Bethan Jones
Posted on 20 May 2015

Can financial considerations justify dismissal of an employee?

There are five fair reasons that an employer can rely on as justification for dismissing an employee: conduct, capability, redundancy, statutory restriction and 'some other substantial reason' justifying dismissal ('SOSR'). Where an employer faces an unfair dismissal claim, they must first demonstrate that the reason for dismissal falls within one of these categories. The tribunal will then consider whether the employer acted reasonably in treating that as a sufficient reason to dismiss the employee.

In the case of Anderson v Chesterfield High School, the Employment Appeal Tribunal ('EAT') considered whether it was reasonable to dismiss a Senior Learning Mentor from his role at an independent Academy when he became elected as mayor of Liverpool. Although the facts of this case are quite specific, it gives some helpful guidance as to the approach that Tribunals will take when considering whether the circumstances of a case are sufficient to justify dismissal for SOSR.

Mr Anderson had been employed at the school since 2001, when he was also a councillor for Liverpool City Council.  In May 2010, he became the Leader of Liverpool City Council, which was effectively a full-time role. Although he remained an employee, he no longer performed any duties for the school and was treated as being on leave. In 2011, the school converted to Academy status, so that his salary started coming straight out of the school's budget. The school had employed someone else to cover the Senior Learning Mentor role, but Mr Anderson's job was effectively held open for his return. 

In May 2012, Mr Anderson was elected as Mayor of Liverpool and the school dismissed him. 

Although the employment tribunal and EAT agreed that his dismissal had been procedurally unfair, the decision to dismiss him for SOSR was upheld. It was decided that a financial arrangement whereby a publically funded school paid an elected council official without him having to provide any services to the school might lead to significant criticism if the arrangement became public.

The risk that such an arrangement might be regarded as misuse of public funds was sufficient to justify dismissal on the grounds of SOSR.  This seems a sensible decision and whilst each case will be considered on its own facts, it is helpful to Academies who now have to manage their own budgets and need to be careful that money is spent in an appropriate and justifiable way.

For more information please contact Bethan Jones, Solicitor in the Education team at bethan.jones@michelmores.com or on 01392 687438.