Employment Law E-Bulletin

Cases: May 08

Stage Managed Dismissals

A recent decision of the Court of Appeal (CA) in the case of Dynamex Friction Limited v Amicus has shown that the fact that an employer may have organised or orchestrated a situation which results in an employee’s dismissal will not always be relevant when assessing whether that dismissal was unfair. 

Following a strike, 86 employees were dismissed.  An Employment Tribunal found that the dismissals were unfair and compensation was awarded to the employees which amounted to around £3,000,000.  The company in question was already facing financial problems and the owner of the business discussed the situation with his accountant.  The accountant was of the view that paying the compensation would send the business into insolvency. 

When the plant shut for 2 weeks in the summer, the owner of the company petitioned for an administration order which was granted.  The management of the business was therefore handed over to an administrator who immediately dismissed all the employees because there was not enough money in the business to continue to pay their wages.

A week after the employees had been dismissed, the business was sold to Dynamex Friction Limited which eventually ended up in the ownership of the same person who had owned and managed the original business which had unfairly dismissed the employees.  The employees argued that the business owner had orchestrated this situation to avoid paying them the £3,000,000 that they had been awarded in compensation.  This meant, in their view, that they had been dismissed for a reason connected to the transfer and that the dismissals were automatically unfair by virtue of the TUPE Regulations.  The original tribunal found that there had been no collusion between the administrator and the business owner and that the administrator had dismissed the employees solely because of the lack of funds in the business when he was appointed.  The decision was overturned by the Employment Appeals Tribunal (EAT) which felt that the aims and objectives of the original business owner should have been given more consideration.  However, the CA has now disagreed with this.

The CA has held that the main issue to be decided in cases like this is who was the person making the decision.  In this case the decision was made by the administrator acting alone.  There had been no evidence to suggest that the administrator had acted anything other than professionally at all times.  The finding that there had been no collusion between the business owner and the administrator meant, in the CA’s view, that the case by the employees must fail.  If the administrator acted alone when deciding to dismiss the employees then the business owner’s thoughts and aims in instigating the process were entirely irrelevant.  The CA emphasised that, had the business owner’s plans not succeeded, no suggestion of underhand tactics would have been made.  The fact that matters turned out in the business owner’s favour could not alter the fact that it was in fact the administrator who made the decision to dismiss based on the facts available to him when he was appointed.

The important principal of law which comes out of this decision is that when deciding whether an economic, technical or organisational reason exists so as to justify a dismissal which would otherwise be unfair pursuant to the operation of the TUPE Regulations, the person making the decision to dismiss is the critical individual.  The action or input of other individuals will only be taken into account as a secondary consideration.  If, in the mind of the deciding person, there is a genuine reason to dismiss, and the tribunal finds that the evidence supports the reason given, then the defence is likely to be upheld.

Dangers of Dismissing for taking a Second Job

The recent EAT case of Havering PCT v Ms Bidwell should be seen as a warning to all employers who are thinking of dismissing an employee who takes on a second job.

Ms Bidwell worked a 37 hour week as a nurse for Havering PCT.  To supplement her income, she also worked regular shifts at a private nursing home.  The terms of her contract with the PCT allowed her to work for other employers but required her to tell the PCT that she intended to do so.  The contract also specified that she could only take a second job if she was working to a level which would not put either herself or patients in danger.

The PCT then discovered that Ms Bidwell had been working particularly long hours for her second employer.  On three occasions she had even worked for 27 hours straight.  As soon as this was discovered, the PCT took action to discipline Ms Bidwell which ultimately resulted in her dismissal as the PCT decided that the hours she had worked were so excessive that she had put patients at risk.

When the case was heard by an Employment Tribunal, the Tribunal decided that dismissal was outside the range of reasonable responses.  Ms Bidwell had told her manager that she was working elsewhere, the PCT had not taken any steps to monitor the hours that its employees were working in second jobs and there was no clear guidance on what the PCT considered to be unacceptable levels of second working.  The PCT appealed as they felt that the harm which could have been done to patients had not been adequately taken into account.  Unfortunately, the EAT agreed with the Employment Tribunal saying that, even given the risk to patients, dismissal was too harsh a sanction in the circumstances.  The EAT felt that Ms Bidwell should have been given a final written warning particularly as this was a first offence.

The lessons to draw from this case are that dismissing for working in secondary employment is always difficult.  Even in situations where employees are working in safety-critical environments, employers will normally have to have given a warning and specifically asked the employee to stop before being entitled to dismiss.  Furthermore, if the job genuinely is safety-critical, employers will be expected to take measured steps to monitor regularly the hours that employees are working both within their main job and any secondary employment that the employee may have notified the employer of.

Intimidating Witnesses

The final two cases in this month’s bulletin concern instances of witness intimidation.  In the case of Force One Utilities v Hatfield, the claimant was threatened by a witness for the respondent in the car park after he failed to accept a settlement offer.  The witness made various comments threatening the claimant’s personal safety and then proceeded to block the car park exit so that the claimant could not leave.  The claimant complained to the Employment Tribunal who eventually decided to strike out the respondent’s case.  Thus, as a result of the behaviour of the witness, the respondent was not allowed to participate in the liability or remedies hearing. 

This decision has now been upheld by the EAT.  Although the EAT acknowledged that a strike out must be a proportionate response to the offending behaviour, given the finding of the Tribunal that the claimant’s evidence would be severely affected because of the significant amount of fear which he felt, then refusing to allow the respondent to participate any further was the only proportionate response as a fair trial was no longer possible.

In the case of Nicholls v Corin Tech Limited, Mr Nicholls was actually threatened after the proceedings had finished.  Mr Nicholls had brought proceedings against Corin Tech Ltd for disability discrimination.  After both parties finished giving their evidence, the owner of Corin Tech Limited was abusive to Mr Nicholls and threatened him with physical violence as the parties were leaving the Tribunal building. 

Mr Nicholls issued further proceedings claiming that these threats amounted to victimisation.  The case came before the EAT, which was asked to consider whether the immunity covering matters said in judicial proceedings meant that the comments made in the corridor after the proceedings had finished could not be challenged by Mr Nicholls in this way.  The EAT has rejected this argument. 

The EAT decided that the principle of judicial immunity is to encourage people to speak freely in court but is not intended to cover anything said outside of court.  The fact that the intimidation occurred by the lifts after the proceedings had finished meant that it could not realistically be said to form any part of the judicial process and, therefore, could not be protected by immunity. 

Both of these decisions show, in different ways, the consequences of letting what is said during proceedings affect you.  If witnesses react to comments it can severely affect that party’s chances of success and, as in the Nicholl’s case, can even give rise to other claims.  Whatever is said in Tribunal, these cases reinforce the message that witnesses need to “keep their cool”.

For further information contact Burnetts' employment law team on 01228 552222.

Back to Employment Law E-Bulletin May '08

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May '08