If an employer fails to follow a fair procedure in reaching the decision to dismiss, but is able to persuade an employment tribunal that, had it done so, the result would have been the same, should that dismissal be regarded as unfair? If so, how should this procedural failure impact on the amount of compensation?
These simple questions have given rise to difficulty virtually throughout the history of unfair dismissal. The original orthodoxy (British Labour Pump v Byrne) was that a procedural failure did not of itself render the dismissal unfair. That was followed in what we then called industrial tribunals up and down the land until the House of Lords looked at this in Polkey -v- AE Dayton Services, and decided that the normal rule was that a failure to follow a fair procedure would result in a finding of unfair dismissal whatever the underlying merits. But if the employer satisfied the tribunal that it would have come to the same conclusion in the event, that could reduce the amount of compensation. That gave rise to the expression of the "Polkey reduction".
All this was turned on its head by the Employment Act 2002 (Dispute Resolution) Regulations 2004, which, for the first time, set out a legally binding minimum dismissal procedure with failure to follow being visited upon the employer not only with a finding of automatic unfairness, but with an increase in the compensation of between 10%-50%. But at the same time, provided the minimum statutory procedure was followed, the British Labour Pump principle was revived, and a tribunal was able to return a finding of fair dismissal, notwithstanding where an employer had failed to follow its own (more elaborate) procedure.
If anybody imagined that the compromise represented by the 2004 Regulations was going to be the last word, they were very much mistaken. In fact, the 2004 Regulations have given rise to any number of difficulties of interpretation and application. With the possible exception of the Data Protection Act, they represent the legislation which is most unpopular with employers and employment lawyers alike. No-one was surprised, and certainly nobody seemed disappointed, when the Gibbons Report recommended they should be repealed lock, stock and barrel. That will happen with effect from 6 April 2009. Their passing will not be lamented.
(One minor bleat before I pass on to what succeeds them, is why parliament should have seen fit to use a mixture of primary and secondary legislation, so that one always had to flick between the act and the statutory instrument, with most of the substantive provisions in the latter.)
In place of the minimum statutory dismissal procedure with the automatic unfair dismissal consequence and an uplift of 10% - 50%, we now see what is effectively a revival of the previous law which applied post the House of Lords in Polkey but with an exhortation to follow ACAS' revised code of practice on disciplinary and grievance procedures: this is enforced by empowering tribunals to increase any award by up to 25% where there is unreasonable failure to comply with the provisions of the code. The code is a mere 10 pages in length. There is additionally a guidance booklet by ACAS in preparation, the current draft of which runs to 74 pages. To my mind, it is regrettable that there will be two documents. These things are best kept simple and reasonably accessible to employer and employee alike. Never mind those advising them!
These are the basic points which should be noted from the 10 page code:
- It does not apply to redundancy or the non-renewal of fixed term contracts on their expiry.
- The key issue whenever a disciplinary or grievance process is being followed is to deal with issues fairly.
- When handling disciplinary issues, employers must:
- establish the facts of each case;
- inform the employee of the problem;
- hold a meeting with the employee to discuss the problem;
- allow the employee to be accompanied at the meeting (if appropriate);
- decide on appropriate action;
- provide employees with an opportunity to appeal.
- When handling grievances in the workplace:
- employees must let the employer know the nature of the grievance;
- employers must hold a meeting with the employee to discuss the grievance, allow the employee to be accompanied at the meeting (if appropriate) and allow the employee to appeal if the grievance is not resolved.
I end with a postscript on another case. Who would have believed that in the 28th year of TUPE, we should see the first decision of the EAT on whether or not the employer has to get right the legal, economic and social implications of the transfer at the outset of the information and consultation process? The answer is that the test is subjective and not objective. Provided the employer says what he honestly believes, he will have discharged his duty. I am pleased about that, partly because otherwise what might be a small and debatable error in a complicated legal analysis could give rise to penal consequences (not a happy situation for anybody giving the advice!) and partly because I was acting for the successful employer. During the hearing the President of the EAT wistfully observed that in the Celtec case on each occasion, as it wended its way up the appellate process, a different judge came up with a different answer until the House of Lords split 3:2 and then required the assistance of the ECJ. What hope for any of us lesser mortals?