Statutory Dispute Resolution Procedures
On 1st October 2004 new Regulations (the Employment Act 2002 (Dispute Resolution) Regulations 2004) (“the Regulations”) providing for statutory disciplinary and grievance procedures will come into force. The Regulations are made under the Employment Act 2002 and the Government hopes that they will result in fewer applications to Employment Tribunals with employers and employees dealing with disciplinary matters and grievances internally.
However, the Government admits that the Regulations are far from simple, which is of some concern given the consequences of failing to comply with the appropriate procedures: employers will be faced with claims for automatically unfair dismissal (i.e. liability will not be an issue). Importantly, an employee will be entitled to a minimum basic award of 4 weeks pay and could have his or her compensatory award increased by as much as 50% (subject to the statutory cap which is currently £55,000). Moreover, in respect of the compensatory award, the same consequences attach to an employer’s failure to comply with the requirements of the statutory grievance procedures.
Discipline and Dismissal
The statutory Discipline and Dismissal Procedure (“DDP”) must be followed where an employer contemplates dismissing an employee or taking ‘relevant disciplinary action’. The latter is defined as “action, short of dismissal, which the employer asserts to be based wholly or mainly on the employee’s conduct or capability, other than suspension on full pay or the issuing of warnings (whether oral or written)” (Regulation 2(1)). Therefore, the DDP will apply to disciplinary sanctions such as demotion and suspension without pay.
Importantly, the DDP will also apply to all types of dismissal (subject to a few excluded categories detailed below), including conduct and capability dismissals, redundancies, retirement (if the employee is below the normal retirement age) and the non-renewal of a fixed term contract. The requirement to go through the statutory procedures for the non-renewal of a fixed term contract could have a significant impact on public authorities which employ employees on fixed term contracts, such as supply teachers, particularly where the employee moves around various departments or schools. If a fixed term employee has over 1 year’s service they will be able to claim automatically unfair dismissal if the procedure is not followed. Therefore it will be essential to check an employee’s length of service (taking into account any period of service with another school or department) before making the decision not to renew a fixed term contract. Where an employee has one year’s service the DDP will have to be followed. This will be an additional administrative burden for public sector employers.
The DDPs will not apply to the following types of dismissal:-
- Dismissal of a whole category of employees with the immediate offer of re-engagement on new terms;
- Collective redundancies (20 or more redundancies within 90 days);
- Most cases of dismissal of employees taking part in industrial action;
- Sudden and unforeseen cessation of the employer’s business;
- Where continued employment of the employee would be illegal; and
- Where a dismissal procedures agreement applies under s.110 Employment Rights Act 1996.
The Procedures
Under the Regulations there are two types of procedure: the Standard DDP and the modified DDP.
The Standard DDP should be followed in the vast majority of cases. It consists of the following stages:
Stage 1
Statement of grounds of action and invitation to meeting.
The employer must set out in writing the employee’s alleged conduct or characteristics or other circumstances, which led the employer to contemplate dismissing or taking disciplinary action against the employee. This should be sent to the employee and the employee must be invited to attend a meeting to discuss the matter.
Stage 2
Meeting
The employee must take all reasonable steps to attend the meeting.
After the meeting, the employer must inform the employee of his decision and notify him or her of the right to appeal against the decision if he or she is not satisfied with it.
Stage 3
Appeal
If the employee informs the employer of his or her wish to appeal, the employer must invite the employee to attend a further meeting.
The employee must take all reasonable steps to attend the meeting.
After the appeal meeting the employer must inform the employee of his final decision.
The modified DDP does not include the meeting stage. Rather, all the employer is required to do is to set out in writing the employee’s alleged misconduct which has led to the dismissal and the basis (at the time of the dismissal) for thinking that the employee was guilty of the alleged misconduct. It should also give the employee a right to appeal against the dismissal.
The modified DDP applies where:-
- the employer dismissed the employee by reason of his conduct without notice,
- the dismissal occurred at the time the employer became aware of the conduct or immediately thereafter,
- the employer was entitled, in the circumstances, to dismiss the employee by reason of his conduct without notice or any payment in lieu of notice,
- and it was reasonable for the employer, in the circumstances, to dismiss the employee before enquiring into the circumstances in which the conduct took place.
Therefore it will only be in exceptional circumstances that an employer will be able to use the modified procedure as in most cases, even where the employee has committed an act of gross misconduct, it will not be reasonable for an employer to dismiss without having a hearing. If there is any doubt, the standard procedure should be followed.
For both the standard and modified DDP, the Regulations state that each step must be taken without “unreasonable delay”. Whilst this phrase may seem self explanatory it is open to interpretation. What actually constitutes “unreasonable delay”? Ultimately this will be for the Employment Tribunals to determine. However, it may mean employers have to deal with disciplinary matters quicker than they have done in the past in order to avoid falling foul of the Regulations.
In addition, the location and timing of meetings must be reasonable. Again this may cause employers problems. Where employees work different shifts to the manager conducting the disciplinary hearing, it may not be reasonable to hold a meeting during the day if the employee usually works nights. There may also be an issue in relation to location if the employer is based in one part of the country but the employee works in another. If this was the case, it may not be reasonable to require the employee to attend the employer’s premises.
Compensation
As stated above, if the employer fails to follow the appropriate DDP (which will ordinarily mean the standard DDP) the employee will have a claim for automatic unfair dismissal. This means liability and the issue as to whether the employer has acted reasonably will not be considered. The employee will be entitled to a minimum basic award of 4 weeks pay (subject to the statutory maximum of £270 per week) and a compensatory award. Where the employer is at fault in failing to follow the DDP the Tribunal must increase the compensatory award by 10% and may increase it by up to 50% if it is just and equitable to do so. If the employee is at fault (for instance if the employee fails to appeal) then the compensation can be reduced by 10% to 50%.
Minimum Standard
Whilst failing to follow the appropriate DDP will render a dismissal automatically unfair, following the statutory procedures to the letter will not mean any resulting dismissal is necessarily fair. All that the new Regulations do is create a minimum standard to supplement an employer’s existing obligations to act reasonably and fairly. Therefore, an employer can only dismiss for a fair reason (conduct, capability, illegality, redundancy or some other substantial reason) and must follow a fair procedure. The statutory DDPs lay the foundations for a fair procedure but it may be reasonable for an employer to do more. For instance, when dealing with misconduct an employer will still need to conduct a reasonable investigation into the allegations, or if dismissing for performance reasons, the employer should have followed a fair capability procedure over a period of time. Otherwise, any dismissal is likely to be unfair under existing legislation relating to unfair dismissal.
Exceptions
In certain circumstances the DDP will not apply or, if it has already been started, will be treated as having been completed. These are as follows:
- Significant Threat or Harm: if the party has reasonable grounds to believe that commencing the procedure or complying with the subsequent requirement would result in a significant threat to himself, his property, any other person or the property of any other person.
- Harassment - if the party has been subjected to harassment and has reasonable grounds to believe that commencing the procedure or complying with the subsequent requirement would result in his being subjected to further harassment. Harassment is defined as conduct which has the purpose or effect of violating the person’s dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for him. However it will only be regarded as harassment if the conduct should reasonably be considered as having that purpose or effect.
- Not Practicable - if it is not practicable for the party to commence the procedure or comply with the subsequent requirement within a reasonable period. It is likely that the Tribunals will take a fairly strict approach as to whether it was practicable for the party to commence the procedure.
In the first two circumstances, the party responsible (e.g. the harasser) will be treated as having not complied with the procedures and the provisions in respect of compensation will apply in respect of that ‘deemed’ failure.
Grievances
The Regulations also introduce new statutory grievance procedures (“GPs”) which an employee must follow before bringing a claim in an Employment Tribunal. If an employee fails to follow the GP then he or she will not be able to present a complaint in a Tribunal, although the Regulations do contain provisions allowing for the extension of time limits to enable the GP to be followed.
The Procedures
As with the DDP, the Regulations provide for a standard GP and a modified GP.
The standard GP consists of the following stages:
Stage 1
Statement of Grievance
The employee sets out the grievance in writing and sends a copy of it to the employer.
Stage 2
Meeting
The employer must invite the employee to attend a meeting. The employee must take all reasonable steps to attend the meeting.
The employer must be informed before the meeting the basis of the grievance and must have had a reasonable opportunity to consider his response.
After the meeting the employer must inform the employee of his decision as to the grievance and notify the employee of the right to appeal against that decision if the employee is not satisfied with it.
Stage 3
Appeal
If the employee informs the employer of his or her wish to appeal, the employer must invite the employee to attend a further meeting.
The employee must take all reasonable steps to attend the meeting.
After the meeting the employer must inform the employee of his final decision.
Again, as with the modified DDP, the modified GP does not involve a meeting. The employee is required to set out the grievance in writing and the basis for it and the employer is only required to set out his response in writing to the employee. However, the modified GP can only be used where:-
- (a) the employee has ceased to be employed by the employer;
- (b) the employer -
(i) was unaware of the grievance before the employment ceased, or
(ii) was so aware but the standard grievance procedure was not commenced or was not completed before the last day of the employee's employment; and
- (c) the parties have agreed in writing in relation to the grievance that the modified procedure should apply.
As before, the timing and location of meetings must be reasonable and each step must be taken without unreasonable delay.
Compensation
As with the DDP, if an employer fails to comply with the GP then a tribunal can increase an employee’s compensation by 10% and, if just and equitable to do so, may increase it by up to 50%. Likewise, where the employee is at fault the compensation will be decreased by 10% and may be increased by up to 50%.
In addition, the same exceptions in relation to the DDP (significant threat, harassment, whether it was practicable) apply to the GP (see ‘Exceptions’ above). Therefore, if the employer has subjected the employee to harassment and the employee believes that if she would suffer further harassment if she followed the GP, the employer would be taken to have failed to comply with the procedure. Therefore, the employee’s compensation could be increased by up to 50%.
It is important to remember that even where an employee has left, the GP will still need to be followed.
Comment
The new statutory procedures will have a significant impact on current practices and Tribunal decisions. However, due to the complexity of the Regulations, the uncertainty caused by overlapping procedures and the use of ambiguous terminology, it seems that the procedures are likely to cause more problems than they resolve.
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