The EAT has ruled that the Acas Code of Practice on Disciplinary and Grievance Procedures (Code) does not apply where there is a dismissal for some other substantial reason (SOSR) if the dismissal is attributable to an irretrievable breakdown in the working relationship. Accordingly, the Tribunal may not apply an uplift on unfair dismissal awards in such circumstances. To do so goes beyond Parliament's intention; for the sanction to apply for SOSR dismissals, such authority must be explicitly stated in the Code (Phoenix House Ltd v Stockman and another).
One potentially fair reason for dismissing an employee is SOSR. In determining whether dismissal is the appropriate sanction, the employer must consider whether the relationship has deteriorated to such an extent that the employee cannot be retained without unacceptable disruption. The burden is on the employer to show that such a break down has occurred; it is not for the employee to disprove this.
If an employer has unfairly dismissed an employee and also failed to comply with the Code, the Employment Tribunal may uplift damages by up to 25% where it is just and equitable to do so. The Code explicitly states that it applies to dismissals for conduct and performance and that it does not apply to dismissals for redundancy or where a fixed-term contract expires without renewal. The Code is silent, however, on whether it applies to dismissals for SOSR. Prior to the decision reported below, there had been no direct ruling on the point, although previous cases had suggested that the Code would apply in such circumstances.
The Claimant's role was removed in a restructure of Phoenix House. She applied for three new posts that had been created but was only successful in one, a more junior role. The Claimant believed she had been mistreated in the application process because of her line manager's dislike of her.
The Claimant interrupted her line manager in a meeting to confront him and ignored requests to leave. Consequently, disciplinary proceedings were commenced with the Claimant being immediately placed on paid leave (and subsequently going on sick leave). She raised a grievance against the Finance Director.
The disciplinary hearing into the Claimant's misconduct and the grievance hearing were held during the Claimant's sickness absence. The grievance was dismissed and she was given a12-month written warning for her misconduct.
The Claimant appealed both decisions. Before the appeals were determined, the Claimant expressed a desire to return to work, whilst maintaining her objections to her line manager's conduct, and sought mediation. Following a mediation session, a formal meeting was held to consider if there was a breakdown in the relationship. The employer found that it would not be possible for the Claimant to return to work and dismissed her for SOSR, namely the irretrievable break down of the working relationship.
The Claimant brought claims for unfair dismissal and allegations of victimisation and detriment because of protected acts and disclosures made in her grievance letter. Only the unfair dismissal aspect of the claim is considered below.
The Tribunal found (and the EAT agreed) that the Claimant had been unfairly dismissed because:
- The procedure was not fair and did not comply with the Code;
- The employer had falsely placed the burden on the Claimant to disprove that the relationship had broken down irrevocably;
- The Claimant had not had an adequate opportunity to put her case to the employer or effectively challenge the assertions made against her; and
- It was outside of the range of reasonable responses for an employer in that situation to determine that the relationship had irrevocably broken down.
The EAT dismissed the employer's appeal, holding that the dismissal was unfair. As the Claimant had not had the opportunity to demonstrate she could return to the workplace, it was not reasonable to simply conclude that she was unable to do so, especially where she would not work directly with those with whom there was a problem. The Claimant was not given the opportunity to try to assume the new role. Further, the employer had demonstrated a partly closed mind.
However, the EAT rejected the Tribunal's decision that the Code applied on the basis that to do so (and so impose a sanction on the employer) was going beyond Parliament's intention. For the sanction to apply it should be explicitly stated as such (as for other matters). The purposive approach suggested in Hussain v Jurys Inn Group Ltd UKEAT/0283/15 was not correct.
As a general principle, the Code should still be followed in all cases, as best practice. Whilst the decision may provide small comfort that the uplift does not apply in cases such as this, it demonstrates the difficulty of such dismissal being found to be fair. Even where a fair process is followed, it is still likely to be difficult for the employer to demonstrate that dismissal was the appropriate sanction, namely that it was a reasonable response if other options are reasonably available to the employer.