In on the act: Employment Bill 2001

Our continuing series of quick guides to major employment legislation, which
puts key information at your fingertips and brings you up to date with the
latest developments. This week Christa Christensen, professional support lawyer
at Bevan Ashford, looks at changes to the Employment Bill introduced last month
including new parental leave rights and tribunal system reforms

The Government unveiled its Employment Bill on 8 November 2001. The Bill
contains measures to deal with a wide range of issues including new maternity,
paternity and adoption leave rights, changes to equal pay law and reforms to
the tribunal system.

It also proposes radical changes to the role of workplace grievance and
discipline procedures and the part these will play in complaints taken to the

S98 Employment Rights Act

The Employment Bill proposes amendments to Section 98 of the Employment
Rights Act 1996 (ERA) by the creation of a statutory dismissal and disciplinary
procedure (DPP) and a statutory grievance procedure (GP). Employers and
employees must use these procedures which will become part of every employee’s
contract of employment.

As things stand, in assessing the fairness of a dismissal under the
provisions of Section 98, a tribunal will determine not only whether the
decision to dismiss fell with the "band of reasonable responses" but
also whether that decision was arrived at through the use of a fair procedure.

Although there is currently no statutory definition of a "fair
procedure", the House of Lords confirmed its importance in Polkey v Dayton
Services 1988 1988 AC 344 in which it reaffirmed that where there were
procedural failings, an employer could not argue that a dismissal was
"fair" on the basis that the use of a fair procedure would still have
resulted in dismissal.

Under Polkey, the tribunal judges not only what was done (the decision to
dismiss) but also, critically, how it was done; thus putting the importance of
a fair procedure at the very core of the right not to be unfairly dismissed.
This procedure has now come to be known as the Polkey rule.

DDP and GP

Under the new proposals, any doubt regarding what constitutes a fair
procedure will effectively be abolished. A three-step statutory procedure is
proscribed. If it is followed an employer can, in theory, be certain that the
dismissal is fair.

The statutory procedure requires that the grounds for the disciplinary
action or grievance must be set out in writing, a meeting must take place and
the employer must give the employee an opportunity to appeal against any

Any procedures that are already in an employee’s contract will stand to the
extent that they are additional to the statutory DDP and GP.

Automatic unfair dismissal

A new category of automatic unfair dismissal would be created where the
relevant DDP has not been used. For example, if an employer fails to set out
the grounds for disciplinary action in writing before inviting an employee to a
disciplinary meeting, any subsequent dismissal would be automatically unfair.

It would also attract a guaranteed four weeks’ pay by way of compensation.

The Polkey rule

As the Bill sets out a standardised procedure for a fair dismissal, it also
proposes the reversal of the now well-established Polkey rule.

An employee would no longer be regarded as unfairly dismissed in relation to
a procedural failing falling outside the statutory procedure, provided the
employer can show that the employee would still have been dismissed.


The importance of using the DPP and GP is further emphasised through the
measures proposed in relation to compensation.

Where an employer unreasonably fails to follow the DPP the tribunal will
increase any award by something between 10 and 50 per cent.

Given that this provision extends to sex, race and disability jurisdiction,
where there is no cap on the initial amount of compensation that can be
awarded, this proposal could mean there are disproportionately sized awards in
some cases.

Barring employees’ claims

It is also proposed that employees will be barred from bringing claims to
the tribunal where they have not used the internal GP to raise their grievance

Although there is currently little detail available in relation to this
proposal, it is likely to create particular problems in claims for constructive
dismissal where, as is normally the case, an employee resigns without having
first raised a grievance.


Although there are important points of detail which are not clear at the
moment, taken as a whole these amendments show a determination from the
Government to deter tribunal claims which could have been settled internally or
avoided completely through the creation and use of effective workplace

Employers should heed that message now and consider whether their internal
procedures need revisiting.

Key points

The Employment Bill proposes

– The creation of statutory discipline and grievance procedures

– A new category of automatically unfair dismissal

– Increases of up to 50 per cent of award for failure to comply with
statutory procedures

– The reversal of Polkey

 The barring of claims by employees
who have not used internal grievance procedures

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