The application of the ACAS Code of Practice on Disciplinary and Grievance Procedures (or not!) can have significant implications in unfair dismissal cases. This is because an Employment Tribunal, who find that an employee has been unfairly dismissed, must then consider whether to make an uplift of up to 25% to any award made to the employee in cases to which the Code applies and has not been followed by the employer (equally, a reduction of up to 25% can be made if the employee has not followed the Code).
The Code itself says 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. However, although this sounds clear, a recent case looked at whether the Code might also apply to dismissals for ‘some other substantial reason’ (SOSR).
The previous case law in this area was Cummings v Siemens Communications Ltd (2010) (see our article on the case here), when an Employment Tribunal said that the Code also applied to SOSR dismissals. However, this was a Tribunal level only decision, so wasn’t binding law, and we have been waiting to see what the higher courts would make of this point.
SOSR is a one of the five potentially fair reasons for dismissal and is a “catch-all” – i.e. where a situation does not fit into one of the other four reasons (capability, conduct, redundancy, or breach of a statutory provision) but where there is still a substantial reason which will justify the dismissal of an employee. This will depend on the facts of the case but it can cover situations such as a breakdown in trust and confidence, or where the employee refuses to agree to new terms and conditions.
As the judgment in Cummings was only at Employment Tribunal level, employment lawyers have been expecting this to be either confirmed or rejected at Employment Appeal Tribunal (EAT) level. The case of Lund v St Edmund’s School, Canterbury (2012) has done just that, and the decision is that it does apply.
Mr Lund had been dismissed without notice or pay in lieu of notice by the school following a breakdown in the employment relationship. The conflict arose in relation an argument about computer equipment which Mr Lund felt was inadequate and ended with him dismantling the system. Mr Lund brought claims for wrongful and unfair dismissal and was successful in those claims. Mr Lund’s award of £18,000 was reduced by 65% as the Employment Tribunal said Mr Lund contributed to his dismissal (for more information on how this works, see our article on contributory fault). No uplift was made in regard to the Code. Mr Lund appealed to the EAT.
The EAT said the Tribunal had erred by not applying any uplift, even where there had been a reduction for Mr Lund’s contributory conduct. The EAT said although the Code says it applies to “disciplinary situations”, this should be construed broadly. In particular, and crucially, the EAT said the Code should apply where an employee faces a complaint which may lead to disciplinary action (whether because of misconduct or poor performance). This is regardless of whether the employee ends up being dismissed for misconduct, poor performance or something else.
The problem is that SOSR situations very often involve overlap with possible misconduct or poor performance issues. Therefore, it is now important that employers consider the Code in a far wider range of situations than had been previously thought. The risk of ignoring the Code is a potential uplift of 25% on any award made to an employee. Although the clarity on this point is welcomed, it does create an additional layer of complexity around the already complex area of dismissals for SOSR. We have experience of advising on numerous SOSR situations so please do contact us if we can help with a situation you are dealing with.
If you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).