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Sham Redundancies and the application of the Acas Code

The Acas code gives best practice guidance on how to deal with certain workplace issues, the most common being disciplinaries and grievances.  Many employers will have their own disciplinary and grievance policy, but it is important to remember that a failure to follow it, or, where the code does not cover certain points in the Acas code, that any compensatory awards could be increased by up to 25%.  However, the code does not apply to redundancy situations, and therefore whilst failing to carry out a correct redundancy procedure can still lead to unfair dismissal claims, any award would not be impacted by the 25% uplift.

However, a recent Employment Appeal Tribunal (EAT) case, Rentplus UK Ltd v Coulson [2022] EAT 81, recently considered a Tribunal’s decision to apply an Acas uplift where the reason for dismissal was redundancy.

Case Overview

Ms Coulson, the Claimant, was a member of Rentplus’ leadership team.  In August 2018, following a restructuring process, Mr Coulson was made redundant.  Prior to her redundancy, she had raised a grievance that she was effectively being phased out by the new CEO of Rentplus, and the proposed restructure did not make her role redundant.  Her grievance was dismissed along with her appeal grievance.  Following her redundancy, she submitted a claim for both unfair dismissal and direct sex discrimination.

The Tribunal Decision

The Tribunal decided that the redundancy was a sham.  The decision to dismiss Ms Coulson had been taken prior to the redundancy consultations starting (at least a year) and found the real reason for her dismissal was Rentplus’ desire to remove Ms Coulson from her role, not remove the role.  Ms Coulson won both her claims and the Tribunal awarded a 25% uplift on her compensatory awarded due to Rentplus’ failure to follow the Acas Code.  Rentplus appealed to EAT on the grounds that the Tribunal had not specifically identified what parts of the Acas Code had been breached and that the Acas Code did not apply to redundancies.

The Employment Appeal Tribunal Decision

The EAT dismissed the appeal and upheld the original decision.  The EAT held that an employer cannot seek to circumvent the Acas Code by presenting the reasons for dismissal as something other than a performance or misconduct issue.  In this case, the EAT held that Rentplus has simply relabelled a disciplinary process as a redundancy process and therefore the Acas Code should have applied.  The EAT also found that where a person wins a discrimination claim, this does not always mean the Acas Code does not apply.  In their reasoning, the EAT stated that a finding of discrimination does not require that the principal reason for the treatment was the protected characteristic, in Ms Coulson’s case, sex.  The EAT stated that conduct or capability situations should still be viewed as a disciplinary, whether or not they are as a result of discrimination.  As such, the Acas Code does apply and should therefore be followed.

Conclusion

The case is a reminder to employers that the Acas Code will sometimes apply even in cases that are not grievances or disciplinaries.  Employers wanting to dismiss an employee should ensure that the appropriate reason for dismissal is chosen and as such, the appropriate procedure should precede the dismissal.  In the case of redundancy, employers should always remember that it is the role that is made redundant and not the employee.  An attempt to pass off a conduct issue as a redundancy for example, could lead to a Tribunal deciding the Acas Code applies and therefore a 25% uplift on compensation could be awarded.

Please contact –

Simon Turton

Sturton@pm-law.co.uk

Tel: 0114 220 1795

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