In the recent case of SPI Spirits (UK) Ltd v Zabelin 2023, the Employment Appeal Tribunal’s (EAT) decision reminds employers that - where there is a failure to follow the statutory ACAS Code of Practice, this can result in considerably increasing the award of damages against the employer.
The EAT also ruled that – even where a senior executive with equal bargaining power agrees to a contractually capped compensation, such an agreement would have no effect in law. Tribunals can award compensation for losses due to a whistleblowing dismissal based on a just and fair basis, with no statutory cap applying to the award.
SPI Spirits (UK) Ltd v Zabelin – The Facts
In the case of SPI Spirits (UK) Ltd v Zabelin, the employee’s losses amounted to £1.6 million, but his employment contract capped his damages to just £270,000. This was the agreed amount he would be paid on termination, and – in return for him…
Both employer and employee negotiated the contract. Interestingly, the employee himself was legally trained, but agreed to the terms. The employer accepted that the clause was not binding on the Employment Tribunal (ET), but nonetheless argued it should be considered when it came to assessing the damages award.
The Employment Appeal Tribunal (EAT) rejected the employer’s reasoning. This was due to the fact that – if they agreed with the given argument, it would result in an employee being allowed to contract out of their statutory legal rights. This decision has made clear the position of the ACAS Code on disciplinary and grievance procedures…
Failure to Follow the ACAS Code
Failure by the employer to follow the correct procedures can result in an uplift of up to 25% on damages awards. The provision of the ACAS Code applies regardless of the ET concluding that the employee’s behaviour amounted to protected whistleblowing. In relation to any grievances, there is no requirement for the employee to express their concerns in writing for the ACAS Code to apply.
This point was of particular relevance in the case of SPI Spirits (UK) Ltd v Zabelin due to the fact that the EAT decided to award a 20% uplift to the whistleblowing damages. The grievance about wage cuts affecting himself – as well as 2,000 other employees, gave him reasonable belief that the disclosure was made in the public interest. The claimant had formulated this belief after an open discussion with another employee. This occurred after the grievance was given, but before any of the grievance meetings took place. The EAT ruled that the Tribunal was allowed to decide if there had been any changes to the facts.
Impact on Employers
Where an employee uses an individual as an agent - and the individual does not follow the ACAS Code, the uplift for a whistleblowing detriment can be applied against that individual personally.
For employers and HR practitioners, the key point to take away from this case is the importance of having a fair contract of employment in place, and a need to ensure the ACAS Code is always adhered to and followed.
This article is for informational and educational purposes only and should not be relied upon as legal advice. If you require assistance with creating contracts of employment - or simply want to get some additional guidance on this topic, please do not hesitate to contact the Quest Advice Line Service for free on 0116 274 9193.
