When considering claims for wrongful dismissal, tribunals have to identify the terms of the contract that have allegedly been breached by one of the parties. In St Mungo’s Community Housing Association v Finnerty, the Employment Appeal Tribunal (EAT) held that if a tribunal concludes that there has been a breach of the implied term of trust and confidence, it cannot also hold that there has not been a fundamental breach.
Mr Finnerty was a housing manager for St Mungo’s, a charity which works with homeless people. On 2 August 2018, he visited one of the organisation’s housing projects where he was confronted by a resident who was being evicted for threatening to use a knife on a contractor.
The resident verbally attacked Mr Finnerty who feared for his own safety. For reasons that were not entirely clear from the CCTV footage, he ran at the resident and pushed him over and out the door. The resident then attacked Mr Finnerty with two knives. In the incident report for his employer, Mr Finnerty failed to admit that he had punched the resident during the fracas, although he referred to it in his statement to the police.
Mr Finnerty was then dismissed without notice for initiating an attack on a resident and for not owning up to the fact on the incident report to his employer. He lodged tribunal claims for wrongful dismissal (the failure to pay him notice pay) and unfair dismissal.
With regard to the unfair dismissal claim, the tribunal found that St Mungo’s had passed the first two limbs of the misconduct test set down in the case of British Home Stores v Burchell. That is, that they reasonably believed that Mr Finnerty was guilty of misconduct and had reasonable grounds on which to base that belief.
However, it did not pass the third limb in terms of conducting a reasonable investigation. In particular, the tribunal found that St Mungo’s should have made more effort to contact a witness and should have taken into account the very significant threats to Mr Finnerty from the resident. With regard to his failure to give a complete record of the incident to his employer, the tribunal held that although this was “not ideal”, it was understandable.
It, therefore, concluded that the decision to dismiss him was unfair as it was not within the band of reasonable responses open to an employer. It also constituted wrongful dismissal because, although Mr Finnerty was in breach of contract, he was not in fundamental breach.
St Mungo’s appealed, arguing (among other things) that the tribunal had misapplied Burchell, by failing to ask whether the beliefs held by the organisation were reasonable and had also substituted its own view as to the fairness of dismissal as a sanction. Nor was it legally open to the tribunal to find that Mr Finnerty was in breach of contract with regard to the implied duty of trust and confidence, but not sufficient to allow St Mungo’s to dismiss him without notice.
Allowing the appeal, the EAT held that in judging the fairness of the dismissal, the focus of the tribunal judge should have been on the evidence that the managers had before them and the decisions they came to on that basis. Instead, he had failed to distinguish between his own evaluation of the evidence and theirs, leading him to substitute his view for that of the employer.
With regard to the claim for wrongful dismissal, the EAT agreed with St Mungo’s that tribunals cannot legally come to the conclusion that a breach of the implied term of trust and confidence is not a fundamental breach. If the tribunal had some other contractual term in mind, it was not clear what it was, rendering the decision legally unsafe.