Daniel Issac and Emma Sanderson, Solicitors Journal, 09/07/04; pp. 812, 813 © Waterlow Professional Publishing. Reproduced with permission.
The Employment Act 2002 (the Act) proposed a radical new system to encourage the res-olution of disputes within the workplace (see ‘Employment Act 2002 (1)’ (2002) 146 SJ 772).
Since then, the Government has been consulting over the proposals, and deferring their introduction, to the point where many practitioners believed (and hoped) they would never be introduced. Finally the Employment Act 2002 (Dispute Resolution) Regulations 2004 (the Regulations) have been published, and are due to come into force on 1 October 2004.
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Overview of the changes
The Act sets out four statutory procedures: a standard and a modified dismissal and disci-plinary procedure, and a standard and a modified grievance procedure. The basic concepts are that complaints by employers and employees should be reduced to writing, meetings should be held to discuss the issues, and appeals should be offered in all cases. While these concepts might be non-contentious, the enforcement measures (outlined in our previous article) are arguably not so.
Initially, the Government wanted the new procedures to be implied into all employment contracts, but has now retreated from this proposal. Although the procedures will apply as a matter of statute, for the time being they will not become implied contractual terms. The Government will review the position after two years.
Standard procedure
The standard dismissal and disciplinary procedure will not apply in as many circumstances as originally anticipated.
Regulation 3(1) provides that the standard procedure will apply when the employer ‘con-templates’ dismissing the employee, or taking ‘action short of dismissal … based wholly or mainly on the employee’s conduct or capability’. Action short of dismissal is not fully defined, but is likely to include demotions and transfers. Importantly, the Regulations pro-vide specifically that it excludes ‘suspension on full pay’ and ‘the issuing of warnings (whether written or oral)’. Formal performance monitoring is also unlikely to trigger the procedure, as such monitoring is akin to issuing disciplinary warnings (although dismissal is often contemplated from the outset).
It will remain good practice, in day-to-day disciplinary matters, for employers to set out their concerns in writing, hold meetings and offer appeals. However, there will be no statu-tory penalty if they fail to do so.
Regulation 4(1) expressly excludes the operation of the procedure in specific cases including (but not limited to):
● collective dismissals designed to engineer changes to terms and conditions;
● proposals to dismiss as redundant 20 employees or more in a 90 day period (which will trigger collective consultation obligations under the Trade Union and Labour Relations (Consolidation) Act 1992);
● where the employee is engaged in an unofficial strike or other unofficial industrial action;
● where the employer’s business suddenly ceases to function because of an unforeseen event; and
● where continued employment would be unlawful.
Despite the breadth of these exceptions, the procedures will apply to a range of dis-missals, including individual redundancies and the expiry of fixed-term contracts.
Modified procedure
The modified dismissal and disciplinary procedure was highly contentious. As every junior HR person knows, it is a mistake to dismiss employees for gross misconduct without first giving them the opportunity to put forward their case in a disciplinary hearing. As originally proposed, the modified procedure appeared to allow employers retrospectively to correct this type of procedural mistake. This is no longer the case. Regulation 3(2) now states that
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the modified procedure shall apply in relation to a dismissal where:
(a) the employer dismissed the employee by reason of his conduct without notice;
(b) the dismissal occurred at the time the employer became aware of the conduct or imme-diately thereafter;
(c) the employer was entitled, in the circumstances, to dismiss the employee by reason of his conduct without notice or any payment in lieu of notice; and
(d) it was reasonable for the employer, in the circumstances, to dismiss the employee before enquiring into the circumstances in which the conduct took place.
Paragraph (d) arguably means that the modified procedure should never apply, because it is never reasonable to dismiss an employee before enquiring into the circumstances. However, employment tribunals (ETs) are likely to adopt a slightly more lenient interpretation.
Grievance procedures
At present, many ET claims are issued alleging, for example, discrimination, based on inci-dents that the employee did not mention while employed. In future, generally this will not be possible.
The Act will generally prevent an employee from presenting a complaint to an ET about action his employer has taken in relation to him until he has submitted a written grievance under one of the statutory procedures and 28 days have passed. The main exceptions are where:
● the employee has reasonable grounds to believe that submitting the grievance would result in a significant threat to himself or his property (or someone else or their property); or
● the employee has been subjected to harassment and has reasonable grounds to believe that submitting the grievance would result in further harassment.
Generally, the standard grievance procedure will apply. However, the modified procedure (which omits the need for a meeting) will apply to grievances by former employees, pro-vided: (a) the former employer was unaware of the grievance before the employment ended (or, if it was so aware, the standard procedure was not completed before the employment ended); and (b) both parties agreed in writing (after the employer became aware of the grievance) that the modified procedure should apply.
Under reg l4 the service of discrimination questionnaires is not to be seen as the raising of a statutory grievance.
Extension of time limits
Regulation 15 confirms that the time limits for bringing ET claims will be extended in cer-tain circumstances to allow internal dispute resolution.
If either of the dismissal and disciplinary procedures applies to a complaint (e.g. a com-plaint of unfair dismissal) and, at the date the normal time limit expired, the employee had reasonable grounds for believing that a dismissal or disciplinary procedure which included the substance of the complaint was being followed, the time limit for bringing an ET claim will be extended by three months.
If either of the grievance procedures applies to a complaint (e.g. a complaint of dis-crimination) and, at the date the normal time limit expired, the employee and not issued a claim, but had complied with the requirement to raise his grievance in writing to his employer, the time limit for bringing an ET claim will be extended by three months.
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If the employee issues a claim during the normal time limit, but is barred by the Act from doing so because either he has failed to raise an internal grievance, or he has done so but the required 28 days have not passed, the three month extension will apply.
Meetings
Regulation 13 provides that if it is ‘not reasonably practicable’ for either party to attend a meeting ‘for a reason which was not foreseeable when the meeting was arranged’, that shall not be regarded as failure to comply with the statutory procedure. In such circumstances, there is a duty on the employer to rearrange the meeting (taking into account the availabil-ity of the employee’s companion, if relevant). If the rescheduled meeting does not take place for similar reasons, the duty on the employer to attempt to rearrange ceases, and the parties will be treated as having complied with the statutory procedure.
This seems sensible, but practitioners should watch for early ET decisions on the mean-ing of ‘a reason which was not foreseeable’. This is different from, a reason which was not foreseen and, arguably, it could be a considerable hurdle to show that a reason was not fore-seeable.
Logistical guidance
Many commentators were concerned about the potential overlap between grievance and disciplinary matters, and who would be blamed if the statutory procedures were not com-pleted. Although the Regulations attempt to give clarity on these issues, in complex cases practitioners will undoubtedly have to pick through the Act and Regulations in an attempt to establish whether the procedures apply, whether they are deemed to have been com-pleted, and whether fault for non-completion lies with one of the parties. This is one area in which litigation is likely to increase rather than decrease.
Less litigation?
Any legal system must balance deciding each case on its own merits (which leads to fairness but uncertainty) with rigid rules (which provide certainty at the expense of fairness in indi-vidual cases). English law has tended to favour the former approach, but these rigid proce-dures begin to tip the balance the other way. But will this certainty lead to more settlements?
Procedural mistakes by employers may encourage an increased number of claims, but the certainty of the outcome may also lead to an increased number of settlements: more litiga-tion but fewer hearings. Regarding grievances, Brendan Barber, TUC General Secretary, has said the primary focus of the Regulations is to make it as difficult as possible for individu-als to reach an ET, rather than encouraging the early resolution of disputes in the work-place. This sentiment certainly has a ring of truth.