Suspension without pay and the statutory procedures

01.01.08

Suspension without pay and the statutory procedures

The statutory disciplinary procedures apply to the suspension of an employee without pay. The EAT has decided that, although suspension without pay can take place before a disciplinary hearing, it must not happen before the employer informs the employee by letter that it is contemplating suspension without pay. The decision does not affect suspension on full pay.

Mr Bunn's contract with Wilf Gilbert (Staffs) Limited required him to work on Mondays, although he rarely did. After refusing to work one Monday, he was suspended without pay. He was not given a letter stating why he was to be suspended and it was two weeks before a disciplinary hearing took place, at which time he was dismissed. Mr Bunn brought a claim for unlawful deduction of wages in respect of the unpaid period of suspension.

On the basis that there was no contractual right to suspend without pay, Mr Bunn's unlawful deduction of wages claim was successful. Mr Bunn appealed to the EAT, claiming that his compensation should have been increased in light of Wilf Gilbert's failure to comply with the statutory disciplinary procedures.

The EAT found that suspending an employee without pay is "relevant disciplinary action" for the purposes of the statutory procedures. Where the disciplinary action consists of a suspension without pay, it can take place before a disciplinary hearing. However, the EAT held that when contemplating suspending an employee without pay, an employer must send a Step 1 letter* - giving the employee the chance to put their case before the suspension takes effect.

Since the statutory procedures had not been followed, Mr Bunn's award was subject to an uplift of between 10% and 50%.

In practice

1. Before suspending an employee without pay:

  • ensure that there is a contractual right to do so; and
  • send the employee a letter outlining the circumstances which have resulted in the suspension being contemplated and inviting the employee to a meeting.

2. If an employee is being paid during a period of suspension then the statutory procedures will not apply. Although the employee will need to be informed (preferably in writing) of their suspension, the period of suspension and their rights and obligations during that period, this need not be before the suspension takes effect. Also, the employee does not need to be invited to a disciplinary hearing at this stage.

Wilf Gilbert (Staffs) Limited v Bunn 2008 UKEAT/0547/0

* The Step 1 letter must set out the employee's alleged conduct or characteristics, or other circumstances, which have led to the employer contemplating suspending the employee, and must invite the employee to attend a meeting to discuss the matter.