Employment Law – Tribunal Error – Unfair Dismissal – Breach of Contract – Bad Employee History

The case of Woodland v MPI Ltd [2007,] concerned an employee who was the manager of a branch of recruitment consultants. In 1993, the employee’s responsibility for dealing with cash and signing cheques was removed from him when he was disciplined for theft from his employer. Following this incident in 1997, allegations of sexual harassment were made by a job applicant who had been interviewed by the employee. Then in 2001, despite the previous problems, the employee was made a director of the employer, having decided that the manager of each branch should become a director.

His contract of employment specified that he was entitled to a notice period of one year. A number of years later the employee was summarily dismissed following disciplinary proceedings in respect of various matters. The matters in question included failures of performance in relation to his branch and for taking unauthorised leave. The employee brought proceedings against the employer alleging that he had been unfairly dismissed and breach of contract.

The employment tribunal found in favour of the employee holding that an instant dismissal had not been within the band of reasonable responses that his employer could have acted under and that dismissal with notice would have been a more reasonable response. The tribunal went on to find that as the employer was not entitled to terminate the employee’s contract without notice, his claim for breach of contract was successful.

The employer subsequently appealed against that decision to the Employment Appeals Tribunal. The employer argued the following that:

§ The tribunal had erred in law in finding the dismissal to be unfair on the basis that although it would have been fair to dismiss for incapability on notice, it was not fair to do so summarily; and

§ The tribunal had erred by confusing unfair dismissal with breach of contract. It had failed to consider whether summary dismissal was justified under the contract of employment.

The appeal was allowed on the following basis:-

An established principle of law relating to unfair dismissal states that whether the dismissal was summary or on notice was irrelevant to the issue of the fairness of the dismissal. The only situation where there was an exception was where it might have a bearing on the credibility of any witnesses. In a regular unfair dismissal claim which did not involve any question of automatic unfair dismissal, the tribunal had to first decide

what was the reason for the dismissal?

if a reason was identified, did it fall within s.98(1)(b) of the Employment Relations Act 1996 (“the Act”).

If a reason was identified and the tribunal concluded that that reason fell within s.98(1)(b), then the tribunal had to go on to consider whether it had been reasonable to treat that reason as a sufficient reason for dismissing the employee, in accordance with s.98(4) of the Act.

If it would not have been reasonable to dismiss the employee on those grounds, the dismissal would be deemed unfair. However, whether the dismissal was summary or on notice was not a consideration which entered into the framework of statutory consideration.

In this case, the tribunal ought to have applied the principles established in the relevant precedents found in case law.

Furthermore, having reached the conclusion that it was reasonable and fair to dismiss, the tribunal should have found the dismissal to have been fair irrespective of the fact that they believed the dismissal should have been on notice and not summary.

Therefore the finding of unfair dismissal could not stand. The factual conclusions of the tribunal were such that the dismissal ought to have been unanimously held to have been fair.

With regards to the breach of contract claim, the tribunal had not considered:-

whether the employee’s inability to manage his branch successfully and to produce the desired result amounted to wilful neglect of his duties under his contract

whether it amounted to persistent breach (or otherwise) in the discharge of his duties

whether the holiday events amounted to a grave misconduct or wilful neglect

whether the earlier history proved not only a breach of the express terms, but amounted to destruction of, or serious damage to, trust and confidence between employer and employee.

In failing to consider these factors, it was held that the tribunal had erred in law.

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© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.