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In the case of Holmes v Qinetiq Ltd UKEAT/0206/15/BA the Employment Appeal Tribunal (“EAT”) considered whether the ACAS Code of Practice applied to capacity (ill health) dismissals and, if so, whether the Claimant was able to claim an uplift to his compensation for a failure to comply with the ACAS Code of Practice.

The EAT held that the ACAS Code of Practice does not apply to ill health dismissals as the ACAS Code of Practice, properly construed, does not apply to an employer’s internal procedures concerning alleged incapability to undertake a role because of sickness absence; the EAT held that the ACAS Code of Practice only applies to procedures concerning allegations of misconduct and poor performance (rather than ill health).

The factual background of Holmes v Qinetiq Ltd

Mr Holmes was employed by Qinetiq Ltd (“Qinetiq”) as a security guard from 1 July 1996 until his dismissal on 17 April 2014. He was based at Aberporth, Wales.

During the period of his employment Mr Holmes had a number of long periods off work sick due to pain he experienced in his back, legs, and hips. He underwent surgery in April 2014 that effectively resolved the pain he had been experiencing prior to undergoing surgery but Qinetiq dismissed him in April 2014 on the grounds of his ill health without obtaining an up-to-date Occupational Health report on Mr Holmes’ ability to attend work in the future.

Mr Holmes issued claims for unfair dismissal and age discrimination.

The Employment Tribunal’s decision

During the Employment Tribunal proceedings Qinetiq conceded liability regarding the unfair dismissal and discrimination claims.

A remedies hearing was held to determine what compensation Mr Holmes should be awarded in his claims. Mr Holmes and an employee of Qinetiq, Morag Morrison, gave evidence at that hearing. As well as past and future loss of earnings (and injury to feelings), Mr Holmes claimed that he should be awarded an uplift to his compensatory award as, he alleged, the ACAS Code of Practice applied and Qinetiq had unreasonably failed to follow it.

The Employment Tribunal awarded Mr Holmes his past losses to the date of the Employment Tribunal (7 September 2015) and, further, his future losses from 7 September 2015 to 6 September 2018 (a period of 3 years). The Tribunal declined to award an ‘ACAS uplift’ for failure to follow the ACAS Code of Practice as it found that the Code of Practice did not apply to ill health dismissals for four reasons:

  1. The ACAS Code of Practice does not apply to internal procedures regarding ill health incapability, and is limited to internal procedures concerning misconduct or culpable poor performance
  2. Ill health dismissals are a result of medical incapability, not culpable poor performance
  3. There was precedent (Lund v St Edmunds School Canterbury) to show that the presence of culpability is central to any award of an ACAS uplift
  4. There was no suggestion that Mr Holmes was in any way culpable for what had happened

Mr Holmes appealed against the decision of the Employment Tribunal on 3 grounds:

  1. Whether the Tribunal was correct to refuse to award any uplift in compensation;
  2. Whether there was evidence to support the conclusion that suitable alternative employment would have been obtained by 6 September 2018 and so that full loss ceased as of that date;
  3. Whether travel costs could properly be ignored or not taken into account in determining pecuniary loss in the period from 7 September 2015 onwards

The decision of the Employment Appeal Tribunal

The Employment Appeal Tribunal rejected all 3 grounds of appeal, holding:

  1. That Mr Holmes’ internal capability procedure was not a “disciplinary situation” and an ACAS uplift could therefore not apply (as this was only intended to apply to internal poor performance or disciplinary proceedings)
  2. There was sufficient information available to the Tribunal to make the judgment that it did – assessing future loss is an imperfect, speculative exercise based on necessarily limited information
  3. No evidence of any travel expenses had been put to the Tribunal during the remedies hearing, and it was therefore entitled not to make an award in respect of such

Why is this case important?

This case is important as it sets a precedent that ill health dismissals do not invoke any ACAS uplift award (whether the dismissal is discriminatory or not). This is welcome news for employers, given that the law on this issue was previously uncertain.

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

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