Siobhan Murphy
Posted on 18 Aug 2020

Employment Appeal Tribunal considers the effect of a successful internal appeal on a dismissal, where the employee has no intention of returning to work

The Employment Appeal Tribunal has held that, where an employee appeals an employer's decision to dismiss, an internal decision to overturn the dismissal will, in law, be as if no dismissal ever occurred. This principle applied despite the employee making it explicitly clear when submitting their appeal, and throughout the appeal procedure, that they had no intention of returning to their role regardless of the outcome.

Phoenix Academy Trust v Kilroy (UKEAT/0264/19/AT)

Background

The Claimant was employed as the acting principal of a secondary school. Following a transfer of the school into Phoenix Academy Trust (the Trust), the Claimant became employed by the Trust. Following the transfer, the Trust invited the Claimant to resign on numerous occasions and commenced investigations into concerns that it had about his performance. Following a finding of gross negligence, the Claimant was informed by telephone, on 23 July 2018, of his summary dismissal. On the same day, shortly after the communication of his dismissal, the Trust received a letter from the Claimant, resigning and alleging constructive dismissal. As the call which communicated the dismissal took place prior to the delivery of this letter, the reason for the dismissal remained summary dismissal for gross negligence.

The Claimant appealed the dismissal but stated explicitly that he did not want to be reinstated, regardless of the outcome. The appeal was upheld and the Claimant's dismissal was overturned. As a result, the Claimant was informed that he would be reinstated retrospectively from 23 July 2018. Following this, the Claimant submitted a further letter of resignation and brought a claim for constructive unfair dismissal due to a breach of the term of trust and confidence in relation to (i) his dismissal on 23 July 2018 and (ii) the period up until his resignation. The Trust argued that, by invoking the appeal procedure, the Claimant had affirmed any prior breach.

In the first instance, the Employment Tribunal (ET) held that, given the Claimant's repeated statements of intent not to return to work, he had not affirmed his employment contract following a breach of the implied term of trust and confidence. The Claimant had been correct to form the view that his employer wished to be rid of him and his claim for constructive unfair dismissal was upheld.

The Trust appealed the decision on the basis that the ET had not been referred to key case law, which supported the argument that the Claimant had affirmed the contract.

What does previous case law say?

There were two key cases to which the ET was not referred.

The first case was Kaur v Leeds Teaching Hospitals NHS Trust, where the Employment Appeal Tribunal (EAT) held that, where there is a continuing breach of the term of trust and confidence, an employee can rely on the totality of the employer's acts, notwithstanding a prior affirmation of the contract, provided that the later acts form part of the same series. The EAT proposed five questions that, if satisfied, would support the notion that the employee could still rely on the earlier breaches by an employer:

  1. What was the most recent act on the part of the employer which the employee says caused, or triggered, his or her resignation?
  2. Has he or she affirmed the contract since that act?
  3. If not, was that act (or omission) by itself a repudiatory breach of contract?
  4. If not, was it nevertheless a part of a course of conduct comprising several acts and omissions which, viewed cumulatively, amounted to a repudiatory breach of the implied term of trust and confidence?
  5. Did the employee resign in response (or partly in response) to that breach?

The second case was Folkestone Nursing Home v Patel, which held that, where there was a contractual right to appeal against disciplinary action resulting in dismissal, both employer and employee are bound to treat the employment relationship as having remained in existence throughout any appeal process. Any other reasons for exercising the right to appeal were deemed to be collateral to the object of having such a process included in the contract of employment.

Importantly, it was noted that exercising a right of appeal against what is said to be a seriously unfair disciplinary decision is not likely to be treated as an unequivocal affirmation of the contract.

What did the EAT hold in Phoenix Academy Trust?

The EAT held, in the light of Folkstone and Patel, that by adopting the contractual appeal process, the Claimant had made an unequivocal election to treat his employment contract as continuing and affirmed the breaches prior to his appeal.  

As such, it became necessary to consider whether the Trust's conduct of the subsequent contractual appeal process itself constituted a continued breach of the implied term of trust and confidence. The case was remitted to the ET to reconsider this point in line with the questions set out in Patel, which could potentially mean that any prior affirmation is immaterial.

What can employers take from this?

This case will be of particular relevance where an employee appeals a dismissal with the sole intention of, for example, clearing their name. Where a dismissed employee brings an internal appeal, they essentially will be bound in all circumstances by the outcome of such appeal, despite their motive behind the invocation of the procedure. As a result, if the outcome of an appeal is that the dismissal is overturned, the dismissal effectively "vanishes" in law, with the result being that there will no longer be a dismissal on which to found an unfair dismissal claim. The alternative is a claim for constructive dismissal, which is much more difficult to prove. Employers must, therefore, place utmost care when carrying out any appeal procedure to ensure that it is done properly and fairly, which will reduce the risk of any constructive dismissal claim.

One point to note is that there was an absence of discussion as to the applicability of the principle in Patel, which was followed by the EAT, where an employee has a clear intention not to return to his/her previous job. It may be that a referral to the Court of Appeal is made in the future to clarify this point. We will continue to monitor any updates on this case.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact Rachael Lloyd or Siobhan Murphy to discuss any issues you are facing.