Chand v EE Limited: composite reasons and the reasonableness test in unfair dismissal

The Employment Appeal Tribunal has allowed an appeal in Chand v EE Limited [2026] EAT 17, finding that an Employment Tribunal erred in upholding a dismissal where the employer's belief in fraudulent conduct lacked reasonable grounds, despite one allegation being potentially sufficient for dismissal.

Elizabeth Chand worked for EE Limited for 16 years as a Senior Customer Advisor with an unblemished record. During 2022, whilst caring for unwell parents, she made errors in four separate customer transactions. EE dismissed her for gross misconduct, concluding each incident constituted fraud. She admitted negligence but denied any fraudulent intent.

The Employment Tribunal found that EE had no reasonable basis to conclude fraud had occurred in any of the four incidents. However, it deemed the dismissal fair because the fourth incident alone—an egregious breach of customer connections policy—warranted summary dismissal, even absent fraud.

The composite reason principle

Lord Fairley, sitting as President of the EAT, identified a fundamental error in the Tribunal's approach. Section 98(1) of the Employment Rights Act 1996 requires employers to prove the actual reason—or principal reason—for dismissal, not what the reason could have been.

The Tribunal's own findings established that the dismissing manager, Mr Palmer, "failed to view [the] allegations separately" and had indicated that fewer proven allegations might have altered the outcome given Chand's length of service. This demonstrated a composite reason for dismissal comprising all four allegations, each characterised as fraudulent.

Applying Smith v Glasgow City District Council [1987] ICR 796, Lord Fairley held that where an employer relies on composite reasons and a key element lacks reasonable grounds, the dismissal cannot be fair. As Lord Mackay stated in Smith, accepting as reasonably sufficient a reason which is "neither established in fact nor believed to be true on reasonable grounds is an error of law."

The EAT rejected EE's argument that Robinson v Combat Stress UKEAT/0310/14 supported a different outcome. Whilst Robinson confirms that a single sufficient incident may justify dismissal despite unreasonable conclusions about other matters, this depends on establishing that the single incident was actually the principal reason in the decision-maker's mind—a finding the Tribunal never made.

The appeal process

Similar reasoning applied to the internal appeal conducted by Mr Matthewman. The Tribunal made no finding that his view of the fourth allegation differed from Mr Palmer's. Both managers concluded the conduct was fraudulent—a belief unsupported by reasonable grounds. The fourth allegation comprised two elements: a policy breach and fraud. Even if the policy breach alone could theoretically justify dismissal, fraud remained integral to the actual dismissal decision.

Cross-appeal dismissed

EE's cross-appeal argued the Tribunal should have examined all allegations together, which would have supported fraud findings. Lord Fairley dismissed this, noting the Tribunal correctly applied BHS v Burchell [1980] ICR 303 and Post Office v Foley [2000] ICR 1283. How the Tribunal analysed evidence was within its discretion as primary fact-finder, and its conclusions—not alleged to be perverse—warranted respect.

The EAT substituted a finding of unfair dismissal and remitted the case for a remedy hearing. Questions of contributory conduct and Polkey reductions remain for the Employment Tribunal to determine, alongside any assessment of what a fair procedure might have concluded about the non-fraudulent policy breach.

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