The recent case of Base Childrenswear Ltd v Otshudi has considered the tricky issue of whether an employer can be penalised for not hearing a grievance from an ex-employee. When an employee raises a grievance, an employer must follow the Acas Code. If an employer unreasonably refuses to comply with the Acas Code then an employment tribunal can adjust the amount of compensation awarded to a claimant by up to 25% either way.
There is no definition of "employee" in the Acas Code, and no express statement that it applies to former employees. However, the definition of employee in the employment legislation which enacts the ACAS Code includes someone who has left their employment. The claimant, Miss Otshudi, worked for the respondent for three months. She was called into a meeting and summarily dismissed on, what the respondent claimed to be, grounds of redundancy. The claimant believed that her dismissal was racially motivated and submitted a grievance and an appeal against her dismissal. The respondent did not respond to the grievance or the appeal.
The claimant alleged seven acts of racial harassment of which the tribunal upheld one (which related to her dismissal). The tribunal found that the claimant's dismissal was an act of racial harassment, though it dismissed her other claims as out of time. When it came to awarding remedies, the tribunal applied an uplift of 25% due to the respondent's failure to follow the Acas Code in respect of her grievance or her dismissal.
The tribunal's decision on remedy was appealed by the respondent on various grounds, though the issue of the Acas uplift was not one of them. The Employment Appeal Tribunal (EAT) did not say that the tribunal's actions in awarding the Acas uplift had been made in error so, in absence of any statement to the contrary (there have been no previous EAT decisions on the issue), it seems that employers who wish to err on the side of caution should follow the Acas Code when considering grievances from employees after termination of employment.
Even if the employee is no longer employed by the employer a failure to hold a post-termination grievance hearing will risk a 25% uplift to any compensation awarded. This will be the case even if the ex-employee has only been employed for a few months and has no right to claim unfair dismissal, as in the case of Ms Otshudi.
The ACAS Code also deals with disciplinary hearings and while this case is about a grievance, employers should also tread carefully when considering whether to hold hearings, once the employee has left their employment.
