Ignorance is bliss
Labour & European Law Review Weekly Issue 339 02 October 2013
When assessing whether a dismissal is fair or not, tribunals have to take a number of factors into account. In Docherty and anor v SW Global Resourcing Ltd, the Court of Session held that this may include looking at whether an employer’s ignorance of the law was excusable and if so, whether it was decisive or was outweighed by other factors.
Thompsons was instructed by the two claimants to act on their behalf.
Mr Doherty and Mr Jones had worked for Global Resourcing since 1997. In July 2010, as a result of a serious downturn in business, the company gave the men 12 weeks’ notice that it intended to rescind their terms and conditions of employment.
This included abolishing their guaranteed minimum weekly salary and only being given work when they were needed. If they were not given any for two months, they would be dismissed.
The company consulted on the removal of the guaranteed payment, but as it had not realised that loss of the payment would change the men’s status from employee to worker, it had not consulted on that question.
The two men claimed unfair constructive dismissal.
Decisions of lower courts
The tribunal found in their favour holding that, although the company had a sound business reason for removing the guaranteed payment, the same could not be said of the change to the men’s employment status, not least because it was unintended. The dismissals could not therefore be for “some other substantial reason” under section 98(1)(b) of the Employment Rights Act 1996.
Even if it were wrong about that, the tribunal said that the decision to dismiss fell outside the range of reasonable responses which a reasonable employer might adopt; and that no other reasonable employer would have dismissed the men for refusing to agree to such a significant variation of their contracts.
The EAT overturned that decision, holding that the company did have good business reasons for its decision and had not realised that it would result in a change in the men’s employment status. They had therefore been dismissed for “some other substantial reason”.
Decision of Court of Session
The Court of Session (the Scottish equivalent of the Court of Appeal) said that the men’s appeal turned on the question of “fairness”.
The Court criticised the tribunal for failing to consider whether the company should have taken professional advice or whether its ignorance of the law was excusable. If the latter, the tribunal should have considered whether that was decisive or was outweighed by other factors. Or, given the radical nature of the changes, whether the company had been put “on notice” that they might be problematic in terms of the law.
Equally, however, it criticised the EAT, holding that it was wrong in the way that it had assessed the tribunal’s reasoning. It had placed too much emphasis on the fact that the company did not have the benefit of legal advice and did not consider “the destructive effect” that the change had on the men’s statutory rights.
It therefore allowed the appeal and remitted the case to the tribunal to decide whether the dismissals were fair.