Springhouse Solicitors

ACAS Code does not apply to breakdown in working relationship dismissal

We report on a further case about the ACAS Code, which follows hot on the heels of Holmes.

This case deals with one of the questions left unanswered by Holmes, namely what happens in the case of SOSR (some other substantial reason) dismissals?

In this case, the Claimant Ms Stockman was dismissed by Phoenix House Limited on grounds of an irretrievable breakdown in the working relationship.

Background

The ACAS Code of Practice on Disciplinary and Grievance Procedures is clear that it only applies in the disciplinary context, and this was clarified in the case of Holmes, which held that there needs to be some form of culpable conduct that is being addressed for the Code to apply.

In this case, Ms Stockman had raised a grievance against the company’s finance director (she was a financial accountant), Mr Lambis. She also confronted him while he was in a meeting with another person, and was subject to a disciplinary process for this.

Ms Stockman was absent on sick leave while the disciplinary process was taking place, and she was dismissed in her absence on the basis of an irretrievable breakdown in the working relationship.

The EAT decided that the ACAS Code did not apply in this case. The EAT’s reasoning was that, because the application of the ACAS Code could result in a stiffer financial penalty for employers (an uplift of up to 25% on any award) clear wording would need to be found in the legislation enabling this. Because the ACAS Code does not specifically include SOSR dismissals, the EAT therefore decided that the intention must have been to exclude them. This is in contradiction with a previous case (Hussain) with which the EAT “respectfully disagreed”.

The EAT also went on to find that there had been no unfair dismissal in this case. They said that no reasonable employer could have come to the conclusion that the working relationship had irretrievably broken down. Ms Stockman did not necessarily have to come into day to day contact with Mr Lambis. Furthermore, there was no evidence that she could not work harmoniously with her immediate manager who was a different person.

Implications

While this case gives some clarity as to the applicability of the ACAS Code, it also provides a warning to employers that they should think carefully about dismissing employees on grounds of an irretrievable breakdown in the working relationship. The Courts will see this as a drastic step and although dismissals for this reason can potentially be fair, there is a high standard for this.