Repeal of the statutory dispute resolution procedures: case study

Jenny Wotherspoon and Helen Dallimore of Osborne Clarke continue a series of articles on the repeal of the statutory dispute resolution procedures with a case study that looks at the impact of the repeal on dismissal and disciplinary procedures.

Rachel is employed by FriendsInsure, an insurance brokerage with offices throughout the UK. Rachel is an insurance broker and has worked in the Leeds office for just over a year. Ross, a senior manager with the company, has been informed that Rachel has stolen money from petty cash.

Under the current provisions, what should Ross do prior to any disciplinary meeting taking place?

The allegation is serious and could warrant Rachel's dismissal on grounds of gross misconduct. However, to avoid the dismissal being successfully challenged as being unfair, FriendsInsure needs to be able to show that:

• it believed that Rachel was guilty of the offence (in this case, theft) and that it had reasonable grounds for that belief; and
• it carried out a fair procedure before reaching the decision to dismiss.

A fair procedure includes a reasonable investigation. In this case, FriendsInsure should carry out an investigation to determine whether a disciplinary meeting is appropriate. In doing so it should consider the current ACAS Code of Practice - Disciplinary and grievance procedures (PDF format, 327K) (on the ACAS website). While a failure to follow the code will not, in itself, make a dismissal unfair, it will be a factor that the tribunal will take into account.

In this case, a reasonable investigation will involve a full investigation of the facts, including holding investigatory meetings with the individual or individuals who have made the allegations, and any witnesses. Any relevant CCTV footage should also be viewed. There should be an investigatory interview with Rachel. The investigation should be even-handed, and written records and statements must be kept. Ross should appoint a suitable person (such as another manager or an HR representative) to carry out the investigation. When appointing an investigator, FriendsInsure should remember that, ideally, this person should not also conduct the disciplinary meeting.

FriendsInsure could suspend Rachel with pay while the investigation is ongoing if there is an express contractual right permitting it to do so. However, in accordance with the guidelines set out in the current ACAS code, suspension should be imposed only after careful consideration, and should be as brief as possible. Rachel should be told that the suspension does not amount to disciplinary action and does not involve any pre-judgment of the case.

What action would Ross be required to take if this scenario were to take place following the repeal of the statutory dismissal and disciplinary procedures?

When the statutory procedures are repealed employers will still be required to undertake a reasonable investigation in disciplinary and dismissal cases. This will be a requirement of the revised ACAS code of practice, which employers will be expected to follow. The code is currently in draft form (Draft Code of practice on discipline and grievance (PDF format, 85K) (on the ACAS website)) and has been subject to consultation. There is also a guidance document, also in draft form (Discipline and grievances at work: draft ACAS guide (PDF format, 368K) (on the ACAS website)), which is not legally binding but acts as a useful reference point for employers and complements the code. (See Repeal of the statutory dispute resolution procedures: ACAS code of practice and guidance in this series for further details.)

As with the current ACAS code, failure to follow the revised code will not, in itself, make a dismissal unfair, but any failure will be a factor that a tribunal will take into account when deciding if a dismissal is fair. However, under the new regime, tribunals will also be able to adjust any awards of compensation by up to 25%, for unreasonable failure to comply with the ACAS code.

Therefore Ross would need to ensure that a thorough investigation was carried out if FriendsInsure wished to avoid subsequent allegations that the process was unfair, and avoid an increase by up to 25% in any compensatory award as a result of its failure to comply with the revised ACAS code.

Under the current requirements, what steps does FriendsInsure need to take if it is considering dismissing Rachel?

If FriendsInsure is considering dismissing Rachel it will need to follow a disciplinary procedure that both is fair and complies with the minimum statutory procedure.

A fair procedure will involve investigating the allegation fully and hearing what Rachel has to say by way of explanation or mitigation. If, following the investigation, the company believes that there is a case for Rachel to answer, it must hold a disciplinary hearing before taking further action. The disciplinary hearing should, ideally, be conducted by a manager who did not carry out the investigation. The disciplinary hearing should not be heard by Rachel's line manager, particularly where dismissal is a possible outcome. In this scenario, Ross, as a senior manager, might be the appropriate person to carry out the disciplinary hearing, particularly if he did not conduct the investigation. FriendsInsure should also take into account the current ACAS code since this may be taken into consideration by a tribunal in considering the fairness of a dismissal (although a failure to follow the code will not, of itself, lead to a finding of unfair dismissal, or impact on compensation).

Rachel also has the right to be accompanied at the disciplinary hearing by a trade union representative or a fellow worker, and she should be informed of this right.

In addition, FriendsInsure must build into the fair procedure outlined above the specific requirements of the standard statutory procedure:

• Step one - Prior to any disciplinary hearing, it must set out in writing the alleged conduct that leads it to contemplate dismissing or taking disciplinary action against Rachel. It should send a copy of this written statement to her and invite her to a disciplinary hearing to discuss the matter.
• Step two - There must be a disciplinary hearing before any action such as dismissal is taken against Rachel. However, the hearing should not take place until Rachel has been informed of the basis of the allegations against her, and she has had a reasonable opportunity to consider these. Rachel must take all reasonable steps to attend the disciplinary hearing. After the hearing FriendsInsure must inform Rachel of its decision and notify her of the right of appeal.
• Step three - If Rachel appeals, FriendsInsure must invite her to attend an appeal meeting, and inform her of its final decision.

All steps under the statutory procedure must be taken without unreasonable delay. The timing and location of meetings must be reasonable and they must be conducted in a manner that enables Rachel to explain her case.

If FriendsInsure does not follow the statutory procedure any subsequent dismissal will be automatically unfair and any award of compensation made to Rachel will be increased by between 10% and 50%.

If FriendsInsure follows a procedure that complies with the requirements of the statutory procedure, but which falls short of the requirements of general fairness, the dismissal may still be unfair. In such circumstances, there is no power for the tribunal to award this 10% to 50% increase in compensation.

What would the position be if this situation took place following the repeal of the statutory procedures?

When the statutory dispute resolution procedures are repealed, employers will still be expected to comply with the general requirements of fairness, and with the revised ACAS code of practice, which highlights the key elements of good practice.

The draft revised ACAS code recommends, as part of its general principles and in the context of the disciplinary process, that employers should:

• establish the facts of the case;
• inform the employee in writing of the allegations against him or her and the possible consequences (for example dismissal);
• hold a meeting (ie a disciplinary hearing) prior to which the employee should have been notified of the problem and the basis for the allegations;
• ensure that any disciplinary meeting is, as far as possible, conducted by a manager who was not involved in the matter giving rise to the dispute;
• allow the employee to have an opportunity to put his or her case in response before any decisions are made;
• deal with any issues promptly - meetings and decisions should not be unduly delayed; and
• act consistently and ensure that like cases are treated alike.

In practice, this is similar to the approach required under the statutory procedures. However, it will not be automatically unfair to dismiss an employee without complying with these principles, although tribunals will take such failures into account when deciding whether a dismissal is fair. Tribunals may also adjust awards of compensation by up to 25% for any unreasonable failure to comply with the revised ACAS code.

The right to be accompanied at a disciplinary hearing will continue to apply.

Under the current provisions, what steps should FriendsInsure take after the disciplinary hearing?

Theft from an employer is generally accepted as gross misconduct, which in most cases will justify dismissal. FriendsInsure should consider the appropriate sanction, bearing in mind the seriousness of the theft, Rachel's previous disciplinary record and length of service, and any explanation put forward by her. The company should also ensure that the penalty is consistent with any previous instances of similar misconduct.

If the company decides to dismiss Rachel, it should, under step two of the statutory procedure, confirm its decision in writing to her and offer her a right of appeal. If Rachel chooses to exercise this right, the company must invite her to attend a further meeting and inform her of the outcome. The appeal forms step three of the standard procedure.

The appeal meeting should comply with the general requirements for the statutory procedures, for example, there should be no unreasonable delay and the timing and location of the appeal must be reasonable. If possible, the company should ensure that the manager conducting the appeal meeting is independent and is more senior than the manager who conducted the dismissal meeting.

What would be the position if this dismissal took place following the repeal of the statutory procedures?

Employers will still be required to consider carefully what sanction to impose and to confirm the decision to the employee, although there is no express requirement in the code for this to be in writing. Failure by an employer to offer a right of appeal will not render a dismissal automatically unfair. However, such a failure will breach the principles of general fairness and the revised ACAS code. Tribunals will take such a failure into account when determining fairness and may adjust any award by up to 25%. Therefore FriendsInsure would be advised to follow the same appeals process as currently required.

Do employers currently have to follow their own disciplinary procedures?

As a matter of good practice, even if its own disciplinary procedure is non-contractual, an employer is advised to follow its terms.

However, under the current provisions, provided that the statutory procedure is followed, an employer's failure to follow its own disciplinary procedure when dismissing will not, of itself, make the employer's decision to dismiss unfair provided that it can show that the employee would have been dismissed in any event.

What will the position be following the repeal of the statutory procedures?

The repeal of the statutory procedures means that it will not be possible for a tribunal to find that a dismissal was fair if an employer commits a procedural irregularity and does not properly follow its disciplinary procedure. However, the tribunal will be able to make a deduction to any compensation awarded if the procedural irregularity did not affect the outcome and the employer would have dismissed even if the correct procedure had been followed.

Next week's article will be FAQs on disciplinary procedures and will be published on 26 August.

Jenny Wotherspoon (jenny.wotherspoon@osborneclarke.com) is a senior solicitor and Helen Dallimore (helen.dallimore@osborneclarke.com) is a solicitor at Osborne Clarke.

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