Dismissal close to two-year anniversary was unfair



What happened?  

An ET found that a small recruitment agency employing three office staff, unfairly summarily dismissed its recruitment manager, Ms Wileman. The two directors of the business decided to dismiss Wileman because, although they found her to be very competent and a positive contributor to the business, regrettably she had an offensive demeanour. This often resulted in frequent clashes between her and Mr Weaver (one of the director’s) where she would raise her voice and use unprofessional language to vocalise her point of view.

In August 2016, a heated conversation took place between Wileman and Weaver, during which Wileman stated that she would look for another job. She did not put this in writing and continued to work for a further four weeks. During this period, her co-worker and friend Mrs Thomas had a personal discussion with her advising that she intended to resign from the business. Wileman in her capacity as manager did not forewarn the directors of this.

When the directors discovered Wileman was aware Thomas was leaving but did not warn them, this revelation triggered the decision to dismiss Wileman on the grounds of gross misconduct. However, in execution of that decision, no investigation or disciplinary hearing took place. Weaver simply telephoned Wileman and advised her she was summarily dismissed (without notice), her effective date of termination being 20 September 2016.

On the date of her dismissal Wileman had less than 2 years’ service, she was just 2 days short of the qualifying length of service required to raise grounds for unfair dismissal.  Despite this, Wileman sought redress before an Employment Tribunal (ET) on the grounds of unfair dismissal.

What did the ET say?

The employer’s first line of defence to the complaint of unfair dismissal was Wileman had insufficient service to pursue this type of claim. Wileman on the other hand argued that she was entitled to receive a statutory minimum notice and if provided, the resultant consequence would be to extend her effective date of termination (EDT) to a later date, giving her the qualifying service to pursue grounds of unfair dismissal.

ET held that Wileman had a statutory right to one week’s notice and this would result in a later date (i.e. 27 September 2016), being determined as the EDT. This in turn would mean that Wileman would then have 2 years and 5 days' continuous service and therefore be entitled to bring a claim of unfair dismissal.

 The ET went on to find that the dismissal was substantively unfair, as there was no regard to the ACAS Code of Practice or any procedure. On this basis, it held that compensation awarded to Wileman, would be uplifted by 25%. However, the ET declined to apply any deduction to the compensation, as deductions were necessary only where a dismissal was procedurally unfair and not where a dismissal was substantively unfair. The employer appealed both findings made by the ET to the Employment Appeal Tribunal (EAT).

What key issues did the EAT consider?

(i) Whether an employee who is summarily dismissed, (without notice) can claim that their notice period should be extended by the statutory minimum notice entitlement; and

(ii) Whether it was correct for an Employment Tribunal (ET) to find that where a dismissal is substantively unfair, it was under no requirement to make a percentage reduction to the compensatory award. 

What did the EAT say?

At EAT the employer successfully appealed each ground of appeal. However, the EAT still found it necessary to remit the case back to the ET.

Why did the EAT send the case back to the ET?

  • The ET did not establish from the facts that Wileman’s conduct justified a summary dismissal.
  • The ET had wrongly limited its approach to the question of whether there should be a reduction in compensation.
  • The ET wrongly suggested a distinction should be made between procedurally or substantially unfair dismissals. The reduction in compensation principle (known as Polkey) applies to both types of dismissals.

Important takeaway points

  • Take extra care when dismissing employees who are close to their two-year employment anniversary.
  • If summary dismissal is an unavoidable outcome, consider seeking legal advice about the potential risks.