Royal Assent for the Employment Act was received on 8 July. At the latest,
the new rules on unfair dismissals will be in place by the end of 2003. These
rules will have a dramatic effect of how tribunals deal with cases of unfair
dismissal. They will also have huge ramifications for the awards that both
employers and employees can expect to receive.
The Changed Procedure
Currently, in an unfair dismissal claim, the party bearing the burden of
proof usually gives evidence first. Almost invariably this will mean the
employer presents its evidence first and then the employee will follow with
theirs. Tribunals do, however, have enormous control and flexibility over their
own procedures.
With the new Employment Act in place, unfair dismissal claims will look
different. Applicants may never get into the tribunal at all if they have
failed to follow a proper grievance or appeal procedure. And, where the parties
do come to a tribunal, they are likely to face a new first stage in
proceedings.
This will scrutinise how closely the respondent employer has followed the
relevant statutory procedure (usually the dismissal and disciplinary
procedure).
The tribunal must look at whether the procedure applies, whether it has been
completed, and if not, whether that non-completion is wholly or mainly
contributable to the respondent employer. If it finds that the employer has
failed to comply with the procedure, it will almost invariably regard the
dismissal as unfair – regardless of the reasons the employer provides.
In those cases, the next stage of the process will be the remedies stage – the
actual case on its merits will never be heard. The remedies stage will also be
radically different, since the tribunal will have an obligation to raise
compensation by 10 per cent (unless exceptional circumstances apply), with a
further discretion to increase the compensation by up to 50 per cent. In some
cases, this could mean compensatory awards would reach £80,000.
If the respondent employer can show that the non-completion of the statutory
procedure was the employee’s fault, the applicant’s compensation must be
reduced by 10 per cent and possibly up to 50 per cent, in the same way as
described above. With average awards at relatively modest levels, this could
mean successful applicants receiving very low awards in some cases.
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Action Required
All employers should now be looking carefully to ensure their procedures for
discipline, dismissals and grievances are more than adequate to comply with the
relevant statutory procedures.
