On 6 April 2009 the Mandatory Dismissal and Disciplinary Procedures and Grievance Procedures (the statutory procedures) will be Repealed when Relevant Provisions of the Employment Act 2008 Come Into Force.

It is no exaggeration to say that this is one of the most eagerly awaited changes to employment law for many years, and it is all but impossible to find anyone who doesn't view this as a positive development.

The statutory procedures were introduced by the Employment Act 2002, in October 2004, with the laudable intention of trying to encourage employers and employees to settle their differences in the workplace at an early stage, and avoid ending up in the employment tribunal.

Unfortunately, the statutory procedures failed miserably to achieve this aim; tribunal claims actually increased, as parties fought over the interpretation of the statutory procedures themselves.

What had, at first glance, looked pretty simple and easy to understand proved anything but, and employers who found themselves caught out by the requirements of the statutory procedures faced stiff penalties: a finding of automatic unfair dismissal and an increase in any compensation awarded by up to 50%.

Here, we summarise what will change on 6 April, and the new regime that will replace the statutory procedures.

What will change?
The position will revert largely to that which applied before October 2004. However, there are a few important differences:

• The statutory procedures and related provisions are repealed in their entirety.
• There will no longer a distinction between the standard and modified procedures.
• A dismissal will no longer be automatically unfair where the employer does not follow the relevant statutory procedure.
• Employment tribunals will no longer have the power to increase or decrease (depending on which party is at fault) an award for unfair dismissal by between 10% and 50%.
• Automatic extension of time limits for bringing tribunal claims will no longer apply. However, tribunals will retain their discretion to increase the time limit for claims where they consider it 'just and equitable to do so'.
• An employee will not need to raise a grievance before a tribunal will accept their claim.
• An employer will no longer have to hear grievances from ex-employees (but may wish to do so).

What will replace the statutory procedures?

• There will be a new ACAS Code of practice on discipline and grievance (the Code) and this will be taken into account by tribunals when deciding whether certain dismissals were fair.
• The Code only applies to disciplinary situations including misconduct and poor performance. The Code expressly states that it does not apply to redundancy dismissals or dismissals where a fixed-term contract is not being renewed. It would also seem that it will not apply to non-disciplinary dismissals such as retirement and capability due to genuine long-term illness.
• It will not be mandatory for employers to follow the Code so they will not be liable to proceedings simply for a failure to follow it. However, the Code sets out best practice advice that employers should follow because a dismissal will still be substantively unfair where no procedure has been followed.
• Tribunals will be able to increase or decrease awards by up to 25% (depending on the party at fault) where they consider that there has been an unreasonable failure to comply with any provision of the Code (this will apply not just to cases of unfair dismissal but also to other relevant claims such as discrimination).
• What is regarded as an 'unreasonable' failure will be for the tribunal to decide and will depend on the facts of each case. The size and administrative resources of the employer will be relevant to the question of whether they acted reasonably in the circumstances.

Difficult issues: Transitional arrangements
There are complicated transitional provisions, particularly in relation to on-going grievances, which will govern whether the old regime or the new regime will apply.

Dismissals

• The old regime, in its entirety, will continue to apply where the dismissal occurred before 6 April 2009.
• The old regime, in its entirety, will continue to apply where the employer has taken any step (for example sent a Step 1 letter) under the statutory dismissal and disciplinary procedure before 6 April 2009.
• The new regime will apply to any case where the employer begins or takes dismissal or disciplinary action against the employee on or after 6 April 2009.

Grievances

• If the action of which the employee complains occurred wholly before 6 April 2009 the old regime applies.
• If the action of which the employee complains occurred wholly on or after 6 April 2009 the new regime applies.
• If the action of which the employee complains started before 6 April but continues after it the old regime will apply provided that a grievance is submitted to the employer or a complaint is presented to an employment tribunal before 4 July 2009.
• This long stop date is extended to 4 October 2009 in respect of claims with a six-month time limit, for example equal pay and redundancy payments.

The consequences of a case falling under the old regime are that:

• the three month extension to the time limit for submitting a claim will continue to apply
• a dismissal will continue to be automatically unfair where there is non-compliance with the statutory procedures
• awards will continue to be adjusted between 10-50%
• an employee will have to submit a grievance to their employer, in most cases, before a tribunal will accept their claim

The consequences of a case falling under the new regime are that:

• the three month extension to the time limit for submitting a claim will no longer apply
• there will be no automatically unfair dismissal
• awards will continue to be adjusted by up to 25%
  
• an employee will not have to submit a grievance to their employer before a tribunal will accept their claim

Employers considering taking disciplinary action against an employee around the beginning of April may therefore prefer to wait until after the implementation date, so that they come within the more favourable new regime.

Difficult issues: Interpretation of the ACAS Code
The Code is relatively short at just ten pages. ACAS has also issued much longer guidance to accompany the Code, which is intended to provide employers with more detailed advice.

Tribunals will not be required to have regard to the guidance in the same way as the Code, but it is possible they will make reference to it so employers should be aware of its contents.

The Code will need to be interpreted correctly by employers in order to ensure that they comply with it.

Already some potential issues have been identified, for example:

• How far should employees and their representatives be involved in the development of the employer's rules and procedures?
• Are employees entitled to cross examine witnesses at disciplinary meetings?
• Has the definition of grievance changed?
• How should employers deal with overlapping disciplinary and grievance procedures?
• What can an employer do when an employee goes off sick before a disciplinary hearing?

We will be looking at these and other issues relating to the Code in more detail in the future.

What action should we take now?
Although these changes are intended to re-introduce an element of flexibility and discretion, employers should carry on much as they have been, and should certainly not dispense with procedure altogether.

None of the lessons learned in recent years will be wasted, and continuing to follow the procedures which have applied since 2004 will be the best defence to any unfair dismissal claims.

As with any new law, there will inevitably be a bedding-in period, and there are some areas of uncertainty (for example in relation to the transitional arrangements), which may themselves be the subject of litigation before we can be clear about the position.

Generally, however, it is to be hoped that escaping from the straitjacket of the statutory procedures will provide greater flexibility for employers dealing with disciplinary and grievance issues in the workplace.

Practical pointers

• Ensure HR and managers are aware of the main principles of the Code - consider what training and/or communications may be necessary.
  
• Review intranet materials, handbooks and contracts to ensure they are up to date and reflect the new regime.
  
• Consider whether any changes to your internal procedures and policies need to be made.
  
• Keep a watching brief on this area generally; it is likely that there will be indications from the tribunals in the coming months as to how they will approach the new regime.