On 1 October 2004 new rules come into force with an important impact for HR professionals when dealing with disciplinary and dismissal matters and grievances. Eilidh Wiseman, Partner at Dundas & Wilson explains.

Broadly, unless the employer follows the minimum disciplinary and dismissal procedure set out in the new legislation, any dismissal will be automatically unfair.

That means that, if the employer has “tripped up” in relation to the minimum prescribed procedure, there will be no scope for him to argue before an employment tribunal that the dismissal was fair. In other words, employers beware!

In relation to grievances, however, employees will usually not be able to bring an employment tribunal claim unless they have lodged a formal internal grievance first and given their employer at least 28 days to try to resolve the matter with them. This is a big shift from the current position where there is no such obligation on the employee before he can submit an employment tribunal claim. This time – employees beware!

These measures were introduced by the Government to try to facilitate resolution of disputes between employers and employees internally and therefore reduce the overall number of employment tribunal claims being lodged.

Dismissals

The new rules will apply to almost all dismissals, subject to a few limited exceptions, and must therefore be followed for dismissals for redundancy, ill health etc as well as misconduct.

The new rules do not, however, apply to verbal or written warnings.

The employee will continue to have the right to be represented by a work colleague or trade union official as before.

The new rules specify two types of procedure, know as the standard procedure and the modified procedure.

The modified procedure only applies in very limited circumstances. Namely, where the conduct is so serious that the employer dismisses first without a disciplinary/pre-dismissal meeting and then allows the employee to appeal the dismissal decision. This goes against the grain of all of the current case law and generally is not to be recommended as the preferred route!

The standard procedure will be used in most cases. In summary this is as follows:

• Employer writes to employee setting out the employee’s alleged conduct or other circumstances which lead him to contemplate dismissal or disciplinary action
  
  
• Employer invites the employee to a meeting to discuss

• A meeting takes place before any action is taken – before this meeting the employee should be aware of “the basis” for the allegations or other circumstances which lead the employer to contemplate dismissal or disciplinary action

• Employee must be given a reasonable opportunity to consider all of the information in advance of the meeting

• Employee must take all reasonable steps to attend the meeting

• Employee must be told of the employer’s decision after the meeting and be told of his right of appeal

• If the employee wishes to appeal he must tell the employer and the employer must invite the employee to attend a further meeting

• Employer must inform the employee of his final decision after the appeal meeting.

All of this may sound straightforward and indeed will be included in the disciplinary and dismissal polices of many employers already.

If, however, this procedure is not followed by the employer the dismissal will be automatically unfair and will result in increased compensation of up to 50%. Any increase will, however, still be subject to the usual cap on compensatory awards for unfair dismissal. The cap is currently £55,000 and increases on 1 February each year, broadly in line with inflation.

Likewise, however, if the employee does not comply with his obligations under the procedure there is scope to decrease the compensatory award by up to 50%.

The current law provides that employees require to lodge an unfair dismissal claim with the employment tribunal within 3 months of their dismissal. As the new law sets out an appeal process which may take additional time, however, the employee will be granted an automatic extension of 3 months if, at the end of the first 3 month time limit, the employee reasonably believed that the employer was following a dismissal or disciplinary procedure.

Grievances

The new procedure will apply whenever an employee or ex-employee has a grievance. A grievance is defined as ” a complaint by an employee about action that his employer has taken or is contemplating taking in relation to him”.

Again the rules specify two types of procedure, the standard procedure and the modified procedure.

The modified procedure can only be used when the employment has ended and both parties agree in writing to use it. In summary the modified procedure provides that the employer sets out in writing his grievance and the basis for it and sends it to the employer and the employer must respond in writing. There is no requirement for any meetings or appeal.

The standard procedure provides as follows:

• Employee writes to employer setting out the employee’s grievance

• Employer invites the employee to a meeting to discuss the grievance

• Before this meeting the employee must inform the employer of “the basis” for the grievance

• Employer must be given a reasonable opportunity to consider his response in advance of the meeting

• Employee must take all reasonable steps to attend the meeting

• Employee must be told of the employer’s decision after the meeting and be told of his right of appeal

• If the employee wishes to appeal he must tell the employer and the employer must invite the employee to attend a further meeting

• Employer must inform the employee of his final decision after the appeal meeting

The wording of the new law and the obligations on both the employer and the employee are similar for both the dismissal/disciplinary and the grievance procedures.

Similarly, there is scope for an increase or decrease in any compensation award by up to 50% depending on whether the employer or employee follows the prescribed grievance procedures. Importantly however, in most cases, if the employee fails to use the procedure he will be prevented from bringing an employment tribunal claim in the first place. This is a sea change from the current law. Only time will tell whether employees are up to speed with their new legal obligations by the time the new law is introduced.

For employers who have detailed disciplinary, dismissal and grievance procedures already the new laws may seem like nothing to worry about. The financial consequences for the employer in getting it wrong are, however, steep – up to a 50% increase in the compensation award.

It is also fair to say that the devil is in the detail of the new law! Employment lawyers and HR professionals alike have been pouring over the new legislation in advance of 1 October and have discovered a number of loopholes and unanswered questions which are likely to lead to litigation to resolve. The message is therefore clear – follow the new prescribed procedures “to a T” and seek professional advice if you are unsure!