Mark Shulman*, Consultant Solicitor at Keystone Law
*
**UNFAIR DISMISSAL
Whether dismissed
*Had an employee been dismissed when the employer's decision letter allowing an appeal and revoking the dismissal was unclear and the disciplinary procedure itself did not deal with what was to happen if an appeal was allowed? No, said the EAT in [Folkestone Nursing Home Ltd v Patel]()* UKEAT/0348/15/DM, there had been no dismissal in the circumstances.

Background
An employee working in a nursing home was dismissed for gross misconduct on two counts: falsifying residents' records and sleeping on duty. But that decision was revoked after an internal appeal at which the employee said that he had been sleeping during his rest break and that he had been unable to complete the daily record sheets because of an interruption.

The appeal decision letter dealt only with the allegation about sleeping on duty, saying that:

"You were on an unpaid break when you were asleep and therefore were able to do with this time as you pleased as it was not deemed as working time. Therefore I do not believe that by sleeping in this unpaid hours break you had breached any company rules and procedures.

I will therefore arrange…a date for you to return to work".

But the employee did not return to work. He said that the appeal decision letter was incomplete since it did not deal with the allegation that he had falsified records. He brought ET claims for wrongful and unfair dismissal.

Was there a dismissal?
At a preliminary hearing the issue arose as to whether there was a 'live' dismissal at the time of the Claimant's presentation of his ET claims. The full hearing resulted in a finding that the Claimant had been dismissed because, although his right of appeal was contractual, the disciplinary procedure did not specify what was to happen when an appeal succeeded.

Even if that were not the case, the 'revocation' of dismissal was in any event too unclear and left out significant issues; there was a lack of clarity in the appeal letter which, in the ET's view, amounted to an offer for the Claimant to return to work on an unspecified basis. The letter did not tell the Claimant that the second allegation had been dismissed; nor did it explain the basis on which the Claimant was to return to work.

Had the Claimant been reinstated?
The Respondent appealed against the finding that the Claimant had been dismissed, arguing that the EJ had erred in law in concluding that there had been no effective reinstatement.

The EAT pointed out that the disciplinary procedure in the present case had not specified that reinstatement was an option on appeal. However, that did not matter because in [Salmon v Castlebeck Care (Teesdale) Ltd]() [2015] ICR 735, the EAT had had no hesitation "…in thinking that the tribunal was in error in looking for a separate decision, consequent on a successful appeal, that there should be "reinstatement"…. Where a decision is to dismiss…any success on appeal means that the decision is one in which dismissal does not take effect". The EAT commented that it was "regrettable" that the ET had not been referred to that case, even though the employer's representative (Peninsula Business Services Ltd) had also been involved in the Salmon case (an omission which would come back to haunt the employer on the question of costs which were refused by the EAT).

Therefore, even though in the present case the disciplinary procedure did not specify that reinstatement would be the result of a successful appeal, it was inherent in the appeal procedure.

Appeal letter
As to the appeal decision letter, the EAT thought its content was clear: the original decision to dismiss had been revoked and the Claimant was entitled to start work again - his contract was revived and he was entitled to back pay. In Salmon it had been stated that:

"Where the effect at common law, contractually, is that a decision has been taken to allow the appeal…[that] has the effect of reviving the contract, subject only to there being some contractual term or provision which prevents it".

Accordingly, the appeal was allowed and a declaration was made that the Claimant was not dismissed. As mentioned above, the employer's application for costs was refused and a perusal of that part of the EAT's judgment is worthwhile in analysing what the employer's representative should have done.

Misconduct – duty of disclosure
Was a Head Teacher under a duty to disclose her close personal relationship with a convicted sex offender where there was no express contractual or statutory duty to do so? Yes, said the Court of Appeal in [A v B Local Authority & Anor ]()[2016] EWCA Civ 766, deciding (in what seems to have been a risk averse policy decision given the nature of the case) that it "should have been apparent" to the Head Teacher that there was a duty to report.

*Background
*The Claimant was a Head Teacher. She was dismissed after failing to notify the school authorities about her association with a man who was a convicted sex offender (who had made indecent images of children by downloading them onto his computer). The school considered that the failure to disclose this relationship constituted gross misconduct because it was putting the safety of children at risk.

The ET found that the employing school had a genuine belief on reasonable grounds that the Claimant had been guilty of misconduct. It said that it "is not surprising that the obligation to disclose this particular information is not to be found expressly set out in the claimant's contract of employment. We consider that it is obvious that for a head teacher to have failed to disclose such information to her governing body whether it is expressed in her contract of employment or not is a matter of misconduct".

But the ET decided that the dismissal was procedurally unfair and applied a 90% Polkey reduction and then reduced that figure by 100% for contributory fault by reason of the Head Teacher's  blameworthy conduct - meaning that the Claimant would receive no compensation at all. The Claimant's appeal to the EAT argued that there was no proper evidential basis to justify the conclusion that she was under a duty to disclose and therefore no finding of misconduct could properly be made. That appeal failed and she then appealed to the Court of Appeal.

Duty to disclose
The principal ground of appeal was in essence that the ET had not identified any specific obligation on the Head Teacher to disclose the circumstances concerning her relationship and that it could not be misconduct to fail to make a disclosure in the circumstances. Further, the ET was not entitled to make its own independent assessment of what was required in terms of disclosure. It should have focused on asking whether there was evidence from which a reasonable employer could have concluded that the relationship potentially increased the risk to children at the school – about which there was no evidence. It was argued that the dismissal for gross misconduct was therefore unfair.

Minority view – substantively unfair dismissal
The Court of Appeal dismissed the appeal by a majority. Elias LJ (who was in the minority) said that there was simply no evidence which justified a reasonable employer concluding that there was even the potential for an enhanced risk to children at the school. His view was that it had first to be demonstrated that the nature and circumstances of the Head Teacher's relationship did actually increase the risks, or at least that there was a realistic basis for believing that it might. Whilst nobody would dispute that protecting children from sexual harm was of the utmost importance and disclosure was plainly necessary where the risk to children in the school was enhanced, it was "…a dangerous world if mere association with a sex offender warrants that conclusion being drawn". Elias LJ considered that the dismissal was therefore substantively unfair.

Disclosure should have been apparent
However, Black LJ and Floyd LJ disagreed. Black LJ said that the Head Teacher's association did pose a risk to the children and she had a duty to inform the school of it so that steps could be taken to protect them. As a Head Teacher with safeguarding responsibilities, she "should have realised that for herself". The association with a convicted sex offender, although falling short of living in the same household or being "a relationship" (which were circumstances specifically addressed in various statutory safeguarding provisions which did not apply in the present case), still gave rise to risk to children at the school. The nature of the risk from which the children needed safeguarding was not spelled out by either the panel or the ET, but in Black LJ's view it did not need to be: "it should have been apparent to the appellant as a head teacher with safeguarding responsibilities".

Disclosure of the information was necessary so that the governing body could consider what protective steps were required in the light of it. Given her experience in family cases, Black LJ thought that sexual offenders not only posed a risk to children through influencing the adults around them, but may create and take advantage of opportunities to have contact with children in circumstances which appear innocent, but enable them to abuse the children in question without in any way influencing the adults in charge of those children. For example, the arrival of a "friend" of the Head Teacher's at the school gate, or his attendance as a visitor at a school function, may pass without comment, as might apparently polite and friendly attempts by him to engage children in conversation. Black LJ said that "the problem here arose because of the appellant's failure to tell the governing body the important facts". But it by no means followed inevitably that such misconduct justified dismissal; that depended on the precise circumstances of the case.

Floyd LJ considered that it was "beyond dispute" that if a Head Teacher becomes aware of facts which have the potential to place the children at a school at enhanced risk of harm, they would come under a duty to disclose those facts to those with responsibility for the safeguarding of the children. If they failed to disclose the information to the school, the school would be entitled to treat that failure as misconduct. So for example, where a teacher discovers that a school employee had a conviction for a serious offence involving children, but   the school was unaware of that, the question of whether that should be disclosed to the employer answered itself (it should be disclosed).

The problem presented by the present case was as to what should happen when the facts known to the teacher were less extreme. There would be cases at the other end of the factual spectrum where a duty to disclose would not be engaged. For example, where a teacher has a distant relative in a different part of the country with a relevant conviction for sexual offences, there would probably not be a duty to disclose.

It all depended on the detail of the facts known to the teacher and whether a reasonable person with knowledge of those facts would consider that those facts presented an enhanced risk to the children. Two points persuaded Floyd LJ that the decisions of the school disciplinary panel and the ET were justified:

first, the focus was not on the question of whether harm would actually occur, but on whether the existence of the Head Teacher's association could form the basis of a reasonable belief by the school that there was the potential of an enhanced risk* of harm. There was evidence which passed that very low threshold. * secondly, it was not for the Head Teacher to decide for herself whether her relationship gave rise to a risk of harm. Her obligation to disclose was in order to allow the school to take that decision. The present case was much closer to the boundary between two types of cases (i.e. those which obviously presented a risk and those which obviously did not). As it was a case where some people might think that there was a risk, a reasonable person would have asked themselves whether their employer would have wished to know about the existence of the association with the sex offender and his arrest and conviction, so that the employer could determine whether any steps were necessary to protect children at the school.

Accordingly, the evidence of the Head Teacher's association was an adequate basis for the disciplinary panel and the ET to make their respective findings and concurring with Black LJ, the appeal was dismissed.

*Comment
Whilst the decision in the present case might be confined to its particular facts, the principles could well have a wider application in other contexts where the safeguarding of children is paramount. This could be the case even where there is no specific statutory or contractual obligation to make a disclosure. Clients may therefore require advice as to the parameters and disclosure duties in specific circumstances, leaving practitioners to offer advice where making a wrong call could have particularly serious implications for the client concerned. In practice this is likely to result in a cautious approach in favour of disclosure in this type of case.
*
Curing defects on appeal
*In [Khan v Stripestar Ltd ]()*UKEATS/0022/15/SM, the Scottish EAT confirmed that there is no limit on the extent to which a second internal stage of the employer's disciplinary process can remedy a defective first stage - anything can be cured by a proper appeal process.

Background
The Respondent's business was selling and repairing new and used cars. The Claimant was responsible for running the garage workshop. A customer of the garage decided not to proceed with repairs to his vehicle and the Claimant decided to purchase it. The Claimant paid £300 to the customer for the car and then made up a job card for the vehicle. However, the Claimant inserted the name of the customer on the job card and instructed technicians within the workshop to start work on the engine. The car remained in the workshop for several weeks after which the Claimant had the vehicle removed.

The employer subsequently discovered that the Claimant had purchased the vehicle and a disciplinary hearing was subsequently held. But it lasted no longer than six minutes and the Claimant was given no opportunity to make any representations or give information. The Claimant was dismissed for the unauthorised purchase of a customer's car, subsequent repairs carried out on the vehicle under the customer's name on the job card and the removal of the vehicle from the premises without the repairs being paid for.

The Claimant's internal appeal was rejected and a finding of dismissal for gross misconduct was upheld.

Following a claim of unfair dismissal the ET decided that the original disciplinary hearing was "wholly inadequate and…would have rendered the dismissal procedurally and substantively unfair". The EJ was satisfied that at the appeal stage, the employer had carried out a thorough investigation and had reasonable grounds on which to sustain the belief that the Claimant had purchased the vehicle contrary to the customer practice in place in the garage, that he had falsified the job card and instructed the technicians not to record the job. The ET decided that overall the appeal process was fair and cured the defects in the investigation and at the original disciplinary hearing.

Curing a defective hearing
The key issue considered by the EAT was whether there are any limits to the extent to which a second or subsequent process internal to the employer can remedy a defective first stage. The leading authority was the Court of Appeal decision in Taylor v OCS Group Limited [2006] ICR 1602 in which it was stated that ETs should:

"…consider the fairness of the whole of the disciplinary process. If they find that an early stage of the process was defective and unfair in some way, they will want to examine any subsequent proceeding with particular care. But their purpose in doing so will not be to determine whether it amounted to a rehearing or a review but to determine whether, due to the fairness or unfairness of the procedures adopted, the thoroughness or lack of it of the process and the open-mindedness (or not) of the decision maker, the overall process was fair, notwithstanding any deficiencies at the early stage".

Having found that the whole of the first stage of the disciplinary procedure was both procedurally and substantively unfair, it was open to the EJ to hold that the manager hearing the appeal (as the ultimate decision maker) had acted reasonably and fairly in relation to his findings. He had interviewed all relevant witnesses, considered the behaviour that might amount to gross misconduct and made his decision in an independent and impartial manner.

The EAT stated that there were no limitations on the nature and extent of the deficiencies in the first stage of the disciplinary process that can be cured by a thorough and effective appeal. The wholly defective first stage of the relevant disciplinary process did not prevent a fair dismissal at the second stage.

In all the circumstances, the EAT considered that the conclusions of the EJ were well within the reasonable range of decisions and there was no error of approach. Therefore the appeal failed and was dismissed.

*Comment
This case will assist employers in that there will be a second bite of the cherry if there is an appeal because this can cure any earlier defects in the disciplinary process, provided that overall the dismissal process is fair. However, caution is still required because unless the overall process is fair, there is still the risk of an unfair dismissal finding. Employers would therefore be well-advised to ensure that a proper and fair procedure is adopted at every stage of the disciplinary process.

*Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator. His blog on new employment legislation can be found here.