20 May 2019

A brief guide to some recent cases on unfair dismissal.

Relying on live warnings: Beattie v Condorrat War Memorial and Social Club

An employment tribunal had to consider the dismissal of an employee who was on a final written warning and then committed a further act of misconduct.

The employee’s position was that the final warning had been deeply flawed – it was unduly harsh, there had been no proper investigation of the issues, and that offence did not amount to “serious misconduct” in terms of the employer’s policy.

The employment tribunal rejected the employee’s challenge to the earlier warning. The decision was upheld by the Employment Appeal Tribunal (“EAT”). The EAT reiterated that the test for whether an employee can, in an unfair dismissal claim, challenge an earlier warning, is whether the warning was “manifestly inappropriate”. That is a high threshold to reach. In this case, although there had been no formal investigation of the allegations against the Claimant, that was less significant as the employee had admitted some responsibility for the offence that led to the warning, and in all the circumstances it could not be said that the warning was “manifestly inappropriate”. It had not been issued in bad faith, and there was at least a prima facie basis for the warning.

While confirming that it will be difficult for an employee to challenge reliance on an earlier warning, this case confirms that it is possible to do so, and employers should ensure therefore that there is a proper basis for any warning that is issued and that a proper procedure has been followed.

Need for investigation: Radia v Jefferies International Ltd

This case also considered the extent to which investigation is required, and whether there needs to be an investigation hearing.

A senior employee and FCA regulated person gave evidence at an employment tribunal hearing. The tribunal found him to be lacking in credibility and considered his evidence was evasive. Based on the tribunal findings the employee was invited to a disciplinary hearing and dismissed. He was denied any right of appeal.

The employee claimed unfair dismissal arguing that the procedure was fundamentally flawed as there had been no investigation, and no appeal. The employment tribunal rejected his complaint

On appeal the EAT agreed that the lack of investigation did not make the dismissal unfair. There is no legal requirement to have an investigation hearing and the extent to which any investigation is needed will depend on the circumstances. As the employer was relying on the terms of the tribunal judgement, there was no further investigation that could reasonably be carried out, and it was not inappropriate that the first chance the employee had to defend himself was at a disciplinary hearing.

However, the failure to offer an appeal made the dismissal unfair.

This serves as a useful reminder that while an employer needs to fairly investigate an allegation, what that will involve will vary from case to case, and in some instances very little will be required. In most cases, however, where the facts are not self-explanatory, it will be appropriate to have a separate investigation stage, ideally carried out by someone different from the ultimate disciplinary chair

Disciplinary suspension: London Borough of Lambeth v Agoreyo

A special needs teacher was accused of using excessive force against 2 pupils. She was suspended pending a full investigation. She resigned alleging that by suspending her, the employer had materially breached her contract of employment, entitling her to resign and treat herself as having been dismissed. She raised court action for damages for breach of contract.

The basis of the teacher’s action was that the suspension had been a “knee jerk” reaction, the decision reached without proper assessment of what had happened, or the effect that suspension would have upon the teacher. As such, she argued, the act of suspension was enough to breach the implied duty on every employer not to act, without reasonable and proper cause, in such a way as is calculated or likely to destroy or seriously damage the mutual relationship of trust and confidence that must exist between employer and employee.

The claim initially failed, but her appeal was upheld by the High Court which considered that it had not been “reasonable and/or necessary” to suspend the employee.

In a further appeal, the Court of Appeal overturned that decision, and agreed with the employer’s position. The High Court had applied the wrong test and should have simply considered (as the initial court had done) whether there was “reasonable and proper cause” for the suspension.

While the employee’s challenge failed in this case, this serves as a useful reminder for employers that suspension should not be a “knee jerk” reaction, and that they may have to justify the decision to suspend. Other employees in other cases have succeeded in showing that a suspension was a breach of contract by the employer.

TUPE Unfair dismissal: Hare Wines v Kaur

The TUPE Regulations suggest that where there is a TUPE transfer if an employee of either business is dismissed, before or after the transfer, by reason of the transfer, then that will be an automatically unfair dismissal

In this case, an employee was dismissed by the “transferor” (old employer) immediately before the transfer. The employee claimed unfair dismissal. An employment tribunal concluded that the reason for dismissal was as follows: A Director of the “transferee” (the new employer) had worked with the Claimant previously and they had experienced a difficult working relationship. The Director accordingly did not want to work with the employee again and required that the employee be dismissed by the transferor.

The transferee argued at the Court of Appeal that even if the tribunal was correct as to that reason, that did not mean that the dismissal was “by reason of” the transfer. The dismissal would be due to personal relations, not the transfer. The Court of Appeal disagreed. The transfer was the sole or principal reason for the dismissal; were it not for the transfer there would have been no dismissal. While there can be a defence for dismissals that are due to organisational reasons, there is no defence for dismissals for personal reasons. The dismissal was automatically unfair and liability for that dismissal transferred to the transferee.

This is a perfect example of the trap that some businesses fall into when acquiring a business (or taking on a contract) under TUPE – they can ask the transferor to dismiss staff pre-transfer, but liability for these dismissals will pass to the transferee, who will need to pay up unless the sale contract contains comprehensive indemnities by the transferor in relation to such claims.

For further information, please contact your usual BTO contact.

Contact: Douglas Strang, Senior Associate dst@bto.co.uk T. 0141 221 8012