EAT clarifies when employers could face an uplift in a tribunal award
In the cases Holmes v Qinetiq and Phoenix House v Stockman, the Employment Appeal Tribunal (EAT) had to decide whether the Acas Code of Practice on Disciplinary and Grievance Procedures applies to ill-health dismissals and ‘some other substantial reason’ (SOSR) dismissals relating to a breakdown in the working relationship.
Until recently, employers have had little clarity on the question of whether the Acas code applied in these circumstances. Failing to follow the code can make a dismissal unfair and can also result in an increase of 25 per cent to any unfair dismissal award. Employers defending such claims have faced the risk of this sanction for not complying with the rules, even though it is far from clear that the code is intended to apply in those circumstances.
The confusion arises from the code's wording. It states that it applies to "disciplinary situations", and explicitly includes misconduct and poor performance, and explicitly excludes dismissals for redundancy or the non-renewal of fixed-term contracts. The code does not specify whether it applies to other dismissal situations.
The EAT’s general observations in two previous cases relating to SOSR dismissals, Hussain v Jury's Inn Group and Lund v St Edmund's School Canterbury, did little to resolve the confusion. In Hussain, the EAT decided the wording of the code should be interpreted broadly to apply to these dismissals. In Lund, the EAT also held that the code should apply, but added that this might not be the case where a dismissal for misconduct was not envisaged at the outset.
The Holmes case is the first to finally determine that the code does not apply to an ill-health dismissal.
Tribunal
Holmes, who was disabled, worked for Qinetiq as a security guard from 1996. He had a number of extensive absences because of pain in his back, legs and hips and was dismissed on the grounds of ill health in 2014. The employer conceded it was an unfair dismissal because it had failed to obtain an up-to-date occupational health report on his ability to attend work after an operation that effectively resolved the pain he had been experiencing.
He was awarded compensation for unfair dismissal and unlawful discrimination, but argued that this should be increased by 25 per cent increase for the employer’s failure to follow the code.
EAT
The EAT disagreed and held that in genuine ill-health dismissal cases, the code will not apply. The EAT decided there must be some form of "culpable conduct" on the part of the employee, such as misconduct or poor performance requiring correction or punishment, for the code to apply. Here, there was no suggestion of any culpability (such as malingering) on the employee’s part and so it did not apply.
A couple of months after the Holmes case, another EAT decision, in Phoenix v Stockman, clarified whether the code applied to SOSR dismissals. Stockman developed an acrimonious relationship with her employer after it rejected a formal grievance and subsequently issued her with a written misconduct warning. The employer considered that the employment relationship had broken down irretrievably and dismissed her for ‘some other substantial reason’.
An employment tribunal upheld her unfair dismissal claim and found the employer’s non-compliance with the code meant her compensation should be increased by 25 per cent. The EAT agreed the dismissal was unfair but held that clear wording was needed to show the code applied to SOSR dismissals. It did not have this wording, so did not apply to these dismissals.
Comment
These cases provide helpful clarification. In terms of procedure, however, arguably little has changed. Although employers are not bound to follow the Acas code, they should still continue to apply those elements that are relevant. Employers dismissing employees for SOSR or genuine ill-health have to show they have followed a fair process and compliance with relevant elements of the code will help to demonstrate this.
Employers should also bear in mind that the Acas code, and potentially the 25 per cent compensation uplift, will continue to apply in ill-health and SOSR dismissals where there is some element of misconduct or poor performance on the part of the employee which would otherwise lead to disciplinary action.
Sarah West is an associate in the employment department at Hogan Lovells
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