the Employment Protection Act 1976. Acas iscurrently directed by a council, which consists of employer, trade union andindependent members and its chair, Rita Donaghy.The services offered by Acas include:– Preventing and resolving collective industrial disputes throughconciliation, mediation or arbitration– Resolving individual disputes over employment rights (Acas is under astatutory duty to attempt to conciliate settlements of disputes where a claimhas been made to an employment tribunal) – Providing information and advice on most employment matters via acountry-wide telephone enquiry service.Acas’s general statutory duty was recently revised by the EmploymentRelations Act 1999 and the reference to its role in dispute resolution wasdropped in favour of a wider all-encompassing duty to “promote theimprovement of industrial relations”.In 2000, Acas’s role was extended by Schedule A1 of the Employment RelationsAct 1999 to include helping employers and unions to resolve differences over astatutory request for union recognition. From 21 May 2001, Acas’s services were expanded further by offering the newAcas arbitration scheme as an alternative to the employment tribunal in unfairdismissal cases. Comments are closed. Cheap and cheerfulOn 1 Jun 2001 in Personnel Today Previous Article Next Article Related posts:No related photos.last_img

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