When 25% becomes 2.5%: a useful reminder on Acas Code uplifts

If an employer fails to follow the Acas Code of Practice when dealing with a disciplinary or grievance matter, an employment tribunal can sometimes increase the compensation awarded to an employee by up to 25%.

But 25% is the maximum – it is not an automatic increase.

The recent case ofSheikholeslami v University of Edinburgh is a useful example of how tribunals decide what percentage to award.

Reduction in the uplift

In Sheikholeslami, the tribunal found serious problems with the employer’s procedure. It initially decided that a 25% uplift was appropriate.

However, when the employee’s compensation was eventually calculated at more than £1.7 million, the tribunal decided that applying a 25% uplift to such a large award would have resulted in a very significant additional sum.

It then reduced the uplift to 2.5% as a more appropriate percentage given the overall compensation award.

The Employment Appeal Tribunal (EAT) agreed that it was entitled to do this. Tribunals can look at the overall financial result when deciding what uplift is “just and equitable”, or fair in the circumstances.

When can the tribunal award an uplift?

The Acas Code applies to disciplinary situations, including misconduct and poor performance, as well as grievances. It does not apply to redundancy dismissals or the expiry of fixed-term contracts.

The power to increase compensation comes from theTrade Union and Labour Relations (Consolidation) Act 1992.

Before awarding an uplift, a tribunal should consider:

1. Did the Acas Code apply?
2. Did the employer fail to follow it?
3. Was that failure unreasonable?
4. If so, what percentage uplift would be fair?

When is the full 25% uplift awarded?

Serious procedural failures can still result in the full 25% uplift. For example, tribunals have awarded 25% where a disciplinary outcome was effectively decided in advance or where an employer failed to hold a disciplinary hearing at all.

Does the removal of the compensation cap affect uplifts?

From January 2027, the compensation cap for ordinary unfair dismissal will be removed. This means that compensation awards, and potentially Acas Code uplifts, are likely to become much higher.

Sheikholeslami shows that tribunals can reduce the percentage uplift if applying a higher percentage would produce a disproportionately high financial result.

But the best way to reduce the risk remains to follow a fair process:

• investigate properly,
• explain the allegations,
• hold a genuine hearing,
• allow the employee to be accompanied,
• keep an open mind, and
• offer a right of appeal.

Further reading

• Unfair Dismissal compensation should be fair and proportionate – contributory fault – Hunter Law
• Day 1 unfair dismissal and compensation cap dropped  – Hunter Law
• Unfair Dismissal – employee conduct shouldn’t always impact compensation  – Hunter Law
• Unfair Dismissal  – ACAS

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