Last week we reported the EAT's confirmation in Holmes v Qinetiq Limited that the ACAS Code of Practice on disciplinary and grievance procedures does not apply to ill-health dismissals – they are not cases of misconduct or poor performance where the employee is culpable. Now the EAT in Phoenix House Ltd v Stockman has said the Code also doesn't apply to "some other substantial reason" (SOSR) dismissals for breakdown in working relationships.

The employee was dismissed for SOSR when an acrimonious relationship developed with her employer, after they rejected her formal grievance against a colleague and also issued her with a written misconduct warning. The employer took the view that the relationship had broken down irretrievably. The Tribunal upheld her unfair dismissal claim, on the basis that dismissal was outside the range of reasonable responses to the situation. It also found that there were procedural failings (the most significant being that the employee had been required to prove that the relationship was retrievable) and the Code had not been complied with, so compensation could be increased by 25%.

The EAT agreed that the dismissal was unfair but concluded that the Code, and therefore the 25% uplift, didn’t apply.

There are two previous cases on this issue. In Lund v St Edmund's School Canterbury, another SOSR/breakdown in working relationship dismissal, but one where the employer had started off bringing disciplinary proceedings, the EAT confirmed that the Code applies to any dismissal arising from a disciplinary situation, even if it is not technically a conduct dismissal. But the EAT hinted that it might not apply to cases where dismissal for conduct was not envisaged at the outset.

Earlier this year, however, the EAT in Hussain v Jury's Inn Group Ltd commented that although it is not clear from the wording of the Code whether it is intended to apply to SOSR dismissals, on balance, it should do so.

In Phoenix House, the EAT decided that the Code definitely doesn’t apply. Clear words are needed to give effect to a punitive sanction for failure to comply and the Code doesn't make it clear that it covers SOSR dismissals; in fact, some of its provisions (on investigations, for example) won't generally apply to them.