In April, the government replaced the statutory procedures for handling discipline and grievances with a new process from the conciliation service Acas.
The Acas Code of Practice on Disciplinary and Grievance Procedures promised a far less prescriptive approach to dealing with disputes than the statutory procedures, which were described by one HR director as “almost a metaphor for how not to manage employee relations”.
It is no surprise that the statutory code – the fixed three-stage process for dealing with disputes – was so unpopular with employers. Within three years of being introduced in 2004, the number of cases registered with the Employment Tribunal Service (ETS) had risen by more than one-third – painting a much worse picture of employee relations than was actually the case.
The new 45-point Acas code of practice, a result of the Gibbons Review of the 2004 legislation, marked the end of the legal requirement to deal with discipline and grievance issues in a fixed way. Instead, tribunals are allowed to increase or decrease any award they make by up to 25% if they feel the code has been unreasonably breached.
Nip in the bud
Acas said the emphasis would be on nipping problems in the bud and, where possible, dealing with them in the workplace. If cases do end up at a tribunal, decisions will be based on what is “fair and reasonable” rather than nit-picking about whether procedures were followed correctly, it said.
But, seven months after its launch, has the new code of practice started to deliver on these promises?
There is little in the way of hard evidence at this stage, as the ETS has just released preliminary figures on the number of tribunal cases since March. They showed 30,541 Acas-conciliated settlements in the period April to September 2009.
Guy Bredenkamp, employment partner at law firm Beachcroft, says the code will “wash away many of the problems” created by the statutory procedures. “It takes a level of formality away and I expect it will lead to reduced claims,” he says.
Lorraine Heard, partner at law firm Dickinson Dees, agrees, pointing out that a number of previous claims were based on the premise that a failure to follow the strict statutory rules amounted to an automatically unfair dismissal.
“These have gone and, although it is too early to tell, it seems likely that there will be a reduction in claims based mainly on procedural points,” she says.
The code also states that employees are no longer barred from lodging a claim without first raising a grievance. While some employers have suggested that this could lead to an increased number of claims, it may well have the opposite effect because of time restrictions, according to Rees.
“If a grievance is lodged first, the standard time limits for bringing statutory claims will apply – they will no longer be extended to allow the grievance or disciplinary process to be completed,” she says.
Acas itself has yet to carry out research into the impact of the code, and has been quick to stress that the number of tribunals is not the only way to assess the code’s value. But it says there have been about 3,500 requests for its new “pre-claim conciliation” service, which is offered, where applicable, to employees calling the Acas helpline for advice about a workplace dispute.
As for the trade unions, Hannah Reed, senior employment rights officer at the TUC, says they welcomed the greater flexibility that the Acas code gives employers.
“There was recognition across the board that the statutory procedures were complex and often unnecessarily escalated disputes at an early stage, while they didn’t help employers’ good practice as they encouraged a tick-box approach,” she says.
“The flexibility in the Acas code is a welcome change, with its greater emphasis on natural justice. Parts such as encouraging an ‘effective and appropriate’ investigation really help employers to focus on what is important, which is good practice.”
But while there have been some welcome changes in the regime, it is important to remember that, in practical terms, not a lot has changed, Heard stresses.
“In most respects, the procedures envisaged by the code remain similar to the statutory dispute resolution procedures comprising a notification stage, followed by a meeting to discuss and a chance to appeal the employer’s decision,” she says.
“Both employees and employers remain obliged to deal with issues promptly and without unreasonable delay. Staff are still entitled to be accompanied by a colleague or trade union representative. Employers are expected to carry out necessary investigations and to give the employee the opportunity to put their case in response before any decisions are made.”
Of course, as with any new regulations, case law will go a long way to defining how the code affects employers. This is particularly relevant to the statement that “unreasonable failures” to follow the code can result in a compensation uplift of up to 25% for successful claims as there is currently no definition of what that “unreasonable failure” may be, Heard warns.
“There is a risk that the concept of ‘reasonableness’ may not necessarily be interpreted and applied uniformly by employment tribunals throughout the country, and the flexibility inherent in a tribunal’s assessment of what is ‘reasonable’ may make it difficult for advisers to be clear about what is likely to be found to amount to unreasonable behaviour in particular situations,” she says.
But Bredenkamp plays down these fears, pointing out that the whole premise of the code was to move away from the overly complicated statutory model.
“Although the term ‘unreasonable’ hasn’t been defined, it seems that Acas is discouraging people from nit-picking over technical aspects of the code,” he says. “Pre-2004, there was an Acas code anyway and, in all my years of attending tribunals, I never heard of cases looking at definitions.”
One of the more controversial aspects of the new code is the fact it does not apply to redundancy dismissals (whether collective or individual).
Reed describes this decision as a “major disappointment”, warning it might discourage employers from properly consulting affected staff.
“There is a real risk that employers will leave themselves open to unfair dismissal claims (this still applies if the employer does not follow a full and fair redundancy process),” she says. “It would have been beneficial to both employers and staff to have redundancies covered.”
Redundancy has become a central area of dispute as a result of the recession, with ETS figures for 2008-09 revealing that claims relating to the failure to inform and consult about redundancy rose from 4,480 in 2007-08 to 11,371, with claims relating to redundancy pay up almost 50%.
Hard to find
Bredenkamp attributes much of this rise to affected employees being more willing to pursue a claim and less willing to accept an earlier settlement because alternative work is harder to find.
But he rejects the TUC’s call to include redundancy dismissals in the Acas code, claiming they are a “different beast”. “Unions seem desperate to get those claims through, but the process is very different,” he says. “You would have needed a whole new code for redundancy. But, frankly, any employer that goes through redundancy without going through a proper process anyway deserves what it gets.”
Acas says it considered the issue of whether the code should cover redundancy situations “at some length” but felt that, on balance, it should not, for two reasons. First, the Acas code has never covered these situations in the past; and second, the code’s purpose is to provide assistance with disciplinary and grievance situations, which raise different issues to redundancies and the terminations of fixed-term contracts.
But while redundancies may not be directly addressed in the code, Keith Mizon, director of individual dispute resolution at Acas, urges employers going through redundancy processes to tread carefully.
“Misunderstanding redundancy selection processes, which can be complex, or poorly communicating them, can leave people feeling unfairly treated,” he says. “We would encourage employers to contact us for advice on how to avoid or manage redundancies before taking any action.”
The recession is certainly going to bring the effectiveness of the Acas code into the spotlight, and employers will be hoping that the simplified system will go a long way to reducing the number of cases going to tribunal.
ACAS code of practice in summary
- Encourages the use of external mediators to resolve disputes
- Places greater emphasis on employees to behave more reasonably
- Provides new guidance on dealing with overlapping grievance and disciplinary cases and collective grievances
- In misconduct cases, the code says different people or parties should carry out the investigation and disciplinary hearing
- Staff should be provided with more information – for example, copies of written evidence and witness statements – by employers before a disciplinary meeting
- Greater detail has been included in relation to what an employee’s ‘companion’ can and cannot do during a meeting
- The code provides that employers should make a decision on the evidence available where an employee is persistently unable or unwilling to attend a disciplinary meeting without good cause
- Employees have the right to call witnesses
- Does not apply to dismissals for reason of redundancy – although a full and fair redundancy process will still need to be followed to avoid unfair dismissal claims, and the collective redundancy regime will continue to apply in relevant situations
- Does not apply to dismissals due to the non-renewal of fixed-term contracts.
Q What are the possible consequences of failing to follow the revised Acas code of practice on disciplinary and grievance procedures?
A In relevant cases, an employment tribunal is required to take the Acas code of practice on disciplinary and grievance procedures into account when considering whether or not the employer has acted reasonably in all the circumstances. An unreasonable failure by an employer (or employee) to comply with the code will permit a tribunal to increase (or decrease) compensation by up to 25%, depending on which party is at fault.