In handling certain workplace issues, best practice and tribunals dictate that employers should be mindful of the ACAS Code of Practice on Disciplinary and Grievance Procedures (the Code) to ensure that they are acting fairly and reasonably. The Code sets out the minimum steps that an employer should follow when handling a grievance or disciplinary matter for poor performance or misconduct. Failure to comply with the Code may result in compensatory awards being uplifted by as much as 25% by the tribunal. However, the Code explicitly states that it does not apply to redundancy situations.
In the recent case of Rentplus UK Ltd v. Coulson [2022] EAT 81, the Employment Appeal Tribunal (EAT) considered whether an uplift in compensation had been properly applied, where the dismissal was purportedly due to redundancy.
Case facts
Ms Coulson was a member of the Rentplus UK Ltd (Rentplus) leadership team and was Director of Partnerships. She was made redundant by Rentplus following a reorganisation process in August 2018. Prior to being dismissed, she raised a grievance that the impact of the proposed reorganisation did not trigger a redundancy of her role, and that she had been marginalised by the new CEO. Her grievance and appeal were not upheld. She brought claims of unfair dismissal and direct sex discrimination before the Employment Tribunal (ET).
The ET found that the redundancy consultation meetings that had taken place were a sham, and that the decision to dismiss Ms Coulson had been taken at least a year before the consultation meetings started. It found that the real reason for her dismissal was a desire to remove her from her role, and that her role was not redundant. Ms Coulson succeeded in both her claims and the ET awarded a 25% uplift on her compensatory award for Rentplus’s failure to follow the Code. Rentplus appealed to the EAT on the basis that the ET had failed to identify the relevant parts of the Code which had not been followed and that, in any event, no uplift should have been made where Rentplus’s reason for dismissal was redundancy and the ET had concluded there was sex discrimination.
The EAT upheld the ET’s decision and dismissed the appeal. The EAT held that, in disciplinary situations, an employer cannot avoid complying with the Code by presenting their reasons as something other than a performance or misconduct issue, such as a redundancy. In addition, a finding of unlawful discrimination does not preclude the application of the Code. A finding of discrimination does not require that the principal reason for the treatment was a protected characteristic (e.g. sex). Issues with an employee’s conduct or capability, even if they are a result of discriminatory assumptions, will still be deemed a disciplinary situation to which the Code applies, and thus a fair capability or disciplinary procedure should have been followed.
The EAT decision is a reminder to employers that the Code can apply in instances that are not being addressed as disciplinaries or grievances. If an employer’s alternative reason for dismissal is not upheld and an ET finds the principal reason was really performance or misconduct, the Code may apply. Prudent employers should therefore bear the Code in mind when undertaking any dismissal process (or grievance process) to ascertain its applicability and to limit exposure to a finding by an ET that compensation be uplifted by up to 25%.
