It’s BOGOF time. This week we are covering two cases that answer two different questions:
Question One: Can an employer rely on facts found after dismissal to defend a wrongful dismissal claim?
Question Two: Does an employer have to comply with an Employment Tribunal Order for re-instatement or re-engagement?
In Wells and another v Cathay Investments 2 Limited two executives were sacked for gross misconduct during their notice period.
A summary dismissal meant they both missed out on the disposal value of some shares under a share purchase agreement. That loss amounted to over £1 million.
They claimed breach of the share purchase agreement as well as wrongful dismissal in the High Court. Wrongful dismissal was limited to the value of the balance of the notice period as well as the value of the share realisation in that period – so high stakes litigation.
The employer defeated the claim by wielding that trusty old sword, Boston Deep Sea Fishing v Ansell.
By old, I mean ancient. The case dates back to 1888!
The key principle in Boston is that an employer can rely on gross misconduct found after summary dismissal to justify summary dismissal.
That position in contract law can be contrasted with unfair dismissal, a statutory claim, where an employer can only rely on facts known at dismissal to establish a fair dismissal. Facts found after dismissal in unfair dismissal cases may impact the level of award but won’t impact liability.
In the Cathay Investments case the facts found after summary dismissal was the classic breach of Confidential Information via email. Why do employees still do this? Have they forgotten, if they ever knew, that email leaves an indelible digital footprint?
One of the executives had been emailing his father, a former executive in the business, confidential information relating to financial matters.
The employer found this out after dismissal in time honoured fashion by examining the Executive’s email account traffic.
In McKenzie v The Chancellor of Cambridge University, McKenzie brought a claim for unfair dismissal after being dismissed by the faculty of law.
The University faculty having some knowledge of the law quickly saw the writing on the wall and conceded unfair dismissal.
The Employment Tribunal ordered McKenzie to be re-engaged. The University refused to comply with the order. In our experience when academics fall out, they really fall out.
McKenzie then sought a judicial review that the University’s refusal was unlawful and that the order must be obeyed in the Administrative Court. A university as a public body can be judicially reviewed as can any body exercising public duties.
The Court of Appeal subsequently held that an order for re-engagement or indeed re-instatement is not an order, unlike Rumpole’s wife, that must be obeyed.
An order for re-instatement or re-engagement is governed by the Employment Rights Act 1996. The statutory provisions provide for an additional award of between 26 weeks and 52 weeks pay in the event of an order of re-instatement or re-engagement not being complied with by an employer, depending on the circumstances of non-compliance.
So to answer this week’s questions:
- Yes, facts that are found after summary dismissal can make a wrongful dismissal rightful. Think of those deep sea fishermen.
- No, an employer does not have to obey an ET order for re-instatement or re-engagement. An employer can take the financial pain of non-compliance rather than the actual pain of taking back on an employee they don’t wish to have back.