Midland Bank Plc v Madden EAT
7th March 2000 (unreported)
Rumours of the death of the band of reasonable responses test turn out to have been exaggerated. In the case of Midland Bank v Madden, the EAT had to consider the fairness of a misconduct dismissal, as they had done in Haddon v Van den Bergh Foods Ltd (LELR 41, December 1999).
Mr. Madden was dismissed when the bank concluded after an investigation that he was involved in the theft of three debit cards even though he was a long standing employee in a senior position with an unblemished record. The employment tribunal reached the conclusion that the employers had not carried out a proper investigation and therefore could not reasonably believe that he was involved in the theft.
In upholding the employment tribunal's conclusion that the dismissal was unfair because an insufficient investigation was carried out, the EAT have helpfully restated the principles of unfair dismissal and reviewed some of the key previous cases.
Under the two stage process in unfair dismissal, the employer must show the reason for dismissal. The BHS Stores v Burchell [1980] ICR303 case sets out what that means in a misconduct case. Was there a genuine belief, based on reasonable grounds after a reasonable investigation, of the guilt of the employee of the misconduct at the time?
The Burchell test is an objective test about the "reason" for dismissal not the reasonableness of the dismissal and the burden of proof is on the employer. The Employment Tribunal is free to substitute it's view for that of the employers when concluding whether or not the employers have satisfied the Burchell test, but if the reason survives the Burchell test, they cannot.
If the employer shows the reason for dismissal is misconduct (or one of the other five potentially fair reasons), then a tribunal must consider the fairness of the dismissal which has been the response by the employer to the reason they have shown. This is where the test comes in - did the employer's response of dismissing the employee come within the band of reasonable responses which a reasonable employer might have adopted? As the "band of reasonable responses" test had been specifically approved by the Court of Appeal it could not be challenged by the EAT as Haddon had sought to do.
But how wide is the band and what does it actually mean?
In answer to this question, the EAT have provided very helpful guidance which narrows the scope of the test and goes back to the statutory wording. It does not amount to a perversity test. The issue is not whether the decision to dismiss was so unreasonable as to be perverse, but something less: had the employer acted unreasonably in treating the shown reason as a sufficient reason to dismiss. The band of reasonable responses test will not always be determinative when considered with the broad approach in the wording of section 98 of the Employment Rights Act 1996. The employment tribunal can substitute it's own view as to the reasonableness of the dismissal as Haddon had stated.
Haddon remains, in many parts, a good reliable decision which, far from being overruled by this case, is actually helpfully supplemented by this decision. In future, Haddon and Madden will be the dynamic duo when considering misconduct dismissal cases.