Unfair dismissal - Case Round-Up: January 2018

In this month's round-up, Mark Shulman, consultant solicitor with Keystone Law, looks at recent unfair dismissal cases on statutory bar, the “Johnson exclusion zone” and the fairness of a dismissal where the decision-maker was allegedly hostile to the dismissed employee.

Mark Shulman, Consultant Solicitor at Keystone Law


**Statutory bar
**Not many cases are reported on section 98(2)(d) of the ERA 1996. Commonly referred to as a "statutory bar", this subsection provides that a potentially fair reason for dismissal:

"(d) is that the employee could not continue to work in the position which he held without contravention…of a duty or restriction imposed by or under an enactment".

The case of [Baker v Abellio London Limited]() UKEAT/0250/16/LA looked at whether an alleged breach of section 15 of the Immigration, Asylum and Nationality Act 2006 ("IANA") justified dismissal.

Section 15 of IANA provides that:

"15. *Penalty
*(1) It is contrary to this section to employ an adult subject to immigration control if -
(a) he has not been granted leave to enter or remain in the United Kingdom, or
(b) his leave to enter or remain in the United Kingdom -

(i) is invalid,
(ii) has ceased to have effect (whether by reason of curtailment, revocation, cancellation, passage of time or otherwise), or
(iii) is subject to a condition preventing him from accepting the employment.

(2) The Secretary of State may give an employer who acts contrary to this section a notice requiring him to pay a penalty…

(3) An employer is excused from paying a penalty if he shows that he complied with any prescribed requirements in relation to the employment."

Section 25(c) of IANA provides that "a person is subject to immigration control if under the Immigration Act 1971 he requires leave to enter or remain in the United Kingdom, …".

The Claimant was a Jamaican national who had lived in the United Kingdom since childhood. He was employed by Abellio as a bus driver. When Abellio discovered that one of its employees did not have the correct "right to work" documentation, it then carried out an audit of its workforce to see if other employees had the relevant documentation. The Claimant was asked to produce appropriate documentation but, according to Abellio he did not do so. He told Abellio that he had the right of abode and the right to work in the UK. Whilst the company accepted that the Claimant did have such rights, it said that the Claimant's documents did not provide them with a statutory excuse (under section 15(3) of IANA) to allow him to work for them. He was subsequently dismissed, the company relying on contravention of an enactment as justifying the dismissal.

An ET found that the decision by Abellio to dismiss the Claimant fell within the range of reasonable responses. The EJ held that whilst it was not in dispute that he had the right of abode under the IA, production of his passport was not by itself sufficient evidence that he could work in the UK. Abellio had investigated its obligations and the Claimant's immigration status and had requested guidance from the Home Office and so there had been a fair process. In the alternative, the ET decided there was a fair dismissal for SOSR. The Claimant appealed.

Breach of an enactment
At the EAT, both parties agreed that under section 98(2)(d) of ERA 1996, there had to be an actual breach of a duty or restriction - a genuine but erroneous belief of a breach would not be sufficient.

Was there any such breach? No said the EAT. The EJ had been wrong in holding that an employer was obliged under IANA to obtain specific documentary evidence that the Claimant had the right to work in the UK. The EJ had failed to refer to section 25 of IANA which specified that a person is subject to immigration control if, under the IA, he or she is required to have leave to enter or remain in the UK. It was agreed by the parties that the Claimant was not such person.

And even if the Claimant had been subject to immigration control, section 15(3) of IANA did not impose a requirement to obtain certain documents to allow the employee to work. The effect of the provision was that if certain documents are obtained from the employee, the employer could be excused from paying a penalty.

Could there still be a fair dismissal for SOSR? Yes - a "genuine but erroneous belief that it was impermissible to continue to employ a person because of an enactment prohibiting further lawful employment" could amount to "some other substantial reason" (Bouchaala v Trusthouse Forte Hotels Ltd [1980] ICR 721. The EJ had therefore made no error of law in that finding.

Reasonableness of employer's belief
Was the EJ wrong to conclude that the dismissal was fair? Yes - although a genuine but mistaken belief could potentially justify a dismissal for SOSR, the reasonableness of the mistaken belief about the reason for dismissal should be taken into account.

Whilst Abellio had contacted the Home Office and the UK Border Agency, the ET should have also taken into account whether or not full information was given to the authorities and whether they had all the material on which they could consider whether section 15 of IANA was in play or not. Whilst the dismissal process may well have been fair, the failure of Abellio to produce evidence of giving full information to the relevant authorities or of taking reasonable steps to ascertain the position under section 15 may have affected the ET's conclusion on the overall fairness of Abellio's decision (based on an erroneous belief).

Accordingly, the assessment made by the EJ of the reasonableness of the decision to dismiss was defective and could not stand. The issue of the fairness of the dismissal (for SOSR) was remitted for consideration by another ET.

An important take away from this case is that for the purposes of section 15 IANA, not all employees are subject to immigration control (as set out under section 25 of IANA). Further, as the EAT confirmed, section 15 of IANA does not require that certain documentation must be produce to an employer in order legally to employ someone (although there could be other legislative provisions which are relevant here).

Even in cases where there is no statutory bar to continued employment, there can be a genuine but mistaken belief by the employer about the legal position which can itself justify a dismissal for SOSR. But, there will still need to be a sufficient investigation before an ET can properly determine that the particular mistaken belief justified a dismissal.

Implied obligation of trust and confidence
The recent case of [Rawlinson v Brightside Group Ltd ]()UKEAT/0142/17/DA considered the boundary of the "Johnson exclusion zone" and the distinction between claims relating to the manner of dismissal and claims which pre-date and are separate from the dismissal itself.

The Claimant was employed as Group Legal Counsel for an insurance broking business carried on by Brightside Group Ltd ("BGL"). BGL decided to dismiss the Claimant because of performance concerns. However, to "soften the blow" and because BGL wanted the Claimant to work through his three-month notice period so as to ensure a smooth handover of work, BGL did not tell him the real reason for its decision. Instead it told him there was to be a re-organisation of work which was to be carried out by an external service provider.

The Claimant thought this meant TUPE applied and contended that as BGL were dismissing him in connection with a TUPE transfer, that dismissal was automatically unfair. He indicated that he would therefore not work his notice and resigned, claiming he had been constructively dismissed.

It was only after his employment had terminated that the Claimant began to learn (through disclosure from BGL under a subject access request) about the real reason for his dismissal.

The Claimant pursued claims before the ET, including damages for constructive wrongful dismissal, contending he resigned in response to a fundamental breach of contract (i.e. the implied obligation to maintain trust and confidence).

In rejecting the Claimant's claim for damages for his notice period an ET found that BGL had not breached the implied term. The ET held that BGL had no legal obligation to provide information to the Claimant about his performance. The ET thought that BGL's only obligation was to give contractual notice which it had in fact provided. Therefore, there was nothing that could have amounted to a breach of the implied term of mutual trust and confidence. The Claimant appealed.

Breach of implied term?
The EAT allowed the appeal. Although the Claimant had not left in response to the breach of the implied term (he had left in relation to alleged breaches of the TUPE Regulations), that was not necessarily fatal to a claim for damages - the Claimant would still be entitled to rely on a repudiatory breach by BGL. This was in accordance with the principle as explained by Jack J at first instance in [Tullett Prebon plc and Ors v BGC Brokers LP and Ors]() [2010] IRLR 648 (QBD) when it was said that "an employee may justify his refusal to perform his contract of employment by any grounds which existed at the time of his leaving". The Claimant's case was that there was therefore a duty on BGL to be honest or, at least, not to mislead him - if it decided to provide him with a reason for his dismissal then it would be a breach of the implied term if it then lied as to the real reason.

The EAT agreed that it was uncontroversial that the implied term imported an obligation upon an employer to act in good faith and not to mislead in so far as it relates to a continuing employment relationship. But did the Claimant's complaint arise from a breach of the implied term during his employment, or did it relate to his dismissal? If it was the latter then the "Johnson exclusion zone", would apply (Johnson v Unisys Ltd.

The boundaries of the "Johnson exclusion zone", were explained in Eastwood and Anor v Magnox Electric plc and McCabe v Cornwall County Council [2004] IRLR 733 HL, in which Lord Nicholls observed:

"… An employee's remedy for unfair dismissal, whether actual or constructive, is the remedy provided by statute. If before his dismissal…, an employee has acquired a cause of action at law, for breach of contract or otherwise, that cause of action remains unimpaired by his subsequent unfair dismissal and the statutory rights flowing therefrom."

The EAT agreed with the Claimant that in all but the most unusual of cases, the implied term must import an obligation not to deliberately mislead. Whilst BGL had determined to "soften the blow", its position was not entirely altruistic as it wanted to keep the Claimant for his notice period so it could organise his replacement and allow for an orderly hand-over. This approach was consistent with an intention by BGL to maintain the Claimant's trust during the notice period.

Normally, a complaint about communication of an incorrect reason for a dismissal would not give rise to any financial loss: the employee would only suffer loss at the point when the dismissal came into effect. But on the particular facts, by misleading the Claimant BGL was demonstrating an intention to refuse to meet its obligations under the implied term. This was not as part of its dismissal of the Claimant, but as part of its attempt to keep the employment relationship alive during the notice period. Therefore, the breach of the implied term preceded and stood apart from the dismissal. As a result of a breach of the implied term, the Claimant suffered financial loss (his notice pay).

The EAT set aside the ET's decision and substituted its own decision that the Claimant's claim for damages for notice pay succeeded.

The EAT confirmed that in "all but the most unusual of cases", the implied term must import an obligation not to deliberately mislead. However, it went on to say "that there may be particular cases in which the operation of the implied term would permit some element of deceit (the white lie that serves some more benign purpose)", although it could not see how that was so in the present case.

*In practical terms, any deceit by an employer as to the reason for dismissal is almost certainly likely to come to light in documentation at the inspection stage if legal proceedings are launched. Such information may also surface after a data subject access request (as happened in the present case). Also, depending on the circumstances, any falsehood by an employer at an earlier stage could well taint their evidence (or the weight given to it) in the event of an ET hearing.
Hostility of decision maker
Was an ET right to decide that the dismissal of a school employee was unfair because of the Head Teacher's alleged hostility to that employee? No, said the EAT in [St Nicholas School (Fleet) Educational Trust Ltd v Sleet]() UKEAT/0118/17/BA, even if the dismissal suited the Head Teacher's underlying desire to see the Claimant's employment end.

The Claimant was the Maintenance Manager at a school which had bought the site knowing that there was a right of way across it (used by a Mr Potter to access his land).

Subsequently, the Head Teacher became aware that Mr Potter's use of the right of way had changed. The Head Teacher became concerned that Mr Potter's son and friends were accessing the land and holding clay pigeon shoots during the school day. It appeared that the Claimant had known of this, but had failed to inform either the Head Teacher or the School Bursar. This was perceived as a significant breach of the Respondent's child protection and safeguarding policy and the Head Teacher considered this should be taken further. She instigated disciplinary proceedings against the Claimant and he was dismissed for gross misconduct in failing to advise of the change of use relating to the right of way.

An ET upheld a complaint of unfair dismissal, concluding that the school had not made good its alleged reason for dismissal (conduct) and that the Head Teacher (the relevant decision-taker) had demonstrated hostility towards the Claimant's continued employment (as she had previously issued him with a final written warning for performance concerns notwithstanding 20 years of unblemished service). Furthermore, the ET did not consider that the school's investigation had been adequate and decided the decision to dismiss fell outside the range of reasonable responses. The school appealed.

Reason for dismissal
What was the reason for the Claimant's dismissal? The ET had found the school had not discharged the burden upon it to prove the reason for the Claimant's dismissal was his conduct. It considered that the Head Teacher's motives "were less about child protection and more about a predetermined intention to dismiss the Claimant".

The EAT confirmed that in determining the reason for dismissal, an ET needed to decide what was the set of facts known to the employer that caused it to dismiss. If the Head Teacher genuinely had in mind the Claimant's failure to inform her of safeguarding issues arising from the change in use of the right of access, those matters could still be the reason for dismissal even if the Head Teacher had an underlying desire to see the Claimant's employment end. Such a mindset might mean that the fairness of the dismissal was tainted, but would not necessarily mean the reason given was not the genuine reason (or principal reason) for the decision to dismiss.

The EAT said that the ET's findings as to what was in the Head Teacher's mind at the relevant time were "entirely consistent" with the Respondent's stated reason for dismissal (i.e. conduct). There was nothing in the ET's reasons that cast doubt on the school's reason for dismissal. There was nothing in the evidence to support a suggestion that the Head Teacher was committed to getting the Claimant out regardless of reason. And even if the ET had found that the Head Teacher had been positively hostile to the Claimant's continued employment, the right of access issue could still be the reason for the Claimant's dismissal.

Fairness of dismissal
The Head Teacher's alleged ulterior motivation to see the Claimant go was also an issue in relation to the fairness of the dismissal. But again, the EAT found that there was nothing to support a conclusion of unfairness in the light of the findings by the ET.

Whilst it had been the Head Teacher who had previously dealt with the Claimant's performance issues and had also given the Claimant a final written warning, that was inevitable given that she was the person responsible for disciplinary matters as the Claimant's line manager. It was perverse of the ET to hold that her actions showed insufficient impartiality, especially when the final warning given by the Head Teacher had been upheld at an internal appeal and there was nothing in the ET's decision to suggest the warning was given other than in good faith and for cause.

Given this (and other errors by the ET), the unfair dismissal decision was set aside and the claim remitted for rehearing by a differently constituted ET.

Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator.

Published: 09/01/2018 11:09

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