The band plays on

The
Court of Appeal has at last come to the rescue of employers by restoring the
traditional test for whether a dismissal is unfair. By John McMullen and
heather falconer

The
Court of Appeal has brought to an end months of uncertainty over perhaps the
most fundamental issue in unfair dismissal law.

In
its ruling in the HSBC (formerly Midland Bank) vs Madden dispute, it has firmly
re-established the test that tribunals must use in deciding whether a dismissal
is unfair.

It
was a well established point of law that in judging the reasonableness of an
employer’s decision to dismiss, tribunals should not put themselves in the
employer’s place and decide what they would have done in the circumstances. As
long as the employer’s decision fell within a band of responses that could be
considered reasonable, the tribunal was obliged to find the dismissal fair.

But
Mr Justice Morison threw the law into confusion last year in the case of Haddon
vs Van Den Bergh Foods, one of his last before retiring as president of the
Employment Appeals Tribunal. He ruled that tribunals were wrong to determine
the issue of fairness by asking whether in the circumstances the dismissal fell
within the range of reasonable responses.

Morison
said the test for fairness set out in section 98(4) of the Employment Rights
Act 1996 was "clear and unambiguous and should be applied without
embellishment".  

An
employment tribunal would inevitably have to substitute its own view for that
of the employer. The band of reasonable responses test made the test for
fairness too close to a test for perversity, measuring it only by extremes.

This
case had potentially enormous implications for employers. Whereas in the past
they could take some comfort from the fact that the tribunal would not take an
interventionist approach, that was no longer the case.

It
made it harder to justify a dismissal, as the employer had to persuade the
tribunal that in the same circumstances, with the benefit of hindsight, it
would have come to the same conclusion – that the response in question was the
"only" reasonable response in the circumstances. It effectively
turned the tribunal into an extra level of appeal for dismissed employees.

The
Scottish Court of Session considered Mr Justice Morison’s remarks in the case
of Ethicon Ltd v Wilson. Lord Johnstone, the President of the EAT in Scotland,
said "this tribunal would take this opportunity to endorse completely the
observations of Mr Justice Morison in Haddon".

But
perhaps the more considered approach could be seen in Midland Bank plc v
Madden. In this, a conduct case, the EAT summarised the law as it saw it. It
said no court short of the Court of Appeal could discard the band of reasonable
responses test – but that Haddon was right to point to the danger of the test becoming
one for perversity. And a tribunal was, as Haddon suggested, free to substitute
its own views for those of the employer as to the reasonableness of dismissal.

While
the EAT had attempted to restore clarity, it in fact created more confusion.

In
its long-awaited ruling, the Court of Appeal reversed the EAT’s decision and
said it was for parliament alone, and not the courts, to decide if this crucial
and well established test should be changed. Indeed, it said the lack of
parliamentary intervention was significant.

The
test had been applied consistently for years without interference from
Parliament, even though the law relating to other aspects of unfair dismissal
had been amended on numerous occasions.

The
Court of Appeal also refused leave to appeal to the House of Lords, laying the
argument to rest once and for all.

The
decision re-establishes the view that faced with a particular situation there
are a number of ways in which an employer may react from dismissal to a
warning. It also recognises that these different sanctions may all be
reasonable responses open to an employer, and provided that the action taken by
the employer falls within that range, tribunals may not interfere.

This
approach has been approved by the Court of Appeal since the case of British
Leyland UK Ltd v Swift, 1981, IRLR 91, in which Lord Denning held that the
industrial tribunal was wrong to ask whether a reasonable employer would have
considered that a lesser penalty than dismissal was appropriate.

It
was endorsed by the EAT in Iceland Frozen Foods Limited v Jones, 1982, IRLR
349. This case laid down guidelines which have been followed by tribunals ever
since.

The
test has been much criticised over the years as an unwarranted gloss on the
terms of the statute. It allows a harsh dismissal to be deemed fair and looks
at "fair" dismissals rather than "just" dismissals – as the
facts in Haddon illustrate (see panel).

But
it remains the test that all courts must follow unless and until parliament
sees fit to change it. This is welcome news for employers at a time when unfair
dismissal cases look set to rocket even further. But there is no room for
complacency. The need to adopt fair procedures remains as great as ever.

Dr
John McMullen is National Head of Employment Law at Pinsent Curtis and author
of Business Transfers & Employee Rights (3rd edition, Loose Leaf and
Bulletin, Butterworths)

Case
study: The case that started it all

Haddon
had worked for Van den Bergh Foods for 15 years with a "blameless
record". He was to receive a good service award at a presentation ceremony
to take place between 5.15pm and 7.30pm.

On
the day in question Haddon was scheduled to work on the 2pm to 10pm shift. A
week before the presentation he spoke to his business centre manager about his
working arrangements for that day. He was told he would have to come back to
work after the ceremony because of short-staffing due to sickness.

Haddon
then spoke to the shift operations controller who told him it was not usual for
people to return to work after a presentation because alcohol was provided.
Haddon was employed as a technical operator. The shift operations controller
told him he should resolve the issue with the business centre manager, which he
did not do. The company had a draft policy which was due to be implemented from
the beginning of January 1998 which provided that "no alcohol will be
provided at functions where employees are returning to work".

On
his arrival at the function Haddon was offered alcohol. He subsequently decided
he would not return to work and was dismissed for disobedience. During the
disciplinary hearings he argued he had not taken the business centre manager’s
request that he return to duty after the ceremony seriously and that there were
two other people who had left their shift early without permission who had not
been dismissed.

The
tribunal noted there was only a short period of the shift left after the
ceremony was over and that Haddon’s absence made no difference to the operation
of the shift or the company’s production that night. It said most people would
consider his dismissal harsh in the extreme, but did however find the
employer’s procedure fair and accepted its argument in relation to allegations
of inconsistency.

In
its decision, the tribunal stated that while many people would find the
instruction to return to work unreasonable, "we are mindful that we must
not substitute our own views for the views of the respondent". It said the
case did Van den Bergh Foods no credit at all. However, it felt obliged to
conclude the dismissal was within the range of reasonable responses and
therefore fair. Haddon’s case was dismissed and he appealed to the EAT.

The
EAT ruled that just because it could not be said that no reasonable employer would
have dismissed in these circumstances, the dismissal was not automatically
fair.

The
test


The starting point should always be the words of the statute (section 98(4) of
the Employment Rights Act 1996).


In applying these the tribunal must consider the reasonableness of the
employer’s conduct, not simply whether they (the members of the employment
tribunal) consider the dismissal to be fair.


In judging the reasonableness of the employer’s conduct an employment tribunal
must not substitute its decision as to what was the right course for that of
the employer.


In many, though not all, cases there is a band of reasonable responses to the
employee’s conduct; one employer might reasonably choose one response among
these, another quite reasonably might choose another.


The function of the employment tribunal is to determine whether in the
particular circumstances the decision to dismiss falls within the band of
responses a reasonable employer might have adopted. If it does the dismissal is
fair; if not it is unfair.

Comments are closed.