Dispute rules move to fresh era

1 December 2004



The rules on dispute and grievance procedures have changed. Robin Rhodes explains what this means for employers and employees


From October 1 2004, all employers have been obliged to implement new statutory discipline and dismissal procedures (DDPs) and grievance procedures (GPs).

The aim is to ensure that all employers’ procedures meet a minimum legal standard. It is imperative that every business, however small, acquires the newly-published information and applies it in future. They can do so either by amending existing procedures or by introducing the new procedures in their published form.

These new rules represent an important change in the law on unfair dismissal and the admissibility of tribunal claims. They are designed to ensure that no major decisions affecting a person’s employment are made without first taking certain prescribed procedural steps.

Both the DDPs and GPs entail prescribed and mandatory steps for handling these dispute resolution problems. This article will not go into the detail, but rather aims to clarify a few of the apparent contradictions in some of the published material and explain the reasoning behind these changes. I will also highlight the most important elements of the awesome amount of advice available to employers.

Much more space is devoted to discipline and dismissal than to grievances, but there is a cautionary note about the need to check Equal Opportunities Policies as they are a form of grievance procedure.

The driving force behind these changes is the need for more effective procedures for handling such disputes and to place the obligation on both employers and employees to make this happen.

Complaints to employment tribunals have fallen back from a high of more than 130,000 in 2000/2001, but the annual figure is still over 115,000 and the process is becoming much more legalistic, time-consuming and expensive.

Taking action

Many businesses will not have to alter their existing procedures greatly to conform to the new laws. However, every business must ensure that its employees have written statements of the principal terms and conditions of employment and these must now include dispute resolution procedures which meet the new minimum requirements. For the first time tribunals will have the power to make an award against employers that have not taken this action.

For many smaller employers the best sources of help are two ACAS self help guides, Producing a written statement (Ref G01) and Producing disciplinary and grievance procedures (Ref G02).

Both contain example documents which fulfil the legal requirements in a simple and practical way. All employers should order the updated ACAS advisory handbook Discipline and grievances at work (Ref H02).

This is not only the best guide to all the most common problems met in the application of such procedures, but also contains the revised ACAS Code of Practice on disciplinary and grievance procedures as an Appendix. It is well written and provides practical assistance.

The Code of Practice is uniquely authoritative as employment tribunals are obliged to use it as their yardstick when considering the reasonableness of an employer’s actions. An employer who does not apply the Code’s provisions, or worse doesn’t know them, is clearly inviting a judgement to be made against him.

Whenever employers consider dismissal, or other serious disciplinary action, they will be obliged to go through the steps defined in the new statutory procedure, applying the standard three-step procedure or, in cases of gross misconduct, the modified two-step procedure. Failure to do so may lead to any subsequent dismissal being “automatically unfair”. However, employees must co-operate with the procedures and take certain steps, such as putting forward an appeal if they feel unfairly treated.

Employees will also be obliged to follow the steps defined in the new statutory grievance procedure, where it applies. In some circumstances if they fail to do so, they will be prevented from bringing a tribunal claim relating to the substance of that grievance.

Compensation for any successful tribunal claim in which one or other of the statutory procedures applies can be reduced or increased by between 10% and 50% to reflect a failure on the part of the employer or employee to comply with any aspect of the new procedures.

Discipline and dismissal

There are some crucial misunderstandings as to when the new statutory procedure applies. The definition of dismissal is now much wider than it was under the previous rules. A “dismissal” for these purposes includes dismissal on the grounds of conduct, capability, health, redundancy, non-renewal of a fixed-term contract, and compulsory early retirement.

However, employees must have 12 months’ qualifying service before they complain to an employment tribunal that the employer failed to follow the statutory procedure.

The provision that has caused the most confusion relates to “disciplinary action”. This is specifically defined as “action short of dismissal” (e.g. demotion or unpaid suspension) and expressly excludes the issuing of oral or written warnings, which are still the commonest form of disciplinary action.

I think employers would be very unwise to take this too literally, a view confirmed by the new ACAS Code of Practice. The Code more sensibly distinguishes between informal and formal disciplinary action and says “The first step in any formal process is to let the employee know in writing what it is alleged they have done wrong.” This is the first step of the standard three-step statutory disciplinary procedure, and the one which will require the greatest change in practice for most employers.

It may well be that employers with few employees will be allowed to omit this step (tribunals have always been required to take account of the size and administrative resources of an employer when considering whether its actions have been reasonable).

Natural justice

But, the ACAS advice quoted above reflects a clear principle of natural justice – the accused should know the charges against them, and any documentary evidence that will be used in their support, sufficiently well in advance of any hearing to enable them to prepare their defence.

Even when an employer has applied the statutory procedures it does not mean that his decision will be “automatically fair”. The new laws have sought to provide some relief to employers from the rigours of demonstrating procedural fairness. If the employer can show that they have applied the statutory procedure, and that any procedural failure outside that required by the statutory procedure would have made no difference to the decision to dismiss, the dismissal will be fair.

This significant change to the “reasonableness test” adopted by tribunals for some time may well be not as secure as it looks – my advice would be to stay with the Code of Practice in all cases.

Many companies have a reduced disciplinary procedure during a probation period. Fine, and as probation periods are completed before an employee acquires the qualifying service necessary to make a complaint of unfair dismissal, the statutory procedure should not present a problem. But it is “best practice” to write to short service employees giving reasons for their dismissal and offering the opportunity to appeal. Further, someone may have got the dismissal wrong and righting such wrongs can do wonders for employee relations. Again, if you do not allow for an appeal because the employee does not have the qualifying service for an unfair dismissal complaint, you may find yourself with a tribunal complaint for one of the more exotic forms of dismissal, or for some form of discrimination. In this case by denying an appeal you have may have denied yourself the opportunity to hear that complaint and resolve it internally.

The way the ACAS Code distinguishes between informal and formal warnings, may well prove increasingly valuable to employers in the future.

The “oral warning” is under threat as being too ambiguous. Most employers now make sure that any oral warning is confirmed in writing, so that a record of the event is properly established on the files.

So consider moving to a system of informal warning and counselling as a first stage, and a formal written warning as the next stage.

Most grievances are resolved informally and formal grievances are a rare event for most employers. However, the new laws introduce a statutory grievance procedure. An employee who has not put a more serious grievance in writing to an employer, may find they they are prevented from proceeding with an employment tribunal complaint on that subject until they have done so.

Do remember that discrimination complaints may need a different procedure from that used for other grievances, possibly involving managers/directors to whom the complainant does not report.

Finally, these changes to the law are very new but their purpose is clear, and all supervisors and managers who may be involved in the application of such employment procedures should be trained so that they understand what is required and are confident in applying it.

All article references are to ACAS publications. They can be ordered on-line www.acas.org.uk or by phone: 08702 42 9090.


Laws have changed Laws have changed


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