Secretary of State for Business Innovation & Skills v Howard & Anor

An appellate tribunal may intervene for error of law where the reasoning of an Employment Tribunal falls outside the range of reasonable responses, or where no reasonable tribunal could have reached the decision on the evidence.

Under section 3A of the Employment Agencies Act, the suitability inquiry is protective. Serious, sustained dishonesty connected with operating an employment agency may justify a prohibition order. The fact that the immediate victims were hirers, rather than job seekers, does not remove the risk to vulnerable persons using employment agencies. A tribunal should not draw artificial distinctions between types of dishonest conduct when assessing suitability.

The Secretary of State appealed against an Employment Tribunal’s refusal to prohibit Mr and Ms Howard from carrying on or being concerned in the carrying on of an employment agency or employment business.

The Tribunal had found that the respondents had acted dishonestly, had substantially enriched themselves, and had used an employment agency connected with them to invoice employers while concealing conflicts of interest and submitting improper claims. They had pleaded guilty to false accounting offences and received criminal sentences.

The central issues were whether the respondents were unsuitable under section 3A of the Employment Agencies Act, and, if so, the appropriate scope and duration of any prohibition order.

Appeal allowed and remitted. The Employment Tribunal’s decision was fundamentally flawed and was remitted to a differently constituted Employment Tribunal for reconsideration.

1. Although appeals lie only on questions of law, the Employment Appeal Tribunal may intervene where the lower tribunal’s reasoning is outside the range of responses open to a reasonable tribunal, or where no reasonable tribunal could have reached the decision on the evidence. This was a rare case of that kind. The approach was consistent with Piglowska v Piglowski [1999] 1 WLR 1360 and the Wednesbury principle.

2. Section 3A of the Employment Agencies Act establishes a protective regime. It recognises the vulnerability of job seekers and the need for trust in those operating employment agencies and businesses. Once misconduct or another sufficient reason is established, the tribunal must determine suitability and, where appropriate, the scope and duration of the prohibition, subject to the statutory maximum of 10 years.

3. The Tribunal’s reasoning wrongly treated the dishonesty as arising from the first respondent’s conflicts of interest in his employment, rather than from the manner in which the employment agency business was conducted. It also wrongly treated the criminal director-disqualification period, the low risk of reoffending, and the fact that the employers were the immediate victims as decisive considerations.

4. Dishonesty was materially connected with the respondents’ operation of the agency. The Tribunal should not assume that misconduct is irrelevant merely because similar conduct could occur in another business. Nor should it draw an artificial distinction between employers who were defrauded and vulnerable job seekers who might be exposed to the respondents in future.

5. The respondents had not attended either hearing, but fairness required that they be given an opportunity to present their account before a fresh Tribunal. The matter was therefore remitted for reconsideration.

• Employment Appeal Tribunal: allowed the Secretary of State’s appeal against the Employment Tribunal’s refusal to make a prohibition order and remitted the matter to a differently constituted Employment Tribunal.