Two cases have recently highlighted the parameters of the ACAS Code of Practice on Disciplinary and Grievance Procedures (ACAS Code) both to dismissals for cases of genuine ill health and for “some other substantial reason” (SOSR). These are both potentially fair reasons to dismiss under the Employment Rights Act 1996.

The Acas Code of Practice on Disciplinary and Grievance Procedures explicitly states that it applies to dismissals for conduct and performance and that it does not apply to dismissals for redundancy or where a fixed term contract expires without renewal. The Code does not mention other issues affecting capability such as ill health, or to SOSR dismissals. For the latter, historically there has been confusion over whether the ACAS Code applies as has been reflected in the case law. For capability dismissals there is non-statutory guidance which accompanies the ACAS Code which states that the matter should only be dealt with as a disciplinary issue in cases of absence for no good reason.

In both cases a key issue was whether, if the ACAS Code did apply, then the dismissal procedures adopted failed to comply with the Code, with the result that any compensation for unfair dismissal awarded to the Claimants could be increased by up to 25%.

Holmes v Qinetiq Ltd UKEAT/0206/15

The Claimant worked as a security guard for Qinetiq (the Respondent) from 1996 until 2014. Extended absences relating to problems with his back, hips and legs ultimately led to him being dismissed on ill health grounds on the basis that he was no longer capable of doing his job. The Respondent conceded that his dismissal was unfair because it failed to obtain an up-to-date occupational health report about his ability to reliably attend work after having an operation in 2014 to resolve his health issues. At the remedy hearing, the Claimant argued that there should be an uplift to his compensation on the basis that his employer had failed to follow the ACAS Code when dismissing him. The tribunal disagreed, concluding that the Code does not extend to dismissals on grounds of ill health, where there is no disciplinary component. The Claimant appealed.

The EAT dismissed the appeal and stated that there was no requirement to apply the ACAS Code on dismissal for genuine ill health. The Code was intended to apply only to situations where an employee’s alleged acts or omissions involve culpable conduct or performance that require correction or punishment giving rise to a disciplinary situation or disciplinary action. While misconduct involves culpable conduct, poor performance is capable of involving both culpable and non-culpable conduct. The EAT said that where poor performance is a consequence of genuine illness or injury, it is difficult to see how culpability would be involved, or disciplinary action justified. It noted that the position is different where ill health leads to a failure to comply with sickness absence procedures or an allegation that the ill health is not genuine. In those cases, any disciplinary procedure invoked would be to address the alleged culpable conduct on the employee’s part rather than any lack of capability arising from ill health.

Here, no disciplinary procedure was invoked because, apart from the effects of his illness, the Claimant was able to perform his job of security guard and there was no suggestion that his conduct or performance gave rise to a disciplinary situation or involved culpable conduct. Therefore, there was no need for the Respondent to follow the Code.

What to take away?

This decision confirms that employers need not follow the ACAS Code where they are dismissing for genuine ill health, in a situation where there is no issue of poor performance. Even then theACAS Code will only apply to poor performance where there is some element of culpability on the part of the employee.

Phoenix House Ltd v Stockman and anor EAT/0264/15

The Claimant was dismissed by her employer, PH Ltd (the Respondent), for SOSR following an unsuccessful grievance against a fellow employee, for which she had been issued with a written warning for misconduct. The basis for dismissal was the Respondent’s view that the employment relationship had broken down to such an extent that it was irretrievable. An employment tribunal upheld the Claimant’s unfair dismissal claim and concluded that, in its view, no reasonable employer would have concluded that the employment relationship was beyond repair to the extent that dismissal was a reasonable option. The dismissal was also procedurally unfair, the Employer had failed to comply with the ACAS Code with the result that any compensation awarded could be increased by up to 25%.

The Respondent appealed and although the EAT upheld the tribunal’s finding that the Claimant’s dismissal was both procedurally and substantively unfair it rejected the tribunal’s conclusion that the ACAS Code applied to SOSR dismissals for breakdown in working relationship.

In the earlier EAT case of Lund v St Edmund’s School, Canterbury 2013 ICR D26, the EATobserved that the ACAS Code will apply if disciplinary proceedings have been or ought to have been invoked even if the ultimate reason for dismissal is SOSR. In the more recent case of Hussain v Jurys Inns Group Ltd UKEAT/0283/15 the EAT stated that if the ACAS Code is given a purposive construction, it should apply to a dismissal for SOSR.

However in this case, the EAT ‘respectfully’ disagreed with the provisional view in Hussain because clear words in the ACAS Code would be required to give rise to that sanction, otherwise an employer may well be at risk of what is in reality a punitive element for non-compliance, in circumstances where an employer has not been clearly forewarned by Parliament. The EAT stated that the ACAS Code “does not apply to dismissals for some other substantial reason”. Clearly, elements of the ACAS Code are capable of being, and should be, applied e.g. giving the employee the opportunity to demonstrate that she can fit back into the workplace without undue disruption but to go beyond that, and impose a sanction for failure to comply with the letter of the ACAS Code, was not what Parliament had in mind.

What to take away?

As with the Holmes v Qinetiq case the EAT has confirmed the boundaries of the application of theACAS Code to dismissals. However, even though the Code may not always apply employers need to ensure that the manner of the dismissal does not breach other tenets of employment law, such as ensuring it does not amount to unlawful discrimination.