In Phoenix House v (1) Stockman (2) Lambis, Ms Stockman (S) worked in the finance department. Mr Lambis (L) was the Finace Director. The employer restructured the department. S and a colleague Ms Savage, applied for the roll of Management Accountant. Savage got the job and S subsequently accepted the post of Paroll Officer.

A colleague, Mistry (M), agreed with S that L had treated her differently, because he disliked her.  L asked to see M in his office to understand his position.  S perceived that M was being reprimanded for his support for her.  She entered L’s office and demanded that he tell her what their conversation was about.  L told her in a normal tone of voice, to leave his office, which she did eventually.

S raised a grievance about L,  but it was rejected. The employer then insitiuted disciplinary proceedings concerning S’s actions relating to entering L’s office uninvited and initially refusing to leave. S was issued with a warning for misconduct. S was off sick for a lengthy period while this was going on.

S agreed to a mediation meeting to discuss if the working relationship between her and the employer had broken down to such an extent that it was irretrievable. Even though S stated she believed the relationship was not beyond repair and she would now be working in a different role, the employer felt that nothing she had said had changed the position and S was dismissed for some other substantial reason (SOSR) in that “the working relationship is irretrievably broken down”

An employment tribunal (ET) found the dismissal procedurally unfair. It was also substantively unfair because dismissal was not within the range of reasonable responses. One element of the procedural unfairness found by the ET was that the employer did not comply with the Acas Code of Practice on Disciplinary and Grievance Procedures; this in turn could give rise to an uplift of up to 25% when awarding compensation. The employer appealed, in particular arguing that the Acas Code does not apply to SOSR dismissals.

The EAT rejected the appeal against unfair dismissal, finding that the ET’s decision was “unassailable”. The EAT, however, agreed with the employer that the Acas Code does not apply to SOSR dismissals and therefore the ET would not be permitted to appy any uplift. In the EAT’s view, clear words in the Code that it applies to SOSR dismissals are required to apply that sanction, otherwise an employer may face a risk of which it has not clearly been forewarned by Parliament. Certain of the Code’s provisions, e.g. investigation, may not be of full effect in any event in such a dismissal. Given the absence of ‘clear words’, the Code, does not apply to dismissals for SOSR.

This case follows ‘hot on the heels’ of the EAT’s decision in Holmes v Qinetiq, reported last week, that the Acas Code did not apply to the dismissal of an employee who was incapable of doing his job purely because of ill health. While not expressly set out, the EAT’s decision in this case follows the same logic in that the Code does not apply where no misconduct or incapability is involved. That is often the case in most ‘personality clash’ type cases where one employee simply cannot get on with another. 

A fair procedure, however, is still required and here the EAT explain that nevertheless, elements of the Code are capable of being, and should be, applied, e.g. by giving the employee the opportunity to demonstrate that he or she can fit back into the workplace without undue disruption. The EAT also highlight that a fair procedure requires the employer to consider whether or not the relationship has deteriorated to such an extent that the employee cannot be reincorporated into the workforce without unacceptable disruption. That is likely to involve careful exploration of the employee’s state of mind and future intentions judged against the background of events.

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