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Employment Law - When Shippit sent Richard packing

Richard Gear had been employed by Shippit Ltd for over 30 years. Shippit transports goods across the UK and Richard was its operations manager with health and safety responsibility. For some time he had his concerns about the business and was worried about his own liability if things went wrong. He made his concerns known to the board of directors (of which he was also a director) but they took exception to his frank approach. Whilst the managing director was away on holiday, Richard clashed with a number of other managers who took the matter further by complaining to the MD on his return. The complaint was summarised that Richard’s managerial style was confrontational, although there was no real evidence of this. No records were taken and there was no investigation. Without warning, Richard was called into a meeting and asked to resign, but he refused prompting his employer to dismiss him on notice. He was put on garden leave and his employment was terminated at the end of his six month notice period. Unhappy with the decision, Richard brought a claim of unfair dismissal to the Employment Tribunal.

Q1. Was the decision to dismiss reasonable?There are five potentially fair reasons for dismissing an employee of which gross misconduct is one.  However, assuming that an employee has committed an act of gross misconduct, the Employment Tribunal must determine whether or not the employer acted reasonably or unreasonably in treating the reason for the dismissal (the misconduct) as a sufficient reason for dismissing the employee. In assessing whether or not dismissal is warranted, the employer must have an honest belief in the misconduct of the employee based upon an investigation which is reasonable in all the circumstances. Shippit had put up with Richard’s managerial style for some 30 years without complaint, but had taken the decision that it was time to part company with what it described as a troublesome employee. However, the decision to dismiss would only be fair if there were reasonable grounds to sustain the belief and there must also be as much investigation undertaken as possible. In this case, Shippit acted upon information received without seeking an explanation from Richard and getting to the bottom of why he was so concerned. In the absence of all the facts, it is difficult to see how Shippit could have entertained reasonable grounds to sustain the belief that Richard’s conduct was so bad as to justify his dismissal.

Q2. Had the company followed a fair procedure before dismissing?No. Richard had not been given any warning that he faced dismissal; there was no attempt to investigate what had happened; and Richard was given no chance to explain his point of view at a disciplinary hearing. He was simply asked to resign and when he refused he was dismissed. The ACAS Code of Conduct stresses the importance of having a known disciplinary procedure and it is clear from previously decided cases that a failure to adhere to a fair procedure will almost always lead to a finding of unfair dismissal. As we will see later, failure to follow the new statutory disciplinary procedures will mean that such dismissals in the future will be automatically unfair.

Q3. Did Richard succeed with his claim?Not unsurprisingly, yes. The tribunal concluded that Shippit only had some vague notion of misconduct and it was impossible to determine whether or not dismissal in these circumstances was within a range of reasonable responses. Of course, there may be occasions where an employee’s conduct is so severe and exceptional that it means that he is not entitled to a proper enquiry. However, such cases are extremely rare and employers should exercise caution and seek legal advice before dismissing in these circumstances.

Q4. Would Richard’s case have been stronger following the introduction of new statutory disciplinary procedures which came into force on October 1 of this year?What this case demonstrates is that, for a misconduct dismissal to be fair, there must be an honest belief in the misconduct of the employee. That belief can only be justified where the employer has carried out as much investigation into the matter as is reasonable in the circumstances and, even where the employee’s action amounts to gross misconduct, the employer still has to follow a correct procedure.In addition, since October of this year, employers must now follow a minimum three-step procedure when contemplating dismissal. Failure to do so will result in any subsequent dismissal being automatically unfair (and any compensation award being uplifted by up to 50%) whether or not there was a good reason to dismiss. In a nutshell an employer must first write to the employee setting out the allegations against him; secondly, there must be a hearing to discuss the allegations and the employer must inform the employee in writing about the decision offering a right of appeal; and thirdly if the employee wishes to appeal he/she must notify the employer and the employer must hold an appeal hearing and notify the employee of its decision. Whilst there are many technical rules dealing with how and when the procedure must be used, this is outside the scope of this article. Suffice it to say that had Richard been dismissed on or after October 1 2004 he would have succeeded without much effort on his part. The end result would have been the same but his compensation, which already ran into tens of thousands of pounds, would have been much greater.

Names in this article are fictitious. However, the facts and decisions are real.

For further enquiries telephone the IMI legal help-line on 0870 120 0009 and ask for John Holmes, Motor Industry Solicitor at Taylor & Emmet. You can also find additional help and support by visiting the Legal Link section of the IMI website or visit www.tayloremmet.co.uk/imi