The proposed repeal of the statutory dispute resolution procedures was welcomed by many people involved in human resources and employment law. But an employer or employee still risks substantial financial penalties if they drop their guard before 2009, when the new legislation comes into force. Jean Sapeta explains

Until the rules governing disputes are repealed, employers and employees must continue to follow the existing three-step procedures for disciplinaries, dismissals and grievances.

In addition to repealing these procedures, there are also proposals to abolish the fixed Advisory, Conciliation and Arbitration Service conciliation period. The aim of the disciplinaries, dismissals and grievances procedures and the fixed conciliation was sound - dispute resolution without recourse to tribunals. However, many felt that the sanctions imposed for failure to follow them were draconian, that disputes had become overly formalised and that the fixed conciliation period did not help settlement.

Financial sanctions

Although the procedures are to be repealed, they are to be replaced by other potential financial sanctions. If a process is set out in a statutory or Advisory, Conciliation and Arbitration Service code of practice and an employer or employee unreasonably fails to comply with the process, then a tribunal can increase or decrease any award it makes to the employee by up to 25 per cent.

While an increase or decrease of 25 per cent is a significant amount, this change is a marked softening of the current mandatory increase/decrease provisions.

Codes of practice

The Advisory, Conciliation and Arbitration Service provides guidance on handling disputes in its code of practice on disciplinary procedures. The current code refers to the procedures that are to be repealed and so is being substantially revised for reissue when the new system comes into force.

Besides the Advisory, Conciliation and Arbitration Service code, there are more than a dozen other codes of practice. The new law makes it clear that the relevant code of practice will be the statutory procedure to be followed in resolving a dispute of that nature.


The Employment Bill also tackles tribunals' various jurisdictions on equal pay; sex, race and disability discrimination; unauthorised deductions from wages; unfair dismissal; entitlement to a redundancy payment; breach of contract; breach of working time regulations; and newer jurisdictions relating to discrimination on the grounds of sexual orientation, religion or belief and age, as well as trade union rights.

Employee consultation

The new law also revives the significance of the Polkey case. This important decision established that an employee had a right to be consulted before being dismissed (except in exceptional circumstances). Consultation was required even if it would have made no difference to the decision to dismiss. So, a dismissal could be unfair purely on procedural grounds.

However, there was a softening element in Polkey: where an individual was found to have been unfairly dismissed for procedural reasons, the compensatory award could be reduced if the tribunal was satisfied that the employee would have been dismissed in any event, even if a proper procedure had been followed.

Technical breaches

Employers will also benefit from a decrease in financial exposure arising from a technical breach in relation to a grievance hearing. Hopefully this will allow all parties to concentrate on the real reason for the dispute rather than on procedural niceties.

Until the new law comes into force, both employer and employee must follow the existing statutory procedures for discipline and grievance - or risk the current draconian financial penalties.