Whitelock & Storr & Ors v Khan

Where an employee alleges dismissal for making a protected disclosure but the employer advances misconduct as the reason, the tribunal must first determine the potentially fair reason relied on by the employer. It must ask whether the employer reasonably believed that the employee had committed misconduct and whether that belief was the reason for dismissal. It must then weigh that case against the alleged protected-disclosure reason, applying the guidance in Kuzel without treating rejection of the employer’s case as automatically establishing the employee’s alternative case. A Step 1 disciplinary letter need not expressly mention dismissal if, viewed in context, serious allegations make the risk of dismissal implicit.

Mr Khan, a solicitor employed by Whitelock & Storr, was summarily dismissed after raising grievances about unpaid bonus, working conditions and training. The Employment Tribunal held that he had made protected disclosures and had been automatically unfairly dismissed under section 103A of the Employment Rights Act 1996. It also found unfairness under sections 94 and 98A, including failure to warn that dismissal was possible, and rejected the alleged misconduct concerning duty-solicitor slots and a rival practice.

The employers appealed. The central issues were whether the Tribunal had properly analysed the competing reasons for dismissal, whether the disciplinary allegations were reasonably capable of constituting misconduct, whether the Step 1 letter complied with the statutory procedure, and how the counterclaim should be addressed.

1. Appeal allowed in part and remission. The findings of automatic unfair dismissal under Employment Rights Act 1996, section 103A, and the alternative finding under section 94 were set aside. The findings that protected disclosures had been made in good faith remained.
2. Applying Kuzel v Roche Products Limited [2008] IRLR 530, the Tribunal had to address the employer’s asserted potentially fair reason first, because the primary burden of showing the reason for dismissal lay on the employer. It had to decide whether the employers reasonably believed that, while still employed, Mr Khan had acted or attempted to act to their detriment concerning the duty-solicitor slots or the setting up of another firm, in breach of his duty of trust and confidence. It then had to decide whether that was the reason for dismissal, balancing it against the allegation that the misconduct case was a response to the grievances.
3. The Tribunal impermissibly substituted its own view of the operation of the duty-solicitor scheme for the employers’ state of mind. Whether the alleged transfer was legally effective did not answer whether the employers reasonably believed that Mr Khan had committed misconduct. The issues concerning prior repudiatory breach, affirmation and the RDF argument had not been determined and were remitted.
4. The finding under section 98A also required reconsideration. Under Schedule 2, Part 1, Chapter 1 of the Employment Act 2002, the Step 1 statement had to set out the grounds leading the employer to contemplate dismissal or disciplinary action. The authorities established that dismissal need not always be stated expressly. Given the grave allegations concerning the letterheads, duty-solicitor slots and practice certificate, dismissal was implicitly a possibility, and the Tribunal had to consider that question.
5. The counterclaim also required reconsideration. The matter was remitted to a fresh Employment Tribunal, on a limited basis confined to the issues and findings successfully appealed. Counsel were invited to draft the terms of remission.

• Employment Appeal Tribunal: allowed the relevant grounds of appeal against the London (Central) Employment Tribunal’s decision sent on 24 October 2009. The protected-disclosure and alternative unfair-dismissal findings were set aside, subject to the preserved finding that protected disclosures had been made in good faith. The remaining issues were remitted to a fresh Tribunal.