New Employment Tribunal Rules

The ACAS code of practice and SOSR dismissals

The Acas Code of Practice on Disciplinary and Grievance Procedures Code contains recommendations on how to deal with disciplinary matters and grievances. In a successful unfair dismissal case at an employment tribunal, failing to follow the Code can often result in a ‘fine’ for the employer – an uplift of up to 25% on the compensation which they must pay to the employee. The Code explicitly states that it is applicable to dismissals for conduct and performance and that it is not applicable to dismissals for redundancy or where a fixed term contract expires without renewal. However, the Code does not state whether it applies to dismissals made for some other substantial reason (SOSR) and so this has always been unclear.

In the recent case of Phoenix House Ltd v Stockman, Ms Stockman was dismissed for an SOSR reason. Following Ms Stockman putting in an unsuccessful grievance concerning her treatment during a restructure and receiving a written warning for an incident of misconduct, the employer maintained that the employment relationship had broken down irrevocably and dismissed her. The Employment Tribunal held that the employer’s decision to dismiss had been unreasonable and also said that the employer had not followed the ACAS code of practice, meaning that Ms Stockman was entitled to an uplift on her compensation. The Tribunal reasoned that if the ACAS code was interpreted sensibly, it should also apply to SOSR dismissals.

The employer appealed the case, and the EAT agreed that the dismissal was unfair but disagreed with the uplift awarded. The Employment Appeal Tribunal (EAT) held that there should be no 25% uplift to an unfair dismissal award for dismissals made for SOSR for breakdowns in the working relationship. This case follows Holmes v QinetiQ Ltd, in which it was held that the ACAS code does not apply to dismissals for genuine ill health where there is no issue concerning poor performance.

This news may be welcomed by employers but the Phoenix case also emphasises that it can be difficult to dismiss an employee for an SOSR reason, especially a breakdown in working relations or a personality clash, and that this should be seen as a last resort. It is important to note that although the uplift is not applicable to SOSR dismissals, certain aspects of the Code still are, for example giving the employee a fair hearing, the right to be accompanied and the right of appeal.