• All Change For Dispute Resolution At Work?
  • April 15, 2009
  • Law Firm: Withers Bergman LLP/ Withers LLP - New Haven Office
  • What is the current law?

    Since October 2004 employers and employees have had to deal with dismissals and grievances in accordance with statutory procedures - the statutory discipline and dismissal procedures (‘SDDPs') and the statutory grievance procedures (‘SGPs'). Sanctions have fallen on employers and employees who have failed to follow them, including automatic findings that a dismissal is unfair and an adjustment of a Tribunal award against the defaulting party.

    What is wrong with it?

    There is widespread consensus that these procedures have not worked to keep disputes out of Tribunals, which was the Government's stated objective in bringing them into force. Instead they have led to a vast amount of satellite litigation about what the procedures mean and when and how they should be applied. Employers have also felt that they have polarised disputes at an early stage and have closed the door on the informal approaches that can sometimes be more effective to resolve differences at work. In the year following the introduction of the statutory procedures, the number of Tribunal claims increased overall by 15%. Whilst this was in part due to rocketing numbers of equal pay claims, there was also an increase across the board, with the number of unfair dismissal claims alone rising from 41,832 to 44,491.

    What has the Government proposed instead?

    On 6 April this year these much-maligned procedures will be abolished and replaced with a system reliant upon a new ACAS Code of Practice. The changes have been brought about by the Employment Act 2008, which received Royal Assent on 13 November 2008. The Act makes a number of changes to employment law, the most significant of which is the repeal of the SDDPs and SGPs.

    The intention is to rid workplaces of some of the worst aspects of the statutory procedures but to keep in place measures that will encourage both sides to try to resolve their disputes in the workplace before taking them to Tribunals.

    Will it work?

    The key question is, will this attempt work? The Government is abolishing wholesale the statutory procedures themselves. This means the abolition of the three (or in some cases two) stage procedures which both sides have to follow if either an employee raises a grievance or the employer is contemplating disciplinary action against, or dismissal of, an employee. It follows from this abolition that employees will not be prevented, as they currently are, from bringing claims to the Tribunal if they have not raised their grievances internally first. It also follows that an employer will not be found automatically to have unfairly dismissed an employee if one of the steps in the procedure was not complied with, even in a technical way. So far so good.

    However the Government in its wisdom has not abandoned altogether the idea of an incentive to ensure that both sides make a genuine attempt to settle their disputes at work. It has therefore retained a version of the existing rule that says a party who unreasonably fails to comply with one or more of the steps in the statutory procedure can have compensation adjusted upwards (if the employer is at fault) or downwards (if the fault lies with the employee). The position from April this year will be that a discretionary adjustment of up to 25% will apply where one of the parties has unreasonably failed to comply with one of the provisions in the new ACAS Code.


    On one view this is a good idea because it mean that an even handed attempt has been made to ensure that both parties come to the table before hastening to dismiss or rushing off to the Tribunal - employees as well as employers have obligations under the Code. One aspect of the statutory procedures that employers have, in the main, liked is the requirement for employees to raise an internal grievance before being able to take a claim to the Tribunal. This means that employers are now rarely, if ever, surprised by the appearance on the HR Director's desk of papers from the Employment Tribunal about a grievance that no-one knew the employee had. That part of the current regime will survive through an obligation in the ACAS Code for the employee to raise a grievance in writing with the employer if he or she has been unable to resolve it informally.

    Back to the future

    On another analysis however the new proposal retains one of the worst aspects of the current regime, by creating a document on the interpretation of which will turn people's chances of gaining or losing money in Tribunal proceedings. The danger, and perhaps the likelihood is that Tribunals will once again become involved in resolving issues about what the provisions in the Code actually mean, so that the question of whether an award can or should be adjusted upwards or downwards can be resolved in turn. Hence potentially even more satellite litigation, holding up decisions about the real issues in a dispute.

    The fact that some of the provision of the Code look oddly familiar (‘Keys to handling disciplinary action in the workplace: Inform the employee of the problem; Invite the employee to a meeting to discuss the problem.....Inform the employee of the right to appeal'), may mean that employers feel just as hidebound by the exact wording of the ACAS Code as they ever did by the statutory disciplinary and dismissal procedures themselves.

    Other points to watch include the following.

    • The Code applies to the issuing of warnings (oddly the current statutory disciplinary procedure does not, although in practice many employers currently follow the statutory procedure when issuing warnings so as to comply with the wider requirements of the current ACAS Code, good practice and unfair dismissal law).
    • Both the employer and employee are expected to consider using an independent third party, including external mediators, to resolve disputes (although that statement appears in the Foreword and so is technically not part of the Code itself).
    • Employees and their representatives (if appropriate) are expected to be involved in the development of rules and procedures (that statement appears in the actual Code and therefore an employer who introduces new procedures without consultation is liable to be penalised in Tribunal proceedings).
    • Disciplinary matters are to be investigated ‘promptly'. At what point will a delay in investigation leave an employer exposed to a penalty from the Tribunal?
    • Periods of suspension are to be kept ‘as brief as possible'. Again, at what point and in what circumstances will the length of a suspension lead to an uplift in compensation?

    Only time will tell whether these parts of the Code will lead to litigation, but the potential is clearly there.

    Further guidance

    There is also a much longer Guide recently issued by ACAS, which amplifies the provisions of the Code but is not required to be taken into account by Tribunals. It will be interesting to see whether in fact Tribunals do start making reference to the terms of the Guide to assist in interpreting what the Code means, particularly where the Code's drafting is brief or unspecific. For example the Code says ‘Where an employee is persistently unable or unwilling to attend a disciplinary meeting without good cause the employer should make a decision on the evidence available'.

    What does ‘without good cause' mean? The Code does not say. The Guide, however, gives more detail and some examples of how the employer might weigh various relevant factors such as the seriousness of the disciplinary offence and, if sickness is the reason for non-attendance, medical opinion. A Tribunal will be required to come to a view about what the phrase means in a case, for example where the employee is alleging that the employer breached the Code by deciding to dismiss in the employee's absence. It is therefore difficult to see how it will be able to avoid looking at the Guide as well as the Code. This means that employers will need to familiarise themselves with both documents.

    Some good news for employers

    On a positive note for employers, the new Code will not apply when employment is terminated because a fixed-term contract is coming to an end (although there must still be a valid reason not to continue the employment). That brings to an end a short era of tiresome procedure for procedure's sake. And, perhaps mercifully in the current climate, the Code will not apply when the reason for the dismissal is redundancy. However, again general principles of unfair dismissal will remain at play, so procedure remains important.

    In transition

    The question of when these changes will come into force is more complex than might first appear. The principal date is 6 April 2009, but there are certain transitional provisions that will need to be taken into account given that the new law is dealing with procedures rather than single events. These provisions say the following.

    The statutory procedures will still apply where:

    The employer is contemplating a dismissal or disciplinary action that attracts the SDDPs and the employer has, on or before 5 April 2009, either:

    • issued a Step 1 letter or held a Step 2 meeting; or
    • taken ‘relevant disciplinary action'; or
    • dismissed the employee.

    Where one of the SGPs applies and the action on which the grievance is based occurs either:

    • wholly before 6 April 2009; or
    • begins on or before 5 April 2009 and continues beyond that date and the employee presents a complaint to an employment tribunal or submits a valid grievance:
    1. on or before 4 July 2009 for claims with a three-month time limit;
    2. on or before 4 October 2009 for claims with a six-month time limit (equal pay and redundancy).

    This means that the repeal of the statutory dispute resolution procedures will affect not just future dispute resolution, but also some disciplinary and grievance proceedings that are already underway on 6 April.

    In essence, the SDDPs will continue to apply where the first step of a disciplinary and dismissal action has taken place by 6 April 2009. This will usually be when the employer has sent a letter to the employee or a meeting between the parties has taken place. If neither of these events has happened, the important date will be the date of the dismissal or disciplinary action.

    The SGPs will continue to apply to grievances where the action about which the employee complains took place before 6 April 2009, or started before 5 April 2009 and continues after that date and the employee presents a complaint to an employment tribunal or submits a valid grievance either before 6 July 2009 or 6 October 2009, depending on the nature of the claim.