The EAT has confirmed that the power to increase or decrease an award of compensation for a failure to comply with the Acas Code of Practice on Disciplinary and Grievance Procedures does not extend to dismissals on the grounds of ill health and is instead limited to disciplinary and poor performance situations (Holmes v Qinetiq Ltd, EAT).

Background

The Acas Code of Practice on Disciplinary and Grievance Procedures (Code) provides practical guidance for handling disciplinary and grievance situations in the workplace. While the Code states that it does not apply to dismissals due to redundancy or the non-renewal of fixed-term contracts on their expiry, it is silent as to whether it applies to ill health dismissals.

If an employer does not follow the Code where a disciplinary procedure has been invoked, an Employment Tribunal (ET) is entitled to increase any subsequent compensation awarded for unfair dismissal by up to 25%.

Facts

The Claimant, a security guard, had a number of problems with his back, hips and legs which resulted in him having several lengthy absences from work. He was dismissed on the grounds of ill health on the basis that he was no longer capable of doing his job.
Apart from the effects of his illness, the Claimant was able to perform his job of security guard and there were no problems with his conduct or performance. As such, the employer did not invoke a disciplinary procedure prior to dismissal. The Claimant brought claims of disability discrimination and unfair dismissal.

The Claimant's dismissal was found to be unfair and the ET awarded the Claimant compensation for unfair dismissal and unlawful discrimination. The employer conceded that, because it had failed to obtain an up-to-date occupational health report about the Claimant's ability to attend work after he had undergone an operation to resolve his pain, the dismissal was unfair.

The ET held that the power to increase compensation for failure to comply with the requirements of the Code did not extend to dismissal on ground of ill health because:

  • The Code does not apply to internal procedures operated by an employer concerning an employee's alleged incapability to do the job arising from ill health or sickness absence.
  • The concept of incapability in section 98(2)(a) of the Employment Rights Act 1996 on the grounds of medical incapacity does not involve an element of culpability.
  • Apart from the effects of his illness, the Claimant was able to perform the job of security guard and there was no suggestion that he was culpable in relation to his conduct or performance.

As such, the ET held that the employer was not required to follow the Code and, therefore, no uplift to the compensation was awarded.

EAT decision

The Claimant appealed.

Amongst other issues, the EAT examined the issue of whether the ET was correct to refuse an increase to the award. The EAT agreed with the ET on this point, holding that the Code is limited to internal procedures relating to disciplinary situations that include misconduct or poor performance, and may extend beyond that only in situations concerned with sanctioning culpable behaviour of the employee.

Therefore, the Code did not apply to procedures concerning an employee's alleged incapability to do the job arising from ill health or sickness absence.

This decision is of particular importance to employers because it provides guidance on the scope and limits of the Code. It confirms that employers who dismiss employees for genuine ill health reasons are not required to follow the Code. It also suggests that the Code will only apply to dismissals for "some other substantial reason" if there is an element of misconduct or culpability by the employee.

The position would be different where an employee's ill health led to a disciplinary issue and a procedure invoked to address the alleged misconduct, for example, dishonestly exaggerating the severity of the illness.

However, it will still be good practice follow the Code when dismissing employees for ill health, as this will help to show reasonableness and put the employer in a much stronger position in the event of any subsequent dispute. Employers should also refer to the non-statutory guidance which accompanies the Code, which contains useful information for dealing with ill-health cases.