The Employment Appeal Tribunal (EAT) has held in SPI Spirits (UK) Ltd v Zabelin that an agreed contractual compensation payment due on termination of employment did not make it just and equitable for the tribunal to cap its award for whistleblowing detriment and dismissal at that level.
The EAT also held that the disciplinary provisions of the Acas Code on Disciplinary and Grievance Procedures can apply to a whistleblowing dismissal.
Mr Zabelin (Z) was a Group Chief Investment Officer for SPI Spirits (UK) Ltd (SPI). In March 2020 SPI imposed a 30% pay cut on all employees for a fixed period until June 2020. In June they sought to extend the pay reduction with no end date given. Z raised concerns about the extension of the pay reduction on the basis that a pay cut would be in breach of his contract, that the previous pay cut had caused a stressful environment amongst employees and that the pandemic was being used as an excuse to cut pay without any transparency. There was also discussion about his discretionary bonus. The majority shareholder in the group who made all decisions about Z's employment was told what he had said and phoned Z. When Z objected to plans to revisit the bonus principles the shareholder orally dismissed him.
Z brought claims for unfair dismissal and detriment on the grounds of having made protected disclosures and the tribunal upheld his claims. It found that Z made qualifying protected disclosures which he reasonably believed to be in the public interest and was subject to detriment for these disclosures when he was dismissed.
SPI appealed against the remedy decision on the basis that, having regard to the maximum liability on termination stated in the employment contract, compensation should have been capped at £270,000, and that an uplift should not have been applied. SPI also argued that, under the grievance provisions of the Acas Code, the mandatory first step is for the employee to put the grievance in writing and, as a result, the Code was never engaged in relation to the protected disclosures as they had not been written down.
The EAT held that the contractual provisions could not apply to limit liability for statutory employment claims, and the fact that the clause in the contract had been freely negotiated did not mean that it would be just and equitable to apply the £270,000 cap (there is no cap in whistleblowing cases and compensation should reflect the loss caused). The EAT also found that Z had emailed his concerns before expressing them fully in a meeting and the fact that no protected disclosure was included in the written document itself did not mean that the Acas Code did not apply. It held that, in this instance, the power to award an uplift arose on the basis that the disciplinary provisions of the Code were engaged but not fully followed when the majority shareholder dismissed Z without following any procedure.
Take note: The decision in Zabelin is interesting because it disagrees with previous case law. The Acas Code does not expressly say whether or not it applies to automatically unfair dismissals by reason of a protected disclosure. However, in another EAT case, Ikejiaku v British Institute of Technology, it was held that the disciplinary section of the Code did not apply because the making of a protected disclosure could never be a ground for possible disciplinary action. In Zabelin it was held that Z's making of the protected disclosures amounted to alleged culpable conduct for which he was dismissed. This means that the factual circumstances of each case will need to be considered to determine whether the disciplinary provisions of the Code may be engaged if action is being taken by the employer because of alleged culpable conduct by the employee. It's also worth noting that following Zabelin a contractually agreed compensation sum on termination will not operate to cap a tribunal award.
