Podcast: the Good
The procedures contained in the Employment Act 2002 (Dispute Resolution) Regulations 2004 were introduced to reduce the number of cases coming before tribunals and encourage work place resolution of disputes. The result, however, was the opposite and a lack of confidence in the procedures led to their repeal.
Critically evaluate the reasons why the statutory procedures were so unsuccessful.
Podcast: the Good
The Employment Act 2002 introduced for the first time the concept of statutory dispute resolution procedures, by introducing procedures for dealing with both disciplinary matters and grievances. The aim of the new procedures was to reduce the amount of claims heard by tribunals and encourage employers to use basic procedures before taking disciplinary action. The latter aim was as a result of research commissioned by the (then) DTI, which showed high levels of tribunal cases in which little or no use had been made of internal procedures to try and resolve a dispute before resorting to a tribunal. However, the flavour of the later consultation paper, ‘Routes to Resolution’ (DTI 2001), placed great emphasis on cost, stating that the cost of running the Employment Tribunal Service was £51.7 million to date. (1) This is a good point to make and sets the scene for the rest of the essay. Using figures in this way reinforces arguments made later on. The 2002 Act laid out the basic procedures with the Employment Act 2002 (Dispute Resolution) Regulations 2004, providing more detail. The procedures came into force in October 2004 and, as Pitt (2008) states, ‘quickly became universally unpopular’. At the same time, ACAS issued a revised Code of Practice on Disciplinary and Grievance Procedures (2004). While the aim of the procedures was to reduce claims reaching an employment tribunal, figures issued by the Tribunal Service in September 2007 showed that tribunal claims 2006/7 were up 15 per cent when compared to 2005/6 figures. (2) The introduction clearly establishes the premise that will be argued throughout the essay.
The disciplinary and dismissal procedures consisted of a standard and modified procedure. They applied to all cases except certain dismissals during a strike or other industrial action, where the employer’s business suddenly ceased due to an unforeseen event, where an employee could not continue to work without breaking the law and where the dismissal was one of collective redundancies involving 20 or more employees.
The standard procedure in Schedule 2 Part 1 of the 2002 Act, consisted of: notifying the employee in writing of the alleged misconduct, characteristics or other circumstances which led the employer to contemplate dismissal or disciplinary action and inviting the employee to a meeting; holding a meeting before deciding on any action (except in the case of a disciplinary suspension) and then informing the employee of the outcome and of the right to appeal; and holding an appeal if required and informing the employee of the final decision. The employee had to take all reasonable steps to attend the meetings. Each step had to be taken without unreasonable delay, the timing and location of the meetings had to be reasonable, both the employer and employee had to have an opportunity to state their case and at the appeal, the employer should be represented, if possible, by a more senior manager than the first hearing. (3) It is necessary to briefly describe the procedures in order to critique them. However, it is not necessary to go into a lot of detail, just enough to be able to support later arguments.
Early cases discussed the amount of information that should be given to the employee. In Alexander v Brigden Enterprises (2006) the dismissals were for redundancy. The EAT held that the employer had to tell the employee why the redundancies were happening and why he had been selected. In YMCA Training v Stewart (2006) the EAT held that although the employer did not have to detail all of the evidence against an employee, the employee should have enough information to be able to answer the case against him.
The modified procedure applied in cases of gross misconduct and consisted of notifying the employee in writing of the alleged misconduct that led to dismissal and informing him of the right to appeal, and holding an appeal and informing the employee of the final outcome. The Explanatory Notes to the Act made it clear that the modified procedure should only be used in exceptional circumstances and stated that not all gross misconduct should be dealt with by the modified procedure.
Originally the Government intended to make the procedures a contractual term in all employees’ contracts. A consequence of this would have made any breach of procedures a breach of contract claim, in addition to the other rights provided, and it may be that this influenced the Government to make the procedures non contractual. Scott-Davis v Redgate Medical Services (2007) made it clear that there was no free standing right to sue for a breach of procedures if the employee did not have the continuity to claim unfair dismissal, except in the case of an automatic unfair dismissal where no continuity is needed (RKS Services v Palen (2007)).
The procedures were regarded as a minimum. Breach of them by the employer was an automatic unfair dismissal and compensation could be increased by between 10 per cent and 50 per cent. Compensation could also be reduced if the failure to comply with the procedures was the fault of the employee. Given that they were a minimum, in some cases larger employers may have had procedures that had additional steps, such as an investigative hearing or two appeals. Section 98A of the Employment Rights Act 1996 provided that where an employer had complied with the statutory procedures but failed to comply with his procedures that were over and above the statutory ones, that failure would not render the dismissal unfair if the employer could show that the breach of his own procedures made no difference to the final outcome. This was a statutory overruling of the House of Lords decision in Polkey v A E Dayton Services Ltd (1987). In Polkey the House of Lords overturned the famous decision of British Labour Pump Co Ltd v Bryne (1979), which introduced the ‘no difference’ rule, which the House of Lords stated was a misinterpretation of the statute, requiring a court to look at the reasonableness of the employer’s behaviour and not the unfairness to the employee. (4) While Polkey is a famous case, it is important to state the House of Lords reasoning behind the decision to provide support for the arguments in the answer. The resurrection of the no difference rule caused some disquiet from both academics (Deakin and Morris (2005)) and the judiciary, particularly from Prophet J, an ex President of employment tribunals.
It was clear from decisions under the procedures that the tenets of the previous law were still relevant. In Premier Foods plc v Garner (2007) the claimant was one of three who received a final warning after disciplinary proceedings. All three appealed and at the appeal two employees claimed that they were covering for Garner. Garner was suspended and at a hearing two days later was dismissed. The EAT held that the dismissal was unfair as the employer had not observed the statutory procedures. The employer should have started the procedures again when new evidence came forward and allowed Garner enough time to consider the case against her. In Bowen v Millbank Estate Management Organisation Ltd (2007) Bowen was invited to a disciplinary hearing and only at that hearing did she know the details of the investigation. She asked for the hearing to be adjourned and at the reconvened hearing she was dismissed. Again the EAT held that there had been a breach of the statutory procedures, in that she should have known the case against her before the initial hearing and it was irrelevant that the meeting had been reconvened.
While these cases show that, to some extent, the procedures did not affect the case law prior to 2004, in that the decisions were likely to be the same before the introduction of the statutory regime, there were other areas that caused problems. For example, what constituted a meeting? What were reasonable steps an employee had to take to make a meeting? What constituted unreasonable delay? What was reasonable in terms of timing and location? What constituted writing? What happened if an employee didn’t turn up to a meeting and at what stage, if any, could an employer hold a meeting in the employee’s absence? None of these was resolved, which meant that cases were going to the tribunals on an interpretation of the Act and the Regulations, so increasing, rather than reducing, the tribunal workload. Furthermore, critics such as Prophet above, did not agree with the overturning of Polkey, and Pitt (2008) notes that the exclusion of suspension on full pay, and warnings from the requirement to follow the procedure, was controversial. In addition, the refusal of the Government to make the procedures contractual meant that a failure to follow the procedure for any disciplinary action short of dismissal left the employee with no remedy. (5) The paragraph sums up the complexity of the regulations from the writers point of view and also uses criticisms from other sources.
In addition to the statutory disciplinary procedures, the Employment Act 2002 also introduced statutory grievance procedures. By s 32, an employee who did not follow the grievance procedures was unable to later present a claim to an employment tribunal. This was considered to an unprecedented restriction on employee rights, particularly where the employer had committed a repudiatory breach of contract and the employee wished to resign and claim constructive dismissal. Where the procedures applied, the time limit for presenting a claim to a tribunal was increased to six months by regulation 15 of the Employment Act 2002 (Dispute Resolution ) Regulations 2004. As with the disciplinary procedures, there was a standard and a modified procedure. Under the standard procedure, the employee had to put his grievance in writing, to the employer, the employer had then set up a meeting and there was a further right of appeal. The modified procedure consisted of a written grievance by the employee and a written response from the employer. This could only be used when employment had ended and the employee agreed in writing to use the modified procedure. (6) This paragraph shows a detailed reading of the question. The procedures covered both dismissal/discipline and grievances and the answer acknowledges this.
Similar problems with the interpretation of the disciplinary procedures also applied to the grievance procedures. In Shergold v Fieldway Medical Centre (2006) the employee resigned and complained about unfair dismissal. After meeting with her employer she was advised to put in a formal grievance but did not do so. The EAT said that her letter of resignation constituted the grievance. Similarly, in Commotion v Rutty (2006), a letter requesting flexible working, which had been refused, was also held to constitute a grievance and in Galaxy Showers v Wilson (2006) it was stated that to comply with the procedures, the letter merely had to state the grievance, it did not need to state that the employee wished to take things further. However, in City of Bradford Metropolitan District Council v Pratt (2007), it was held that where the modified procedure was used, given there was no meeting, the employee had to write down the grievance and all the grounds for it. In the case, Pratt had put in a post employment grievance about pay. Her written grievance did not include the grounds for her complaint, as she didn’t name comparators. The EAT said that she had not complied with the procedures and thus her claimed was barred. (7) This paragraph uses case law to demonstrate the argument but doesn't spend a lot of time writing out the facts of cases. It is only necessary to give a brief account of the facts to allow the reader to understand the decision.
It is obvious from the cases above that the procedures created more work for tribunals. The Government had said that it would review the procedures after three years of operation and this came in the form of the Gibbons Review (Better Dispute Resolution) in March 2007. While the review acknowledged that the idea of the statutory procedures was a good one because there were benefits to workplace dispute procedures, it also stated that the new procedures were almost a total failure. Gibbons gave three reasons for this: first, the regulations exacerbate and accelerate disputes; second, complexity; and third, the fact that the regulations were not relevant to all situations (Sanders 2009). Gibbons also suggested that the procedures may have caused a rise of 30 per cent in tribunal applications. As such, the review recommended the abolition of the procedures. This was achieved by the Employment Act 2008, which also allows tribunals to increase compensation where the employer has failed to observe the revised ACAS code (2009).
The basic premise in the Employment Act 2002 was a good idea, in that it encouraged all employers to have basic procedures within the workplace. However, a number of issues led to their almost universal criticism. The restriction on employee rights, the statutory overruling of Polkey, the exclusion of suspension on full pay and warnings from the procedure and the lack of a remedy for where the procedure was not followed in non dismissal cases, led many academics to see the procedures as pro employer and anti employee. In addition, the detailed requirements in the Dispute Resolution Regulations, which led to cases coming before tribunals on questions of interpretation, thus increased, rather than decreased, the burden on both the tribunals and Employers (Gibbons). As such, the procedures failed to achieve their intended aim. (8) The conclusion summarises the arguments already made and doesn't introduce new material.