Misconduct dismissals: Could the long-established approach to fairness be open to question?

Author: Darren Newman

Darren Newman

Consultant editor Darren Newman considers a recent case in which the Supreme Court judges seemed to cast doubt on the long-established approach to misconduct dismissals set out in Burchell.

Lady Hale, the President of the Supreme Court, caused a bit of a stir recently when she appeared to suggest that one of the longest established precedents in employment law might be wrong. The case of British Home Stores Ltd v Burchell [1978] IRLR 379 EAT is relied on day after day in employment tribunals dealing with misconduct unfair dismissal cases. It sets out a three-pronged test for the fairness of dismissals based on misconduct, requiring the employer to have an honest belief in the guilt of the employee, for that belief to be based on reasonable grounds, and for the employer to have carried out a reasonable investigation. The test is absolutely central to how we approach cases of dismissal for misconduct, so the thought that it might be open to question is startling.

The point arose in the Supreme Court case of Reilly v Sandwell Metropolitan Borough Council [2018] IRLR 558 SC. That case concerned a head teacher who was dismissed for failing to disclose to her governing body that someone with whom she had a close friendship had been convicted of downloading indecent images of children. The employment tribunal, Employment Appeal Tribunal (EAT) and Court of Appeal had all agreed that the head teacher should have disclosed the conviction and that it was reasonable for the employer to dismiss her for not doing so (although the dismissal was actually held to be unfair for technical procedural reasons). The Supreme Court agreed, finding that the contract expressly required the head teacher to assist the governing body in fulfilling its functions and that her failure to disclose the conviction was a breach of this obligation.

There is no great legal principle here and watching the case being presented it struck me that Lady Hale in particular was frustrated at the limited nature of the argument being put to the Court. One issue that was hovering over the case was whether or not a fair conduct dismissal had to involve a breach of contract on the part of the employee. In other words, if the head teacher was under no contractual obligation to disclose her friend's conviction, could the employer have fairly dismissed her for misconduct?

As it happened, the Supreme Court did not decide the issue because it concluded that the head teacher did have a contractual duty to disclose. For what it is worth I think this is in any event a rather sterile argument. If an employer is acting reasonably in dismissing an employee for their conduct, then I cannot see how that conduct can be anything other than a breach of at least an implied term of the contract. The two issues cannot really be separated. But it seems to be in this context - of distinguishing the reason for dismissal from its reasonableness - that the Court has found itself musing on the effect of Burchell. Giving the leading judgment, Lord Wilson said that the three-pronged test set out in Burchell did not fit well with the general reasonableness test, but was in fact aimed at the initial enquiry in an unfair dismissal case into whether or not there was a fair reason for the dismissal - a view with which Lady Hale agreed.

The significance of the point is that, if Burchell is about establishing the reason for dismissal only, that could leave the tribunal to take its own view of whether or not it was fair to dismiss the employee for the alleged misconduct. This has been suggested before - namely in the EAT decision in Midland Bank plc v Madden [2000] IRLR 288 EAT, which was overturned by the Court of Appeal (Post Office v Foley; HSBC Bank plc (formerly Midland Bank plc) v Madden [2000] IRLR 827 CA). In that case the Court of Appeal reasserted that the Burchell test is a test of reasonableness as well as a test of what the reason for dismissal was. The Court of Appeal also confirmed that the range of reasonable responses test - under which the tribunal should not substitute its own view of reasonableness for that of a reasonable employer - still applied to unfair dismissal cases.

I think that both Lord Wilson and Lady Hale are wrong about Burchell. In my view, the case clearly concerns both the reason for the dismissal (the employer's honest belief) and the reasonableness of it (the reasonable grounds for the belief following a reasonable investigation). It was certainly accepted as such as far back as 1980 when it was first approved by the Court of Appeal in W Weddel & Co Ltd v Tepper [1980] IRLR 96 CA.

However, reading between the lines, I think it is really the range of reasonable responses test that the Supreme Court had in its sights rather than the decision in Burchell per se. Lady Hale in particular quoted Lord Justice Sedley's dissenting judgment in Orr v Milton Keynes Council [2011] IRLR 317 CA. In that case he expressed the view that Burchell had limited the extent to which a tribunal could interfere with the conclusions of the employer, but acknowledged that he was bound by the Court of Appeal's decision in Post Office v Foley.

My own view is that the Burchell test is perfectly sound, provided one bears in mind that it is not, in itself, sufficient to judge the fairness of the dismissal. There must be an honest belief, based on reasonable grounds, following a reasonable investigation, but the tribunal must also be satisfied that the decision to dismiss is fair. Currently, that is determined by deciding whether or not the decision falls within the range of reasonable responses open to the employer. In effect, this can limit the tribunal's enquiry to whether or not the dismissal is in accordance with the employer's own policies and procedures. If it really is the range of reasonable responses test that the Supreme Court was questioning, that is potentially very significant.

Lady Hale stressed that she had reached no view on this as the point had not been argued, but her comments do at least suggest that the Supreme Court is open to considering a rather more robust assessment of what is reasonable, based on the tribunal's own judgment and expertise. That would be a major shift in approach and anyone seeking to argue for it has a long and winding road ahead. Employment tribunals, the EAT and the Court of Appeal must all apply the law as it currently stands. However, if someone does have the staying power to argue a case all the way up to the Supreme Court, we may see a significant change to the law of unfair dismissal.