The high cost of disciplinary procedure
non-compliance
From today employers who breach strict disciplinary and grievance
procedures could find that employees are able to claim automatic unfair
dismissal and an uplift in compensation. Trevor Bettany, a partner in
Speechly Bircham's employment team, tells Grania Langdon-Down why...
Employers
who fail to comply with new statutory minimum standards for dealing with
disputes could find that not only will employees be able to claim automatic
unfair dismissal, but they will also be able to seek an increase in any
compensation award of between 10% and 50%. And that could prove very costly
if the employee can tie any breach of those standards in with a
discrimination claim, says Trevor Bettany, a partner in Speechly Bircham's
employment team.
Bettany explains: "The uplift in compensation is not restricted to unfair
dismissal. Employees may argue that they were dismissed because of their
race or sex and, further, that their employers didn't go though the
dismissals and disciplinary procedures (DDPs) properly because of their race
or sex. They will then ask the tribunal to increase their uncapped
discrimination compensation by up to 50%. This is going to make a real
difference in the way these problems are managed, particularly at the
professional or more senior level. I think there will have to be some causal
connection between the breach of procedures and the discrimination loss and
you can imagine everyone focusing on any breaches and why they took place.
But this is one of those issues that will become clearer as decisions start
to come through."
He highlighted the key developments introduced in the Employment Act 2002
(Dispute Resolution) Regulations 2004, which come into force today.
Employers must now go through a three stage DDP - starting with a written
statement of the reason for the proposed dismissal or "relevant disciplinary
action", followed by a meeting at which that reason will be discussed, and
then an appeal if the employee pursues it. If those minimum standards are
breached, the dismissal becomes automatically unfair and the employee can
seek an uplift in compensation. The three stage process also applies to
non-disciplinary dismissals, such as ill-health or individual redundancy.
Bettany says: "What the Government is trying to do is introduce minimum
standards of fairness in all workplaces and to attach sanctions with real
teeth to penalise employers and employees who fail to comply with them so as
many disputes as possible are dealt with internally. While this is
admirable, the regulations are extremely - and unnecessarily - complicated.
They include various circumstances in which they do apply, do not apply,
apply in modified form or are treated as having been completed. Even
employers who comply will not necessarily avoid liability because they will
also need to comply with ordinary principles of procedural and substantive
fairness and take into account the revised ACAS code of practice as well as
their own internal procedures, which may impose higher standards.
"From a procedural point of view, there has never previously been one fatal
error which would render a dismissal automatically unfair. Now employees
almost have a shopping list of steps with which their employer must comply.
Employers must also specify or refer to the DDPs in the contract of
employment or in an accessible document or the employee will be able to
claim an extra two to four weeks' pay as part of their tribunal claim.
"The regulations are a significant increase in employee rights but the
regulations also provide some comfort for employers. Employees who do not
raise their grievance internally will be precluded from bringing a tribunal
claim. Where the relationship has broken down, the three stage process can
be replaced by a modified procedure involving a written statement from each
side to avoid what would otherwise effectively be a dress rehearsal for the
tribunal. An employee who fails to complete the DDP or the statutory
grievance procedure will correspondingly face a reduction in compensation of
between 10% and 50% if the tribunal deems the failure to complete the
process is wholly or partly attributable to the employee."
Overall, he says the unions are concerned that the complexity of the
regulations will put employees off bringing a claim, while the message to
employers must be to ensure their line managers know they must comply with
the minimum standards or face drastic consequences.
(01/10/04)
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Legislative annotations in other services:-
Employment Act 2002 (Dispute Resolution) Regulations 2004, SI 2004/752.
UK
Europe
USA&Canada
Aust.&NZ
Asia