In this month’s highlights, our team summarises the latest developments in UK employment law and their implications for employers. Catch up on September’s highlights here.
1. In Alom v. FCA, the Employment Appeal Tribunal (EAT) held that the dismissal of an employee for misconduct is not unfair despite alleged shortcomings in the disciplinary process.
What led to the dispute, and why is the outcome significant for employers?
- An employee of the Financial Conduct Authority (FCA), Mr. Alom, was determined to have sent a hostile email to a female colleague – which was found to be harassment – as well as a further email regarding a separate conduct complaint in violation of the FCA’s confidentiality policy. Following a disciplinary procedure, Alom was dismissed.
- Alom brought a complaint of unfair dismissal, which was rejected by the Employment Tribunal. Alom appealed this decision, arguing that his dismissal was procedurally unfair for the following reasons:
- He was not provided with a transcript of the internal investigative interviews regarding his conduct.
- An HR “script” that was prepared for his line manager indicated that the line manager was not the true decision maker, and so dismissal was a foregone conclusion.
- A search of his company computer during the internal investigation breached his right to privacy under the European Convention on Human Rights (ECHR).
- The EAT noted that there is no absolute requirement to provide Alom with the transcript, according to the ACAS Code of Practice on Disciplinary and Grievance Procedures which states that it would “normally be appropriate to provide copies of any written evidence, which may include witness statements.”
- Additionally, the EAT noted that, because the witness evidence was not provided to the disciplinary hearing manager, it could not have been relied upon to reach the decision to dismiss Alom.
- The EAT also noted that it was not uncommon for HR to assist a line manager in preparing for a disciplinary hearing. Based on the evidence provided by Alom’s line manager, the EAT was satisfied that he had not already decided on the course of action to take, and so the decision to dismiss was made by him, rather than pre-determined by HR. However, the EAT acknowledged that employers should be cautious about providing “scripts” that may contain apparent conclusions.
- Although the EAT seemed to accept Alom’s argument that the search of his work computer constituted a disproportionate interference of his right to privacy, it was decided this was not relevant as the evidence obtained from the search was not relied upon in the decision to dismiss Alom.
Takeaways
- There is no absolute obligation to provide claimants with transcripts of internal interviews. However, to the extent that interview transcripts are used, the employee needs to understand the case against them.
- Employers should be careful when providing decision makers with documents which may be deemed “scripts” that may contain pre-determined conclusions about disciplinary decisions. It is important that any disciplinary decision rests solely with the relevant manager.
- When determining whether a decision to dismiss was fair, evidence obtained through possible violations of an employee’s right to privacy will only be taken into account if that evidence was used in the decision-making process.
2. In Davidson v National Express Ltd, the EAT held that it was wrong to limit a claimant’s future loss of earnings for unfair dismissal to age 65.
What led to the dispute, and why is the outcome significant for employers?
- The claimant, “D”, was a coach driver for National Express Ltd and failed three consecutive alcohol breath tests based on the company policy limit (which was lower than the national drink driving limit). Following an investigation and disciplinary proceedings, D was summarily dismissed for gross misconduct. D appealed this decision but was unsuccessful.
- D claimed unfair dismissal before the Employment Tribunal, which found that the dismissal was unfair solely because of flaws in the appeal process.
- In assessing D’s financial loss, the Employment Tribunal considered that D found alternative employment, albeit at a lower rate of pay, and also limited the calculation of future loss to an assumed retirement age of 65, which it considered “just and equitable” despite D’s claims that she would need to work to the age of 70 out of necessity.
- D appealed to the EAT, which held that the Employment Tribunal had erred in its assessment of D’s underlying loss, and that it was not sufficient for the Employment Tribunal to solely rely on what it considers just and equitable.
- The EAT found that the Employment Tribunal had not provided a reasoned basis for its assessment of future loss and remitted the compensatory award for recalculation, noting that the Employment Tribunal must consider any evidence which might assist it in determining just compensation, including D’s intention to work to the age of 70 due to personal and financial circumstances. The EAT also concluded that the Employment Tribunal needs to consider whether D’s intention might change in the future, as well as the potential for interference by factors such as ill health or other contingencies of life.
Takeaways
- Even where an employee is found guilty of gross misconduct, employers must ensure that the complete disciplinary process is adequately performed because mistakes or omissions may lead to a successful claim for unfair dismissal.
- In determining any compensatory award, the Employment Tribunal must consider all the facts that might assist it in determining the appropriate award, rather than what is merely just and equitable. This may include the intention of a dismissed employee to work until an age higher than is typical, which would inherently result in a higher compensatory award.
3. In Partnership of East London Co-operatives Ltd v Maclean, the EAT held that the Employment Tribunal erred in finding that a contractor working through a personal service company was a worker and employee of the end user.
What led to the dispute, and why is the outcome significant for employers?
- M worked as a clinical streamer, carrying out initial clinical assessment of patients at community urgent treatment centres run by Partnership of East London Co-operatives Ltd (PELC), until she terminated the relationship.
- M brought several claims before the Employment Tribunal, but the central issue to be considered was whether M was considered an employee or a worker of PELC under the Employment Rights Act 1996.
- PELC argued that M was a self-employed contractor operating through a personal service company (PSC). M argued that she only set up the PSC for payment purposes at the request of PELC.
- The Employment Tribunal determined that the contract was between M and PELC, and also that M was both a worker and an employee of PELC. The Employment Tribunal noted that M was required to perform the work personally for PELC, had never exercised any right of substitution despite its inclusion in her contract, that substitution was impractical, and that there was sufficient control and mutual obligations to establish an employment relationship.
- PELC appealed to the EAT, which found that the Employment Tribunal erred in its conclusion that M was a worker and employee, noting that PELC was under no obligation to provide shifts to M and there was no obligation on M to accept these. The EAT did, however, find that the Employment Tribunal was correct in determining that the contract was between PELC and M personally, rather than through her PSC.
- The EAT found that the Employment Tribunal’s initial conclusion on mutuality of obligation was not supported. The EAT also found that the Employment Tribunal did not adequately explain its decision that there was an obligation of personal service due to the impracticality of substitution.
Takeaways
- The EAT’s decision reinforces the importance of carefully considering the actual working relationship, the mutuality of obligation and any potential restrictions on the right of substitution when assessing whether an individual is an employee, a worker or a self-employed contractor.
- The fact that a contractual right of substitution has not been invoked does not, in itself, preclude the Employment Tribunal from finding that the right genuinely forms part of the parties’ agreement.
- The Employment Tribunal may find that a contract for service exists between the company and individual, even if the individual is paid through a PSC. Employers should not rely on such a mechanism to avoid classifying an individual as an employee or worker.
4. In Henderson v GCRM & ors, the EAT confirmed that managers who play no part in wrongdoing cannot be personally liable for whistleblowing detriments, even where others in the organisation have acted improperly.
- Ms. Henderson worked for GCRM as an embryologist and raised concerns over a two-year period about staffing levels and departmental procedures, which were accepted as protected disclosures.
- Henderson’s line manager was frustrated by Ms Henderson’s frequent disclosures and initiated a disciplinary process for a separate alleged misconduct. Henderson was dismissed for misconduct. Crucially, however, the decision maker – an HR manager – was not aware of Henderson’s protected disclosures and relied on input from the line manager in reaching the decision to dismiss.
- Ms Henderson brought several claims, being:
- Automatic unfair dismissal against GCRM.
- Whistleblowing detriment, specifically by way of dismissal, against her line manager and the HR manager.
- That GCRM should be vicariously liable for the dismissal detriment.
- The Employment Tribunal dismissed the claim for automatic unfair dismissal and dismissed the claim for whistleblowing detriment against the line manager, as they did not make the decision to dismiss.
- However, the Employment Tribunal found that the HR manager was liable for detriment by way of dismissal, and also that GCRM was vicariously liable for that detriment.
- On appeal, the EAT overturned the Employment Tribunal’s finding. The EAT held that the HR manager, having acted genuinely and independently, could not be held personally liable for whistleblowing detriment merely because another individual was motivated by protected disclosures in pursuing a disciplinary process, as doing so would improperly render an innocent decision-maker primarily liable. Consequently, GCRM could not be vicariously liable for the manager’s actions.
- However, the EAT remitted the claim for automatic unfair dismissal to the Employment Tribunal, noting that the Employment Tribunal did not properly consider whether the line manager improperly manipulated the disciplinary process or created a false reason which the HR manager relied upon.
Takeaways
- The decision provides reassurance that managers who act in good faith will not be personally liable in situations where they have genuinely made their own decision, despite another individual acting improperly.
- Employers should ensure that disciplinary and whistleblowing processes are independent and transparent, and that investigations are handled by individuals who have not previously been involved in the issues raised.
- It is important for employers to maintain a clear audit trail of the decision-making process so that they can provide evidence of this process in dismissal cases.