The In-House Lawyer

It is just over a year since the Statutory Dispute Resolution Procedures (the Procedures) were abolished. The intention of the Procedures was to reduce the number of claims by increasing the number of disputes that would be resolved internally. However, in practice automatic unfair dismissal claims flooded the tribunal system as employers who had followed a fair procedure generally, but did not tick all the procedural boxes, found themselves defending claims.

Following the long-awaited abolition of the Procedures, it was hoped that there would be a dramatic reduction in the number of claims being presented to tribunals. However, the latest statistics reveal a different picture. The number of tribunal claims has increased by 56%, with unfair dismissal, redundancy and breach of contract claims increasing by 17%. This does not mean that the abolition of the Procedures was in vain. A major part of the increase in the number of unfair dismissal, redundancy and breach of contract claims can be attributed to the recession and the large increase in multiple claims, such as those involving equal pay issues.

In the new environment, employers (and employment lawyers) do not have the certainty of the step-by-step procedures prescribed by a statute. We must therefore keep abreast of developments in case law and guidance so that we can best advise on what will and what will not constitute a fair procedure when dismissing or disciplining an employee. One area where we have already seen significant developments is in the right of an employee to be accompanied.

right to be accompanied

Section 10 of the Employment Relations Act 1999 and the ACAS Code of Practice on Disciplinary and Grievance Procedures (2009) (the ACAS code) set out the right to be accompanied by a colleague or a trade union representative at any hearing that might result in a formal warning being issued, the confirmation of a warning or other disciplinary action (ie, at appeal hearings). However, employees often request that this right is extended to allow them to be accompanied by a legal representative at disciplinary hearings. Typically, this request has been denied and, until relatively recently, advisers would comfortably repeat the mantra that the right to be accompanied extends only to colleagues and trade union representatives. However, recent case law on this issue means that an employee’s request to be accompanied by a legal adviser should be considered a little more carefully.

R (on the application of G) v The Governors of X School & anor [2009]

In R v X, a teacher (G) argued that Article 6 of the European Convention on Human Rights (ECHR) meant that he was entitled to legal representation at a disciplinary hearing where, in the event that the allegations were upheld, his employer would report him to the Secretary of State/Independent Safeguarding Authority (ISA) on the basis that he was unfit to work with children.

Public bodies, such as schools, must not act in a way that is incompatible with the ECHR (which has ‘direct effect’). Article 6 of the ECHR (transposed into UK law by s3 of the Human Rights Act 1998) provides that everyone is entitled to a ‘fair and public hearing’ in relation to the determination of civil rights, obligations or criminal charges.

In R v X, the school took disciplinary action against G following allegations of an inappropriate relationship with a child. The school refused G’s request to have legal representation at the disciplinary hearing. Following the hearing, G was summarily dismissed. G was also told that he would be reported to the ‘appropriate agencies’, on the basis that he might be unfit to work with children. G appealed the decision and again requested legal representation at the appeal hearing. The request was refused by the school and the Secretary of State was notified of G’s dismissal.

G applied for judicial review, arguing that the failure to allow legal representation at the disciplinary and appeal hearings was a breach of Article 6 (which was directly applicable to the school). The Court of Appeal agreed with the High Court that Article 6 was engaged. The former held that due to the seriousness of the allegations, G was entitled to an ‘enhanced measure of procedural protection’. Crucially, G’s ability to continue to teach was directly at stake (if reported to the ISA and placed on the barred list) and the disciplinary proceedings could have resulted in severe reputational damage.

Contractual right to legal representation

There are situations in which an employer’s contractual disciplinary policy will entitle an employee to legal representation at an internal disciplinary hearing.

Kulkarni v Milton Keyes Hospital NHS Foundation Trust & anor [2009]

In Kulkarni the Court of Appeal held that it was an express term of Kunal Kulkarni’s contract that he was entitled to be legally represented at an internal disciplinary hearing. Perhaps more interestingly, the Court of Appeal also held obiter that, had it been required to consider the application of Article 6, it would have held that it was engaged and, in the circumstances of Kulkarni, implied a right to legal representation in civil proceedings.

In Le Compte Van Leuven and De Meyere v Belgium [1981], it was held that Article 6 rights were not usually engaged in disciplinary proceedings but could be in certain circumstances (the court did not explain what those circumstances might be). In Kulkarni the Court of Appeal commented on that principle and suggested that in proceedings where all that was at stake was the loss of a specific job, Article 6 would not be engaged. However, where the effect of the proceedings could be far more serious (perhaps involving a potentially career-ending event), Article 6 would be engaged. This covers situations where there is no express right to be legally represented in the contract but an employee requests such representation.Hameed v Central Manchester University Hospitals NHS Foundation Trust [2010] In Hameed, the High Court held that Article 6 was not engaged where an employee was dismissed for gross misconduct but where an independent tribunal was not convened (in breach of contract). This was because a dismissal for gross misconduct did not mean that Waheeda Hameed would be unable to work again in her chosen profession. Leave has been granted to appeal but this decision will be welcomed by employers.

Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2010]

On a further cautionary note, in Edwards the Court of Appeal held that an employee could recover damages for loss of future employment where:

• they have been dismissed as a result of findings made at a disciplinary hearing;
• there has been the breach of an express contractual term relating to the conduct of disciplinary proceedings (such as a right to legal representation); and
• that breach has been the cause of the dismissal.

These damages could be significant where an employee may never work again in their chosen profession as a result of disciplinary action that is based on a process that falls short of contractual requirements.

Practical significance

Private employers may consider these decisions to be of little practical relevance. This may be so in industries where the loss of a job is unlikely to be a career-ending event. One industry for which these decisions may have significant relevance is the financial services sector. Approved persons and firms regulated by the Financial Services Authority (FSA) have a duty to report any conduct that may affect an approved person’s fitness and propriety to perform controlled functions. A question mark over an individual’s fitness and propriety may lead to the FSA withdrawing a person’s approved status. This will necessarily impact on an employee’s future employability with any entity that is regulated by the FSA. Disciplinary proceedings that may call into question an employee’s fitness and propriety could therefore be considered to be a potentially career-ending event.

This may cause alarm to many in businesses that are regulated by the FSA. Most companies will not want internal disciplinary processes to become unnecessarily protracted and complicated by the involvement of legal counsel on both sides. A potential way of mitigating the effects of legal involvement could be to ‘hive-off’ the regulatory matters into a separate hearing, at which the employee would be legally represented. At that hearing, the only matters that would be considered would be whether a duty arises to report the matter to the FSA and the extent of such reporting. The non-regulatory matters could be dealt with in a separate hearing without legal representatives being present.

Conclusion

While the decisions above are expressly limited to their facts, when instigating internal disciplinary proceedings employers should carefully consider whether the outcome of the proceedings could threaten an employee’s future career. If it could, employers should carefully consider whether that employee should be given the option of having legal representation at the disciplinary hearing.

Understandably, many employers will be concerned that having lawyers present at disciplinary proceedings is contrary to the informal nature of such proceedings (as expressly encouraged by the ACAS Code) and would lengthen internal processes, significantly increasing both the stress and cost involved in internal procedures. There is a clear danger that if both the employer and the employee are legally represented, internal disciplinary proceedings will be a rehearsal of the trial process.

That said, this may be a price worth paying if a failure to allow an employee to be legally represented leads to a cause of action in itself (in the case of public employers), is used as a springboard for an unfair dismissal claim or leads to criticism from a judge and a potential increase in damages at a subsequent trial.

By Greg Campbell, partner, and Susannah Kintish, solicitor, Mishcon de Reya.

E-mail: greg.campbell@mishcon.com; susannah.kintish@mishcon.com.