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

If an employer fails to follow the Acas Code 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 of Sheikholeslami v University of Edinburgh is a useful example of how tribunals decide what percentage to award.

From 25% to 2.5%

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

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

The tribunal therefore looked again at whether 25% was appropriate and reduced the uplift to 2.5%.

The Employment Appeal Tribunal 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 an uplift apply?

The power to increase compensation comes from section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992.

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.

Before awarding an uplift, a tribunal should consider:

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

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.

What should HR do?

From January 2027, the compensation cap for ordinary unfair dismissal will be removed. This means that compensation awards, and potentially Acas Code uplifts, could become more significant.

Sheikholeslami shows that tribunals can reduce the percentage uplift where applying a higher percentage would produce a disproportionate financial result. But employers should not rely on that happening. 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.

About Jon Dunkley

Jon Dunkley is a Partner at Wollens and heads up the firm’s Regulatory Department. Based at our North Devon office, Jon is a highly experienced solicitor with a broad commercial and regulatory practice, supporting businesses, professionals and senior employees across a wide range of legal issues.

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