Author
kathryn clapp

Kathryn Clapp

Senior Knowledge Lawyer

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Author
kathryn clapp

Kathryn Clapp

Senior Knowledge Lawyer

Read More

20 July 2022

Law at Work - July 2022 – 5 of 7 Insights

Unfair dismissal remedies: calculating the compensatory award and ACAS 25% uplift on a sham redundancy dismissal

Calculating the compensatory award for unfair dismissal

At the remedies hearing of Dafiaghor-Olomu v Community Integrated Care the employment tribunal (ET) ordered a compensatory award of about £46,000 be paid by the employer to the claimant following her successful unfair dismissal claim. On her appeal (where her renewed application to be re-engaged in the employer's business did not succeed) the evidence for the original monetary award was revisited and the tribunal increased the sum to be paid by the employer to her to about £129,000.

Compensation for unfair dismissal claims is subject to a statutory cap, which at the time of the employee's claim was £74,200 or 52 weeks' pay, whichever is the lower.

The claimant appealed to the EAT as to what amount was due to her. If the statutory cap was applied first (to the £46,000), then she was only entitled to about a further £28,000. If the sum already received was deducted from the new, higher award of £129,000, and then the statutory cap was applied, she would be due a further £74,200 (the maximum permitted for unfair dismissal).  The EAT took the latter view which meant that the employer received no credit for having made the original payment and was in effect penalised for having complied with the ET's original order; a position for which the EAT had sympathy. The EAT also held that the ET had not been wrong in refusing to reconsider its decision not to order re-engagement at the second remedies hearing. It also dismissed a cross appeal by the employer that the ET had not been entitled to increase the compensatory award at that subsequent hearing.

We do not know whether this case will be appealed further, but respondents may take a view to delay paying compensatory awards until after any appeals process has ended. This does not come without risk as there are time limits for payment in place, and such a course of action would require a tribunal agreeing to suspend the time limits.

Acas uplift of 25% in sham redundancy procedure

In Rentplus UK Ltd v Coulson [2022] EAT 81 the EAT upheld an ET's decision to award a 25% uplift to an employee's compensation, in respect of the employer's failure to comply with the Acas Code of Practice on Disciplinary and Grievance Procedures. Despite the employer dressing up the claimant's dismissal as "redundancy", the ET held that that the dismissal was discriminatory and the procedure a total sham. Although the employer appealed the decision, the EAT agreed with the ET and provided the following questions to assist a tribunal when considering an Acas uplift.

  • Is the claim one which raises a matter to which the Acas Code applies?
  • Has there been a failure to comply with the Acas Code in relation to that matter?
  • Was the failure to comply with the Acas Code unreasonable?
  • Is it just and equitable to award an uplift because of the failure to comply with the Acas Code and,
  • if so, by what percentage, up to 25%?

Although the Acas Code applies to disciplinary and performance cases and explicitly excludes dismissals on the grounds of redundancy, where an employer masks the real reason for dismissal, but on the facts there is a discriminatory or a disciplinary situation, then the Acas Code will be applied. If there is an unreasonable failure to comply with the Code, a tribunal are likely to award an uplift in any compensatory award.

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