The ACAS Code of Practice on Disciplinary and Grievance Procedures does not apply where someone is dismissed from work purely due to ill health. This means employers can dismiss someone for sickness without following the process recommended in the ACAS Code. In addition, employment tribunals do not have the power to adjust awards made in such cases, as it usually would.

What is the ACAS Code?

The ACAS Code sets out best practice and gives practical guidance for employers handling disciplinary and grievance issues in the workplace.

While it is not a strict legal requirement to follow everything set down (and failure to follow it doesn’t make a person or organisation liable to proceedings), employment tribunals do take it into account when deciding relevant cases such as unfair dismissal.

A tribunal can increase or decrease (depending on which party is at fault) any award it makes by 25% in such cases where there has been an unreasonable failure to comply with provisions of the ACAS Code.

How does this apply to ill health and employee sickness?

The ACAS Code states that it applies to dismissing an employee for conduct or performance issues, but not to dismissals because of redundancy or the end of a fixed term contract. However, it does not mention dismissal for other reasons, such as ill health.

However, in the case of Homes v QinetiQ in 2016, the Employment Appeal Tribunal (EAT) confirmed that the ACAS Code does not apply to ill health dismissals, providing a degree of clarity over the matter.

Facts of the case

The claimant in the case, Mr Holmes, had brought a claim for unfair dismissal against QinetiQ relating to his dismissal for ill health. QinetiQ accepted that he had been unfairly dismissed, because they had not obtained an up to date medical opinion.

However, the Tribunal did not award any statutory uplift for failure to follow the ACAS Code. QinetiQ’s position, with which the EAT agreed, was that the ACAS Code was not applicable as the dismissal had not been due to any culpability on the part of Mr Holmes. For instance, the absences were not for a spurious reason and were not excessive or in breach of any policies. These matters could have given rise to disciplinary sanctions, but this was purely a genuine ill health case, so could not.

The implication of this decision is that, because the ACAS Code is not applicable to an dismissal due genuine employee sickness, individuals cannot claim the 25% uplift for an employer’s failure to follow the Code.

What procedure do employers have to follow before dismissing for ill health?

Just because the ACAS Code does not apply to dismissals for ill health, this does NOT mean that employers can dismiss an employee due to sickness without first going through a fair procedure.

What that procedure looks like will vary from case to case, but it will certainly involve the employer seeking a medical opinion on the prognosis for the employee, consulting with them regarding their future employment and warning them of the risk of dismissal from work before a decision is made.

Employers should not be too hasty to dismiss and should consider whether the sickness of the employee might qualify as a disability within the meaning of the Equality Act 2010. If so, the employer has a legal duty to assess whether any reasonable adjustments can be made to assist the employee in returning to work.

What about other types of dismissal?

What was less clear following the Holmes case was whether other types of dismissal were covered by the ACAS Code, for instance SOSR (some other substantial reason) dismissals. In such circumstances, there may be some element of culpability on the part of the employee as well as an element of business need by the employer, such as where there is an irretrievable breakdown in the working relationship.

Fortunately, another decision from the EAT, Phoenix House came hot on the heels of Holmes, resolving the issue in respect of the breakdown of the working relationship at least.

Dismissal following breakdown of working relationship

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

Whilst employed as a financial accountant for the company, Ms Stockman had raised a grievance against the company’s finance director, Mr Lambis. She also confronted him at work, while he was in a meeting and was subject to a disciplinary process for this.

Ms Stockman was absent from work on sick leave while the disciplinary process was taking place, and 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 another previous case (Hussain) with which the EAT “respectfully disagreed”.

As regards the unfair dismissal claim, the EAT said that no reasonable employer could have concluded that the working relationship had irretrievably broken down. Ms Stockman did not necessarily have to come into day to day contact with Mr Lambis at work. Furthermore, there was no evidence that she could not work harmoniously with her immediate manager who was a different person.

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 an employee 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.