New proposals to radically reform employment tribunals were announced on Friday by the DTI Employment Relations Minister Alan Johnson.

Key proposals include:

• organisations which do not have dispute resolution procedures in place – or do not use them when workplace disagreements arise – to have arrangements for managing such disagreements
  
• a new, charging regime for use of the employment tribunal system to reduce the cost burden on the taxpayer. Exemptions would apply to those on benefits and in cases of genuine need.

The proposals – outlined in a Government consultation document published on Friday – are designed to promote conciliation in the workplace rather than litigation and reduce the strain on the employment tribunal system and its users. Tribunal applications have increased threefold between 1991 and 2001.

Announcing the proposals, Alan Johnson said:

“These are progressive proposals for reform which will create a modern dispute resolution system.

“The Government is convinced that many disagreements can be successfully resolved through better procedures in the workplace between an individual and their employer but equally a tribunal system designed to cope with increasing caseloads is essential.

“Over three in five of applications to tribunals come from applicants who have not attempted to resolve the problem directly with their employer in the first instance. Many of the disputes concerned are such that they could potentially have been resolved before they get to the tribunal stage. They are often minor disagreements that escalate.

“That is why the Government is proposing that an in-house system for dispute resolution should be a requirement in all businesses that do not already have one.

“The cost to a business of defending a tribunal claim is considerable. The cost of defending a claim and replacing a member of staff can typically exceed £5,000 – irrespective of the management costs associated with defending such a claim and damage to workplace relations.

“A proper dispute resolution procedure in the workplace could resolve disagreements before they impact upon the employer or employee.”

The Government is also proposing that tribunal users contribute to the cost of dealing with their case – otherwise the increase in caseload will mean the cost of the tribunal service will continue to fall entirely on the taxpayer without a radical change in the way that it operates.

Alan Johnson continued:

“Charging a modest amount would bring a faster and more customer-focused service and also raise funding for improvements in the tribunal and conciliation process.

“At least a quarter of all tribunal applications which come from those who are on benefits or in genuine need will be exempt from any charges. These people will still have access to justice.”

The Government will also consult on a number of other proposals including:

• increasing awards at employment tribunals where a basic new dispute resolution procedure has not been used by the employer – with awards being reduced where an employee has not used the grievance procedures before applying to the tribunal;
  
• better enforcement and other improvements to the existing statutory requirement for employers to provide a written statement of employment terms to employees (currently businesses with less than 20 employees are exempt);
  
• limited extensions to the time limit for lodging tribunal claims where an internal disciplinary or grievance procedure is still in play – in order to facilitate resolution in the workplace;
  
• introducing a fixed period of conciliation to focus parties’ minds within that period on whether or not they were interested in reaching a settlement;
  
• a limited amendment to unfair dismissal legislation to allow employment tribunals to disregard minor procedural errors by employers, provided such errors have made no difference in practice and the dismissal is otherwise fair;
  
• a fast-track system to be introduced for certain jurisdictions (such as unlawful pay deductions and breach of contract);
  
• tribunals to be allowed the discretion to award wasted non-legal costs (such as a party’s overnight expenses) in circumstances where a party has acted vexatiously;
  
• allow the Presidents of the Employment Tribunals to issue practice directions, in order to achieve greater consistency throughout the country.

The Government has not put forward any proposals to introduce cost recovery as a general principle, nor does it intend to do so.

Alan Johnson added:

“The consultation makes clear the need for change. At the forefront of the Government’s thinking are the fundamental principles of access to justice, fair and efficient tribunals and a modern, user-friendly public service.”

The Government’s consultation document, Routes to Resolution: Improving Dispute Resolution in Britain, was published on Friday and is available on the DTI website at: www.dti.gov.uk/er/individual/et.htm

(The Government announced a review of employment dispute resolution on 22 June 2001).