Applicability of ACAS Code

01.08.2016

In a pair of recent cases, the EAT has confirmed that that ACAS Code of Practice on Disciplinary and Grievance Procedures does not apply to dismissals for ill health, where there is no suggestion of poor performance on the part of the employee, or to dismissals for some other substantial reason, where the dismissal was attributed to a breakdown in the working relationship.
In Holmes -v- QinetiQ 2016 the employee was dismissed on the basis that due to ill health he was no longer capable of performing his job. The Tribunal held that the dismissal was unfair, as the employer had not obtained an up-to-date occupational health report before taking this decision (Mr Holmes had recently undergone an operation, which might have affected his ability to work). The employer did not follow the ACAS Code, but the Tribunal refused to award the 25% uplift on the basis that the Code did not apply. The EAT agreed – the Code is intended to apply to situations where an employee faces a complaint or allegation that may lead to disciplinary action, i.e. there needs to be some form of culpable conduct. Where poor performance is a consequence of genuine illness, there will usually not be any culpable conduct and therefore the Code does not apply.
Phoenix House Ltd -v- Stockman 2016 concerned an employee who was dismissed for some other substantial reason (SOSR), namely an irretrievable breakdown in the working relationship. The EAT agreed with the Tribunal that the dismissal had been unfair, on the basis that an objective, reasonable employer would not have concluded that the employment relationship was beyond repair. The employer had erred in starting the meeting from the position that the relationship had broken down, and putting the burden on the employee to prove otherwise. It was not however appropriate to award a 25% uplift for failure to comply with the ACAS code, as although elements of the Code could be applied, the EAT held that if Parliament had intended the 25% uplift sanction to apply to SOSR dismissals then it would have stated this expressly.
These two cases provide useful guidance for employers to be aware of going forwards. A 25% uplift on damages awards for failure to comply with the ACAS Code is potentially a significant penalty.