UK: Dismissal Issues - A Summary Of Some Important Decisions

The ACAS Code of Practice on Disciplinary and Grievance Procedures is taken into account by tribunals and is used by them as a guide to good industrial practice.

The ACAS Code recommends that:

• first written warnings should be active for six months;

• final written warnings should be active for twelve months; and

• only in the case of extremely serious conduct, which is bordering on gross misconduct, should warnings remain active indefinitely.

In Airbus UK Limited v Webb (2006), Mr Webb was employed as an aircraft fitter. In July 2004, he was initially summarily dismissed for gross misconduct because he had allegedly fraudulently misused company time and equipment by washing his car when he should have been working. However, on appeal, a final written warning was imposed, which was expressed to remain on his personnel file for 12 months. When he was reinstated, he was sent a letter informing him that further misconduct was likely to lead to dismissal.

On 20 September 2005, just three weeks after his final written warning expired, Mr Webb was found with other employees in a locker area where they appeared to be watching television, when they should have been working.

Following a disciplinary hearing, all employees were found guilty of gross misconduct. Mr Webb was summarily dismissed. The other four employees were given a final written warning, and were not dismissed because they had no prior disciplinary record.

The Employment Appeals Tribunal ("EAT") held that expired disciplinary warnings should be ignored when deciding which disciplinary sanction to give an employee. It gave helpful guidance on the practical impact of the decision, in particular that:

• The purpose of giving a warning is to enable the employee to know where he stands and what is expected of him.

• If the warning is to expire, this gives rise to the expectation that it does so for all purposes.

• Employers can cater for exceptional circumstances in their disciplinary policy, by tailoring it to particular circumstances. Examples of this are:

In light of this decision, employers are advised to review their disciplinary policies, and to consider whether they should be "tailored" to cater for exceptional circumstances.

Under the Employment Rights Act 1996 ("ERA"), to avoid a finding of unfair dismissal, an employer must show that:

• the dismissal was for one of five potentially fair reasons; and

• it acted reasonably in treating the reason as a sufficient reason to dismiss the employee.

The ERA also provides that failure by an employer to follow procedures in the dismissal of an employee does not of itself make the employer’s action unreasonable, provided that the employer can show that it would have dismissed the employee even if it had followed the procedure. This can lead to a finding that the dismissal was fair, notwithstanding that procedural errors occurred.

In Loosley v Social Action for Health, the EAT considered whether a dismissal was fair in circumstances in which the employer had failed to offer the employee a particular job, which the employee alleged was "suitable alternative employment" ("SAE") because it was influenced by a third party which preferred another employee for that role.

Mr Loosley was employed by Social Action for Health ("Social Action") as a mental health worker. Social Action’s work was funded by a local authority, which was unhappy with the work Social Action had done and decided to terminate the funding arrangement. Social Action also employed a Mr Walker who was junior to Mr Loosley. Work on another project for the local authority became available when otherwise Mr Loosley’s and Mr Walker’s jobs would have been redundant. This job was not offered to Mr Loosley. The local authority wanted to work with Mr Walker and did not wish to continue working with Mr Loosley.

The EAT concluded on the evidence that Mr Loosley would not have been appointed to the job for the local authority even if Social Action had drawn Mr Loosley’s attention to this job as SAE. The dismissal was found to be fair even though:

• a third party had influenced the redundancy procedure; and

• Social Action had not followed a fair procedure, by failing to consider Mr Loosley for a job that would have been SAE.

Whilst, at first glance, it seems surprising that a third party can influence a redundancy process - as the EAT acknowledged - where an employer whose business depends upon gaining a contract understands that the contract will only be obtained if a particular employee does the work, it is difficult for the employer not to appoint that particular employee. This is, of course, subject to the proviso that the decision is not tainted by discrimination.

Employees can only bring a claim for unfair dismissal under Section 98 of the Employment Rights Act 1996 ("ERA") if they have been dismissed. A dismissal will occur if either:

• the employer terminates the employment; or

• the employee resigns and can establish that he was constructively dismissed - i.e. that:

It is not always clear whether an employee has resigned, or whether he was dismissed. Examples of findings by the courts on this issue include:

• where an employee was told that he would be dismissed if he did not resign = dismissal (East Sussex County Council v Walker (1972))

• where an employee chooses to resign rather than face disciplinary proceedings = resignation (Staffordshire County Council v Donovan (1981))

• where an employee enters into a genuine severance agreement which is negotiated between the parties = resignation (Crowley v Ashland (UK) Chemicals Limited (1979)).

In the recent case of Sandhu v Jan de Rijk Transport Limited (2007), the Court of Appeal considered whether an employee, who entered into a severance agreement during a meeting at which he was told that he would be dismissed, had resigned or been dismissed. Under the existing case law, for there to be a resignation there should be some form of negotiation and discussion with the employee in which he has a genuine choice.

The Court of Appeal overruled the decision of the Employment Tribunal, which had been upheld by the EAT, and held that the employee had been dismissed on the grounds that:

• he had not been told why he was being called to the meeting;

• he had not been given an opportunity to reflect on the employer’s proposals, or to take advice on these; and

• the terms of the severance agreement were not particularly favourable to him.

It found that the employee had done no more than attempt to "salvage what he could from the inevitable fact that he was going to be dismissed … the very antithesis of free, unpressurised negotiation".

Whilst most employers would not take such an extreme position as the respondent did here, this case serves as a good reminder of the requirement that, when signing up to a severance agreement, an employee should be given a genuine choice and the ability to negotiate a settlement on the termination of his employment. Otherwise, an employer runs the risk that the employee will succeed in a claim for unfair dismissal.

In Daymond v Enterprise South Devon (2007), the EAT considered the issue of whether an employee had the requisite length of service to bring an unfair dismissal claim.

In January 2005, Miss Daymond entered into an arrangement with Enterprise South Devon whereby she acted as "director in charge" of the company. She chose to invoice the company for her services through one of her own companies, rather than being paid through the payroll. In view of this, no deduction for PAYE was made during this time. Subsequently, in April 2005, she entered into a formal contract of employment with the company. She was dismissed in January 2006.

Miss Daymond subsequently brought a claim for unfair dismissal (as well as for damages for wrongful dismissal). The company contended that she did not have the requisite one year’s qualifying service to bring an unfair dismissal claim, on the basis that she had only been employed since April 2005, when she entered into a formal employment contract.

The EAT upheld the Tribunal’s decision that, although Miss Daymond had been an employee since January 2005, her contract was tainted by illegality. In view of this, she could not claim unfair dismissal. The EAT found that the contract that was in place between January and April 2005 was illegal because it had the effect of depriving the Inland Revenue of a payment (PAYE) to which it was entitled. However, the EAT allowed the appeal in relation to wrongful dismissal, based as it was on the contract entered into in April 2005.

Whilst this decision is very much based on the specific facts of the case, it is noteworthy that the Tribunal found that Miss Daymond had been an employee since January 2005.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.