The Acas Code of Practice on Disciplinary and Grievance Procedures applies to all dismissals except redundancy dismissals or the non-renewal of fixed term contracts on their expiry. In Phoenix House Ltd v Stockman and anor, the Employment Appeal Tribunal (EAT) held that, in addition, it does not cover dismissals for “some other substantial reason” (SOSR) although elements of the Code can be applied to them.

Basic facts

In May 2013, Ms Stockman entered the office of the finance director without permission and refused to leave. Following an investigation she was issued with a 12-month written warning for misconduct. The firm set up a mediation meeting to try to iron matters out but this was unsuccessful.

Ms Stockman was then asked in November 2013 to attend a formal meeting at which it was decided that her relationship with her employer had irretrievably broken down and that they were terminating her contract of employment for SOSR.

Ms Stockman claimed unfair dismissal.

Tribunal decision

The tribunal held that the procedure followed by her employer was unfair and did not comply with the 2009 Acas Code of Disciplinary and Grievance Procedures. It was also clear that her employer had decided from the outset that the relationship had broken down, which put Ms Stockman in the position of having to prove otherwise.

In addition the tribunal found that the decision to dismiss on the basis that there had been an irretrievable breakdown in the relationship was outside the range of reasonable responses as no objective employer would have concluded that the relationship was beyond repair. As the Acas code applied and as the employer had unreasonably failed to comply with it, the tribunal held that under section 207A(2) of the Trade Union and Labour Relations (Consolidation) Act 1992, it had the power to increase her compensation.

Relevant law

Section 207(A)(2) states that if it appears to the tribunal that a relevant Code of Practice applies and the employer has unreasonably failed to comply with it, it may, “if it considers it just and equitable in all the circumstances to do so” increase the award to the employee by up to 25 per cent.

EAT decision

Although the EAT agreed with the tribunal that the dismissal was procedurally and substantively unfair, it held that the code did not apply to dismissals for SOSR and therefore the uplift could not be awarded.

The EAT confirmed that the code would apply when the employer had initiated disciplinary proceedings under the conduct rules that resulted in dismissal because of a breakdown in the relationship between employer and employee (some other substantial reason). However, whilst elements of the code were relevant and should be applied by employers to ensure fairness, Parliament had not intended that the uplift for breach of the letter of the Acas code should apply to SOSR dismissals. The uplift would not be applied as to do so would subject the employer to an additional punitive fine in circumstances where the employer had not been warned this might be the case.