W Devis & Sons Ltd v Atkins

For unfair-dismissal liability under the Trade Union and Labour Relations Act 1974, fairness is determined by the employer’s actual reason for dismissal and the circumstances known at that time. An employer cannot retrospectively justify an unreasonable dismissal by relying on misconduct discovered afterwards.

After-discovered misconduct may, however, be considered when assessing compensation. The tribunal must make an award where the statutory conditions require it, but may fix compensation at nil or a nominal amount where that is just and equitable. Conduct can reduce compensation under the contributory-fault provision only if it caused or contributed to the dismissal. These conclusions concerned the statutory scheme before the amendments made by the Employment Protection Act 1975.

W Devis & Sons Ltd v Atkins [1977] AC 931 concerned an abattoir manager who was dismissed because his employers were dissatisfied with his management. After the dismissal, the employers discovered alleged dishonest dealing which, if proved and known earlier, could have justified summary dismissal.

An industrial tribunal refused to consider the new allegations when deciding whether the dismissal was fair. It found that the employers had acted unreasonably, held the dismissal unfair and left compensation for later determination. The employers appealed unsuccessfully to the High Court and the Court of Appeal.

The central issues before the House of Lords were whether misconduct discovered only after dismissal was admissible when determining fairness and, if it was not, whether it could nevertheless affect compensation.

1. Disposition. The House of Lords unanimously dismissed the employers’ appeal. Viscount Dilhorne delivered the leading speech. Lord Diplock, Lord Simon of Glaisdale, Lord Edmund-Davies and Lord Fraser of Tullybelton agreed with the dismissal and the material reasoning.
2. Fairness at the time of dismissal. Per Viscount Dilhorne, paragraph 6(8) of Schedule 1 to the Trade Union and Labour Relations Act 1974 directs the tribunal to examine whether the employer acted reasonably in treating the reason which caused the dismissal as sufficient. Misconduct unknown to the employer could not have formed part of that reason. Evidence discovered after dismissal was therefore irrelevant and inadmissible on the issue of fairness. Lord Simon reached the same conclusion from the provision’s plain meaning.
3. The employer’s reason. Viscount Dilhorne approved the formulation of Cairns LJ in Abernethy v Mott, Hay and Anderson (1973) 8 I.T.R. 228. A reason consists of facts known to the employer, or beliefs held by the employer, which cause the dismissal. A reason stated to the employee is evidence of the actual reason but is not necessarily conclusive. Fairness does not require the employer to communicate the reason before or when notice is given.
4. Matters which ought to have been known. An employer cannot establish fairness by relying on facts which were unknown but ought reasonably to have been known. Conversely, an employer may act unreasonably if an apparently sufficient reason was accepted only because the employer ignored matters which ought reasonably to have been known and which would have shown that reason to be insufficient.
5. Procedure. Non-compliance with a disciplinary procedure prescribed by the applicable Code does not automatically make a dismissal unfair. It may nevertheless justify such a finding where compliance would have made an otherwise unfair dismissal fair.
6. Compensation. Paragraph 17(3) had to be read with paragraph 19. Under paragraph 19(1), the amount was whatever the tribunal considered just and equitable in all the circumstances, having regard to the employee’s attributable loss. Consequently, misconduct discovered after dismissal could be considered at the compensation stage and could justify nominal or nil compensation. Viscount Dilhorne approved that aspect of Earl v Slater and Wheeler (Airlyne) Ltd (1973) 8 I.T.R. 33.
7. Contributory conduct. Paragraph 19(3) applied only where the employee’s action caused or contributed to the dismissal. After-discovered misconduct could not satisfy that causal requirement. Where paragraph 19(3) did apply, the tribunal could reduce compensation to a nominal or nil amount; there was no minimum award of 20 per cent. The contrary dicta in Kemp v Shipton Automation Ltd (1976) 11 I.T.R. 232 were disapproved.
8. Later statutory context. Lord Diplock warned that the decision was not necessarily authoritative once paragraph 6(8) operated with the basic and compensatory award provisions of the Employment Protection Act 1975. Lord Simon, Lord Edmund-Davies and Lord Fraser expressed corresponding concern.

1. House of Lords: The employers’ appeal was dismissed unanimously. The Court of Appeal’s decision was left undisturbed: W Devis & Sons Ltd v Atkins [1977] AC 931 .
2. Court of Appeal: The employers’ appeal from the High Court was dismissed. No citation is stated in the judgment.
3. High Court: The employers’ appeal from the industrial tribunal was unsuccessful. No citation is stated in the judgment.
4. Industrial tribunal: The tribunal held that the dismissal was unfair, declined to recommend re-engagement and left compensation for agreement or later determination. It excluded the after-discovered misconduct from the fairness stage.