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12 August 2016

Phoenix House Ltd v Stockman

In Phoenix House Ltd v Stockman, the EAT approached the subject of the ACAS Code of Practice on Disciplinary and Grievance Procedures ("the Code") once again, this time specifically in relation to dismissals for Some Other Substantial Reason ("SOSR"). The dismissal was by reason of a breakdown in the working relationship.

The Facts

Ms S was employed as a Financial Accountant at PH which was a charity. There was a full restructure in which her post was removed and S obtained the more junior role of Payroll Controller among the many she applied for. She felt that the Finance Director had treated her unfairly in the recruitment process and raised a grievance in respect of this. As a result of an inappropriate outburst during a meeting, disciplinary proceedings were began against her to run in parallel with the grievance.

Ms S went on sick leave and both the grievance and disciplinary hearings went ahead in her absence, resulting in a written warning and the grievance not being upheld. She exhausted all lines of internal appeal and there was no agreement by mediation. PH invited Ms S to a hearing to decide whether the working relationship had irretrievably broken down. S notified PH in advance that it had not, that she believed she could work under the Finance Director and that she wished to return to work after her sick leave. The new role did not necessitate even day to day contact with the Finance Director.

At that hearing, another Director found that there was no route for her to return to work as the relationship had irretrievably broken down and that Ms S would be dismissed for SOSR.

She made a claim to the ET for unfair dismissal.

The ET

The ET decided that the dismissal was unfair as it was not reasonable to consider that the working relationship had indeed irretrievably broken down. There were also procedural irregularities which constituted breaches of the Code such as not allowing Ms S to adequately put her case and that she was not given the opportunity to show that the relationship was in tact.

When considering the remedy, Ms S asked for an uplift to her claimed loss on the grounds that PH had failed to take follow the Code whilst PH stated that the code did not apply. The Tribunal can award an uplift of 25% to a claim for failure to follow the statutory Codes of Practice under section 207A(2) of the Trade Union and Labour Relations (Consolidation) Act 1992.

The ET found that the Code was applicable in the circumstances.

PH appealed both the finding of unfair dismissal and the applicability of the Code.


Whilst PH failed in their appeal against the unfairness of the dismissal, they were successful in their appeal against the application of the Code. The EAT dismissed the suggestion that the Code applied on the basis that it did not explicitly state that it applied to SOSR dismissals; the Code must specify proceedings to which it applies and it does not state that it applies to these dismissals.


This builds upon the previous case considered in this brief (Holmes v Qinetiq) in fortifying that the specific wording of the Code is paramount. This is welcome news in that we can begin to have certainty that the Code spells out the correct requirements and is therefore better guidance for managing employees. It remains to be seen whether these decisions will prompt ACAS to update their Codes of Practice.

The previous test in these circumstances was unpredictable in practice. Asking the question of whether the business should have invoked the disciplinary procedure is difficult without the benefit of hindsight and without being there in person at the time. In this case it might have even changed the outcome due to the proximity between the SOSR and the disciplinary.


To find out how Steeles Law Employment team can support you and your business, please do not hesitate to call 01603 598000 or email employment@steeleslaw.co.uk. Appointments are available at our Diss, Norwich and London offices or at your offices by appointment.

*The information provided in this article is designed to provide useful information on the subject, not to provide specific legal advice.

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