Dispute resolution procedures repeal: employers' questions answered

We answer employers' questions on the effects of the repeal of the statutory dispute resolution procedures on 6 April 2009 and their replacement with a "lighter touch" regime based on the new Acas code of practice on disciplinary and grievance procedures. Issues covered include: the processes to follow in redundancy dismissals and where a fixed-term contract expires without being renewed; employees' right to call relevant witnesses; dismissals that would have fallen under the modified statutory dismissal procedure; time limits for appeals; and grievances from ex-employees.

Q1: The new Acas code of practice on disciplinary and grievance procedures states that it does not apply to dismissals due to redundancy - so which procedure should employers now follow for redundancy dismissals?

Following the abolition of the statutory dispute resolution procedures, the focus will simply be on whether or not the employer has behaved reasonably in dismissing the employee in question for redundancy. Over the years there has been much case law on this issue, so employers should not be short of guidance on how to proceed. In looking at fairness the tribunal will focus on the key areas of:

• fair selection criteria;
• fair assessment of the criteria; and
• proper consultation.

There will no longer be a set format of meetings that must be held in the lead-up to a redundancy dismissal, but a fair process is likely to include the following:

• An initial meeting with the employee (or group of employees) to announce the likelihood of redundancies, with an outline of the employer's proposals for taking the matter forward, including the proposed selection criteria and method of applying those criteria. Employees are usually given the option of putting forward any suggestions of their own at this stage.
• A meeting with the employee selected for redundancy outlining the basis on which the selection was made. The employee should be given a chance to challenge and question the basis for selection, and this may involve a further meeting if the employee needs time to consider his or her assessment or the employer needs time to investigate issues raised by the employee.
• A meeting confirming the selection and discussing the possibilities for redeployment to alternative work or assistance that the employer can provide to help the employee find alternative work.

There is no rule regarding the number of meetings held: this depends to a large extent on the scope and complexity of the exercise. What is important is that there is genuine consultation with the individual and an overall fair basis for selection. The redundancy should not simply be presented as a fait accompli. Genuine engagement is required.

Q2: As the Acas code does not apply to redundancy dismissals, must we continue to offer the right of appeal against a redundancy dismissal?

There will no longer be a statutory right to an appeal in a redundancy situation, and case law prior to the coming into force in October 2004 of the statutory dispute resolution procedures did not require an appeal against selection for redundancy as part of a fair procedure. What matters is that there is a fair method of selection and that the employee is given a fair opportunity to challenge his or her selection during the course of the consultation.

If, however, you have a specific redundancy selection policy that states that an appeal will be offered - perhaps included as a result of the statutory procedure - it may well be unfair to depart from this unless a new procedure is agreed.

Q3: The new Acas code specifically states that it does not apply to the non-renewal of fixed-term contracts. How should we now deal with the expiry of fixed-term contracts?

So far as the law is concerned, the non-renewal of a fixed-term contract is a dismissal (s.95(1)(b) of the Employment Rights Act 1996), and protection against unfair dismissal applies just as it does to express dismissals. The employer would need to show that one of the potentially fair reasons - such as redundancy - applied. An employment tribunal would then consider whether or not, in all the circumstances, the employer had acted reasonably in dismissing the employee.

The first question for the employer is why the contract is not being renewed. If the reason is structural or financial, ie either the work has been completed or the funding for the particular role has come to an end, the dismissal is likely to be for redundancy. If this is the case, the employer has to pay just as much attention to fairness as it does when the individual concerned is employed on an open-ended contract. It may be that the employee's selection is not an issue because there is, in essence, a "pool of one" - due to the individual's work ending or losing its funding. However, the employer will still need to show proper consultation in the run-up to the end of the contract and a reasonable attempt to find alternative work within the organisation.

If the reason for the non-renewal is that the employee is not performing well, the employer should follow the same performance management process that it would for any other employee. In relation to conduct issues, it should follow its disciplinary procedure. A proper investigation and fair procedure cannot be dispensed with simply because the employee's contract was due to expire in any event.

Q4: If there is a disciplinary case to answer, the new Acas code states that the employer should inform the employee of this in writing. Does this requirement differ in any way from step-one of the statutory dismissal and disciplinary procedure?

Not really, although arguably the Acas code goes further than the statutory procedure in that it recommends that the employer should provide copies of any written evidence such as witness statements with the notification. The statutory procedure required merely that the employer inform the employee of the basis of the allegations before the meeting.

There is, however, an important difference between the requirements of the statutory procedure and the recommendations made in the code. The statutory procedure was mandatory and any failure to complete it on the part of the employer made a dismissal unfair. If an employee was not given a written invitation to a disciplinary meeting, any subsequent dismissal was unfair, even if the employer had given an oral invitation and carefully explained to the employee the purpose of, and basis for, the meeting.

Following the abolition of the statutory procedure, it will be open to an employer to argue that, despite the absence of a written invitation, a dismissal was nevertheless fair. The tribunal will take into account that there has been a failure to comply with the Acas code, but it might be possible for the employer to persuade it that, in the circumstances, the employee understood the nature of the meeting perfectly well, and had a fair opportunity to prepare and put his or her side of the story. If this is the case, the tribunal may feel that the dismissal was fair despite the absence of a written invitation - particularly where the employer has just a handful of employees and verbal, rather than written, communication is the norm.

This is not, however, to detract from the importance of abiding by the code, or to understate the value of putting important communications in writing, so as to avoid any debate about what was said and when.

Q5: The Acas code states that, at a disciplinary hearing, the employee should be able to "call relevant witnesses". We've not permitted this in the past because of fears that it could potentially be a difficult situation to handle. Can we continue to adopt this approach?

This aspect of the code is certainly problematic, and it might have been hoped that it would provide greater clarity on such an important issue. Hitherto it has not been a requirement of a fair disciplinary process that witnesses should be called to give evidence in person and cross-examined (Ulsterbus Ltd v Henderson [1989] IRLR 251 NICA and Santamera v Express Cargo Forwarding t/a IEC Ltd [2003] IRLR 273 EAT). There may be situations when fairness requires witnesses to be called, but what matters is that the rules of natural justice are satisfied in respect of the hearing. These are that the employee understands the allegation that has been made, and has a reasonable opportunity to put his or her side of the case to the employer, and that the employer gives the employee's arguments proper and open-minded consideration (Khanum v Mid-Glamorgan Area Health Authority [1978] IRLR 215 EAT).

The question is whether or not the reference to witnesses in the new Acas code has fundamentally changed this position. Close examination of the code suggests not. It does not require the employer to call witnesses to present the evidence against the employee. Neither does it say that the employee must be allowed to cross-examine any witnesses that are called. Rather it provides that the employee should be given an opportunity "to raise points about any information provided by witnesses", which is not the same thing. In any event, this does not depend on the witness being present at the hearing: it could refer to evidence given by the witness and put in writing to be considered at the disciplinary hearing.

However, the code does clearly state that "the employee should also be given a reasonable opportunity to ask questions, present evidence and call relevant witnesses". It would therefore seem to be a breach of the code not to allow an employee to call witnesses to the disciplinary hearing. On the other hand, there are limits to the employee's right to do this.

First, a right for an employee to call his or her own witnesses is not the same as a requirement for the employer to produce witnesses that the employee would like to cross-examine. Thus an employee may have the right to call a witness who would support his or her case - but that does not mean that the employee can require anyone who was interviewed by the employer in the course of the investigation to be subjected to cross-examination. The employer is free to present its evidence in written form, provided that the employee is allowed a fair opportunity to challenge it.

Second, an employee's right to call witnesses is not absolute. The code speaks only of giving the employee a "reasonable opportunity" to do so. This clearly allows the employer to refuse to hear witnesses who do not have any relevant evidence to give, or who merely confirm what the employer already accepts, for example the employee's previous good conduct. Similarly, if the employee wished to call a large number of witnesses making substantially the same point, the employer would surely be able to insist on hearing only a reasonable number of them.

Third, an employee does not have the power to summon witnesses. If the employee nominates someone whose account of events should be heard, but that person is unwilling to attend the hearing, then it would seem unreasonable to expect the employer to force the individual to do so. His or her evidence should be taken into consideration as part of the overall investigation, and the employee who is the subject of the hearing should have a chance to respond to it, but a disciplinary hearing is not a court of law. An employee may persuade a colleague to come forward and give evidence in person, but the code does not suggest that he or she has any power to compel the colleague's attendance.

Further case law may be needed to clarify the meaning of the code in this regard, but in the meantime it is reasonable to suppose that the requirement in the code does not represent a major change from the previously accepted position. The employer remains free to present its evidence in writing and the employee is not entitled to insist on cross-examining the employer's witnesses in person. An employee can, however, call witnesses, provided that their evidence is relevant, the overall request is reasonable and the witness in question is willing to take part.

Q6: How should employers deal with those dismissals that would have fallen to be handled under the modified statutory dismissal and disciplinary procedure?

In reality, the cases to which the modified procedure applied were rare. In almost all cases of gross misconduct, an investigation and a fair hearing are essential before the employer determines what action to take. However, it has always been accepted that there will be some rare situations in which following the normal disciplinary process would be "futile", so that it can be dispensed with fairly. The point was first clearly expressed by the House of Lords in Polkey v AE Dayton Services Ltd (formerly Edmund Walker (Holdings) Ltd) [1987] IRLR 503 HL and, before the advent of the statutory procedures, was often referred to as the "Polkey exception". With the repeal of the statutory procedures, the Polkey exception still applies, at least in theory. The Acas code states that "a fair disciplinary process should always be followed before dismissing for gross misconduct", but the Polkey exception does not conflict with this. The point is that there may be cases in which the situation is so serious and unambiguous that dismissal without a hearing does in fact amount to a fair disciplinary process.

However, such cases are rare. The best approach is for employers to assume that the disciplinary process should be followed in all cases. It is only in the most serious and urgent cases, where the continued employment of the employee, even where suspended, is likely to do serious harm to the employer's interests, that dismissal without a full hearing should be contemplated.

Q7: The new code states that employees should appeal against any disciplinary action that they feel is wrong or unjust, or where they feel that a grievance has not been satisfactorily resolved. Are we permitted to set a time limit in which an appeal must be submitted?

Yes. This is essentially a matter for the employer to set out in its own procedure. Although the code does not refer to a time limit, it stresses the importance of appeals being heard without unreasonable delay, and a time limit on submitting appeals is consistent with this requirement. The time limit should not be so short, however, that the employee does not have a reasonable opportunity to consider his or her position before deciding what to do. The non-statutory Acas guidance that accompanies the code suggests that five working days is usually appropriate. The employer should reserve discretion to consider later appeals depending on the circumstances of the case.

Q8: We would like to revert to our old grievance procedure, under which employees were obliged to fill in our standard grievance form. But, as the code states only that a grievance should be in writing, will we be obliged to consider anything in writing - an email for example - that could potentially be viewed as a grievance?

There should be no problem with your proposal, provided that the method by which you require grievances to be submitted is clearly explained to all employees and the form is not so onerous that it deters employees who wish to raise a grievance from doing so.

It would be a good idea to respond to general complaints received via, for example, email with a reference to the grievance procedure, pointing out that, if the employee wants to submit a formal grievance, he or she should complete the appropriate form. However, wherever possible, the option of resolving the grievance by informal means should also be stressed.

Q9: Following the repeal of the dispute resolution procedures are we obliged to deal with grievances from ex-employees?

No. Grievance procedures should focus on resolving disputes with employees. A former employee might have a dispute with his or her ex-employer that could form the basis of tribunal or court proceedings, and the employer may feel that it is appropriate to engage in dialogue with the individual in the hope of resolving the issue. However, this does not require the use of a formal grievance procedure with a right of appeal.

Further, the way in which the discussions are handled will not affect the outcome of the case. For example, if an employee has resigned and is claiming constructive dismissal, the question will be whether or not the resignation was the result of a fundamental breach of contract by the employer before the resignation. How the employer behaves after the resignation - for example by refusing to meet the employee or discuss his or her complaint - will not affect the question of whether or not there was a constructive dismissal.

Q10: In what circumstances will the statutory procedures continue to apply from 6 April 2009?

The transitional provisions for the repeal of the procedures are set out in the schedule to the Employment Act 2008 (Commencement No.1, Transitional Provisions and Savings) Order 2008 (SI 2008/3232).

The statutory disciplinary and dismissal procedures will continue to apply only where on or before 5 April 2009 the employer has commenced the statutory procedure by sending the employee the written invitation to the meeting required by step one of the procedure (or has complied with any of the subsequent steps, or actually dismissed or disciplined the employee).

This means that if the misconduct occurs on, for example, 4 April 2009, if the employer sends an invitation to a disciplinary meeting on or after 6 April, the statutory procedures will not apply.

The situation is a little more complex in relation to the grievance procedures. In this regard, the transitional provisions are particularly important because they relate not just to the grievance hearing itself, but also to the restriction on bringing tribunal complaints in s.32 of the Employment Act 2002.

Where the action about which the employee is complaining occurred wholly before 6 April 2009, the statutory grievance procedures will continue to apply. This is so even where the employee submits his or her written complaint on or after 6 April. An employee could complain about such action long after it had occurred and the statutory grievance procedures would technically still apply. However, in reality, the employment tribunal time limits would prevent such a claim from making progress.

Where the action about which the employee is complaining occurred partly before 6 April 2009 but continues on or after that date, the grievance procedures will still apply provided that the employee presents a complaint to the employment tribunal or sends the necessary written complaint to the employer on or before 4 July 2009. Where the grievance is about the operation of the equality clause or is about entitlement to a redundancy payment, the applicable date is 4 October 2009.

Employers can therefore be sure that any disciplinary proceedings commenced on or after 6 April 2009 will not be caught by the statutory procedures. Where a grievance relates to action beginning before this date, the procedures will apply only when the employee makes a complaint (either to the employer or to the tribunal) by 4 July 2009 (or by 4 October 2009 where relevant). Where a grievance relates to conduct beginning on or after 6 April, or where no complaint has been made by the specified dates, the statutory grievance procedures will not apply.