Grievances under the new ACAS Code: a quick guide

A quick guide to the key issues when handling employee grievances, including practical steps to help employers avoid uplifts to compensation in employment tribunal claims under the Employment Act 2008.

The Employment Act 2008 (EA 2008) introduces a new regime affecting the vast majority of employment tribunal claims from 6 April 2009. It repeals the statutory dispute resolution procedures under the Employment Act 2002, and the associated Employment Act 2002 (Dispute Resolution) Regulations 2004, which are widely viewed as unworkable. At the same time, the EA 2008 will give tribunals a discretion to increase or reduce awards by up to 25% in certain cases where the employer or employee unreasonably fails to comply with the new ACAS Code of Practice on Disciplinary and Grievance Procedures (the ACAS Code).

Why is it important to follow the ACAS Code?

It can avoid a potential claim

The ACAS Code is intended to help employers and employees resolve grievances effectively in the workplace. Dealing with a grievance effectively can avert tribunal claims by enabling the issue to be resolved internally.

It can affect the level of compensation

If an employee's claim is successful but either the employer or the employee failed to follow the ACAS Code, the level of compensation awarded to the employee may be affected. If the employer unreasonably failed to follow the Code, the tribunal may increase the employee's compensation by up to 25%. If the employee unreasonably failed to follow it, the tribunal may reduce their compensation by up to 25%. The tribunal must decide what uplift (or reduction) would be just and equitable. (Section 207A, Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), as inserted by section 3, Employment Act 2008 (EA 2008)).

This regime does not apply to all claims but does apply to the types of claim most commonly brought in the tribunals (including those related to discrimination, unfair dismissal, equal pay, breach of contract, working time, detriment, and deduction of wages). The full list is set out in the new Schedule A2 of TULRCA.

How should grievances be handled?

The employee should raise the grievance in writing

A grievance can be any concern, problem or complaint that an employee raises with the employer. If a grievance cannot be resolved informally, the employee should raise it in writing with a manager (if the grievance concerns their line manager, the grievance should be raised with another manager).

A failure to raise the grievance in writing does not prevent an employee bringing a tribunal claim about the matter. However, the employee may recover less compensation if they have not done so.

The employer should hold a meeting and investigate the complaint

A meeting should be held to allow the employee to explain their grievance and how they think it should be resolved. Managers, employees and their companions should make every effort to attend the meeting. If the matter needs further investigation, the employer should consider adjourning the meeting and resuming it after the investigation has taken place. When the meeting is concluded, the employer should communicate its decision in writing without unreasonable delay.

The employee may bring a companion

An employee (or other worker) has statutory right to bring a companion (a fellow worker or a trade union representative) to a grievance meeting, where the complaint is about a "duty owed by the employer to the worker" (section 10, Employment Relations Act 1999). This right has its own remedy for breach, but it is also part of the ACAS Code.

The employee must make a reasonable request to be accompanied. What is reasonable will depend on the circumstances, but the ACAS Code suggests that it will not normally be reasonable for the companion to be someone whose presence would prejudice the meeting, or someone from a remote workplace if a suitable and willing companion would be available at the same site.

The employee has a right of appeal

If the employee is not satisfied with the outcome, they should appeal in writing, specifying the grounds of their appeal. If they bring a tribunal claim without appealing, any compensation they are awarded may be reduced.

The appeal should be dealt with impartially at a hearing, which should (if possible) be conducted by a manager who has not been previously involved. The employee should be informed in advance of the time and place of the appeal hearing and may bring a companion. The employer should communicate the final decision in writing without unreasonable delay.

How has the law changed?

Best practice has not changed significantly

The new ACAS Code is part of a new regime under the Employment Act 2008 which replaces the statutory dispute resolution procedures under the Employment Act 2002. Best practice advice to employers and employees in dealing with grievances in the workplace should not change significantly in the light of the new law (but see Potential headaches).

The impact of the procedure on compensation and time limits has changed

The consequences of failing to follow the correct procedure are different under the new regime. The key differences include the following:

An employee who has not submitted a grievance is no longer barred from bringing a claim.

The submission of a grievance under the old regime triggered a three-month extension of time to bring a tribunal claim. There is no automatic extension of time under the new regime (see Potential headaches).

Under the new regime, the ACAS Code applies to any grievance and an "unreasonable" failure to follow it can affect compensation. This replaces complex regulations under the old regime governing when the statutory grievance procedures applied and when they were excluded. Any breach of the applicable statutory grievance procedure would enable a tribunal to adjust compensation.

Compensation under the old regime could be adjusted by 10-50%, although less than 10% was permissible in exceptional circumstances. The adjustment under the new regime is 0-25%.

When does the new regime apply?

There are complex transitional provisions governing which regime applies. In general, any grievance concerning facts which occurred wholly before 6 April 2009 will fall under the old regime and any grievance which concerns facts occurring wholly on or after that date fall under the new regime. For most grievances about a state of affairs spanning that date, the old regime will continue to apply if the grievance or claim is submitted on or before 4 July 2009, although in some cases involving equal pay, redundancy or industrial action the date is 4 October 2009 (Employment Act 2008 (Commencement No. 1, Transitional Provisions and Savings) Order 2008).

The new ACAS Code does not apply to collective grievances - in other words, grievances raised by a recognised trade union or other appropriate representative on behalf of two or more employees (paragraph 45, ACAS Code).

There is no longer an explicit requirement to follow a grievance procedure in cases involving former employees. It is not clear whether the definition of "employee" in the new ACAS Code includes a former employee .

Potential headaches

Involving employees in developing procedures

The ACAS Code states that employees and, where appropriate, their representatives (such as a recognised trade union) should be "involved" in the development of grievance procedures, and that employers should help employees and managers to understand how they are to be used. The Code is not specific about how to involve employees and does not explicitly require employers to seek employees' agreement. Neither is it clear why the Code refers to employee and their representatives, rather than employees or their representatives.

Where an employer has failed to put any written procedures in place, or has put procedures in place without involving employees, this could technically be a breach of the Code, even if the employer ultimately follows a fair procedure. It is not clear what view tribunals will take of this, especially where the employee has not suffered any additional injustice as a result.

Only claims by employees are affected

A tribunal may only adjust compensation in cases involving employees (section 207A(1), TULRCA). Where the claim involves a right which is available to a wider category of individual, such as a whistleblower protection (which is available to workers), or protection from discrimination (which is also available to self-employed individuals), this may lead to satellite litigation over employment status in cases where this would not usually be an issue.

Handling grievances during a disciplinary procedure

Employees often submit grievances during disciplinary procedures, either regarding the procedure itself or the circumstances leading up to the initiation of that procedure. Under the statutory dispute resolution procedures, this gave rise to complicated legal and procedural issues, which no longer apply.

Now employers must decide whether to suspend the disciplinary procedure in order to fully investigate the grievance or, if the issues are related, deal with both of them concurrently. The non-statutory ACAS guide gives guidance on this.

The time limit for bringing claims is much shorter

As there will no longer be an automatic three-month extension of time for bringing a claim once a grievance has been submitted, there will be additional pressure on both sides to complete the procedure in order to avoid the employee having to submit a claim just to preserve their position. Tribunals will no doubt keep the time limit in mind when considering whether there has been unreasonable delay by the employee in submitting their written grievance or appeal, or by the employer in arranging meetings or communicating the outcome of those meetings in writing.

There will be uncertainty over compensation

One potential problem under the new regime is that the ACAS Code is not written in the precise language of a statute. Tribunals will have a wide discretion to decide what amounts to a failure to follow the Code, whether that failure is "unreasonable" and to what extent an uplift or reduction in compensation is "just and equitable". This will lead to considerable uncertainty for employers and employees until case law has developed, and may make it difficult to advise on appropriate figures for settlement of claims.

Practical steps

For employers

Involve employees or their representatives in developing workplace procedures, and make sure those procedures are transparent and accessible to employees.

Train managers how to handle grievances effectively, when to involve HR, and how to spot when there may be a potential legal claim.

Encourage managers to resolve issues pro-actively and informally before they get to a formal grievance stage.

Allow the employee to put their side of the story at a meeting before undertaking any necessary investigation and again before making any decision.

Keep written records, including minutes of meetings.

Communicate decisions effectively and promptly, setting out reasons.

For employees

Seek to resolve matters informally but, if this is not possible, do not delay unreasonably before submitting a formal written grievance.

Make every effort to attend meetings and consider bringing a companion.

Submit a written appeal if not satisfied with the outcome and set out the reasons why not.

Be aware of the time limit for bringing a claim if the appeal is not successful or if the employer does not resolve it promptly.

Contact

Judith Ellery Head of Employment

David Baynton Solicitor

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This article summarises the law on issues which we believe may be of interest to your business. It is not a comprehensive review of the subjects and accordingly is published without responsibility for loss occasioned to any person(s) acting or refraining from action as a result of information published. This document is provided for information only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.