The Secretary of State has approved the new draft ACAS Code of Practice on discipline and grievances following public consultation. The new draft Code has been revised to take into account the changes proposed to be made to workplace dispute resolution procedures by the Employment Act 2008, which received Royal Assent on 13th November.
In the consultation, which ended in July this year, the draft Code was criticised for being too vague, which it was suggested, could have led to increased litigation. The revised Code has addressed some of these concerns by adding more detail, but this may have the effect of restricting flexibility and leave employers open to challenge when mistakes or omissions are made. Employers should now think about what changes are needed to disciplinary and dismissal, capability, performance and grievance policies in time for 6 April 2009 when the Code is likely to come into force.
Background to the Code
The Employment Act 2008 will abolish the current statutory disciplinary and dismissal procedures from 6 April 2009. Accordingly unfair dismissal rules will revert to the pre-2004 position. Where a Tribunal finds that a fair procedure has not been followed, the dismissal will be unfair but the Employment Tribunal will have a discretion as regards the size of the compensatory award and may reduce this to nil if it considers that following a fair procedure would have made no difference. Unlike the current statutory dispute resolution procedure, a failure to follow the revised Code will not give rise to an automatically unfair dismissal. Instead, the Tribunal will be able to adjust compensation awards by up to 25% where it finds that there has been an unreasonable failure to comply with any provision of the Code.
How the Code will impact on dismissals and discipline in the workplace
- The Code covers both misconduct and poor performance situations. It does not apply to redundancies or expiry of fixed term contract dismissals, although these dismissals will, of course, still be covered by unfair dismissal laws. Awards for other claims such as for discrimination and unfair detriment in employment may be subject to the 25% adjustment in circumstances where the Code should have been followed.
- The Code essentially retains the 3 step process laid out in the current statutory procedures. For example, for disciplinary dismissals an employer will still be obliged to inform the employee in writing about the disciplinary meeting, hold the meeting and give a right of appeal. Unlike the statutory procedures, claims to the Tribunal will no longer be barred for failing to raise a grievance before bringing the claim. Furthermore failure to follow the correct procedure will not result in an automatic unfair dismissal.
- Employers should also take into account the separate ACAS booklet which contains more comprehensive guidance on dealing with disciplinary and grievance situations. Failure to follow this guidance will not be taken into account for the purposes of the 25% uplift but it may well be taken into account by the Tribunals when considering if a dismissal is fair.
- The revised version of the new Code places more emphasis on employees having to behave reasonably and consistently; this helps to shift some of the responsibility away from the employer, so as to cater for unreasonable employees.
- Employees and their representatives need to be “involved” in the development of rules and procedures for handling disciplinary and grievance situations. Note that “involved” does not mean that they have to “agree”; the original draft provided that such rules had to be agreed with Trade Unions or employees representatives.
- The new Code suggests disputes could be resolved by a mediator. It also suggests written records should be kept during disciplinary and grievance cases. As these provisions are now in the Foreword to the Code and not the Code itself, failure to follow these suggestions will not be taken into account by the Tribunal for the purposes of the 25% adjustment to awards.
A few practical points to note from the revised new Code:
- Where practicable, different people should carry out investigations and the disciplinary hearing.
- The written notification of the disciplinary meeting to the employee should include copies of written evidence and may include any witness statements. Basically the letter should set out each of the allegations against the employee and should include copies of all relevant evidence that has been gathered, including any witness statements taken.
- There is a new right for employees to call witnesses, which may prove controversial. As many employers do not allow this, a change may be required to your procedures.
- Where an employee is persistently unable or unwilling to attend a disciplinary meeting without good cause, the employer may be able to make a decision on the evidence available. Notwithstanding this new provision, you should take care not to be too hasty in using this route.
- A decision to dismiss should only be taken by a manager who has authority to do so.
- As regards appeals, employees should submit written grounds of appeal prior to the appeal meeting and the person holding the appeal meeting should be a different manager from the manager previously involved in the case. The requirement in the original draft of the revised Code, whereby, whenever possible, a more senior manager should hold the meeting has been taken out.
- The new Code recognises that grievances can be resolved informally without having to go through the formal procedure.
- The Code does not apply to collective grievances and there is now a special procedure where a grievance arises during a disciplinary process.
Despite the abolition of the statutory procedures, it will be very important to follow a fair procedure when disciplining and dismissing employees. Note that the Code provides only the very basic principles of natural justice which all employers, whatever size, are expected to follow. Larger employers with greater resources will be expected to meet a level of fairness which goes beyond the basics set out in the Code.
Will employers find the new procedures easier to comply with? In practice, little should change given that the three step procedure and the reasonableness test remains. Employers faced with Tribunal claims may find them easier to defend because there will no longer be the threat of automatic unfair dismissal for failure to follow the correct procedure. Under the new regime, Tribunals will also have more discretion when making decisions on the fairness of any dismissal but along with this increased discretion comes less certainty for employers. Predicting the size of awards will be more difficult because of the Tribunals’ wide discretion to reduce the award to nil if it finds a fair procedure would have made no difference, and because of the potential uplift of up to 25%. However, Tribunals are likely to be cautious about the extent to which they use the uplift, just as they have been under the current rules.