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The Employment Act 2008 (EA 2008) introduced a new regime affecting the vast majority of employment tribunal claims from 6 April 2009. It repealed the old statutory dispute resolution procedures which were widely viewed as problematic.
As such, employers are now expected to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures (the ACAS Code).
The rules on procedurally-unfair dismissal found in section 98A of the Employment Rights Act 1996 were also repealed, heralding a return to the old law under the leading case of Polkey v A E Dayton Services [1987] IRLR 503 (HL).
Why is it important to follow the ACAS Code?
It can avoid an unfair dismissal claim:
The ACAS Code is intended to help employers and employees deal effectively with issues of alleged misconduct or poor performance in the workplace. When deciding whether an employee has been unfairly dismissed for misconduct or poor performance, an employment tribunal will consider whether the employer has followed a fair procedure. In doing so, it must take account of any provisions of the ACAS Code that appear to be relevant.
It can affect the level of compensation:
If an employee brings a successful claim for unfair dismissal or a number of other common types of claim (including those related to discrimination, breach of contract, working time, detriment, and deduction of wages) arising out of dismissal or disciplinary action for misconduct or poor performance, the level of compensation awarded to the employee can be affected if either party failed to follow the Code. If the employer unreasonably failed to follow it, the tribunal may increase the employee's compensation by up to 25%. If the employee unreasonably failed to follow it, the tribunal may reduce their compensation by up to 25%. The tribunal must decide what uplift (or reduction) would be just and equitable.
When does the ACAS Code apply?
The Code applies to misconduct and poor performance cases:
The ACAS Code is part of a new regime under the EA 2008 which replaces the statutory dismissal and disciplinary procedures (DDPs). Whereas the DDPs applied to dismissal for nearly any reason, the ACAS Code only applies to "disciplinary situations", a concept which includes misconduct and poor performance but explicitly excludes dismissals on grounds of redundancy or the non-renewal of a fixed-term contract.
How should misconduct or poor performance be handled?
The employer should investigate the issues:
It is an important principle established in the case law of unfair dismissal that an employer should carry out a reasonable investigation, and this is reflected in the ACAS Code. This may involve investigatory meetings with the employee under investigation or it may simply involve the collation of other evidence. Any investigatory meeting should not result in disciplinary action without a disciplinary hearing.
If paid suspension is necessary during the investigation, this should be as brief as possible and kept under review. The employer should make clear that this is not in itself a form of disciplinary action.
The employer should inform the employee of the issues in writing:
If there is a case to answer, the employee should be notified in writing of the alleged misconduct or poor performance and its possible consequences (including, where appropriate, the risk of dismissal) in sufficient detail to enable them to respond at a disciplinary hearing. Any written evidence, which may include witness statements, should be provided to the employee.
The notification should set out the time and place of the disciplinary hearing (which should be held without unreasonable delay while ensuring the employee has reasonable time to prepare their case). It should also set out the employee's right under the Employment Relations Act 1999 to bring a companion (either a fellow worker or a trade union representative) to the hearing.
There must be a disciplinary meeting or hearing:
It is a basic principle of fairness that a decision whether to dismiss or take other disciplinary action should not be taken without a disciplinary hearing or meeting.
Managers, employees and their companions should make every effort to attend the meeting. If the employee is persistently unable or unwilling to attend without good cause, the employer should make a decision on the available evidence. Either side should give advance notice of any witnesses they intend to call.
At the hearing:
- The employer should explain the allegations and go through the evidence.
- The employee should be allowed to set out their case and answer the allegations.
- The employee should have a reasonable opportunity to ask questions, present evidence, call relevant witnesses and raise points about any information provided by witnesses.
The employer should inform the employee of the decision in writing:
Following the hearing, the employer's decision should be sent to the employee in writing without unreasonable delay. If misconduct or poor performance is established, a dismissal would usually only be appropriate if there has been a written warning and a final written warning. Gross misconduct can justify dismissal for a first offence, but not without following the disciplinary procedure.
Written warnings should set out the nature of the misconduct or poor performance, the improvement required, and the timescale for improvement. They should also specify how long they will remain current, and the consequences of further misconduct (or failure to improve) within that period.
The employee has a right of appeal:
If the employee feels the disciplinary action against them is unjust, they should appeal in writing, specifying the grounds of their appeal. If they bring a tribunal claim without appealing, any compensation they are awarded may be reduced.
The appeal should be heard without delay, ideally at an agreed time and place, and should be conducted impartially by a manager who (where possible) has not been previously involved. The employee can bring a companion to the appeal hearing.
How has the law changed?
The law on unfair dismissal, time limits and compensation has changed:
Almost any type of dismissal was potentially covered by the statutory DDPs, but there were complex regulations governing which procedure applied and when they might be excluded. The new regime only applies to disciplinary matters (including misconduct and poor performance).
The consequences of failing to follow the correct procedure are different under the new regime. The key differences include the following:
- A dismissal without following an applicable DDP under the old regime would have been automatically unfair. Under the new regime, the question is whether the employer acted outside the band of reasonable responses in treating misconduct or poor performance as the reason for dismissal, and the tribunal will take account of the ACAS Code in deciding that issue.
- Under the old regime there were provisions for an automatic three-month extension of time in certain circumstances. There is no automatic extension of time under the new regime even if an appeal is still ongoing.
- Compensation under the old regime could be adjusted by 10-50% for any failure to complete a DDP, although less than 10% was permissible in exceptional circumstances. The adjustment under the new regime is 0-25%, and will only apply where a failure to follow the ACAS Code is "unreasonable".
Evidence at disciplinary hearings
The ACAS Code recommends two significant steps:
1. Reviewing the charges and evidence
The Code requires employers, at the start of the hearing, to "explain the complaint against the employee and go through the evidence that has been gathered". This stage has often been ignored in the past, or taken as read, since the employee should already have been given the opportunity to digest this information.
2. Allowing the employee to call witnesses
Secondly, employees should be given "a reasonable opportunity to ask questions, present evidence and call relevant witnesses". While asking questions and presenting evidence is generally viewed as essential to natural justice, the right to call witnesses to the hearing is not. Case law has established that a disciplinary hearing is not a quasi-judicial process, and it would usually have been considered sufficient for the employer to interview witnesses (including those whose evidence favours the employee) as part of its investigation, and to rely on their statements at the hearing without having to call the witnesses themselves.
There is no specific requirement for the employer to call its own witnesses, or to allow the employee to cross-examine them. The Code does not even explicitly state that employees must be allowed to question their own witnesses directly, merely that they be allowed to "call" them. This may give the employer some control over the conduct of the hearing. However, the employee should be permitted to "raise points about" a witness's testimony.
In any event, if the employee challenges the evidence of a witness who is not present at the hearing, an employer should consider adjourning the hearing to re-interview the witness in the light of any new information presented by the employee.
Appeals against warnings
While it was previously considered best practice to allow employees a right of appeal against a warning, the statutory DDPs did not apply to warnings and therefore there were no further consequences if an appeal hearing was denied. Under the new regime, a failure to allow a right of appeal against any disciplinary action, including a warning, is a breach of the ACAS Code. It could therefore increase compensation in the tribunal if the employee brings a successful claim (such as a victimisation claim) based on the disciplinary action.
Practical points for employers
- Involve employees and/or their representatives in developing any new disciplinary procedures, and make sure the procedures are transparent and accessible to employees.
- Manage conduct and performance issues pro-actively before they get to a formal disciplinary stage.
- Investigate issues thoroughly. Even if the employee has attended an investigatory interview, always hold a disciplinary hearing once all the evidence is available, and allow the employee to put their side of the story (including calling witnesses unless this is unreasonable), before making any decision.
- Keep written records, including minutes of meetings.
- Communicate decisions effectively and promptly, setting out reasons.
If you would like any further information on disciplinary procedures, please contact us.
