A recent employment appeal tribunal (EAT) decision provides a helpful insight into the considerations made by a tribunal when uplifting compensation in cases where an employer is found to have unreasonably failed to follow the ACAS Code of Practice and Grievance procedures (‘ACAS Code’).
In a 2019 case, employees Melissa Biggs and Roxanne Stewart were awarded a total of £150,000 for their claims of unfair dismissal and pregnancy and maternity discrimination. These were brought against the company through which Sir Benjamin Slade hired out his properties for weddings and other events. The tribunal held that the termination of employment of both employees had been engineered by Sir Benjamin who considered it ‘highly inconvenient’ that both had become pregnant at around the same time.
The tribunal found that Sir Benjamin had been the driving force behind a ‘course of conduct’ which his manager Mr Hamilton pursued at his bidding. This was designed to encourage the employees to resign, including withholding pay, failure to pay SMP, a spurious TUPE transfer and ignoring their grievances. Stewart, an employee with ten years’ service, was dismissed for alleged gross misconduct shortly before giving birth prematurely, without any proper procedure being followed. Biggs resigned after her grievance about non-payment of SMP was ignored and she therefore claimed constructive dismissal.
Under s.207A of the Trade Union and Labour Relations (Consolidation) Act 1992 a tribunal has the power to increase or decrease an award of compensation by up to 25% if it considers an employer or an employee has acted unreasonably. The tribunal therefore decided to uplift the award by the maximum permitted amount for both employees, due to Sir Benjamin’s failure to comply with the ACAS Code. They also received awards for injury to feelings and aggravated damages and these were also uplifted by 25% because of the distress caused and the seriousness of the discriminatory acts.
Sir Benjamin and Mr Hamilton recently appealed on grounds that the uplift was too high to be proportionate or acceptable. They also argued that uplifting both the injury to feelings and the aggravated damages award by 25% was impermissible ‘double counting’ because these elements overlapped with the compensation for the breach of the ACAS Code, which also applied a 25% uplift.
The EAT dismissed the appeal, considering the absolute value of the uplift was not so high as to be disproportionate. It highlighted that it should remain at the discretion of the tribunal to decide what is ‘just and equitable’ to award without further constraints. Whilst recognising that the maximum uplift would apply only to the most serious cases, the EAT pointed out that there will be cases where the 25% uplift is applied since this reflects the range set out by Parliament.
The EAT also rejected that there was ‘double-counting’ in the uplifts, stating that the three awards were assessing different things in different ways and so were not comparable. In any event the judge stated that the malice shown by Sir Benjamin in failing to comply with the ACAS Code meant that the 25% uplift could be justified by the punitive element alone, which did not overlap with the compensatory character of the awards for injury to feelings and aggravated damages.
The EAT suggested in future tribunals may choose to apply a four-stage test when considering the effect of a failure to comply with the ACAS Code:
- is an ACAS uplift just and equitable;
- if so, what is a just and equitable percentage, considering all the circumstances (which must not exceed 25%);
- is there any overlap or double-counting with other awards and, if so, what adjustment is necessary; and
- apply a sense-check to consider whether the sum of money represented by the uplift is disproportionate in absolute terms and, if so, what further adjustment is needed?
The EAT also clarified that awards for injury to feelings and aggravated damages are taxable under s.401 of the Income Tax (Earnings and Pensions) Act 203 as these related to termination of employment.
This case shows the importance of adhering to the ACAS code when going through a grievance or disciplinary procedure to ensure you are doing everything which would be considered reasonable in the circumstances. It highlights the wide discretionary power of tribunals to uplift compensation where it is just and equitable to do so and that the ACAS uplift may be regarded as punitive as well as compensatory. If you would like further guidance on this matter, please contact Christian Meredith at [email protected].