Recent Changes in Employment Law

From 6th April 2009 the Statutory Dispute Resolution Procedures introduced in October 2004 under the Employment Act 2002 (Dispute Resolution Regulations) 2004 have now been abolished.

The Statutory Dismissal, Disciplinary and Grievance Procedures have been widely criticised by Tribunal users, legal advisers and judges owing the fact that the procedures were very prescriptive and often formalised disputes at an early stage leaving little or no room for informal resolution. The Procedures also created lots of litigation as to how they should be applied resulting in unwelcome uncertainty for employees and employers about whether they had complied with all the necessary steps.

The new procedures are based on the ACAS Code, which has existed since 1977 and undergone a number of revisions to accommodate legislative changes, such as the right to be accompanied.

The ACAS Codes of Practice apply to both disciplinary and grievance issues. However, unlike the statutory procedures the code is not legally binding and a failure to follow its provisions will not automatically result in a penalty of any kind. Nonetheless, a failure on the part of either party to comply by the provisions of the code in situations to which it applies will be taken into account by Tribunals as evidence when assessing cases. In addition, Tribunals may in certain cases increase an award of compensation by up to 25% if they find that the employer failed unreasonably to follow the guidance set out in the Code, or decrease it by up to 25% if they find that the employee has failed unreasonably to follow it.  It is however expected that Tribunals will pay regard to the ACAS Codes of Practice as they will be admissible as evidence in any proceedings before Tribunals. The ACAS Codes of Practice applies only to employees i.e. those who work for an employer under a contract of employment. However, it will also apply to claims where a worker is asserting that they have been denied the right to be accompanied at a disciplinary or grievance hearing or subjected to a detriment or dismissal arising from the exercise or attempt to exercise this right.

Under the new regime, a failure to follow the ACAS Codes procedures will not make a dismissal automatically unfair. This differs from the old regime whereby a failure to comply with the statutory procedures rendered a dismissal automatically unfair and triggered the uplift or decrease in compensation and is therefore less prescriptive.

The ACAS Codes of Practice do not apply to redundancy dismissals nor do they apply to cases involving the non-renewal of fixed terms contracts.

It will therefore be necessary for employers to ensure that their managers are made aware of the implications of the new regime to avoid potential uplifts in cases where the ACAS Codes apply.

Although the procedural requirements under the code would appear to be similar to the procedural requirements under the old regime, a crucial difference is that the less prescriptive nature of the ACAS codes of practice should hopefully promote greater informal resolution of disciplinary and grievance matters although it remains to be seen how Tribunals will interpret a failure on the part of the employer or employee to comply with the code in cases where it applies.