The New ACAS Code: What Does the Future Hold?

Friday 12th June 2009

Whilst employment lawyers leapt for joy (or at least managed a smile) at the repeal of the statutory dispute resolution procedures, one mustn’t forget that with new law comes new problems.

As we are all aware by now (hopefully), the new ACAS Code replaced the statutory dispute resolution procedures with effect from 6 April 2009 (subject to transitional provisions) and we all breathed a sigh of relief that there was no longer the "automatic" unfair dismissal for a failure (sometimes potentially minor) to comply with the statutory disciplinary and dismissal procedure. Notwithstanding this sensible change, it is interesting to consider the potential pitfalls that the new Code may give rise to.

What has changed?

The ACAS Code applies to situations of misconduct or poor performance concerning employees. The Code does not apply to redundancy dismissal or the non-renewal of fixed term contracts on their expiry (unlike the old statutory procedure.) Tribunals will consider the Code when determining whether an employer has followed a fair dismissal procedure. The Code still encompasses a staged disciplinary and dismissal procedure involving writing to the employee, carrying out an investigation, holding a meeting, and offering the opportunity to appeal (and a separate grievance procedure). It is unlikely therefore, that employers with good procedures already in place will need to replace these, although they should be reviewed in light of the new Code. There is of course no longer the automatic unfair dismissal, no automatic three month extension of time to issue proceedings in certain circumstances, and compensation adjustments are limited to 25% rather than the previous 50%.

Involving Employees in Developing Procedure

The Code provides that "Employees, and where appropriate, their representatives should be involved in the development of rules and procedures…" The ACAS Guide gives some guidance as to what the rules should contain, and refers to "consultation with employees", but it does not go as far as to say that employers should seek ‘agreement’ from employees. The Code also provides that it is important to help employees and managers understand what the rules and procedure are, where they can be found, and how they are to be used, and therefore employers should ensure that managers are provided with relevant training. It is not clear the impact this will have on tribunal claims and what exactly will satisfy employees being "involved."

What is "unreasonable"?

An "unreasonable" failure to comply with the Code can mean an adjustment to compensation of up to 25% (up or down depending on which party is at fault.) Again, it not clear what the tribunal will find to be "unreasonable." Therefore, until case law has developed, it is difficult to advise on what will constitute an "unreasonable failure" and difficult to advise as to reasonable figures when negotiating the settlement of claims.

Evidence and Witnesses

The Code provides that at a disciplinary hearing, employees should be given a reasonable opportunity to ask questions, present evidence and call relevant witnesses. It is unlikely that this means the employee should be allowed to "cross-examine" the employer and witnesses, but again, the extent to which employers are expected to accommodate this is yet to be seen.

Warnings

The statutory disciplinary and dismissal procedure specifically did not apply to situations where an employer issued warnings. The ACAS Code, however, contains specific provisions relating to warnings and therefore a failure to allow an employee the right to appeal against a warning will be a breach of the Code.

The intention behind the introduction of the statutory disciplinary and grievance procedures in 2004 was to reduce tribunal claims and get employers and employees to resolve workplace disputes without the need to resort to litigation. Those procedures failed entirely to fulfil their purpose, which is proven by their abolishment just 5 years after their introduction. It cannot be disputed that the repeal of the procedures was necessary, however, it is yet to be seen whether the introduction of the new ACAS Code is the solution that we all hope it is. I’m sure that in any event, there will be plenty of case law that us employment lawyers will have endless fun discussing over our morning coffee.

Author: Administrator

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