ACAS Code does not apply to some ill health dismissals

Louise Walker
Legal Director
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The general rule is that if an employer does not follow the ACAS Code of Practice (‘ACAS Code’) on disciplinary and grievance procedures, an Employment Tribunal can award an uplift in compensation of up to 25% for non-compliance where Claimants are successful with subsequent claims.

The ACAS Code sets out the irreducible minimum steps which an employer should follow including carrying out sufficient investigation; giving employees fair notice of any allegations; holding a hearing; and extending employees the right of appeal against any action taken.

Disciplinary procedures are regularly used, not just to deal with misconduct issues, but also with issues of capability. However, a recent case heard by the Employment Appeal Tribunal (EAT) has clarified that the ACAS Code will not be applicable to every type of capability dismissal.

In this case, the Claimant was dismissed on grounds of ill health on the basis that he was no longer able to carry out his job as a security guard. He brought claims for unfair dismissal and discrimination. The employer conceded that the dismissal was unfair because it had failed to obtain an up to date medical report regarding the Claimant’s ability to attend work reliably before dismissing.

At the subsequent remedy hearing, the Claimant argued that there should be an uplift in compensation on the basis that the employer failed to follow the ACAS Code. The Employment Tribunal refused to award an uplift, based on their view that the ACAS Code did not extend to dismissals on grounds of ill health where there is no ‘disciplinary’ component.

The Claimant appealed to the EAT, who upheld the decision of the Employment Tribunal. They pointed out that the concept of incapability includes both poor performance and medical incapacity. Poor performance involves an element of culpability, whereas medical incapacity involves no culpability. For the ACAS Code to apply, they decided that there must be some culpability on the part of the employee. It was therefore concluded that the ACAS Code does not apply to this type of ill health dismissal.

This concept that there must be some element of culpability for the ACAS Code to apply is helpful, but there will remain many grey areas to be litigated over, in terms of what amounts to culpability in particular cases.

The position would almost certainly be different from this case, for example, if the reason for dismissal was not the sickness absence itself, but rather a failure to comply with sickness absence procedures. The ACAS Code would probably also apply in cases where an employer considers that the illness is not genuine.

Finally, it is important to understand that following the ACAS Code is not only relevant to the question of an uplift in compensation, it is also capable of affecting the fairness of a dismissal.

You can read the case here:

http://www.bailii.org/uk/cases/UKEAT/2016/0206_15_2604.html

It is also worth noting that in a separate case, the EAT has decided that the ACAS Code did not apply to a dismissal for ‘Some Other Substantial Reason’, where the reason for dismissal was the irretrievable breakdown in the working relationship between employer and employee.

However, applying the concept of culpability from the ill health dismissal case, it is important to realise that employers would not be able to avoid applying the ACAS Code by simply saying the working relationship had broken down, where it was some sort of culpable conduct on the employee’s part that led to the breakdown in the working relationship.

You can read the latter case here:

http://www.bailii.org/uk/cases/UKEAT/2016/0264_15_1705.html

Topics: ACAS, EAT, Employment Appeal Tribunal