The Cost of Tribunal Compensation
Compensation for successful employment tribunal claims is calculated in different ways, but with at least one element usually based on the losses suffered by the affected employee or worker. A few recent cases have dealt with the Acas Code uplift, the statutory cap and the taxation of injury to feelings (ITF) awards.
Each year in April 2022, the Government uprates the various statutory payments and caps to which an employee or worker is entitled for proving unfair dismissal. The same weekly pay cap for calculating statutory redundancy payments is used to calculate the unfair dismissal basic award, presently £571. The unfair dismissal compensatory award is presently capped at the lower of 52 weeks’ pay or £93,878.
At the same time each year, the Presidents of the Employment Tribunals also issue updated guidance of the three bands of awards for ITF. These may be awarded for successful discrimination or detriment claims and the upper band is presently £29,600 to £49,330, although even higher sums can be awarded in the most exceptional cases.
In the cases of Slade and another v Biggs and others, a tribunal awarded the maximum 25% uplift (£11,000 and £15,500) for the employer failing to follow the Acas Code on Disciplinary and Grievance Procedures in addition to separate awards for ITF (£20,000 and £25,000 respectively) and aggravated damages. The reasoning for the ITF awards (vindictiveness and spuriousness of the disciplinary process) was different from the reasoning for the uplift (no regard to the Acas Code).
The EAT upheld the 25% uplift and set out some guidance for future tribunals. Is it just and equitable to award any Acas uplift? If so, what percentage is just and equitable? Does such an uplift overlap with other awards, such as ITF? If so, what adjustment is appropriate to avoid double-counting? Finally, is the overall Acas uplift disproportionate in all the circumstances? If so, what further adjustment should be made?
As the awards for ITF and aggravated damages related to matters “in connection with” the termination of employment, the EAT also held that the tribunal had been correct to gross up the awards because they were taxable.
In the case of Rentplus UK Ltd v Coulson, the EAT held that the tribunal had been correct to award the maximum 25% Acas uplift where it had found that the real reason for a purported redundancy was actually sex discrimination related to personal and performance issues. The Acas Code applies in conduct and performance scenarios, but not where dismissals are for other reasons such as redundancy. The employer had unsuccessfully argued that the Acas Code didn’t apply because their reason was redundancy. In this case, it had been found that the whole dismissal process had been a sham and the employer had completely failed to follow the Code.
The EAT set out further guidance on the Acas Code. Does the claim raise a matter to which the Code relates? Has there been a failure to comply with the Code? Was the failure unreasonable? The EAT then went on to refer to its previous Slade judgment (referred to above) on how to calculate any uplift.
The important takeaway here is that an employer will not escape an Acas uplift by trying to dress up a conduct or performance matter as a redundancy dismissal. Even if you are carrying out what you believe to be a genuine redundancy dismissal, it’s always best to ensure that the employee has every opportunity to challenge your proposals at a consultation meeting and appeal (as you would probably do anyway to ensure a fair procedure is followed) where you have or have had recent conduct or performance issues with the employee. The same applies where the employee has recently raised any potentially discriminatory or detriment matter.
An extreme example of the effect of an unreasonable failure to follow the Acas Code was recently provided in the case of Macken v BNP Paribas London Branch. In this case, the employee brought successful claims for equal pay, direct sex discrimination and victimisation. She was awarded 15 years’ losses until retirement at the age of 65, totally £2,081,449.70 (including awards for ITF and aggravated damages), including a 20% uplift of £317,016.34.
Finally, in the recent case of Dafiaghor-Olomu v Community Integrated Care, the employer lost an unfair dismissal claim and paid the £46,153.55 award in full. The employee appealed and the tribunal at a second remedies hearing awarded an increased sum of £128,961.59. Unfortunately for the employer, the EAT held that the employer should be given credit for the £46,153.55 before the then statutory cap of £74,200 was applied. This means that they had to pay £74,200 plus £46,153.55, rather than just the £74,200 which they would have had to pay had they failed to have comply with the tribunal’s original order.
If the statutory cap is or could be relevant in any particular future case, an employer would therefore be well-advised to think carefully before paying out any unfair dismissal award (which should be paid within 14 days to avoid incurring any interest) until after any employee appeal has been completed.
Please contact the team at Synchrony Law if you require any assistance dealing with grievances, proposed dismissals or employment tribunal proceedings.