Employers can sometimes feel that the law expects them to be divine when managing employees with the right to bring claims for unfair dismissal (those with more than two years service). The Courts usually expect employers to establish and then apply robust disciplinary procedures when taking action in respect of, for example, poor performance or misconduct. In simple terms, a disciplinary procedure refers to a system of rules, which is publicised to employees and applied to them consistently. However, as David Moyes, or any of the Premiership football club managers summarily dismissed in recent years could testify, the failure to follow any disciplinary procedure at all will not always create problems for employers.
If there is no allegation of unlawful discrimination or equivalent protection (where compensation is theoretically unlimited), disciplinary procedures may be of less importance to certain employers. Football clubs for instance, often dispense with the services of managers (including Moyes) before they have been in the job long enough to have the right to take their employer to an Employment Tribunal. Furthermore, the high value of the settlement packages on offer to those who walk away quietly (Moyes was reportedly paid £7 million in wages and compensation by Manchester United) mean that it is rarely worthwhile for such an employee to bring a claim for unfair dismissal, where compensation is capped at a maximum of £76,574.
Football clubs do not stand alone in this category of employer. For instance, in the financial services sector, it is often customary for employers to offer departing employees generous settlement packages than suffer the disruption and inconvenience of managing a lengthy disciplinary procedure. The niceties of employment law might also be dispensed with in all types of business when handling the departure of a senior executive and where a vacuum of leadership at the top can be more dangerous to an employer than the cost and reputational damage of a potential Tribunal claim.
However, many employers have neither the luxury nor inclination for such short-cuts. They may be operating under a limited budget or they may believe that good disciplinary procedures are essential for their reputation, as well as boosting productivity in the workplace. There is much to be said in support of both sides of the argument.
By adopting a disciplinary procedure, an employer significantly increases its chances of successfully defending a claim for unfair dismissal. Such a procedure can also sometimes help an employer when responding to allegations of unlawful discrimination or that an employee had “blown the whistle” on alleged wrong doing. However, an employer should be careful not to assume that a disciplinary procedure will always be the right response in every situation. For example, if an employee admits misconduct but alleges that this was caused by a disability (such as depression), and the employer still applies its disciplinary procedure against the employee without first investigating this explanation, including considering whether to gather medical evidence, the employer runs the risk of potentially committing unlawful disability discrimination. In this situation, protections under anti-discrimination law may, in actual fact, require the employer to suspend or modify its disciplinary procedure in some way.
Obviously, the steps which an employer will be required to take under its disciplinary procedure will vary, depending on the reason for taking the action against an employee in the first place. If, for example, an employee is accused of misconduct, a good disciplinary procedure will as a minimum require an employer in a timely manner to: (a) establish the facts of the case; (b) inform the employee of the problem; (c) hold a meeting with the employee to discuss the problem; (d) allow the employee to be accompanied at the meeting; (e) decide on appropriate action; and (f) provide employees with an opportunity to appeal. These essential principles are set out in what is called the ACAS Code of Practice (the “Code”). Tribunals are obliged to take this into account, where relevant, in claims before them. The following focuses on disciplinary procedures arising out of misconduct.
Of critical importance is the need for an employer to carry out such investigation as is reasonable in the circumstances. The question of what is reasonable will depend on the strength of the evidence against an employee and the seriousness of the allegations. If, for example, an employee is literally caught in the act of fighting with a colleague, the investigation stage of the disciplinary procedure may be straightforward. However, a more rigorous investigation is likely to be required, where for instance the allegation is that a manager has bullied more junior colleagues and where there are conflicting accounts of events.
It is in theory difficult for the Courts to find that an employer has not carried out a reasonable investigation. However, in practice employers do sometimes fall foul of this requirement. This is unsurprising given the difficulties employers may sometimes encounter in balancing competing interests of: (a) gathering and assessing all relevant evidence; and (b) minimizing the disruption to the business, by not casting the net too wide and distracting people from their day jobs over a protracted period. A particular problem for employers can be in dealing with reluctant witnesses who wish to remain anonymous. The Courts will scrutinise a decision to protect anonymity carefully because of the general principle of fairness that accused persons should be able to answer the case against them.
At an early stage, an employer will need to consider whether the allegations against an employee are so serious that this warrants a decision to suspend that employee (on full pay and making it clear that this is not a sanction or finding of guilt). Such decisions should not be taken lightly and only where what the employee is alleged to have done is considered to amount to gross misconduct (e.g. very serious wrongdoing or negligence). If an employer fails to suspend an employee in this situation, this may seriously undermine the employer’s argument that the employment relationship is so damaged it can no longer continue (i.e. that this is gross misconduct rather than some lesser form of misconduct).
A downside with suspending an employee is that it will usually only be reasonable for an employer to suspend someone for as long as it is absolutely necessary to carry out an investigation. This may create an added pressure on employers when deciding how much investigation to carry out. Other practical factors that an employer will need to consider is how to communicate a decision to suspend to other employees and customers, bearing in mind the need to protect the confidentiality of the accused and not to prejudge the outcome of the investigation.
Even where an employer establishes that there is gross misconduct, the automatic response should not be to immediately dismiss someone before considering whether it is appropriate to issue the employee with a lesser sanction. An employer should, for example, consider whether there is any contrition from the employee, or whether there are any mitigating circumstances, such as that the prohibited act was a blip over a long and unblemished career and that the employee has promised never to repeat the mistake.
In many cases, it will be appropriate for an employer to follow a staged process under its disciplinary procedures and this is specifically envisaged by the Code. For acts of minor or serious misconduct, an employee may receive a series of warnings before the employer considers the possibility of dismissal.
As a defence mechanism, employees subject to a disciplinary procedure sometimes lodge a complaint with an employer about some aspect of their treatment in what is described as a grievance. In this situation, the Code states that employers are permitted to suspend their disciplinary procedures whilst the grievance is investigated and determined, before carrying on with the disciplinary procedure. However, employers may sometimes encounter difficulties in this situation where an employee refuses to co-operate or otherwise appears to be disruptive and create delay. An employer should be firm but fair in dealing with such employees. Building up a paper trail in which the employer always appear to be reasonable in presenting options to an employee (even when faced with an uncooperative employee) can be very helpful for an employer when it eventually decides that it has done enough to be able to determine the grievance on the information available.
There may also be times where an employer legitimately decides that the grievance procedure and disciplinary procedure can be run concurrently or that the issues raised within the grievance are actually matters which should be addressed as part of the disciplinary process. However, this approach should be adopted with care and often after taking legal advice. This is because employees sometimes bring grievances in order to set up additional legal claims – employers may provide ammunition for such claims by failing to suspend their disciplinary procedures.
Depending on an employer’s business needs and available financial resources, it will not always be necessary or convenient to follow disciplinary procedures when disciplining employees. However, for most employers, good disciplinary procedures are seen as essential for managing difficult employees in the fairest and most effective way and to reduce the risk of being found by a Tribunal to have acted unlawfully.
Matt Howse, Partner and Lee Harding, Associate in the employment practice of global law firm Morgan Lewis’ London office
I am a partner in Morgan Lewis's Labour and Employment Practice and lead the team in London. I have 20+ years of experience in the employment field. My practice includes both contentious and noncontentious matters and is focused on companies in the financial services, media, legal, and insurance industries. I provide strategic advice on employment law issues, advise on the employment law aspects of transactions, and have successfully represented clients in high court and employment tribunal litigation.
I also advise and represent clients with respect to privacy law issues, including providing data protection compliance advice, reviewing data protection and employee monitoring policies, and advising on freedom of information and the law of confidentiality.
Prior to joining Morgan Lewis, I led the employment practice of Dewey & LeBoeuf in London, and was previously a partner at Barlow Lyde & Gilbert.