Employers only have a few months to get to grips
with new disciplinary and grievance procedures. Julian Yew outlines the changes
and their potential impact.
New
statutory procedures governing disciplinary, dismissal and grievance issues
will overhaul how workplace disputes have to be resolved on and after 1 October
2004.
Consultation
on the DTI's implementation of the Employment Act 2002 (Dispute Resolution)
Regulations 2004 ended on 29 October 2003. On 20 January 2004, the DTI published
the public's response and placed amended draft regulations before Parliament.
Employers
have to brace themselves for the new regime. The statutory procedures will
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.
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.
Much
to the relief of employers, the statutory procedures will not have contractual
effect, as the DTI wishes to monitor how the new procedures operate in practice
to gauge their effectiveness before invoking s.30.
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?
This
standard procedure will apply where the employer intends to take disciplinary
action (eg, suspension without pay, demotion or loss of pay) in relation to the
employee's capability and/or conduct. It will also apply to dismissals
involving capability dismissal, conduct dismissals, individual redundancy
dismissals, non-renewal of fixed-term contracts and retirement dismissals.
The
DDP will not apply when employers give warnings or suspend an employee on full
pay. The exclusion of warnings is inconsistent with s13(4) Employment Relations
Act 1999, which defines a disciplinary hearing as one which involves the
"administration of a formal warning". The author envisages that s.13 will have
to be amended by Parliament in due course. Further, the arbitration and
conciliation service, Acas, will need to classify what constitutes a
disciplinary hearing in its code to achieve consistency with the statutory
procedures.
When
will the modified DDP apply?
A
modified DDP applies where the employment has terminated. It will only apply to
gross misconduct cases.
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'. This is
slightly different from the definition in s.13(5) Employment Relations Act 1999
as the DTI states that disclosures made under the Public Interest Disclosure
Act 1998 fall outside this definition. Thus, employees will 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, the parties 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.
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
(eg, illness, incapability, long-term absence abroad, cessation of business)
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
(e.g. premises burn down) 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 (eg,
changes to contractual terms) unless the employee refuses re-engagement
the case involves national security.
Where
does the Acas code fit in?
There
was considerable opposition to a separate code of practice for small
businesses. On 21 January 2004, Acas published a revised draft code of practice
on disciplinary and grievance procedures which, when effective, will apply
toall employers regardless of their
size. The code can be seen online at http://www.acas.org.uk/publications/pdf/CP01.2.pdf
Consultation
on the draft code closes on 14 April 2004.
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.
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
do employers need to do now?
Businesses
only have the next few months to understand and apply the new regime where they
have to resolve any disciplinary, dismissal or grievance issues at work.
All
line managers should be made aware of and trained on the application of the new
dispute resolution procedures. Existing disciplinary, dismissal and grievance
procedures will also need to be audited to comply with the new regulations.
The draft regulations can be seen at http://www.hmso.gov.uk/si/si2004/draft/20048455.htm
Julian Yew
is an employment solicitor in the Employment Pensions & Benefits Group at
Stephenson Harwood.
His book Dismissals: Law & Practice (second edition), published by the Law
Society, is out in Autumn 2004.
