Unfair dismissal: When should a manager's unreasonable conduct be taken into account?

Author: Darren Newman

Consultant editor Darren Newman looks at recent unfair dismissal cases, including Royal Mail Group Ltd v Jhuti, which concern the knowledge of the decision-maker and asks when the unreasonable conduct of another manager should be taken into account in deciding whether or not the decision to dismiss is fair.

In employment law we are generally concerned with how an employer has behaved. Why did the employer dismiss that employee? Has the employer behaved reasonably? These questions assume that the employer is a real person with clearly identifiable aims and motives. In most cases, the reality is rather different. An employer's conduct is the sum of the individual actions of the managers acting on its behalf. When we ask why an employer has acted in a particular way, do we have to look inside the minds of all of those who have taken part in the process or do we look for a decision-maker to stand in the employer's place?

The cases so far have tended to look for a single decision-maker and ignore the motives of others who might have contributed to that decision. Orr v Milton Keynes Council [2011] IRLR 317 CA concerned the dismissal of an employee in circumstances where his line manager withheld information from the disciplinary investigation that could have cast a different light on the alleged misconduct. By a majority, the Court of Appeal held that the dismissal was fair based on what the individual manager making the decision to dismiss knew at the time of the dismissal. In CLFIS (UK) Ltd v Reynolds [2015] IRLR 562 CA the Court of Appeal found that an employer had not discriminated against a worker because the manager who took the decision to terminate her contract was acting in good faith. The fact that his decision was based on information given by managers who were influenced by the worker's age did not affect the reason for the termination of the contract.

The Supreme Court recently considered this issue in Royal Mail Group Ltd v Jhuti [2020] IRLR 129 SC. This case concerned a manager who dismissed the employee because she genuinely believed that the employee's performance was so poor that she should not be confirmed in her post at the end of her probation period. However, she reached that decision on the basis of misleading information given by another manager who was motivated by the fact that the employee had made a protected disclosure. The Supreme Court held that where a manager effectively secures the dismissal of an employee for a particular reason, but hides that behind an invented reason that is adopted by the decision-maker, the true reason for the dismissal is the hidden reason rather than the invented reason.

One of the disappointing things about the Jhuti decision is how very narrow its conclusions are. There are not many cases where a manager will have behaved in such a Machiavellian way as to secure the dismissal of an employee by tricking another manager into dismissing for an invented reason. Much more commonly, the potential unfairness to an employee will be the result of misjudgement rather than malice.

Take the recent Employment Appeal Tribunal (EAT) decision in Uddin v London Borough of Ealing [2020] IRLR 332 EAT. The employee was dismissed following allegations of sexual assault against a colleague. The alleged incident had taken place at a social event and everyone involved had been drinking heavily in a bar. The employee allegedly led his junior colleague to the disabled toilets where the assault took place. The employee had no clear recollection of what had happened and his alleged victim had pieced together an account based not only on her own memory but also on the accounts given by other employees who were with them at the time. A report was made to the police and an internal investigation led to a disciplinary hearing.

When the disciplinary hearing took place, the manager who had conducted the investigation (investigating officer) knew that the junior colleague had withdrawn her allegation to the police and had signed a statement to the effect that she did not have a clear recollection of the alleged assault. However, he did not share that knowledge with either the employee or the manager conducting the hearing. The employment tribunal found that the dismissal was fair. The tribunal stated that even if the investigating officer had disclosed what he had known, there were other grounds on which the employer could have reached the conclusion that the employee was guilty of gross misconduct. The EAT overturned this decision. It noted that the fact that a complaint had been made to the police was something that the employer considered relevant enough to include in the investigation report. Also, the manager conducting the disciplinary hearing had said in evidence that if she had been aware that the police complaint had been withdrawn, she would have wanted to know why. The EAT concluded that the investigating officer's failure to disclose the withdrawal of the police complaint was in itself sufficient to make the dismissal unfair. Whether that will lead to any meaningful award of compensation or that the employer will be able to argue that even if it had known of the withdrawal of the complaint, it would still have chosen to dismiss, remains to be seen.

For our purposes, the key point in Uddin is that the dismissal was held to be unfair although the manager who made the decision was acting fairly based on the information that she was given. This was not a case like Jhuti, where there was a concealed motive for the dismissal, but the EAT accepted that the conduct of the manager conducting the investigation should be taken as being part and parcel of the conduct of the employer. The crucial difference between Uddin and Orr is that the manager at fault in Uddin was the one who conducted the investigation, which is an integral part of the dismissal process. In both Orr and Jhuti it had been suggested that the knowledge of someone other than decision-maker might be relevant if that person was directly involved in the investigation. The EAT's decision in Uddin is the first formal application of that principle.

However, I think that the law should go further - at least in unfair dismissal cases where it is the overall reasonableness of the employer's actions that needs to be considered. Why should it matter whether or not the unreasonable conduct of a manager occurs within the confines of the investigation or disciplinary hearing? If the manager is senior enough to be acting on behalf of the employer, the reasonableness of that manager's actions should be taken into account in deciding whether or not the decision to dismiss is fair. While the Court of Appeal decision in Orr currently stands in the way of that approach, any employer that has to rely on that decision is going to be on the back foot. Arguing that the unreasonable conduct of your managers does not affect the fairness of a dismissal is not an attractive argument, even if it is legally sound.