Originally published in In House Lawyer Magazine

Until now the Employment Appeal Tribunal (EAT) had expressly refused to offer tribunals guidance on the application of the statutory uplift to compensatory awards where employers had failed to follow the statutory disciplinary and dismissal procedures (SDDPs). One can speculate that increasing pressure from the lower courts has lead to the EAT changing its stance.

In Aptuit (Edinburgh) Ltd v Kennedy, the EAT set out the factors that tribunals should or, more accurately, should not take into account when applying the uplift.

The Law

All employers should now be reasonably comfortable with the SDDPs, which employers and employees have had to comply with since 1 October 2006 when dismissal or other relevant disciplinary action is contemplated.

The standard SDDP, which, in all but the most exceptional cases, will apply if an employer is contemplating dismissing or taking ‘relevant disciplinary action’ against an employee, requires the employer to:

  • set out in writing the employee’s alleged conduct and invite the employee to attend a meeting to discuss the matter;
  • have such a meeting and, after it, inform the employee of its decision and notify them of the right to appeal against the decision; and
  • if the employee does wish to appeal, to invite them to attend a further meeting.

Failure to follow the SDDP will not only lead to what might be a potentially fair dismissal being held to be automatically unfair, but also to an uplift of the employee’s compensatory award. In particular, a tribunal must, unless there are ‘exceptional circumstances’, increase any award that it makes to the employee by 10% and, if it considers it just and equitable, may increase it by up to 50%.

The Facts

The factual background of Aptuit was something of a muddle, although the tribunal found that Mrs Kennedy, whose position had been identified as being at risk of redundancy, and who was subsequently dismissed on this ground, had not been ‘offered a right of appeal’, despite her own admission that she knew that she could appeal. The tribunal held that her dismissal was, on this basis, automatically unfair.

It ordered an uplift of 40% stating that:

‘... the failures of the respondent were serious. They are a large organisation. There appears to have been no [redundancy] consultation and... they had treated this longstanding employee in a shoddy manner.’

The Appeal

The company, Aptuit, appealed on several grounds, the two of interest being that the tribunal:

  • Aptuit had failed to ‘offer’ Kennedy a right of appeal; and
  • had awarded a 40% uplift by reference to matters that were not relevant and without recognising that the uplift was discretionary.

The EAT conceded that the company was right on the first part of its appeal. The EAT held that the SDDPs do not require a right of appeal to be communicated in a letter of dismissal, or for such a right to be ‘offered’. Rather, the SDDPs require employers to notify the employee of their right of appeal. Since Mrs Kennedy gave evidence that she knew she had a right of appeal, the tribunal should have, but failed to, enquire how she knew that.

With regard to the uplift, it went on to find that the tribunal had taken irrelevant matters into account, namely:

  • ‘serious failures’ that were not connected with the SDDP;
  • the size of the employer;
  • the lack of redundancy consultation; and
  • the ‘shoddy treatment’ of a longstanding employee.

In the EAT’s view, the only relevant factor was Aptuit’s failure to complete the SDDP.

Comment

Although the EAT’s decision appears to give employers more flexibility in how they deal with dismissal and other disciplinary matters, we do not recommend that employers use this decision to adhere less rigorously to the SDDPs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.