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The cost of failing to follow procedure in employee grievance and disciplinary issues

The Labour Relations Commission’s Code of Practice on Grievance and Disciplinary Procedures recommends that employers have a procedure for dealing with grievances and disciplinary issues – and indeed provides significant guidance to employers on the appropriate components of such procedures.

Though not legally binding, the provisions of the Code of Practice are being used by the bodies such as the Employment Appeals Tribunal and High Court in adjudicating on cases relating to disciplinary issues, for example, claims of unfair dismissal.  The bar has been set such that employers need to be able to demonstrate that they have complied with the provisions of the Code of Practice.

But what happens if an employer fails to follow the procedure properly?  Or if the employer’s procedure is deemed to have been flawed in some way?  Either of these can result in the employer failing to defend themselves successfully against a claim of unfair or constructive dismissal.  The financial impact of such rulings can be severe – potentially far outweighing the cost of ensuring that a proper procedure is in place and is followed correctly.  And of course there can also be significant reputational damage when rulings enter the public domain.

Of course employers can also be found against in case of fact.  But this article is focusing on a different but very real possibility – there is ample precedence in case law to show that employers can lose a case even if they have a strong or even compelling argument.  The strength of any case they have against an employee is downplayed and can even be deemed irrelevant if their actual procedure is deemed flawed.

For example, in a case ruled on in late 2011, involving a claim of unfair dismissal made by an employee who had knowingly broken company policy by attending the funeral of a friend who had been murdered (ref UD1266/2010), the Employment Appeals Tribunal found that the employer – Usher Insulations Limited – made two procedural mistakes :

1. They moved too fast to the dismissal stage.  “No satisfactory reason was given as to why the initial stages of the disciplinary process were skipped save for the respondent saying that the issues were so serious it merited ‘fast-tracking’ to stage four”.
2. The employer “did not properly investigate the incidents ……. and relied solely on the investigation of a third party”.

These were sufficient for the Tribunal to rule that employee was unfairly dismissed.  However, due to the fact that the employee “contributed to his dismissal for a number of reasons”, the award was €5000.

A more severe financial penalty resulted for the Dublin Airport Authority in another unfair dismissal case ruled on in early 2011 (ref UD516/2010) where an employee was suffering occupational stress in a role that he had acknowledged he was not suited for.  The Employment Appeals Tribunal in its determination said that “makes no determination as to whether there was any merit to the claimant’s grievance”!  Its focus instead was on the fact that ”once there was a grievance, the grievance procedure ought to have been followed. It was not”.  The award against the employer totalled €73,414.96.

In a constructive dismissal case brought by an employee who had found pornography on her computer and who ultimately resigned over how the company dealt with the issue during 2009, the Employment Appeal Tribunal ruled (ref  UD145/2010, that the employee (who had been suspended during the course of the company’s investigation) was constructively dismissed for a number of reasons.  In a damning determination the Tribunal listed a number of reasons for its decision including :

• The employee had been suspended without justification.
• The suspension had been “by a man whose role in the matter was seriously flawed and questionable”.
• “She should not have been left suspended for such a significant length of time”
• “The company had no specific procedure in place to deal with such an issue”
• “The respondent did owe claimant a duty of care, which said duty was breached.”

The common thread in these three cases is that procedures were either not in place or were not followed.  The Tribunal went even further in a case published in May 2012 (ref. UD1713/2010) concerning an employee whose conduct and demeanour at an initial disciplinary meeting was “suggestive of a significant psychological health issue”.  Prior to that meeting the employee had expressed a “clearly communicated belief that he was being bullied, harassed and victimised”.  The Tribunal felt that the employer “could and should have sought to ascertain the nature of the appellant’s illness, the likely duration over which he might have been suffering from the illness and the extent, if any, to which it might offer an explanation, partial or otherwise, for his conduct”.    The Tribunal went on to say that “it is unnecessary for the Tribunal to consider if the sanction of dismissal was proportionate and appropriate”.  And it ruled that “the investigation carried out by the respondent was insufficient and ignored an issue that any reasonable employer would have explored”.  This is striking – Tribunal explicitly stated that its focus was on how the company procedurally dealt with the case (and by implication not on whether the employee had a case to answer).  The employee was awarded €30,000.

The route to mitigating risks of these sorts of judgements occurring to an employer is obvious :

1. Employers should be familiar with the Code of Practice.
2. Employers should have their own grievance and disciplinary procedures defined and written down.
3. Not only should the procedure comply with the Code of Practice, it should also be clearly seen to be fair and reasonable.  For example, even if the procedure fairly and reasonably defines elements that comply with the Code, the procedure needs to reach the same level of fairness and reasonableness for any elements above and beyond what is mentioned in the Code.
4. Employers need to be able to demonstrate that the procedure is used in the case of grievance and disciplinary proceedings.

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