Rentplus UK Ltd v Coulson

The Employment Appeal Tribunal dismissed the employer's appeal against an Employment Tribunal finding of unfair dismissal and a maximum 25% uplift under section 207A TULR(C)A for failure to comply with the Acas Code on disciplinary and grievance procedures. The EAT held that the Employment Tribunal properly applied the Acas Code because the employer had treated the employee as being in a disciplinary/capability or grievance situation and had conducted a sham process in bad faith. The EAT concluded that a sham procedure that is predetermined and taken in bad faith can amount to a failure to comply with the Acas Code, such failure may be unreasonable and it was just and equitable to apply the full 25% uplift. The EAT also explained that while fuller reasoning is preferable, a brief explanation can stand if the judgment, read fairly as a whole, shows the correct application of the statutory test in section 207A TULR(C)A.

Background and parties: The claimant was Director of Partnerships for Rentplus UK Limited, joining in 2015. The employer reorganised after new investment and decided to dismiss the claimant; the Employment Tribunal found that the claimant had been frozen out, that the redundancy and grievance/consultation processes were a sham and that the real decision-maker had predetermined dismissal.

Procedural posture: The Employment Tribunal at Exeter (heard 17–19 August 2020; judgment 27 August 2020) found unfair dismissal, rejected redundancy as the reason, found aspects of sex discrimination and applied a 25% uplift under section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992 for failure to comply with the Acas Code. The employer sought permission to appeal; on sift Eady J initially considered there were no reasonable grounds but permission to proceed was granted under Rule 3(10) by Heather Williams QC DJHC on the discrete points now argued before the EAT.

Nature of the claim and relief sought: The underlying claim was unfair dismissal (section 111 Employment Rights Act 1996). The Employment Tribunal awarded compensation for unfair dismissal and applied an uplift under section 207A TULR(C)A for unreasonable failure to comply with the Acas Code. The employer appealed against the uplift and the tribunal's approach to the Acas Code.

Issues before the EAT:

• Whether the Acas Code applied where the employer contended the dismissal was for redundancy but the ET found sex discrimination and the claimant had raised a grievance;
• whether a sham or predetermined process can amount to a failure to comply with the Acas Code;
• whether the Employment Tribunal was required to identify the precise provision of the Acas Code breached when awarding a percentage uplift and to set out more detailed reasoning for the uplift amount;
• whether the tribunal had erred in law in applying the full 25% uplift.

Court’s reasoning and conclusions: The EAT analysed section 207A by splitting it into components: (i) whether the claim involves a matter to which the Acas Code applies; (ii) whether there was a failure to comply with the Code; (iii) whether any failure was unreasonable; and (iv) whether it was just and equitable to award an uplift and, if so, by what percentage (up to 25%). The EAT held that applicability depends on substance: where an employer treats an employee as facing disciplinary or capability issues, or where a grievance has been raised, the Code can apply even if, as a matter of fact, the employee is innocent or the dismissal is characterised differently. The EAT accepted that a sham procedure, applied in bad faith and predetermined so that nothing the employee said could affect the outcome, is not compliance with the Code and can justify an uplift. The EAT found that the Employment Tribunal’s brief reasoning, read fairly as a whole, showed that it applied the correct statutory test and that the breaches were egregious; accordingly the 25% uplift was appropriate and there was no error of law requiring interference.

Other findings: The EAT observed that fuller analysis by a tribunal is generally desirable when applying section 207A, but absence of detailed breakdown of components is not fatal if the judgment as a whole shows correct application of law and permissible conclusions. The EAT dismissed the appeal.

The appeal was dismissed. The EAT concluded that the Employment Tribunal correctly applied section 207A TULR(C)A and the Acas Code: where an employer treats an employee as being in a disciplinary/capability situation or where a grievance has been raised, the Code can apply even if the ultimate label of dismissal differs; a sham, predetermined process conducted in bad faith is a failure to comply with the Code; the failure was unreasonable and justified the maximum 25% uplift. The Employment Tribunal's concise reasoning was sufficient when read fairly as a whole.

Appeal from the Employment Tribunal sitting at Exeter (hearing 17–19 August 2020; judgment issued 27 August 2020). On sift, Eady J considered there were no reasonable grounds for appeal but permission to proceed was granted under Rule 3(10) by Heather Williams QC DJHC on a limited ground. Full appeal heard in the Employment Appeal Tribunal, judgment ([2022] EAT 81) handed down 27 May 2022.