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Julian Yew looks at the statutory procedures governing disciplinary, dismissal and grievance issues
New statutory procedures governing disciplinary, dismissal and grievance issues introduced by the Employment Act 2002 overhauled how workplace disputes have to be resolved on and after 1 October 2004. The new rules which all employers have to follow are set out in the Employment Act 2002 (Dispute Resolution) Regulations 2004.
The statutory procedures affect all businesses regardless of their size. If an employer has not followed the statutory procedures in a dismissal case, the dismissal will be "automatically unfair". In addition, employers who terminate the employment of their employees without following the statutory procedures risk compensation being increased at a tribunal by between 10 and 50 per cent.
To whom will the statutory procedures apply?
The procedure will only apply to employees.
When will they apply?
The disciplinary and dismissal procedures apply to disciplinary action and dismissals occurring on or after 1 October 2004. The grievance procedure applies to grievances occurring on and continuing after 1 October 2004, but not to grievances which have been lodged with an employer before 1 October.
What is the effect of the procedures on continuity of employment?
Where an employee has been dismissed and is later re-instated/re-engaged following the statutory procedures, there will be no break in the continuity of their employment.
Must an employer follow the statutory procedures where an employee has less than one year's continuity of employment?
Although breaching the statutory dismissal procedure will render a dismissal "automatically unfair", an employee must still have worked continuously for at least one year in order to be able to claim unfair dismissal. However, there are some types of unfair dismissal claims where employees do not need the minimum length of service at all (e.g. pregnancy, health and safety and whistleblowing related dismissals) so employers need to be cautious. The statutory grievance procedures will apply to all employees regardless of their length of service as they relate to claims which do not require a minimum length of service (see below).
Do the statutory procedures have contractual effect?
Section 30 of the Employment Act 2002 empowers Parliament to incorporate the statutory procedures as an implied term in every contract of employment. The danger to employers is that a breach of the procedures will give rise to a breach of contract claim.
The statutory procedures currently do not have contractual effect, as the Department for Trade and Industry wishes to monitor how the new procedures operate in practice to gauge their effectiveness before invoking section30.
Statutory disciplinary and dismissal procedure
What does the statutory disciplinary and dismissal procedure (DDP) involve?
Employers have to initiate either the standard DDP or three-step procedure or the modified two-step procedure.
The three-step version involves:
(i) informing the employee of what the employer intends to do
(ii) meeting with the employee and
(iii) dealing with the employee's appeal
The modified procedure involves:
(i) writing to the employee about their dismissal
(ii) giving them the right to an appeal
When will the standard DDP apply?
Where retirement is by mutual consent, there is no need to follow the DDP. The DDP will not apply when employers give warnings or suspend an employee on full pay. Employers may however have their own internal procedures in relation to such disciplinary sanctions.
When will the modified DDP apply?
A modified DDP applies where the employment has terminated. It will only apply to gross misconduct cases where there is incontrovertible evidence of the employee's guilt so that having a meeting will make very little difference to the process and the employee is dismissed immediately or immediately after. The modified procedure should only be used in exceptionally circumstances.
Statutory grievance procedure
What does the Statutory Grievance Procedure (SGP) involve?
All employees will have to use the standard, three-step SGP, or a modified two-step procedure.
The three-step procedure entails:
(i) writing to the employer about the grievance
(ii) meeting with the employer
(iii) appealing against the employer's decision
A modified SGP or two-step procedure which involves:
(i) the employer writing to the employee about their grievance
(ii) giving them the right to an appeal
When will the SGP apply?
The SGP applies when an employee has a grievance. Under the new regulations, a grievance is defined as 'a complaint by an employee about action which his employer has taken or is contemplating taking in relation to him' that could form the basis of a tribunal claim. These include complaints about equal pay, discrimination in the employment field, detriment in relation to trade union membership and activities, detriment in relation to union recognition rights, unauthorised deductions and payments, detriment in employment, unfair dismissal, redundancy payments, detriment in relation to national minimum wage, detriment in relation to tax credits, breach of the Working Time Regulations 1998 and detriment relating to European Works Councils (Schedule 4 Employment Act 2002).
Disclosures made under the Public Interest Disclosure Act 1998 fall outside the definition of a "grievance". Thus, employees have the option of making a normal grievance (statutory procedure will apply) or a whistleblowing disclosure (statutory procedure will not apply).
Employees have to initiate the SGP where the issue relates to constructive dismissal, warnings and suspension on full pay or any other contemplated action by the employer, which is discriminatory or unlawful.
When will the standard, three-step SGP apply?
It will apply in most cases and even after the employment has ended. The net effect being that employees are forced to resolve their grievance with their employer before running to the Employment Tribunal.
When will the modified SGP apply?
The two-step SGP will only apply after termination of employment, but is subject to very limited circumstances, eg., both the employer and employee agree in writing to a 'reduced' procedure or where it was not reasonably practicable for the parties to comply with the standard procedure following termination of employment.
Who can accompany the employee at a DDP or SGP meeting and what can the employee's companion do in such a meeting?
An employee may be accompanied by a fellow colleague or a trade union official. The employee does not need to belong to any trade union nor is there a requirement for the trade union to be recognised by the employer. Some employers, in certain limited circumstances, allow employees to be accompanied by their spouse or a friend but this is not a legal requirement.
The employee's companion role used to be fairly limited but this was extended by section 37 of the Employment relations Act 2004. An employer must now permit the employee's companion to (a) address the hearing in order to (i) put their case; (ii) sum up their case; (iii) respond on the employee's behalf to any view expressed at the hearing; and (b) to confer with the employee during the hearing. The law does not require the employer to permit the employee's companion to answer questions on their behalf or address the hearing if the employee indicates that they do not wish for their companion to do so. Further, the companion's powers cannot be exercised in such a way that prevents the employer from explaining its case or prevents any other person at the hearing from making their contribution.
What if an employee refuses to attend a meeting scheduled by the employer?
A meeting may be postponed by an employee where their chosen companion is unable to attend the meeting. In this event, the employee has the statutory right to postpone the meeting by up to fivr working days, according to section 10 of the Employment Relations Act 1999.
A meeting may also be postponed by the employee due to unforeseen circumstances (e.g. illness, absence abroad). However, an employee need only re-schedule the meeting one more time and if the employee is unable to attend the second meeting for unforeseeable reasons, the statutory procedures are deemed to have been satisfied. In these circumstances, neither party will be held at fault for failure to complete the procedure, therefore award adjustment will not apply.
Are there any exemptions from DDP and SGP?
There is no need for an employer to commence or exhaust the DDP or for an employee to commence or exhaust the SGP where:
either party may be subject to harassment or unreasonable behaviour, such as violence, abuse or intimidation
where it is not practical for the employer to comply - illness, incapability, long-term absence abroad, cessation of business, for example
where the employee has submitted a claim in the tribunal before a modified dismissal procedure is initiated
the case is a collective dispute
the case involves a collective redundancy
the case involves a collective grievance
the employee is seeking interim relief
the employee's dismissal is due to industrial action;
there is a sudden and unexpected cessation of business (premises burn down, for example) and it becomes impractical to employ any employees
where continuing to employ the employee contravenes a legal duty/restriction imposed by law
the parties have recourse to a collectively agreed dispute resolution
the employee is covered by a dismissal procedures agreement
there has been a dismissal and re-engagement unless the employee refuses re-engagement
the case involves national security.
Where does the Acas code fit in?
The statutory procedures should be read in conjunction with the Acas Code of Practice on managing discipline and grievance at work which was implemented by The Employment Code of Practice (Disciplinary and Grievance Procedures) Order 2004 (SI 2004 No. 2356) on 3 September 2003. It is useful to have a copy of this practical code to hand.
Although the statutory procedures set down minimum procedures to be adopted by an employer and employee in terms of steps, it is not prescriptive in terms of how each step has to be implemented in practice.
The Acas code provides some guidance in this respect. For example, Acas recommends that an employer should respond to an employee's written grievance within five days. Conversely, employees should appeal against any disciplinary sanction or dismissal within five days. Employers can set their own time limits provided that they are reasonable.
Can employees be barred from issuing tribunal claims if they miss the three-month deadline due to the statutory procedures?
Employees will be granted an extension of time where they have reasonable grounds to believe that a statutory DDP is still ongoing when the normal time limit expires. Where a grievance is ongoing, a three-month extension will be granted. Appropriate extensions will also be made to discrimination questionnaires accordingly which are also time limited.
What if an employee issues an Employment Tribunal claim without initiating or exhausting the statutory procedures?
The new Employment Tribunal forms now require employees to indicate if they have complied with the statutory procedures and if they have not, why not. Claims may be rejected by the Employment Tribunal or if they are permitted to proceed, the employee's compensation may be reduced by at least 10% and up to 50% percent.
In Noskiw v Royal Mail Group plc , ET Case No. 2602639/04, an employee's claim for disability discrimination was dismissed by the tribunal because he had failed, prior to him issuing his tribunal claim, to raise his concerns with his employer in accordance with the statutory grievance procedure. The tribunal rejected the employee's assertion that raising grievances would have been futile. The employee was given another opportunity to raise any grievances with his employer and then resubmit the claim before the tribunal.
How do I know if something is a disciplinary/dismissal matter as opposed to a grievance?
If there is an express dismissal, the DDP should apply.
If an action is being contemplated by the employer, which is discriminatory or unlawful, the employee should use the SGP. Warnings and suspensions can also be dealt with under the grievance procedure where they give rise to a tribunal claim.
In practice, however, there may be an overlap between the two procedures, such as where an employee raises a grievance during a disciplinary or dismissal hearing.
What are some of the pitfalls for employers?
Existing disciplinary, dismissal and grievance procedures should be audited to comply with the new regulations if they have not been updated since 1 October 2004.
All line managers should be made aware of and trained on the application of the new dispute resolution procedures. The new procedures can be tricky for the unwary and if the statutory procedures are breached, the legal and financial consequences can be burdensome. The DTI has produced detailed guides for employers on the new regulations. These can be accessed at http://www.dti.gov.uk/er/resolvingdisputes.htm.
Remember that the statutory procedures are minimum procedures employers have to adopt. Employers may have more elaborate internal procedures and should remember to comply with their own procedures as well in order to avoid claims.
Last but not least, complying with the statutory procedures avoids an "automatically unfair dismissal" claim but it does not in itself make the dismissal fair. Employers must still have a fair reason for dismissing an employee and must act fairly in relation to that reason prior to their dismissal.
Julian Yew is an employment solicitor in the employment pensions and benefits group at Stephenson Harwood. He is the author of Dismissals: Law & Practice (second edition), published by the Law Society.