The Enactment of the Employment Rights (Disputes Resolution) Act 1998 - ERDRA

This Act had its genesis in the then Conservative Government's Green Paper of December 1994 'Resolving employment rights disputes: options for reform'. The aim then was to cut costs in the Industrial Tribunal system and to reduce the number of cases being brought.

Nearly four years later, and with some of the more extreme suggestions omitted, the proposals have now become law. Enacted, but largely not in force with no implementation date yet announced, but anticipated by the summer.

Of immediate effect, however, is the right of appeal against Tribunal decisions in breach of contract cases to the Employment Appeal Tribunal. When ITs were given the power to hear breach of contract claims in the Industrial Tribunal's Extension of Jurisdiction Order 1994, no appeal procedure from Tribunal decisions was set out.

Appeals from ITs have been stayed in the EAT as they had no power to hear them as confirmed by the EAT case of Pendragon Plc v Jackson [1998] IRLR17.

The way is now open for the EAT to hear these cases and the power is made retrospective to deal with those cases which have been stayed.


ERDRA renames 'Industrial Tribunals' as 'Employment Tribunals'. The knock on effect is that Chairmen will now be Employment Tribunal Chairmen and the Industrial Tribunals Act is renamed as the Employment Tribunals Act.


The Act enables ACAS to provide, fund and promote a scheme for the arbitration of unfair dismissal disputes. It is not at all clear how this will work in practice.

ACAS have not yet drafted a scheme, but are aiming for April 1999. The scheme will be voluntary: it will only be available where both parties agree to opt for it, and whether it will be attractive to Applicants or Respondents will depend upon the final terms.

A significant difference from current tribunal proceedings would be that the scheme will be confidential. ACAS have stated they intend the scheme to be free from legalism, but since lawyers will not be excluded from representing parties, this may be merely wishful thinking.

There will be no appeal on a point of law and the scheme can be entered by one of two routes - through an ACAS COT3 settlement or Compromise Agreement which refers the case to the ACAS arbitration scheme.

It remains to be seen whether the arbitration system will provide an effective alternative dispute mechanism to the tribunal system. It seems unlikely, however, since the arbitration scheme is likely to use the same legal tests and be stuck with the band of reasonable responses approach to unfair dismissal cases.

Another indicator can perhaps be found in the ACAS recent revisions to the Code of Practice on disciplinary practice and procedures in employment. This has not been substantively amended or updated from the 1977 Code - an indication of more of the same?

Initially the arbitration scheme will be limited to unfair dismissal disputes. But ERDRA provides that the scheme may be extended to other types of dispute including race, sex, disability and trade union discrimination cases. Arbitration awards can be enforced in the County Court.

Compromise Agreements

The Act enables Compromise Agreements to be signed off not only by Solicitors and Barristers, but also trade union officials and Advice Centre workers. Trade union officials - officers, employees and members will be able to sign off Compromise Agreements if they are a member of an independent trade union and have been certified in writing by the trade union as competent to give advice and are authorised to do so on behalf of the union.

However, this will not cover lay officials who are employed by the other party or where the trade union is itself the other party to the Compromise Agreement. It is also necessary for the union to have an insurance policy in place to cover the risk of a negligence claim against the adviser.

Employers sometimes agree to pay legal costs for solicitors advising the employee: will 
they pay for the cost of advice given by trade union officials? Advice Centre Advisers are prevented by the Act from seeking payment from the Applicant, but not from the other side.

It is a welcome extension to enable trade union officials to sign off Compromise 
Agreements and belatedly acknowledges the role of trade unions in negotiating settlements in unfair dismissal cases and other employment law disputes.

Penalty Clause

In what is likely to be an ineffective attempt to encourage employers and employees to resolve disputes internally, unfair dismissal Applicants can have up to two weeks' pay docked from a compensatory award if they have failed to use an internal appeal procedure (Section 13). It will apply in the following circumstances: 
1 Where the employer provides a procedure for appealing against dismissal; and 
2 The Applicant is given written notice stating both that the employer provided the procedure including the details of it either at the time of the dismissal or within a reasonable period afterwards, but 
3 The Applicant did not appeal against the dismissal under the procedure (unless prevented by the employer from using it).

The tribunal can reduce the compensatory award by up to a maximum of two weeks' 
pay (subject to the current £220 limit on a weeks' pay), as the tribunal considers just and equitable. It will be interesting to see how often tribunals in practice make this deduction.

In an attempt at even-handedness, an employer can also be penalised if it provides a procedure for appealing against dismissal, but prevents the Applicant from appealing against the dismissal under the procedure. The Applicant's compensatory award can be increased by up to two weeks' pay because of the employer's failure, according to justice and equity. Ludicrously, there is no penalty on an employer who fails to provide an appeal procedure at all.

Extending the Powers of the Tribunal Chairman to Sit Alone

ERDRA extends the categories of case where Employment Tribunal Chairmen must sit alone (unless they exercise their discretion to sit as a tribunal of three) in the following proceedings: 

  • the right not to suffer deductions of unauthorised or excessive trade union subscriptions and political fund subscriptions 
  • the employer's failure to pay all or part of a protective award 
  • the right to receive a Section 1 statement of employment particulars 
  • the right to receive a statement of changes in employment particulars 
  • the right to be given an itemised pay statement 
  • guarantee payments 
  • the right to remuneration where an employee is suspended on medical grounds (but not maternity grounds) 
  • redundancy payments 
  • application for an employer's payment against the Secretary of State in insolvency situation 
  • appointment of unauthorised person where the employee has died intestate 
  • failure to pay compensation under TUPE.

These provisions will undermine the function of the tribunal as an industrial jury. For example, failure to pay a redundancy payment is not straight forward and often requires an analysis of whether or not a redundancy situation exists - an area where the expertise of the lay tribunal members is invaluable.

Proceedings without a 'full' hearing

The Act empowers the Secretary of State to make tribunal procedure regulations so that a tribunal can determine cases without a full hearing in certain circumstances:

  • where both parties have given their consent for the proceedings to be determined on the basis of written evidence alone 
  • where the Respondent has done nothing to defend the case 
  • where it appears that the Tribunal has no power to grant the relief claimed or the Applicant is not entitled to it 
  • where the case is bound to be dismissed because of the decision of a superior Court; or 
  • the proceedings relate only to a preliminary issue.

The Act also introduces the concept of a Legal Officer. Tribunal procedure regulations can allow Chairmen to act alone and to delegate the function to Legal Officers provided the powers do not extend to determining proceedings or the carrying out of pre-hearing reviews. These will remain as judicial functions.


Conciliation Officer's powers have been extended to claims for statutory redundancy payments and the Secretary of State will guarantee statutory redundancy payment disputes which have been awarded after conciliation.

Clause 14 prevents double recovery of compensation for Employment Rights Act and Disability Discrimination Act claims - bringing the DDA into line with the provisions in both the Sex Discrimination and Race Relations Act.

ERDRA does not extend to Northern Ireland.