Relationship Breakdowns, Dismissals and the ACAS Code
The EAT has held that the ACAS Code of Practice on Disciplinary and Grievance Procedures (the ACAS Code) does not apply to dismissals for some other substantial reason (SOSR) where there has been an irretrievable relationship breakdown between colleagues.
The ACAS Code states that it applies to dismissals relating to misconduct and poor performance. Where an employer unreasonably fails to comply with the provisions of the ACAS Code, employment tribunals may increase a compensation award by up to 25%.
The Facts
In Phoenix House Ltd v Stockman and another, Ms Stockman worked as a Financial Accountant for Phoenix House Ltd (Phoenix). Following a restructure there was a period of acrimony in which Ms Stockman brought an unsuccessful grievance against the Finance Director and received a written warning for misconduct. Ms Stockman was ultimately dismissed for SOSR, on the basis that her relationship with the company had broken down irretrievably.
Ms Stockman commenced proceedings against Phoenix for unfair dismissal.
Decision
The Employment Appeal Tribunal (EAT) upheld the Tribunal's decision that the dismissal was procedurally and substantively unfair, but found that there should not have been a 25% uplift in compensation for non-compliance with the ACAS Code as the ACAS Code did not apply in this case.
Best Practice
This decision confirms that the ACAS Code will not apply to SOSR dismissals where there has been an irretrievable breakdown in relationships, even where there has previously been an element of misconduct. This appears to contrast with the recent case of Holmes v QinetiQ which suggests that the ACAS Code would apply where there has been some element of culpable conduct on the part of the employee, even if this was not the ultimate reason for dismissal.
In any event the ACAS Code sets out basic principles of fairness and employers should still have regard to those principles when dealing with a breakdown in relations which seriously impacts the performance of the organisation and considering a SOSR dismissal.
It must be stressed however that a fair SOSR dismissal, where there has been a breakdown in the working relationship, is difficult to achieve. A tribunal would expect employers to explore all other reasonable options to solve the problem without resorting to dismissal, including considering mediation, redeployment or a change in working patterns.