An issue that commonly arises in practice for many employers is how to handle grievances raised by former employees.
To date, the legal obligations on an employer in these circumstances have not been clear – especially since the abolition of the Statutory Disciplinary and Grievance Procedures. In particular, the Acas Code of Practice on Disciplinary and Grievance Procedures is silent on this point.
As a result, many employers have reasonably assumed they have discretion in this regard. Often adopting a commercial approach by perhaps doing a brief investigation of the issues, internally, without offering the employee a grievance hearing or right of appeal (assuming the applicable grievance procedure is non-contractual).
After all, what difference does it make if the employee has already left? Even if an employee was to raise a claim, any action taken by the employer after the employee has left could not be taken into account in determining the employer’s liability before the employee’s departure, right?
That was certainly the position until the recent case of Base Childrenswear Ltd v Otshudi UKEAT/0267/18. In that case, the Employment Tribunal found that the damages awarded to an employee in respect of a race discrimination claim should be uplifted by 25%, as a result of the employer’s unreasonable failure to comply with the Acas Code by not dealing with the Claimant’s post-termination grievance. Despite the case being appealed on another point, this particular issue was never disputed; nor did the EAT pass any comment to suggest that the approach was wrong.
The employer’s failure to contest whether this was the correct approach in the Otshudi case may, at first, be surprising – given the widespread practice of employers to handle post-termination grievances differently. And whilst it is disappointing that the issue wasn’t discussed more thoroughly, when you drill down into the detail, the chance for contesting the decision on this point was perhaps limited.
This is because the Trade Union and Labour Relations (Consolidation) Act 1992 (the legislation which allows for uplifts to be made for non-compliance with the Acas Code) expressly defines ‘employee’ to include someone who has left their employment – thus limiting the scope for employers to credibly maintain that they are not required to follow the Acas Code in respect of post-termination grievances.
This decision had significant ramifications in the Otshudi case – resulting in compensation totalling nearly £40,000 being awarded against the employer.
So what does this mean in practice for employers who want to avoid a similar fate?
- Unless and until this issue is considered directly by the EAT, a prudent employer should deal with post-termination grievances in the same way as grievances raised during the course of employment, particularly where there is a risk of a claim. As such, this may represent a significant change in practice.
- Not only does this case have implications for dealing with post-termination grievances, but it also means employers will be exposed to the same risks if they fail to follow the Acas Code in other respects – for example, by dismissing someone on disciplinary or performance grounds without following a process that is compliant with the minimum requirements under the Acas Code. This risk should therefore be borne in mind in such circumstances.
- Importantly, these risks remain the case even if an employee has less than two years’ service. This is because ACAS uplifts not only potentially apply in relation to claims of unfair dismissal but also claims that do not require any minimum length of service, such as discrimination, whistleblowing etc., if they relate to a claim in which the Acas Code applies (for example, because there is a disciplinary or grievance element) – as was the position in the Otshudi case.
Ultimately the need to mitigate against the risks presented in this case have to be balanced with the cost/time incurred in following a full-scale procedure on every occasion. There is still scope for employers to follow a more simplified or truncated process in certain circumstances – for example, where the employer can be confident that the employee does not have any credible grounds for a claim. This is because it is not possible to raise a standalone claim for failure to follow the Acas Code. Rather, this argument must ‘piggy-back’ on another claim.
Furthermore, the ability to award an uplift only applies where it was unreasonable for the employer to not follow the Acas Code, which will inevitably depend on the circumstances.
For these reasons, it will be especially important to assess the ‘risk profile’ of each individual case going forward and tailor the approach accordingly, in light of the Otshudi case.
It is not all bad news for employers, however. The application of the Acas Code is a double-edged sword, as the legislation also allows for awards of compensation to be reduced by up to 25% in circumstances where an employee has unreasonably failed to comply – for example, by not exercising their right of appeal. In light of this case, this possibility should now extend to circumstances where an employee has unreasonably failed to appeal a decision despite having already left their employment, even if the outcome was delivered post-termination.