<Criminal Law Essays and Dissertations

Unfair Dismissal

Due to the vacuum, which led to some 203 industrial disputes a year regarding contentious dismissals by employers, the Royal Commission on Trade Unions and Employers Associations 1968 (the Donovan Commission) recommended the urgent implementation of a system that would offer workers better protection against unfair dismissal as well as alleviate the Industrial disharmony that gripped Britain. The principle of unfair dismissal was developed as a mechanism to protect employee's from arbitrary treatment, and to offer 'just and equitable' compensation. As a result of the Donovan Commission statutory protection was afforded to employees with the introduction of the Industrial Relations Act 1971, the subsequent Trade Union & Labour Relations Act 1974, and today is encapsulated under the provision of the Employment Rights Act 1996 s.94-107.

Whilst the rules governing the establishment of a case of unfair procedure require the adherence to a number of procedural steps, the final step, relating to the reasonableness of the employers actions in the circumstances of the case, is covered by s.98(4) which outlines the statutory test of fairness.

To aid the interpretation of this section the judiciary have adopted two tests; firstly did the employers decision to dismiss fall with a 'band of reasonable responses' as expounded in Iceland Frozen Foods v Jones [1982] by Browne Wilkinson J (approved by Mummery LJ in Post Office v Foly; HSBC Bank v Madden [2000]); and secondly whether or not the employer has adopted a fair procedure in relation to the employees dismissal. This second test has been the subject of much judicial angst, not only with regard to what constitutes fair procedural steps but whether there is a requirement that they should be strictly adhered to by each employer in each case. Whilst it should be remembered that the procedural steps required in disciplinary case might well differ from a redundancy situation, it is possible to identify four general principles governing a fair procedure, as alluded to by Mr Justice Harman in Byrne v Kinematograph Renters Soc [1958]. These principles are entrenched within the ACAS Code of Practice on Disciplinary and Grievance Procedure (2000), and following the decision in Lock v v Cardiff Rly Co Ltd [1998] it was held that it was an error of law to fail to have regard to the Code. Further, s207 TULR(C)A 1992 states that the Code is admissible in evidence before any tribunal, and where relevant the Code's provisions must be taken into account.

However, before examining the judiciary's adherence, and reasoning for adhering or otherwise to these procedural steps, we will briefly examine what they themselves entail.

Firstly, in British Home Stores v Burchell [1978], Arnold J stated that where an employer held a belief of guilt of an employee, this must be based on reasonable grounds and subject to the employer having carried out as much investigation into the matter as was reasonable and practicable in the circumstances.

Secondly, in Whitbread v Mills [1988] it was stated that the reasonableness of the employers conduct in the dismissal process required compliance with not only a pre-dismissal procedure, but also an appeals process. Subsequently in Clark v CAA[1991], the EAT formulated a set pattern that a fair hearing should adopt in accordance with the due process model, to include being accompanied by a fellow worker or trade union official (s.10 ERA 96), the right to call witnesses and the right to ask questions.

Thirdly, in W. Mids Co-op Soc. V Tipton [1986], Lord Bridge held that the appeals procedure was an integral part of deciding the question of fair procedure, his reasoning being based on the dicta of Viscount Dilhorne in Devis & Sons Ltd v Atkins (1976), that the reasonableness of the employers actions must be considered "in accordance with equity and the substantial merits of the case".
Finally, upon the finding of guilt at a hearing, except in cases of gross misconduct, a correct warning procedure should be implemented, comprising of an oral warning, a first and second written warning, alternatives to dismissal such as demotion and finally dismissal.

However, problems have arisen in situations where the courts have adopted a varied approach to the requirement that these four steps are implemented, which have varied between strict adherences, to circumstances where they are completely circumnavigated.

Following the introduction of the Industrial Relations Act 1971 and the Trade Union & Labour Relations Act 1974, until 1976 the courts considered that adherence to the procedural steps outlined above as being fundamental to the whole ethos of 'reasonableness' and that irrespective of the employee's conduct a failure to follow the correct procedure was sufficient in itself to lead to a decision of unfair dismissal, itself a somewhat unjust concept (alluded to by Lord Diplock's reference to a 'rogue's charter' in Devis & Sons v Atkins [1977]) . However, following a relaxation in the EAT's stance towards such procedure in Charles Letts & Co v Howard [1976], and the CA less than enthusiastic attitude in Hollister v NFU [1979] which viewed procedural matters as merely one of a number of background factors, matters came to a head in British Labour Pump Co v Byrne [1979]. In the case the CA caused a major shift in the judicial stance towards procedural fairness by adopting what became known as the 'no difference rule.' Mr Justice Slynn held that where the firm could prove that the decision to dismiss without regard to procedural correctness made no difference to the final outcome, then the dismissal could not be unfair. However, where a decision to dismiss without a proper investigation was seen to be unreasonable at the time of the dismissal, as required by the decision in British Home Stores v Burchell [1978], the employer was able to rely on subsequent facts that would prove that the following of procedural steps would have resulted in the same outcome. Whilst the decision was affirmed by the CA in W & J Wass v Binns [1982], this decision regarding subsequent facts was seen as anathema to the House of Lords decision in W Devis & Sons v Atkins [1977] in which Viscount Dilhorne has stated that "in my opinion it is not the case that an employer can establish that a dismissal was fair by relying on matters of which he did not know at the time but which he ought reasonably to have known."

The death-knell for the British Labour Pump principle was sounded by the EAT in Sillifant v Powell Duffryn Timber [1983]. Browne-Wilkinson J acknowledged that situations may arise where an offence is so heinous that a reasonable employer could advance that such an investigation would make no difference as in Bailey v BP Oil [1980] (where the employee was seen on holiday in Mallorca when claiming sick leave), however stated that the decision had reintroduced the confusion that the decision in W Devis & Sons v Atkins [1977] had sought to avoid with regard the reasonableness of the employers conduct and its effect upon the compensation payable. He added that "the British Labour Pump principle appears to have become established in practice without it being appreciated that it represented a fundamental departure from both basic principle and the earlier decisions…it is wrong in principle and undesirable in its practical effect", and that the only test of fairness of a dismissal is the reasonableness of the employers decision to dismiss judged at the time that the dismissal takes effect. However, he added that he believed that in situations where a dismissal is found to be unfair on procedural grounds, but facts established that a disciplinary dismissal could have been justified, compensation payable should be reduced, possibly to nothing (although this was addressed by the introduction of Employment Act 1980, now embodied in s.122(2) ERA 96).

The EAT was however in no position to overrule the position in British Labour Pump as it was bound by the CA authority as per the rule of stare decisis. Therefore change was not brought about for another five years until the case of Polkey v AE Dayton Services (1988) arrived before the HL, which concerned the case of four van drivers who were made redundant without any proper procedure being adhered to such as advance warning, consultation or alternative resolutions. The HL stated that the British Labour pump test was inconsistent with the statutory language that did not allow a reliance on matters not known to the employer before dismissal, and emphasised two predominant reasons for overruling it. Firstly, it was inconsistent with the decision in W Devis & Sons v Atkins [1977], Lord Mackay stating that what tribunals had to consider "is what the employer did that is to be judged, not what he might have done", and secondly and more significantly argue Smith & Wood, that the decision was based on consideration of the lack of injustice to the employee (simply a matter with regard compensation, not liability), and not the reasonableness of the employers actions, per Viscount Dilhorne in W Devis & Sons v Atkins [1977]. Painter & Holmes point out that this may put tribunals in a position where a pre-eminence is placed on disciplinary procedure, rather than on the reasons for dismissal.

However, Lord Bridge and Lord Mackay in Polkey emphasised that there is no requirement for a slavish adherence to procedure, upholding the dicta of Browne Wilkinson J in Sillifant v Powell Duffryn Timber [1983] that "there may be cases where the offence is so heinous and the facts so manifestly clear that a reasonable employer could take the view that whatever explanation the employee advanced it would make no difference". Lord Bridge mentioned 'exceptional cases' which he described as being where at the time of dismissal an employer subjectively thought it reasonable that to go through such procedures would be meaningless. Lord Mackay stated that a lapse of procedure will not automatically make a decision unfair, however adopted a more objective test based on whether the employer could reasonably have concluded at the time at the time that to go through such procedures would be meaningless. The latter approach to an exception was subsequently given approval by the CA in Duffy v Yeomans & Partners [1995], where Balcombe LJ stated that there is no requirement that the employer must have made a conscious decision not to consult with the employee; it is sufficient that, judged objectively, the employer does what a reasonable employer might do. However Smith & Wood point out that the difference between the two approaches is more than semantics, a loose interpretation of the objective test would bare an unfortunate resemblance to the 'no difference' rule. Collins adds that this element of flexibility existed at the expense of the principle of respect for the dignity of the individual worker that a strict adherence to procedural fairness embodies.

It is further of interest that post-Polkey the courts have shown a propensity to forgive minor procedural lapses. In Fuller v Lloyds Bank [1991], where the party dismissed was not allowed access to statements which formed the basis for his dismissal, Knox J stated that "the defect was not such as to render the procedure intrinsically unfair so as to require the dismissal not to stand as fair." And in Santamera v Express Cargo Forwarding, EAT (IDS Brief 727, Feb 2003) the EAT held that an employee that was not allowed to cross-examine witnesses was not unfairly treated with regard to procedure.

The Polkey approach to procedure will be replaced in mid 2003 by the introduction of the Employment Act 2002 which received royal assent during July 2002. The Act will introduce a new s.98A into the ERA 96 concerned with statutory dismissal and disciplinary procedures (DPP's hereafter), which will introduce a minimum standard of statutory procedural entitlement that will be implied into all contracts of employment. Patricia Hewitt, the Sec of State for Trade & Industry informed the HC that the aim of the new legislation was to establish proper dispute resolution procedures in the workplace, and to encourage employees and employers to resolve problems internally before resorting to tribunal. However, as Adrian Williams points out many of the new measures are not novel, loosely following the ACAS code and existing case law.

Fundamental in the Act is the emphasis on mandatory procedure. This has had the effect of causing a return to the pre-1979 position where a failure to follow a statutory procedure outlined in the Act will become a ground for unfair dismissal in its own right, and will attract a separate minimum compensatory award of 4 weeks pay. S.30, which ensures that employers are unable to insert clauses into employment contracts waivering these DPP's. Where a clause is inserted into a contract it must be construed as adhering at least to the minimum procedure that the statute requires of employers. Therefore, contractual procedures cannot be inserted to dilute the DPP's, however situations where a contractual provision offers greater protection over and above the DPP will stand and operate alongside the DPP. However, Hepple and Morris (2002 ILJ) point out that the effectiveness of such procedures in excess of the DPP must already be called into question however following the dicta of Lord Hoffman in Johnson v Unisys Ltd [2001], . There he stated that for the judiciary to construct a common law remedy for unfair dismissal that did not require the qualifications and restrictions required of the statutory remedy would have the potential to circumvent all the restrictions on the statutory right. Collins (ILJ 2001) takes this further, stating that the HL decision not to allow an employee the opportunity to challenge the manner of a dismissal on the basis of a breach of an implied term such as good faith has meant that "any hopes that the common law of wrongful dismissal might be adjusted to reflect modern perceptions of how employees should be treated fairly and with dignity must be thrown on the bonfire of innocent carcasses."

This is a significant departure from the present law. Lord Mackay's 'objective test', for side-stepping procedural protocol, affirmed in Duffy v Yeomans & Partners [1995] has now been abolished, no circumstance can be forwarded by employers for ignoring procedural requirements.


Further, s.31 provides that where there is a failure by employers or employees to adopt the statutory provision prior to a application to a employment tribunal, the tribunals are able to vary the compensatory awards between 10-50%, although exceptional circumstances will allow greater scope. This will repeal the current provisions contained in s127A ERA 96 mentioned above.

The content of the Statutory Dispute and Disciplinary Procedure were summarised in the IDS Brief "The Employment Bill". The procedural steps regarding disciplinary matters follow a three step system (s.32), for both employers and employees. This is based firstly around a notification in writing mentioning the nature of the disciplinary action and an invitation to a meeting, secondly the meeting itself, and finally an appeals procedure. Where cases of gross misconduct have arisen and the employee has been summarily dismissed, the procedure involves only a two step system. The first involves a 'grounds for action' which sets out in writing the employee's alleged misconduct which has lead to the dismissal together with notice instructing the employee as to the appeals procedure, and secondly the appeals procedure itself. Except in cases of summary dismissal, the first meeting must take place before disciplinary action, except in the case of suspension, but the appeal need not.

The Act specifies that the steps are to be taken without unreasonable delay, and that the employee must take all reasonable steps to attend all meetings. At the conclusion of all meeting or appeals, unless further enquiries are required, the employers are to give notice of their decision .

S.33 contains a controversial aspect of the Act in its ability to exclude claims to ET's by employees who have failed to adhere to step 1 of the grievance procedure (s.32(2)) within a 28 day period, which is seen as undermining employee rights. Further, it has been questioned by Judge John Prophet, President of ET's whether this infringes Article 6(1) ECHR. Similarly employer friendly is the removal of the current requirement to arrange a 'mutualy convenient time' for the meeting has been replaced by a requirement that the employee takes all reasonable steps to attend at a time proposed by the employer. Further Hepple and Morris point out that both the standard and the modified procedure fall significantly short of the current ACAS code, a measure defended by Alan Johnson that basing the statutory procedures on the ACAS code would be duly onerous to those employers with a lack of internal procedures.

 

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