Acas Code and sham redundancy
21 July 2022
The Employment Appeal Tribunal (EAT) has considered whether the 25% uplift for failing to follow the Acas Code of Practice on disciplinary and grievance procedures applied to a discriminatory dismissal that was not a genuine redundancy.
The employee, C, was part of the senior leadership team. A decision had been taken to dismiss her in March 2017, but this was not communicated to her at the time. Following the appointment of a new CEO the company started a reorganisation, which was described as a redundancy exercise (even though the number of posts was increasing). Following consultation meetings with C, she submitted a grievance on the grounds that her role was not redundant and that she had been marginalised by the CEO. Her grievance and her appeal were both dismissed by the company, and she was given notice to terminate her employment in August 2018.
C brought claims in the employment tribunal for unfair dismissal and sex discrimination, both of which were upheld. The tribunal found that the decision to dismiss her had been taken in 2017; the consultation meetings were a sham and the genuine reason for her dismissal was not redundancy, but a desire to remove her from her role. The tribunal awarded C an uplift of 25% to her compensation, due to the finding that the company’s failures were so “egregious” that the maximum possible uplift was required.
The company appealed to the EAT on the basis that the Acas uplift did not apply to a dismissal either due to redundancy or sex discrimination.
The EAT has dismissed the employer’s appeal, upholding the tribunal’s decision. In its decision, it has provided guidance on when to apply an Acas uplift by posing a series of questions for tribunals to consider:
- Is the claim one that raises a matter to which the Acas Code applies? It applies to disciplinary and grievance situations. A finding of discrimination does not preclude the application of the Acas Code, and an employer cannot sidestep it by pretending a dismissal is for some other reason, such as redundancy. The EAT was satisfied that in C’s case, the company had decided to dismiss her due to dissatisfaction with her personally and/or her performance, meaning there was a ‘disciplinary situation’ to which the Code applied.
- Has there been a failure to comply with the Acas Code in relation to that matter? This will involve a consideration of which provisions of the Acas Code have been breached, and which (if any) have been complied with. An employer acting in bad faith and pretending to apply an appropriate procedure will be acting in breach of the Code. It was clear in C’s case that there had been a total failure to comply with the Code.
- Was the failure to comply with the Acas Code unreasonable? It is not sufficient for there to have been a failure to comply with the Code, it must also be unreasonable (as it was in C’s case).
- Is it just and equitable to award an uplift, and by what percentage? The maximum that can be awarded is 25%, and this must take into account any potential overlap with other awards. The tribunal had concluded that C’s employer had acted in bad faith and there had been a total failure to apply any of the protections provided by the Acas Code. There had been no error of law in applying a 25% uplift.
The EAT further concluded that even if there had not been a ‘disciplinary situation’ to which the Code applied, there was a ‘grievance situation’ that had been a sham and therefore a total failure to comply with it.
Consequences of this decision
This case highlights the risk for employers that while the Acas Code is, on the face of it, limited to disciplinary and grievance situations, it might be held to apply to other types of dismissal that are later challenged in the employment tribunal, including ‘sham’ redundancies or discriminatory dismissals. It is always prudent for employers to follow a fair procedure before making the decision to dismiss, and usually advisable to comply with the basic requirements of the Acas Code, even if the dismissal is purportedly unrelated to a disciplinary (or a grievance) situation.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at July 2022.