New
rules to speed resolution of employment contract disputes have been drafted,
but their scope is limited
Moves
are under way to make it easier to settle disputes about employment contracts.
However, these could rebound on unwary employers, costing them money. HR
managers, particularly in large companies with a legal department, will need to
know the new rules if, as expected, they are implemented by the courts.
As
many HR managers will know, civil litigation in England and Wales has gone
through what lawyers called the most dramatic changes for 150 years. Gone is
the old way of doing things, with lawyers using delaying tactics and running up
costs to pressure the other side into surrender. Now the emphasis is on
settling disputes and minimising costs. The new Civil Procedure Rules, as they
are called, came into force in 1999 after a comprehensive review of the civil
justice system by Lord Woolf who now heads the criminal court system.
A
key reform was the adoption of "pre-action protocols". Courts expect
parties to explore their disputes in correspondence before starting
proceedings.
The
idea is to make parties focus on the issues, strengths and weaknesses in the
case before running to the court to sort it out. It was believed that so many
cases settled just before the hearing because it was only at that point parties
thought seriously about their position.
The
protocols set out the procedure which all parties should follow ñ including the
timescale ñ before the final step is
taken to issue proceedings.
The
"spirit" behind the protocols is that the potential claimant should
provide as much information about his or her claim to a defendant in the hope
that this may lead to a settlement of the claim or the claim being withdrawn
before either party incurs unnecessary costs.
A
court can take into account compliance or non-compliance with a particular
protocol when giving directions for the management of proceedings and, more
importantly, when making orders for costs.
However,
so far the courts have approved only four protocols: personal injury, clinical
negligence, defamation and construction/engineering. Employment, though, may
follow soon. The Employment Lawyers’ Association is about to submit a draft
protocol to the courts for their approval.
The
draft protocol sets out in detail the areas which must be covered in a letter
of claim, the aim being that the claimant is to provide as much information as
possible. In addition, the claimant is entitled to request documents from the
defendant.
The
protocol sets out a timetable for dealing with a complaint. Acknowledgement of
receipt of a detailed letter of claim must be within five working days and a
detailed response sent within 15 working days.
However,
the protocol would apply to relatively few claims ñ county court and High Court
breach of contract claims above £5,000. This excludes most employment-related
disputes.
So,
it may not be much use in practice. However, it could trap unwary HR managers
who, as many do, deal with the initial stages of litigation themselves. Some HR
teams take the view that there is no need to involve lawyers until proceedings
start.
In
many cases, that is the correct view to take. The danger here, though, is that
they may not realise that a protocol applies and end up being penalised in
costs or the litigation process as a result.
This
is particularly a concern to HR teams with ready access to, say, a legal
department. A court may well expect them to know the details on this.
As
ever, HR managers need to be alert for any new rules. They do not need to know
these ones in detail, but they will need to know they are there.
Key
points
*
Watch out for changes to the court rules on breach of contract claims.
* Know when the rules apply.
* Do not dismiss claims out of hand. You could end up paying some costs even if
the claims are bad.
Jonathan
Chamberlain is a partner at Wragge & Co
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