The Legal 500

The second anniversary of the introduction of the statutory dispute resolution procedures is looming on the horizon. By now, employers should be accustomed to following the statutory dismissal, disciplinary and grievance procedures in appropriate circumstances.

In essence, these procedures involve three stages as follows:

• The employer gives the employee a written statement of the grounds for dismissal or relevant disciplinary action. In the case of a grievance, the employee sets out their grievance in writing.
• A meeting should be held at which both sides can explain their case, following which the employer informs the employee of the decision and their right of appeal (unless of course the modified procedure applies).
• If the employee so requests, an appeal meeting should be held.

The Employment Act 2002 provides that if an employee succeeds with a claim before the employment tribunal, in circumstances where one of the statutory dispute resolution procedures should have been followed but was not, then the employment tribunal should, if it considers it just and equitable to do so, increase or reduce the award by between 10% and 50%, depending on whether the employer or employee was at fault.

It should be noted that compensation for unfair dismissal may not be increased beyond the statutory cap of £58,400. As there is no cap on any compensation awarded in discrimination cases, a 50% uplift can lead to a very high compensation award.

The legislation contains no guidance on what factors should be taken into account when deciding whether to uplift or reduce compensation. However, having regard to case law in relation to protective awards for failing to inform and consult in relation to collective redundancy exercises (Radin Ltd v GMB and others) and business transfers (Sweetin v Coral Racing), cynics anticipated that the employment tribunals would adopt a hard-line approach and increase compensation by the maximum permitted where the employer is at fault.

Recent first instance decisions have illustrated that such cynicism was well founded, with uplifts at the upper end of the spectrum - often at 40% or 50%. (Dosanjh v Ergo Computing UK Ltd, Giles v Geach and Jones t/a Cornelia Homes, and Varoujian v Chelsea Textiles Ltd).

Norris and Robertson v Lambert and Lambert T/A Black Bull Inn

In this first instance case the tribunal adopted a very broad approach to the question of uplifting compensation, applying the uplift to a number of different components of the total compensation awarded.

Facts

Mr Norris brought an unfair dismissal claim against his employers, Mr and Mrs Lambert, who were partners and proprietors of the Black Bull Inn, where he worked. One of Mr Norris's colleagues had an altercation with Mrs Lambert about the amount of her wages. This led to the colleague telling Mrs Lambert that she could ‘stuff her job'. In response Mrs Lambert assaulted the colleague in an attempt to recover the pay packet that she had just distributed.

Mr Norris tried to stop Mrs Lambert assaulting his colleague. As a result Mr Lambert told him that if he didn't like it he could leave. He was then escorted off the premises. Mr Norris and his colleague later reported this incident to the police. Mr Norris subsequently brought a claim for unfair dismissal, wrongful dismissal, unlawful deduction from wages, accrued holiday pay and harassment on the grounds of his sexuality.

Employment tribunal's decision

The employment tribunal found that the statutory disciplinary and dismissal procedure was applicable to Mr Norris's dismissal, but had not been followed in any respect by his employers. There had been no attempt at setting out the reason for the dismissal in writing, conducting any form of meeting about it or offering an appeal meeting. As there was a complete failure to apply the statutory procedure the tribunal considered that an uplift of 50% should be applied to the award.

Worryingly, the tribunal not only applied a 50% uplift to the compensatory award in relation to his unfair dismissal claim, but also applied a 50% uplift in relation to the unlawful deduction of wages claim, the claims for accrued holiday pay and notice money, and in relation to the sum awarded for injury to feelings as a result of the sexual orientation harassment.

Comment

It is not known whether this case will be appealed, but it is at least questionable whether the tribunal was correct to award a 50% uplift in relation to claims that should have been covered by the statutory grievance procedure (ie the claim for unlawful deduction of wages, accrued holiday pay and sexual orientation harassment). At the very least Mr Norris should have complied with Step 1 and set out his grievance in writing.

Mr Norris was also awarded four weeks' pay because he had not received a section 1 statement of his terms and conditions of employment. This award was not subject to the 50% uplift.

Although this decision, and the other decisions referred to above, have no precedent value, they may be indicative of the general approach that the tribunals will adopt in relation to this issue of uplift. Employers should be mindful of this and, where at all possible, ensure that employees have up-to-date section 1 statements of their terms and conditions and that the statutory dispute resolution procedures are followed where appropriate.

Guidance is now awaited from the EAT in this respect. However, for the time being, parties to proceedings have no real guide as to the level of compensation that may be recovered at the tribunal to help them focus on any settlement discussions beforehand.

Case refs

Radin Ltd v GMB and others [2004] EWCA Civ 180

Sweetin v Coral Racing [2006] IRLR 252

Dosanjh v Ergo Computing UK Ltd

ET 2601428/05, 27 January 2006

Giles v Geach and Jones t/a Cornelia Homes (25 July 2005, unreported)

Varoujian v Chelsea Textiles Ltd (7 June 2005, unreported)

Norris and Robertson v Lambert and Lambert t/a Black Bull Inn

(IDS Brief 801)