The demise of the dismissal and disciplinary procedure will give employers cause for celebration, as it has produced some very undesirable consequences for unwary employers who, by acting on common sense alone, may easily wind up in breach of their obligations and face significant legal liability.
Consider the following scenario. An employee is absent from work, without providing any justification such as illness or annual leave. The employee’s absence continues for several weeks; he does not return telephone calls or emails from his workplace during this time. After five weeks, the employer discovers that the employee has taken up a position with someone else. The employer assumes that the employee has resigned, and that this is the end of the matter.
An employer that made such an assumption would, in fact, be putting itself in a very risky position. Case law from the 1980s casts doubt on the idea that an employee can dismiss himself. Either he resigns or he is dismissed. The reason for this is that an employment contract, like any other contract under English law, is not terminated when a party breaches it. The innocent party, the employer in this scenario, can terminate the contract in response to the employee’s breach if it is serious enough. In such a case, however, it is the employer that terminates the contract; a dismissal takes place.
The position is not the same for employees. Employment rights legislation has created the concept of constructive dismissal, under which an employee may resign and claim that, in law, his resignation should be treated as a dismissal.
There are numerous circumstances in which such a claim might succeed, including: unilateral changes by the employer to the terms and conditions of employment; bullying by the employer; unjustified accusations by the employer against the employee; or failure to deal with a grievance or to investigate a complaint of sexual harassment.
At the time those cases in the 1980s were decided, the mere fact that a dismissal had taken place did not create problems for the employer, provided there was a fair reason why the employee had been dismissed and the dismissal was fair under the circumstances.
However, since October 2004, it has been unlawful for an employer to dismiss an employee in all but very limited circumstances without first following the dismissal and disciplinary procedure contained in the Employment Act 2002. This entails writing to the employee setting out the reason why dismissal is being contemplated, holding a meeting with the employee, giving a decision on dismissal to the employee after the meeting and offering a right of appeal against that decision.
Failure to follow such a procedure automatically renders a dismissal unfair in most cases, even where dismissal was completely justifiable on the facts. Furthermore, the employer normally faces increased financial consequences if the correct procedure has not been followed.
The employer in this scenario would probably have to pay at least four weeks’ pay to the employee. This would be in addition to the legal costs and time expended in defending a tribunal claim.
Constructive dismissal is a well-established legal concept. There is, however, no corresponding notion of constructive resignation. Short of a clear resignation by an employee, the prudent employer must always assume that any termination is a dismissal and follow the procedure accordingly.
Ostensibly, the new Employment Bill would do away with the problem of automatic unfair dismissal in situations where the correct procedure is not followed. The Bill would abolish the statutory dismissal and disciplinary procedure, along with the statutory grievance procedure. A new code of practice, a draft of which has been published by conciliation service Acas, would instead be issued. Tribunals would have the power to increase or decrease an award to a claimant by up to 25% where the code of practice applied but was not followed by either party.
Acas’s draft code of practice is quite short and is based around uncontroversial principles such as the right to appeal any decision taken by the employer and the importance of promptness and consistency in an employer’s handling of disciplinary and grievance matters.
It is perhaps worth noting, however, that the statutory dismissal and disciplinary and grievance procedures introduced in October 2004 were only a few paragraphs in length and yet they generated dozens of cases on procedural matters and countless headaches for managers and lawyers during their short lifetimes. It may well be years before there is any degree of certainty in this area of employment law.
Patrick Simon is an associate in the employment group at
EmploymentJune2008
