Labour & European Law Review Weekly Issue 479 20 July 2016
After identifying the reason for dismissal, tribunals have to consider whether the procedure the employer followed was fair. In Express Medicals Ltd v O’Donnell, the Employment Appeal Tribunal (EAT) held that tribunals cannot decide that a dismissal was procedurally unfair without specifying what procedure the employer should have followed.
Mr O’Donnell and the “controlling mind” of Express Medicals, Dr Hegarty, had been friends and colleagues for many years. They were sole directors of the company, which they had founded together. Mr O’Donnell had a one-third shareholding while Dr Hegarty held the rest of the shares.
However, in July 2014 they had an argument in which Mr O’Donnell swore at his colleague; while Dr Hegarty told him he was a bully and should resign. Mr O’Donnell agreed to leave, but only if he received some salary. Over the next six weeks, they discussed by e-mail the terms on which he might leave. However, on 5 September 2014, Mr O’Donnell was dismissed following an e-mail sent by the company’s solicitor.
He claimed unfair dismissal on the basis that the company had failed to follow a fair procedure.
Although the tribunal judge agreed that “no particular procedure” had been followed, equally he said it was not clear what procedure the company should have adopted in the circumstances, nor what it might have achieved.
However, he held that the dismissal was unfair for some other substantial reason (SOSR), namely the breakdown in trust and confidence between the parties, because of a lack of procedure. He also declined to make a Polkey reduction which is when tribunals can reduce a claimant’s award of compensation if it thinks the person would still have been dismissed even if the employer had followed a fair procedure.
The company appealed on the basis firstly that it was perverse for the judge to hold that the dismissal was unfair for SOSR; and secondly that there was nothing to suggest that a procedure could have achieved anything. It also appealed against the tribunal’s refusal to make a Polkey reduction.
The EAT upheld the appeal on the basis that the judge failed to specify what procedure the employer should have followed. As he did not do so, his reasoning was “inadequate to support the conclusion” that the dismissal was unfair.
In addition, given that the judge had found that the parties were in the course of negotiating terms on which to part when Mr O’Donnell was dismissed, and that the relationship had come close to if not crossed the point at which trust and confidence could be salvaged, it was perverse to hold there was insufficient evidence on which to assess whether the employment would continue.
Likewise, with regard to the Polkey deduction, it was difficult to assess the chances of whether Mr O’Donnell would have been dismissed following a fair procedure without knowing what that procedure should have been.
This case makes it clear that, when a dismissal is unfair because of the absence of any procedure, a tribunal must address the issue of what the procedure should have been. A finding on procedure could then provide evidence from which a tribunal can assess a Polkey reduction, based on the chance that the employment would not continue.