Maximum uplift of 25% was appropriate for breach of the Acas Code of Practice
In Rentplus UK Ltd v Coulson, the Employment Appeal Tribunal (EAT) upheld the Employment Tribunal’s (ET) decision to award a 25% uplift to the Claimant’s compensation for unfair dismissal for a failure to comply with the Acas Code of Practice on Disciplinary and Grievance Procedures (the Acas Code).
Background
Ms Coulson (the Claimant) was employed as “Director of Partnerships” at Rentplus (the Respondent) from 2015. The Respondent was a privately funded commercial company that purchases properties which are rented to tenants by housing associations. The Claimant’s role included managing the consultants, PR & Comms, and IT. She was a member of the leadership team and actively contributed to the strategic development of the business, its decision making and policy formulation.
Unbeknown to the Claimant, in March 2017, a decision was made to dismiss her. Mr Collins was appointed as a consultant in April 2017. The then CEO, had the intention that Mr Collins might succeed him as CEO, a role he in fact took up in October 2017 without the role being advertised. In early 2018, the Respondent started a reorganisation which they described as a redundancy exercise (despite the total number of posts being set to increase). The Claimant attended consultation meetings regarding the redundancy of her role and submitted a grievance that the assessment of her role as was not accurate. Her grievance and grievance appeal were dismissed. The Claimant was given notice of her dismissal in August 2018 and brought claims for unfair dismissal and direct sex discrimination.
Employment Tribunal decision
The ET held that the dismissal was unfair, finding that the consultation meetings were a sham as the decision to dismiss the Claimant had already been made long before the consultation process, and the reason for the dismissal was a want to remove the Claimant from her role, not a redundancy. The ET found that there were facts from which it could infer sex discrimination and that the Respondent had not disproved discrimination.
The ET also found that the failures to comply with the Acas Code were so egregious, an uplift in compensation of 25% was required.
The ET concluded that the grievance process was just as much a sham as the redundancy.
The Respondent appealed the decision to the EAT stating that the ET had erred in concluding that the Acas uplift should apply where the reason for the dismissal was redundancy. Further, the ET should have identified the failings for which an uplift was being made by reference to the relevant parts of the Acas Code which had been breached.
Employment Appeals Tribunal decision
The EAT upheld the ET decision and dismissed the appeal noting that employers cannot circumvent the Acas Code by disguising a misconduct or performance related dismissal as a redundancy.
The EAT considered it was implicit in the ET’s reasoning that the Claimant was in a “disciplinary situation” to which the Acas Code applied, this being that she was dismissed due to dissatisfaction with her personally and/or her performance, which was tainted by sex discrimination, and a fair capability or disciplinary procedure should therefore have applied. As the ET had concluded that the dismissal process was a sham and there had been a total failure to comply with the Acas Code, in the circumstances, there was no error of law by awarding an uplift of 25% to the compensation.
What is the ACAS Code and when should an ACAS uplift be granted?
Employers considering dismissal for poor performance or misconduct are required to have regard to the Acas Code which sets out the key elements of a fair procedure. Its aim is to help employers, employees and their representatives manage disciplinary and grievance situations at work. It applies to disciplinary situations (including misconduct and poor performance) and grievances, but explicitly excludes dismissals on grounds of redundancy or the non-renewal of a fixed-term contract. Although the Acas Code is not legally binding in itself, ETs will take the Code into account and can adjust awards by up to 25% if either party unreasonably fails to comply with it, section 207A, Trade Union and Labour Relations (Consolidation) Act 1992, (TULRCA).
Helpfully, the Judge sitting in the EAT provided that that section 207(a) TULRCA can be broken down into four components:
- 1. Is the claim one which raises a matter to which the Acas Code applies?
It was clear that the ET considered the Acas Code applied in this case. It rejected that redundancy was the reason for the Claimant’s dismissal and although the sex discrimination case was upheld, this was not the only reason for dismissal as the Claimant was in a disciplinary situation due to the Respondent’s dissatisfaction with her performance, therefore a fair capability or disciplinary procedure should have applied.
- 2. Has there been a failure to comply with the Acas Code in relation to that matter?
This was clearly made out here. The redundancy was described as a sham as the dismissal of the Claimant was pre-determined. There was absolutely nothing that the Claimant could say to prevent her dismissal and there was a total failure to comply with the Code.
- 3. Was the failure to comply with the Acas Code unreasonable?
Although the ET’s comments on the 25% uplift were very brief it was stated that the failures were ‘so egregious’, an uplift in compensation of 25% was required, therefore the burden of “unreasonableness” was clearly met. Indeed, the breach was beyond merely being unreasonable.
- 4. Is it just and equitable to award an uplift because of the failure to comply with the Acas Code and, if so, by what percentage, up to 25%?
The Respondent in this case asserted that the ET should have identified the failings for which the uplift is being made by reference to the relevant parts of the Acas Code that it was in breach of. The EAT noted that generally, this should be done. However, in this case, the ET found that the process adopted was a complete sham and the ET concluded that the Respondent acted in bad faith such that there was a total failure to apply any of the protections afforded by the Code, therefore there was no error in law in awarding a 25% uplift.
The EAT also addressed the issue of the Claimant’s grievance. It stated that, even if there had not been a “disciplinary” situation, there certainly was a “grievance” situation, which was as much a sham as the dismissal process. Had the ET turned its mind to the issue it would have applied equivalent reasoning and concluded that the Acas Code applied to the Claimant’s grievance, the process was a sham, there was a total failure in compliance and a 25% uplift was appropriate.
What can employers learn from this case?
This case is a useful reminder that ETs will look beyond the reason for dismissal provided by the employer and that the Acas Code can apply even in cases which on the surface are not obviously disciplinaries or grievances. In any event, it is crucial to follow a fair procedure to avoid a finding of unfair dismissal. The Acas Code provides a very useful framework for best practice and much of it will be relevant regardless of the reason for dismissal.
New 'Fire and rehire' Acas Code
In March 2022, the Government announced that a new statutory Code of Practice will be published on the use of “fire and rehire” practices that are used to bring about changes to employee’s terms and conditions of employment. Similarly to the Acas Code of Practice on Disciplinary and Grievance Procedures, ETs and courts will be required to take the Code into account when considering relevant cases, including unfair dismissal and they will have the power to apply an uplift of 25% to compensation where the Code applies and the employer unreasonably fails to follow it. There is currently no set date for the introduction of the new Code.
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