Grievances are concerns, problems or complaints that your employees raise with you. Where possible, you should encourage employees to settle them informally with their line manager, but you should also have formal procedures available to your employees.
Having formal grievance procedures in place allows you to give reasonable consideration to any issues which can't be resolved informally and to deal with them fairly and consistently. See:
Your rules and procedures should be set out in writing and comply with the Labour Relations Agency Code of Practice on Disciplinary and Grievance Procedures. Failure to meet either of these requirements may result in extra compensation for the employee if they succeed in a tribunal claim.
Read more on handling grievances.