October 2004 saw the introduction of the Employment Act 2002, which has brought a new approach to staff dispute resolution.

It has long been acknowledged that disputes in the workplace are disruptive, stressful, and costly – both for employers and employees. Once time and legal expenses are taken into account, the average cost of an employment tribunal for a UK employer is ?2,000. In addition, it is said that 50% of employees who take a case to a tribunal end up in lower paid or lower status jobs after the hearing, and almost a quarter find themselves unemployed.

In a recent twelve month period, the UK employment tribunal service received over 94,000 claims. But research showed that in more than 33% of cases, the employee and his or her manager had not had any prior discussion about the problem.

The new legislation in the Employment Act aims to address these problems by:

• encouraging both employers and employees to discuss disputes
• promoting alternative ways to resolve disputes
• enabling the employment tribunal system to work more effectively.

Since October 2004, all employers and employees have been required to follow a new three-step process when dealing with most dismissals, disciplinary actions or grievances. If they don’t, they could face a financial penalty should a dispute reach a tribunal.

The stages in this new three-step process are as follows:

If an employer is considering disciplinary action, he must put the reasons for this in writing to the employee. Similarly, if the employee has a grievance against his employer, he must put it in writing in a letter to his employer.

A face to face meeting must take place between the employer and the employee to discuss the issues raised in the letter. There must be a suitable amount of time prior to the meeting for the recipient of the letter to consider the other party’s complaint. Following the meeting, the employee must be informed of the employer’s decision and notified of their right to appeal.

This may happen after sanctions have already been imposed. The employer must inform the employee of the outcome of the appeal.

The above standards are intended to be a minimum which must be met by all UK employers. However, so long as these minimum standards are complied with, companies are free to personalise the procedures to suit the needs of their own business.

Remember, if a dispute reaches tribunal and one of the parties has not followed the three-step process in full, they will almost certainly face penalties.

If an employer fails to follow the new rules, then any award made to the employee by a tribunal will be increased by a minimum of 10% up to a maximum of 50%

If the employee fails to follow the procedure, any award they are adjudged to receive is reduced by a minimum of 10% up to a maximum of 50%.

In light of the new regulations, all businesses need to:

• Understand the new laws
• Review existing disciplinary and grievance procedures
• Put in place new procedures where none exists
• Inform employees of their new rights and where they can go to obtain more information
• Update company documents such as the employee handbook to reflect the new legislation
• Follow the new three-step process when dealing with any disciplinary matters of staff grievances.

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Copyright 2004 David Miles. You are welcome to reproduce this article on your website, so long as it is published "as is" (unedited) and with the author's bio paragraph (resource box) and copyright information included. In addition, all links to external websites must be left in place.

David Miles is the editor of the Employee Contracts website which provides information on HR and personnel issues such as: contracts of employment, disciplinary procedures, and staff dispute resolution.