UK: Whistleblowing: Acas Code on Disciplinary and Grievance Procedures
Mr. Zabelin, the Group Chief Investment Officer for SPI Spirits, agreed a 30% pay cut from April to June 2020 because of the effects of the pandemic on the business. When SPI said the pay cut was being extended to at least 1 September 2020, Mr. Zabelin raised various issues in an email and at a meeting in early June 2020, including alleging that the pandemic was being used as an excuse to cut pay without transparency and that employees were being intimidated. There was also a discussion about changes to bonuses. Mr. Zabelin subsequently had a telephone conversation with Mr. Shefler, the majority shareholder in the group, who suggested Mr. Zabelin should resign if he didn’t agree to proposed changes to bonuses. When he queried why he should resign, Mr. Shefler dismissed him. Mr. Zabelin then brought claims for automatic unfair dismissal and detriment on the grounds of having made whistleblowing protected disclosures including regarding reductions to his pay and bonus and staff welfare.
The Acas Code of Practice on disciplinary and grievance procedures sets out minimum standards required when managing disciplinaries and grievances – and failure to follow this Code can be taken into account when assessing liability and compensation. A grievance must be in writing and set out the nature of the grievance. In claims where the Code applies, if there has been any unreasonable failure to follow it, the tribunal has a discretion to increase (“uplift”) the compensation award where the employer is at fault, or decrease if the employee is at fault, by up to 25%.
The tribunal upheld Mr. Zabelin’s claims. SPI appealed in relation to the compensation awarded, arguing that provisions in his employment contract and other agreements meant that his compensation should be capped at £270,000. The EAT concluded that, even if the contractual clauses had the meaning contended by SPI, the outcome they sought to achieve was an unenforceable contractual cap on the tribunal’s awards which was void under employment legislation.
The EAT also found that Mr. Zabelin’s concerns were set out in his email, and although he did not refer to the protected disclosures, these were closely related, and the underlying nature of his grievance did not change – and the Code therefore applied. The tribunal was also entitled to award the uplift as the protected disclosures could constitute culpable behaviour by SPI, and the disciplinary provisions in the Code were therefore engaged.
Key Action Points for Human Resources and In-House Counsel
A grievance must be made in writing but if new grievances subsequently arise, they do not each have to be put in writing for the Acas Code to be engaged, unless there is a ‘material change’ in the nature or scope of the complaint.
The compensation uplift for an employer’s failure to comply with the Code may also be applied to awards made against individuals if they were responsible for that failure. This will apply in claims such as this one, where an employee brings a claim against an individual as well as their employer, and the individual is responsible for the failure to comply with the Code.
Contractual provisions in employment contracts and settlement agreements will not protect employers from, or limit, uncapped awards in whistleblowing claims.
