Every small employer eventually faces the moment: an employee has done something that cannot be ignored, and someone says "we need to do something about this." What happens next either follows a recognisable, fair process — or it doesn't, and that difference is measured in tribunal awards. Unreasonable failure to follow the ACAS Code of Practice on disciplinary and grievance procedures can increase any compensation by up to 25 per cent. The Code is short. There is no excuse for not knowing it.

What the law actually asks of you

For a misconduct dismissal to be fair under section 98 of the Employment Rights Act 1996, you need three things: a genuine belief in the misconduct, based on reasonable grounds, following a reasonable investigation — and a fair procedure throughout. The ACAS Code is what "fair procedure" means in practice. Employees generally need two years' service to claim ordinary unfair dismissal, but do not let that lull you: discrimination, whistleblowing and other automatically unfair claims have no qualifying period, and the Employment Rights Act reforms are moving ordinary unfair dismissal towards day-one protection — check the current position on GOV.UK before relying on the two-year buffer.

Step 1 — Slow down and separate roles

The first discipline is internal: the person who witnesses or reports the problem should not be the person who decides the outcome. In a small business this is hard, but you can still separate investigation (gathering facts) from decision (the disciplinary hearing). If you are a founder with no one else senior, consider external support for one of the two roles — especially for anything serious.

Step 2 — Investigate before you accuse

An investigation is not a prosecution; it is a fact-finding exercise. Interview witnesses, gather documents, check systems and timestamps, and — almost always — hold an investigation meeting with the employee concerned. Keep notes of everything. Suspension is not a default and not a neutral act: use it only where there is a genuine reason (risk to people, evidence or the business), keep it paid, and review it regularly. ACAS guidance on investigations covers this well.

Many cases end here: the facts do not support the allegation, a quiet word or training fixes it, and nothing formal is needed. That is a good outcome, not a wasted investigation.

Step 3 — The invitation letter

If the facts justify a formal hearing, write to the employee with:

• the specific allegation, in enough detail that they can prepare a response;
• the evidence you will rely on, attached;
• the possible outcomes (for example, a warning up to and including dismissal, if dismissal is genuinely contemplated);
• the date, time and place of the hearing, with reasonable time to prepare;
• the statutory right to be accompanied by a colleague or trade union representative — section 10, Employment Relations Act 1999. If the employee's companion cannot attend on the proposed date, you must rearrange to a reasonable alternative within five working days.

Vague allegations ("unprofessional behaviour") are the most common letter defect. Specific dates, specific conduct, specific rule breached.

Step 4 — The hearing

At the hearing: introduce everyone and their roles, state the allegation, go through the evidence, and let the employee respond fully — they may challenge evidence, call their own witnesses, and raise mitigation. Take a proper note (ideally by someone not presenting the case). If something genuinely new emerges, adjourn and investigate it rather than pushing to a decision.

Then adjourn to decide. Do not announce the outcome in the room on the spot; instant decisions look predetermined because they usually are.

Step 5 — The decision and the letter

Decide on the balance of probabilities what happened, then decide the sanction considering: seriousness, the employee's record and service, mitigation, and — crucially — consistency: how you have treated comparable cases before. Sanctions typically run: first written warning, final written warning, dismissal. Summary dismissal without notice is reserved for gross misconduct — and even gross misconduct requires the full process first.

Confirm in writing: what was found, the sanction, how long a warning stays live, the improvement expected, and the right of appeal with a deadline.

Step 6 — The appeal

Always offer an appeal, heard by someone not involved so far and, ideally, more senior. The appeal reviews whether the process was fair and the sanction reasonable — it can uphold, overturn or substitute the outcome. Skipping the appeal is a direct breach of the ACAS Code.

Template: disciplinary invitation letter skeleton

[Date] — Private and confidential
Dear [name],

Further to our investigation into [brief description], I am writing to
invite you to a disciplinary hearing on [date] at [time] at [location].

The allegation to be considered is:
[Specific allegation with dates/times and the rule or standard said to be
breached.]

The evidence to be considered is enclosed: [list documents/statements].

Possible outcomes include [no action / written warning / final written
warning / dismissal — only state dismissal if genuinely possible].

You have the right to be accompanied by a colleague or trade union
representative. Please confirm attendance by [date]. If you or your
companion cannot attend, contact [name] and we will rearrange within
a reasonable period.

Yours sincerely,

Disciplinary process checklist

• □ Investigation completed and documented before any accusation
• □ Investigator and decision-maker separated where possible
• □ Suspension only where justified, paid, and reviewed
• □ Invitation letter: specific allegation, evidence enclosed, outcomes stated, accompaniment right confirmed
• □ Reasonable preparation time; rearrangement offered if companion unavailable
• □ Hearing held with full response heard and proper notes taken
• □ Decision taken after adjournment, checked against consistency and mitigation
• □ Outcome letter with sanction, duration, expectations and appeal route
• □ Appeal heard by someone independent of earlier stages
• □ Automatically unfair and discrimination angles checked before any dismissal

The practical takeaway

A fair disciplinary process is not bureaucracy for its own sake. It is how you find out what actually happened, treat the person decently, and make a decision you can defend — to the employee, to the team watching, and if necessary to a tribunal. The steps above fit on one page; the cost of skipping them does not.

If you have a live conduct issue and want the process checked before letters go out, book a discovery call with The People Powered at start a conversation with The People Powered.

This article is general guidance for employers, not legal advice on a specific case.