In the UK, there is an Advisory Conciliation and Arbitration Service (ACAS) run by the government, providing free and impartial advice to employers and employees. They have produced a Code which employers are required to follow when dealing with disciplinary and grievance procedures; failure to reasonably follow the Code leads to employers being penalised by way of increased compensation to employees in the Tribunal. This was introduced by Parliament.

However, the Code expressly says that it applies to dismissal for misconduct and performance and while most HR teams in companies have thought that it applies to all dismissals that is not in fact the case.

Another type of dismissal, is ‘dismissal for some other substantial reason’. This includes dismissals where an employer dismisses an employee for an irretrievable breakdown in their working relationship.

In the recent case of Hussain v Jurys Inns Group Ltd [2015], S was employed by P. When her post was removed in a restructure, S successfully applied for a junior position. S felt that she had been unfairly treated in this process by L and she raised a grievance against him. S confronted L and was subjected to disciplinary proceedings.

S went on sick leave during which S’s grievance was dismissed and she was given a written warning for misconduct. S unsuccessfully appealed against both decisions. Following an unsuccessful mediation, P invited S to a meeting to consider their working relationship.

At the meeting, S expressed her wish to return to work. She considered that she could work with L, despite not retracting her previous comments about him. At the end of the meeting, S was told by P that they were terminating her employment for SOSR because their working relationship had irretrievably broken down.

An employment tribunal held that S’s dismissal was unfair. It held that P had failed to comply with the Code and P appealed against this.

While the dismissal was still deemed unfair by the EAT, the EAT disagreed that the Code would apply. The Code applies more rigid obligations on the employer. Where a tribunal finds that a dismissal to which the Code applies was unfair, it must consider making an uplift to any award of compensation if the employer failed to follow the Code; in this instance, the uplift awarded by the tribunal was overturned as the Code was not applicable.

In some cases, there may be an overlap between misconduct and a breakdown in the employment relationship and so whether or not the Code is applicable may not always be clear. In situations such as this, employers should err on the side of caution and have their HR team and the person in charge of dealing with the disciplinary or grievance procedure read the Code and ensure compliance.

It is always good practice to deal with employment issues reviewing matters from the eyes of a judge should the matter go to the tribunal. That way, you can see whether the way in which you, as an employer, may avoid getting penalised for the way in which you treat employees and to ensure you are as fair as possible to your employees.
For further information, please contact Koichiro Nakada – Head of Japan Business Group ( and Yoko Nakada - Senior Associate, Deputy Head of Japan Business Group (
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