In March the Government launched a ‘call for evidence’ on micro businesses’ experience of dealing with dismissal. The call for evidence was partly prompted by employers revealing, through the Government’s ‘Red tape challenge’, that they found it “difficult, time consuming and expensive to end the employment relationship when things go wrong”.

The discussion period closed on 8 June. The Government is unlikely to proceed with its proposals on compensated no fault dismissals outlined in the document but hasn’t said yet whether it will reform the ACAS code of practice on discipline and grievance.

Questions are posed around whether the code provides sufficient flexibility for performance dismissals, and whether it is a burden in practice for employers. The document asks whether there should be a separate code for small and micro employers and requests views on other models, such as the Australian small business code.

Given the opportunity, many of us would list a number of complaints about the code. The language used for warnings is more appropriate for misconduct than performance issues and its impact on small businesses with limited resources, and no access to sophisticated legal and HR support, is well documented.

The code can also be fairly criticised for its lack of guidance on troublesome aspects of grievances. For example, how are employers supposed to deal with employees who raise serial complaints? How should they resolve overlapping grievances? Should they deal with grievances raised post-termination? And so on.

The Employment Lawyers Association set up a working party to review these concerns. We concluded the current version of the code and its accompanying guidance are on the whole sufficiently flexible to apply to most scenarios and infinitely better than the statutory dispute resolution procedures they replaced. Our conclusion was that the code was not broken enough to require fixing. The worst thing for business right now would be to introduce new regulations, which employers would then have to adjust to, or create a multiplicity of codes for different scenarios, which could easily create confusion.

It is hard for small businesses to find someone impartial to hear an employee’s appeal, and the time and cost of handling a disciplinary or grievance process can be disproportionate for them. But creating a new code applicable only to small businesses will not solve these problems. To ensure certainty about when the code applies, you have to define a small business. Should it be decided on average headcount over a certain period rather than on a specific date? If so, how do you determine headcount? Do you count full time equivalents or all heads? Do you count agency workers and contractors? Any code would have to be crystal clear as to how “small” should be determined to avoid satellite litigation.

The fundamental problem, however, of implementing a “lite” version of the code is that the current one encapsulates the standards of general unfair dismissal law. It requires employers to establish the facts, inform the employee of the problem, hold a meeting, allow the employee to be accompanied, decide on appropriate action, and provide an opportunity to appeal. Any “procedure-lite” version could mislead employers, because small firms would still have to comply with these underlying legal requirements. They would need to be exempted from the regime altogether to avoid this problem, creating a two-tier workforce with rights dependent on the size of the employer. Other models, such as the Australian code for small businesses do not help, because this regime relies far less explicitly on the procedure followed by the employer in implementing dismissal.

Close scrutiny of the law and the code reveals that there is flexibility in the system. Perhaps more should be done to publicise this, rather than creating a new standard for businesses to get their heads around.


Ellen Temperton chaired the Employment Lawyers Association (ELA) working party that provided a response to the Department for Business, Innovation and Skills on this issue. She is also a partner in the employment, reward and immigration department at Lewis Silkin LLP