Procedural Fairness in Unfair Dismissal
Repeal of the Employment Act 2002 (Dispute Resolution) Regulations 2004: A report
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In October 2004 the government introduced a statutory minimum disciplinary and grievance procedure dealing with disputes in the workplace. These procedures and related rules are set out in the Employment Act 2002 (Dispute Resolution) Regulations 2004 and state that employers must follow a minimum dismissal and disciplinary procedure in the workplace or otherwise dismissal will be automatically unfair. When bringing a claim at the Employment Tribunal for unfair dismissal, employees are also entitled to additional compensation if these disciplinary and dismissal procedures are not adhered to. Although the aim of the Regulations was to encourage informal resolution of disputes, many employers felt that they were too complicated and did not achieve the desired aim. Gibbons (2007 pg.24)[1] sums up this view,
‘The procedures are seen as a prelude to employment tribunals, rather than a way of resolving problems in the workplace’
The Employment Bill 2007 therefore recommends a repeal of the Regulations for what is hoped will be a more straightforward regime likely to come into force in April 2009.
The Regulations
A standard dismissal procedure as per the Regulations involves the following three steps. The first is a letter which must be sent to the employee setting out the reason for dismissal and inviting them to a meeting at a convenient time and place. The employee must be given time in which to consider the letter and then has a duty having done so to take all reasonable steps to attend the meeting. The second step involves the actual meeting which has to be conducted in a manner which enables both employer and the employee to explain their case. After the meeting the employee must be notified of the decision and provided a right of appeal. The third step would be the appeal process and if the employee wishes to appeal, they must inform the employer who will then invite them to an appeal meeting. The onus is on the employee to take all reasonable steps to attend this appeal meeting and as far as is practicable a more senior manager from the organisation should attend the appeal meeting.
The appeal meeting must be conducted in the manner in which enables both the employer and the employee to explain their case. After the meeting the employee must be notified of the final decision. During every meeting in the process, the employee has a right to be accompanied by a work colleague or a trade union official. This companion may address the hearing, confer with the employee during the hearing and may also sum up the employees case but must not answer questions on behalf of the employee.
In the case of a grievance against an employer the same steps must be followed with the letter sent from employee to employer stating the nature of the grievance and asking for a meeting to be held. Where the employee has already left employment the Regulations provide for a modified procedure that does not require the Step 2 meeting.
The problems created by the Regulations
When the Regulations came into force on the 1st October 2004 the government resolved to revisit them after two years. The Department of Trade and Industry confirmed this in its Success at Work Report (2007 pg. 8)[2]
‘This is a key part of DTI’s work to simplify regulation, by removing compliance costs and complexity, and addressing irritants for business and others affected by employment law, while ensuring that employee rights are protected.’
The government then commissioned an independent report on the 12th December 2006 written by Michael Gibbons who was asked to assess all employment dispute resolution procedures including suggestions for adapting the Regulations if he found them not to be fit for purpose. He interviewed over 60 employers, employees and intermediaries involved in dispute resolution. Gibbons in his report entitled Better Dispute Resolution (2007 pg.5) states[3],
‘In conducting the Review I was struck by the overwhelming consensus that the intentions of the 2004 Regulations were sound and that there had been a genuine attempt to keep them simple, and yet …as formal legislation they have failed to produce the desired policy outcome. This is perhaps a classic case of good policy, but inappropriately inflexible and prescriptive regulation.’
It became apparent that the regulations did not state clearly what a written grievance was or what it was to contain. With no specific guidance on this, parties called for procedural hearings at the ET to establish whether the claimant actually put their grievance in writing and whether all of the claims that were found in their Claim Form had previously been evidenced in the grievance letter. The respondents were claiming that this was not the case and therefore there was no case to answer. Therefore although the procedures were clear as to the steps to follow in bringing a dispute insufficient guidance was given about each stage leaving Tribunals with an increase in the number and length of proceedings. Gibbons explains the difficulty with identifying what constitutes a grievance letter (2007 pg.8),
‘…comments in resignation letters and in 360-degree feedback forms have been held to meet the requirements, so some employers feel it is necessary to check closely and investigate any written communication that might be construed as a grievance’
Although the intention of the regulations was for early informal resolution of disputes, the drafting of the Step 1 letter and consequent meetings in practice escalate many issues taking up management time and proving stressful for employees. Also the three step process as outlined above was not always adequate in all circumstances. Small businesses in particular have complained about the formal, ‘one size fits all’ approach of the regulations. Gibbons explains (2007 pg. 8),
‘…the appeal stage is an unnecessary burden, especially for small businesses. The appeal will often be to the same person who made the original decision. It can also be difficult in cases where employees have left the workplace. One business felt it necessary to follow the three-step procedures for each of their Christmas temporary staff before they left –
a process which added no value.’
The main thrust of the opposition to the current regime is that it has created an unhealthy overlap between the resolution of disputes and the litigation procedure which should as far as possible be kept separate. For example the regulations stipulate that before a claim is lodged at the Employment Tribunal (ET) a grievance letter must be sent to the employer within three months of the alleged dismissal or conduct. Any breach of the procedure would allow the Tribunal to grant up to 50% increase if the fault was that of the employer or 50% reduction in the award depending on whether the fault was that of the employee. Of course apart from the fact that it is not always easy to ascertain whose fault led to a breach of procedure such stipulations and penalties mean that litigation has to be considered at an early stage when resolution of the dispute should be paramount. Gibbon states (2007 pg.25),
‘Both large and small businesses have reported that the number of formal disputes has risen. The Review has heard that 30 to 40% increases have been typical in the retail sector.’
Further complications arise where there are multiple claims for example in an equal pay case and the three step process has to be repeated many times creating an unnecessary administrative burden. The same burden is also felt where and employer seeks to follow the disciplinary steps and at the same time the employee also seeks to pursue a grievance.
‘It is not always clear how the two strands of the Regulations should operate in such circumstances, and employers can feel compelled to hold excessive numbers of meetings and write excessive numbers of formal letters to be sure of fulfilling the procedural requirements’[4]
The proposed reforms
As a result of the Gibbons Review, the Government held a consultation and the responses received formed the basis of the present reform proposals published in the Employment Bill 2007 which has received royal assent and is now the Employment Act 2008.
The first major reform is for the Regulations to be repealed in their entirety in April 2009 and replaced with a revised ACAS Code of Practice (the Code) which has been agreed in draft form. There will also be non statutory guidance also provided by ACAS. ACAS stands for the Advisory Conciliation and Arbitration Service and currently offers employees an arbitration service as an alternative to resorting to proceedings. Also it has always provided a Code for resolving disputes but it is only now being adapted and incorporated into statute. In actual fact the revised ACAS code provides for the same three step procedure but does not incorporate the same penalties and conditions as the Regulations. There have also been some additional requirements which seem to lean towards ensuring that employees behave ‘reasonably’. The draft Code is designed to provide basic practical guidance for disciplinary and grievance procedures but is limited as it will not apply to dismissals as a result of redundancy[5] or expiration of a fixed term contract.The Code describes the remit it covers[6],
‘Disciplinary situations include misconduct and/or poor performance…Grievances are concerns, problems or complaints that employees raise with their Employers’
It suggests in the Foreword of the Code[7] that employers and employees should try to resolve disputes between them. However if they cannot, they should seek the help of an independent third party inside or outside the organisation. The Code provides that where the Employment Tribunal must ascertain compliance with the Code it will do this on a case by case basis taking into account the size and resources of the employer. Therefore unlike the Regulations there is no expectation that all business will comply with every provision in the Code providing greater flexibility for employers.
In relation to disciplinary procedures the first step is to establish the facts of each case by collating evidence and holding an investigatory meeting if necessary. The Code then states[8],
‘If it is decided that there is a disciplinary case to answer, the employee should be notified of this in writing. This notification should contain sufficient information about the alleged misconduct or poor performance and its possible consequences to enable the employee to prepare to answer the case at a disciplinary meeting’
New provisions provide for evidence collated including witness statements to be provided by the employer with the letter requesting a disciplinary meeting. Also an employee may call their own witnesses. The statutory right to be accompanied to this meeting still stands however the Code’s emphasis on ‘reasonableness’ is evidenced where it states[9],
‘However, it would not normally be reasonable for workers to insist on being accompanied by a companion whose presence would not prejudice the hearing nor would it be reasonable for a worker to ask to be accompanied by a companion from a remote geographical location if someone suitable and willing was available on site.’
The dispute Regulations had provided that on appeal the employer only had to make one attempt to reconvene the meeting however under the Code the employer has to show that the employee has persistently been unable or unwilling to attend before a decision can be made in their absence.[10] If the employee decides to appeal, grounds of appeal in writing must be submitted to the employer.[11] This requirement was not found in the Regulations and the idea behind it is to ensure that further time is not spent discussing issues that have already been covered in the first meeting.
In a case of a grievance for example instead of the emphasis on a Step 1 grievance letter, the revised Code states[12],
‘If it is not possible to resolve a grievance informally employees should raise the matter formally and without unreasonable delay’
The employee should inform the employer of the grievance preferably in writing and the letter should be addressed to the line manager. Unlike the Regulations, a claim would not be barred in absence of a grievance letter although a failure to send this letter would be a breach of the Code and may lead to a reduction in the award.
The Code states that a meeting must be heard pursuant to the letter and that the employee must have the right to be accompanied by a colleague or trade union official. As with the disciplinary procedure, the requirement here is that the right to be accompanied is reasonable. During the meeting the employer can ask for an adjournment in order to carry out an investigation. There is also a right of appeal and subsequently the employee can decide to take the matter further and pursue the case in the Employment Tribunal.
The new regime will not hold a dismissal to be automatically unfair if there has been a breach in procedure. Employment Tribunals will have to decide cases on what is fair and reasonable and will have discretionary powers to adjust awards of up to 25% if either employer or employee has not followed the ACAS code. In relation to this provision the government report Resolving Disputes in the Workplace Consultation (May 2008 pg.16) it states,
‘This will be a power rather than a duty in order to allow the employment tribunals discretion to apply it in the interests of justice and equity’
It is hoped that these reforms will give a higher level of flexibility in resolving work place disputes and various businesses can tailor the new regime to their specific needs. The Government has also agreed as part of the reform to invest ?37M into the ACAS helpline system in order to provide early mediation for workplace disputes that would otherwise result in tribunal claims. Resolving Disputes in the Workplace Consultation (May 2008 pg.16)[13] states,
‘The government considers the way forward should be a short non prescriptive Statutory Code setting out the principles of what and employer and employee must do supported by fuller statutory guidance’
The idea is that the new statutory code will provide guidance for employment tribunals and the non statutory guidance will be used by employers and employees. Where a grievance arises during a disciplinary process, the disciplinary may be suspended or both can be dealt with concurrently if related. The Code does not cover collective grievances which must be dealt with under the agreed collective grievances procedures agreed with trade unions.
The likely effect of these reforms on employers and employees
It is unlikely that the Code will have a major change on the dispute resolution process in the work place. The code incorporates the same three steps that were found in the Regulations. There is still a penalty of an increase or decrease in the award up to 25% depending on whether the employer or employee is at fault.
Because the employee is likely to suffer a reduction in compensation of up to 25 % the pressure to ensure a grievance letter is sent still remains. Although unlike the Regulations, the claim is not barred due to failure to lodge a grievance, the number of grievances brought by employees is not likely to be reduced for so long as there remains a penalty, albeit the employee at the grievance stage may not have considered litigation. So arguably there may not necessarily be reduction of time spent on hearing and processing grievances in the workplace.
Also with the repeal of the Regulations there is no automatically unfair dismissal because of non compliance. Many have argued that this places fewer restrictions on unscrupulous employers therefore increasing the likelihood of litigation. There would need to be clear communication by the government and business to their employees as to how the new regime will work and arrangements need to be put in place for the transition between the old and new procedures.
As far as practical points flowing from the provisions of the ACAS Code, the following would ensure that employers are taking the right steps to ensure compliance although there still remains areas of uncertainty that will only be made clear once the Code is put into practice.
Mediation training should be provided for Human Resources staff to act as internal mediators and consider compiling a list of good mediators outside the organisation.
In the Introduction of the Code, it states that employees should be involved where appropriate in the development of rules and procedures so to this end it would be prudent if employers hold consultation meetings with employees and their Trade Union Representatives during the transition period between the Regulations and the Code.
Guidelines should be provided as to how to provide a ‘reasonable opportunity’ to call witnesses (Clause 12) and establish in policy that that the right to be accompanied is subject to considerations as to reasonableness (Clause 15). These issues are clearly subjective and would vary on a case by case basis and are therefore likely to prove controversial or even problematic
Guidelines should be drafted as to when and under what circumstances the employee has shown inability or unwillingness to attend a disciplinary meeting without good cause.
Different people should oversee the investigatory and later the disciplinary process.
In order to facilitate early resolution of disputes as well as implementing the Code the government also intends for ACAS to provide a helpline where simple disputes can be dealt with over the phone or by internet. This extends the existing right to mitigation that parties must be notified of in any dispute. However the issue is ensuring that ACS has the necessary funds and staff to successfully fulfil this role. Staff must be well trained in providing employment advice and negotiating settlement between parties. Another proposal is that the Employment Tribunal Application process should happen via the helpline giving claimants access to advice on their claim and alternatives to litigation.
Not all involved in the dispute resolution process favour these reforms. In the government report Resolving Disputes in the Workplace Consultation[14] it states
‘Opponents of repeal included a number of Trade Unions, representatives of vulnerable workers and individuals. Many cited the benefits of having a standard required procedure in all workplaces which operated to the benefit of workers in all types of organisations and encouraged good practice.’
From the point of view of an employee, the fear is that the new regime and its emphasis on ‘reasonableness’ leaves too much to the discretion of the employer. This coupled with the removal of the automatically unfair provision has left the issue of unfairness to the Employment Tribunal who will access the situation based on many factors other than breaches in the code including the size and resources of the employer. There is therefore an element of uncertainty in the new provisions certainly for the employee but for the employer as well. In the Legal Action Group’s response to the government consultation (June 2007) it states,[15]
‘Repeal of the Employment Act 2002 (Dispute Resolution) Regulations 2004 (the ‘regulations’), will not improve the poor position of the many, low paid, non-unionised, workers in the labour market. The government should act to protect the most vulnerable by encouraging trade union organisation and by other legislative measures.’
The concern of the Group is that the government’s emphasis on mediation could lead to vulnerable employees losing their right to a formal hearing to resolve disputes. In order for alternatives to litigation to be properly considered good quality advice needs to be available to all however only a third of the working population are trade union members. A lack of access to legal aid will mean that non members will not have proper recourse to legal advice. It seems unlikely that the ACAS helpline proposal will cater for all workplace disputes.
The Code has also been seen as unfair towards employees as it does not take into account that in reality there is rarely a balance of power between employer and employee. Employers have more resources and employees tend to already feel intimidated when bringing a grievance. A simple dispute could still have as its underlying cause a long term abusive policy against workers which of course cannot be resolved through a telephone conversation with an ACAS mediator. Indeed there are many categories of workers including the elderly and disabled or those with language difficulties who would need face to face advice. The LAG report states,[16]
‘We have to question whether the DTI is taking an even-handed approach to the resolution of work-related disputes or whether it has bowed to pressure from the powerful employers lobby.’
The overall view therefore of those acting for employees is that although the Regulations were unnecessarily complex they could have been simplified without being repealed as they provided minimum protection for all workers, whether or not they were trade union members. The principal reason for issuing the Regulations was because it was found that many employers did not have any procedures in place for resolving dispute and a repeal of the regulations could mean a return to this situation. There are also potential problems with the right of employees to bring claims being infringed where it is proposed that the Tribunal application system should also be processed through the ACAS helpline. LAG notes[17],
‘It would be inappropriate for a service point that had an aim of providing advice and guidance to also act in a ‘gatekeeping’ role for potential ET claims. Combined with the suggestion that the new advice service should be able to over-ride or contradict the advice given by a representative11, this would damage any integrity generated for
such a service.’
Conclusion
Clearly the repeal of the Dispute Resolution Regulations 2004 and the implementation of the ACAS Code due to take effect in April 2009 is not without its difficulties. The Government’s aim is to reduce the amount of claims being taken to the Tribunal although it recognises that dispute resolution is in itself only one strand. The other is revising the law in relation to unfair dismissal and making the Tribunal processes itself more efficient.
The Code is similar to the Regulations in that it mirrors a three step process. However the onus is often put on the employer to determine what is reasonable which has the effect of the Tribunal later claiming breach of the regulations or the employee claiming that their rights have been infringed. The employer therefore has a burden to act reasonably and the vagueness of this term although creates more flexibility to employers will produce greater uncertainty. Only time will tell whether the Code will in fact encourage a ‘conflict resolution culture’ and reduce the administrative burden on employers as its drafters intended.
BIBLIOGRAPHY
ACAS: Draft for Consultation: Draft Code of Practice on Discipline and Grievance (Nov 2008) http://www.acas.org.uk/CHttpHandler.ashx?id=961&p=0
BERR -Resolving Disputes in the Workplace Consultation Government Response (May 2008)
DTI-Better Dispute Resolution: A Review of Employment Dispute Resolution in Great Britain- Michael Gibbons (March 2007)-http://www.berr.gov.uk/files/file38516.pdf
DTI-Success at work resolving disputes in the workplace: A consultation- (March 2007)
DTI-Success at work resolving disputes in the workplace: A consultation- Response of the Legal Action Group (2007)
Is it the end of the road for Statutory Minimum Dispute resolution Procedures– Nick Hine May 2008)http://www.tcii.co.uk/images/upload/guest_article_pdfs/11ganick_hine2ddpdf_2173.pdf
United Kingdom: New Acas Code Of Practice on Disciplinary And Grievances Article by Val Dougan Dundas and Wilson Solicitors 28 November 2008
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