Employment Relations Act 2000: The unforeseen consequences

The Labour party usually makes law changes during their term that will benefit employees, not changes that will make access to justice more costly and difficult. In 2000, the Labour Government scrapped the Employment Contracts Acts 1992 and replaced it with the Employment Relations Act (ER Act), which on the contrary has had the unforeseen consequences of higher legal costs for both employees and employers.

The Employment Tribunal, had till 2000 heard personal grievance claims for dismissal, redundancy etc. The members overall were competent, were legally trained and were specialists in employment law and hearings were conducted at a reasonable cost to the parties.

The Tribunal followed the precedents set in Employment Court decisions so lawyers were able largely to anticipate the findings on particular sets of facts and evidence. The Members, conscious that their findings could be overturned by the Court if wrong, generally gave good decisions.

Soon after the ER Act was introduced in 2000, the Tribunal was dismantled; most of its members were dismissed and replaced by the Employment Relations Authority stocked with government chosen members.

Mediation became a compulsory first step. Most of the ex-Tribunal Members were appointed to the new mediation service.

Now the 'first' hearing held in the Authority is inquisitorial, and is termed an 'investigation meeting'. Not until the Act was amended, did Members even need a tertiary qualification, and they were mostly appointed because they had union affiliations or HR backgrounds. The paradox of this is that the Mediation Service inherited some highly skilled, experienced and legally trained adjudicators/mediators, whereas for more than a decade, Authority Members needed no tertiary training and experience, skill or legal knowledge.

The supervisory powers of the Court over the Authority have been removed making each Authority Member a law unto themselves. No matter how inconsistent or contrary to general evidence and procedural rules their actions or instructions to counsel are, no application for review can be brought in the Court.

The Members exercise autocratic, draconian powers akin to the Spanish Inquisition, and their decisions need not be based on the precedents set by the Court. This makes the outcome of the claims invariably uncertain and unpredictable, and often illogical, and inequitable and unfair.

Instead of an appeal process to the Employment Court, as under the earlier legislation which limited litigants' costs, the new legislation created a first hearing in the Authority followed by a full further de novo hearing in the Employment Court.

Now any party dissatisfied with the Authority's decision, must challenge the decision anew in the Court, and rather than just one hearing and an appeal to the Court on the papers without the further need to lead evidence again, there now are two hearings resulting in a duplication of hearing costs. This makes it a much more expensive process for both litigant parties than litigation was up until 2000.

The Labour Government's stated intention at the time, and their purpose in creating the Authority was that it would provide speedy, efficient, and cheap access to justice 'without regard to technicalities'. Unfortunately this has not eventuated and some members unnecessarily complicate the investigation process leading on occasion to hugely increased costs.

At a meeting with the previous Head of the Authority, Alistair Dumbleton, concerns around the inconsistent procedural approaches of Members and the high costs resulting from this, were raised. Mr Dumbleton conceded that there was a need for a 'Bench Book' as would be used in a Court, and which gives guidance to the Judges and ensures procedural consistency across the Courts. Fourteen years after the legislation was introduced, there is no 'Bench Book', and processes and decisions coming out of the Authority still depend largely on the length of the Chancellor's foot.

Although being sceptical at first of a compulsory mediation process, it certainly is a practical, informal forum affording the parties an opportunity around a table to reach an agreed resolution and early settlement. Seven to eight of every ten cases where I act for either the employer or the employee, are settled (generally amicably), and the parties can shake hands, can close that chapter in the book, and can move on, without the costs of the process having entirely broken the bank.


Article first published in June/July 2013 in the SA Magazine Issue 033, and revised and updated in May 2014.