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11 June 2013

ACAS Code and SOSR dismissals

Our employment team considers the implications of a new EAT decision relating to dismissals for ‘some other substantial reason’.

Facts

L was a school teacher who was dismissed without notice or notice pay.  The termination letter stated that the dismissal was the result of a breakdown in the trust and confidence essential to the employment relationship.

L had been unhappy with the computer systems used at the school and eventually dismantled the computers in his class.  He also refused to allow a consultant, who had been engaged to report on his teaching, to observe his class.  Colleagues complained about his difficult attitude.  Following a short period off work with stress, he was suspended on full pay.  Having assessed L as medically fit to return to work, the school asked him to attend a meeting at which he was handed the termination letter.  He had been given no prior warning that dismissal was a possible outcome of the meeting.

L succeeded in his claims for wrongful and unfair dismissal.  The tribunal found that L’s dismissal was procedurally and substantively unfair and awarded compensation of around £18,000.  The tribunal ruled that L’s refusal to compromise and difficult attitude had played a big part in his dismissal, which it held was for ‘some other substantial reason’ (SOSR).  The tribunal therefore assessed contributory fault at 65%, with the result that his compensation was reduced.  No uplift was made to reflect the employer’s failure to follow the ACAS Code of Practice.

L appealed to the Employment Appeal Tribunal (EAT) in relation to the level of compensation awarded.  In particular, he appealed on the grounds that the tribunal had failed to consider whether an uplift under the ACAS Code should be granted.

Decision

The EAT held that the tribunal had failed to adequately address whether the ACAS Code applied to the award. It had noted that the Code itself was silent as to whether it applies to dismissal for ‘some other substantial reason’ (SOSR), but this was the extent of their discussion. The tribunal had not expressly ruled whether or not the Code applied to a dismissal for SOSR, but decided that it should not be applied in this case since L had contributed to his own dismissal.

The EAT considered that, despite his behaviour, it was not L’s fault that the ACAS Code had not been followed.  L had done nothing to contribute to the school’s failure to act in accordance with the Code.  To deny him an uplift on the basis that he had contributed substantially to his own dismissal would be to penalise him twice over.
As to whether the Code applied to SOSR dismissals, the EAT held that as the Code applies to “disciplinary situations”, this should be construed broadly.  In particular, where an employee faces complaints which may result in disciplinary action, as was clearly the case here, the Code should apply regardless of what the stated reason for dismissal eventually is. The EAT stressed that the important factor in deciding whether or not the Code applies was the process used from the start, not the reason for dismissal.

Comment

This decision clarifies that the ACAS Code can apply in relation to a dismissal for SOSR, in circumstances where disciplinary proceedings were (or could have been) invoked, even if the resulting dismissal is technically for SOSR rather than misconduct.

The ruling appears to make a distinction between SOSR cases where there was never any question of disciplining or dismissing the employee for a conduct issue (the reason for the dismissal is simply the breakdown in the relationship), and situations where it is not immediately clear whether or not there is a conduct issue.
The distinction can be difficult to draw in practice, but certainly in any situation where misconduct has occurred employers should ensure that the procedural steps set out in the ACAS Code are followed, to avoid a potential uplift to any award of compensation.

A copy of the EAT judgment is available here.