A code with teeth
April 2009
Sophie Whitbread provides a summary of the new dispute procedure regime brought by the ACAS code of practice
The abolition of the much-maligned statutory dispute resolution procedures is upon us, to the relief of employers and their HR advisers. The procedures, introduced in October 2004, were designed to help employees and employers to settle workplace disputes internally and to circumvent employees resorting to the Employment Tribunal. However, the legislation, as subsequently interpreted in case law, is generally agreed to have served only to complicate matters.
The ACAS revised code of practice
The regime coming into force on 6 April 2009 does not, however, simply herald a return to life before October 2004. As most employers will by now be aware, the old procedures have been replaced by an ACAS revised code of practice (see also, Caritas, issue 15, February 2009, page 5). Nothing new in that, one might think, as ACAS have always produced codes of practice on dealing with disciplinary and grievance issues, which Employment Tribunals have taken into account when considering the fairness of a dismissal. The difference with the new code is that an Employment Tribunal will be entitled to adjust any compensatory awards made by up to 25 per cent for an ‘unreasonable’ failure by the employer or the employee to comply with any provision of the code. This raises the status of the code considerably. The draft code was approved in final form on 12 March 2009 . This article will review the main changes introduced by the Code and identify a number of traps for the unwary.
Summary of the ACAS code
- The code is designed to enable disciplinary and grievance situations to be resolved in the workplace.
- Fairness and transparency are highlighted as key ideals.
- What is reasonable or justified will depend on the circumstances of the particular case, taking into account the size and resources of the employer.
- The code gives specific, step-by-step guidance on handling disciplinary and grievance matters. See Example below: dispute resolution in practice.
- Disciplinary and grievance matters should be dealt with promptly and consistently.
- Employers should carry out necessary investigations, informing employees of the basis of the problem and allowing them to put their case in response.
- The informal resolution of problems and employee participation is encouraged wherever possible.
- Any unreasonable failure to follow the code can result in an adjustment to compensation of up to 25 per cent.
- Procedural failures will no longer lead to a claim of automatic unfair dismissal.
When does the code apply?
The code applies to disciplinary and grievance matters only and is specifically framed not to apply to redundancy dismissals or the expiry of fixed term contracts. This does not mean to say that no procedure at all should be followed when dealing with such terminations. The usual rules of fairness when dismissing by reason of redundancy will apply, so employers should continue to consult with employees individually and, where necessary, on a collective basis, to seek alternative employment for affected employees. You should also remember that, where someone has been employed on a fixed term contract for at least a year, he or she will have gained unfair dismissal rights. A fair reason for dismissal will still be required and a fair process must be followed.
Employers should also note that the code applies to all disciplinary warnings and not just to dismissals, and in that respect is of wider application than the old procedures. This means you may need to review your disciplinary and grievance procedures to ensure they comply with the code.
What about grievances?
One major problem with the old dispute resolution procedures was that a huge volume of case law was generated around what exactly constituted a grievance. This was of such importance because employees were in most cases required to submit a grievance before being entitled to bring a claim against their employer. Employers understandably became extremely cautious and would treat almost any hint of a complaint in writing as a grievance. This was often counter-productive, escalating the problem and making its resolution more unlikely.
The new code has removed the need for an employee to raise a grievance before being able to submit a claim to the Employment Tribunal, but employers may unfortunately find that they continue to be faced with the same difficulties as under the old system. This is because the new code states that, if a matter cannot be resolved informally, employees should raise it formally in writing with their employer, who should then arrange a meeting. Given the threat of a 25 per cent uplift in compensation for an unreasonable failure to comply, you will still need to tread carefully in this area, assessing whether complaints in writing are in fact grievances, and dealing with them in accordance with the code.
On a more positive note, as employees no longer have to lodge a grievance before bringing a claim, there will be no automatic extensions of time for doing so. Most claims must, therefore, be brought within a three-month period, which is a welcome return to greater certainty for employers.
How should we deal with overlapping disciplinary and grievance issues?
Under the old procedures a complicated set of provisions dealt with when and how a grievance should be responded to if it overlapped with a disciplinary matter. The code provides a welcome return to a more common sense approach. It states that, where an employee raises a grievance during a disciplinary process, that process may be temporarily suspended in order to deal with the grievance, or alternatively, where the grievance and disciplinary matters are related, it might be considered appropriate to deal with the issues together. You therefore have some flexibility to deal with the matters in the most appropriate manner. The key point is that the grievance must be addressed.
Can we now forget the old procedures?
Not immediately. Certain transitional provisions will apply to disciplinary and grievance matters that are ongoing as at 6 April 2009. In the case of disciplinary matters, if disciplinary action or a dismissal has taken place before 6 April, the old procedures will continue to apply. This also applies where the employer has got as far as issuing a letter inviting the employee to a disciplinary or dismissal meeting.
In the case of grievances, where the action complained of took place before 6 April, the old procedures will apply. Where there is a continuing complaint that straddles 6 April, the old procedures will be relevant as long as the employee brings a grievance or lodges a claim by 4 July 2009.
The right to be accompanied
Employees remain entitled to be accompanied at disciplinary and grievance meetings by a fellow worker, Trade Union representative or official employed by a trade union. However, employers should be aware of the consequences of refusing an employee’s reasonable request to be accompanied. In the past many employers have not taken this right too seriously because of the relatively low compensation payable in case of a breach, namely two weeks’ pay (capped at the statutory maximum, currently £350 per week). From now on, the additional possibility of an uplift of up to 25 per cent on total compensation paid – which could be significant in high value claims – should make employers more cautious.
Employee participation
Two parts of the code seek to encourage increased employee participation in dispute resolution. Where employers and employees cannot resolve disciplinary and grievance issues in the workplace, the code recommends that they should consider using an independent mediator to help to resolve the problem. Not all disputes are suitable for mediation and some employees will not be amenable to such an approach, but you may be pleasantly surprised at the number of issues that can be resolved with the assistance of a third party. The mediator could come from outside the organisation, but could equally be an individual within the organisation who has specifically been trained for that role. This is a welcome move away from the very strict and formal procedures in place prior to April 2009 and it is to be hoped that, in appropriate cases, it could help to avoid unnecessary litigation. Note that this recommendation is not contained within the main body of the code, so failure to comply will not put employers at risk of uplifts in compensation.
The code further provides that employees and employee representatives should be involved in the development of workplace rules and procedures, and employees and managers also need to understand what those rules and procedures mean. It is not clear how willing Employment Tribunals will be to award uplifts in compensation where employers have not engaged with employees when developing such rules, so it is worth getting employees involved wherever possible.
What can we do to prepare for the changes?
Employers should take the following steps:
1) Review policies and procedures and workplace rules to ensure that they comply with the code, and involve employees and their representatives where possible in making any changes;
2) Ensure all managers are trained on the requirements of the code and the organisation’s own disciplinary and grievance procedures to minimise the risks of failure to comply with the code; and
3) Consider training employees to be mediators or using external mediators for appropriate disputes.
A change for the better?
The code takes a step back from the strict procedures and draconian consequences of the old regime. You should be aware, however, that it is potentially more onerous in some respects. A 25 per cent uplift in compensation could result from an unreasonable failure to follow any part of the code, and there are therefore more opportunities for employers (and for that matter employees) to slip up.
The repeal of the old procedures is certainly to be welcomed. Only time and case law will tell whether the new code does prove to be workable and whether, in fact, it succeeds in promoting the improvement of employment relations in the workplace. purposive approach this time around.
Author: Sophie Whitbread
Sophie Whitbread is an associate at Charles Russell LLP, specialising in all aspects of employment law. She is a member of the Association of European Lawyers and convenes its Employment Law Special Interest Group. She is also a member of Charles Russell’s charities and religious charities groups. She speaks at internal and external seminars, and provides bespoke training to clients.
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