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Employers - Are you aware of your obligations?

It may have been almost 2 years since the Employment Act 2002 (Dispute Resolution) Regulations 2004 (the ‘Regulations') came into force but are you complying with required minimum procedures?

Employment claims are on the increase. According to the ACAS 2005/2006 Annual Report there were 109,712 applications to Employment Tribunals in 2005/2006; this is an increase of 34% on the previous year. It is of no surprise that the highest percentage of claims are for unfair dismissal.  If a Tribunal finds that an employee has been unfairly dismissed an employer could be ordered to pay compensation up to the maximum limit of £58, 400 (this is for unfair dismissal only. A higher award could be ordered if there are other aspects involved in a claim i.e. sex discrimination).  The amount of compensation awarded to employee does of course depend on the circumstances of case.

As an employer you may have been very lucky and not yet had to deal with an employee or former employee making a claim against you through the Tribunal. It is inevitable, however, that most employers will at some point have to deal with how to discipline an employee.  Although there is no fool proof way of guaranteeing that a former employee will not make a claim against you, taking preventative action is the best way to try and avoid any claims.

Under the Regulations all employers have to follow the statutory prescribed minimum procedures if contemplating dismissing an employee or imposing some other disciplinary penalty (other then a warning or suspension on full pay).  The Regulations require employers to follow a 3 step procedure which is as follows:-

Step 1 - the employer has to write to the employee informing them of the allegations against them and the basis of the allegations.  The employer has to invite the employee to attend a meeting to discuss the matter.

Step 2 - a meeting must take place to discuss the allegations.  At this meeting the employee has a right to be accompanied by a Trade Union representative or a colleague. After the meeting the employer must inform the employee of their decision and inform the employee of the right to appeal against the decision.

Step 3 - if the employee informs the employer that he wishes to appeal against the decision made, the employer must invite the employee to attend an appeal hearing. 
The employee again has the right to be accompanied at this meeting.  After the appeal meeting the employer must inform the employee of his final decision. 

If the minimum dismissal and disciplinary procedures are not followed, the result will be automatic unfair dismissal.  If this is the case an Employment Tribunal can penalise an employer by increasing the compensation awarded to an employee by between 10% - 50%.

If an employer has not followed the dismissal and disciplinary procedure, there is a possibility that the damage can be minimised, if an employer is able to prove that if it was not for the procedural error the employee would in any event still have been dismissed.  The compensation awarded to the employee may then be reduced. 

Under the Regulations employers are also required to follow a statutory grievance procedure when an employee raises a complaint about "action which his employer has taken or is contemplating taking in relation to him".  If the statutory grievance procedure is not followed the employer again runs the risk of increased compensation being awarded to an employee by the Tribunal.  Further discussion on this point is unfortunately outside the remit of this article. 

For employers facing a claim in the Tribunal there are of course financial implications.  If the employer is not insured to cover Tribunal claims, the legal costs involved in dealing with the matter are irrecoverable.  The employer may also be ordered to pay compensation to an employee.   There is also the "hassle" of dealing with the claim, this can take up significant management time and is also stressful for other employees if they are involved in giving evidence at the Tribunal. 

It is therefore extremely important that employers are aware of their obligations under the Regulations and have in place proper procedures to deal with disciplinary and dismissal action.  In accordance with the Regulations employers must provide employees with a written statement explaining all aspects of the employer's dismissal and disciplinary procedure. 

This article appeared in the October 2006 edition of Devon Today and was correct at time of going to press. Please contact us for up-to-date information.