The three steps to dispute resolution

Last month, new rules came into force which introduced mandatory procedures for dismissals, disciplinary actions and grievances.

Under the Employment Act 2002 (Dispute Resolution) Regulations 2004, the basic principles are simple for both dismissals, disciplinary actions short of dismissal (but not oral or written warnings) and grievances. There are three steps to be followed:

• Write to the employee (or employer for a grievance)
• Meet to discuss the problem and inform the employee of the decision
• Hear any appeal.

Just about every housing employer already has procedures that include these steps and often more. So what’s different?

The penalty

Employers may have the procedures but in the past they haven’t always followed them. Under the new rules, they must. Failure to follow the procedures makes any dismissal automatically unfair and the employer liable for four weeks’ pay. If the employer is found to have been unfair in other respects, any compensation payable may increase by between 10% and 50%.

Staff will have to use the grievance procedure first, otherwise any employment claim may not even get off the ground.

Employers must tell their staff about these procedures – and make sure they can prove they have. A tribunal will not be impressed if, three years after the event, you tell them: “Our IT people put something out on the intranet but we’ve changed our systems since then and no one can quite remember when.”

This does not mean employers can drop their more elaborate contractual procedures – this new statutory procedure is a minimum. If you have contracted to do more you are stuck with it. Employers do need to check their procedures. For example, there needs to be a right of appeal. I have seen one registered social landlord with a procedure that said staff could only appeal if they had grounds. This would not comply with the new regulations.

Getting a move on

Next there is a requirement to take each step in a reasonable time. Associations need to get on with it – and be able to prove they got on with it. Dealing with disciplinaries and grievances is time consuming, but they must be given a high priority.

Fixed-term contracts

Failure to follow the procedures makes any dismissal automatically unfair and the employer liable for four weeks' pay

This is a dismissal and disciplinary procedure and therefore applies to everything that in law is a dismissal – and that includes not renewing the contracts of fixed-term employees. From now on, employers must write to such members of staff, tell them why their contract is not being renewed, hold the meeting and, if necessary, the appeal.

What if you just want to leave?

Employees must use the grievance procedure even if they have left the organisation. So it’s no longer possible to walk out angry about your treatment and lodge an unfair dismissal case based on constructive dismissal. Staff must write in with their grievance first.

When are two steps enough?

There is a modified two-step procedure for dismissals, where the employer tells the employee why they have been dismissed and that they have a right of appeal. But this should come with a large health warning: it can only be used in those rare cases where a summary dismissal would be acceptable, such as the person who is caught forging cheques and escorted off the premises, or where the employer can no longer employ someone for reasons outside the employer’s control – perhaps a work permit has expired.

The three-month time limit

The assumption is that these processes can be completed within three months – clearly the government has never seen some of the long, drawn-out processes beloved of the housing sector, where nine months later people are still arguing about who should hear the appeal.

But if a dismissal and disciplinary procedure is not finished within the three months, the employee has three months from when it is finished to lodge a claim with a tribunal. If it finishes within the three months, even just before the end of that period, the employee gets no extension (though they could apply to the tribunal to lodge out of time). This is another incentive for the employer to get on with the process.

What’s next for employers?

From 6 April 2005, employers with more than 150 staff will be affected by the Information & Consultation of Employees (ICE) Regulations. These implement the EU Directive that gives employees the right to be informed and consulted about the business they work for. This will affect many housing-sector workers. Visit the ACAS website (details below) for more details.