The ACAS Code of Practice on disciplinary and grievance procedures (the Code) sets out the principles that employers must follow when handling disciplinary and grievance situations. When deciding whether an employee has been unfairly dismissed for misconduct or poor performance, an employment tribunal will consider whether the employer has followed a fair procedure. In doing so, it must take account of the provisions of the Code.
If an employee brings a successful claim for unfair dismissal or a number of other common types of claim (including those related to discrimination, breach of contract, working time, detriment, and deduction of wages) arising out of dismissal or disciplinary action for misconduct or poor performance, the level of compensation awarded to the employee can be increased by up to 25% if the employer unreasonably failed to follow the Code, or reduced by up to 25% if the employee unreasonably failed to do so.
In the recent case of Local Government Yorkshire and Humber v Shah (UKEAT/0587/11/ZT), the Employment Appeal Tribunal (EAT) addressed the question of whether adjustments to compensation under the Code can be made in favour of workers as well as employees.
The claimant, Ms Shah, was a project manager seconded to Local Government Yorkshire and Humber (LGY&H) from Bradford and Airedale Primary Care Trust. After Ms Shah raised concerns about financial probity at LGY&H, the working relationship broke down and she ceased work. She subsequently made a successful claim for compensation based on the fact that she had suffered a detriment for making a protected disclosure under the whistleblowing provisions of the Public Interest Disclosure Act 1998.
The compensation awarded by the employment tribunal included future loss, injury to feelings as well as a 25% increase because LGY&H had failed to comply with the Code. LGY&H appealed to the EAT on the issue of remedy. The EAT refused to overturn the tribunal's awards for future loss and injury to feelings. However, the EAT disagreed with the tribunal's decision to uplift the award for breach of the Code.
The relevant legislation allows uplift of an award to "the employee". For these purposes, an employee is defined more narrowly than a worker, being “an individual who has entered into or works under a contract of employment”. The EAT therefore concluded that only employees, as opposed to workers, can take advantage of the potential uplift, even though the EAT was minded to accept that LGY&H was obliged to follow the Code.