Unfair Dismissal: essential facts

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Unfair Dismissal - the essential facts

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INTRODUCTION

• Since 4 September 2000, workers have had a statutory right to be accompanied by a fellow employee or trade union official of their choice during grievance and disciplinary hearings.
• The statutory right to be accompanied arises only upon a reasonable request being made by the employee and whilst most employers automatically offer the right to be accompanied without any prior request, there is no statutory duty to do so.  The employee’s request need not be in writing.
• ACAS has published a Code of Practice on Disciplinary and Grievance Procedures, a revised version of which came into force on 1 October 2004.  The Code is not legally enforceable, but may be taken into account by Employment Tribunals where relevant.
• The Government wants to encourage all employers to have procedures for handling disciplinary problems and employee grievances, and to put stronger incentives in place to ensure that procedures are followed both by the employer and the employee when a complaint arises.  The Employment Act 2002 therefore provided for the introduction of minimum procedural actions set out in a statutory dismissal and disciplinary procedure (DDP) and statutory grievance procedure (GP).  These procedures came into force on 1 October 2004. 

DISCIPLINARY OR GRIEVANCE HEARINGS

• A disciplinary hearing is defined as a hearing which could result in the imposition of a formal warning, or the “taking of some other action in respect of a worker by his employer” or the confirmation of such a warning or other action.  The Code draws an important distinction between informal discussions and investigation, where the right to be accompanied does not apply, and formal investigations or hearings where it does.
• In London Underground Limited v Ferenc-Batchelor (2003), the EAT held that that a disciplinary warning was “formal” in terms of the statutory right if it became part of the employee’s disciplinary record. This would be the case where in was confirmed in writing, had a specified time before it became spent and would be taken into account in the event of a similar offence.
• A grievance hearing is defined as “a hearing which concerns the performance of a duty by an employer in relation to a worker.”  The duty concerned may arise by contract, common law or by statute.
   

THE COMPANION

• The companion may be either a trade union official or another worker.  There is no right to be accompanied by a solicitor or other person outside of the statutory provision, subject to the usual considerations of fairness.  There is no duty upon the person chosen to agree to act as a companion.
• The choice of companion must be reasonable, for example it would not be appropriate for the worker to insist on being accompanied by a colleague whose presence would prejudice the hearing or who might have a conflict of interest or who works at a geographically remote location when a suitably qualified person is available on site.
• If the worker’s chosen companion is not available he or she can suggest an alternative reasonable time within five working days of the original date and the employer must postpone the hearing until then.
• Where the companion is another worker or a lay trade union official employed by the employer, the companion is entitled to reasonable paid time off to prepare, take instructions and attend the hearing.
• On 30 September 2004, the Government gave one day’s notice of the coming into force of a provision clarifying the role of the companion at a disciplinary or grievance hearing.  This provision will therefore come into force on the same day as the new statutory disciplinary/dismissal and grievance procedures.     
• The employer must permit the worker’s companion to:
  
  (a) address the hearing in order to do any or all of the following:
       (i)     put the worker’s case;
       (ii)    sum up that case;
       (iii)    respond on the worker’s behalf to any view expressed at the hearing;
  (b) confer with the worker during the hearing.
  
• The employer is not required to permit the worker’s companion to:
  
  (a) answer questions on behalf of the worker;(b) address the hearing if the worker indicates that he does not wish his companion to do so; or(c) prevent the employer from explaining his case or prevent any other person at the hearing from making his contribution to it.

BREACH OF THE RIGHT TO BE ACCOMPANIED

• Where a worker is denied the right to be accompanied, he or she may bring a claim in the Employment Tribunal in this regard and, if the claim is upheld, shall be entitled to a maximum of two weeks’ pay.
• A week’s pay is made subject to the statutory maximum, which is £310 per week as of 1 February 2007.
• The award shall not be made in addition to any supplementary award made on the Tribunal finding that the employer had failed to permit the complainant to follow an internal appeals procedure.
• A worker may also claim that the employer subjected him or her to a detriment or (unfairly) dismissed the employee for a reason connected with the exercise of or attempt to exercise the right to be accompanied.  Not only may such a worker bring a claim regardless of his or her period of service, but also regardless of age.

STATUTORY DISPUTE RESOLUTION PROCEDURES

The Government wants to encourage all employers to have procedures for handling disciplinary problems and employee grievances, and to put stronger incentives in place to ensure that procedures are followed both by the employer and the employee when the complaint arises.

The Employment Act 2002 (Dispute Resolution) Regulations 2004 therefore provide for the introduction of minimum procedural actions set out in a statutory dismissal and disciplinary procedure (DDP) and statutory grievance procedure (GP). 

The new procedures will apply to all employers, regardless of how many employees are employed, and employees.  The new procedures will not replace an employer’s existing procedures, but in the event that an employer’s procedures do not meet the new statutory requirements, the new minimum procedures will apply.  Company procedures may incorporate the statutory procedures together with other provisions, but may not detract from or exclude them.

THE PROCEDURES

Standard (3-Step) Dismissal and Disciplinary Procedure

Step 1:
The employer should set down in writing the nature of the employee’s conduct, his/her capability or other circumstances that may result in dismissal or disciplinary action, and send a copy of this statement to the employee.

Step 2:
The employer should invite the employee to a meeting to discuss the issue. 
Both parties should take all reasonable steps to attend.
After the meeting, the employer must inform the employee about any decision and offer the employee the right to appeal.

Step 3:
If the employee wishes to appeal, he/she must inform the employer. 
The employer should invite the employee to attend a further meeting to discuss the appeal. 
The final decision must be communicated to the employee.

Modified (2-Step) Dismissal Procedure

Step 1:
The employer should set down in writing the nature of the employee’s alleged misconduct that has led to the dismissal, the evidence for this decision and the right to appeal against the decision and send a copy of this to the employee.

Step 2:
If the employee wishes to appeal, he/she must inform the employer. 
The employer should invite the employee to attend a further meeting to discuss the appeal. 
The final decision must be communicated to the employee. 

Standard (3-Step) Grievance Procedure

Step 1:
The employee must set out in writing the nature of his/her complaint, and provide a copy of this statement to the employer.

Step 2:
The employer should invite the employee to at least one hearing at a reasonable time and place at which the alleged grievance can be discussed.   
Both parties should take all reasonable steps to attend.
After the meeting, the employer must inform the employee about any decision and offer the employee the right to appeal.

Step 3:
If the employee wishes to appeal, he/she must inform the employer. 
The employer should invite the employee to attend an appeal meeting to discuss
After the appeal meeting, the final decision must be notified to the employee.

Modified (2-Step) Grievance Procedure

Step 1:
The employee should set down in writing the nature of his/her complaint. 

Step 2:
The employer must respond to the complainant in writing.

GENERAL POINTS TO NOTE

• Each of the steps under the new procedures must be carried out without unreasonable delay.
• Meetings between the employer and the employee must enable both parties to present their cases.
• The timing and location of the meetings must be reasonable.
• As far as possible, at appeal meetings, the employers should ensure that a more senior manager hears the appeal than attended the first meeting. 
• The statutory right to be accompanied applies to all meetings under the new procedures

THE STANDARD DDP

The DDP applies to all types of dismissals (including dismissals on grounds of capability, conduct, redundancy, expiry of a fixed term contract or early retirement), except where:

• an employee is constructively dismissed
• employees are dismissed and offers of re engagement are accepted
• the dismissal relates to the taking of industrial action
• the employer’s business suddenly and unexpectedly ceases to function (for example, burns down) and it becomes impractical to employ any employees
• the employee cannot continue to work, in the position they held, without contravening a legal duty or restriction
          
  The DDP also applies to any (disciplinary) actions short of dismissal, that are taken by the employer in respect of the employee, wholly or mainly due to the employee’s capability or conduct, except for
• suspension on full pay and oral/written warnings
   

THE MODIFIED DDP

The standard DDP will apply in all relevant cases except on the very rare occasions where an Employment Tribunal would exceptionally find an immediate gross misconduct dismissal to be fair in conjunction with relevant and applicable case law.   In this case, the modified DDP will apply.

However, if the employer elects to do the minimum required in order to comply with the relevant statutory procedure, this does not automatically mean that the dismissal will be deemed fair.  Therefore, the most appropriate measure when an employer discovers an alleged gross misconduct act, will continue to be suspension pending an investigation followed by a disciplinary hearing.

THE GRIEVANCE PROCEDURE

A grievance has now been defined in the Regulations as “a complaint by an employee about action which his employer has taken or is contemplating taking in relation to him” that might lead to one of more specified tribunal claims.  In this context, “employer” can include a third party, such as a colleague.

The standard GP will apply to an employee still in employment or an employee who is no longer employed who complains about (or appeals against) action short of dismissal for reasons other than capability or conduct (which are covered by the DDP).  This will therefore apply to suspensions on full pay, disciplinary warnings and constructive dismissals.

However, the modified GP will apply where

• the employee has ceased to be employed; and
• the standard GP was not completed before the termination of employment; and
• the parties agree in writing that the modified GP will apply.

Neither GP will apply if, at any point, it becomes not reasonably practicable for either party to take the next procedural step in the GP.

The GP will also not apply to the making of a protected disclosure (in accordance with the provisions of the Public Interest Disclosure Act 1998) unless the employee wishes it to apply.

The Employment Appeal Tribunal, in the case of Shergold v Fieldway Medical Centre (2005), has held that in relation to the statutory grievance procedure  –

1. There is no formality required in a statutory standard grievance letter. The requirements “are minimal” - all an employee needs to do is set out his or her complaint in writing.
2. The statutory procedures should rarely result in the Claimant being debarred or the employer being liable for an automatic unfair dismissal (see below).
3. The fact that the written grievance is contained in a letter of resignation “makes no difference at all”, provided that it is the setting out of a complaint in writing.
4. It is not necessary to make it plain in the writing that it is a grievance, or is an invocation of a grievance procedure.
5. There is equally no requirement that an employee must comply with any company or contractual grievance procedure.
6. It is not necessary that every detail of the complaint be set out, as a grievance letter is not a pleading. It is sufficient if the employer can “understand the general nature of the complaint being made”.
7. It is also unnecessary that the employer have the chance to respond to the grievance; all the statute requires (for the standard procedure) is for the employee to set out his complaint in writing.

In Arnold Clark Automobiles v Stewart (2006), the Employment Appeal Tribunal held that a solicitor’s letter could amount to a statutory grievance even though it may be –

1. adversarial rather than conciliatory;
2. intended to claim financial compensation rather than invoke a grievance;and
3. headed “without prejudice”.

In Canary Wharf Management v Edebi (2006), the Employment Appeal Tribunal held that, in considering whether the content of the grievance letter raised the same complaint as the employee was seeking to have subsequently determined by the Employment Tribunal, this would be the case if “on a true reading of the statement and having regard to the particular context in which it is made, [the employer] can be expected to appreciate that the relevant complaint is being raised.”

In Kennedy Scott Limited v Francis (2007), the Employment Appeal Tribunal held that the statutory requirement to set out the grievance in writing and provide a copy of it to the employer was fulfilled when the employee presented his complaint orally at a meeting with his line manager who noted it down.  There is no necessity for an employee personally to put the grievance in writing and send it to his employer.

EXEMPTIONS FROM THE STATUTORY PROCEDURES

Either Procedure

Exemptions will apply in various circumstances, such as

• a party reasonably believes that they or their property are at risk if they follow the relevant procedure
• a party (who has already been subjected to harassment) reasonably believes that they would be further harassed if they follow the relevant procedure
• it is not practicable to follow the relevant procedure within a reasonable period

The DDP

Where an employer is making collective redundancies and must consult elected employee (or trade union) representatives, the statutory DDP will not apply.  However, dismissing an employee in these circumstances is unlikely to be fair unless the employer has individually consulted with the employee.

The DDP will not apply if the “employer first contemplates dismissing or taking [relevant disciplinary] action against the employee” before 1 October 2004.

The GP

Where a collective grievance is raised by an elected employee (or trade union) representative on behalf of two or more employees, the statutory GP will not apply.

The GP will not apply to a grievance raised before 1 October 2004, even where the action forming the basis of the grievance continues after that date.

FAILURE TO COMPLY

A Tribunal could previously enhance or reduce a compensatory award by two weeks’ pay to reflect a failure by the employer to allow or the employee to make use of an internal appeal process.  The Regulations now provide that Tribunals must increase or reduce compensatory awards where either the employee or the employer had unreasonably failed to follow the statutory procedures in respect of the complaints. The amount of enhancement or mitigation would be a minimum of 10% (unless exceptional circumstances make it unjust or inequitable) and up to a maximum of 50% of the compensatory award.

Any failure on the part of an employer to complete a relevant statutory procedure will cause a dismissal to be unfair for this reason alone and will give rise to a minimum basic award of four weeks’ pay (unless such an award would cause injustice to the employer).  Conversely, any failure by an employer to take other procedural actions outside the scope of the statutory procedures will not render the dismissal unfair, if taking such actions would have made no difference to the decision to dismiss and the dismissal would otherwise be fair.

Where a meeting that had been arranged, has fallen through due to the fact that either or both parties could not attend and the employer has subsequently rearranged the meeting, but this falls through a second time, the employer is under no obligation to rearrange it again. 

All employers (of whatever size) will be required to set out (or refer to where set out) the relevant disciplinary and dismissal procedure applicable to the employee (incorporating the statutory DDP) in the statement of particulars (which may be incorporated in another document such as a contract of employment).

Where an employee brings one or more of a range of specified complaints in the Tribunal, any failure to provide an accurate or complete statement of particulars (or any statement at all), the Tribunal will be required to increase any sum of compensation awarded by between two and four weeks’ pay depending upon the seriousness of the breach (unless such an award would cause injustice to the employer).

These provisions should provide incentives to both employee and employer to make use of internal procedures to avoid the commencement of Tribunal proceedings and the adverse effects on the calculation of compensation.  In addition, a failure to follow the statutory procedures may result in adverse costs consequences for the Applicant for the unreasonable bringing of proceedings.

EXTENDING TIME LIMITS

The Regulations allow for the extension of time limits for the presentation of complaints to a Tribunal to allow the statutory procedures to be completed. 

Although the Government had originally proposed that there be no extension of time in dismissal or disciplinary situations, the Regulations provide that the time limit be extended by a period of three months where the employee has reasonable grounds for believing a disciplinary (including appeal) procedure is still ongoing at the point when the normal time limit expires.

A similar extension of time will apply where, under the GP, an employee:

• sends a step one letter before the expiry of the normal time limit
• attempts to present a tribunal application without having written a step one letter under the GP and waited 28 days, provided that they then send a step one letter within 28 days of the normal time limit expiring

The issuing of a discrimination questionnaire will not count as a step one grievance letter.

OVERLAPPING DISCIPLINARY AND GRIEVANCE ISSUES

An action by the employer in respect of the employee can fall under either type of statutory procedure, DDP or GP, but not both.  If the employer effects a dismissal (excluding constructive dismissal), the grievance procedure is not applicable.  In the event that the action is something other than dismissal, the views of each party may differ in relation to which type of procedure is applicable.

In the consultation exercise, the Government suggested that it would be good practice for both parties to send a letter to the other party that could be classed as a step one letter under the procedure each party considered was the applicable one to follow. 

If an employee were to raise an issue for the first time at a step two or three meeting under the DDP that the employer’s actions were due to something other than conduct or capability, the employee would have to send a step one letter under the GP to enable them to subsequently bring a tribunal complaint relating to a matter that fell outside the DDP.  In this regard, letters and meetings can be multi-purpose.

IMPLIED CONTRACTUAL TERM

Section 30 of the Employment Act 2002 provides that the new statutory procedures can become an implied term of all contracts of employment.  However, the Government does not currently propose to implement this provision. 

THE FUTURE

In March 2007, the Government began a consultation on the proposals made by the Gibbons Review which, amongst other things, recommended that the current Statutory Dispute Resolution procedures should be repealed. The consultation closes on 20 June 2007. 

Updated May 2007

The information contained in this Fact Sheet is for general guidance only and represents our understanding of employment law and practice.  asb law and Alexander Lloyd cannot be held responsible for any action or inaction taken in reliance upon the contents.  Specific advice should be taken on any individual matter.