Greetings and welcome back to your weekly case law update. Last week’s newsletter had features on; restrictive covenants, warm weather working and the gig economy. This week we will be looking at unfair dismissal for conduct related issues.
Section 98 of the Employment Rights Act 1996 states that for a dismissal to be fair, the reason for dismissal must be the principle reason for dismissal. That reason must be either; capability, conduct, redundancy or some other substantial reason. Section 98 also states that the fairness of a dismissal will depend on whether the employer acted reasonably in the circumstances – including the size and resources of the employer – and the merits of each case.
Today’s question is:
Does an employee have to be culpable for their conduct for a dismissal to be fair?
Mr Ktorza, the Claimant, was an executive director for JP Morgan, the Respondent, in their foreign exchange department. The Claimant earned a six-figure salary that had the potential to rise to seven-figures once bonuses were added on.
The Claimant had been subjected to two final written warnings during the course of his employment, the second of which was still active on his record at the time of dismissal. For a while the Respondent had adopted a culture of short filling client orders – not completing them in full. However, this practise was discouraged following a training seminar. The Respondent allegedly warned the Claimant and other employees not to short fill client orders, though, the document that stated this was not shown to the Claimant during the training.
The Claimant was then involved in an order for €10million but the Claimant short filled it for €5million. This was the first instance of short filling since the training and a disagreement occurred between the Claimant and one of his colleagues. The Claimant was suspended and ultimately dismissed, although the Claimant maintained he was unaware of the instruction not to short fill orders.
He initiated ET proceedings and the ET held the Claimant was unfairly dismissed. It found that for a conduct dismissal to be fair, the employee must be culpable for the conduct – i.e. aware, negligent or reckless to the outcome of the conduct. If the change of short filling policy was to be unambiguous then the Claimant should have been unambiguously told this.
The Respondent appealed and the EAT allowed the appeal. It held that culpability is not a requirement for conduct dismissals. For a conduct dismissal to be fair it merely needs to be a reasonable response based on the circumstances of the employer and the merits of the case.
The takeaway point:
No, an employee does not need to be culpable for their conduct to make a dismissal fair. Conduct can be intentional, reckless, negligent, unconscious and accidental. Any of these mental states can result in a fair dismissal if the circumstances of the employer and facts of the case suggest dismissal was in the range of reasonable responses.