UK: The New Dismissal, Disciplinary and Grievance Procedures

Last Updated: 14 October 2004

The Employment Act 2002 (Dispute Resolution) Regulations 2004 (the "Regulations") were approved by Parliament in February this year and come into force on 1 October 2004. They set out for the first time statutory dismissal, disciplinary and grievance procedures (the "Procedures") to be followed. The Procedures will apply to dismissals and disciplinary matters which occur after 1 October 2004 and grievances which occur or continue after 1 October 2004.

Presently the Procedures will not be contractual although the position is due to be reviewed by the Government in 2006, at which point the Procedures might well become an implied term of every employee’s contract of employment.

The Procedures set a "minimum" standard only. Most employers will have procedures in place which already go beyond the statutory requirements, at least in the traditional disciplinary areas. However, the Procedures do apply to certain types of dismissal where ordinarily one would not expect to follow the disciplinary procedure.

DISMISSAL AND DISCIPLINARY PROCEDURE

The Regulations introduce two types of Dismissal and Disciplinary Procedure ("DDP") the Standard DDP and the Modified DP.

The Standard DDP consists of three stages. Step One, the employer must set down in writing the nature of the employee’s conduct, capability or other circumstances that may result in dismissal or disciplinary action, and send a copy of this statement to the employee.

Step Two, the employer must invite the employee to a hearing. The employee must take all reasonable steps to attend. After the hearing, the employer must inform the employee about any decision in writing, and offer the employee the right of appeal. The employee has a right to be accompanied to the hearing by a work colleague or trade union representative.

Step Three is the appeal stage. If the employee wishes to appeal, he/she must inform the employer. The employer must invite the employee to attend a further hearing to appeal against the employer’s decision, and the final decision must be communicated to the employee. Where possible, a more senior manager should attend the appeal hearing than the chair of the Step One meeting.

The Standard DDP will apply when the employer is contemplating dismissal (including dismissal on grounds of capability, conduct, redundancy, nonrenewal of a fixed term contract and retirement). It will also apply where the employer is contemplating any disciplinary actions short of dismissal in relation to an employee, wholly or mainly by reason of the employee’s conduct or capability ie demotion or transfer.

The Standard DDP should be used where an employer is not making collective redundancies, (ie, where the collective redundancy consultation obligations do not apply). This means that whenever an employer makes an individual redundant he will have to invite him to a hearing, allow him to be accompanied by a colleague or a trade union representative and he will be entitled to an appeal hearing. In practice this means that the procedure for a fair redundancy will be even more proscribed.

The procedure must also be followed in other, perhaps surprising, situations. For example the Standard DDP must be used where a dismissal consists of the nonrenewal of a fixed term contract. It must also be used where there is a compulsory retirement if the employee could claim unfair dismissal.

MODIFIED DISMISSAL PROCEDURE

It is almost always unfair to dismiss an employee instantly, without first going through some form of procedure or carrying out some form of investigation, even in a case of apparently obvious gross misconduct. However, tribunals have occasionally found such dismissals to be fair. The Regulations will allow this possibility to continue for a small minority of gross misconduct dismissals, but even in these cases the employer will be required to use the Modified DP after dismissing an employee.

The Modified DP is a two step procedure.

Firstly, the employer must set down in writing the nature of the alleged misconduct that has led to the dismissal and the evidence for this decision. The letter should also set out the right to appeal against the decision.

Step Two, if the employee wishes to appeal, he/she must inform the employer. The employer must invite the employee to attend a hearing to appeal against the employer’s decision, and the final decision must be communicated to the employee.

GRIEVANCES

Like the Dismissal and Disciplinary Procedures, there are both Standard and Modified Grievance Procedures.

As Step One of the Standard Procedure, the employee must set down in writing the nature of the alleged grievance and send their written complaint to the employer;

Step Two, the employer must invite the employee to a meeting. The employee must inform the employer what the basis for the grievance is and he must take all reasonable steps to attend the meeting. After the meeting, the employer must inform the employee about its decision in respect of the grievance and offer the right to appeal the decision;

Step Three, if the employee is still unhappy, the employer must convene an appeal meeting. After the meeting, the employer must confirm the appeal decision in writing.

The Modified Grievance Procedure is a simplified version of the Standard Procedure:

Step One, the employee must set down in writing the nature of the alleged grievance and send the written complaint to the employer. Simply sending a discrimination questionnaire is not deemed sufficient;

Step Two, the employer must confirm its decision in writing and send this to the employee.

The Standard Procedure will apply in all cases where the employee is still employed and in most cases where the employee is no longer employed, subject to the content of the grievance being covered in the scope of the statutory grievance procedure.

The Modified Procedure will apply where employment has finished and both parties agree or the employer is unaware of the grievance before the employment has terminated.

OVERLAP WITH DISCIPLINARY ACTION

There is no need for employers to follow a separate statutory Grievance Procedure if the employer is taking conduct or capability action and a grievance is raised in writing during the disciplinary process, prior to the appeal stage.

IMPACT ON EMPLOYMENT TRIBUNAL PROCEEDINGS

An employee cannot bring a claim unless they have raised a written grievance where the statutory Grievance Procedures apply. The employee must then wait for 28 days before being able to lodge a claim with the Employment Tribunal. The Employment Tribunal will grant an extension of time automatically for three months from the date the normal time limit would have originally expired provided that an internal Grievance Procedure is ongoing.

IMPACT OF FAILURE TO COMPLY WITH PROCEDURES

Automatic Unfair Dismissal

A dismissal will be automatically unfair if the Standard DDP or Modified DP are not completed for reasons "wholly or mainly attributable" to the employer. This is of course subject to the employee having been employed for the requisite 12 months qualifying period.

Financial Sanctions

Financial sanctions may be placed on either the employer or the employee for failure to comply with both the Dismissal and Disciplinary and Grievance Procedures. The test is whether a non compliance is "wholly or mainly attributable" to failure by either party.

The Employment Tribunals are required to increase or decrease compensation awarded to the employee by between 10% and 50% where the statutory Procedures have not been completed and that failure is attributable to one of the parties. The Tribunal will look at what is "just and equitable" when deciding by what percentage to vary the award.

The cap on awards for unfair dismissal will remain in place (currently set at £55,000).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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