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Staff dismissal - changes in the law

Published on: 27 Apr 2009

From this month, employers who fail to follow a new code of practice when dealing with discipline and grievances will be liable to pay more compensation.


To avoid findings of unfair dismissal and increased awards for damages, employers must make sure that they have got to grips with the changes.


Among other things, the 2008 Employment Act has removed the statutory dismissal and grievance procedures. Employers will now be encouraged to comply with the revamped ACAS (Advisory, Conciliation and Arbitration Service) Code of Practice on Disciplinary and Grievance Procedures, which tribunals look at when hearing cases.


The code sets out key principles, but is not a substitute for the employer having their own disciplinary and grievance procedures. When issuing terms and conditions to an employee, an employer is required to specify the disciplinary and grievance procedures that apply, or to inform employees where the documents can be located. Failure to do so can lead to compensation being paid to an employee.


The code provides guidance on what is expected from an employer, and employees, when a disciplinary issue or grievance arises. It stresses the need for fairness and transparency and the use of rules and procedures.


Indeed, employment tribunals will note what is ‘fair and reasonable’ when deciding cases, and will consider whether the employer has followed the principles set out in the code. It will not apply to dismissals on the basis of redundancy or the nonrenewal of fixed-term contracts on their expiry.


There is no prescriptive definition of a disciplinary situation, but the code anticipates dealing with issues relating to poor performance and misconduct. However, it makes the point that some employers may have separate policies to deal with conduct, such as poor performance and harassment issues.


The code sets out key principles which need to be applied fairly by an employer and the requirements for a fair process:

  • Employers are responsible for carrying out any investigations necessary to establish the facts of the case.
  • Employers should inform employees of the cause of the problem and provide them with an opportunity to put their case in response before any decisions are reached.
  • The code repeats details of an employee’s statutory right to be accompanied at any formal disciplinary meeting.
  • Following the meeting, employers must decide whether any disciplinary action is justified and inform the employee in writing of the decision.
  • Employers should allow employees to appeal against any formal decision and notify the employees in writing of the outcome of an appeal hearing. In terms of a grievance, the code simply states that grievances are concerns, problems or complaints that employees raise with their employers. The code provides only general guidance on what an employer is required to do when dealing with a grievance.
  • If it is not possible for the employee to resolve the grievance informally, employees should raise the matter formally, in writing, and without unreasonable delay with a manager who is not the subject of the grievance.
  • On receipt of a grievance, the employer should arrange a formal meeting without unreasonable delay. The employee should explain their grievance and be given the opportunity to say how they think it should be resolved.
  • Where an employee’s grievance relates to a complaint about a duty owed by the employer, then the employee has the right to be accompanied by a work colleague or a trade union representative.
  • Following the meeting, the employer needs to decide whether any further investigation is required and what action it needs to take.
  • Where an employee is unhappy with the outcome, they should be allowed to appeal and set out the grounds for their appeal without delay in writing.

But from this month, an employee will be able to bring a claim in the tribunal without having first raised a grievance with the employer. As for ACAS, it will be under a new duty to continue conciliation throughout the proceedings until the case is heard.


Why are we having more changes in this area?


Since October 2004, employers have had to grapple with statutory dispute resolution procedures which imposed minimum standards on employers when dealing with disciplinary and grievance issues. The procedures were introduced to encourage employers to resolve disputes in the workplace but failed to achieve this aim.


The government commissioned an independent review of the procedures, which found that although the statutory procedures encouraged early resolution of disputes in some cases, they created a high administrative burden with unintended negative consequences.


What are the penalties for not following the new rules?


From this month, a tribunal will be able to find that a dismissal is unfair on procedural grounds alone and reduce or eliminate the employee’s compensatory award to reflect the likelihood that a dismissal would have gone ahead where a fair procedure had been followed.


A failure by employers to follow the new code of practice does not mean that tribunal proceedings will immediately follow.


However, where tribunal proceedings are issued, an employer’s failure to observe the requirements of the code may result in an employment tribunal increasing the compensation payment to an employee by up to 25 per cent. Similarly, where an employee unreasonably fails to comply with the code the amount of compensation awarded may be reduced by up to 25 per cent.


For more information, visit the ACAS website