Under provisions within Section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), an Employment Tribunal (ET) can uplift compensation awards by up to 25% when employers do not follow the ACAS Code of Practice in disciplinary and grievance matters. For the uplift to apply in grievance procedures, the issue must be done in writing – as confirmed by the Employment Appeal Tribunal’s findings in Cadogan Hotel Partners Ltd v Ozog 2014.
Among other awards, tribunals can also award compensation for losses due to whistleblowing dismissals. The sum of the award is dependant on what the tribunal thinks is just and equitable according to the circumstances of the case. As such, there is no statutory cap for such awards.
The lesson to learn here is that employers must ensure that any disciplinary and/or grievance matters are addressed internally in a fair and proper manner – as per their internal policies and procedures. It is vital that employers adhere to the minimum legal requirement of following the ACAS Code on Disciplinary and Grievance Procedures. This is especially true in cases where the employee has over two years’ service – as failure to do so could result in substantial claims for compensation. This was the result in the case of SPI Spirits (UK) Ltd v Zabelin 2023…
SPI Spirits (UK) Ltd v Zabelin 2023 – The Facts
SPI Spirits (UK) Ltd ran a wine and spirits business, and employed Mr Zabelin as a Group Chief Investment Officer due to him having a legal background. In his contract of employment, there was a term that a sum of £270,000 would be payable to Zabelin on his termination in return for post-termination covenants. This was expressly inclusive of any other amounts claimed on the termination.
In March 2020 – due to the pandemic situation, a temporary pay cut of 30% was imposed by SPI to all employees. Originally, this was to last between April and June 2020 - but was extended to September with the possibility of a further extension down the line.
Zabelin expressed concerns over continued unilateral pay cuts and changes to his discretionary bonus. He argued that it amounted to a breach of contract, had resulted in a toxic and stressful work environment, and had negatively impacted the health and safety of fellow employees. He also stated that to use the excuse of the pandemic without any transparency was unacceptable.
SPI Spirits (UK) Ltd v Zabelin 2023 – The Tribunal
Zabelin was eventually dismissed over the telephone without a formal hearing on the grounds – or for the sole and principal reason, that Zabelin had made protected disclosures. As a result, he brought claims for unfair dismissal and whistleblowing.
The Employment Tribunal upheld his claims, awarding Zabelin £1,626,452 for whistleblowing detriments, and £3,589 for his unfair dismissal claim. The awards had a discretionary uplift of 25% in event of a failure to follow the ACAS Code on disciplinary and/or grievance procedures. Zabelin was also awarded a further £9,000 for injury to his feelings.
Zabelin’s contract of employment had a provision that he would only be entitled to £270,000 in compensation if SPI terminated his contract after a minimum of 12 months of service. As such, SPI claimed that – although it was accepted that the contractual provision was not enforceable as a legal cap on the award, the contractual provision should be taken into account as relevant circumstances for a reduction. As they felt this was on just and equitable grounds, SPI decided to appeal against the amounts awarded.
What did the Employment Appeal Tribunal decide?
The Employment Appeal Tribunal (EAT) concurred with the ET that any contractual provision that limits its obligation on statutory employment claims will not bind the tribunal. Further, it is likely to be void and unenforceable, even if the terms were freely agreed between the parties. As such, there was no guarantee that such a cap was just and equitable grounds for reducing any awards – especially those involving whistleblowing matters.
As it related to a 25% uplift for a failure to comply with the ACAS Code of Practice on grievances and disciplinary procedures, the EAT stated that: “Where the employer dismisses or takes other action against employees because of what it regards as, or potentially as, culpable conduct, the discipline provisions of the code will apply.”
Although the dismissal in this case was more about whistleblowing, the ACAS Code was found to apply. This reflects wider implications of the ACAS Code of Practice on both disciplinary and grievance procedures. Should you require any assistance with handling these matters internally, please do not hesitate to call our HR Advice Line Team for FREE on 0116 274 9193.
