Susan Thompson and Abigail Nevill discuss whether the Employment Appeal Tribunal is taking a more employer-friendly approach when deciding what a step-one letter must contain.
Whilst employers should now be familiar with the statutory disciplinary and dismissal procedures (SDDPs) contained in the Employment Act 2002(the Act), it is still the case that despite their best efforts employers regularly fail to meet the requirements under step one of the SDDPs, resulting in findings of automatic unfair dismissal against them.
However, some welcome relief has come for employers in the form of four recent decisions of the Employment Appeal Tribunal which has clearly taken a purposive approach to the employer’s obligations under step one.
By way of a reminder
Where an employer is contemplating taking certain types of disciplinary action or dismissing an employee, they must follow the SDDPs. If the employer fails to follow the SDDPs then any resultant dismissal of the employee will be automatically unfair and any compensation awarded to the employee can be subject to an uplift of between 10% and 50%.
Step one of the SDDPs provides that the employer must set out in writing the nature of the employee’s conduct, capability or other circumstances that may result in the employer contemplating dismissal or disciplinary action (the step-one statement). The employer must send a copy of the statement to the employee. In addition, the Act requires that the employer must inform the employee of the basis of the complaint prior to the step-two meeting and therefore most employers will include this information in the step-one statement.
Contemplating a dismissal
Many employers have pondered on what is meant by “contemplating a dismissal”. In Madhewoo -v- NHS Direct UK (EAT/0030/06/LA) the EAT held that the term only requires the employer to have considered or be considering a course of action which might result in dismissal and not to actually have made the decision to dismiss.
This has caused practical problems for employers, particularly in the case of redundancy dismissals. In practice, the vast majority of employers invite an employee to a meeting without representation at which they are advised that, for various reasons, they are potentially at risk of redundancy. Ideally, there will then follow a period of consultation during which a genuine search for alternative employment will be undertaken. If, at the end of this period, no alternative employment has been secured, the employee’s dismissal is confirmed by reason of redundancy. The vast majority of employers will send a step-one letter at this stage or after the initial meeting. However, the reality is a dismissal is contemplated at the point the employees are advised that they are at risk of redundancy. As such, the step-one statement should be used when inviting employees to the first consultation meeting. Not to do so is a breach of the Act and an automatic unfair dismissal.
The EAT in Alexander v Bridgen Enterprises Ltd  IRLR 422 endorsed this approach. Here the claimants were dismissed by reason of redundancy and their employer asserted that it was sufficient for the step-one statement to simply state ‘redundancy’ as the reason for dismissal. The EAT agreed that Bridgen need only set out in broad terms the grounds which led it to contemplate dismissing the employee and that stating ‘redundancy’ satisfied this. Despite this however, the EAT said that the dismissal was automatically unfair as Bridgen had failed to comply with step two of the SDDPs. The EAT held that it was necessary for the employee to know in advance of the step-two meeting the basis for the employer contemplating dismissal by reason of redundancy, including providing the employee with their individual redundancy assessment. Without this the EAT held that the employee would not be able to make an informed response in relation to their potential dismissal, therefore preventing the matter from being dealt with internally, thereby defeating the object of the procedures.
In YMCA Training v Stewart  IRLR 185 information was given to the employee as part of the investigation prior to the disciplinary hearing. However, no formal letter was sent to her asking her to attend the disciplinary meeting, although she had been sent a letter initially inviting her to the investigatory meeting and outlining a number of allegations. The EAT gave a purposive interpretation of the SDDPs and ruled that the letter sent initially about the investigatory meeting complied with the requirements of step one because the employer had informed the employee of the basis of the allegation.
Thus, despite the labels the parties put on various stages of the process, the EAT will look behind the labels and take a practical view as to whether or not the substantive requirements of the SDDPs are fulfilled.
Context as a whole
This approach to interpreting the SDDPs was further confirmed in the cases of Draper v Mears Ltd  IRLR 869 and Homeserve Emergency Services Ltd v Dixon (UKEAT/0127/07). In both cases the claimants were caught red handed using company property in breach of company policies. They claimed that the dismissals were automatically unfair because their respective employers had breached the SDDPs in so far as the step-one statement had not informed them that they were at risk of dismissal. The EAT held however that it was implicit by the nature of what had occurred and in the manner that it had happened that the employers would be contemplating dismissing them.
What does this mean in practice?
If these cases were followed in their strictest sense it could potentially set a dangerous precedent in that, although it may be appropriate in some cases for the employer not to include the fact that they were contemplating dismissing the employee in the step-one statement, this may not always be the case. Whether step one has been satisfied will very much depend on the individual facts before the tribunal and employers should be cautious of relying on these decisions to excuse them from dismissing employees without first making the risk of dismissal clear.
These recent decisions rightly lead employers and HR professionals to question what it is that will comply with the statutory requirement in writing step-one statements? Whilst it appears that the obligations placed on the employer have ‘relaxed’, it is still in an employer’s interest to continue the same level of best practice as has previously been adopted. Although it is open for employers to provide employees with brief, non-technical step-one statements that may, at times, not even have to state that the employer is contemplating dismissal, this action would not be advised. Where an employer is capable of doing so, it still remains the case that best practice is to set out as much detail as possible to allow the employee to adequately defend their case and avoid the dismissal being found to be procedurally unfair. The employer should ensure that the step-one statement cross references with the disciplinary procedures as set out in their handbook, or alternatively if they have separate policies, they should provide the employee with a copy of these.
Since the introduction of the statutory procedures employers and HR professionals alike have criticised the unreasonable and onerous conditions that they have imposed. Whilst the change in direction of the tribunals in adopting a more employer-focussed interpretation of the SDDPs is to be welcomed, it remains to be seen whether this change is a little too late in light of the Government’s intention to repeal them as a result of the Gibbons Review.
Susan regularly advises both employees and employers on all aspects of employment law, particularly in relation to collective redundancy issues, TUPE, discrimination and senior executive terminations.
This article was first published by Consult Gee HR during December 2007 www.consultgee.co.uk