The ACAS Arbitration Scheme (Great Britain) Order 2004

• Citation: S.I. 2004/753
• Sections: 234

Section 1 Citation, commencement, interpretation and extent

(1) This Order may be cited as the ACAS Arbitration Scheme (Great Britain) Order 2004 and shall come into force on 6th April 2004.

(2) In this Order—

“the 1996 Act ” means the Employment Rights Act 1996;

“basic amount” means such part of an award of compensation made by an arbitrator as comprises the basic amount, determined in accordance with paragraphs 139 to 146 of the Scheme;

“English/Welsh arbitration” means an arbitration under the Scheme, which the parties have agreed shall be determined under the laws of England and Wales;

“the Scheme” means the arbitration scheme set out in the Schedule with the exception of paragraphs 52EW, 110EW, 183EW, 187EW, 194EW, 200EW, 205EW, 209EW, 212EW, 217EW, 223EW and 224EW thereof;

“Scottish arbitration” means an arbitration under the Scheme, which the parties have agreed shall be determined according to the laws of Scotland.

(3) This Order extends to Great Britain;

(4) Paragraphs in the Schedule marked “EW” apply only to English/Welsh arbitrations;

(5) Paragraphs in the Schedule marked “S” apply only to Scottish arbitrations;

(6) Paragraphs in the Schedule not marked “EW” or “S” apply to both English/Welsh arbitrations and Scottish arbitrations.

Section 2 Commencement of the Scheme

The Scheme shall come into effect on 6th April 2004.

Section 3 Revocation

Subject to article 8, the ACAS Arbitration Scheme (England and Wales) Order 2001 is revoked.

Section 4 Application of Part I of the Arbitration Act 1996

The provisions of Part I of the Arbitration Act 1996 referred to in the Schedule at paragraphs 52EW, 110EW, 183EW, 187EW, 194EW, 200EW, 205EW, 209EW, 212EW, 217EW, 223EW and 224EW and shown in italics shall, as modified in those paragraphs, apply to English/Welsh arbitrations conducted in accordance with the Scheme.

Section 5 Application of Part I of the Arbitration Act 1996

(1) Section 46(1)(b) of the Arbitration Act 1996 shall apply to English/Welsh arbitrations conducted in accordance with the Scheme, subject to the following modification.

(2) For “such other considerations as are agreed by them or determined by the tribunal” in section 46(1)(b) substitute “the Terms of Reference in paragraph 17 of the arbitration scheme set out in the Schedule to the ACAS Arbitration Scheme (Great Britain) Order 2004”.

Section 6 Enforcement of re-employment orders

(1) Employment tribunals shall enforce re-employment orders made in arbitrations conducted in accordance with the Scheme in accordance with section 117 of the 1996 Act (enforcement by award of compensation), modified as follows.

(2) In subsection (1)(a), subsection (3) and subsection (8), for the words “section 113” substitute in each case “paragraph 123(i) of the Scheme”.

(3) In subsection (2) for “section 124” substitute “section 124(1) and (5) and subsections (9) and (10)”.

(4) In subsection (3)(a) for the words “sections 118 to 127A” substitute the words “sections 118 to 123, section 124(1) and (5), sections 126 and 127A and subsections (9) and (11)”.

(5) After subsection (8) insert—

(9) Section 124(1) shall not apply to compensation awarded, or to a compensatory award made, to a person in a case where the arbitrator finds the reason (or, if more than one, the principal reason) for the dismissal (or, in a redundancy case, for which the employee was selected for dismissal) to be a reason specified in any of the enactments mentioned in section 124(1)A.

(10) In the case of compensation awarded to a person under section 117(1) and (2), the limit imposed by section 124(1) may be exceeded to the extent necessary to enable the award fully to reflect the amount specified as payable under the arbitrator’s award in accordance with paragraphs 131(i) or 134(iv) of the Scheme.

(11) Where—

(a) a compensatory award is an award under subsection (3)(a) of section 117, and

(b) an additional award falls to be made under subsection (3)(b) of that section, the limit imposed by section 124(1) on the compensatory award may be exceeded to the extent necessary to enable the aggregate of the compensatory award and additional awards fully to reflect the amount specified as payable under the arbitrator’s award in accordance with paragraphs 131(i) or 134(iv) of the Scheme.

(12) In this section “the Scheme” means the arbitration scheme set out in the Schedule to the ACAS Arbitration Scheme (Great Britain) Order 2004.

Section 7 Awards of compensation

An award of a basic amount shall be treated as a basic award of compensation for unfair dismissal for the purposes of section 184(1)(d) of the 1996 Act (which specifies such an award as a debt which the Secretary of State must satisfy if the employer has become insolvent).

Section 8 Transitional provision

(1) The Scheme has effect in any case where the appropriate date falls on or after 6th April 2004.

(2) In a case where the appropriate date falls before 6th April 2004, the arbitration scheme set out in the Schedule to the ACAS Arbitration Scheme (England and Wales) Order 2001 continues to apply.

(3) In this article, the “appropriate date” means the date of the Arbitration Agreement. Where the parties sign the Arbitration Agreement on different dates, the appropriate date is the date of the first signature.

(4) In this article, “Arbitration Agreement” means an agreement to submit the dispute to arbitration, as defined in paragraph 26 of the Scheme.

Section 1

The ACAS Arbitration Scheme (“the Scheme”) is implemented pursuant to section 212A of the Trade Union and Labour Relations (Consolidation) Act 1992 (“the 1992 Act”).

Section 2

The Scheme provides a voluntary alternative to the employment tribunal for the resolution of unfair dismissal disputes, in the form of arbitration.

Section 3

Resolution of disputes under the Scheme is intended to be confidential, informal, relatively fast and cost efficient. Procedures under the Scheme are non-legalistic, and far more flexible than the traditional model of the employment tribunal and the courts. For example (as explained in more detail below), the Scheme avoids the use of formal pleadings and formal witness and documentary procedures. Strict rules of evidence will not apply, and, as far as possible, instead of applying strict law or legal precedent, general principles of fairness and good conduct will be taken into account (including, for example, principles referred to in any relevant ACAS “Disciplinary and Grievance Procedures” Code of Practice or “Discipline and Grievances at Work” Handbook). Arbitral decisions (“awards”) will be final, with very limited opportunities for parties to appeal or otherwise challenge the result.

Section 4

The Scheme also caters for requirements imposed as a matter of law (eg, the Human Rights Act 1998, devolution issues, existing law in the field of arbitration and EC law).

Section 5

The Scheme accommodates certain differences between the law of Scotland and the law of England and Wales relating to arbitrations generally. It does so by providing, to the extent necessary in order to accommodate those differences, separate provisions applicable to Scottish arbitrations on the one hand and to English or Welsh arbitrations on the other. For convenience, paragraphs that apply only to Scottish arbitrations are marked “S” and paragraphs that apply only to English or Welsh arbitrations are marked “EW”.

Section 6

As more fully explained below, cases enter the Scheme by reference to ACAS, which appoints an arbitrator from a panel (see paragraphs 41 to 43 below) to determine the dispute. ACAS provides administrative assistance during the proceedings, and may scrutinise awards and refer any clerical or other similar errors back to the arbitrator. Disputes are determined, however, by arbitrators and not by ACAS.

Section 7

Unless in the course of a hearing, all communications between either party and the arbitrator shall be sent via the ACAS Arbitration Section.

Section 8

Paragraph 218 below sets out the manner in which any document, notice or communication must be served on, or transmitted to, ACAS or the ACAS Arbitration Section.

Section 9

The term “Employee” is used to denote the claimant (ie the former employee), including any person entitled to pursue a claim arising out of a contravention, or alleged contravention, of Part X of the Employment Rights Act 1996.

Section 10

The term “Employer” is used to denote the respondent.

Section 11

The term “EC law” means:

(i) any enactment in the domestic legislation of England and Wales or of Scotland giving effect to rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Community Treaties, and

(ii) any such rights, powers, liabilities, obligations and restrictions, which are not given effect by any such enactment.

Section 12

The term “English/Welsh arbitration” means an arbitration under this Scheme, which the parties have agreed shall be an English/Welsh arbitration.

Section 13

The term “Scottish arbitration” means an arbitration under this Scheme, which the parties have agreed shall be a Scottish arbitration.

Section 14

The term “devolution issue” means a devolution issue as defined in paragraph 1 of Schedule 6 to the Scotland Act 1998 or a devolution issue as defined in paragraph 1 of Schedule 8 to the Government of Wales Act 1998.

Section 15

With the exception of paragraphs 26(i) (“Requirements for entry into the Scheme”), 114EW (“Form of the award: English/Welsh arbitrations”) and 117S (“Form of the award: Scottish arbitrations”) below, references to anything being written or in writing include its being recorded by any means so as to be usable for subsequent reference.

Section 16

Paragraphs 46EW, 47EW, 48EW, 49EW, 50EW, 51EW, 52EW, 53EW, 110EW, 114EW, 115EW, 116EW, 177EW, 181EW, 183EW, 187EW, 194EW, 200EW, 205EW, 209EW, 212EW, 217EW, 223EW, 224EW and 226EW below shall apply only to English/Welsh arbitrations. Paragraphs 54S, 55S, 56S, 57S, 58S, 59S, 111S, 112S, 117S, 118S, 119S, 178S, 182S, 184S, 188S, 189S, 190S, 191S, 192S, 193S, 195S, 196S, 197S, 198S, 199S, 201S, 202S, 203S, 204S, 206S, 207S, 208S, 210S, 211S, 213S, 225S and 227S below shall apply only to Scottish arbitrations.

Section 17

Every agreement to refer a dispute to arbitration under this Scheme shall be taken to be an agreement that the arbitrator decide the dispute according to the following Terms of Reference:

In deciding whether the dismissal was fair or unfair, the arbitrator shall:

have regard to general principles of fairness and good conduct in employment relations (including, for example, principles referred to in any relevant ACAS “Disciplinary and Grievance Procedures” Code of Practice or “Discipline and Grievances at Work” Handbook), instead of applying legal tests or rules (eg court decisions or legislation);

apply EC law.

The arbitrator shall not decide the case by substituting what he or she would have done for the actions taken by the Employer.

If the arbitrator finds the dismissal unfair, he or she shall determine the appropriate remedy under the terms of this Scheme.

Section 18

This Scheme only applies to cases of alleged unfair dismissal (ie disputes involving proceedings, or claims which could be the subject of proceedings, before an employment tribunal arising out of a contravention, or alleged contravention, of Part X of the Employment Rights Act 1996).

Section 19

The Scheme does not extend to other kinds of claim which are often related to, or raised at the same time as, a claim of unfair dismissal. For example, sex discrimination cases, and claims for unpaid wages are not covered by the Scheme.

Section 20

If a claim of unfair dismissal has been referred for resolution under the Scheme, any other claim, even if part of the same dispute, must be settled separately, or referred to the employment tribunal, or withdrawn. In the event that different aspects of the same dispute are being heard in the employment tribunal as well as under the Scheme, the arbitrator may decide, if appropriate or convenient, to postpone the arbitration proceedings pending a determination by the employment tribunal.

Section 21

Because of its informal nature, the Scheme is not designed for disputes raising jurisdictional issues, such as for example:

whether or not the Employee was employed by the Employer;

whether or not the Employee had the necessary period of continuous service to bring the claim;

whether or not time limits have expired and/or should be extended.

Section 22

Accordingly, when agreeing to refer a dispute to arbitration under the Scheme, both parties will be taken to have accepted as a condition of the Scheme that no jurisdictional issue is in dispute between them. The arbitrator will not therefore deal with such issues during the arbitration process, even if they are raised by the parties, and the parties will be taken to have waived any rights in that regard.

Section 23

In particular, in agreeing to arbitration under the Scheme, the parties will be treated as having agreed that a dismissal has taken place.

Section 24

The Scheme is not intended for disputes involving complex legal issues. Whilst such cases will be accepted for determination (subject to the Terms of Reference), parties are advised, where appropriate, to consider applying to the employment tribunal or settling their dispute by other means.

Section 25

The Scheme is an entirely voluntary system of dispute resolution: it will only apply if parties have so agreed.

Section 26

Any agreement to submit a dispute to arbitration under the Scheme must satisfy the following requirements (an “Arbitration Agreement”):

(i) the agreement of each party (which may be expressed in the same or in separate documents) must be in writing;

(ii) the agreement must concern an existing dispute;

(iii) the agreement must not seek to alter or vary any provision of the Scheme;

(iv) the agreement must have been reached either:

(a) where a conciliation officer has taken action under section 18 of the Employment Tribunals Act 1996, or

(b) through a compromise agreement, where the conditions regulating such agreements under the Employment Rights Act 1996 are satisfied; and

(v) the agreement must be accompanied by a completed Waiver Form for each party. Parties applying for English/Welsh arbitrations should complete Appendix A; parties applying for Scottish arbitrations should complete Appendix B.

Section 27

Where an agreement fails to satisfy any one of these requirements or where the parties are unable to agree whether the arbitration should be an English/Welsh arbitration or a Scottish arbitration, no valid reference to the Scheme will have been made, and the parties will have to settle their dispute by other means or have recourse to the employment tribunal.

Section 28

Where:

(i) a dispute concerning unfair dismissal claims as well as other claims has been referred to the employment tribunal, and

(ii) the parties have agreed to settle the other claims and refer the unfair dismissal claim to arbitration under the Scheme,

a separate settlement must be reached referring the unfair dismissal claim to arbitration which satisfies all the requirements listed above (although it may form part of one overall settlement document).

Section 29

All Arbitration Agreements must be notified to ACAS within two weeks of their conclusion, by either of the parties or their independent advisers or representatives, or an ACAS conciliator, sending a copy of the agreement and Waiver Forms, together with IT1 and IT3 forms if these have been completed, to the ACAS Arbitration Section.

Section 30

For the purposes of the previous paragraph, an Arbitration Agreement is treated as “concluded” on the date it is signed, or if signed by different people at different times, on the date of the last signature.

Section 31

Where an Arbitration Agreement is not notified to ACAS within two weeks, ACAS will not arrange for the appointment of an arbitrator under the Scheme, unless notification within that time was not reasonably practicable. Any party seeking to notify ACAS of an Arbitration Agreement outside this period must explain in writing to the ACAS Arbitration Section the reason for the delay. ACAS shall appoint an arbitrator, in accordance with the appointment provisions below, to consider the explanation, and that arbitrator may seek the views of the other party, and may call both parties to a hearing to establish the reasons for the delay. The arbitrator shall then rule in an award on whether or not the agreement can be accepted for hearing under the Scheme.

Section 32

Any such hearing and award will be governed by the provisions of this Scheme.

Section 33

Where all parties so agree in writing, ACAS may consolidate different arbitral proceedings under the Scheme.

Section 34

At any stage of the arbitration process, once an Arbitration Agreement has been concluded and the reference has been accepted by ACAS, the party bringing the unfair dismissal claim may withdraw from the Scheme, provided that any such withdrawal is in writing. Such a withdrawal shall constitute a dismissal of the claim and the arbitrator shall upon receipt of such withdrawal in writing issue an award dismissing the claim.

Section 35

Once an Arbitration Agreement has been concluded and the reference has been accepted by ACAS, the party against whom a claim is brought cannot unilaterally withdraw from the Scheme.

Section 36

Parties are free to reach an agreement settling the dispute at any stage.

Section 37

If such an agreement is reached:

(i) upon the joint written request of the parties to the arbitrator or the ACAS Arbitration Section, the arbitrator (if appointed) or the ACAS Arbitration Section (if no arbitrator has been appointed) shall terminate the arbitration proceedings;

(ii) if so requested by the parties, the arbitrator (if appointed) may record the settlement in the form of an agreed award.

Section 38

An agreed award shall state that it is an award of the arbitrator by consent and shall have the same status and effect as any other award on the merits of the case.

Section 39

If the agreement settling the dispute includes an agreement that one party (the “paying party”) shall pay a sum of money to the other (the “receiving party”) the arbitrator shall (unless the parties have agreed that the said agreement shall not be the subject of an award) draft an award ordaining the paying party to pay the agreed sum to the receiving party together (if the parties have agreed that interest shall run on the agreed sum) with interest thereon at such rate as the parties may have agreed and from such date or dates as the parties may have agreed until payment. The arbitrator shall send a copy of the said award in draft to each party and invite each party to confirm that the draft award accurately reflects the agreement between them. Upon receiving confirmation to that effect the arbitrator shall issue an award in the terms of the agreed draft.

Section 40

Subject to paragraph 39, in rendering an agreed award, the arbitrator:

(i) may only record the parties' agreed wording;

(ii) may not approve, vary, transcribe, interpret or ratify a settlement in any way;

(iii) may not record any settlement beyond the scope of the Scheme, the Arbitration Agreement or the reference to the Scheme as initially accepted by ACAS.

Section 41

Arbitrators are selected to serve on the ACAS Arbitration Panel on the basis of their practical knowledge and experience of discipline and dismissal issues in the workplace. They are recruited through an open recruitment exercise, and appointed to the Panel on the basis of standard terms of appointment. It is a condition of their appointment that they exercise their duties in accordance with the terms of this Scheme. Each appointment is initially for a period of two years, although it may be renewed by ACAS, at the latter’s discretion. Payment is made by ACAS on the basis of time spent in connection with arbitral proceedings.

Section 42

Arbitral appointments are made exclusively by ACAS from the ACAS Arbitration Panel. Parties will have no choice of arbitrator.