The statutory disciplinary and dismissal and grievance procedures came into force 18 months ago and provide employers and employees with a minimum framework for resolving disputes in the workplace. The intention is sound and the model couldn’t be simpler - just 3 easy steps to comply! So why is the Government considering abolishing them?

The Department of Trade and Industry commissioned an independent review on employment dispute resolution in December 2006. The findings were published last month in a report by Michael Gibbons, a member of the Better Regulation Commission, who states that the statutory procedures “have had unintended consequences which have outweighed their benefits”. It is claimed that the procedures have unnecessarily increased the number of formal complaints, resulting in an added administrative and financial burden on the parties involved.

In basic terms the procedures require employers to follow 3 steps when disciplining or dismissing an employee and provide a similar approach to raising and resolving employee grievances. The 3 steps are:

• a written statement
• a meeting to discuss the situation, and
• an appeal meeting.

Certain situations fall outside the scope of the statutory procedures but, in general, they apply to:

• disciplinary action short of dismissal – but not formal warnings
• dismissal – although constructive dismissal is treated as a grievance
• individual grievances – but only if they could form the basis of a tribunal complaint listed in the regulations

There are consequences for both the employer and the employee if the procedures are not adhered to and the matter is referred to an employment tribunal, including a finding of automatic unfair dismissal and up to a 50% increase or decrease in compensatory awards. Also, the Tribunal rules were amended to allow a three month extension of time in which to bring a claim, to allow time for the procedures to be followed, and to bar employees from presenting claims, where they had not first presented a formal grievance. 

Sounds simple but the result of all this has led to more work and confusion amongst employees, employers and tribunals alike! Some key areas of contention seem to be:

• What constitutes a Step 1 letter to trigger the formal grievance procedure? Following a number of cases, any number of written complaints can amount to a “grievance” including resignation letters, a flexible working application and letters before action from a solicitor. Although such correspondence may not comply with internal grievance procedures, they are sufficient to constitute a statutory grievance. It doesn’t even matter that your policy requires formal grievances to be raised with a particular person.  In Thorpe & another v Poat & another (2005) the employees faxed their grievance to the employer's company headquarters in Jersey rather than giving it to the person specified in their contracts and the EAT held that the grievance was still valid.
  
  
• The statutory procedures are not the only consideration - Compliance with the statutory disciplinary and dismissal policy alone will not ensure a fair dismissal. Employers must turn to other sources, such as the ACAS Code of Practice, for guidance on implementing a fair procedure overall and the decision to dismiss must still be within the "band of reasonable responses". However, where the employer has followed the statutory process but failed to take other procedural actions, the tribunal must now also consider whether the procedural failure had any bearing on the decision to dismiss.  If, on a balance of probabilities, the employee would have been dismissed in any event, the dismissal will be fair..
  
  
• Incorporating the statutory procedures –Employers were not expected to replace more detailed existing procedures of best practice but instead incorporate the statutory requirements. This applied not only to discipline and grievance procedures but also redundancy procedures, anti-harassment and bullying policies and processes for terminating employees on fixed term contracts or during the probationary period. However, employers have been penalised for over stipulating the process where the requirements are inconsistent with the statutory procedures. In Masterfoods v Wilson (2006) the EAT found that the insistence that an employee enclose written grounds of appeal was not necessary in order to satisfy Step 3 of the statutory procedure, which only requires the employee to inform the employer of their wish to appeal. As a result the employer had not complied and the dismissal was automatically unfair.
  
  
• Does it relate to employees with less than a year’s service? The procedures apply to all employees irrespective of the length of service. However, there is no free standing right to bring a claim for failure to follow the statutory procedures. Normally, the employee will need to have at least one year’s service in order to bring a claim of unfair dismissal. However, there is a risk that the employee may claim that the dismissal was discriminatory, or that it was unfair for one of the reasons that does not require a qualifying period of employment, such as a whistleblower’s claim. In such cases, the employee's compensation would be increased as a result of the failure to follow the statutory procedure.

Following the Michael Gibbons report, the Government has now launched a consultation with a view to abolishing the statutory procedures and seeking views on the other recommendations, including free mediation services to replace the ACAS fixed conciliation periods. The consultation paper can be downloaded at www.dti.gov.uk/consultations/page38508.html and closes on the 20th June 2007.

You should put in a response to avoid a repetition of this debacle and not wait until 18 months later to say “I told you so!”, as many are no doubt now doing!