UK: No Let Up On Redundancies

Last Updated: 31 March 2009
Article by James Tait

As we move further into 2009, the Government's initial strategy to stimulate the economy is yet to show any signs of redressing the balance. This year is likely to see an increase in the number of redundancies across all sectors, with the public sector now also being hit.

We have put together some general guidance on dealing with redundancies. Advice on specific individual cases should be sought before taking any action and we would be happy to talk to you about any of the issues raised in this bulletin.

However, it is not all bad news!

Discipline and Grievances

To the absolute delight of employers and advisors alike, a significant event will take place on 6 April 2009, namely the repeal of the statutory dismissal and disciplinary procedures.

Features of the current regulations which have frustrated all concerned include:

  • A relentless rise in the overall number of claims (despite the intention of the regulations to reduce claims), together with an extraordinary amount of satellite litigation over the issue of what a 'grievance' is
  • The 'one size fits all' approach, setting out a mandatory minimum standard to follow in all situations. The exemptions are too limited to be meaningful. Failing to follow the stipulated processes in dismissal cases gives rise to an automatic unfair dismissal, together with an uplift of 10%-50% in compensation, which has resulted in some unjust results for employers
  • All other attempts at simplifying tribunal practice and procedure by the regulations has in fact had the opposite effect, making employment law unduly inflexible at times for both employers and employees

What happens in April?

Essentially, the existing rules will be abolished. New rules will be implemented in their place. But what are they?

First of all, the mantra of 'three steps' will no longer be heard. Employers will no longer face automatic unfair dismissal claims for not following the three step dismissals procedure.

Instead, the ACAS Code of Practice has been revised, and it sets out the principles of what is reasonable when dealing with dismissals and grievances. It should be studied carefully. It is still currently reproduced as a draft document, but this is the version which will be implemented.

Grievance and dismissal procedures will still be as important as ever, and good employment practice will still be expected. Tribunals, however, instead of awarding the mandatory 10%-50% increase in compensation for not following the 'three steps' procedures, will look instead at what procedure was adopted. If it was reasonable, taking the ACAS guidance into account, an employer is unlikely to face a successful unfair dismissal claim.

However, failing to study the code is dangerous. A tribunal will be able to put awards up (or down) by up to 25% in the event of inexcusable default on the part of the employer or the employee when dismissing or raising a grievance.

In addition, employees will no longer have to raise a written grievance (and thereby engage in arguments as to whether a grievance has been raised in the first place!) before bringing an employment tribunal claim. However, if they do not allow their employer to deal with the grievance appropriately, and attempt to resolve matters by having recourse to litigation, then they may suffer reductions of up to 25% in their compensation, even if they ultimately succeed in tribunal.

What happens in the run up to April?

Dismissal and grievance procedures take time, and many of them will be ongoing, come 6 April 2009. There are therefore 'transitional provisions' which will apply.

Generally speaking, if an employer has started disciplinary or dismissal action before 6 April 2009, then they will have to comply with the protocol which is currently in force.

In cases where the action about which the employee has complained, took place before 6 April 2009, and continues beyond that date, the pre-6 April 2009 rules will apply, subject to final 'cut off' dates as below:

  • Where the employee sends in a grievance or employment tribunal claim on or before 4 July 2009, if it relates to claims with a three month time limit (such as a discrimination or wages claim); or
  • On or before 4 October 2009 if it relates to a claim with a 6 month time limit (such as equal pay claims).

In all other cases, the new ACAS Code of Practice will be taken into account, and the current rules will not apply.

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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