In unfair dismissal claims, employment tribunals take the ACAS Code of Practice on Disciplinary and Grievance Procedures into account where relevant and may increase an award of compensation by up to 25% for an employer’s unreasonable failure to follow it. Conversely, if an employee has unreasonably failed to follow the guidance set out in the Code an award can be reduced by up to 25%. It is, therefore, important to know when it applies.
The Code states that it applies to all disciplinary situations including misconduct and poor performance. Redundancy dismissals and the non-renewal of fixed term contracts on their expiry are specifically excluded.
There have been a number of conflicting decisions on whether the Code applies to ‘some other substantial reason’ (‘SOSR’) dismissals but recently the Employment Appeal Tribunal confirmed that it does not. In Pheonix House v Stockman, in which an employee was dismissed for SOSR following a breakdown in working relationships, the EAT found the dismissal to be procedurally unfair but that the Code did not apply. Accordingly no uplift could be applied to the compensatory award.
In the EAT’s view:
- Parliament had not intended for the Code to apply to SOSR dismissals;
- some of the provisions of the Code do not readily apply to SOSR dismissals, such as the requirement to have an investigation.
Ill health dismissals
In another recent case, Holmes v QinetiQ, the Employment Appeal Tribunal decided that the ACAS Code does not apply to ill health dismissals. It found that the Code is limited to proceedings relating to misconduct or poor performance, the presence or absence of culpability being key.
The Code could, however, apply if ill health led to a disciplinary issue such as unauthorised absence. In that case, the disciplinary proceedings would be as a result of the alleged culpable conduct and not the sickness absence itself.
It is good practice to adhere to the Code’s relevant provisions even if the basis for a potential dismissal is some other substantial reason or ill health rather than misconduct or performance. This will help to ensure a fair procedure. A failure to do so can, however, only trigger the 25% adjustment if the dismissal is of a type specifically covered by the Code.
Please get in touch with your usual Brodies’ contact should you wish to discuss anything raised in this blog.
On July 4, 2016