The new arbitration scheme from Acas is designed to stem the rising tide oftribunal cases. But there are fears that they could actually lead to anincrease in formal procedures. By Philip WhiteleyFrom this autumn an employer embroiled in a dispute with a member of staffwill have a genuinely new option. Some 18 months late, the individualarbitration scheme will finally come on stream. Whether large numbers of aggrieved employees will shun the limelight of thecourts and disappear into a private room to settle their differences remains tobe seen. Arbitration will be binding and confidential with no chance of appeal. It isnot a soft option. The maximum £50,000 limit on compensation available in tribunalclaims will apply, and arbitrators will be able to order reinstatement of adismissed individual. But it is closer to the original tribunal concept of an informal settlementwithout reliance on legal precedents. Arbitration service Acas, which devisedthe scheme, is now quietly confident it will take cases out of the courtprocess. It badly needs to. With the quadrupling of the maximum award for unfairdismissal and the growth of employee rights, cases have soared. Latest figuresindicate that there were 164,000 cases lodged between April 1999 and March2000, compared with around 125,000 for the year before. The tribunal service has been busy creating eight new tribunal rooms forLondon and the south-east at a new site in Watford. Hearings started at the newrooms this summer. Trade unions have been using the growing number of individual rightspragmatically to compensate for a loss of collective force. Last December theTUC proudly highlighted the record £14.3m it won in compensation for its membersin 1999. There is political pressure for the scheme to work. Next year is generalelection year and the Conservatives are keen to show that Labour has overseengrowing workplace confrontation. As well as the increase in individual cases,TUC figures in June showed a sharp increase in ballots for industrial action,which were seized on by Opposition spokespeople. And there are indications that employers and unions are prepared to give ita fair wind. Some employers may find the absence of an appeal unattractive,says Jerry Gibson, assistant director operations for Acas. “But theinformality of the hearings, the fact that it is an industrial relationssolution as opposed to a legal decision-making process, and the fact that it isconfidential may be attractive. That is the view that I am getting from bothsides of industry and from the legal profession.” He adds: “Our view is that if you cannot settle the claim in some waythen there will be a tribunal hearing or arbitration. Both of those havevarious factors; some may make one system more attractive than the other.”The legal profession is getting in on the act, too. The Employment LawyersAssociation has set up a working party on alternative dispute resolution toinvestigate its potential benefits and consider the types of claims best suitedto it. The group, consisting mainly of lawyers and professional mediators aswell as an Acas representative, aims to come up with a practical ADR policy ofits own. Julie Quinn, deputy chair of the ELA and senior associate at law firm Allen& Overy, comments: “Currently, the majority of cases brought inemployment tribunals are the result of employer/employee relationships havingirreparably broken down. ADR will give both parties an opportunity to resolvetheir disputes more quickly in a private and less adversarial forum.” Some commentators see a danger, however, that claimants could pursue the newprocedure as an alternative to an out-of-court settlement, rather than as areplacement for tribunals. Willy Coupar, director of the Involvement & Participation Association,and chair of the DTI’s Partnership Fund, argues that there could be an increasein formal procedures, not a fall. “A very large number of complaints never get to tribunal,” hesays. “They are either resolved through Acas conciliation, are withdrawnor are settled elsewhere. It is likely that the arbitration process will drawin many of the cases presently resolved elsewhere.” He points out that the threshold for a case to cross before reaching courtis higher than that for an arbitrated settlement. “There are issues likethe balance of probability of success; how much financial support you have, andthe willingness of people to grind it out.” The reason for the surge in cases is not so much to do with the state of thelaw or the attraction of tribunals, he argues, as much as the fact that theemployment relationship has been individualised, and people are more accustomedto dealing with lawyers. “Thirty or 40 years ago, for 95 per cent of the workforce, the ideathat the law could be used to resolve workplace matters would never havecrossed their minds. They would have thought only of a trade union,”Coupar says. “Now, many more people are familiar with the law; more have haddivorces and they have bought houses. Lawyers are far more part of everydaylife.” Around one million people each year seek help from a Citizens’ Advice Bureauabout a problem at work. “You ain’t seen nothing yet in terms of thegrowth of use of the law,” says Coupar. “Growth will continue.Arbitration will add another option.” Elaine Aarons, chair of the ELA and an employment partner at Eversheds,points out that people now seek legal advice at an early stage in the process,whenever there is a workplace dispute. “Far more cases involve lawyers on one side or the other – it used tobe the minority, now it is the majority,” said Aarons. “One of theparties is going to take legal advice at an early stage, and the advice theyare going to get is that there is an inevitable unpredictability in the outcomeof arbitration.” The uncertainty is caused by the absence of legal precedent. Employers willhave to balance legal fees of perhaps £5,000 to £10,000 against maximum unfairdismissal compensation of £50,000, and gauge whether the pay-out is more orless likely in a tribunal. “Also, it is very often the case that one of the parties actually wantsthe matter to be heard in a public forum, because they want to clear theirname,” says Aarons. “An employee often sees publicity as one of thestrongest cards, as it can be potentially damaging to the employer’sreputation.” Coupar advises Acas to target its new procedure at the disputes for which itis most suited – primarily those such as contractual and severance issues. Inthese cases matters are primarily factual, rather than a test of reasonableness,and can benefit hugely from an independent arbitrator. Case study: An individual solutionMany employers are realising the way to deal with the tribunal problem isthrough a fundamental review of employee relations, rather than tinkering withgrievance and disciplinary procedures.An analogy can be drawn with managing customers, where complaints proceduresare used to improve service. Similarly giving a fair hearing to aggrieved staffcan inform and help the management of others – a point underlined in Acasguidance.Armed services caterer Naafi has taken a lead. An agreement finalised inJune with the union MSF allows for binding arbitration in collective issues asan alternative to industrial action, and an extra high-level review of eachcontested case before it reaches tribunal.If the MSF, having reviewed the cases, agree that the process has beenhandled effectively they undertake not to represent the employee at a tribunal.The organisation recognises it cannot waive an employee’s statutory right toseek redress in tribunals, but the objective is to minimise the number of casesgoing that far.”We have one eye on what we expect to be an increasing tendency to goto tribunal,” says Naafi HR director Mike Nicholson. “We have seen anincrease in numbers because awards have gone up to £50,000; with discriminationcases there are no service length criteria. We saw there was potential for thevolume of cases to increase and the cost and time could be very large.”Nicholson accepts there have been times when managers have been too ready todismiss someone. “What we want is consistency of treatment. With the bestwill in the world, when there are different cases in different parts of theworld, there will be differences. This is to act as a filter; to look at a casein relation to other cases.”But he adds, “We’re not just talking about problem staff anddisciplinary cases. We see this as integrated into the management processes. Wedo not believe that strikes have any place in modern, forward-thinkingbusiness. On the other hand bullying, harassment, and treating staff badly haveno place either.”Nicholson would look favourably at statutory arbitration in the event ofNaafi’s internal procedures failing to resolve a dispute. “We wouldcertainly consider using that, though our whole emphasis is on trying toresolve the matter internally.” Before pointing the finger at statutory procedures and demandingrefinements, employers might reasonably be expected to follow Naafi’s lead inensuring that their own processes honour the principles of fairness. Previous Article Next Article Related posts:No related photos. Keeping it out of courtOn 1 Sep 2000 in Personnel Today Comments are closed.