The Employment Appeal Tribunal (EAT) has held that the 25% uplift for non-compliance with the Advisory, Conciliation and Arbitration Service (ACAS) Code of Practice on Disciplinary and Grievance Procedures does not apply to 'some other substantial reason' (SOSR) dismissals for a breakdown in the working relationship.

The case involved the dismissal of an employee following a period of acrimony, during which she had brought an unsuccessful grievance against a fellow employee. An Employment Tribunal upheld her unfair dismissal claim as well as finding procedural deficiencies, with the result that any compensation awarded could be increased by up to 25%.

The EAT upheld the Tribunal's finding that the dismissal was procedurally and substantively unfair, but rejected the finding that the ACAS Code—specifically the 25% uplift—applied. It ruled that whilst elements of the Code are applicable, the Code does not apply to SOSR dismissals. To impose a sanction for failure to comply with the Code to the letter, therefore, was not what Parliament had in mind.

The decision in Phoenix House Ltd V Stockman closely follows that in Holmes V QinetiQ Ltd Eat 0206/15, which held that the Code did not apply to ill-health dismissals. The ACAS Code applies in cases where alleged acts or omissions involve culpable conduct or performance that requires correction; ill-health was not considered to fall in to this category.

What Should Employers Do Next?

For any employee termination, employers will need to make a decision on a case-by-case basis as to how to manage the exit discussions and procedure, taking into account the ACAS Code and their own disciplinary and performance management procedures. Employers should review their policies to ensure that they do not contradict the developing body of case law regarding the applicability of the ACAS Code.