17th February 2009
A new era in employment relations? The ACAS Code of Practice
Out with the old and in with the new, or at least that is how the introduction of the Employment Act 2008 and the new ACAS code of practice on disciplinary and grievance procedures is being heralded. But will April 2009 be the new dawn government and ACAS hope it will be?
This briefing will examine the new regime that will govern disciplinary and grievance issues from April 2009 and ask whether less really is more, or whether this regime is likely to be as problematic as the old one.
Background
October 2004 saw the introduction of the Employment Act (Dispute Resolution) Regulations 2004 (“the Regulations”). The Government insisted these regulations would revolutionise the handling of disputes in the workplace bringing employer and employee closer together and in turn reducing the appetite for tribunal litigation with the knock-on effect that tribunal claims would be reduced by a third.
The sad truth is that however well intentioned these aims, the procedures have not worked. There has been an explosion in pre hearing activity, particularly in respect of the statutory grievance procedures. Instead of encouraging a culture of workplace resolution, the Regulations seemed to have initiated a game of “spot the grievance”. In small scale redundancy exercises, for example, employers have often been unable to engage properly with employees for fear of breaching the statutory disciplinary procedure.
It was inevitable that something had to give, and in March 2007 the Gibbons Review recommended wholesale repeal of the Regulations. Following extensive consultation the Employment Act 2008 (“the Act”) received royal assent on 13 November 2008. The Act will repeal the Regulations in their entirety. The provisions relating to uplifts will disappear although new financial sanctions will be introduced (more later).
In November 2008 ACAS published the last draft of its revised Code of Practice which has now been approved. The question, however, is whether the Code of Practice is more likely to help employers resolve disputes early, in the workplace, and with less cost and complexity than the Regulations it replaces. Or will the Code leave employers and employees alike open to challenge?
Employment Act 2008
Before examining the provisions of the Code of Practice it is important to understand the effect of the Employment Act 2008.
The Act inserts into the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) section 207A. This amendment sets out the financial consequences of failing to comply with a code of practice - an uplift or reduction in compensation of up to 25 per cent applied by the tribunals on a just and equitable basis. Schedule A2 incorporates into TULR(C)A the jurisdictions to which section 207A applies.
The employment tribunal must first decide whether the claim relates to one of the jurisdictions listed in Schedule A2. If it does, and the tribunal finds for the claimant, the tribunal must decide whether or not to increase or reduce any award by no more than 25 per cent if it considers it just and equitable to do so.
Leaving to one side the issue of whether the definition of code of practice extends to the codes relating to race, sex, equal pay and disability as suggested by some (the explanatory notes to the Employment Act 2008 state that the definition of code applies only to the ACAS code of practice) compliance with the ACAS code of practice will be key to avoiding the liability.
ACAS Code of Practice
The Code’s primary aim is to promote the improvement of employee relations in the workplace. This is highlighted by the requirement that “employees and where appropriate their representatives should be involved in the development of rules and procedures”. This encourages a two-way dialogue and is less draconian than the previous draft which required that procedures should be “agreed wherever applicable with trade unions or employee representatives”.
The Code of Practice is accompanied by a 74 page guidance note and whilst compliance with the guidance note will not be taken into account for the purposes of the uplift it may be taken into account by tribunals when considering general principles of fairness. Helpfully the new Code clarifies that it applies to neither redundancies nor the termination of fixed term contracts. The Code also makes it clear that it is not applicable to collective grievances.
On a positive note the Code of Practice seeks to apportion responsibility between employer and employee by imposing a joint obligation on the parties to engage collaboratively in the process.
However, there is much about the language used in the Code that suggests the “light touch” may in fact lead to as many problems as arose from the original Regulations, and fail to give employers and employees sufficient confidence to move to a more informal approach to dispute resolution.
For example the Code states “it is also important to help employees and managers understand what the rules and procedures are, where they can be found and how they are to be used”. This is very laudable for the purposes of engaging with the workforce, but if an employer is unable to prove that these steps have been taken is the employer in breach of section 207A and liable to an uplift if a complaint of the kind listed in schedule A2 is successful?
The language of the Code also confuses the obligations on employers under section 98(4) Employment Rights Act 1996. It talks of establishing the need for formal action to be “reasonable or justified” depending on the circumstances of the particular case. But the Employment Rights Act 1996 only requires the tribunal to decide on fairness and whether the decision was reasonable. The concept of justification, common to other aspects of employment law, is alien to the unfair dismissal framework.
The Code also contains echoes of the old regime. For example, both parties are required to raise and deal with issues “promptly and should not unreasonably delay meetings, decisions or confirmation of those decisions”. What is “promptly”? How relevant are the circumstances of each case? How much scope if there for inconsistency amongst tribunals? These questions matter; whilst there will be no automatic unfair dismissal, a breach still triggers an uplift or reduction (although uplift seems more likely).
What of “employers should allow employees to be accompanied at any formal disciplinary or grievance meeting”? This provision fails to alert employers that there is in fact, and has been for the last 10 years, a statutory right to be accompanied which carries with it its own sanctions for non-compliance.
Handling disciplinary issues
When it comes to disciplinary issues the provisions look remarkably like those contained in the 2004 Regulations. They are also expanded on considerably in the 74 page guidance note and employers may potentially have to cross-refer to these two documents.
What is new, and perhaps contentious, is the right of employees to be given a reasonable opportunity to call “relevant witnesses”.
This change raises a number of practical issues. Can witnesses be cross-examined as the Code provides employees with “an opportunity to raise points about any information provided by witnesses”? Will managers be comfortable about overseeing hearings where witnesses are, in effect, giving evidence and being cross-examined? Will this impact negatively in the workplace if employees feel pressurised to give evidence?
Although this is not an absolute right it will undoubtedly require employers to justify refusing to allow employees to exercise the right or run the risk of breaching the code. Litigation in this area must surely loom large especially as the provision flies in the face of existing Employment Appeal Tribunal case law.
There is, however, some good news.
The Code provides for a decision to be taken in the absence of an employee who is “persistently unable or unwilling to attend a disciplinary meeting”. Perhaps it would have been of more use to employers if the code identified how many meetings should be convened rather than using the word “persistently” but at least this provides some help.
Handling grievances in the workplace
As with the disciplinary process the ghost of the statutory grievance procedures can be seen in the new process for handling grievances.
Happily for employers the Code of Practice provides that the “disciplinary process may be temporarily suspended in order to deal with the grievance” or “where the grievance and disciplinary cases are related it may be appropriate to deal with both issues concurrently”.
Conclusions
There are undoubtedly areas of weakness that will fully come to light as the Code comes into force. The Code is very basic, and although its simplicity is intended to bring clarity, as we have seen, it is unlikely to achieve this. Part of the Code is wrong, for example confusing reasonableness and justification in the unfair dismissal arena. And finally, it fails to offer sufficient guidance to employers and employees in dealing with difficult situations. It is in these areas that the Code is unlikely to live up to expectations.
For those reasons we question whether the Code will contribute to improved employee relations – instead of “spot the grievance” we may well be playing “spot the breach”.
Anna Fletcher
Director, Employment Team
Wragge & Co LLP
anna_fletcher@wragge.com
