In Holmes v Qinetiq Ltd (UKEAT/0206/15) the Employment Appeal Tribunal had to decide whether the Acas Code of Practice on Disciplinary and Grievance Procedures (the Code) applies to ill health capability dismissals.
The Acas Code
The Code is designed to provide practical guidance for those who find themselves engaged in disciplinary or grievance procedures. Disciplinary situations are noted to include misconduct and/or poor performance. The Code states that it does not apply to redundancy situations or the non-renewal of fixed term contracts. It does not say whether it applies to capability or ill health dismissals.
For anyone involved in an employment tribunal (ET) claim, the Code takes on additional importance. If it applies, an ET can apply a financial penalty to anyone who unreasonably fails to comply with it. If an employer unreasonably fails to comply with the Code the ET can increase any award it makes to an employee by up to 25%. The ET has a parallel power to reduce any award by up to 25% if an employee is found to have unreasonably failed to comply with the Code.
The Code covers situations in which a disciplinary situation arises. Disciplinary situations are noted in the Code to cover both misconduct and poor performance. Misconduct clearly involves culpable behaviour.
Poor performance however is capable of involving both culpable and non-culpable conduct. Where poor performance is due to a genuine ill health absence, culpable conduct is not involved. An employer would not be expected to deal with such a situation as a disciplinary matter, which means that the Code does not apply.
Mr Holmes was dismissed from his job as a security guard on grounds of ill health, following a number of extended absences due to problems with his back, hips and legs. Qinetiq failed to obtain an up to date occupational health report prior to taking the decision to dismiss Mr Holmes and conceded that the dismissal was unfair.
Employment tribunal decision
At the remedy hearing Mr Holmes argued that an uplift should be applied to his compensation as a result of Qinetiq’s failure to follow the Code. The ET refused to uplift Mr Holmes’ compensatory award, on the basis that the Code does not apply to ill health dismissals. According to the ET, incapability procedures relating to an inability to do the job arising from sickness absence are not covered by the Code, which is limited to matters concerning culpable misconduct or culpable poor performance.
The Employment Appeal Tribunal (EAT) agreed with the ET and dismissed Mr Holmes’ appeal, holding that the Code only applies to situations where there is culpable conduct – in the form of misconduct or poor performance – that requires correction or punishment.
This case is helpful in clarifying that culpability is key to whether the Code applies to capability situations.
The question of whether some situations involve culpable behaviour on the part of an employee will continue to be a difficult one to answer. On a practical level the question of whether a situation can be categorised in a particular way is less important than ensuring that the necessary elements of a fair process are followed. If there is any doubt, the best course of action will be to follow the Code.
Note that in the recent case of Phoenix House Ltd v Stockman and another (UKEAT/0264/15), the EAT faced another question regarding the scope of the Code. This time it had to decide whether the Code applies to dismissals for some other substantial reason (SOSR). In the Phoenix case the dismissal resulted from a breakdown in a working relationship.
The ET upheld Ms Stockman’s unfair dismissal claim on the basis that no reasonable employer would have taken the view that the relationship in question had broken down to the extent necessary for dismissal to be a reasonable option. It applied a 25% uplift to Ms Stockman’s compensation in response to various breaches of the Code.
The EAT agreed that the dismissal was both procedurally and substantively unfair but rejected the ET’s conclusion that the Code applied. This contrasts with another EAT decision where the Code was found to apply to a situation that began as a conduct related matter but ended up as a SOSR dismissal, based on a breakdown in an employment relationship (Lund v St Edmund’s School Canterbury UKEAT/0514/12). Presumably the next case to address the issue will consider the degree of culpability.