Employment Law: Important Changes to Disciplinary, Dismissal and Grievance Procedures

The Statutory Dispute Resolution Procedures (the "DR Procedures") are due to end on 6 April 2009, and will be replaced by a new Acas Code of Practice (the "Code") and a new 74 page ACAS guide.

The DR Procedures were introduced in 2004 to provide a system for both employers and employees to deal with disciplinary, dismissal and grievance issues that arose in the work place. Failure to comply had serious legal consequences resulting in automatic findings of unfair dismissal and financial penalties.

The aim of the DR Procedures was to reduce conflict between employers and employees at an early stage and therefore reduce the number of claims in the Employment Tribunal. In reality, they had the opposite effect with one particularly adverse side effect being the increase in satellite litigation about the DR Procedures themselves.

So, it's goodbye to the DR Procedures and hello to the Code (and new ACAS guide). However, this does not mean that from 6 April the DR Procedures can be ignored altogether. Employers will still need to follow a fair procedure in dealing with disciplinary and grievance issues as set out in the Code, and there are transitional provisions to deal with disciplinary, dismissal & grievance situations that straddle pre and post 6 April.

The main headline points for employers to note are as follows:-

• As with the DR Procedures, the Code only applies to Employees.

• There will no longer be a finding of automatic unfair dismissal because an employer has failed to comply with one of the steps in a disciplinary or grievance procedure.

• The Code is not legally binding but whilst a failure to follow its provisions will not automatically result in a penalty nevertheless, the Tribunal will have reference to the Code in deciding whether an employer has acted fairly and reasonably.

• There will no longer be an automatic uplift of between 10% and 50% for a failure to follow the DR Procedures (or in the case of an employee an automatic decrease for a failure by the employee to follow the DR Procedures). However, if an employer fails unreasonably to follow the guidance set out in the Code then the Tribunal may in certain cases increase any compensation by up to 25% or, decrease it by up to 25% if an employee fails unreasonably to follow the Code.

• In assessing the 25% increase or decrease, case law on the point relating to the DR Procedures will no doubt continue to be relevant since the test for the Tribunal is whether:-
  (i) the failure by the employer or employee has been unreasonable; and
  (ii) the Tribunal considers it just and equitable to make the increase or decrease.

• Unlike the DR procedures which were applied uniformly to all employers regardless of individual factors such as size, resources and workforce, there is no longer a "one size fits all" approach under the Code. Employers will need to be more creative and flexible in line with the resources available to their organisation in dealing with disciplinary and grievance matters in order to show Tribunals that they have acted reasonably in all the circumstances.

• The Code does not apply to redundancy dismissals or to the non-renewal of fixed term contracts. This is a marked departure from the DR Procedures as the Statutory Dismissal Procedure did apply to non-collective redundancy dismissals (i.e. less than 20 employees being made redundant) and to the non-renewal of fixed term contracts and there is large uncertainty at present how these types of dismissals will need to be conducted.

• Notwithstanding the Code does not apply to redundancy dismissals, employers would be unwise to abandon a similar consultation procedure for redundancy. A fair procedure must still be followed in the case of redundancies and this normally envisages a process involving meetings with individuals, discussions about scores and selection criteria and letters confirming decisions and providing information. Also, the collective consultation rules still apply to collective redundancies.

• The Code follows similar principles to previous Acas codes of good practice. However, it does introduce the concept of an employee being given the opportunity to call relevant witnesses to a disciplinary hearing. This could include witnesses on whom the employer is relying, thus making the hearing more adversarial in format.

• The Code simplifies the situation whereby a grievance is raised during a disciplinary process. Under the DR Procedures this had become very complicated with rigid rules and little flexibility to deal with the situation. The Code provides that in this situation, the disciplinary process may be temporarily suspended in order to deal with the grievance. If the grievance and disciplinary are related then it may be appropriate to deal with both issues concurrently. This gives employers more leeway.

• The DR procedures applied to grievances raised by employees, even if they had left the employment. It is unclear whether the Code applies in this situation as it is silent on the point. However, if employers do receive grievances from employees in resignation letters or after they have left, it is recommended that an employer at least responds in writing (and in some situations tries to arrange a meeting) to minimise the risk of a 25% uplift if the former employee subsequently brings a successful claim.

• The DR Procedures must still be followed in
  (i) Disciplinary, dismissal and grievance situations that formally commence before 6 April 2009; and
  (ii) Grievance situations that have their origins prior to 6 April, and continue after that date provided a formal grievance is made or a claim is brought in the Employment Tribunal by 4 July 2009.
  There are detailed transitional provisions in place relating to this and it is recommended that you take legal advice if you think you are in this situation.

• In light of these changes, we have revised our disciplinary and grievance procedures for clients. Please contact one of our Employment group partners for further information:

Marian Derham
marian.derham@harbottle.com
020 7667 5222

Howard Hymanson
howard.hymanson@harbottle.com
020 7667 5161

Joanne Twiss
joanne.twiss@harbottle.com
0207 667 5200

Employers are also advised to read the Code which is 10 pages long and its accompanying guidance (slightly longer at 74 pages), both of which are available on the ACAS website www.acas.gov.uk.

Summary Table of Main Changes

Pre-6 April 09	Post 6 April 09
DR Procedures	The Code
Failure to comply= automatic unfair dismissal	Unreasonable failure to follow?
Standard 3 step process applied uniformly regardless of individual organisation	More emphasis on individual organisation & circumstances in assessing reasonableness
10-50% increase/decrease	25 % increase/decrease
Applies to non-collective redundancy dismissals and non-renewal of fixed term contracts	Not applicable to redundancies or non-renewal of fixed term contracts
Require questions to be put to witnesses	Call witnesses to hearings
Complicated provisions where grievance raised during a disciplinary or redundancy	Simplified process with more flexibility

AND BEWARE: Transitional provisions for disciplinary, dismissal & grievance situations straddling pre & post 6 April 09.