Following the launch of a government review of the UK's employment dispute resolution procedures, HR Zone business editor Dan Martin asks experts what needs to be done to improve the process.

The rules

More workplace disputes should be resolved internally within organisations, the government claimed in October 2004 as it unveiled a range of measures focused on driving attention away from using costly and often adversarial employment tribunals.

With the deliberate intention of making it harder for individuals to take their employers to an external hearing, ministers pledged that the regulations would ensure most disputes were dealt with by internal management thus reducing the cost on employers and maintaining workplace morale. On 1 October 2004, the day the rules came into force, ministers claimed a 34,000 – 37,000 annual reduction in the number of tribunal claims would save the taxpayer up to £34m per year.

The regulations made it mandatory for every UK employer to follow statutory discipline, dismissal and grievance procedures by introducing a minimum three-step process in the form of written statements, meetings and appeals.

New tribunal rules of procedure were also implemented including a new pre-acceptance process, the use of default judgements, increased case management and the ability of tribunal chairs to strike out claims in appropriate circumstances.

But just over two years on since the introduction of the new rules, official figures have shown 115,000 tribunal claims have taken place this year, up 30% on 2005, suggesting that laws trumpeted as beneficial to employers and employees alike have been far from successful.

As a result, the government recently announced that the whole dispute resolution process is to be reviewed.

The review

"We must make the employment disputes system work better, both for business and employees," trade and industry secretary Alistair Darling proclaimed on 7 December as he launched the review. Following informal talks between ministers, trade unions and business groups over recent on the issue, former Powergen executive Michael Gibbons has been tasked with reviewing the options for simplifying and improving all aspects of employment dispute resolution.

Evidence that the rules haven't worked didn't take very long to come to light. As with much government legislation, much of the complaints have come down to the old favourite of red tape. Confederation of British Industry (CBI) research released in 2005 showed three-quarters of employers had encountered additional red tape because of the new reforms.

A year on from their research, burdens associated with the dispute resolution changes is an issue which still concerns the CBI. The organisation claims that because employment tribunals automatically find a dismissal unfair if an employer has not followed all the steps detailed in the statutory dismissal procedures, bosses are concerned at ensuring all areas are covered. "A greater focus on the procedure to follow rather than the substance of any grievance has developed," says Richard Wainer, principal policy advisor at the CBI. "Employers feel they have to dot all the Is and cross all the Ts due to a fear of being seen as not correctly following the statutory procedures." He believes that many organisations have been forced to instigate inappropriate formal procedures over a dispute which could have been easily settled informally through a simply apology, something that was legal before October 2004.

The focus on procedure has been demonstrated in several recent employment tribunal cases, something cited by Ben Willmott, employee relations adviser at the Chartered Institute of Personnel and Development (CIPD). "There have been numerous tribunal hearings where argument over what constitutes a written agreement letter have been discussed even before the actual dispute has considered," he says.

Wainer meanwhile cites the first hand experience of one of the CBI's business members who lost a tribunal case solely because the aggrieved employee had not been invited to a resolution meeting in writing even though he was invited verbally and a fair process was followed.

Over at Acas, the independent agency which aims to solve workplace disputes through conciliation and arbitration, concerns about the state of the employment tribunal regime have been expressed. "The employment tribunal system has become so complex," says Acas director of individual conciliation Keith Mixon. "The fixed periods for conciliation which were introduced in 2004 is something we've always been sceptical about and our experience of them has not led us to change our minds."

Another bugbear of employers is that tribunals are failing to weed out "weak and vexatious" cases. While tribunals chairs have the power to order claimants to pay a deposit if they want to continue a case or strike out those they believe have no prospect of success, business groups have claimed tribunals have been reluctant to act.

Employment lawyers have also complained about the rules saying that the procedures are so complicated even professional advisers find it hard to interpret them. "In some cases, the statutory procedures are unnecessary (for example the expiry of a fixed term contract where the employee acquiesces to non-renewal) and time consuming yet they must still be followed," says Claire Thompson from law firm Browne Jacobson. "The procedures have opened the door for increased litigation rather than reducing the number of claims issued."

The reforms

So what needs to be done to improve the system? A lot, according to most parties.

"Yes, employers must follow a fair procedure on discipline and grievance," says Wainer. "But there shouldn't be an automatic finding of unfair dismissal if they have not followed the procedure to the letter."

Other CBI recommendations include allowing employers to follow procedures that differ from the statutory service that have been approved by an external organisation such as Acas and removal of the statutory three-step procedure from non-dismissal dismissals such as redundancy.

Several experts believe that the government should place a greater focus on the promotion of mediation as a way of increasing the number of disputes resolved internally. "It would be useful to find a way of promoting the use of mediation for the resolution of workplace conflict," says Willmott. "CIPD research shows very few organisations are using mediation. It is a challenge for firms as mediation is only appropriate for certain types of conflict but all employers should consider mediation as an option."

In recent industry discussions about mediation suggestions have been made that the government is considering making it compulsory. Such an idea has led to strong opposition. Most agree that while mediation is a good idea, it works best when both parties come together voluntarily. "Making it compulsory goes against principles of mediation," says Willmott, with Wainer saying: "Employers will be concerned if the call for compulsory mediation does gathere momentum. It would just become another hoop for employees to jump through before entering a tribunal claim."

Ultimately, most commentators agree, key to solving the dispute resolution problem is ensuring disputes do not happen in the first place. An Acas policy paper published earlier this year called for firms to concentrate on developing a culture of dispute prevention rather than dispute resolution. "It's all about mindset," says Mizon. "It's all very well have good procedures but you need line managers trained to use them well." It's there where HR comes in.

"HR's role should be to ensure managers have the skills and informal mediation abilities to intervene with confidence at an early stage," adds Willmott. "They should act as broker to help resolve disputes in the workplace and generally be able to step in and deal with disputes early rather than referring disputes to HR and going more formal procedures."

Thompson says that ultimately it's all about communication. "Encourage employees to communicate openly with each other rather than allow concerns to 'grow arms and legs'. In appropriate circumstances communicate positive outcomes to instil confidence that concerns will be considered sympathetically."