ACAS Code of Practice: A Guide for Small Business Employers

Handling misconduct, poor performance or grievances can be challenging for small businesses. The ACAS Code of Practice on Disciplinary and Grievance Procedures sets out basic standards for fair workplace procedures.

Employment tribunals can consider the Code, and compensation may be adjusted by up to 25% where either party unreasonably fails to follow it.

Acas published a draft replacement Code on 30 July 2026, with consultation closing at 11:59pm on 23 September 2026. Until the replacement is approved and comes into force, employers should follow the current 2015 statutory Code.

What Is the ACAS Code of Practice on Disciplinary and Grievance Procedures?

The Code is statutory guidance designed to help employers, employees and their representatives deal with disciplinary and grievance situations in the workplace. The current Code came into force on 11 March 2015 and contains 47 numbered paragraphs.

It covers matters including:

• Employee misconduct
• Unsatisfactory performance
• Workplace grievances
• Investigations
• Disciplinary meetings
• Formal warnings
• Dismissal following disciplinary action
• Appeals
• The statutory right to be accompanied

Employers can read the full statutory Acas Code alongside the more detailed Acas guide to discipline and grievances at work.

The distinction matters. The statutory Code can be taken into account by employment tribunals. The longer Acas Guide provides practical good-practice advice and sample procedures, but it does not itself have the same statutory status.

Why Does the ACAS Code Matter to Small Businesses?

Small employers sometimes assume formal HR procedures mainly matter to larger organisations with dedicated people teams. That is a risky approach.

The Code applies principles that can be relevant regardless of whether the employer has five employees or five thousand. At the same time, tribunals can take an employer’s size and resources into account when considering whether its actions were reasonable.

That does not mean a small business can ignore the process. It means the way fairness is achieved may reasonably reflect the organisation’s structure and available resources.

For example, a 10-person company may not have three different HR managers available to investigate, conduct a hearing and hear an appeal. It should still try to provide as much independence and impartiality as reasonably possible.

The commercial case is also significant. Acas said when launching its 2026 consultation that formal disciplinary and grievance procedures cost UK employers an estimated £2.36 billion a year, while informal resolution can be substantially cheaper.

For a small company, avoiding unnecessary escalation can therefore protect both employee relationships and management resources.

Is the ACAS Code Changing in 2026?

Yes, but the proposed replacement is not yet the operative statutory Code.

Acas published a draft replacement on 30 July 2026 as part of a formal consultation. The consultation runs until 23 September 2026.

Once Acas has reviewed consultation responses, it may modify the draft. If it decides to proceed, the updated Code must go through the relevant approval process, including presentation to the Secretary of State and being laid before Parliament.

Small employers should therefore distinguish between:

• What they must work with now: the existing 2015 Code.
• What they should prepare for: the direction set out in the 2026 draft.

The proposed Code expands from 47 to 95 numbered paragraphs, which shows that this is considerably more than a minor wording update.

2015 Code vs 2026 Draft Code: What Is Changing?

Area	Current 2015 Code	2026 Draft Code
Length	47 paragraphs	95 paragraphs
Main terminology	Mostly employee, disciplinary and grievance	Greater use of worker and concerns at work
Informal resolution	Encouraged mainly in the foreword	Integrated directly into statutory guidance
Fairness	General fairness principles	Expanded principles focused on early resolution and preventing escalation
Equality	No dedicated Equality Act section	Dedicated unlawful discrimination and reasonable adjustment guidance
Suspension	Should be brief and reviewed	Specific circumstances where suspension should be considered
Mediation	Mentioned mainly in introductory guidance	Dedicated mediation and facilitated conversations section
Companion postponement	Five-working-day statutory rule	Recognises cases where more than five days may reasonably be allowed
Formal grievance	Basic written grievance requirement	Encourages a short, clear grievance plus the outcome sought
Workplace policies	Written procedures encouraged	Greater emphasis on accessible procedures and staff training
Employment status	Mainly employee terminology	Worker terminology used more widely
AI	Not addressed	Acas is consulting on AI-related disciplinary and grievance issues

The direction of the draft is clear. Acas wants employers to think about workplace concerns as issues to be resolved early wherever possible, rather than automatically pushing every problem into a formal process.

What Principles Should Employers Follow Now?

The current statutory Code requires employers to approach disciplinary and grievance matters fairly.

For a small business, that normally means following several basic principles.

Deal With Issues Promptly

Minor problems should not be left for months and then suddenly used as evidence supporting disciplinary action.

Employers should raise issues within a reasonable period and avoid unnecessary delays in meetings or decisions.

Establish the Facts

An employer should investigate before deciding that misconduct has occurred.

Depending on the circumstances, that might involve:

• Reviewing emails or documents
• Speaking with witnesses
• Examining attendance or performance records
• Meeting the employee
• Checking relevant workplace policies

The investigation should be proportionate to the seriousness of the issue.

Explain the Problem Clearly

Employees should understand exactly what they are being asked to answer.

For formal disciplinary proceedings, employers should normally explain the alleged misconduct or performance problem in writing and provide enough information for the employee to prepare.

Give the Employee an Opportunity to Respond

A disciplinary decision should not be predetermined.

The employee should be able to explain their position, challenge evidence, present relevant information and raise points about witness evidence.

Allow Accompaniment Where Required

Workers have a statutory right to be accompanied at qualifying formal disciplinary and grievance meetings.

A permitted companion can normally be:

• A Fellow Worker
• A Trade Union Representative
• A Trade Union Official

Employers should also consider whether additional support or adjustments are required because of disability or another equality-related issue.

Give Employees a Right of Appeal

Formal disciplinary decisions should normally carry an opportunity to appeal.

Where reasonably possible, an appeal should be handled by someone who was not previously responsible for the decision.

How Should a Small Business Run a Disciplinary Procedure?

A practical disciplinary process can be broken into several stages.

1. Identify the Concern

Establish whether the issue concerns conduct, performance or another workplace matter.

Minor issues may sometimes be resolved through an informal management conversation.

Serious issues, particularly potential gross misconduct, are more likely to require a formal investigation and disciplinary procedure.

2. Investigate Before Making a Decision

Gather enough evidence to understand what happened.

Do not conduct the investigation simply to prove an assumption that has already been made.

Where reasonably practicable, someone different from the disciplinary decision-maker should carry out the investigation.

3. Decide Whether Formal Action Is Necessary

An investigation does not automatically need to result in a disciplinary hearing.

Possible outcomes may include:

• No Further Action
• Informal Management Action
• Additional Training
• Performance Support
• Mediation
• A Formal Disciplinary Hearing

4. Send a Written Disciplinary Invitation

If a formal meeting is required, explain:

• What the allegation or concern is
• The possible consequences
• When and where the meeting will take place
• The employee’s right to be accompanied
• What evidence will be considered

Allow reasonable time for preparation.

5. Hold the Meeting

Explain the concern and evidence clearly.

The employee should then have a reasonable opportunity to respond, ask questions, provide evidence and identify relevant witnesses.

6. Decide What Action Is Proportionate

Potential outcomes can include:

• No Action
• A Written Warning
• A Final Written Warning
• Training Or Support
• Another Contractually Permitted Measure
• Dismissal In Serious Cases

Gross misconduct can justify dismissal without notice, but it does not remove the requirement to conduct a fair disciplinary process. The current Code explicitly states that a fair procedure should still be followed before dismissal for gross misconduct.

7. Confirm the Outcome in Writing

The written decision should explain what was decided, why it was decided and what happens next.

Where a warning is issued, state:

• The Misconduct Or Performance Problem
• The Improvement Expected
• The Relevant Timescale
• How Long The Warning Will Remain Current
• The Consequences Of Further Problems

8. Offer an Appeal

Explain how the employee can challenge the decision and any deadline contained in the company’s procedure.

How Should Employers Handle a Grievance?

A grievance is a concern, complaint or workplace problem raised by an employee.

Where appropriate, encourage the employee to raise concerns informally first. However, serious complaints should not be pushed into an informal process where that would be inappropriate.

If the matter becomes formal:

1. Receive The Grievance In Writing: The employee should explain the nature of their concern.
2. Arrange A Meeting: Hold the meeting without unreasonable delay.
3. Allow The Employee To Explain Their Position: Listen carefully and obtain further information where necessary.
4. Investigate Where Required: Some grievances cannot reasonably be decided from the initial written complaint alone.
5. Reach A Decision: Confirm the outcome and any proposed action in writing.
6. Provide An Appeal Process: Allow the employee to challenge the outcome if they remain dissatisfied.

The 2026 draft would additionally encourage workers to provide a short, clear explanation, identify what outcome they would like where possible and explain what informal resolution has already been attempted.

What Is the Legal Basis of the ACAS Code?

Two provisions of the Trade Union and Labour Relations (Consolidation) Act 1992 are particularly important.

The Code itself is issued under section 199 of the Act.

The potential adjustment of employment tribunal awards is dealt with separately under section 207A.

Where section 207A applies, an employment tribunal can potentially:

• Increase an employee’s award by up to 25% where the employer unreasonably failed to comply with the relevant Code
• Reduce an employee’s award by up to 25% where the employee unreasonably failed to comply

The important word is unreasonably. A technical departure from the Code does not automatically produce a 25% adjustment.

The tribunal considers the circumstances and whether an adjustment is just and equitable.

Is the ACAS Code Legally Binding?

Not in the same way as an Act of Parliament.

Failure to follow the Code does not automatically create legal liability by itself.

However, employers should not interpret that to mean it is optional. Employment tribunals must take relevant provisions into account when deciding applicable cases, and an unreasonable failure to comply can affect compensation.

For business owners, following the Code also helps demonstrate that decisions were made through a structured and fair process rather than arbitrarily.

What Does the ACAS Code Not Cover?

The current Code expressly states that it does not apply to:

• Redundancy Dismissals
• Non-Renewal Of Fixed-Term Contracts When They Expire

The 2026 draft retains these exclusions.

The current Code also says organisations may wish to deal with matters such as bullying, harassment and whistleblowing through separate procedures.

These areas can involve additional legal considerations, particularly discrimination and whistleblower protections, so employers should not assume that following an ordinary disciplinary or grievance procedure alone resolves every legal obligation.

What About Collective Grievances?

Collective grievances are another important exception.

The 2026 draft says the Code does not apply where a grievance is raised on behalf of two or more workers by a representative of a recognised trade union or another appropriate workplace representative.

Those matters should instead be managed through the organisation’s collective grievance arrangements.

Does the ACAS Code Apply to Workers or Employees?

This is becoming increasingly important.

The existing Code mainly uses the term employee, although the statutory right to accompaniment applies to workers.

Acas has said it considers following the principles for both workers and employees to be good practice.

The 2026 draft therefore switches much of its terminology to worker, which is broader and includes employees as well as some individuals who do not have employee status.

However, there is an important legal distinction. The award-adjustment power under section 207A relates to employees.

This means employers should not assume that employment-status terminology is interchangeable for every legal purpose.

How Is Suspension Changing Under the 2026 Draft?

Suspension is one of the areas where the proposed Code becomes considerably more specific.

The existing Code states that where suspension with pay is considered necessary, it should be as brief as possible, kept under review and made clear that suspension is not disciplinary action.

The draft goes further.

It says suspension during an investigation should only be considered where it is necessary because of a legal requirement or where the employer reasonably believes suspension would protect:

• The Investigation
• The Organisation
• Other Staff
• The Person Being Investigated

For example, suspension might be justified where there is a genuine risk that evidence could be interfered with or witnesses influenced.

If suspension is necessary, the draft also recommends communicating the decision privately and sensitively, explaining why it is required and making clear that it does not amount to disciplinary action.

For employers considering suspension pending an investigation, this reinforces an important management principle: suspension should not become an automatic response to every allegation.

What Does the 2026 Draft Say About Equality and Reasonable Adjustments?

This is another major expansion. The existing Code does not contain a standalone Equality Act section.

The draft specifically reminds employers of their obligations under the Equality Act 2010, including the duty to make reasonable adjustments for disabled workers and avoid other forms of unlawful discrimination.

Depending on the circumstances, adjustments might include:

• Holding meetings in physically accessible locations
• Supplying documents in an accessible format
• Allowing appropriate disability-related support
• Providing an interpreter where a language barrier prevents meaningful participation

Employers should therefore consider accessibility throughout the procedure rather than waiting until a problem occurs at the disciplinary or grievance meeting.

How Could Mediation Become More Important?

The proposed Code includes an entirely new dedicated section covering mediation and facilitated conversations.

These approaches involve an impartial third party helping those involved to reach a resolution.

They can be particularly useful where the underlying issue concerns damaged working relationships rather than a straightforward factual or legal dispute.

Under the draft:

• Mediation Can Be Proposed At Different Stages
• Participation Should Be Voluntary
• The Process Should Be Confidential
• A Formal Procedure Can Be Paused While Mediation Takes Place
• The Mediator Or Facilitator Should Be Impartial

However, mediation is not suitable for every situation.

The draft gives examples including cases where:

• A Formal Decision About Statutory Rights Is Required
• Someone Else Must Make The Decision
• There Is A Serious Power Imbalance
• Intimidation, Coercion Or Abuse Prevents Safe Participation
• Someone Cannot Participate Voluntarily And Meaningfully Even With Appropriate Support

The draft also recognises that small businesses may not always have access to mediation resources.

What Is Talon Engineering Ltd v Smith and Why Does It Matter?

The right to be accompanied can create difficult scheduling situations for employers.

The statutory rule generally requires an employer to postpone a qualifying hearing where the employee’s chosen companion cannot attend, provided the proposed alternative is reasonable and falls within five working days of the original meeting.

However, Talon Engineering Ltd v Smith demonstrated why employers should not treat the five-working-day limit as an automatic justification for refusing every longer postponement.

Acas explains that an unreasonable refusal to postpone a disciplinary hearing because a companion is unavailable can contribute to a finding that a dismissal was unfair.

The 2026 draft therefore says it may be reasonable to allow more than five working days, particularly where dismissal is a possible outcome and allowing the delay would not cause an unreasonable postponement.

For employers, the lesson is simple: consider the circumstances rather than treating five days as an absolute maximum in every situation.

What Is the Difference Between the ACAS Code and Your Company’s Procedure?

This distinction causes confusion for many small employers.

The Acas Code provides statutory principles and standards.

Your company’s disciplinary or grievance policy sets out the internal process used within the business.

Your policy might contain additional requirements such as:

• Internal Deadlines
• Named Decision-Makers
• Warning Periods
• Investigation Stages
• Appeal Procedures
• Additional Rights

Employers should therefore check both the Acas Code and their own procedures before taking formal action.

A business that follows the basic Acas principles but ignores a contractual disciplinary procedure could potentially create a separate contractual problem.

For that reason, employment policies should be reviewed periodically and drafted carefully rather than copied from another company’s handbook.

A Practical ACAS Checklist for Small Employers

Before completing a disciplinary or grievance process, check whether you can answer yes to the following:

• Have We Identified The Exact Workplace Concern?
• Have We Considered Whether Informal Resolution Is Appropriate?
• Have We Investigated The Facts Properly?
• Have We Avoided Predetermining The Outcome?
• Have We Told The Employee Clearly What The Issue Is?
• Have We Supplied Relevant Evidence Where Appropriate?
• Have We Given Reasonable Preparation Time?
• Have We Explained The Right To Be Accompanied?
• Have We Considered Equality Act Adjustments?
• Have We Allowed The Employee To Respond Fully?
• Have We Considered Alternative Outcomes?
• Is Any Warning Or Sanction Proportionate?
• Have We Confirmed The Decision In Writing?
• Have We Provided An Appeal?
• Have We Kept Appropriate Records?

For very small businesses without an HR department, a checklist like this can help prevent important procedural steps being missed.

Sample Wording for Common Disciplinary and Grievance Documents

These examples are starting points rather than substitutes for advice on a specific case.

Disciplinary Meeting Invitation

Example wording:

You are invited to attend a disciplinary meeting on [date] to discuss concerns regarding [brief description]. The possible consequences include [state possible consequences where appropriate].

Attached are the documents that will be considered. You will have an opportunity to respond to the concerns and provide relevant evidence.

You have the right to be accompanied at the meeting by a fellow worker, trade union representative or trade union official.

Written Warning

Example wording:

Following the disciplinary meeting on [date], it has been decided that a written warning is appropriate because [reason].

The improvement required is [expected behaviour or performance], which should be achieved by [timescale].

This warning will remain current for [period]. Further misconduct or failure to achieve the required improvement during this period may result in further disciplinary action.

You may appeal this decision by [appeal procedure].

Grievance Outcome

Example wording:

Following your grievance and the meeting held on [date], we have considered the information provided and completed the necessary enquiries.

Our decision is [outcome], for the following reasons: [brief explanation].

The company intends to take the following action where appropriate: [action].

If you are dissatisfied with this outcome, you may appeal by [procedure].

What Should Employers Document?

Records can become extremely important if a dispute later develops.

Keep relevant documentation such as:

• The Original Complaint Or Allegation
• Investigation Notes
• Relevant Emails And Documents
• Witness Information
• Disciplinary Invitations
• Evidence Supplied To The Employee
• Meeting Notes
• Written Warnings
• Grievance Outcomes
• Appeal Documents
• Reasons For Important Procedural Decisions

Records should be accurate, appropriately confidential and retained in line with applicable data protection requirements and company policies.

Documentation is particularly useful when a manager later needs to demonstrate why a decision was reasonable rather than simply what decision was made.

When Should a Small Business Get External Advice?

Not every disagreement requires an employment solicitor.

However, external advice can be particularly valuable where:

• Dismissal Is A Possible Outcome
• Gross Misconduct Is Alleged
• Discrimination Is Raised
• Disability And Reasonable Adjustments Are Relevant
• Whistleblowing Is Involved
• Senior Executives Or Directors Are Involved
• The Employee Is A Trade Union Representative
• A Criminal Investigation Overlaps With Workplace Action
• The Employee Has Raised A Grievance During Disciplinary Proceedings
• There Is A Serious Procedural Error
• An Employment Tribunal Claim Is Threatened

Acas provides free workplace guidance, while employment solicitors and HR consultants can provide case-specific professional advice.

For regulated businesses, additional industry-specific obligations may also operate alongside the Code. The 2026 draft specifically uses the UK Market Abuse Regulation as an example where separate legal requirements may affect procedures involving senior employees or company directors.

What Should Small Businesses Do Before the New Code Arrives?

Employers should not rewrite their entire disciplinary process around a draft that may still change.

However, several actions make sense now because they reflect good practice under both the existing Code and the direction of the proposed replacement.

Small businesses can:

1. Review Existing Policies: Check whether disciplinary and grievance procedures are written clearly and accessible to staff.
2. Improve Informal Conflict Management: Train managers to identify and address lower-level concerns before they become formal disputes.
3. Review Suspension Practices: Avoid treating suspension as an automatic response to serious allegations.
4. Check Equality And Accessibility: Make sure procedures allow appropriate reasonable adjustments.
5. Improve Documentation: Record why important decisions were made.
6. Review Accompaniment Procedures: Make sure managers understand both the statutory right and when flexibility may be reasonable.
7. Consider Mediation: dentify whether an internal or external mediator could be used for suitable workplace disputes.
8. Monitor The Final 2026 Code: Policies should be reviewed again once Acas publishes the final replacement and its commencement date is confirmed.

Final Thoughts

The ACAS Code of Practice on Disciplinary and Grievance Procedures gives small employers a framework for dealing with difficult workplace situations without sacrificing fairness.

The fundamentals remain straightforward: establish the facts, communicate clearly, listen to the employee, avoid predetermined decisions, permit appropriate accompaniment, document outcomes and provide an appeal.

The 2026 draft points towards an even stronger emphasis on early resolution, equality, proportionate investigations, careful use of suspension and mediation.

For small businesses, the aim should not be to build a complicated corporate HR system. It should be to create a procedure that is clear, consistent, proportionate and capable of demonstrating that important employment decisions were made fairly.

FAQs

Is the ACAS Code of Practice compulsory?

The Code is not legislation creating automatic liability for every breach, but employment tribunals must take relevant provisions into account. Unreasonable non-compliance can also result in certain tribunal awards being adjusted by up to 25%.

Is the ACAS Code being updated in 2026?

Yes. Acas published a draft replacement Code on 30 July 2026. The consultation remains open until 23 September 2026. The draft has not yet replaced the current 2015 Code.

What Is the Difference Between the ACAS Code and the ACAS Guide?

The Code is statutory guidance that employment tribunals can take into account. The Acas Guide is a more detailed practical resource containing additional advice and sample procedures, but it does not have the same statutory status.

Does the ACAS Code Apply to Workers or Only Employees?

The existing Code mainly refers to employees, although the statutory right to accompaniment applies more broadly to workers. Acas considers extending the principles to workers good practice, and the 2026 draft deliberately uses worker terminology much more widely.

Can an Employer Dismiss Someone for Gross Misconduct Without a Warning?

Gross misconduct can justify dismissal without a prior warning or notice. However, employers should still conduct an appropriate investigation and fair disciplinary process before deciding to dismiss.

Can an Employer Suspend Someone During an Investigation?

Potentially, but suspension should not be automatic. The current Code says it should be brief and kept under review.

The 2026 draft would make clearer that suspension should only be considered in limited circumstances where there is a genuine need to protect the investigation, organisation, staff or person concerned.

Does an Employer Have to Postpone a Hearing if a Companion Is Unavailable?

Where the statutory right applies, an employer must accept a reasonable alternative date proposed within five working days.

Talon Engineering Ltd v Smith also demonstrates that employers should consider whether allowing a longer postponement would be reasonable in the circumstances.

Does the Code Cover Redundancy?

No. The statutory Code specifically excludes redundancy dismissals and the non-renewal of fixed-term contracts when those contracts expire.

Does the Code Apply to Collective Grievances?

The draft Code expressly excludes grievances brought on behalf of two or more workers by a recognised trade union representative or another appropriate workplace representative. These should follow the employer’s collective grievance arrangements.

Can Mediation Replace a Disciplinary Procedure?

Sometimes mediation can help resolve workplace relationship problems, but it is not appropriate for every dispute.

Serious misconduct may still require a formal disciplinary procedure, and mediation should not be used where a legal or factual determination is required or where safe, voluntary participation is not possible.