Important statutory dismissal and grievance procedures are set to change under new proposals due in 2009. These developments are “must know” for all staff at buyers and sellers of marcoms services with responsibility for dismissal, disciplinary or grievance action, whatever the size of the company. Naomi Flynn tells us more.
Topic: Grievance procedures
Who: UK Employers & Employees
Where: UK
When: April 2009
Law stated as at: 27 November 2008
What happened:
The current dismissal and grievance procedures require employers to follow set statutory procedures when dealing with disciplinary, dismissal or grievance issues. Failure to do so can leave employers exposed to successful automatic unfair dismissal claims by their employees and an uplift in any damages awarded to the employee by an Employment Tribunal of up to 50%.
The procedures have hit the marketing services industry hard, with many companies (particularly smaller agencies) overlooking the procedures and facing the consequences at Employment Tribunals. The existing regime is due to be repealed under the Employment Bill in April 2009 and be replaced by a less cumbersome approach to employment dispute resolution.
Background
Prior to the Employment Act 2002 ("EA") there was no legislation which directly governed the procedure an employer should follow when considering dismissal or disciplinary action.
Case law required an employer to act 'reasonably' in these circumstances, including having a fair reason for dismissal and following a 'fair procedure'. What exactly this meant was not confirmed and whether a particular action was fair was a question of fact to be considered by the Employment Tribunal, taking into account the size and resources of the employer.
This is clearly an ambiguous and difficult standard for an employer to be certain of satisfying.
The EA introduced new mandatory procedures to be followed whenever an employer contemplated taking disciplinary action or dismissing an employee. The aim of the new procedures was to limit the number of Tribunal claims and to encourage employers and employees to resolve disputes before escalating to the judicial system, which is costly and time consuming for all parties.
The most common type of procedure under the EA is the Standard Dismissal and Disciplinary Procedure ("SDDP"). This must be followed in all circumstances where an employer is considering taking disciplinary action against or dismissing an employee.
In summary the SDDP provides an employer follow 3 steps:
- Step 1: written statement. The employer must set out in writing the employee's alleged conduct or characteristics or other circumstances which have led the employer to contemplate dismissing or taking disciplinary action. A copy of this must be sent to the employee and the employee must be invited to a meeting to discuss.
- Step 2: Meeting. The employer must give the employee sufficient information of the basis of the alleged conduct in the statement provided in step 1 to enable them to make a considered and informed response. The meeting must be held within a reasonable time and the employee is entitled to be accompanied by a colleague or trade union representative. After the meeting the employer must notify the employee of their decision and, if applicable, the employees right to appeal.
- Step 3: Appeal. If the employee wishes to appeal the decision a further meeting must be held and the employer must notify the employee of their decision.
A breach of the SDDP does not in itself give rise to a right to claim by the employee. The breach must attach to another claim such as unfair dismissal or unlawful discrimination. However, if this procedure has not been followed any dismissal will be found automatically unfair and there will be an uplift in any compensation awarded to the employee by up to 50%.
Problems with the regime
The SDDPs have been heavily criticised as being vague and uncertain. In particular there are conflicting views on when the procedures will apply, when they are exempt and when they are treated as complied with. There is also a view that they go too far, and that as a result of the uncertainty employers can find themselves open to claims of 'unfairness' when they have sought to comply with a fair procedure. As a consequence many commentators believe that the SDPPs actually increase the risk of a dispute reaching a Tribunal rather than being settled early.
Reform
The Government began reviewing the SDDPs two years after they were introduced. As a result of its the reviews the Employment Bill (published in 2007) is set to come into force next year. This will repeal the existing SDDPs and replace it with a policy encouraging employers to follow the guidance set out in the revised ACAS Code of Practice on Discipline and Grievance.
Why this matters:
What does this mean for employers?
- Failure to follow the ACAS Code will not in itself give rise to a cause of action against the employer, but it has been proposed that an 'unreasonable failure' to comply may lead to an increase in any award of damages of up to 25%.
- The Code, due to come into force in April 2009, will affect all employers. The guidance provides that employers should follow a 3 step procedure almost identical to the one under the current system.
- The new regime may reduce some opportunist claims as there will no longer be a mandatory finding of unfairness if the procedure has not been followed and it will see a reduction in the uplift of damages to no more than 25%. However, the same difficulties of vagueness of required procedure and uncertainty of definition of 'reasonable' will remain.
- Employers should have a clear dismissal and disciplinary policy and procedure and should make sure that employees' are aware of it and that it is followed. However, as employers remain under a duty to ensure the procedure is fair in all the circumstances they should exercise extreme caution when considering a dismissal or disciplinary action and if in doubt seek legal advice.
