Employers who unreasonably fail to follow the Acas Code of Practice on Disciplinary and Grievance Procedures, where it applies to a dismissal, face the risk of an uplift to compensation for unfair dismissal by up to 25%. A lack of clarity as to when the Code applies is therefore unhelpful: the Code states that it applies to "disciplinary situations" expressly including misconduct and poor performance and excluding redundancy dismissals and the non-renewal of a fixed term contract, but is silent on other categories of dismissal.

The EAT has recently confirmed in Holmes v Qinetiq that the Code does not apply to dismissals for genuine ill-health or sickness absence; the Code will only apply where there is an element of culpable conduct on the part of the employee (eg, malingering). Equally, the Code does not apply to dismissals which are for "some other substantial reason" such as an irretrievable breakdown in working relationships (Phoenix House v Stockman).

Although these decisions are helpful to employers in clarifying that there is no potential 25% uplift to compensation when dismissing for these reasons, it remains prudent to follow as much of the Code as is relevant, as this will assist in demonstrating a fair procedure in relation to those types of dismissal. For example, when considering a dismissal for breakdown in working relationships, the requirements of fairness coincide with the Code requirement to give the employee an opportunity to put their case, ie to demonstrate that the relationship remains strong enough, or can be repaired, so as to allow the employee to fit back into the workplace without unacceptable disruption.

Employers should also bear in mind a previous EAT ruling that the Code will apply if an employer invokes a disciplinary process to consider misconduct allegations, even if the ultimate reason for dismissal was "some other substantial reason" and not misconduct. Where it could be argued that the reason for disciplinary action is the employee's culpable conduct leading to the breakdown in relationships, the cautious approach would be to assume the Code may apply.