377: An employer’s failure to follow the Acas Code can lead to a 25% uplift on a compensatory award

When considering disciplinary, performance and grievance issues, employers must have regard to the Acas Code of Practice on Disciplinary and Grievance Procedures, although the Code does not apply to dismissals on grounds of redundancy or non-renewal of fixed-term contracts. Where an employer has unreasonably failed to follow the Acas Code, a Tribunal may award an uplift to compensation of up to 25% if it is just and equitable to do so.

In Rentplus UK Ltd v Coulson, the Employment Appeal Tribunal (EAT) recently held that the Acas Code applied to a discriminatory dismissal that was not a genuine redundancy and awarded the maximum 25% uplift due to the employer’s failure to comply.

Ms Coulson was employed by Rentplus UK Ltd as Director of Partnerships. In around March 2017, a decision was taken to dismiss her, but not immediately. After a new CEO took over in the Autumn of 2017, Ms Coulson felt that she was being frozen out. In early 2018, the company embarked on a reorganisation which was described as a redundancy exercise despite an increase in the total number of posts. Ms Coulson attended consultation meetings, but also submitted a grievance alleging that she was being marginalised by the new CEO and that her role was not genuinely redundant. Her grievance was rejected, and she was eventually dismissed by reason of redundancy. Ms Coulson brought claims for unfair dismissal and direct sex discrimination.

The Tribunal held that her dismissal was unfair because the decision to dismiss her had been taken in Spring 2017, meaning that the redundancy consultation process was a total sham. It also held that her dismissal was tainted by sex discrimination. When assessing compensation, Ms Coulson was awarded a 25% uplift due to the company’s complete failure to apply the Acas Code.

Rentplus appealed, arguing that the Acas Code did not apply where the reason for dismissal was redundancy or sex discrimination and that the Tribunal had not properly explained why it had applied a 25% uplift.

The EAT agreed that the Tribunal’s reasoning could have been more detailed but looking at the judgment overall, it was clear that the key issues had been considered. The Tribunal had concluded that the redundancy process was a sham because the outcome was predetermined, and had therefore rejected redundancy as the true reason for dismissal. It was implicit in the Tribunal’s reasoning that in reality Ms Coulson was dismissed due to dissatisfaction with her performance. Rentplus had acted in bad faith and there had been a total failure to comply with the Acas Code. There was therefore no error of law in awarding the maximum 25% uplift.

This decision is a useful reminder that a Tribunal will be prepared to increase compensation for failure to comply with the Acas Code where it concludes that the employer’s true reason for dismissal is related to poor performance or misconduct. As this case illustrates, this could apply to a sham redundancy or a dismissal involving discriminatory assumptions. It is worth noting that the same reasoning would apply to a sham grievance process. The employer’s failure to follow the Acas Code must also have been unreasonable. However, where the employer has acted in bad faith and has failed to take account of an employee’s views during a disciplinary, capability or grievance procedure, there is likely to be a breach of the Acas Code. If there has been a total failure to comply, it is likely that a 25% uplift will be considered appropriate.

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