Labour & European Law Review Weekly Issue 248 15 December 2011
If an employer gives one reason in a letter confirming dismissal, what happens if they give a different reason when submitting their defence to a Tribunal claim? The Employment Appeal Tribunal (EAT) said in Screene v Seatwave Ltd that the dismissal can be fair if the change in the reason is simply mislabelling.
The company, an events ticketing service, fell victim to a fraud in which it lost almost €1.7 million from its German bank account in June and July 2008. The fraudsters used unauthorised and false electronic bank transfer transactions to buy tickets online.
It was Mr Screene’s job, as the financial controller, to monitor the account but he did not detect or report the fraudulent transactions until August 2008. Following a disciplinary hearing on 2 September he was summarily dismissed on the ground of gross misconduct.
He brought a claim of unfair dismissal. The company said in the ET3 form (its defence) that Mr Screene was fairly dismissed on grounds of “capability”.
The Employment Tribunal held that although Mr Screene had been dismissed for reasons of both capability and conduct, the main reason was his conduct. Namely, his failure to adequately monitor the cash position on the company’s German bank account which meant the company was unaware of significant losses.
It found, as a matter of fact, that his failure to do so was the main reason that the losses mounted up and that he “had neglected one of the central parts of his job as Financial Controller”.
It found that the procedures that the employer had followed leading up to dismissal - although not perfect - were fair and that the decision to dismiss summarily for gross misconduct was a reasonable one.
On appeal, Mr Screene argued that as his former employer had pleaded capability on the ET3 form, the Tribunal should have dealt with it as a capability case, not misconduct. Had it done so, the procedural failings would have made dismissal for capability unfair.
But the EAT disagreed. Relying on the case of Hotson v Wisbech Conservative Club, it said that in circumstances where the employer changes the label placed upon the reason for the dismissal, the employee must be given the opportunity to address the circumstances arising from that change. Fairness means that the employee must not be prejudiced by the change.
In this case, the EAT was satisfied that there was no prejudice to Mr Screene. The decision to dismiss was grounded in the same set of facts and although there had been some “shifting of the label”, the employer made clear in the letter of dismissal the facts of his dismissal for misconduct. Mr Screene himself had also expressly acknowledged that he had been summarily dismissed by reason of gross misconduct in his Tribunal claim.
The EAT concluded that: “Put very simply, if the Claimant were asked by a man in the street what it was that he had done or failed to do, that was considered so serious by his employer as to justify immediate dismissal, he would have answered that his employer had relied on his failure, as the Financial Controller, to monitor a bank account, and spot fraudulent activity that had remained undetected for months, and caused very significant loss. To our mind, that would aptly be described by the ordinary, reasonable man in the street, as a dismissal for misconduct”.
In this case Mr Screene was aware of the facts and reason for his dismissal and these were fully aired in the Tribunal. However, it will not always be the case that a change in the reason simply amounts to a change in the label. In Hoston the EAT held that dismissal for dishonesty instead of inefficiency gave rise to a different set of facts which the employee had not been given the opportunity to consider and so found her dismissal was unfair.