The new laws apply to disciplinary, dismissal and grievance procedures for businesses of all sizes including, for the first time, those with fewer than 15 employees.

Essentially, there is a three-step process that employers must follow when bringing disciplinary or dismissal proceedings against an employee, or when an employee raises a grievance against a company.

Letters come first

Step one, for both employer and employee, is to write a letter detailing exactly what the issue is and, for the employer, what action is to be taken.

After the letter, the business must arrange a meeting with the employee in reasonable time, although the law allows a maximum of 28 days for this. The meeting time and place has to be convenient for both parties and each can nominate a representative to accompany them.

If the employee is not satisfied with the conclusion of the meeting, he or she then has the right to appeal – the third stage of the process. After this, the employer can deliver their final decision.

Risks still abound

However, Mike Huss, senior employment law specialist at business services firm Peninsula, warns that simply taking the three steps does not guarantee you will win if the case goes to an employment tribunal.

‘Many employers think that following the 1,2,3 process covers them and any dismissal is fair, but the fact is that the process only gives you the right to defend yourself at a tribunal. Not following the procedure means that any dismissal is automatically unfair.’

In the case of dismissal being ruled automatically unfair, any compensation payable to the employee will be increased by between ten and 50 per cent. ‘You could be looking at a bill of £40,000 with 50 per cent on top,’ warns Huss.

Adopt policies now

Paul Lane, employment law specialist at solicitors Lee & Pemberton, advises that businesses integrate the procedures as soon as possible, starting with employment contracts.

‘Employers have the choice of putting the new procedures into every individual employment contract or referring to a statement of the rules, which could be written out in full in an employee handbook, for example. It is up to the individual employer how detailed they want to make it.’

Huss reinforces this, saying employers must ‘make sure they’ve got the contracts right and follow the letter, meeting and appeal process religiously.’