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Employment Tribunal Compensation

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Could a clause in a contract of employment, purporting to limit the financial liability of the Respondent on termination of employment, operate to cap the compensation awarded by the tribunal in a whistleblowing claim?

No, held the EAT in SPI Spirits (UK) Limited v Zabelin. The Employment Tribunal found that the Claimant had been subjected to detriment, and was automatically unfairly dismissed on grounds of whistleblowing.

The Respondent argued that it would be ‘just and equitable’ for the Claimant’s remedy to be capped at £270,000, as this was the maximum liability on termination stated in the contract of employment. The Respondent further argued that the award should not be uplifted for failure to follow the ACAS Code of Practice, as the Claimant’s written grievance did not contain any protected disclosures – these were later made verbally. The tribunal disagreed, applied a 20% uplift to compensation and awarded the Claimant over £1 million.

The Respondent appealed.

The EAT agreed with the tribunal:

1. any attempt to limit liability for statutory employment claims in contractual documentation will be ineffective (s203 Employment Rights Act 1996).

2. the fact that the contractual clause was freely negotiated, did not mean that it would be ‘just and equitable’ to apply the cap. For whistleblowing cases, there is no cap and compensation should reflect the loss caused. 

3. although a grievance needs to be in writing in order for the ACAS Code to apply, the fact that no protected disclosure was included in the written document itself, did not mean that the ACAS Code on grievances did not apply.

4. regardless, the relevant sections of the ACAS Code, in this case, are those that relate to disciplinary proceedings. Where the employer dismisses or takes other action against an employee because of, in substance, what it regards as culpable conduct, the discipline provisions of the ACAS Code will apply.