Statutory dispute resolution procedures: the dismissal and disciplinary procedures
Victoria Parry, of Osborne Clarke, analyses the new statutory dismissal and disciplinary procedures, which come into effect on 1 October 2004.
Introduction
The Employment Act 2002 introduced new statutory procedures for workplace dispute resolution. These will become effective from 1 October 2004 and will apply to all employers and employees. The new procedures are set out in the Employment Act 2002, Schedule 2 and affect dismissal, disciplinary and grievance procedures. In this week's article, we consider the statutory disciplinary and dismissal procedures.
Recent research by the Engineering Employers' Federation found that the number of disputes referred to employment tribunals increased by 50% over the past five years. This is expensive for the taxpayer and costly and time consuming for businesses. The Government hopes that the new legislation will encourage parties to resolve disputes within the workplace rather than at an employment tribunal. However, the new legislation has had a mixed reaction. ACAS has welcomed it, and produced a revised Code of Practice on Disciplinary and Grievance Procedures (PDF format), which takes into account the new procedures. The TUC is less happy, saying that the complicated legislation will result in more disputes rather than fewer.
Although the Government initially intended to make the procedures contractual, which could have resulted in breach of contract claims from employees with less than one year's service, it has decided not to do this yet.
The new procedures
There are two dismissal and disciplinary procedures under the new legislation. The first is the standard (three-step) dismissal and disciplinary procedure, which applies in the majority of situations. The second is the modified (two-step) dismissal procedure, which applies in only very limited situations.
Although the statutory procedures apply to the majority of dismissals, some are excluded. The dismissals to which the procedures do not apply are those where:
In addition, the statutory procedures will not apply if there are reasonable grounds for the employer or employee to believe that applying the relevant statutory procedure would threaten a person or property or result in further harassment of one of the parties, or if it is not practicable to comply with the procedure within a reasonable period.
The standard procedure
The standard procedure will apply to all dismissals, except those listed above and those for which the modified two-step procedure is appropriate (see below). It will also apply where, for a reason related to the employee's conduct or capability, the employer takes action short of dismissal such as altering an employee's duties, docking pay, suspending on no pay, reducing a bonus or demotion. However, controversially, the procedure will not apply to suspension on full pay or to the issuing of warnings.
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Standard (three-step) dismissal and disciplinary procedure |
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Step one: statement of grounds for action and invitation to meeting |
The employer must set down in writing the nature of the employee's alleged conduct or characteristics or other circumstances that may result in dismissal or disciplinary action, send this statement or a copy of it to the employee, and invite the employee to a meeting to discuss the issues. |
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Step two: meeting |
The meeting must take place prior to any action being taken, except where the disciplinary action consists of suspension. By the time of the meeting the employee must have been informed of the basis for including the grounds given in the step-one statement, and have had a reasonable opportunity to consider his or her response to that information. The employee must take all reasonable steps to attend the meeting, and afterwards the employer must inform the employee of its decision and of his or her right of appeal. |
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Step three: appeal |
If the employee wishes to appeal he or she must inform the employer. The employer must then invite the employee to attend a further meeting to determine the appeal, which the employee should take all reasonable steps to attend. Any disciplinary action or dismissal may occur prior to the appeal meeting. After the appeal hearing the final decision must be communicated to the employee. |
The modified procedure
This procedure applies in place of the three-step standard procedure in very limited situations.
It is to be used only by an employer who dismissed by reason of conduct without notice (or by payment in lieu of notice) immediately after it became aware of the conduct, and where it was reasonable to dismiss before enquiring into the circumstances in which the conduct took place.
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Modified (two-step) dismissal and disciplinary procedure |
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Step one: statement of grounds for action |
The employer must set down in writing the nature of the alleged misconduct that has led to the dismissal, the basis for the thinking at the time of the dismissal that the employee was guilty of the alleged misconduct, and the right to appeal against the decision, and send this statement or a copy of it to the employee. |
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Step two: appeal |
If the employee wishes to appeal, he or she must inform the employer. The employer must invite the employee to attend a meeting to discuss the appeal, which he or she should take all reasonable steps to attend. After the appeal meeting the final decision must be communicated to the employee. |
Compliance with the procedures
Once all the stages of either statutory procedure have been applied up to the appeal procedure, the parties will be deemed to have complied with that statutory procedure. If the employer has sent a written statement of the issue to the employee, held a meeting to discuss it and then informed the employee of the outcome in writing, and the employee has then made an application to the tribunal for interim relief, or used an appeal procedure under a collective agreement, then the parties will also be deemed to have complied.
Failure to comply with the procedures
If the parties fail to comply with the statutory procedure then any failure will be attributed to the party at fault. If the employer is at fault, this will automatically amount to unfair dismissal and lead to an increase in the amount of compensation by between 10 and 50%. Where the employee is at fault, this will lead to a reduction in any compensation payable by between 10 and 50%.
Employers should bear in mind that applying the relevant statutory procedure does not necessarily make a dismissal fair. They will still need to behave reasonably in all the circumstances in order to avoid a finding of unfair dismissal.
Extension of the time limit for applying to the employment tribunal
In order to allow the parties enough time to follow the new procedure, tribunals will extend the time limit for bringing a claim by a further three months where the employee had reasonable grounds for believing that a dismissal or disciplinary procedure was being followed in respect of matters that included the substance of the tribunal complaint.
Next week's article will consider the new standard and modified grievance procedures.
Victoria Parry is a partner at Osborne Clarke (victoria.parry@osborneclarke.com)
Further information on Osborne Clarke can be accessed at www.osborneclarke.com
