Does a Fair Dismissal Require The Right of Appeal?

The right of appeal during the dismissal process is one that is widely acknowledged; in fact, ACAS, in its Code of Practice on Disciplinary and Grievance Procedures, says that:

“where an employee feels that disciplinary action taken against them is wrong or unjust, they should appeal against the decision. Appeals should be heard without unreasonable delay and ideally at an agreed time and place. Employees should let employers know the grounds for their appeal in writing.”

Therefore, if this is the case, would the converse be true? Would the lack of a right to appeal render a dismissal procedurally unfair?

Not necessarily, said the Employment Appeal Tribunal in a recent case, Moore v Phoenix Product Development.

What happened?

Mr Moore was the CEO and founder of Phoenix Product Development (PPD), which sold and marketed his invention, a water-saving toilet. After sixteen years, he was replaced by Dylan Jones because of concerns about his performance and the lack of commercial success of the toilet.

Having been bound up for so long with the fortunes of the company he founded, he had difficulty accepting the new way of things, even though he was still on the payroll and had director status.

Unable to psychologically relinquish his former role, Mr Moore began to behave unprofessionally towards Mr Jones, undermining him to both board members and external investors (and describing the latter as “leeches”). He also continued to refer to PPD as “my company”, despite his shareholding having reduced to only 5%.

Mr Moore and Mr Jones had a meeting to examine these aspects of Mr Moore’s behaviour. He agreed with Mr Jones that he would work to rectify the issues raised. However, this didn’t last long – later in the year, during an overseas business trip, he criticised Mr Jones and other members of the board during a conversation with one of PPD’s most important investors.

His actions raised concerns amongst the board, who met to discuss what to do about the situation. The tribunal heard what happened next:

“[Mr Moore] was unrepentant and continued to refer to [PPD] as “my company”, something which [PPD] had indicated was problematic. The Tribunal found [Mr Moore] had entered that meeting in a “thoroughly confrontational manner” showing no insight, no regrets, no contrition and blaming others, particularly Dylan Jones. [Mr Moore’s] written submissions consisted largely of criticisms of Mr Jones’ performance and sought to blame Mr Jones for many of the flaws or shortcomings in the company’s performance as [he] saw it.”

As a result, the board voted to terminate his employment and he was not offered the right to appeal this. Unsurprisingly, he did not take this lying down and brought a claim for unfair dismissal.

What did the Employment Tribunal say?

The Employment Tribunal (ET) said that even though PPD had not offered Mr Moore the right to appeal, there would have been no point doing so as his dismissal had been caused by his ongoing conduct and the irretrievable breakdown in the working relationship between himself and PPD. They also pointed out that had his dismissal been ruled unfair, his compensation would have been reduced by 100% to reflect the effect his conduct had on the outcome. Mr Moore appealed against the ET’s decision.

What does the law say?

The Employment Rights Act 1996, Section 98, says:

(4) …the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer), depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and shall be determined in accordance with equity and the substantial merits of the case.

The ET judgment said that “Even section 207 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) only requires that the Code “shall be taken into account”. It can be taken into account, and then disapplied if the circumstances and the context are right. I consider that this is such an exceptional case.”

The Employment Appeal Tribunal Decision

Examining the case, the Employment Appeal Tribunal (EAT) said that the ET’s decision had been correct. Although an appeal would normally be part of a fair procedure, that would not invariably be so, as this would disregard the law, which obliges the tribunal to take circumstances into account. In this case, those relevant circumstances included:

• Mr Moore was a board-level director and employee.

• PPD was a relatively small organisation with no higher level of management.

• Mr Moore himself had brought about an “irreparable breakdown” in trust and confidence.

• This was considered to be “destructive”, destabilising and a “drag-factor” for the company.

• He was unrepentant about his conduct and attitude.

• He had not shown any sign that he was likely to change.

The Employment Tribunal had carefully considered whether an appeal would have served any purpose and had correctly concluded it would not have done in these circumstances.

What Does This Mean for Employers?

As can be seen from the judgments of the ET and EAT, there is no legal requirement for a specific procedure to be followed in order for a dismissal to be classed as fair. However, it is certainly not the case that employers can dispense with the right of appeal as a general rule; the ET and EAT were quite explicit in stating that this was the exception rather than the rule and depended on a certain set of circumstances.

The ACAS Code of Practice, as outlined above, does recommend offering employees a right of appeal, but that Code does not apply to dismissals which are carried out for Some Other Substantial Reason (SOSR), which was the case with Mr Moore (see https://www.rradar.com/post/some-other-substantial-reason)

The size of the business

PPD was a small business and not one where alternative work could have been found for Mr Moore; nor would a re-training programme have been effective as his attitude had remained resistant to previous attempts to change it. An HR specialist who had been asked by PPD to review its business had drawn the conclusion that the problem was Mr Moore himself, who would “attempt to sabotage any CEO coming into the business”.

This is worth considering for companies of a small size, where there isn’t the facility to re-deploy an errant employee, or a situation where there has clearly been a breakdown of the working relationship such that no reasonable efforts can be made to restore it. However, as with all such cases, written records must be kept by the employer to show that they have done all that is reasonably practicable, in case a tribunal claim is made and they need to provide evidence.

The purpose of an appeal

If an employer is considering dismissal, they should consider why they are doing this and what they might hope to achieve. In most cases, an appeal will offer a chance to look again at the decision and the reasoning behind it. It would seem obvious that a robust and well-argued decision will be resistant to vexatious challenges, whilst a shoddy and ill-thought-out decision almost deserves to be stopped or reversed before it is too late and an injustice is perpetrated.

The scope of an appeal

Employers may be worried about how long it will take to carry out an appeal. Rather than revisit the entire case, the process can be shortened somewhat by concentrating on the specific grounds of appeal raised by the employee (assuming that they have not appealed every ground of the original decision)