Update: dismissal law

Reason for the dismissal

In the high profile case of Aslef v Brady [2006] IRLR 576, the EAT upheld a tribunal's finding that a trade union general secretary was not dismissed for gross misconduct, as the union alleged, but because of politically motivated hostility towards him. Accordingly, the union had failed to show that the dismissal was for a potentially fair reason. The EAT pointed out that dismissal might be for an unfair reason, even where misconduct has occurred. The question is whether the misconduct was the real reason for dismissal and the onus is on the employer to prove that. Even a potentially fair reason may be the pretext for dismissal for other reasons. Evidence that others would not have been dismissed in similar circumstances would be powerful evidence that the employer did not dismiss for a proper reason, but it is open to the tribunal to find a dismissal unfair, even in the absence of such strong evidence. In a case of mixed motives such as malice and misconduct, the principal reason may be malice, even though the misconduct would have justified the dismissal had it been the principal reason. On the other hand, the fact that the employer acted opportunistically in dismissing the employee does not necessarily exclude the finding that the dismissal was for a fair reason.

Refusal to sign up to an unreasonable restrictive covenant may amount to a potentially fair reason for dismissal, according to the Court of Appeal in Willow Oak Developments Ltd t/a Windsor Recruitment v Silverwood [2006] IRLR 607. If a reason for dismissal is whimsical or capricious or dishonest, or is based on an inadmissible ground such as race or sex, then it is not potentially fair. However, if the category into which the reason falls is one that can, in law, form a legitimate ground for dismissal (such as an employee's refusal to accept covenants proposed by the employer for the protection of his legitimate business interests) then one must proceed to the second question, ie, whether the employer acted reasonably or unreasonably in treating that reason as a sufficient reason for dismissing the employee. The possibility that the covenant, if agreed, might not be enforced as a matter of contract is at best only one factor in determining whether the process of negotiating and bargaining, and the sanction imposed by the employer, was reasonable.

Lapsed warnings

In Diosynth Ltd v Thomson [2006] IRLR 284, the Court of Session upheld a decision that employers acted unreasonably in treating a previous warning that had expired as a determining factor in deciding to dismissal the claimant for further breaches of safety procedures. An employee who is given a written warning which states that it will remain in force for a specific period is entitled to assume that the warning will cease to have effect after that period. The employers conceded in this case that, but for the previous lapsed warning, the claimant would not have been dismissed. In regarding the warning as tipping the balance in favour of dismissal, the employers acted as if it remained in force beyond the expiry of the 12-month period and that was unfair.

Dismissal on racial grounds

In Redfearn v Serco Ltd t/a West Yorkshire Transport Services [2006] IRLR 623, the Court of Appeal reversed the decision of the EAT reported at [2005] IRLR 744, which had given rise to much controversy and debate. A bus driver was dismissed when the employers discovered that he was seeking election as a councillor for the British National Party. The employers contended that the reason for his dismissal was health and safety grounds, having regard to the fact that a significant number of their passengers and employees were of Asian origin. A tribunal accepted that the reason for dismissal was health and safety and not racial grounds, but the EAT allowed the bus driver's appeal. The Court of Appeal restored the original ruling. Although the circumstances in which the decision to dismiss was taken included racial considerations, that did not mean that the dismissal was 'on racial grounds'.

Dismissal and disability

In Taylor v OCS Group Ltd [2006] IRLR 613, the Court of Appeal concluded that a dismissal of a profoundly deaf employee for misconduct was not for a reason 'which related' to his disability. The employment tribunal was right to focus on the reason for dismissal that was present in the employer's mind, and in finding that this reason (misconduct) was not related to the claimant's disability. The argument accepted by the EAT, ie, that it was unnecessary to show that the disability-related reason was present in the employer's mind, in order to demonstrate that the reason 'related to' disability, was fallacious.

Statutory dismissal procedures

The EAT has given valuable guidance on the interpretation of the controversial statutory dismissal procedures introduced in October 2004, in Alexander v Bridgen Enterprises Ltd [2006] IRLR 422. The duty on an employer under the statutory procedures is to provide the ground for dismissal and the reasons why he relies on that ground. The purpose of the procedures is to seek to prevent the matter going to an employment tribunal, if possible, by providing the opportunity for differences to be resolved internally at an earlier stage. To achieve that aim, the information provided must at least enable the employee to give a considered and informed response to the proposed decision to dismiss. The statutory procedures are not concerned with the reasonableness of the employer's grounds, nor the basis of those grounds, in themselves. At this stage, the focus is on what the employer is proposing to do and why he is proposing to do it, rather than on how reasonable it is for him to be doing it at all. Step 1 of the standard procedure requires the employer merely to set out in writing the grounds that lead him to contemplate dismissal, together with an invitation to attend a meeting. The statement need do no more than state the issue in broad terms. In a conduct case, this will involve identifying the nature of the misconduct in issue. In other cases, it may require no more than specifying, for example, that it is lack of capability or redundancy.

At step 2, the employer must inform the employee of the basis for the ground(s) given in the statement. This information need not be reduced into writing. The basis for the grounds are simply the matters that have led the employer to contemplate dismissal for the stated ground(s). In a case of alleged misconduct, this will mean putting the case against the employee. In order to comply with the statutory procedure, there is no reason to provide detailed evidence, but the employee must be given sufficient detail of the case against him to enable him properly to put his side to the story. The fundamental element of fairness must be met. In redundancy dismissals, step 2 requires an explanation to be given as to why the employer is contemplating dismissing that particular employee. This will involve providing information both as to why the employer considers that there is a 'redundancy situation' and also why the employee is being selected. In advance of the step 2 meeting, therefore, the employer should notify the employee of the selection criteria used, and also the assessment of the employee. This will give the employee an opportunity to make representations not only about whether the criteria are justified and appropriate, but also (more importantly) whether the marks given to him in respect of any particular criterion are arguably unjust and why. In order to comply with statutory procedures, however, it is not necessary to provide the assessments of other employees. Although failure to provide such information may, in certain circumstances, render the dismissal unfair, the question here is not what should be provided to prevent a particular dismissal being considered unfair under general unfair dismissal law, but rather what information is so basic that failure to provide it ought to be determined to be automatically unfair, as falling foul of the minimum procedural standards with which any employer ought to comply in a redundancy case. On the facts of this case, the employers did not comply with statutory procedures. Although, in advance of the meeting, the employees were told of the criteria adopted in the redundancy selection process, they were not given their own assessments until they were leaving the meeting, by which time their fate was already determined. That was too late.

The 'no difference' principle

The Alexander case also addressed the interpretation of s 98A(2) Employment Rights Act 1996 (introduced by the Employment Act 2002). Although the dismissals were held to be automatically unfair, the EAT considered the alternative argument as to whether the employers could have relied on s 98A(2) if the case had been considered under the general test of fairness. The EAT observed that the effect of s 98A(2) (the so-called Polkey-reversal section) is that, if the employer has failed to comply with a procedure that ought to be have been carried out, that will not render the dismissal unfair if the employer shows that the employee would have been dismissed anyway even if that fair procedure had been adopted. However, the tribunal must have some proper evidential basis for concluding that the employer would have acted in the same way in any event; mere assertion is insufficient. In the light of
s 98A(2), the principle established by the House of Lords in Polkey v A E Dayton Services Ltd [1907] IRLR 503, ie, that the likely effect of taking the appropriate procedural steps should be considered at the stage of assessing compensation, now has only limited application. First, it remains relevant where the statutory procedures have been infringed so that the dismissal is automatically unfair. Second, where the dismissal is unfair under s 98(4), Polkey will still apply if on the balance of probabilities, the employee would not have been dismissed even if a fair procedure had been followed, but where there is a chance that he might have been. (If the chance was more than 50 per cent, s 98A(2) would apply and the dismissal would be fair).

A different view was taken by a differently constituted EAT in Mason v Governing Body of Ward End Primary School [2006] IRLR 432. In that case, the EAT held that s 98A(2) only applies to a procedure of the employer concerned (although it may be written or unwritten, contractual or non-contractual). The EAT in Mason considered that s 98A(2) does not apply to criticism based upon a failure to comply with the standards of a reasonable employer, such as those set out in the ACAS code of practice. Those differences of interpretation will need to be resolved '“ one hopes in the not too distant future.

Compensation

In Langley v Burlo [2006] IRLR 460, the EAT overturned a tribunal's decision to award compensation for wrongful dismissal on the basis of the full wages that the employee would have earned during the notice period, even though she would not contractually have been entitled to full wages (because she was off sick and contractually entitled merely to SSP). The contractual term was clear and there was no justification for saying that it was inapplicable to the notice period. Further, the claimant was not entitled to full pay for the notice period as unfair dismissal compensation on the basis indicated by the National Industrial Relations Court in Norton Tool Co Ltd v Tuwson[1972] IRLR 86. According to the EAT, the Norton Tool principle is no longer a legitimate basis for awarding full compensation for the notice period in the light of the decision of the House of Lords in Dunnachie v Kingston Upon Hull City Council [2004] IRLR 287.