Arbitration scheme arrives at last

After a three-year wait the Acas
Arbitration Scheme will be launched on 21 May. It will provide a voluntary
method of resolving unfair dismissal claims outside the employment tribunal
system.

Narrow ambit of
arbitration

The scheme applies
only to unfair dismissal claims where dismissal is accepted by the employer and
there are no jurisdictional disputes. Thus, for example, no constructive unfair
dismissal claims can be referred, nor can claims where the employer says the
employee was out of time, had a break in continuous service, was not an
employee or was not employed mainly in Great Britain. Any linked claims of
unlawful deduction of wages, breach of contract or discrimination will either
have to settle or go to tribunal in the normal way.

Both parties have to
agree to go to Acas arbitration and sign an arbitration agreement waiving the
employee’s rights to claim unfair dismissal at an employment tribunal either
through Acas or by way of a compromise agreement.

The employer could
gain from going into the scheme by getting a claim dealt with quickly and to
prevent publicity – hearings are in private (but the outcome is not kept secret
unless the agreement submitting the matter to Acas arbitration says it must
be). Consequently, applicants will lose the leverage of publicity if they go
into the scheme; if publicity is an issue, it is unlikely that applicants would
agree to it.

In making their
decisions, arbitrators are obliged not to apply legal tests or rules from court
decisions or legislation. Typically, an employer might have taken or followed
legal advice on a dismissal on the basis of case law. It could make a mockery
of that if arbitration becomes an arena where legal advice cannot be relied on.

By entering the
scheme, both the employer and employee are also giving up the right of appeal
save on grounds of EU law and the Human Rights Act. But parties to the
arbitration can challenge a decision on the grounds that there was a serious
irregularity or the arbitrator had no right to hear and/or decide the case.
Both parties are also giving up any right to claim costs – something which is
significant because employment tribunals will have the power in limited
circumstances to award costs of up to £10,000.

The arbitration
process will not be greatly less formal than a tribunal – there will still be
statements of cases and witness statements, disclosure and in most cases there
will be an IT1 and IT3 to draft as well as the arbitration agreements. The
approach will not be adversarial as the arbitrator will ask all the questions.

Conclusion

Acas arbitration does
offer a useful alternative to an employment tribunal but the circumstances when
it will be in the interests of both sides to go to arbitration will be limited.

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