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UNFAIR DISMISSAL, MISCONDUCT AND THE ACAS CODE

UNFAIR DISMISSAL

Qualification

1. Employees have the statutory right not to be dismissed unfairly: s. 94(1) ERA 1996.

2. The right may generally be claimed by those who are eligible as below.

Employees

3. Defined as someone working under a contract of employment or service, whether

express or implied (and if express) whether it is written or oral: s. 230(1)-(2).

Those who are self-employed are excluded.

4. The starting point is the test laid out in Ready Mixed Concrete (South East) Ltd v

Minister of Pensions and National Insurance [1968] 2 QB 497, 515C:

In consideration of a wage or some other remuneration, does the servant agree

to provide his own work or skill in the performance of some service for his master;

The servant agrees to be under a sufficient level of control to make the other his

master; and

The other provisions of contract are consistent with a contract of employment.

5. Tribunals will often apply the multiple test and look at all aspects of the employment

relationship.

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Crucially, there must be a mutual obligation to supply and perform work (note

contracts which have clauses denying any such obligations which may be a sham

(see Firthglow Ltd (t/a Protectacoat) v Szilagyi [2009] EWCA Civ 98);

Whether the person is integrated into the business and supervised

The purpose and effect of the contract (not just the labels used)

Method and mode of payment

Whether or not sick pay or disciplinary procedures apply.

6. A volunteer may also be included if there is a mutual obligation.

7. Insofar as agency workers are concerned; they may be employed by the organisation

to which they are assigned (the end user) or the agency which assigns them. A

contract may be implied between the worker and the end user. However, it is often

best to consider the two contracts.

8. The employment must be in Great Britain and/or closely connected to it. See the

recent case of Ravat v Halliburton Manufacturing and Services Ltd [2012] UKSC

[2012] IRLR 315.

9. Those working under illegal contracts are excluded. This includes those working

unlawfully or those working under a contract for an illegal or immoral purpose (e.g.

growing drugs, procuring prostitutes etc.).

Length of service

10. For employment beginning before 6 April 2012, there must be 1 years continuous

service. Employment starting on or after this date requires 2 years service.

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11. The service must be unbroken, i.e. continuing even where the employee is not

actually working.

Dismissal

12. There must be a dismissal: forced resignation, constructive dismissal, termination, or

the expiry of fixed-term contract.

13. Constructive dismissal arises where the employer commits a fundamental breach of

contract which entitled the employee to resign: Western Excavating Ltd. v Sharp

[1978] IRLR 27, CA.

Not simply acting unreasonably;

Conduct must amount to a breach of contract (an express or implied term); and

Breach must be fundamental: go to the root of the contract.

Unfairness

14. There are two stages under s. 98 ERA 1996:

Employer must show the reason for the dismissal (or principal reason); the four

potentially fair reasons are capability, conduct, redundancy, or employment in

contravention of a statutory duty; or some other substantial reason; and

Was the dismissal fair in all the circumstances under s. 98(4) which:

(a) depends on whether in the circumstances (including the size and administrative resources of the employers undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case.

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15. The reason for the dismissal will be the facts known to the employer at the time or a

genuine belief held at the time on reasonable grounds: Gilham and Others v Kent

County Council [1985] ICR 233, CA.

Reasons

16. Capability: basically, incompetence. The employee was not able to perform the job to

the standard expected of him.

Was this a genuine belief held by the employer on reasonable grounds; and

Was there a proper investigation;

Was the employee told of his substandard performance and/or given a chance to

improve; was he properly trained?

17. Dismissal as a result of a loss (or failure to gain) a qualification is similar.

18. Conduct: see below.

19. Redundancy: Under s. 139(1), arising from a closure of the business/work place or

reduction in the work force. The employer must consult, adopt a fair selection

process and consider suitable alternative employment.

Fairness in all the circumstances

20. The tribunal will take a view considering the overall merits of the case. The larger the

employer, the more that will be expected. The tribunal will look for:

consistent treatment and fairness towards the employee;

whether the dismissal was within the band of reasonable responses open to an

employer: Iceland Frozen Foods v Jones [1982] IRLR 439, EAT; and

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Not substitute its view in place of the employers.

21. It is not important whether or not the employee was in fact incapable or had

committed misconduct. The issue is whether the employer believed as much.

22. The Tribunal must have regard for the Acas code, see below.

Automatically unfair dismissals

23. Certain dismissals do not require the employee to show unfairness in all the

circumstances or even have minimum service. These include dismissals because of:

Pregnancy and maternity;

Family or domestic entitlements (e.g. adoption, paternity leave etc.);

Applying for flexible working;

Asserting statutory or Regulation rights (Part Time, Fixed-term, Agency etc.);

A refusal to work on the grounds of health and safety;

Trade union membership;

Accompaniment at disciplinary meetings; and

Whistleblowing.

MISCONDUCT

24. There is no statutory definition. However, many obvious forms of misconduct are

recognised whether or not within the employment contract:

theft/dishonesty;

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lateness/absenteeism;

violence;

under the influence of alcohol/drugs;

disobedience, etc.

25. Gross misconduct is a particularly serious form of misconduct which entitles the

employer to dismiss without notice.

26. Conduct outside working hours may also entitle the employer to dismiss depending

on the circumstances; however, the Tribunal will balance the effect of the conduct

outside work on the employer with the employees right to a private and family life.

Fair procedure

27. It is particularly important that a consistent and fair procedure is followed in cases

involving misconduct. The more serious the allegation or consequence, the more

contentious the investigation: Salford Royal NHS Foundation Trust v Roldan

[2010] EWCA Civ 522.

Was the employee caught red-handed or did he admit it?

Is there a contractual disciplinary procedure? If not, was the process undertaken

fair?

28. It is important that the person conducting the hearing is impartial and not, for

example, a witness. The allegation must be put to the employee and he must be

given a proper opportunity to challenge it. It is important that the charge is clear and

evidence for and against it is considered.

The evidence must be shown to the employee;

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The employee must be able to challenge it (not necessarily through cross-

examination); and

The employee should not be taken unawares.

29. Inconsistence is usually unfair unless there is a good reason for it. An employer may

well distinguish two similar cases but unless this is based on rational grounds, the

Tribunal may consider this unfair.

Warnings

30. Previous live warnings may be taken into account and this should be made clear to

the employee in the hearing. A Tribunal will not go behind a previous warning where

it was accepted and/or where it was given in good faith where there was a prima

facie ground for it.

31. Warnings should not be permanent and should lapse after a specific period.

32. Consideration of a lapsed warning, and treating an employee differently because of

it, may not itself be unfair: Airbus UK Ltd. v Webb [2008] EWCA Civ 49.

Dishonesty and BHS v Burchell [1978] IRLR 379

33. In order for an employer to fairly dismiss for dishonesty, he must:

Genuinely believe that the employee was dishonest;

Hold that belief on reasonable grounds; and

Carry out a proper investigation.

34. A criminal investigation is irrelevant. The presence or absence of a conviction does

not hinder the employer.

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35. Even if the evidence is insufficient to satisfy a Tribunal, so long as the dismissing

officer genuinely believed that there were grounds for dismissal, the Tribunal may not

substitute its own view.

ACAS CODE

36. From October 2004 to 6 April 2009 there were minimum statutory dispute resolution

and disciplinary procedures that had to be followed by employees and employers

respectively.

37. The SDP was set out in Employment Act 2002, Sch. 3 and the first two steps, which

received the most appellate attention, were step 1: statement of grounds for action

and invitation to meeting; and step 2: meeting.

38. The third step related to appeal. As the three-stage process has been retained, albeit

in a different legal context, case law concerning the above provision is likely to assist

a tribunal considering issues of compliance or fairness.

39. A failure to comply with the SDP resulted in an increase /reduction in compensation.

The Acas Code of Practice

40. The code is issued under the Trade Union and Labour Relations (Consolidation)

Act 1992, s. 199, coming into force on 6 April 2009. It is essential reading for those

advising either employees or employers as possible complaints unfold. The code

itself is fairly short, simply written and straight-forward.

41. Advisors may also find useful the comprehensive guidance set out in the Acas

booklet Discipline and grievances at work: The Acas guide at

acas.org.uk/media/pdf/6/6/Acas-Guide-on-discipline-and-grievances-at-work-

March-2011.pdf. This provides much more detailed advice for employers and

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employees. While the tribunal is not required to have regard for it, it is useful to

demonstrate what can be expected, for example, in small organisations.

42. The code sets out the basic principles of fairness and natural justice which are

expected to be followed as standard. Bear in mind that the code does not apply to:

Redundancy dismissals; and

Non-renewal of fixed term contracts.

43. Tribunals must take into account the code and may adjust compensation by up to

25% as a result of a partys unreasonable failure to comply with it.

Navigation

44. The code is a mere 45 paragraphs long. Key principles include:

Promptnessraise issues when they arise and hold meetings as soon as

practicable

There should be an investigative stage to establish the facts

Employees should be informed of the problem and be given the opportunity to

be heard before any decisions are made

Employees should be allowed to be accompanied at any formal disciplinary or

grievance meeting

An employee should be able to appeal against any formal decision made

Investigative stage: paragraphs 5 to 10

45. At the first stage the employer must investigate the issue and establish the facts. A

tribunal will consider the genuineness of the belief held by the employer and to this

end; the investigation must be a genuine attempt to establish facts.

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46. Investigatory meetings should not involve disciplinary action and therefore there is no

right of accompaniment. Refusing an employee the opportunity to bring in a

colleague to such a meeting may be entirely justifiablefor example, for

confidentiality or for the integrity of the investigation.

47. Suspensions may be appropriate but should be with pay and as short as possible.

48. If there is a case to answer, the employee must be informed in writing and should be

provided the evidence needed they need to prepare their case for the hearing.

Specifically setting out the misconduct with the relevant details in the letter is

essential. Merely stating that you are invited to a disciplinary meeting to consider

your unprofessional conduct is likely to be insufficient.

49. The employee must be told of the risk of dismissal and why, stating the issue in

broad terms: Alexander v Bridgen Enterprises Ltd [2006] IRLR 422.

50. The employee must be told that they are entitled to be accompanied.

Hearing stage: paragraphs 11 to 16

51. Meetings must be held without unreasonable delay but give the employee enough

time to prepare their case. Employers will often face employees who try and drag out

the process to avoid the inevitable consequences of misconduct. [See paragraph 24]

52. Employees should be given a fair and proper opportunity to refute the allegations and

present their case. This includes calling witnesses, questioning the witnesses of the

employer and challenging evidence. A refusal of an employees request to call

witnesses or preventing questions being asked are likely to render the hearing unfair

and may bring into question the employers motivation.

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53. Each and every piece of evidence need not be provided in advance. The code

requires requires sufficient material to enable the employee to put their side of the

story: Ingram v Bristol Street Parts [2007] UKEAT/0601/06/CEA.

54. However, sometimes anonymous evidence is appropriate: whistleblowing et cetera

55. Employers must allow the employee to be accompanied by:

a fellow worker;

a certified trade union representative; or

an official employed by the trade union.

56. Requests to be accompanied must be reasonable. An employer may reasonably

refuse to bring someone who will prejudice the hearing or cause the employer

obvious practical problems.

57. Employers should be wary, for example, of a trade union representative who tries to

hijack the hearing by treating it as an opportunity to raise allegations against the

employer or raise inappropriate issues as a distraction. [Paragraph 16] neatly sums

up what can be expected of someone who accompanies an employee.

58. After the meeting, the employer should consider all the information and come to a

decision. Remember, its decision may only be impugned at tribunal if it is not one

which a reasonable employer would take. The employer must communicate the

decision in writing and advise of appeal. Bear in mind s. 92, ERA 1996.

59. Gross misconduct does not vitiate the right to a fair disciplinary process.

Appeal stage

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60. An appeal should be conducted impartially and ideally by someone not already

involved with the disciplinary process that is being appealed. The employee must set

out clear grounds for appeal.

61. The code specifically gives guidance at [paragraphs 29] and [30] for employees who

are TU representatives or are charged with criminal offences.

Grievances (not collective grievances)

62. The grievance process may be outlined as below:

Attempts should be made to resolve the matter informally

Otherwise, the grievance should be raised formally with an appropriate manager

A meeting should be held without unreasonable delay

An employee has the right to be accompanied as before but only if the grievance

relates to a duty owed by the employer to the worker

Following the meeting, a decision should be made and communicated in writing

and the employee given the right to appeal

An appeal process should allow the employee to pursue the complaint further

Compensation

63. The compulsory financial penalty, of between 10 to 50 per cent, for non-compliance

has been abolished with tribunals now having a discretion as to adjusting

compensation by 25% either way. Tribunals are still likely to be guided by decided

cases when considering whether or not compensation should be adjusted.

64. Remember that the tribunal has the power to reduce:

The basic award: under s. 122(2), ERA 1996 as a result of the employees

conduct if it is just and equitable to do so;

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The compensatory award: the same power exists under s. 123(6) as above.

Additionally, the tribunal may reduce the award under s. 123(4) as a result of a

failure to mitigate or for some other reason (s. 123(1)).

65. Under s. 207A(1) or (3), Trade Union and Labour Relations (Consolidation) Act

1992, the tribunal may increase or reduce the compensation by 25% where there has

been an unreasonable failure to follow the Acas code and it is just and reasonable to

do so. Importantly, this reduction takes place before any reduction is made for

contributory fault: s. 124A(a), ERA 1996.

66. If an employer has failed to comply with the Acas code, an increase is not

necessarily obligatory: Bristol Street Parts. Consequently, it should not be assumed

that compensation will increase for a breach of the Acas code, even if insignificant,

without regard to the employees conduct.

67. The appropriate percentage will be based on the extent of the noncompliance and

the reasons behind it.

68. Exceptionally, the size of the award may affect the extent of the uplift: Abbey

National plc v Chagger [2009] IRLR 86, at para 135.

69. In Compass Group v Okoro [2009] 153(22) S.J.L.B. 32 the tribunal increased the

award by 20% as it found that the employers letter to the employee notifying her of

the charges did not provide sufficient details of the allegations, nor was it sent in

sufficient time and nor did it refer to or include the evidence to be put to her at the

hearing. While these findings were reversed on appeal, the uplift was not criticised.

70. In Ward v Ashkenzai [2011] EWCA Civ 172, the Court of Appeal approved an uplift

of 50% where the employee was dismissed without any regard for the SDP for

asserting a statutory right. Similarly, in World of Home Improvements Ltd v

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Cooper-Frewer, an uplift of 50% was applied by the tribunal where there was

flagrant disregard for the SDP.

71. Finally, where the tribunal decides to increase the award, as a result of non

compliance, it should give reasons: Abbey National plc v Chagger [2009] IRLR 86,

at para 135 and Compass Goup UK v Okoro at 61.

IQBAL MOHAMMED

30 July 2012