Acas Code does not apply to Dismissal for Some Other Substantial Reason

The Acas Code of Practice on Disciplinary and Grievance Procedures did not apply to a dismissal for some other substantial reason, where the dismissal was attributed to an irretrievable breakdown in the working relationship.

Speedread

The Acas Code of Practice on Disciplinary and Grievance Procedures did not apply to a dismissal for some other substantial reason, where the dismissal was attributed to an irretrievable breakdown in the working relationship. Parliament could not have intended to impose a sanction for failing to comply with the Code in this situation, without expressly stating so.

Facts

In Phoenix House Ltd v Stockman, Ms Stockman was employed as a financial accountant. Her role was removed as part of a restructure and she eventually succeeded in obtaining a more junior role. She felt that she had been unfairly treated by the Finance Director in the recruitment process and raised a grievance against him. She also confronted him when he was engaged in a meeting with another employee and was subjected to a disciplinary process for misconduct.

Ms Stockman went on sick leave and the disciplinary and grievance hearing took place in her absence. The grievance was dismissed and she received a 12 month written warning for misconduct. She appealed both findings, unsuccessfully.

Following an unsuccessful mediation, and whilst she was still on sick leave, she was invited to a formal meeting to consider whether the working relationship had irretrievably broken down. She said she wished to return to work and believed she could still work with the finance director. Her employer disagreed, told her that there was no way she could come back to work and that her employment would be terminated for some other substantial reason, an irretrievable break down in the working relationship.

The employment found the dismissal unfair. The procedure adopted was not fair and did not comply with the Code. The employer appealed.

Decision

The Employment Appeal Tribunal (EAT) agreed that the dismissal was unfair but overturned the conclusion that the Acas Code applied.

An objective reasonable employer would not have concluded that the employment relationship was beyond repair. Ms Stockman was not a key director in a small management team, but a middle ranking clerical employee working as part of a team in a job that would not necessarily bring her in day to day conduct with the Finance Director. The employer’s position was that she could not be expected to report directly to the employee who had beaten her to the more senior internal role for which she had applied. However, Ms Stockman had never been given the opportunity to demonstrate in practice that she could work harmoniously with her, as she had been absent from work on sick leave.

The EAT noted that the question of whether the Code applies to a dismissal for some other substantial reason has not been finally determined. It is stated to apply to disciplinary situations but says nothing about a dismissal for some other substantial reason. Parliament has laid down a sanction for failing to comply with the Code and clear words are needed in the Code to give effect to that sanction. Otherwise an employer may be at risk of being unfairly punished by having an uplift imposed. Certain elements of the Code are capable of being, and should be, applied, for example giving the employee the opportunity to demonstrate that she can fit back into the workplace without disruption, but to impose a sanction for failure to comply with the letter of the Code went beyond what Parliament intended.

Implications

The Acas Code does not apply where an employee is dismissed due to a breakdown in the working relationship. Compensation cannot therefore be increased in such cases due to an unreasonable failure to follow the Code. 

However, employers still need to be cautious. In Lund v St Edmund’s School Canterbury, the EAT indicated that the Code applied in a situation where the employer had initiated disciplinary proceedings under their conduct rules that resulted in a dismissal due to a breakdown in the relationship between employer and employee. If an employer invokes or should have invoked disciplinary proceedings before dismissing, the Code is likely to apply, whatever the ultimate reason given for dismissal. In any event, employers should seek to follow the Code as this will help to ensure that they follow a fair procedure and that the dismissal is fair.