Got a grievance?

The latest round of employment law legislation came into force on 1 October 2004. The Employment Act 2002 (Dispute Resolution) Regulations 2004 impose statutory minimum procedures for resolving workplace disputes that employers and employees must go through before employment tribunal proceedings begin.

The Government is hoping that the changes will encourage employers and employees to resolve workplace problems through dialogue, easing the pressure on employment tribunals and reducing costs. There are growing fears, however, that the Regulations will result in more tribunal hearings that last for longer, particularly in claims for unfair dismissal where they create another hurdle for employers to overcome in satisfying an employment tribunal that a dismissal has been fair.

The Regulations introduce mandatory procedural steps for employers when disciplining employees, dismissing them or handling a grievance. Also, for the first time, the statutory requirement to provide a statement of specific employment terms and conditions has been given teeth, with financial penalties for non-compliance.

Statutory procedures

Employers will be expected to go through a minimum set of standard procedures in the following cases: prior to dismissing an employee in most circumstances; prior to taking disciplinary action short of dismissal in capability and conduct cases; and in response to employees’ grievances.

The standard disciplinary/ dismissal procedure consists of three stages: sending a written statement to the employee setting out the grounds for the proposed action; a meeting with the employee followed by notification of a decision and right of appeal; and if the employee chooses to appeal, holding an appeal meeting and notifying them of the outcome.

The eye-catching part of these provisions isn’t so much their content as their unexpected scope. For example, the procedure will apply beyond many employers’ common sense understanding of a dismissal to include the end of a fixed-term contract, enforced retirement and small-scale redundancies. Many employers will be caught out and will face increased compensation claims.

The procedure doesn’t technically apply to action against an employee on conduct or capability grounds where only an oral or written warning is given, but it does apply where there is any possibility of other resulting action. This would include demotion or a performance improvement plan in the context of capability. Practically, employers will need to observe the procedure in most conduct and capability situations.

The statutory grievance procedure is similarly problematic. It is stated to apply to “a complaint by an employee about action which his employer has taken or is contemplating taking in relation to him”. Broadly, it applies to grievances that could form the basis for a tribunal complaint.

Non-compliance penalties The technicalities of the new procedures are likely to prove tricky given the potentially large financial consequences. It is important to understand that there is not a free-standing right by an employee to bring a claim where the employer fails to observe the procedures. The impact will instead be on compensation in the most common types of existing tribunal claims.

Where the subject of the claim involves one of the statutory procedures and one of the parties was at fault for a failure to complete the procedure, an adjustment will be made to compensation. This must be a minimum of 10% but can be up to 50%. Employers who choose to avoid following the procedures in favour of entering into a compromise agreement may have to pay more to settle claims.

There are further important consequences for non-compliance. With a dismissal, an employer’s failure to follow the relevant procedure will make it automatically unfair regardless of the substance of the case. With a grievance, employees will not normally be able to register an employment tribunal complaint until they have submitted the grievance in writing to their employer and given 28 days for its resolution. Where the employee enters a tribunal claim without lodging a grievance, the usual time limit for bringing a claim after that point will be extended by three months to allow the grievance to be heard first.

Terms and conditions

From October, there will be a further sting in the tail in respect of employees’ terms and conditions. For many years the law has required employers to provide employees with a prescribed written list of terms. To date, however, there has been no sanction for a failure to comply with this requirement.

The new Act provides that where an employer loses the tribunal claim, the Tribunal will award between two and four weeks’ additional pay for failure to give the employee accurate terms and conditions.

It is important to appreciate that this provision, as with the statutory procedures, does not provide a free-standing claim. An award can only be made where the employee has succeeded at tribunal on a different matter. At present, the legislation limits the amount that can be awarded. The maximum that can awarded in respect of a week’s pay is £270, making the maximum additional award for inaccurate terms and conditions £1080.