When should employment tribunals uplift awards?

Cases where employers have not followed the Acas Code of Practice can result in higher compensation, warns Benedict Gorner

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The Acas Code of Practice on discipline and grievance procedures provides basic practical guidance and sets out important principles to be taken into account when an employer is dealing with concerns related to conduct, performance or addressing an employee’s grievance.

Redundancy exercises are specifically excluded from what the Acas code covers. This is understandable when you take into account that redundancy dismissals are a result of the requirements of the business changing or reducing rather than any particular concerns about the individual employee. 

The importance of following the code is emphasised by the fact that the employment tribunal has the power to uplift an award of compensation by up to 25 per cent in circumstances where the employer has unreasonably failed to follow the code. 

In Rentplus UK v Ms Coulson the issue was whether the uplift had been properly applied in circumstances where the reason for dismissal had been described as redundancy by the employer following a restructure.  

Ms Coulson had worked as part of the leadership team dealing with contacts and IT systems in the business, which arranged for the purchase of properties for rental by housing associations. In early 2017 steps were taken to appoint a new CEO. It appeared that this was also the point in time when concerns had been raised about Coulson, although no formal action had been taken.

After the new CEO was appointed new investment was secured and it was announced that there would be a reorganisation. There were subsequent ‘redundancy’ consultation meetings arranged. 

Coulson was invited to attend ‘consultation’ meetings in April and May 2018, following which she was informed that she was to be made redundant. 

Her subsequent appeal against the decision was dismissed and her grievance claiming the process had been a sham as well as discriminatory was also dismissed.  

It was held that the process that had been followed was a sham and that the decision to dismiss Coulson had been unfair and discriminatory. It appeared that a decision to dismiss had been made well in advance, probably the year before, when the decision had been made to replace the CEO.

The reality was that, despite the label, the dismissal was likely down to dissatisfaction with Coulson or the way she was performing her role. In these circumstances, the dismissal could be regarded as the result of a ‘disciplinary situation’ to which a fair capability or disciplinary procedure should have applied. 

When looked at in this manner it was clear that the way in which the employer had dealt with the process had unreasonably failed to follow the code. In these circumstances, where there had been a total failure, it was appropriate to apply a 25 per cent uplift to the compensation awarded. 

The decision highlights the importance of looking at what the reasons are behind the decision to dismiss. There will be no advantage in proceeding to dismissal under a different label as it will be the substance of the reason as found on the facts by the employment tribunal that will dictate whether the Acas code applies. Simply put, the question will be whether the employer considered that there were issues with the employee or their performance and got rid of them because of it. The tribunal will answer that question taking into account all of the surrounding circumstances.

It should also be taken into account that even if there was no ‘disciplinary situation’, the manner in which the employee’s grievance has been dealt with could also trigger an uplift in compensation in circumstances where there has been an unreasonable failure to follow the code.

Benedict Gorner is an employment partner at Gateley Legal