When deciding whether a dismissal is fair or unfair, tribunals have to consider whether the employer had acted reasonably in all the circumstances. In Sunshine Hotel Ltd t/a Palm Court Hotel v Goddard, the Employment Appeal Tribunal (EAT) held that a separate investigatory hearing and disciplinary hearing is not required in every case by right”.

Basic facts

An allegation was made against Mr Goddard that he had breached company rules by sleeping on duty. After he was suspended, his employer carried out an investigation which amounted to little more than sitting down to view some CCTV footage.

Mr Goddard then received a letter inviting him to an investigation meeting. In it, he was warned that, if the allegation was proven, he would have to attend a disciplinary hearing. In the event, no investigation meeting took place as the first meeting became the disciplinary hearing at which he was dismissed.

Mr Goddard brought claims of wrongful and unfair dismissal.

Relevant law 

Under section 98(4) of the Employment Rights Act 1996, the question of whether a dismissal is fair or unfair:

a) depends on whether in the circumstances “the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee”; and

b) shall be determined in accordance with equity and the substantial merits of the case.

Tribunal decision 

Following the three-stage test set out in British Home Stores v Burchell, the tribunal said that it had to decide whether the company genuinely believed that Mr Goddard was guilty of misconduct; that this belief was based on reasonable grounds; and that it followed a proper investigation. In other words, it had to decide whether the employer had carried out "as much investigation into the matter as was reasonable in all the circumstances of the case.”

The tribunal held that the dismissal was unfair for two main reasons. Firstly, there was no investigation, simply two people viewed CCTV footage in the absence of Mr Goddard. Secondly, there was no investigation hearing giving him the chance to put his side of the story and to understand the case he was going to face prior to a disciplinary hearing. That, said the tribunal, was “a basic employment right” which “did not happen here.”

The company appealed on the basis that there does not have to be an investigation hearing in every case that is distinct from a disciplinary hearing.

EAT decision

The EAT agreed that a separate investigatory hearing and disciplinary hearing is not required in every case “by right.” Instead, section 98(4) states that whether a dismissal is unfair depends on whether the employer “acted reasonably” in the circumstances.

However, it then went on to hold that the employment judge in this case had applied the correct test from British Home Stores, allowing it to conclude that the investigation had fallen short of that test, so as to make the dismissal unfair.

Firstly, Mr Goddard had been led to believe that the meeting was only an investigation hearing and not a disciplinary meeting. Secondly, he would, at least to some extent, have been taken by surprise to discover that the final decision was going to be made at the end of that meeting. Thirdly, he had not been given an opportunity to know the case in advance of the hearing so as to be able to prepare for it.

Overall, the tribunal had identified the correct questions, carefully examined the evidence, weighed it fairly (making findings both favourable and unfavourable to each of the parties), made an assessment as to whether things had proceeded as they should have done, made a decision which was reasonable and which did not disclose any error of law.