The scope of the ACAS Code of Practice on Disciplinary and Grievance Procedures (the Code) has been narrowed following two recent claims concerning ill health and some other substantial reason (SOSR) dismissals. If the Code applies, a Tribunal can impose a financial penalty on anyone who unreasonably fails to comply with it. Specifically, a Tribunal can impose an uplift or reduction of up to 25 per cent in any award it gives. It is accepted that the Code covers disciplinary situations, which includes conduct and poor performance. The question in the two recent cases was whether the Code specifically applied to ill health and SOSR dismissals.

Holmes v Qinetiq Ltd (UKEAT/0206/15)

Mr Holmes was dismissed for reasons of ill-health following several extensive periods of absence. Qinetiq did not receive the most current occupational health report before making this dismissal. Mr Holmes argued the dismissal was unfair and the Tribunal should award him with an uplift in his compensation because of Qinetiq's failure to adhere to the Code. Both the Tribunal and the EAT rejected Mr Holmes's position. They held that the Code does not apply to dismissals for genuine ill health, as capability procedures relating to an inability to do the job, due to sickness absence, do not come within the scope of the Code. The EAT clarified that the Code only applies to capability situations where there is some degree of culpability on the part of the employee.

Phoenix House Ltd v Stockman and another (UKEAT/0264/15)

Ms Stockman was dismissed by Phoenix House for a breakdown in the working relationship following a grievance and disciplinary procedure. Ms Stockman's unfair dismissal claim was upheld by the Tribunal, which considered that the Code applied and granted Ms Stockman a 25 per cent uplift in the compensation awarded. The EAT agreed the dismissal was procedurally and substantively unfair, however it did not consider the Code applied to an irretrievable breakdown in the working relationship. The EAT accepted that discrete features of the Code are capable of being applied in SOSR circumstances, for example recommendations for the procedure employers should follow in disciplinary and grievance matters. However, it ultimately held that imposing a sanction for failure to comply with the Code in other situations, such as in these circumstances, would go beyond Parliament's intention.

Our view is that it is always good practice to follow the Code in circumstances where an employee may be dismissed. However, where employers want to follow an expedited procedure, it is useful to have further guidance as to when the Code is likely to apply.