A recent employment law ruling that it was fair to dismiss an employee partly on the basis of an expired warning for misconduct seems to contradict decisions in previous cases. Huw Cooke looks at some of the key issues surrounding expired warnings.
In 1935, the Copenhagen theory of quantum physics stated that a particle existed in all states at once until its actual state was observed. The Schrödinger’s cat mind experiment, in which a (fictional) cat is placed in a box with deadly radioactive material, sought to expose the flaw in this theory. The cat had to be dead – it could not be alive and dead until the point that the box was opened.
And yet, under current employment law (admittedly not as earth-shattering as quantum physics), an expired warning is not always expired. This, surely, is an oxymoron – once a warning has expired, it no longer exists, right? No, not necessarily. While most disciplinary procedures will limit the life of a warning, to the consternation of many employees, there are a number of instances where employment tribunals have sought to resurrect them.
Most disciplinary procedures will provide for an employer to give verbal, written and final written warnings, which will have a defined lifespan. Typically, this will be six months for a verbal warning and 12 months for a written warning. Employees will understandably expect warnings to expire after those prescribed periods of time.
More on warnings and discipline
Indeed this approach is approved by the “Acas code practice on disciplinary and grievance procedures”, which states that an “employee should be told how long the warning will remain current”. In addition, the guidance, which accompanies the code, provides that “employees should be given a written warning setting out the nature of the misconduct and the change in behaviour required” and that “a record of the warning should be kept, but it should be disregarded for disciplinary purposes after a specified period (eg six months)”. Acas is clear on the point – a warning has to have a defined life. The code also gives teeth to this position. Employment tribunals have to take the code into account (eg when considering whether an employee has been unfairly dismissed) and any failure to follow the code can result in an uplift of up to 25% of compensation.
So how do the courts approach the issue of dismissals where employers have relied on expired warnings?
Case law and expired warnings for misconduct
In Diosynth Ltd v Thomson (2006) , the Court took the approach which most would expect. Mr Thomson was an operator at Diosynth chemical processing plant. He was disciplined for failing to carry out a safety process that resulted in a chemical leakage and received a final written warning, which was to remain on his record for 12 months. Four months after that warning had expired, an explosion at the factory led to a fatal accident, and Mr Thomson and a number of other operators were subject to disciplinary action for failing to carry out the same safety process.
The other operators were not dismissed, but taking into account Mr Thomson’s expired warning, the company dismissed him.
The Scottish Court of Session decided that Mr Thomson had been unfairly dismissed and laid down a clear principle that an employer would be acting unreasonably if it took into account an expired written warning when deciding a subsequent disciplinary outcome. In other words, employers should not rely on an expired warning.
This supported the view that, once a warning has expired, it has, well, expired.
Two years later, the Court of Appeal looked at the issue. In Airbus UK Ltd v Webb (2008), Mr Webb was summarily dismissed for gross misconduct but, on appeal, a final written warning was imposed. This warning expired at the end of August 2005.
Some three weeks later, Mr Webb was found, with four colleagues, watching television when he should have been working. Airbus concluded that all five individuals were guilty of gross misconduct, but taking into account his expired warning, only Mr Webb was summarily dismissed. The other four were given final written warnings.
The Court held that Mr Webb had been dismissed for gross misconduct (watching the television instead of working) and that the expired final warning was not the principal reason for Mr Webb’s dismissal.
The Court went on to conclude that the expired warning was a factor which could be taken into account when considering the sanction imposed on an employee, and it was fair to rely on the expired warning as a reason for not reducing the sanction to a final written warning for Mr Webb (as it had done for his colleagues with clean disciplinary records).
Does the Stratford v Autotrail VR Limited decision change the law?
Perhaps unsurprisingly, not least because of the clarity of the Acas code, the issue of using expired warnings stayed away from the courts for a number of years. However, last year’s case of Stratford v Autotrail VR Ltd (2016), has turned the spotlight back on Mr Stratford started work in November 2001. Throughout his employment, he had a poor disciplinary record – a fact which came back to haunt him.
Mr Stratford was seen at work with his mobile phone in his hand, an action strictly prohibited by the employee handbook, and he was dismissed. The dismissing manager concluded that Mr Stratford was not guilty of gross misconduct and issued him with a written warning for the offence.
However, he went on to consider Mr Stratford’s full disciplinary record and noted that “this is the 18th time we have had to discuss your actions, for different reasons, on a formal basis”. Autotrail concluded that Mr Stratford had been given every chance to improve and did not believe that he was capable of change. They decided that “enough was enough” and, as a result, the decision was made to terminate his employment with notice.
Although the employer had relied on expired warnings to justify the dismissal, the Employment Appeal Tribunal (EAT) nonetheless concluded that the dismissal was fair. So, how did the EAT justify this view?
The EAT noted that a key proposition of law established in the Airbus case was that s.98 of the Employment Rights Act 1996 allows a tribunal to find that a dismissal for conduct could be fair even where an expired warning had been relied on. Its reasoning was that s.98(4) requires the tribunal to look at all relevant circumstances in deciding whether the employer acted reasonably in dismissing the employee. The EAT concluded that expired warnings were objective factors to be considered as part of the general question of what was reasonable.
To what extent can an employer rely on an expired warning?
While the Stratford case may be specific on its facts (in particular Mr Stratford’s long and notorious disciplinary record), the EAT has given employers who rely on expired warnings the possibility of using s.98(4) of ERA to trump the Dionsynth principle in the right circumstances.
An employer can take an expired warning into account when deciding on the sanction for a dismissable offence in appropriate circumstances.
An employer should not rely on an expired warning to dismiss an employee for an offence, which would not otherwise justify dismissal.
In exceptional circumstances, a dismissal which takes into account expired warnings may be fair under s.98(4) of Employment Rights Act, although the Stratford case was extreme on its facts and s.98(4) may have been flexed to its widest remit. We may see this narrowed in future cases.
While the cases above all dealt with dismissal for misconduct, there seems to be no reason why these principles should not apply equally to employees who have expired warnings for poor performance.
This may be helpful to address the all-too-common scenario of the employee with a history of doing just enough for a performance improvement warning to expire before letting their performance drop.
What else can employers do?
As well as understanding the law around expired warnings, employers can take other steps which may help them make use of expired warnings.
Disciplinary procedures: reserve the right to impose longer periods than the standard 6/12 months in specified circumstances (eg misconduct verging on gross misconduct, where there has been a history of warnings, where there are health and safety implications etc).
Warnings: ensure that any warnings clearly state how long they will be live for, how long they will be retained for, and how an expired warning may be relied on.
HR support: ensure that your HR team is aware of the law around expired warnings so they can support managers appropriately.
Data protection: don’t forget, in its “Employment practices code”, the Information Commissioner recommends that employers have clear procedures on how expired warnings are handled and how long they are retained by the business (usually this will be for the whole employment). Clarity on this issue will become even more important when the widened data protection regime under the General Data Protection Regulation comes into effect in May 2018 because employers can face multi-million pound fines for non-compliance with the Regulation.