Since October 2004, employers have had to grapple with the statutory dispute resolution procedures which imposed minimum standards on employers when dealing with disciplinary and grievance issues. The procedures were introduced with a view to encouraging employers to resolve disputes in the workplace but, in the end, completely failed to achieve this aim.
The Government commissioned an independent review of the procedures – the Gibbons Review – which found that, although the statutory procedures encouraged early resolution of disputes in some cases, they had created a high administrative burden with unintended negative consequences. In many cases, lawyers had become embroiled at an early stage in the dispute and, all-too-often, a ‘one-size-fits-all’ solution had been imposed.
The procedures have certainly been responsible for a host of Employment Appeal Tribunal decisions as all concerned have tried to acclimatise to the minimum requirements. The Employment Appeal Tribunal expressed the view that the regulations seemed to be more likely to make lawyers money than to resolve disputes.
When will the changes be made?
The Employment Act 2008 has now received Royal Assent and will repeal the current statutory dispute resolution procedures. The changes will come into force in April.
Both the statutory dismissal procedures and grievance procedures will go. Employers will be encouraged to comply with the newly revamped ACAS Code of Practice on Disciplinary and Grievance Procedures. Tribunals will have regard to the Code when hearing cases involving disciplinary and grievance issues.
The Code sets out key principles. It’s not a substitute for the employer having their own disciplinary and grievance procedures. Indeed, it’s important that employers have clearly set out procedures. When issuing Terms and Conditions to an employee, an employer is required to specify the disciplinary and grievance procedures that apply to the employee or to inform employees where the documents may be located (such as in a Company Handbook or on the Intranet). Failure to do so can lead to compensation being paid to an employee.
The Code will provide guidance on what is expected from an employer (and an employee) in situations where a disciplinary issue or grievance arises. The Code stresses the need for fairness and transparency, and the use of rules and procedures when dealing with disciplinary and grievance issues.
Employment tribunals will have regard to what is “fair and reasonable” when deciding cases, and in doing so will consider whether the employer has followed the principles set out in the Code.
A final draft of the Code can be found on the ACAS web site. This replaces the Code issued by ACAS in 2004 to deal with the statutory procedures.
Will the code apply to all dismissals?
The Code will not apply to dismissals on the basis of redundancy or the non-renewal of fixed-term contracts on their expiry.
There’s no prescriptive definition of a disciplinary situation and it’s clearly for the employer to determine when they take issue with an employee’s conduct. The Code anticipates dealing with issues relating to poor performance and misconduct, but makes the point that some employers may have separate policies to deal with certain types of conduct (like harassment issues, for example). If this is the case, an employer will need to make sure that those policies observe the minimum requirements of the Code.
The Code sets out key principles which will need to be applied fairly by an employer and the requirements for a fair process:
- Employers are responsible for carrying out any investigations necessary to establish the facts of the case. If it’s appropriate to suspend the employee while the investigation is ongoing then any period of suspension should be as short as possible.
- Employers should inform employees of the cause of the problem and provide them with an opportunity to put their case in response before any decisions are reached.
- The Code repeats details of an employee’s statutory right to be accompanied where employers should allow employees to be accompanied at any formal disciplinary meeting.
- Following the meeting, employers must decide whether any disciplinary action is justified and inform the employee in writing of the decision taken.
- Employers should allow employees to appeal against any formal decision, and notify the employees in writing of the outcome of an appeal hearing.
What is a grievance?
The current definition of ‘grievance’ for the purposes of the statutory procedures is ‘a complaint by an employee about action which his employer has taken or is contemplating taking in relation to him/her’ and which ‘could form the basis of a complaint by an employee to an employment tribunal, or could do so if the action took place’.
Not surprisingly, this definition has caused a lot of debate about what amounts to a grievance. In contrast, the Code simply states that grievances are concerns, problems or complaints that employees raise with their employers.
How should employers deal with grievance issues?
Again, the Code provides general guidance on what an employer is required to do when dealing with a grievance.
If it’s not possible for the employee to resolve the grievance informally, employees should raise the matter formally (and without unreasonable delay) with a manager who is not the subject of the grievance. The Code recommends that the grievance should be raised in writing and set out the nature of the grievances.
On receipt of a grievance, the employer should arrange a formal meeting without unreasonable delay. At the meeting, the employee should explain their grievance and be given an opportunity to say how they think it should be resolved.
The Code mirrors the statutory rules and recommends that where an employee’s grievance relates to a complaint about a duty owed by the employer, then the employee has the right to be accompanied by a work colleague or a Trade Union representative at the meeting.
Following the meeting, the employer needs to decide whether any further investigation is required and what action, if any, it needs to be taken.
Where an employee is unhappy with the outcome of the grievance, they should be allowed to appeal the outcome and set out the grounds for their appeal without delay in writing.
Employers should be aware that, from April, an employee will be able to bring a claim in the tribunal without having first raised a grievance with the employer. Under the current statutory procedures if an employee tries to present a claim to the tribunal without initiating the grievance procedure, the tribunal will refuse to accept the claim and return it to the employee.
However, if an employee acts unreasonably and fails to follow the Code without good reason, then they risk a reduction in any compensation award by up to 25%.
What is the role of ACAS?
Under the current regime, the time that ACAS can devote to conciliating a settlement is strictly limited (either seven or 13 weeks, depending upon the claim). These restrictions will be removed, and ACAS will be under a duty to continue conciliation throughout the proceedings until the case is heard.
This better reflects when the opportunity for a settlement arises in a case. Some cases require disclosure of documents, a listing date or the exchange of witness statements before the parties are ready to have a meaningful discussion about the merits of the case and the prospects of settlement.
What are the penalties for not following the Code?
Under the current regime, a dismissal is automatically unfair if an employer fails to follow the statutory procedures. This is regardless of whether the employee would have been dismissed had a fair procedure been followed.
From April, a tribunal will be able to find that a dismissal is unfair on procedural grounds alone but reduce or eliminate the employee’s compensatory award to reflect the likelihood that a dismissal would have gone ahead where a fair procedure had been followed. This was the approach that was taken by the tribunals prior to 2004, and is thought to balance the interests of employee and employer.
A failure by employers to follow the Code of Practice does not mean that tribunal proceedings will immediately follow. However, where tribunal proceedings are issued, an employer’s failure to observe the requirements of the Code may result in an employment tribunal increasing the compensation payment to an employee by up to 25%.
Similarly, where an employee unreasonably fails to comply with the Code, the amount of compensation awarded may be reduced by up to 25%.
ACAS publishes guidance booklets on dealing with disciplinary and grievance issues. See the dedicated web link on the right hand panel of this page for details.
Gareth Edwards is a partner in the employment team at Veale Wasbrough Lawyers