Valerie Bond
Posted on 18 Aug 2020

Unfair Dismissal Procedures

In Gallacher v Abellio Scotrail [2020], the Employment Appeal Tribunal recently considered whether procedure was required in order for a dismissal to be fair. When looking at the full facts of the circumstances, the EAT found that the dismissal in this case was, in fact, fair, despite the absence of procedure.

The law: what is Unfair Dismissal?

Subject to some exceptions, the general rule is that, where an employee has completed two or more years' service with their employer, they have a right not to be unfairly dismissed. A dismissal can take place in one of the following ways: by termination of the contract by the employer, by expiry of a fixed-term contract or by the employee's resignation in response to the employer's repudiatory breach (otherwise known as "constructive dismissal").

A dismissal in this scenario will be unfair, unless:

  1. the employer can show that the reason for dismissal was one of five potentially fair reasons (see below); and
  2. the Employment Tribunal finds that, in all the circumstances (including the size and administrative resources of the employer), the employer acted reasonably in treating that reason as a sufficient reason for dismissal.

The five potentially fair reasons are as follows:

  1. Capacity or qualifications
  2. Conduct
  3. Redundancy
  4. Breach of statutory duty or restriction
  5. Some other substantial reason

If a dismissal is found to be unfair, then the potential remedies include reinstatement (the employer re-employing the employee on the same terms of employment with no loss of pay or continuity of employment), reengagement (re-employment of the employee in a comparable role to their former job) or compensation.

In respect of compensation, the employer will usually be ordered to pay the ex-employee a 'basic' and 'compensatory' award. The basic award is a payment calculated in a similar way to redundancy pay, taking into account the employee's years of service, age, date of termination and pay. The compensatory award is an amount which the Employment Tribunal considers will appropriately compensate the former employee for past and future financial loss. In most unfair dismissal cases, the compensatory award is subject to a maximum of the lower of 52 weeks' gross pay or the current statutory limit which, at present, is £88,519.00.

What has been the Tribunal's approach to date?

The landmark case on unfair dismissal is Polkey v AE Dayton Services Ltd [1987] IRLR 503 which found that, if a dismissal is procedurally unfair, the employer cannot invoke a "no difference rule" to establish that the dismissal was, in fact, fair. If it is found that, had the correct procedure been followed, the dismissal would have been fair, then the compensation the employer has to pay may be reduced. However, this would not affect the principal finding of unfair dismissal.

Iceland Frozen Foods Ltd v Jones [1982] IRLR 439 established that the test as to whether the employer acted reasonably is an objective one. As a result, the Tribunal will assess the dismissal in the particular circumstances of the employer and the business at the time of dismissal. It is irrelevant whether the Employment Tribunal would have come to the same conclusion, as found in Foley v Post Office; Midland Bank plc v Madden [2000] IRLR 82.

It was clarified in Orr v Milton Keynes Council [2011] EWCA Civ 62 that the Tribunal will only consider the facts available to the decision-maker at the time of the dismissal. This was further upheld in the case of Royal Mail Ltd v Jhuti [2019] UKSC 55 where the employee's manager hid the real reason for dismissal (protected disclosure) from the decision-maker.

Gallacher v Abellio Scotrail [2020] 2 WLUK 691

The Claimant was Head of Customer Experience and Standards for the Respondent. She raised claims for unfair dismissal and discrimination on the basis of disability, age, and sex.

Relations between the Claimant and her line manager had already begun to deteriorate quite significantly when she was called into what she believed to be a performance review. At that meeting, the Claimant was dismissed without warning, procedure, or right of appeal.

In what might be a surprising decision for some, the Tribunal found that the Claimant had been fairly dismissed for "some other substantial reason", notwithstanding the fact that no procedure had been carried out by the Respondent. The Tribunal found that the Respondent's actions were a reasonable response in the particular circumstances. Furthermore, it was held that a procedure would be likely to have made the situation worse, in what was effectively a personality clash between two senior individuals.

The Employment Appeal Tribunal ('EAT') recognised the unusual circumstances and upheld the Tribunal's decision. It was noted that, in most cases, the failure to carry out any procedure would lead to the conclusion that the dismissal was outside the "band of reasonable responses". However, where following such procedures could reasonably be considered by an employer to be futile, then they could be avoided. In the present situation, the working relationship between the parties had broken down on both sides and so, although uncommon, it was possible to dispense with procedure in this instance.

Points to note for employers

It is important to note that the Tribunal will consider unfair dismissal claims on a case-by-case basis. The fact that, in the case of Gallacher, no procedure was required, does not mean that it can be completely disregarded in all situations. Employers must ensure that they have taken the necessary steps to be able to demonstrate that the dismissal was fair. In most cases, this will still include following the employer's redundancy or disciplinary procedure to reduce the risk of litigation.

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 Valerie Bond to discuss any issues you are facing.