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When does the Acas Code of Practice apply to the dismissal of an employee?

02 August 2016

The Acas Code of Practice on Disciplinary and Grievance Procedures sets out guidance for employers who are handling disciplinary or grievance situations in the workplace. If an employer fails to have regard to the basic principles set out in the Acas Code when handling a disciplinary or grievance matter which results in an employment tribunal claim, an award of compensation may be uplifted by up to 25%. It is therefore important that employers have regard to the Acas Code, especially when any disciplinary procedure results in an employee’s dismissal.

That is not to say that the Acas Code should be followed in all cases ending in dismissal.

In the case of Holmes v QinetiQ, the Employment Appeal Tribunal found that the Acas Code does not apply to dismissals on the ground of ill health (a capability dismissal). The employee in question had been dismissed because his back, legs and hip pain prevented him from working as a security guard. His dismissal was unfair because the employer had failed to obtain an up-to-date occupational health report before it made the decision to terminate the employee’s employment. The Employment Tribunal had declined to award an uplift to the employee’s compensation on the basis that the Acas Code did not apply to his dismissal. The EAT agreed; a dismissal on the grounds of ill health is not connected to an employee’s culpability (as a capability dismissal for poor performance would be) and therefore a disciplinary procedure is not invoked.

In the case of Phoenix House Ltd v Stockman, the Employment Appeal Tribunal found that the Acas Code did not apply to the dismissal of an employee because of a breakdown in working relationship (a ‘some other substantial reason’ dismissal). In this case, the employee raised a grievance at the same time as being the subject of a disciplinary procedure for her misconduct. The disciplinary procedure resulted in a written warning; however, as a result of her grievance, the company concluded that the working relationship between employer and employee had broken down and the employee was dismissed. The Employment Tribunal found employee’s dismissal to be unfair and applied an uplift to the employee’s compensatory award. The Employment Appeal Tribunal agreed that the employee’s dismissal was unfair, but overturned the decision to apply an uplift to the compensatory award on the grounds that the Acas Code does not apply to dismissals for some other substantial reason. Notwithstanding this, the EAT noted that elements of the Acas Code, which reflect common-sense fairness, could, and should, apply.

In both of these cases, a disciplinary procedure had not been invoked which meant that the Acas Code did not apply and there was no entitlement to a 25% uplift. However, both dismissals were unfair because a fair procedure had not been followed. Employers should have regard to the fundamental principle of fairness in all dismissals, regardless of the application of the Acas Code.