No, said the Employment Appeal Tribunal in the recent case of Phoenix House Ltd v Stockman and another.
The ACAS Code on Disciplinary and Grievance Procedures expressly states that it applies to dismissals relating to misconduct or poor performance, but not to redundancy situations or non-renewal of fixed term contracts. It is however silent as to whether it should be followed by employers dismissing employees for some other substantial reason, such as, for example, an irretrievable breakdown in the working relationship due to personality clashes.
This finding is important because a failure to abide by the provisions of the ACAS Code can have expensive financial consequences for employers, as the tribunal may increase a compensation award by 25%.
The facts as reported in the Judgment of the EAT are that Mrs Stockman worked as a Financial Accountant for Phoenix House, a charity. A restructure of the Finance Department abolished her role and Mrs Stockman applied for various other positions and was successful with one of them, which was of a more junior level. She however felt that she had been unfairly treated in the recruitment process by the Finance Director and subsequently raised a grievance against him. She also confronted him whilst he was engaged in a meeting which resulted in a disciplinary process for misconduct.
Mrs Stockman was invited to a formal meeting to assess whether her relationship with her employer had irreversibly broken down, but despite her assertion that she could work with those she had raised grievances against, she was dismissed for “some other substantial reason” (namely an irretrievable breakdown in the working relationship).
Mrs Stockman brought Tribunal proceedings and the Tribunal found that her dismissal was unfair for various reasons.
On appeal the EAT upheld the Tribunal’s decision that Mrs Stockman’s dismissal was unfair. However, it found that the ACAS Code does not apply to dismissal for some other substantial reason and the EAT declined to accept that there should be an uplift in compensation.
The EAT decision in this case echoes its previous judgement in Holmes v Qinetiq, where it was held that the same ACAS Code did not apply to a dismissal for genuine ill health, without issues of poor performance. It therefore seem that the EAT is adopting a literal reading of the ACAS Code, which at least provides greater certainty to employers and employees.
However, although there may be no legal requirement to follow the ACAS Code for every type of dismissal, the code contains a number of steps which are still regarded as best practice and certainly avoid employers to be exposed to the risk of unfair dismissal claims on procedural grounds.
In any event, employers should bear in mind that fairly dismissing an employee for some other substantial reason is difficult to achieve when there has been a breakdown in the working relationships but no clear misconduct that would justify dismissal. A Tribunal would usually expect employers to attempt to resolve the problem reasonably by considering various options, such as mediation.
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