Employers should treat new ACAS Code like law, says expert

The Government is scrapping the compulsory dispute resolution procedures it introduced in 2004 after a consultation process in which many contributors suggested a strengthened ACAS Code would be a better solution.

The new ACAS Code will come into effect on the day of the legal changes next April, the body said.

"The new code is a key element in the Government's plans to streamline and simplify the dispute resolution system to the benefit of employers and employees," said Pat McFadden, minister for Employment Relations. "It will complement the removal of statutory measures by establishing flexible, principles-based guidance to help resolve disputes early."

In 2004 the Government made it compulsory for employers and employees to follow a three step procedure when dealing with workplace disciplinary matters and grievances.  In respect of dismissals if the employer failed to follow the statutory procedure the dismissal is automatically ruled to be unfair.  The aim behind the statutory procedures was to attempt to resolve workplace disputes without the need for the employees to resort to the Employment Tribunal thereby reducing the burden on the Employment Tribunals service.

The Government asked Michael Gibbons to review its procedures and he found that the measures were a well-intentioned failure.

"In conducting the review I was struck by the overwhelming consensus that the intentions of the 2004 Regulations were sound and that there had been a genuine attempt to keep them simple, and yet there is the same near unanimity that as formal legislation they have failed to produce the desired policy outcome," said Gibbons in his report. "This is perhaps a classic case of good policy, but inappropriately inflexible and prescriptive regulation."

The Government chose to scrap the procedures with its Employment Bill, which is expected to become law next April, when some of its job will be done by the ACAS Code.

Employment law specialist Ben Doherty said that though the new Code was not a law like the old procedures, there were still incentives for employers to follow it.

"Unlike the current statutory procedures if the employer fails to follow the code it will not render that employer liable in proceedings; there is no automatically unfair dismissal consequence as with the statutory procedures," he said.

"There may still be consequences for companies who fail to follow the procedure, though," said Doherty." Though it is not compulsory to follow the Code, failure to do so will be taken into account by Tribunals when deciding the claim, and if it is successful the Tribunal may increase payouts by up to 25% if the Code is not followed. In the past the Tribunals had to increase payouts by between 10% and 50%."

ACAS said that it had shortened the Code in line with requests made during the Government's consultation process. Doherty said he thought that the more concise Code would suit everyone caught up in disputes.

"The Code is fairly short and should be easy for all employers to follow," he said. "The simplification that the Code introduces is likely to be welcomed by employers and employees alike."

ACAS's aims for the Code are similar to the aims of the statutory procedures.

"Employers and employees should do all that they can to resolve disciplinary and grievance issues in the workplace," said the Code. "Where this is not possible employers and employees should consider using a third party to help resolve the problem. Recourse to an employment tribunal should only be a last resort."

The Code is in draft form for consultation and responses will be taken until 25th July.