Commercial/Employment UPDATE

Issue No.1 August 2004

Employment - New Statutory Disciplinary and Grievance Procedures

Highly important new employment legislation comes into effect on 1st October 2004 with the introduction of statutory disciplinary and grievance procedures. There are significant consequences for employers failing to comply with these procedures. Furthermore, all employers, regardless of the number of staff they employ, must mention the procedures in their employment documentation. If an employer fails to do this, it will almost invariably result in an award of 2 or 4 weeks’ pay in favour of any employee who makes a relevant tribunal claim even if the claim itself is ultimately unsuccessful

1. Statutory Disciplinary Procedure (“DP”)
• Failure by an employer to comply with the DP means that certain dismissals will be deemed to be automatically unfair (subject to the qualifying period of 12 months’ service).
• The legislation requires tribunals to increase or decrease the compensatory award by between 10 % and 50% where the DP has not been complied with (subject to the compensatory award maximum of £55,000).
2. Statutory Grievance Procedure (“GP”)
• If an employer does not meet the requirements of the GP then any award made by a tribunal in respect of a relevant claim will be increased by between 10% and 50%.
• If the failure to meet the requirements of the GP is attributable to the employee then any award will be decreased by between 10% and 50%.

All employers should be aware of the DP and GP when considering disciplining or dismissing an employee or dealing with an employee’s grievance. All employers should also revise their employment documentation to reflect the new procedures.

Commercial Agents - Court of Appeal Decision

It is essential that businesses with Commercial Agents (or who are considering appointing one) are fully aware of the effect of the Commercial Agents (Council Directive) Regulations 1993 (“the Regulations”). It is also essential that a written Agency Agreement is in place to govern the terms of the agency and its termination.

Amongst other things, the Regulations provide for minimum periods of notice of termination for agents and specify the circumstances and amounts of compensation payable to them on termination. Compensation is not payable to an agent where the agency is terminated by the principal as a result of the agent’s breach of contract. The Court of Appeal recently held that the non-renewal of an agency contract because of and agent’s breach of contract did not fall within this exception. The agent in this case was therefore able to claim compensation despite being in breach of contract.

If your business has an agent or is considering appointing one you should seek legal advice on the effect of the Regulations. You should also seek advice if you are considering terminating an agency agreement.

Note:

Please note that this newsletter is not intended to be a comprehensive statement of the law and should be used for guidance purposes only. If you require specific legal advice please contact Mark Machray or Edward Bond or by telephone 020 7493 2903.