The Risks of a Poor Disciplinary Procedure

At some point, all employers will have to deal with a disciplinary procedure. The key to protecting your business is to avoid undertaking a poor disciplinary procedure. As an employer, you need to know how to discipline employees in the correct way. Simply telling the employee they have a warning, or they are being dismissed without a fair disciplinary procedure, could end up costing your company a lot of money.

What is a disciplinary procedure?
A disciplinary procedure is a process to help employers manage employees’ alleged misconduct and poor performance. Employers should have a written disciplinary procedure which outlines the process, informs employees what it deems to be acts of misconduct and gross misconduct, and further details the potential consequences should an employee be found guilty.

ACAS Code of Practice
Employers are expected to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures. Any unreasonable failure by either party to comply with the code may result in the tribunal increasing or decreasing compensation by up to 25%. This amount is in addition to the legal costs of preparing and attending the tribunal and, also, the lost time of key managers within your business.

Therefore, where there has been an unreasonable failure by either party to comply with the code, the tribunal may increase or decrease compensation by up to 25%, depending on which party is at fault.

Risks of a poor disciplinary procedure – procedural unfairness
Employees require 2 years of service to be able to claim unfair dismissal. One of the risks of a poor disciplinary procedure is failing to follow your own disciplinary procedure. Your own disciplinary procedure should be reflective of the ACAS Code of Practice on Disciplinary and Grievance, if it’s not then a dismissal is likely to be unfair.

Make things clear in the contract
If you do not have written disciplinary rules and a written disciplinary procedure, this will put you at risk of havingf a poor disciplinary procedure..

When employing a new starter, you are legally required to provide them with a Statement of Main Terms of Employment, more commonly known as a contract. This should advise your employee on relevant disciplinary rules that will apply to them. The contract should make reference to your company’s disciplinary procedure, giving specific detail on decisions surrounding any disciplinary outcome and with whom the employee can raise any appeal.

For efficient management of employees, our opinion is not to make the disciplinary procedure contractual.

Procedural Correctness
Nominated people – Sometimes, written procedures will specify a person or role in the company who conducts each stage of the process. Carefully consider whether this is really an effective way to manage the procedure – the ACAS Code of Practice on Disciplinary and Grievance Procedures requires the meeting to be held without any unreasonable delay. If the nominated person specified in the procedure happens to be absent when the meeting is due to take place, this could result in an unreasonable delay.

Potentially, this could result in a breach of the ‘code’ and, if it involves a dismissal for gross misconduct, then the compensation award could possibly increase by 25%.

Being accompanied – Employees have a statutory right to be accompanied at any formal meeting where a warning may be issued, but their request must be reasonable.

Different People
Separate people – If possible, separate people should manage each stage of the disciplinary process, from managing the investigation to conducting the hearing, before overseeing the appeal stage, should it come to that – this is referred to in the ACAS Code of Practice.

Practically, you’ll need to consider what is reasonable in the circumstances. You will need to take certain factors into account, such as the size of your business and the number of senior staff able to perform these roles, which may mean that the same person has to conduct more than one stage. If this happens, it is vital to have a clear written audit trail that evidences the procedure.

Investigations – This is an area that presents disciplinary procedure risks. We have seen many investigations that are simply not thorough enough and, as such, could render a disciplinary procedure unfair. The investigation is the foundation of the disciplinary procedure and a fair procedure is vital.

Witness statements should be gathered, signed and dated, and then cross-referenced and corroborated. Further evidence should be gathered where available, such as CCTV footage and documented evidence. Furthermore, there will be occasions where the accused employee should attend a disciplinary investigation meeting to clarify facts and convey their side of the story – be careful not to deal with this meeting as if it was the actual disciplinary hearing.

Families are no exception!
Family businesses tend to have higher risks of a poor disciplinary procedure because they usually don’t have one!

At Jude Read-HR Consultancy, we have seen many messy family disputes due to a lack of written disciplinary procedures. We have found that family members never believed they would ever have a dispute amongst themselves. If someone is an employee, family member or not, they should still have the same HR protection as anyone else. Family members will still bring a claim to tribunal against your business, if you have treated them unfairly in a disciplinary procedure.

Smaller companies
It can be difficult for smaller employers to comply with all of the advice on how to conduct proper disciplinary procedures, particularly with regard to having separate senior managers conduct differing stages (see above). When it comes to complex disciplinary hearings, if any are likely to result in a dismissal or are deemed to be timely, it’s recommended that a smaller employer outsources the disciplinary investigation to a HR company.

The benefit of outsourcing HR to an external company includes obtaining an impartial and objective report based on facts and supported with evidence. Given the experience of a HR outsourced company, this report is likely to provide a substantial defence in any potential employment tribunal claim, as any significant decision will be based  on its findings.

How much could you have to pay if a case for unfair dismissal is brought?
Disciplinary procedure risks can potentially cost your business £83,682, which is the current maximum compensation award for unfair dismissal. The maximum is 52 times the claimant’s weekly pay. The award is subject to many considerations including loss of wages during the period from termination until the tribunal hearing and loss of future earnings.

How far should HR go?
It is important to remember that while HR is vital for the success of any business, advice given should stay within the parameters of employment law. For example, in the case of Ramphal v Department for Transport in September 2015, an Employment Appeal Tribunal ruled that HR had overstepped the mark and provided more than HR advice with regards to procedural fairness and legal compliance. This was because the findings in a report prepared by an inexperienced manager had changed significantly after speaking with HR.

This case reminds HR professionals and other key stakeholders in businesses that the role of HR is to advise within the limits of employment legislation, ensure procedural fairness, and to minimise any risk to the business.

However, in reality, an experienced and qualified HR professional will add value to a business in a strategic and proactive manner, rather than just acting as the ‘person who has to crack the whip’!

What to do if things go wrong
It’s essential to follow your own disciplinary procedure. Ideally, this should not be specified in a contract, as this makes it much easier for claims to be brought. In the cases of most dismissals that are found to be unfair, it will be as a result of procedural failings. However, we are all human and sometimes things just don’t go to plan, and you end up not following your own procedures. This is where the experience of a HR professional will save you the time, cost, and potentially your reputation, when you don’t quite get it right.

When procedures go wrong, employers should be encouraged that this can rectified at the appeal stage, as shown in the case of Khan v Stripestar Ltd, which found “there are no limitations on the nature and extent of the deficiencies in a first stage disciplinary procedure that can be cured by a thorough and effective appeal”.

Essentially, this case was about an employee dismissed following a disciplinary procedure that lasted only six minutes, with the employer having prevented the employee from having the opportunity to make any representations. There were clear disciplinary procedure risks in this case, as it was deemed that the employer had already made his mind up as to the outcome. If the case had made it to an employment tribunal and it was found to be an unfair dismissal, any compensation would have been potentially reduced, as the outcome would have been the same anyway.

In conclusion, don’t be tempted to act too quickly in disciplining or dismissing an employee; always ensure you’ve covered all bases.

If you’ve not provided your employees with a formal disciplinary procedure, not trained your managers to act consistently and fairly when applying it, and you’ve taken a ‘pot luck’ approach in the past, hoping for the best – and you’ve not had any repercussions yet – then you have been lucky.

Disciplinary procedure risks are very real and will cost you time and money if you do not correctly invest in these. Now is the time to get your disciplinary procedure correct as next time round, you might not be so lucky. You’ve worked hard to get your business where it is today, don’t risk it for the sake of a small cost to become legally compliant.

HR is a valuable tool and a valued strategic partner in the boardroom when embraced and used correctly. It creates efficiency, reduces time spent away from essential functions for your managers, increases customer satisfaction, increases your lead over the competition and helps you to meet and exceed your financial targets. Those employers that only think to source HR when an issue arises, end up spending far more in the long run, risking their company reputation because they could not see the value in the first place.

I hope you found this blog interesting and helpful. If you wish to discuss any aspect of this article, or you would simply like a chat about how Jude Read-HR Consultancy can help your business, then please call us today on 01455 231982 or send us an enquiry via our easy-to-use contact form.

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