Since their introduction in October last year, HR professionals have been getting to grips with the practical implementation of the statutory dispute resolution procedures. This has raised several issues that need to be resolved by case law.
Employers risk a finding of automatic unfair dismissal for breaching the procedures, with a potential 10% to 50% increase on any compensation award.
HR professionals may want to adopt a cautious approach until case law clarifies how the procedures operate in practice. Here are the top five issues that we have come across on this topic, and our suggestions on how HR professionals could tackle them.
Do the procedures apply when awarding performance-related bonuses or pay rises?
Views are divided on this. The disciplinary procedures apply to “relevant disciplinary action”. This is defined as action that is “wholly or mainly by reason of the employee’s conduct or capability”.
A bonus or pay review determined mainly or wholly by reference to personal performance would fall within that definition. However, the procedures specifically do not apply to the most common forms of disciplinary action (paid suspensions and warnings) to avoid over-burdening employers. So, it would be odd to include a whole raft of pay reviews and bonus awards in the procedures.
There is an argument that the procedures are meant to apply when some action out of the ordinary is being considered. Bonuses and pay reviews are simply part of day-to-day management – they shouldn’t create a disciplinary record for an employee. Such concerns may be better dealt with under the grievance procedure.
If evidence of fresh misconduct arises during the procedure, can it be relied upon?
The statutory procedures provide for the employee to be made aware at the outset of all the charges against them. So the safest approach at the moment would be to start a fresh procedure for new misconduct. You might consider adjourning the existing procedure if there is a chance of bringing them together at the appeal stage, but you should get employee consent.
When will larger employers be able to rely on the modified procedure?
The regulations provide for a two-step ‘modified procedure’. This allows immediate dismissal on discovery of gross misconduct without investigation.
It is highly unlikely that larger organisations with a dedicated HR function would ever be able to rely on the modified procedure. Our advice would be to keep it a best-kept secret within HR.
What does “reasonable” mean?
The regulations are peppered with references to “reasonable”. For example, the timing and location of meetings must be reasonable, and all the steps in the procedure must be taken without unreasonable delay.
At present, we simply don’t know what approach the tribunals will take in deciding what is reasonable. They may take the view that there is a range of reasonable responses, as they do with unfair dismissal cases. Or, they may take the stricter line applicable to reasonable adjustments for the purposes of disability discrimination, and substitute their own view of what was reasonable in the circumstances.
Until this is clarified, it would be sensible to ensure that you are aware of any time limits in your business’s procedures, and that you are satisfied of the reasons for the timescale you adopt in each case.
At what point in an individual redundancy does the statutory dismissal procedure kick in?
The issue here is whether the procedure kicks in at the ‘at risk’ stage, or only when the individual’s redundancy is confirmed. As the statutory procedures refer to the employer “contemplating dismissal”, the safest stance until clarification is that it applies at the ‘at risk’ stage.
Learning points for HR
– Decide which procedure you will use to deal with performance-related bonuses/pay reviews
– If fresh misconduct comes to light during a disciplinary procedure, start a fresh procedure
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– Larger organisations will rarely be able to rely on the modified dismissal procedure
– Use the statutory procedures when an employee is ‘at risk’ of redundancy.
Jane Fielding, associate, employment team, Wragge & Co LLP
