Most employers are familiar with the ACAS Code of Practice on Disciplinary and Grievance Procedures and understand that this Code must be followed when dealing with dismissals for misconduct. It is less clear however whether or not the Code applies where an employee is dismissed because of capability, whether relating to ill health or otherwise, or for “some other substantial reason”. In two recent cases the EAT has provided useful clarification about the application of the Code in situations which fall outside the disciplinary context.
Dismissal for ill health
Qinetiq employed Mr Holmes from 1996 until 2014 when he was dismissed on ill health grounds following a number of lengthy absences due to problems with his hips, legs and back. He was no longer capable of doing his job as a security guard. There was no evidence that Mr Holmes had breached any rules of conduct.
Mr Holmes succeeded in his claim for unfair dismissal and argued that his compensation should be increased because of Qinetiq’s failure to follow the Acas Code.
The EAT held that the Code only applies where an employee faces a complaint that may lead to disciplinary action, which infers there has been some type of “culpable conduct” that requires a sanction or correction. Poor performance could be through misconduct, or it could be through conduct where there is no culpability, such as in this case of genuine illness, where disciplinary action would not normally be taken. As such it was found that the Code does not apply.
Dismissal for SOSR
Ms Stockman was dismissed by Phoenix House Limited as the employer believed the relationship had broken down irretrievably. She had raised a grievance against a colleague and had been issued with a written warning for misconduct. Mediation between the parties was not successful and despite her wish to return to work, Ms Stockman’s contract was terminated because the working relationship had broken down beyond repair.
In considering the remedy to be awarded to Ms Stockman and in particular whether compensation should be uplifted because of a failure to follow the Code, the EAT held that clear words in the Code are required to impose a sanction on employers, and they did not exist in the case of SOSR dismissals. Although certain elements of the Code can and should be applied in such a situation, it would go beyond the intention of the Code to punish employers for not following it to the letter in these circumstances.
Comment
Although it has now been confirmed that employers are not bound to follow the Code when dismissing employees for genuine ill health reasons where there is no element of culpable conduct, it is still best practice to apply the relevant principles and standards. The Code will still apply if dismissing an employee for ill health where there are issues of misconduct, such as failure to follow absence reporting procedures or if the reason for absence is not genuine. The Qinetiq case also suggests that an employer will not be penalised for failing to follow the Code where it dismisses because of poor performance unless there is some element of culpability on the part of the employee, which may not necessarily be the case.
Whilst it is also clear from the recent case law that the Code does not apply where an employer terminates employment because of a breakdown in the working relationship, employers should still be cautious when relying on this as a reason to dismiss. In order to ensure that a dismissal is fair, an employer should be able to show not only that the working relationship has broken down irretrievably but also that they have explored all the alternatives before deciding to terminate the contract. Using the Code as a framework is always going to be helpful in ensuring that a fair process is followed.
