Managing disputes: what the law says
Section 2 of the Personnel Today Management Resources one stop guide on managing disputes. Other sections.
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Understand the statutory procedures Find answers to frequently asked questions about handling disputes Outline key employer responsibilities with
regard to bullying and harassment in the workplace |
There are many areas of employment law that touch on an employer's rights and responsibilities when handling disputes. The new regulations introducing statutory disciplinary and grievance procedures are just the tip of the iceberg - employers also need to bear in mind many other pieces of legislation, from the Health and Safety at Work Act to the Public Interest Disclosure Act, as well as the law governing contractual rights and negligence.
In this section we give an overview on how this jigsaw puzzle of duties fits together, and what employers should do to maximise their chances of staying within the law.Details of all the relevant legislation and case law can be found at the end of the section.
What legal status will the new statutory procedures have?
Until now employers have never been legally required to make available written disciplinary or grievance procedures to employees, although in organisations with 20 or more employees, they have been required to issue staff with a written statement of terms and conditions which must set out what the employee can do if dissatisfied with disciplinary action taken against them (Employment Rights Act 1996).
The Employment Act 2002 (Dispute Resolution) Regulations 2004 means employers, regardless of the number of people they employ, must adopt the appropriate one of two minimum statutory disciplinary procedures when carrying out a dismissal or other disciplinary action - or face a finding of automatic unfair dismissal in a tribunal (subject to normal qualifying conditions) and an increase in the award made of between 10 and 50 per cent.
All employers, regardless of the number of staff they employ, must mention their disciplinary rules and the new minimum procedures in the written statement. The tribunals are required to award compensation to employees who are found to have received no such statement or one that is incomplete or inaccurate.
Equally, every employer has the right not to have to defend itself at tribunal over a grievance unless the employee in question has written a letter complying with step one of the grievance procedures and waited 28 days.
The Government has decided not to implement section 30 of the Employment Act 2002 which would have meant the statutory procedures would be written into every contract of employment. This would have meant any failure by the employer to follow them would have allowed the employee to claim breach of contract. The Government said it would consider whether to do this following a review of the impact of the regulations in 2006.
When does a worker involved in a statutory procedure have the right to be accompanied?
Under the Employment Relations Act 1999, workers have the right to be accompanied at a disciplinary or grievance hearing by a trade union representative or a colleague. The Employment Act 2002 stipulates that any meeting held for the purposes of any of the statutory dispute resolution procedures will trigger this right.
The companion has the right to address the hearing to put the worker's case, sum up the case, respond on the worker's behalf to any view expressed during the hearing, and confer with the worker after the hearing. They do not have the right to answer questions on behalf of the worker, address the hearing without the worker's consent, or do anything calculated to prevent the employer explaining its case or stop anyone else at the hearing making a contribution.
If we follow the procedures to the letter will we definitely win an unfair dismissal case?
No. Even if the statutory procedure is followed, the dismissal may still be judged unfair if following additional procedural actions beyond the minimum statutory ones would have prevented the dismissal - or if other aspects of dismissal law are breached. For more on how to conduct a fair dismissal see section 5 .
However, the Employment Act 2002 does introduce an important new defence. The tribunals have traditionally put a lot of weight on questions of disciplinary procedure, especially following the 1988 House of Lords decision, known as 'Polkey'.1 This meant an employer could not generally excuse its failure to follow appropriate disciplinary procedures before dismissal by saying it would have made no difference to its decision if it had.
Section 34 of the Employment Act 2002 changes this. It amends the Employment Rights Act 1996 to say that tribunals must ignore an employer's failure to follow any disciplinary procedures beyond the statutory minimum- provided that any additional procedures would not have saved the employee(s) from dismissal.
Research says most grievances are about harassment and bullying. What are our legal duties in this area?
An employer can be liable for the harassment or victimisation of an employee by other employees on the grounds of sex, race, disability, religion or sexual orientation - and, from 2006, age -if it does not take reasonable steps to deal with allegations of such conduct and to prevent it taking place or recurring. Many of the principles developed in this area of the law apply to all the forms of discrimination.
Harassment is defined in statute as unwanted conduct on the particular grounds complained of with the purpose or effect of violating someone's dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for that person.Whether someone has been harassed is considered on the basis of whether, in all the circumstances, especially the perception of the complainant, it should reasonably be considered as having that effect.
It does not matter if the alleged perpetrator had no intention of causing offence - perhaps they were merely partaking in banter or sending an offensive email which someone else saw by accident. Whether the employer is duty bound to act depends on how the claimant actually reacted and felt, rather than the intention of the harasser.
Victimisation is defined as less favourable treatment because the complainant brought proceedings under the appropriate statute, gave evidence/information in connection with such proceedings, did anything under/by reference to the statutes or alleged that anyone had committed an act which (whether or not the allegation said so) would amount to a contravention of the statute - or because the discriminator knows the complainant intends to do any of those things, or suspects that the complainant has done/intends to do any of them.
There is no victimisation if the allegation, evidence or information was false and not made or given in good faith.
In most cases, harassment will be a course or pattern of behaviour, which becomes harassment once the recipient makes it clear she or he finds it unwelcome and the perpetrator persists. But a single incident may be harassment if it is sufficiently serious or offensive, such as sexually or racially motivated assault or an extremely offensive remark.
For the employer's duties to be triggered, the harasser must have been acting 'in the course of employment'. However, an employer does not have to have authorised the conduct, or even have any knowledge of it, to be liable.2
While it is unlikely any duty will arise where the harassment takes place at a victim's home or, say, in the pub after work, it may arise if the victim is at a social event connected with work and attends in his or her capacity as an employee.
The legislation provides that an employer must take such steps as are reasonably practicable to prevent harassment taking place, or to prevent it happening again - or else be liable.
The tribunals have developed this to mean the employer should not only have specific policies and procedures both to prevent and deal with disputes, but it should also ensure staff, and especially managers and supervisors, are aware of and trained in the procedures. Even then the tribunal may still ask what further steps the employer could have taken, and whether it would have been reasonably practicable to take them.3
Is there a similar duty to deal with bullying?
Employers are not bound by statute to deal with bullying that is not based on grounds included in discrimination law, but they do have duties towards their employees both to protect them from the negative effects bullying may cause, and to stop the employment relationship from breaking down through bullying.
An employee can seek legal redress for bullying by showing that the bullying caused extreme stress and that the employer should have been aware of this and dealt with it (see below for more on stress).
They may also be able to claim constructive dismissal based on breach of contract - specifically the implied term of mutual trust and confidence. This is implied into every employment contract and means employers and those in whom they entrust the day-to-day operation of the employment relationship, ie managers, must not treat an employee in a way that is calculated or likely to destroy or seriously damage the relationship, which is one based on confidence and trust.
This implied term has been invoked in many cases involving bullying and disputes. One of the earliest cases was brought by an employee who had worked as an overseer for the textile company for 18 years.4 During the course of an argument with one of his managers, the manager said to him: "You can't do the bloody job anyway." The employee immediately resigned and claimed constructive dismissal, arguing successfully he was justified in doing so because of the nature of the comment and the fact there was no truth in it.
Since then, the implied term of mutual trust and confidence has been used successfully to claim compensation for abusive or bullying remarks and treatment.
The key in such cases is whether the behaviour or comments are so serious that they entitle the employee to walk out immediately, claiming the employer has breached the terms of the contract to such an extent that they no longer bind the parties together. This is for tribunals to decide on the facts of the case.5 Important considerations are whether the treatment came from someone in the organisation who could be deemed to have the employer's authority; whether the employer dealt with the matter swiftly and offered an immediate retraction or apology; whether the employee was overly sensitive or inflexible; whether the incident could have been foreseen and therefore averted; and whether the employee's behaviour was as bad as the employer's.
It is, therefore, imperative to ensure managers act out their responsibilities properly, through appropriate recruitment, written policies, training and development. Training managers in grievance and disciplinary procedures is important in ensuring that disputes are dealt with in such a way that the employment relationship can be salvaged.
Can parties to a dispute claim damages for the way the employer disciplined or dismissed them?
The implied term of trust and confidence has been used to claim damages for psychiatric injury caused by the way in which the employer has carried out disciplinary procedures. In the Gogay case,6 a care worker in a children's home was implicated by a 13-year-old resident in circumstances that might have suggested sexual abuse, and was suspended pending an investigation. The worker was informed by letter that she was suspended and that an allegation of sexual abuse was being investigated. By the time the council decided there was no case to answer, the worker was clinically depressed and too ill to return to work.
The Court of Appeal decided that the council's handling of the situation was in breach of its obligation to the worker not to act, without reasonable and proper cause, in a way that seriously damaged the employment relationship. The suspension was a knee-jerk reaction, based on inadequate information. There were alternatives that should have been considered, such as a transfer, or a short period of leave.
While the case turns on extreme circumstances, it illustrates that even organisations that have so much at stake if they mishandle serious allegations need to act coolly, rationally and carefully, and be aware at all times of their duty of care, not just towards possible victims, but also towards alleged perpetrators.
The duty of trust and confidence continues until the decision to dismiss someone is made, and can apply to any investigation or evaluation leading to such a decision, but does not apply to the manner in which a dismissal is carried out.7
What are the employer's duties in relation to stress arising from disputes?
Employers have duties under health and safety law and negligence law to protect employees from undue or obvious stress, and this can include the stress arising from disputes, and also the stress arising from the way disputes are handled.
Every employer has a duty under the Health and Safety at Work Act 1974 to ensure, 'so far as is reasonably practicable', the health, safety and welfare at work of all his employees. This means employers have to have systems to ensure employees are not exposed to high levels of stress that could cause them harm such as physical or mental ill health.
Employers also have duties under the Management of Health and Safety at Work Regulations 1999 (MHSWR) to carry out risk assessments to weigh up the likelihood of stress causing harm and put in place appropriate measures if necessary.
The HSE's draft management standards on stress provide some guidance on the sort of measures that are likely to meet these duties. The standards say, for example, that to avoid undue stress from 'negative relationships' in the workplace - this covers harassment and bullying - organisations should aim for a 'state to be achieved' where they:
Other standards cover demands (such as workload), control, support, roles and management of change.
While they are for guidance only, a central theme is that employers should have ways of allowing concerns to be expressed by employees and dealt with, both formally and informally. In other words, the HSE puts great store by effective disciplinary and grievance policies and procedures when it comes to dealing with stress.
The HSE standards arise from the fact that disputes over workload, bullying, restructuring and job uncertainty - and the failure to manage such disputes - have been recurring themes in the six-figure damages awards made for stress over the past 10 years.
Employers may be liable for negligence if they are aware, or should be aware, of a dispute in the workplace that is having a serious effect on the mental well-being of workers and they do nothing about it. This was established by the House of Lords in a case where a female police officer complained internally that she had been raped by a fellow officer while off duty at the police residences.8 She alleged her employer failed to deal with the complaint and "caused and/or permitted officers to maliciously criticise, harm, victimise, threaten, assault and otherwise oppress her" in a campaign of victimisation.
The House of Lords agreed that this amounted to negligence - although it stressed that it was not every case of conflict between employees that would render the employer liable, and that an employee "may have to accept some degree of unpleasantness from fellow workers".
Should damage have been foreseen?
Claims for personal damages arising from stress turn on whether the employer should have reasonably foreseen that someone might be harmed by work-related stress and should have done something about it. The Sutherland v Hatton case9 established factors that will be taken into account in answering the foreseeability question. These include:
The court will try to identify the steps the employer both could and should have taken. The key in such cases is that the employer must react promptly to indications of stress such as a medical note, an employee complaint or comments.
The Court of Appeal said an employer who offers a confidential advice service, with referral to appropriate counselling or treatment services, is unlikely to be found in breach of duty. It also made clear that if the only reasonable and effective step to alleviate the stress caused by a dispute would be to dismiss or demote the employee under stress, the employer will not be in breach of duty in allowing a willing worker to continue in the job.
What if a dispute escalates to such an extent that a worker takes the matter outside the organisation?
Employees have protection under a number of statutes from victimisation and dismissal for reporting alleged breaches of the law in the workplace by either employers or other employees.
For example, the Trade Union Reform and Employment Rights Act 1993 protects employees from victimisation for blowing the whistle on breaches of health and safety law, while the Trade Union and Labour Relations (Consolidation) Act 1992 protects employees from victimisation on the grounds of trade union membership or non-membership.
The Public Interest Disclosure Act 1999 (PIDA) introduced much wider protection for whistleblowers. It renders automatically unfair any dismissal of an employee because they have made a 'protected disclosure'. This includes any disclosure of information which in the reasonable belief of the discloser tends to show, for example, a failure to comply with a legal requirement, that a criminal offence has been committed, or that there is danger to health and safety or the environment.
The Act encourages internal disclosures wherever possible, but provides that disclosures about serious matters to agencies outside the organisation such as the police or relevant authorities may be justified in certain circumstances, such as if the discloser fears internal disclosure will result in victimisation.
The PIDA protection does not require any qualifying service and there is no cap on compensation, which has made it a possible alternative to an unfair dismissal claim for employees who do not have the one year qualifying service.
The Act has been invoked in a number of cases involving disputes between employer and employee. For example, Mr A reported complaints by two employees he managed of sexual assaults, after which he and the two alleged victims were threatened with dismissal and slander actions if they mentioned the incidents to anyone. When an employee asked Mr A what was happening to the alleged assailant, Mr A said he might not be coming back. The employer viewed this as a breach of confidence and disciplined Mr A with a written warning. He then went off sick with stress and later resigned. Mr A was awarded £140,000, of which £5,000 was aggravated damages because the employer's behaviour was 'totally inappropriate'.10
For more on the law and whistleblowing, go to the Public Concern At Work website at www.pcaw.co.uk.
Below are the pieces of legislation that are important to this area, in order of their relevance in the text, with links to further information. Most of the legislation itself can be downloaded at www.hmso.gov.uk.
Case law
1. Polkey v AE Dayton Service Ltd [1987] IRLR 503 HL
2. Jones v Tower Boot Company (1997 CA)
3. Canniffe v East Riding of Yorkshire Council (EOR 93)
4. Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84
5. Moores v Bude Stratton Town Council [2001] ICR 271
6. Gogay v Hertfordshire County Council [1996] AC 155
7. Johnson v Unisys Ltd [1997] IRLR 462
8. Waters v Commissioner of the Metropolis [1997]
9. Sutherland v Hatton [2002] EWCA Civ 76
10. A v X [2001]
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Section 1: Introduction
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