Moving Goalposts

Statutory Dispute Resolution has been with us for about five years. It was to spell the end of frivolous litigation. It would encourage informal resolution and few cases would end up in the hands of unscrupulous lawyers.

But these regulations have failed.They generated a whole new field of dispute - the regulations themselves ! Millions have been spent arguing over whether someone did or didn't breach them and the impact this had on the underlying case.

The government has now admitted this failure and - after a very costly experiment - the rules are to be replaced. A new ACAS Code and a different approach are expected. Companies and staff will need ‘re-educating' yet again in how to handle disputes.

Until new rules are in force, however, the old Regulations apply. And serious penalties remain for non-compliance.

Mandatory Rules

A dispute may arise from either the employer (in the form of discipline) or the employee (as a grievance). Both require statutory procedures.

Any dismissal must comply with the Statutory Dismissal Procedure. This entitles everyone to certain basic rights -

• A letter detailing the allegations and advising of rights.
• A meeting, with a companion (union rep or work colleague).
• A right of appeal.

A slip as to any of the above, or even unreasonable delay in providing them, and it is Automatic Unfair Dismissal. The merits of the discipline become irrelevant. The error is fundamental and the employee will succeed in any claim brought within 3 months. This is surprisingly common. For example the employee may be so disliked, or their offence so serious, that they are never given an appeal.

In the case of a grievance, the same basic structure applies -

• Grievance letter.
• Meeting with companion.
• Right of appeal.

An employee is barred from filing a Tribunal claim unless they have first brought a grievance and waited 28 days.

Unfair Dismissal

Compliance with statutory procedures does not guarantee an employer is in the clear. It simply means any dismissal is not automatically unfair and the merits should be examined before any conclusion is reached.

Only certain reasons are recognised as valid grounds for dismissal.  Tribunals often find the alleged (valid) reason is a gloss to hide the true (invalid) one -

• ‘Misconduct' may hide a line manager's vendetta.
• 'Capability/Sickness' may be caused by bullying or stress.

Perhaps the employee has quit, claiming constructive dismissal. They have an extra hurdle to jump. On top of statutory procedures, they must prove the company's treatment went too far and justified their walking out.

Constructive dismissal cases are very fact-sensitive. Facts depend on witnesses and accurate assessment is tough. Justifying a resignation may be harder than the employee thinks.

 ‘Heads you win. Tails I lose.'

Is it worth keeping someone on? What is the potential downside from unfair dismissal if you don't? Companies must weigh up competing risks. Remember only those with 12 months' service are protected against unfair dismissal.  Companies are entitled to use this to their advantage. The risk here is virtually nil but plan ahead and be careful of notice periods.

Someone with over 12 months service, unfairly dismissed is entitled to two types of financial recompense -

• Basic Award, akin to redundancy.
• Compensatory Award, for actual loss suffered.

The second of these depends on new employment. Failure to find work will be at the cost of the company which sacked him. The average award is £8,000.

Legal costs are a major issue for an employer. Winning is often the most expensive option, especially in bitter disputes. Many claims are brought on a No Win - No Fee basis. For the company however they cannot recover their defence costs even if they do win.

Practical Tips

SME's are most susceptible to Unfair Dismissal claims. The main reason is a lack of distance between the ‘offender' and the decision maker. This creates big problems.

Small companies must remember that the Tribunal will ignore their size and resources. It will create something of a commercial 'fiction' which is a long way from the truth.They will be held to the same standard as major institutions and Plc's. No HR department? No extensive management tier? It doesn't matter. You must create as much distance and objectivity as possible, even if this means going outside your organisation to get it.

Only once you have genuinely exhausted all other avenues, and looked at the situation with the eyes of an Employment Judge, should dismissal be used to resolve a workplace problem.

Michael Morse

Tel: 0113 225 8811

E mail: mmorse@godloves.co.uk