Network Rail Infrastructure Ltd v Marks

An Employment Tribunal determining unfair dismissal must apply a neutral burden of proof when assessing the employer’s reasonableness and the adequacy of its investigation. It must make findings on whether dismissal would nevertheless have occurred following a fair procedure, including under section 98A(2) of the Employment Rights Act 1996 and the Polkey principle. It must also decide whether the employee’s conduct contributed to the dismissal and give reasons for any assessment of future loss. Where the first-instance judgment is materially deficient and the errors cannot safely be corrected, the proper course is a full rehearing before a fresh Tribunal.

Mr Marks was summarily dismissed by Network Rail Infrastructure Ltd for alleged gross misconduct involving a racial remark to a colleague. The Employment Tribunal found the dismissal unfair, dismissed a holiday-pay claim, and awarded compensation.

Network Rail appealed on liability, the application of section 98A(2), the absence of a Polkey finding, contributory fault, and the unexplained period of future loss. Mr Marks cross-appealed on section 98A(1) and section 98A(2). The central issues were whether the Tribunal had adequately reasoned its decision and whether it had applied the statutory and common-law principles governing unfair dismissal and compensation.

The appeal was allowed on all five grounds. The cross-appeal was dismissed. The claim was remitted for a full rehearing before a fresh Employment Tribunal.

1. Burden of proof. The Tribunal erred in treating the employer as bearing the burden of proving that the dismissal was fair and that the investigation was adequate. The burden under section 98(4) of the Employment Rights Act 1996 is neutral. The error was material because the Tribunal had not made clear findings on whether the allegation was justified and the EAT could not say that the result would inevitably have been the same.
2. Section 98A(2) and Polkey. The Tribunal misunderstood section 98A(2) and failed to decide whether the employer could fairly have dismissed the employee even if the correct procedure had been followed. Following Software 2000 Ltd v Andrews [2007] ICR 825, the Tribunal had to consider the evidence and make the necessary prediction, even though that involved speculation, unless the evidence was so unreliable that no sensible prediction could be made. The principle was not confined to redundancy cases.
3. Contributory fault. The Tribunal had to decide, on the balance of probabilities, whether the employee committed misconduct which contributed to his dismissal. Its refusal to address the issue because it had made no finding of fault was an error of law.
4. Reasons for compensation. The Tribunal gave no reasons for selecting 18 months as the period of future loss. That failure did not satisfy the guidance in English v Emery Reimbold & Strick Ltd [2003] IRLR 710.
5. Cross-appeal. The Tribunal was entitled to conclude that the three statutory steps under section 98A(1) had been complied with. The evidence showed that the required written notification, disciplinary hearing, dismissal notification and appeal process had occurred.
6. Disposal. Because the judgment was seriously flawed and could not safely be corrected by the same Tribunal, the case required a full rehearing before a fresh Tribunal, applying Sinclair Roche and Temperley v Heard & Ors [2004] IRLR 763.

• Employment Tribunal: found the dismissal unfair, dismissed the holiday-pay claim, and awarded compensation.
• Employment Appeal Tribunal: allowed Network Rail’s appeal on all five grounds, dismissed Mr Marks’s cross-appeal, and ordered a full rehearing before a fresh Employment Tribunal.