On 2 May 2008, ACAS published a new draft Code of practice on discipline and grievances for public consultation. The Code has been revised to take into account the changes proposed to be made to workplace dispute resolution by the Employment Bill, currently before Parliament, and in particular the forthcoming abolition of the statutory dispute resolution procedures.

Minister for Employment Relations, Pat McFadden, said:

“The new Code is a key element in the Government’s plans to streamline and simplify the dispute resolution system to the benefit of employers and employees. It will complement the removal of statutory measures by establishing flexible, principles-based guidance to help resolve disputes early.”

What will be the consequences of breaching the Code?

Once the statutory disciplinary and dismissal procedures are abolished the penalty of automatic unfair dismissal for failure to follow those procedures will no longer apply. Unfair dismissal rules will revert to the pre-2004 position. Where a Tribunal finds that a fair procedure has not been followed, the dismissal will be unfair but the Tribunal will have a discretion as regards the size of the compensatory award and may reduce this to nil if it considers that a fair procedure would have made no difference (known as the “Polkey” reduction). A failure to follow the revised new Code will not, in itself, give rise to any liability (i.e. dismissals in breach of the Code will not be ‘automatically unfair’ dismissals). However it is proposed that Tribunals will be able to adjust compensation awards by up to 25% for unreasonable failure to comply with any provision of the new Code.

What does the draft new Code say?

The draft new Code is considerably shorter and less prescriptive than the current Code, the intention being to give Tribunals more discretion. The decision to shorten the Code was influenced by the fact that many responses to the Government consultation on the review of the statutory dispute resolution which was undertaken by Michael Gibbons, called for a shorter, more “principles-based” Code.

The revised Code accordingly sets out the principles for handling disciplinary and grievance situations in the workplace, which essentially reflect the core principles in the current Code. These principles are as follows:

  • Make appropriate investigations to ensure the facts of the case have been established.
  • Inform the employee of the complaint against him or her, and provide the employee with an opportunity to state his or her case before decisions are reached.
  • Use procedures primarily to help and encourage employees to improve.
  • Allow employees to be accompanied at disciplinary, grievance and appeal meetings.
  • Any grievance or disciplinary meeting should, as far as possible, be conducted by a manager who was not involved in the matter giving rise to the dispute.
  • Any written warnings for misconduct or unsatisfactory performance should set out the nature of the misconduct/poor performance and the improvement/change required.
  • Do not dismiss an employee for a first disciplinary offence unless it is a case of gross misconduct.
  • Give the employee an opportunity to appeal.
  • Deal with issues as promptly as possible.
  • Act consistently and ensure that like cases are treated alike.
  • Where an employee is charged with or convicted of a criminal offence, this is not itself reason for disciplinary action. Consider the effect of the charge/conviction on the employee’s ability to do their job.

Whereas the current Code provides detailed, step-by-step guidance about the disciplinary and grievance procedures to be followed and elaborates on various possible eventualities, the draft new Code provides very basic practical guidance to employers, employees and their representatives. For example, the current Code provides far more detailed guidance on the disciplinary and grievance rules and procedures that employers should draw up, giving numerous examples of behaviour that would constitute a disciplinary offence. Another example is that the current Code gives detailed guidance as to the nature and scope of the written records that should be kept during the disciplinary and grievance process, whereas the draft new Code simply states that it is good practice to keep written records during disciplinary and grievance cases and that a record should be kept of the outcome.

However, the draft new Code will be supplemented by a separate booklet containing more comprehensive guidance on dealing with disciplinary and grievance situations in which we anticipate that the more detailed guidance will be set out. Presumably the failure to follow the guidance contained in this booklet might possibly be taken into account by Tribunals when assessing whether a dismissal is fair, but will not be taken into account when considering any unreasonable failure to comply with the Code for the purposes of applying the 25% uplift.

When will the new Code come into force?

Consultation on the draft new Code ends on 25 July 2008. It is expected that the Employment Bill repealing the statutory procedures will be passed this summer but will not come into force until April 2009. Although the position is not entirely clear, it appears that the new Code is likely to come into force at the same time as the statutory dispute resolution procedures are abolished.