Airbus UK Ltd v Webb

The Court of Appeal held that a tribunal is entitled to take account of an employee's earlier misconduct, even though the final written warning imposed for that misconduct has expired, when deciding whether a dismissal for later misconduct fell within the range of reasonable responses under section 98(4) of the Employment Rights Act 1996. The court confirmed that the expired warning as a penalty is spent but that the underlying misconduct may remain a relevant circumstance for the reasonableness, equity and substantial merits inquiry. The tribunal had correctly applied the Burchell test to find a potentially fair reason for dismissal, and the Employment Tribunal majority erred in treating the Inner House decision in Diosynth as establishing an absolute rule that an expired final warning must be disregarded for all purposes.

Background and parties: Airbus UK Limited dismissed Mr MG Webb after finding him watching television during night shift on 20 September 2005. Mr Webb had previously received a final written warning in August 2004 for fraudulent misuse of company time; that warning was time-limited to twelve months and expired at the end of August 2005.

Procedural posture: The Employment Tribunal (reserved judgment 16 June 2006) by majority held the dismissal unfair, taking the view that an expired final warning must be disregarded for all disciplinary purposes. The Employment Appeal Tribunal (decision 14 February 2007, UKEAT/0453/06/DA) dismissed Airbus's appeal, but granted permission to appeal to the Court of Appeal. Airbus appealed to the Court of Appeal ([2008] EWCA Civ 49).

Nature of claim and relief sought: The claimant sought a declaration of unfair dismissal and remedy. The legal issue concerned whether an employer may lawfully take account of a prior misconduct for which a final warning has expired when deciding to dismiss for later misconduct.

Issues framed: (i) Whether the expired final written warning must be ignored for all purposes; (ii) whether the employer acted reasonably under section 98(4) ERA 1996 when dismissal followed later misconduct similar to the earlier misconduct; (iii) whether there was disparate treatment of employees who committed the same misconduct.

Court's reasoning: The court analysed section 98(4) ERA 1996, the ACAS guidance and relevant authorities (including Diosynth, UK Coal/Raby and William Grant). It accepted that a time-limited warning as a penalty becomes spent and should not be relied on as an ongoing penalty, but concluded that the underlying misconduct is an objective circumstance relevant to the tribunal's assessment of whether dismissal fell within the band of reasonable responses. The court found Diosynth distinguishable and not authority for a broad rule that an expired final warning can never be considered in determining reasonableness. The tribunal had found that the employer had a genuine belief and conducted a fair investigation (Burchell), and that the reason shown for dismissal was the later misconduct. There was no impermissible disparate treatment, because all involved employees were treated consistently in relation to the nature of their records: the others were first offenders and received warnings, whereas Mr Webb’s conduct was repeated.

Result: The Court of Appeal allowed the appeal, holding that the Employment Tribunal majority had erred in law in treating Diosynth as imposing an absolute rule. The dismissal was held to be within the range of reasonable responses and the claimant's unfair dismissal claim was dismissed.

Appeal allowed. The Court of Appeal held that section 98(4) ERA 1996 permits a tribunal to take account of the facts of a previous misconduct (even if accompanied by a time-limited final written warning which has expired) as one of the circumstances relevant to whether the employer acted reasonably in dismissing for later misconduct. The Employment Tribunal had erred in treating Diosynth as establishing a rule that an expired final warning must be disregarded for all purposes; on the correct construction the dismissal was within the range of reasonable responses and therefore fair.

Employment Tribunal reserved judgment (16 June 2006) found dismissal unfair; Employment Appeal Tribunal dismissed Airbus's appeal (14 February 2007, UKEAT/0453/06/DA) but granted permission to appeal to the Court of Appeal; Court of Appeal allowed Airbus's appeal ([2008] EWCA Civ 49).