Repeal of the statutory dispute resolution procedures: ACAS code of practice and guidance

Helen Ferris and Maria Hoeritzauer of Osborne Clarke continue a series of articles on the repeal of the statutory dispute resolution procedures with a look at the revised ACAS code of practice and guidance.

Introduction

The Government intends to repeal the statutory dispute resolution procedures (see Repeal of the statutory dispute resolution procedures: overview in this series for more details). It does not intend to replace the procedures with further statutory provision. Consequently, in May and June 2008 respectively, ACAS published a revised Draft Code of practice on discipline and grievance (PDF format, 85K) and revised Discipline and grievances at work: draft ACAS guide (PDF format, 368K) (both on the ACAS website) aimed at assisting employers and employees dealing with disciplinary and grievance situations. Both the revised code and guidance have been subject to consultation.

Revised code

According to the revised code, it provides "basic practical guidance to employers, employees and their representatives and sets out principles for handling disciplinary and grievance situations in the workplace". ACAS has taken into account the criticisms raised of the statutory dispute resolution procedures during consultation on them during 2007, and consequently has sought to keep the revised code concise and straightforward.

Employers currently have to grapple with the legislation detailing the requirements and operation of the statutory procedures, guidance for employers on the DBERR website, the existing 48-page ACAS Code of Practice - Disciplinary and grievance procedures (PDF format, 327K) (on the ACAS website) and ACAS guidance (Discipline and grievance at work (PDF format, 327K) (on the ACAS website)). In contrast, the revised code is only 10 pages long, and much less prescriptive than the current code. It is supplemented by the revised guidance, which contains more practical "how to" steps, flowcharts and draft procedures.

The revised code consists of three sections: an introduction setting out key principles applicable to both disciplinary and grievance matters; a section focusing on discipline; and a section focusing on grievances.

Key Principles

The following key principles are included in the draft revised code:

  • Informal resolution of disputes is encouraged. The code specifically refers to the fact that a "quiet word is often all that is required to resolve a problem".
  • Written, specific and clear rules and procedures should be developed for handling disciplinary and grievance situations.
  • Employees and managers should understand how such procedures should be used.
  • To ensure fairness in any formal procedure:
    • issues should be dealt with promptly;
    • employers should act consistently;
    • appropriate investigations should be undertaken to establish the facts;
    • a manager not involved in a dispute should conduct any disciplinary or grievance hearing, although where an employer is raising a performance issue, the employee's immediate manager should usually be involved;
    • the employee should be informed of the basis of the problem and have an opportunity to put his or her case before any decision is made;
    • employees have the statutory right to be accompanied; and
    • employees should have the right to appeal against any formal decision.
  • It is good practice to keep written records during any proceedings and to record the outcome in writing.

There is nothing new in these key principles for employers or employees to embrace - they are all matters covered in the current ACAS code and the statutory dispute resolution procedures. They are also taken into account by employment tribunals in the general consideration of fairness in unfair dismissal claims.

Disciplinary matters

In relation to disciplinary matters, the draft revised code identifies five key stages. These require employers to:

  • Establish the facts of the case.
  • Inform the employee of the problem. The revised code specifically refers to a requirement to notify the employee in writing of what is alleged and the possible consequences, whereas the current statutory procedures require only that the allegations are set out in writing.
  • Hold a meeting. Like the current statutory procedures, the revised code specifically states that the employee should be notified of the nature of the problem and the basis of the allegations against him or her prior to the meeting.
  • Decide on the disciplinary action (if any) to be taken and inform the employee. The revised code provides some (but in no way comprehensive) guidance on what warnings may be appropriate.
  • Provide the employee with the opportunity to appeal. Like the current statutory procedures, the revised code specifically recommends that a more senior manager than the manager who conducted the first meeting should hear the appeal.

The revised code detracts very little from the current statutory procedure and the general considerations of fairness applicable to disciplinary and dismissal matters.

However, any alternative to the current modified statutory disciplinary and dismissal procedure is absent. The modified procedure applies where an employer dismisses an employee on conduct-related grounds, without notice, in circumstances where it is reasonable to do so before making further enquiries. It applies in limited circumstances (in some cases of gross misconduct) and employers are usually advised to follow the standard procedure. This approach is reflected in the revised code, which expressly requires employers always to follow a fair disciplinary process, including a right of appeal, before deciding whether gross misconduct has occurred.

The revised code also refers to special cases involving trade union lay officials, and employees who are charged with a criminal offence.

Grievance matters

For grievances, the following key stages are identified:

  • The employee should let the employer know the nature of the grievance. The revised code simply indicates that this is "best done in writing" to the employee's line manager (or where this is not appropriate, another manager). This differs from the express requirement for the complaint to be in writing under the current statutory procedures, and for the employee to inform the employer of the basis of the complaint.
  • The employer should hold a meeting.
  • The employer should decide on appropriate action and communicate this to the employee.
  • The employer should provide the employee with the opportunity to appeal, ideally to a more senior manager than the manager who heard the grievance.

The revised code states that it is good practice to consider dealing separately with issues involving bullying, harassment or whistleblowing.

Again, there is no replacement for the current modified procedure, which allows employers and employees to agree to conduct grievance disputes in writing, following termination of employment.

Consequences of failing to follow the code

The main difference between the current position, which requires compliance with statutory procedures, and the proposed position, which requires employers simply to consider the revised code in relation to disciplinary and grievance issues, lies in the consequences of failing to do so.

There are a number of possible consequences for both employers and employees where the statutory procedures apply but are not complied with, namely:

  • a finding of automatic unfair dismissal against an employer where an element of the procedure (however small) is not followed;
  • an increase of between 10% and 50% to any compensatory award where an employer fails to follow the procedures;
  • a decrease of between 10% and 50% to any compensatory award where the employee fails to follow the procedures.

In contrast, the draft revised code will not be legally binding. Tribunals will simply be entitled to take it into account in their determinations. Compared with the statutory procedures, there will be few requirements imposed on employees. Under the current proposals, where an employer has unreasonably failed to comply with the revised code in respect of either a grievance or disciplinary procedure, the tribunal may, at its discretion, increase any compensatory award made to the employee, by up to 25%. Equally, where an employee has not complied with the revised code, the tribunal may reduce the award by up to 25%. However, it is only "unreasonable" failures and the exercise of the tribunal's discretion that may trigger such an adjustment to an award.

Scope

It is also worth noting that the revised code relates only to disciplinary and grievance issues. It does not cover other dismissal situations, such as redundancies or dismissals arising on the expiry of fixed-term contracts, which come within the current statutory procedures.

Revised guidance

Like the code, the revised guidance has been subject to consultation. Employers are likely to find the revised guidance Appendix helpful. This sets out advice for dealing with all types of absence. Small and medium-sized employers may find the revised guidance helpful as it takes into account the particular issues that such employers have when preparing and implementing policies, procedures and training. The revised guidance also contains sample disciplinary and grievance procedures, including a checklist and sample procedures specifically tailored to small organisations. There is also a step-by-step guide to holding disciplinary and grievance meetings.

Conclusion

Overall, the revised code and guidance do not significantly alter the position of employers that already have sound procedures and policies in place. Such employers should use the repeal of the statutory procedures as an opportunity to review their own procedures and to undertake training with managers to ensure that they understand how the procedures should be used, and what is expected of employers and employees. The revised code enforces the current best practice of following procedures fairly, promptly, and consistently, of having different personnel deal with different stages of a procedure, and of having a right of appeal.

The main concern for employers is the fact that the revised code may have a significant impact on tribunal awards, even though it is not legally binding.

The next article in this series will be a case study on disciplinary procedures and will be published on 18 August.

Helen Ferris (helen.ferris@osborneclarke.com) is a senior associate and Maria Hoeritzauer (maria.hoeritzauer@osborneclarke.com) is a solicitor at Osborne Clarke.

Further information on Osborne Clarke can be accessed at www.osborneclarke.com.