The role played by the contract of employment is fundamental to appreciate all aspects of employment law. For several years the contract of employment was, with a few exceptions, the exclusive determinant of all matters contained by the employment relationship; all rights, obligations and remedies were entirely contractual. At present, many features of that relationship are established by statutory provisions, for example, the rights to claim unfair dismissal. Then again, these features have not replaced contractual concepts but have been annexed to the essential contractual points, so that many matters examined in this dissertation require an understanding of both.
According to statute law in the United Kingdom, ‘An employee has the right not to be unfairly dismissed by his employer. This right and the related right to complain of an unfair dismissal, is only relevant to those who possess the applicable employment right. In October 2004, The Employment Act 2002 came into force, as a new statutory dispute resolution procedure. The reason behind introducing these measures was to preclude both employers and employees from acting precipitously when a dispute occurred, and moreover, to endeavour to overhaul the arguably exposed disposition of many individual workers formerly overlooked in a corporate dominated environment. It is established that failure by an employee to comply with the pertinent steps will mean that any award may be reduced and, in some cases, that a claim cannot be instituted at all until the crucial steps have been followed; a failure to comply on the part of the employer who dismisses an employee will mean that the dismissal is automatically unfair. Nonetheless, it is in the area of dispute resolution that the law arguably takes a step backwards from the employees’ point of view.
This essay suggests that whilst the principles governing the establishment of a case of unfair dismissal necessitate the adherence to a number of procedural steps, otherwise relating to automatically unfair dismissal, the conclusive step, relating to the reasonableness of the employers actions, is usually satisfied in the employer’s favour. Hence, there is less in the way of support for employees than there seems at the outset.
Owing to the vacuum, which caused some 203 industrial debates a year concerning controversial dismissals by employers, the Royal Commission on Trade Unions and Employers Associations 1968, otherwise known as the Donovan Commission, recommended the imperative operation of an arrangement that would present workers improved protection against unfair dismissal in addition to alleviating the Industrial dissonance that absorbed Britain. The standard of unfair dismissal was developed as an instrument to safeguard employees from subjective behaviour, and to present just and equitable compensation. As a consequence of the Donovan Commission statutory protection was provided to employees with the presentation of the Industrial Relations Act 1971, the succeeding Trade Union & Labour Relations Act 1974, and at present is summarized under the provision of the Employment Rights Act 1996 s.94-107.
The Employment Rights Act 1996, by virtue of s.98(4), outlines the statutory test of fairness. To assist the understanding of this section the judiciary have adopted two tests; firstly did the employers choice to dismiss fall with a ‘band of reasonable responses’ as explained in Iceland Frozen Foods v Jones; and secondly whether or not the employer has accepted a fair procedure proportionate to the employees dismissal. This second test has been the subject of much judicial torment, not merely with consideration to what comprises fair procedural steps but whether there is an obligation that they should be precisely adhered to by each employer in each individual situation. Whilst it should be taken into account that the procedural steps requisite in disciplinary case might well be at variance from a redundancy situation, it is feasible to recognize four general principles governing a fair procedure, as stated to by Justice Harman in Byrne v Kinematograph Renters Soc. These values are ingrained within the ACAS Code of Practice on Disciplinary and Grievance Procedure 2000, and subsequent to the conclusion in Lock v Cardiff Rly Co Ltd it was believed that it was an inaccuracy of law to fail to have observation to the Code.
Unfair Dismissal- The Polkey Test
Before examining the reasons for dismissal, the procedural steps will briefly be examined. Firstly, in British Home Stores v Burchell, Arnold J assured that where an employer supposed a belief of guilt of an employee, this must be established on reasonable grounds and issue to the employer having carried out as much examination into the subject as was reasonable and practicable in the conditions. Secondly, in Whitbread v Mills it was settled that the reasonableness of the employers conduct in the dismissal progression required compliance with not only a pre-dismissal procedure, but also an appeals method. Thirdly, in W. Mids Co-op Soc. V Tipton, Lord Bridge understood that the appeals procedure was an essential part of deciding the uncertainty of fair procedure, his reckoning being based on the pronouncement of Viscount Dilhorne in Devis & Sons Ltd v Atkins, that the reasonableness of the employers’ behaviour must be contemplated ‘in accordance with equity and the substantial merits of the case.’ Ultimately, upon the pronouncement of guilt at a hearing, except for in cases of gross misconduct, an acceptable warning procedure should be executed, encompassing an oral warning, a first and second written warning, substitutes to dismissal such as demotion and finally dismissal.
It is vital to first reflect on the reason for dismissal before moving on to the idea of fairness. Different consequences pertain to these different reasons. If an employer fails to make his reasons obvious he will lose his case in the Employment Tribunal as he is not likely to be able to demonstrate that it was potentially fair. Alan Neal comments that there has been a rigorous attempt by the Executive to haul back the gains made by individual employees under the so called ‘Polkey rule.’ In the consultation period subsequent to the publication of the ‘Routes to Resolution’ the Government flew a political kite to test the air with consideration of legislative intervention in this field. In the paper, the Government resolved that ‘it is unfair to penalize an employer for a shortcoming which made no difference to the outcome of a dismissal. It has therefore decided to act to ensure that tribunals disregard procedural mistakes, beyond minimal procedural standards if following full procedures would have made no difference to the outcome.’
On the whole a dismissal is liable to be unfair where the procedure employed does not engage an amount of consultation with the effected worker. This is appropriate whatever the circumstances, but the nature of any argument or consultation will differ, depending on the truth of each indictment and the situation. The implication of Polkey is that it provides direction on the fundamental issue of fairness and consultation. The majority of cases will necessitate extensive consultation with the ACAS Code of Practice on disciplinary and grievance procedures. The kinds of reasons that are taken into consideration comprise capability and qualifications. In Alidair Ltd v Taylor it was understood that an employer should show honest belief in the employee’s lack of capability and that belief was reasonable, also, if this is associated to health, it should be revealed that medical advice was sought after.
With reference to conduct the case law in this field prospers. The Court of Appeal in Foley v The Post Office of late reaffirmed that tribunals should employ the words of the statute. The Court of Appeal recommended that the proposal of using ‘a band of reasonable responses’ might assist as settled in the case of British Home Stores v Burchell. In a nutshell the employment tribunal should initially determine why the employee was dismissed. If the dismissal was connected to the conduct of the employee, then the imperative aspects to reflect on are, whether there had been a fair examination with a fair procedure. The tribunal then should contemplate if the employer acted fairly or not. In taking into consideration this argument, it is essential to ponder Polkey. In Polkey the House of Lords believed that it is no justification to a claim of unfair dismissal if the employer claims that the unfairness made no difference to the conclusive outcome. To be precise, even if the employer has used all fair measures, then the employee would have been dismissed anyway. Polkey is applicable to the subject of compensation nevertheless, when a Tribunal has to consider the ‘no difference’ argument. If it is an extreme instance, the Tribunal may choose to make no award of compensation at all. It may signify that a Tribunal resolves that even if a fair procedure had been used, it would simply have extended the employee’s employment for a small period, for example, one month. In similar cases the Tribunal may merely award one month’s loss of earnings. On the other hand the Tribunal may make a percentage decrease to take into account that the employee would in any case have been dismissed.
A warnings process will be unsuitable on the other hand in cases of gross-misconduct. Otherwise the Tribunal must pursue the House of Lords in Polkey which evidently states that whether or not a dismissal is fair should be judged by what the employer did not on what the employer might have done. This superseded the earlier law set out in British Labour Pump v Byrne, what became recognized as the British Labour Pump Principle was explained by Browne-Wilkinson J in Sillifant v Powell Duffryn Timber Ltd, ‘Even if, judged in the light of the circumstances known at the time of dismissal, the employers decision was not reasonable because of some failure to follow a fair procedure yet the dismissal still can be held fair if, on the facts proved before the Industrial Tribunal, the Industrial Tribunal comes to the conclusion that the employer could reasonably have decided to dismiss if he had followed a fair procedure.’
By dismissing an employee for job loss in Polkey, devoid of respect to the then Industrial Relations Code of Practice, the House of Lords believed that the British Labour Pump precedent in discounting the claim for unfair dismissal, because it would not eventually have made any difference, was incorrect in theory, because the Tribunal should observe the reasonableness of the actions or the manner of the employer in determining neither to consult or warn. If the employee has experienced a prejudice, this should only be applicable at the later stage of the case, when it was time to gauge compensation. In this regard, if the dismissal was unfair as a consequence of a deficiency in procedure, compensation would be reduced for that reason, demonstrating the possibility that the employee would have lost his job in any case.
In consideration of Foley and Polkey it can be observed that the uncertainty that occurred in the British Labour Pump Case has been vehemently suppressed. Foley sees that any judicial ambivalence that an employer’s reaction to a dismissal situation must be within a scale of reasonable responses. Similarly, Polkey suppresses the irreverence synonymous in British Labour Pump that a technical imperfection in method can mean that a dismissal is not unfair. Procedural fairness will virtually always result in a verdict of unfairness. This feature of procedural fairness is consequently essential to whether the employer’s response fell within a band of reasonable responses. This was lengthened in recent times by the Court of Appeal in Whitbread v Hall. The examination incorporates the means by which an employer uses a procedural process to arrive at a decision to dismiss, even where an employer has confessed his misconduct.
The Employment Act 2002- Post Polkey
The Polkey attitude to procedure has nevertheless been outdated by the Employment Act 2002. The Act introduces a new s.98A, in the Employment Rights Act 1996, involved with statutory dismissal and disciplinary procedures which will present a minimum criterion of statutory procedural entitlement that will be implied into all contracts of employment. The philosophy vital to the new Act is the fundamental matter of Alternative Dispute Resolution ADR. This reproduces the strength of the Woolf Reforms and its highlights on litigation prevention in civil matters. The Act intends to circumvent argumentative litigation by supporting resolution of disputes in the work place by promoting the marginalization of internal disciplinary procedural committees and grievance measures. Patricia Hewitt, for the Secretary of State for Trade and Industry, informed that the objective of the legislation was to provide proper dispute resolution in the workplace, and to encourage employers and employees to settle issues internally before resorting to the Employment Tribunal. On the other hand, as Adrian Williams states, many of the ‘new’ procedures are not original, and they loosely follow the ACAS code and existing case law.
There is less motivation for employees to resort to the Tribunal by allowing extension of times for arguments to be resolute, therefore perhaps avoiding the door of the Tribunal. Superior use of written statement of terms is encouraged in an attempt to make the employment relationship more equally comprehensible and enforceable. In an obvious challenge to the Polkey principle, if a dismissal is fair except for the procedural irregularities, then the dismissal will not be considered to be unfair. Accordingly, Polkey seems to suggest an innate open-minded leaning toward the employee. The employer will under the terms of the new procedures simply have to demonstrate that he acted fairly. To this end, the hypothesis that if the employer is at fault for the collapse of the procedures any dismissal is automatically unfair would seem a rarity. However, one may argue, on the contrary, that even if the employer has conformed with all the requirements of the dismissal and disciplinary procedures that in itself does not mean that the dismissal was fair. The statutory dismissal and disciplinary procedures simply create a minimum standard; the tribunal is permitted to compare what took place with the ACAS guidelines and the company’s own procedures.
The standard dismissal and disciplinary procedures apply to all cases where the employer is considering dismissing the employee, for any reason, or taking ‘relevant disciplinary action’ against the employee. A ‘relevant disciplinary action’ is defined in SI 2004/752, reg 2(1) as an ‘action, short of dismissal, which the employer asserts to be based wholly or mainly on the employee’s conduct or capability, other than suspension on full pay or the issuing of warnings, whether oral or written.’ Section 98A (1) Employment Rights Act 1996 was introduced by the Employment Act 2002, s. 34, it states:
An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if
- one of the procedures set out on Part 1 of Schedule 2 to the Employment Act 2002 (dismissal or disciplinary procedures) applies in relation to the dismissal,
- the procedure has not been completed, and
- the non-completion of the procedures is wholly or mainly attributable to failure by the employer to comply with its requirements.
The statutory dismissal and disciplinary procedures are specified in the Employment Act 2002, schedule 2. It is submitted that they are not revolutionary in their expectations of reasonable behaviour, but instead, their operational complexity may ‘wrong-foot’ many employers and employees. There is a standard procedure for dealing with cases where the employer is considering dismissal or taking ‘relevant disciplinary action’ against an employee. There are three fundamental steps to this procedure. There is in addition a ‘modified procedure’ for dealing with some cases of gross misconduct. There are two steps to this procedure. Lastly, there are general requirements relevant to both forms of procedure. These will be considered first, but it should be observed that a ‘meeting’ must be conducted for the intentions of dismissal and disciplinary procedures, which is a hearing for the purposes of s. 13(4) and (5) of the Employment Relations Act 1999 (c. 26). This indicates that there is an entitlement, under s. 10 of the Act, for an employee to be accompanied at these hearings.
Fundamental to the 2002 Act is the focus on mandatory procedure. This appears to cause a return to the pre-1979 position where a failure to comply with statutory procedure will become a ground for automatic unfair dismissal in its own right. Section 30, however, allows employers to annex clauses into employment contracts, wavers these procedures. If a clause is inserted into a contract for employment, it must be interpreted as conforming to at least the minimum procedure that the statute requires of employers. Consequently, contractual procedures of this kind cannot be inserted to dilute the procedures of the statute, although in situations where the insertion will offer greater protection against the statute, it will stand and operate alongside the dismissal and disciplinary procedures. Nonetheless, Lord Hoffmann in Johnson v Unisys Ltd, stated that for the judiciary to construct such a common law remedy for unfair dismissal that did not necessitate the qualifications and restrictions of the statutory remedy would have the likelihood to evade all the restrictions of the statutory right. Collins, states that the House of Lord’s decision not to allow the employee the chance to dispute the manner of dismissal on the basis of the breach of an implied term signifies that, ‘any hopes that the common law of wrongful dismissal might be adjusted to reflect modern perceptions of how employees should be treated fairly and with dignity must be thrown on the bonfire of innocent carcasses.’ This is an important departure from the previous law, and seems to weigh in favour of the employer against the employee, therefore having effects on automatically unfair dismissal.
The standard dismissal and disciplinary procedures are included in the Employment Act 2002, part 1, chapter 1, schedule 2. It relates to all cases where the employer is considering dismissing the employee, for any purpose, or taking ‘relevant disciplinary action’ against the employee. A ‘relevant disciplinary action’ is identified in SI 2004/752, reg 2(1) as an ‘action, short of dismissal, which the employer asserts to be based wholly or mainly on the employee’s conduct or capability, other than suspension on full pay or the issuing of warnings, whether oral or written.’ The exclusion of suspension on full pay is comprehensible as this is used by employers as a holding function while investigations take place and is not as such a breach of contract; suspension without pay will fall within procedures. At first sight, the exclusion of ‘warnings’ appears to be a little perplexing as this is the most frequent form of disciplinary action. Indeed, this exclusion was the focus of debate in the consultation process and was included in order not to overburden small employers by allowing for a series of commonplace workplace measures to be used before the statutory ones begin to have consequence. Since the strength of the dismissal and disciplinary procedures is one of reasonable action, this is not completely convincing. On the other hand, where an employer is contemplating simply delivering a warning the dismissal and disciplinary procedures are not appropriate. One supposes that if the employer is contemplating issuing a warning, but may perhaps be thinking of dismissal as an alternative, then the procedures will still apply.
The standard dismissal and disciplinary procedures will now be stated. Step 1, includes the statement of grounds for action and invitation to meeting. Under this provision, the employer must: set out in writing the employee’s alleged conduct or characteristics, or other circumstances, which lead him to consider dismissing or taking disciplinary action against the employee; send the statement of a copy of it to the employee and invite the employee to attend a meeting to discuss the matter. Step 2 provisions are those relating to the meeting. It is paramount that the meeting takes place before an action is taken, except in the case where the disciplinary action consists of suspension. The meeting must not take place unless the employer has informed the employee what the basis was for including in the statement under step 1 the ground or grounds given in it, and the employee has had a reasonable opportunity to consider his response to that information. The employee must take all reasonable steps to attend the meeting and after the meeting, the employer must inform the employee of his decision and inform him of the right to appeal against the decision if he is not satisfied with it. Step 3 outlines the appeal process. If the employee does wish to appeal, he must inform the employer, in doing so the employer must invite him to attend a further meeting. The employee must take all reasonable steps to attend that meeting. The appeal meeting does not need to take place before the dismissal or disciplinary action takes effect. After the appeal meeting, the employer must inform the employee of his final decision. The decision whether to appeal or not, rests with the employee.
S 33 contains a controversial aspect of the 2002 Act in its ability to exclude claims to Employment Tribunals by employees who have failed to adhere to step 1. It has been questioned by Judge John Prophet, President of the Employment Tribunal’s whether this infringes Article 6(1) European Convention Human Rights. Again, this criticism seems to suggest biased support in favour of the employer.
The modified dismissal and disciplinary procedure is contained in the Employment Act 2002, Part 1, Chapter 2, sch 2. The modified procedure becomes appropriate only when an employer dismisses an employee summarily, for instance, without notice, or ‘on the spot,’ for gross misconduct. The employer must be at liberty to dismiss without notice on the basis of the conduct and the dismissal must take place as soon as the employer becomes aware of the misconduct or immediately afterwards, and it must be reasonable for the employer to dismiss without making further enquiries. Cases of this kind are sometimes regarded as those where any investigation would be ‘futile.’ An example of such a situation is where the employer has just witnessed an employee assaulting a customer. The procedure in these cases will now be explained.
Step 1 includes the statement of grounds for action. Here, the employer must set out in writing: the employee’s alleged misconduct which has led to the dismissal; what the basis was for thinking at the time of the dismissal that the employee was guilty of the alleged misconduct, and; the employee’s right to appeal against dismissal. The employer must send a copy of this to the employee. Step 2 is the appeal process. Under this heading, if the employee does wish to appeal, he must inform the employer, in doing so, the employer must invite him to attend a meeting. The employee must take all reasonable steps to attend the meeting and after the appeal meeting, the employer must inform the employee of his final decision. Evidently, the modified procedure will not apply in many cases, as not every instance of gross misconduct is covered; only those where the employer responds immediately to the incident.
Under reg 4, the dismissal and disciplinary procedures will not relate to a mixed bag of cases principally focused on where the employer makes ‘collective dismissals,’ for example redundancies. This stipulation was inserted because in such cases the individual characteristics of the employee are usually extraneous to the decision to dismiss. The exclusions under this head are as follows: where the employee belongs to a category of employees who are all dismissed and then all offered re-engagement on new terms where there is a collective redundancy of 20 or more employees and a duty to consult and inform representatives arises, but for redundancies affecting fewer than 20 employees, or where redundancies will take effect in a period longer than 90 days, the statutory procedures will still apply; where at the time of the employee’s dismissal he is taking part in some form of industrial action, there are complicated rules regarding exactly which actions are covered; where the employer’s business suddenly ceases to function, because of an event unforeseen by the employer, with the result that it is impractical for him to employ any employees; where it has become illegal for the employee to continue in his job; or where the employee is one to whom a dismissal procedures agreement designated by an order under Employment Rights Act 1996 s.110 applies at the date of dismissal. This covers specific and detailed collective agreements incorporated into the employees’ contracts.
However, the non-application of the dismissal and disciplinary procedures does not suggest that the employer is free to ignore procedures altogether: the ACAS guidelines on discipline and dismissal are still relevant as are the contractual provisions. The difference is that the consequences of failing to follow the dismissal and disciplinary procedures do not apply. It should be noted here that the word ‘dismissal’ does not include constructive dismissals. In its place, the employee will need to follow either the standard or modified grievance procedure, if he or she wishes to make a tribunal claim relating to the constructive dismissal.
There will be situations where one or other party is deemed to have complied with the stipulations. These fall into two categories: the first, under reg 5, covers technical points where other procedures interrupt the dismissal and disciplinary procedures; the second, under reg 11, where one party’s behaviour makes continuance impossible or it is not reasonably practicable to persist. In such situations, the ‘innocent’ party is relieved of responsibility but the ‘guilty’ party may be penalised. Under reg 5 SI 2004/ 752, the parties are treated as complying with the dismissal and disciplinary procedures, where the procedures have started but the employee claims ‘interim relief;’ where the employee has appealed under an ‘appropriate procedure.’ Both of these provisions are specialist situations. Under reg 11 SI 2004/752: that either party has reasonable grounds to believe that commencing the procedure or complying with the subsequent requirement would result in a significant threat to himself, his property, any other person or the property of any other person; that either party has been subjected to harassment and has reasonable grounds to believe that commencing the procedure or complying with the subsequent requirement would result in his being subjected to further harassment; or it is not practicable for the party to commence the procedure or comply with the subsequent requirement within a reasonable period.
Where the procedures cannot be started or completed because of the conduct of one party the failure of the procedures will be endorsed to that party, in other words, the party arguing against the other party. However, the two procedures have to be reviewed in isolation as regards the outcomes. Firstly, dismissal will be discussed. Where a dismissal has transpired and the failure in the dismissal and disciplinary procedure is down to the employer, this will mean that any dismissal will be ‘automatically unfair dismissal.’ The failure is also applicable to range of potential claims listed in the Employment Act 2002, sch 3. These include, for example, Section 2 Equal Pay Act 1970, section 54 Race Relations Act 1976, reg 28 Employment Equality (Sexual Orientation) Regulations 2003.
Under the Employment Rights Act 1996, s 31, the failure by an employer can be used by the employee to acquire supplementary compensation in ‘schedule 3’ claims. However, if the failure is the cause of the employee, compensation can be limited. Maybe surprisingly, some actions are missing. As a result, circumstances relating to less favourable treatment of part-time workers, under SI 2000/1551, and those on limited term contracts, SI 2002/2034, are not comprised in schedule 3. This signifies that employees can bring claims pertaining to these issues through the statutory dispute resolution procedures.
Secondly, relevant disciplinary action: A failure by an employer in adhering to the dismissal and disciplinary procedures does not give rise to a cause of action per se. Nonetheless, as with ‘dismissal,’ a tribunal may award extra compensation in successful ‘schedule 3’ claims arising from the disciplinary action. For instance, if the employee is subject to disciplinary action and is demoted, she may have a claim for unlawful deduction of wages arising from the lower wages, or even a sex discrimination claim. If she is triumphant in either or both of these claims she may acquire further award related to the employer’s failure to operate the dismissal and disciplinary procedures.
Most employers in the current time are aware of the fundamental nature of being able to justify dismissal decisions and the necessity to follow the correct procedures. Many dismissals, however, are the result of hasty management decisions and it is not uncommon for employers to sit on problems and then expect to dismiss without any warning having been given to the employee, without any consultation. Before any dismissal employers are now advised to adhere to the principles contained in the Employment Act 2002, and to make proper use of the statutory procedures. If the procedures are not correctly adhered to, it is believed, from the outset, that if dismissal occurs this relates to ‘automatically unfair dismissal.’ However, this dissertation has attempted to erase this assumption.
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