Whitbread plc (trading as Whitbread Medway Inns) v Hall

An employer considering dismissal for admitted misconduct must act reasonably in both the penalty selected and the procedure used to select it. The band of reasonable responses applies to each element.

Ordinarily, the employee must receive a fair opportunity to advance explanations and mitigation. The appropriate procedure depends on the employer’s size and resources and the circumstances of the misconduct. Only exceptionally will misconduct be so heinous and clear that a reasonable employer may conclude that no explanation or mitigation could affect the decision.

When determining fairness under section 98(4) of the Employment Rights Act 1996, a tribunal cannot ask whether a fair procedure would have produced the same outcome. A procedurally defective initial decision may be cured by a sufficiently full rehearing on appeal.

The employer dismissed a long-serving public-house manager for gross misconduct after he admitted inaccurately recording stock and income information and failing adequately to monitor stock. The manager offered mitigating circumstances, and none of his misconduct involved personal gain.

The Employment Tribunal found a potentially fair conduct reason but held the dismissal unfair. The manager’s immediate superior had initiated the investigation, had a poor relationship with him, chaired the disciplinary hearing and approached it with dismissal already decided. The internal appeal did not cure those defects. The Employment Appeal Tribunal dismissed the employer’s appeal.

The employer appealed to the Court of Appeal. The central issue was whether, when misconduct is admitted and dismissal falls within the band of reasonable penalties, section 98(4) of the Employment Rights Act 1996 also requires the employer’s decision-making procedure to fall within the band of reasonable responses.

1. Appeal dismissed unanimously. Lady Justice Hale delivered the judgment, with which Lord Justice Mantell and the President agreed. Section 98(4) of the Employment Rights Act 1996 contains both substantive and procedural elements. The band of reasonable responses therefore applies both to the penalty and to the process by which the employer decided upon it.

2. An admission of misconduct does not release an employer from the obligation to act reasonably. The investigation directed to proving the misconduct may have little work to do, but the employer must still consider any defence, explanation or mitigation relevant to whether dismissal is a reasonable response. The decisions concerning admitted misconduct did not establish that procedure becomes irrelevant once the underlying acts are accepted.

3. The principles in Polkey v A E Dayton Services Ltd [1988] ICR 143 applied to misconduct dismissals as well as redundancy dismissals. Procedural and substantive fairness are not mutually exclusive categories. Ordinarily, an employer will not act reasonably unless it investigates fairly and hears what the employee wishes to say in defence, explanation or mitigation.

4. A tribunal must not impose an excessive procedural burden. Section 98(4) expressly requires consideration of the employer’s size and administrative resources. Exceptionally, misconduct may be so heinous and the facts so clear that a reasonable employer could conclude that no explanation or mitigation would affect the decision. This was not such a case.

5. The rules of natural justice do not constitute an independent ground of review in unfair-dismissal proceedings, but an apparent lack of impartiality is important when assessing reasonableness under section 98(4). Here, the employer was sufficiently large to provide a fairer process. The employee’s immediate superior had initiated the complaint, had a poor relationship with him and entered the hearing with her mind made up. That procedure was outside the range reasonably open to this employer.

6. The internal appeal did not cure the defect. The Tribunal was entitled to find that it was not a full rehearing and that the appeal officer had not properly considered other penalties. In assessing fairness, the Tribunal could not ask whether a fair procedure would nevertheless have resulted in dismissal. The order was that the appeal be dismissed with costs.

1. Court of Appeal: The employer’s appeal was dismissed unanimously. The Court upheld the conclusion that the dismissal was procedurally unfair.

2. Employment Appeal Tribunal: On 19 August 1999, the Tribunal dismissed the employer’s appeal. It held that the original disciplinary process lacked the required appearance of fairness and that the internal appeal had not cured the defect.

3. Employment Tribunal: On 7 August 1998, the Tribunal held that the employee had been unfairly dismissed. Although misconduct supplied a potentially fair reason and dismissal was within the range of possible penalties, the employer’s disciplinary process was fatally flawed.