UK: The Employment Act 2008

Last Updated: 30 June 2009
Article by Rima Mehay

The Employment Act 2008 received Royal Assent on 13 November 2008 and is intended to enhance, simplify and clarify key areas of UK employment law. The most significant change introduced by the Act on 6 April 2009 is the repeal of the Statutory Dispute Resolution Procedures. These procedures have been unpopular since their introduction in 2004, largely due to the fact that they were complicated and raised a number of significant legal issues. Initially intended to reduce the number of Employment Tribunal claims, they have had the opposite effect and their repeal is welcomed by all, but not with some trepidation as to their replacement.

Repeal Of Statutory Dispute Resolution Procedures

The Statutory Dispute Resolution Procedures were heavily criticised with many saying they gave rise to more workplace disputes than were resolved. However, what is replacing the old statutory procedures and will it be any better?

New Regime

The Statutory Dispute Resolution Procedures have been replaced by the ACAS Code of Practice on Disciplinary and Grievance Procedures ("the Code") and a non statutory Guide to Discipline and Grievances at Work ("the Guide"), which aims to allow for a more flexible approach to deal with disciplinary and grievance issues rather than the previous "one size fits all" approach.

The main points to note are:

The Code will not be legally binding but its provisions will be taken into account by Employment Tribunals, where appropriate.

  • A failure to comply with the Code will not automatically make a dismissal unfair (as was the case with the old Statutory Dispute Resolution Procedures).
  • An Employment Tribunal will consider whether a failure to follow the Code was unreasonable taking into account factors such as the size and resources of the business. Where there has been an unreasonable failure to comply with the Code, an Employment Tribunal will have power to adjust compensation by up to 25% (upwards or downwards) depending on which party has defaulted.
  • Employees will no longer need to lodge a written grievance with their employer and then wait 28 days before bringing an Employment Tribunal claim.
  • Employment Tribunals can no longer extend the time limits for bringing claims based on compliance with the statutory procedures.
  • In addition, the Code provides that:
    • Employers and employees should raise and deal with issues promptly and without unreasonable delay.
    • Employers and employees should act consistently.
    • Employers should carry out all necessary investigations to establish the facts.
    • Employers should inform employees of the basis of any problem and allow them an opportunity to put their case in response before any decision is made.
    • Employees should be allowed to be accompanied to any formal disciplinary or grievance meeting.
    • Employees should be allowed to appeal against any formal decision.

Transitional Provisions

Although the loss of the Statutory Dispute Resolution Procedures is unlikely to be mourned, their departure will unfortunately be drawn out and employers will still have to consider whether the "old" procedures apply for some time to come. There are some complex transitional provisions in place as we move through 2009. In disciplinary and dismissal cases, the Statutory Disciplinary and Dismissal Procedures will continue to apply if, on or before 5 April 2009, the employer had either:

  • dismissed the employee;
  • taken relevant disciplinary action against the employee; or
  • issued a step 1 letter or held a step 2 meeting.
  • In grievance cases, the Statutory Grievance Procedure will continue to apply if the action on which the grievance is based occurs either:
  • wholly before 6 April 2009;
  • 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;
  • on or before 4 July 2009 for claims with a three month time limit (this applies to almost all claims except equal pay and redundancy claims); or
  • on or before 4 October 2009 for equal pay and redundancy claims.

Working Examples

Employer X issued a step 1 disciplinary letter on 5 April 2009 and Mrs A is dismissed in May 2009. If Mrs A brings an unfair dismissal claim, an Employment Tribunal will consider whether the Statutory Dispute Resolution Procedure was complied with as Employer X took disciplinary action on or before 5 April 2009 – the Old Regime will apply.

Employer Y issued a disciplinary step 1 letter on 6 April 2009 and Mrs B is dismissed in May 2009. If Mrs B brings an unfair dismissal claim, an Employment Tribunal will consider whether the Code was followed as Employer Y took action on or after 6 April 2009 – the New Regime will apply.

Employer Z takes action in February 2009 which continues beyond 6 April 2009. Mrs C submits a written grievance on 9 April 2009. Mrs C brings a discrimination claim which is heard at an Employment Tribunal in December 2009. The Statutory Dispute Resolution Procedure applies as the alleged discriminatory act began on or before 5 April 2009 and continued after and the grievance was submitted before 4 July 2009 – the Old Regime will apply.

Impact Of The Code

On the whole the new regime should not have a significant practical bearing on how disciplinary and grievance issues are handled, as the three-step procedure of (i) inform, (ii) meet and (iii) right of appeal is still considered best practice under the Code.

There are some notable differences, however:

  • The Code does not apply to dismissals on the grounds of redundancy, the non-renewal of a fixed term contract, collective grievances or ill health capability dismissals. Employers should therefore comply with their own procedure in such cases, which is likely to be similar to the steps set out in the Code.
  • Employers are under an obligation to advise employees of their right to be accompanied (previously it was just good practice to advise them of this right).
  • Employers should allow appeals against any form of disciplinary penalty including oral warnings and dismissals.
  • Employers should consider giving copies of any written evidence to an employee before a disciplinary meeting.
  • Employees must be given a reasonable opportunity to call witnesses at a disciplinary hearing.
  • Where an employee is "persistently unable or unwilling to attend" a disciplinary meeting an employer may make a decision on the evidence available.

Difficult Areas Of The Code

There are some matters on which the Code is simply silent or confusing. No doubt these areas will form the basis of case law in the coming months and years.

  • The Code and the Guide are both silent on the application of the grievance procedure to ex-employees (unlike the previous regime). In practice it may be sensible to investigate concerns of the ex-employee.
  • The Code states that "employees and their representatives should be involved in the development of disciplinary rules and procedures", but does not specify how employees should be involved and to what extent.
  • The Code allows an employee to call a witness to a disciplinary hearing but is silent on whether an employee can call one of the employer's witnesses and how to deal with a witness who has been called.
  • The Code and the new statutory dispute regime are therefore not the complete answers to existing problems that some may have hoped and we wait to see how the Employment Tribunals will decide outstanding issues arising from the Code.

Next Steps

Employers should therefore now, in light of these changes, consider carrying out the following:

  • Review of disciplinary and grievance procedures to ensure that they are compatible with the new Code.
  • Ensure that the three-step Statutory Dispute Resolution Procedures are still followed in disciplinary or grievance cases in line with the transitional provisions.
  • Involve employees and/or their representatives in the development of any new procedures.
  • Identify where a more relaxed and informal approach to dealing with problems at work may be appropriate.
  • Train staff in how to deal with problems at an early stage.
  • Keep paper trails including; notes from meetings, correspondence with the employee and investigations conducted.

Other key changes can be summarised as follows:

  • Section 98A of the Employment Rights Act 1996 is repealed and the fairness of a dismissal will no longer be dependent on strict compliance with the Statutory Dispute Resolution Procedures.
  • In the event of a dismissal being found to be unfair, Respondents will be left to rely on the pre-2004 House of Lords case of Polkey v AE Dayton Services Ltd [1987] in an effort to limit any compensatory award. This means that where a dismissal is procedurally unfair, Employment Tribunals will have the power to reduce the compensatory award by up to 100% if the dismissal is likely to have occurred regardless of the procedural unfairness.
  • Employment Tribunals are provided with the power to determine proceedings without a hearing where:
    • All the parties consent in writing; or
    • The person against whom the proceedings are brought has presented no response (or the response has not been accepted by the Employment Tribunal); or
    • The person against whom the proceedings are brought does not contest the case.
  • ACAS no longer has a duty to conciliate and promote a settlement before proceedings have been brought (although they may choose to provide this service at their own discretion), but once proceedings have commenced ACAS has a duty to conciliate throughout the proceedings until a judgment has been delivered.

A copy of the Code and Guide can be found at www.acas.org.uk

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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