Discipline procedures: dawn of a new era?
Of all the rules governing employment, disciplinary procedures are the most difficult to apply. Here, we examine recent developments in the law on discipline and their effect on HR professionals and workplace representatives.
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Key points
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Ensuring high standards of conduct at work, and taking appropriate action when misconduct is evident, can never be an easy process. A major cause of concern for HR is to establish good practice and avoid the possibility of legal challenge, by ensuring that disciplinary action is equitable and thorough. But this is only part of the challenge, because many managers find it difficult to marry HR guidance on how disciplinary action should be handled with their own operational needs, and the rights of individuals to be treated fairly.
Disciplinary policies and procedures among large employers in both the public and private sectors have a tendency to be unwieldy, partly as a result of them having grown organically over a number of years while trying to satisfy the needs of trade unions, HR, managers and, in the case of the public sector, elected politicians. For example, in a typical large local authority or government department, a belt-and-braces approach to discipline policy and procedure may involve the production of a reference document that can run to 50 pages of guidance on how to apply each step of the procedure. Invariably, rather than facilitating efficiency in discipline, this approach tends to create delay and confusion.
In March 2003, Acas1 launched a free online training package that provides practical advice while ensuring that disciplinary and grievance procedures are fair, effective and easy to understand. The service attracted more than 1,000 registered users in its first week, a mark of the considerable interest that exists in getting discipline right.
Changing legal context
The past four years have seen significant developments in the law and practice governing disciplinary action.
The Employment Relations Act 1999 introduced the statutory right for employees to be accompanied by a fellow worker or trade union representative at disciplinary or grievance hearings. This right applies to the broader category of workers, not just employees working under a contract of employment.
Acas published a new Code of Practice on disciplinary and grievance procedures in September 2000, updating the previous Code. Section 3 of the revised Code provides guidance on the right of workers to be accompanied by a fellow worker (of the same employer) or a full-time trade union officer or appropriately certified and experienced lay official at certain disciplinary and grievance hearings.
As with the previous version, the Acas Code is not legally enforceable, but an employment tribunal (ET) is required to take into account any provision of the Code that appears to it to be relevant. This includes the issue of whether or not an employer has acted reasonably in dismissing an employee.
The revised Code places a greater emphasis on involving managers and employees in the formulation of new or amended discipline and grievance procedures. It also highlights the importance of:
The latest development for discipline is embodied in Part 3 of the Employment Act 2002, concerning dispute resolution, that is expected to come into force in October 2004 (box 1). When it does, all employers, regardless of the number of people they employ, will be required to develop and make available to their employees two types of statutory dismissal and disciplinary procedure (DDP), covering different situations.
The Employment Act 2002 gives the secretary of state powers to make Regulations about the time limits for beginning certain proceedings before an ET. These will enable the parties to those proceedings to complete the relevant statutory DDP before a complaint is presented to a tribunal.
New statutory procedures
Many employers lose employment tribunal cases because they fail to follow a fair procedure when dismissing an employee. The Employment Act 2002 attempts to address this perceived problem by requiring all employers to introduce the statutory DDPs. Assuming employers actually comply with the new DDPs, this may help reduce the number of cases where an employer loses at an ET owing to procedural shortcomings. In part, this problem has its roots in the way the tribunals have, over the years, established a system for dealing with claims for unfair dismissal.
Tribunals, when deciding if a dismissal is unfair, tend to divide the reasons into two categories - substantive and procedural unfairness. Procedural unfairness is where the employer has not followed a fair procedure before deciding to dismiss; and substantive unfairness involves instances where the employer does not have one of the five potentially fair reasons for dismissal.
Farewell to Polkey
Under the Employment Act 2002, what has been known for 15 years as the Polkey2 principle will be reversed. The Polkey ruling held that, generally, an employer's failure to follow procedures cannot be justified on the basis that it would have made no difference to the decision to dismiss. However, in assessing compensation, the ET could take into account that dismissal would have been the likely result anyway, if the procedure had been followed properly.
The Polkey ruling (box 2) has been important for HR professionals and trade union representatives, because it has focused attention on adopting a fair procedure before taking a decision to dismiss. Over the years, HR and workplace advisers have been able to use the ruling to convince managers of the need to carry out disciplinary procedures in accordance with the principles of natural justice.
However, the government, and a number of employers' organisations, were concerned that the Polkey principle had resulted in tribunals finding that people had been unfairly dismissed when the employer has made a minor mistake in the procedure they use.
Under the Employment Act 2002, however, failure by an employer to follow a procedure in the dismissal of an employee shall not be regarded by itself as making the employer's action unreasonable, if the employer shows that it would have decided to dismiss the employee even if the procedure had been followed. In other words, failure to follow a disciplinary procedure other than the statutory procedure will not, by itself, make the dismissal unfair. Employers will therefore have to show that if procedures other than the statutory DDPs had been applied properly, the decision to dismiss would still have been made. Even where the employer can show this, the tribunal will still have to assess whether or not the decision to dismiss was within the band of reasonable responses.
Although employment tribunal chairs are not permitted to make public pronouncements on government policy, changes made to tribunal procedures under the Act are known to be unpopular with many of them, particularly in regard to the calculation of compensation in unfair dismissal cases.
Under the Act, an employer's failure to follow the relevant statutory DDP will result in any award of compensation for unfair dismissal being increased. An ET must increase any award by at least 10% but may, if it considers it just and equitable, increase it by up to 50%.
Equally, if a complainant fails to instigate the statutory grievance procedures that exist under the Employment Act 2002 before instituting tribunal proceedings, any award of compensation for unfair dismissal otherwise payable to that employee may be reduced by between 10% and 50%. It has been argued that an employee would have little chance of winning a case of unfair dismissal if they have not registered a formal grievance with their employer.
IRS has not been able to locate any research that identifies the Polkey principle as a major problem, requiring legislation. There are no statistics available on how many dismissals were found unfair on procedural grounds.
According to research by employment lawyers Bob Hepple and Gillian Morris3, Parts 2 and 3 of the Employment Act 2002 signify a desire on the part of government to limit the cost of employment rights.
The authors argue that these Parts of the Act are based on the false premise that there has been an increase in litigiousness on the part of employees who have not attempted to resolve the problem directly with the employer in the first instance before seeking redress at the employment tribunal. And, rather than helping resolve disputes between employers and employees, the Act is likely to increase the number and length of disputes rather than to reduce them.
The research shows that a number of provisions of the Act impose unjustified barriers on access to justice, particularly for the most vulnerable workers. These include:
Brendan Barber, recently elected general secretary of the Trades Union Congress (TUC), says the government's attempts to simplify employment law may leave employees with less protection. A recent TUC report4 suggests that while more individuals are pursuing claims in tribunals, those backed by trade unions are falling.
Unions fear that government plans designed to reduce unfair dismissal claims will in fact lead to more employment rights litigation. The argument is as follows: the obligation on employers to adopt a rudimentary procedure for discipline or grievance issues may actually give employees less protection, because companies will have no legal duty to adhere to anything above minimum procedures. Yet, where an employer does operate a more detailed disciplinary procedure than the statutory DDP, and then follows only the statutory minimum DDP, it may be faced with a claim for breach of contract by the employee.
The TUC is particularly concerned that these attempts to standardise and simplify the system will complicate things further, forcing unions to bring more unfair dismissal claims. At the moment, says the TUC, unions are key in resolving a large number of disputes that don't end up in the tribunals. But it will be hard for workplace representatives to negotiate around the minimum standards envisaged by the government.
Others would argue that the procedural rules to be introduced will supplement the existing laws on unfair dismissal by imposing obligations on employers and employees to discuss their differences before claims are brought. And if disputes cannot be resolved in this way, the employee will still be protected by unfair dismissal legislation. In this context, tribunals will take into account the Acas Code of Practice on disciplinary and grievance procedures, as well as previous case law on what is reasonable.
Claims that new employment legislation will reverse the downward trend in union-sponsored employment tribunal cases have been dismissed by the Chartered Institute of Personnel and Development (CIPD). Mike Emmott, CIPD adviser, employment relations, said the new procedures would improve sub-standard systems. "I doubt whether better employers would axe their current arrangements," he added.
IRS research
During the past 10 years, IRS has conducted a number of employer surveys on developing trends in the operation of discipline policies and procedures. Our last survey, carried out in 2001 (See Managing discipline at work ), revealed that the majority of organisations surveyed (six out of 10) had revised their policies and procedures since we last conducted similar research in 1998. The most common reason for revision was to ensure provision for the new statutory right to be accompanied at a disciplinary or grievance hearing by a fellow worker or trade union representative.
The study also highlighted the increasing trend in managers taking more responsibility for the operation of disciplinary procedures than they did in the past.
Our next large-scale survey of disciplinary practices will take place after the discipline and dismissal provisions of the Employment Act 2002 come into force in late 2004. In the meantime, we spoke to two HR professionals about the challenges they are facing in their revision of disciplinary procedures: Melanie Teasdale, corporate HR manager at Derbyshire County Council, and Emma Brooks, HR adviser at Moat Housing Group.
New legislation helpful
Derbyshire County Council is nearing the end of a review of its disciplinary procedures, and is currently finalising discussion and consultation with trade unions. Like most large organisations, disciplinary procedures form part of collective agreements between employer and unions.
The authority has no plans to fundamentally change disciplinary procedures, but rather to ensure that existing arrangements are better adhered to. Melanie Teasdale says that a particular focus of attention has been ensuring that timescales are set for moving through the stages in the procedure.
Long gone are the days when some high-profile public sector organisations were publicly lambasted for presiding over instances where staff facing disciplinary action remained suspended on full pay from one year to the next. However, within many large public and private sector organisations, there is a tendency for timescales prescribed in disciplinary procedures to slide, sometimes to the point where things start to get out of hand.
Teasdale decided to simplify and slim down the considerable amount of guidance material issued with Derbyshire's disciplinary procedures, such as standard letters, glossary of terms, and weighty explanation of legislation. Additionally, simple guidance is provided on the appropriate action for a manager to take in certain situations; for example, when and how to suspend an employee and how to conduct an investigation.
The discipline and dismissal provisions of the Employment Act 2002 are unlikely to affect large employers such as Derbyshire County Council, who go beyond what the law will require. However, Teasdale argues that large employers should not ignore these provisions in the Act, which she believes present an opportunity for organisations to revisit and update long-standing and often cumbersome approaches to discipline. She adds that the requirement expressly to write disciplinary procedures into individual contracts of employment will focus attention on the working of disciplinary procedures in many large organisations.
Teasdale also points out that the discipline and dismissal provisions of the Act provide an opportunity for employers to look at remedying the problem of not achieving timescales for completing the stages of disciplinary procedures because employees are not available to attend hearings.
Currently an employee can seek to defer the dates of a hearing if they are not available. But Regulations made under the Act will tie down both the employee and the employer as to how long they can seek to defer. This will be helpful to many large organisations who struggle with completing disciplinary cases within reasonable timescales, says Teasdale.
Revising discipline
Moat Housing Group is a leading housing association working in south-east England providing homes and services, including support services to people who need assistance to live independently. The group has grown considerably in recent years as a result of inheriting housing provision from local authorities and the voluntary sector.
The organisation has recently revised its disciplinary procedures. HR adviser Emma Brooks explains that, although there was no need for a radical overhaul of discipline, the old procedures were not up to date with best practice. According to Brooks, there was a need for greater formality, particularly in establishing proper disciplinary hearings. Quite often warnings were issued without a hearing having taken place.
In common with many organisations, managers at Moat Housing Group would issue verbal warnings in one-to-one meetings with employees. Now, it is mandatory that managers do not give verbal warnings without conducting a hearing and applying the basic rules of natural justice (document extract 1). This formality would appear to have had the desired effect because Brooks reports that the number of verbal warnings has dropped considerably since the disciplinary procedure has been changed and made mandatory.
Brooks says that the new approach to discipline attempts to heighten managers' confidence in dealing with often difficult situations, and to help them to manage their staff without HR taking over. To this end the group has placed all discipline policy and procedure in one document, but produced separate user-friendly guidance for managers (document extract 2).
"The reason why we have made the disciplinary procedure mandatory is because there are serious legal consequences of not following it to the letter," says Brooks. She adds that it may be appropriate to streamline other HR policies following new legislation, especially in areas where there is less of a threat of tribunal claims.
1.The Acas discipline and grievance handling training package is available at www.acas.org.uk .
2.Polkey v AE Dayton Services Ltd (formerly Edmund Walker (Holdings) Ltd) [1987] IRLR 503 House of Lords.
3."The Employment Act 2002 and the crisis of individual employment rights", Bob Hepple and Gillian Morris, vol. 31, Industrial Law Journal, issue 3, September 2002, pp.245-269.
4.Focus on employment tribunals, Trades Union Congress, available at www.tuc.org.uk .
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Facts The employee was employed as a van driver, and the employer decided to reorganise its business by replacing its four van drivers with three van salesmen. The employer considered that the employee would not be suitable for employment as a van salesman, and so made him redundant. There was no consultation (as was required by a statutory Code of Practice), and the employee was summarily dismissed and sent home immediately. The employee claimed that the employer had not acted reasonably in treating redundancy as a reason for dismissal, and so he was unfairly dismissed by virtue of the Employment Protection (Consolidation) Act 1978 s.57(3) (the precursor to the Employment Rights Act 1996). The employer claimed that consultation would have made no difference, that he would have been dismissed anyway and therefore, on the basis of British Labour Pump Co Ltd v Byrne [1979] IRLR 94, he was not unfairly dismissed. Held The question depended on the facts known to the employer at the time of the dismissal. The fact that it transpires later that the employee suffers no loss as a result of the procedural unfairness is irrelevant. The likelihood of the employee being dismissed in any event would be relevant to the question of compensation, and not to the question of the fairness of the procedure. The "no difference" principle, established in British Labour Pump Co Ltd v Byrne, was overruled. Polkey v AE Dayton Services Ltd (formerly Edmund Walker (Holdings) Ltd) [1987] IRLR 503 House of Lords. |
