DB Schenker Rail (UK) Ltd v Doolan

In a capability dismissal, the tribunal must ask whether the employer genuinely believed in the stated reason, conducted a reasonable investigation and had reasonable grounds for its conclusion. Medical and occupational evidence informs the employer’s assessment, but the decision remains managerial rather than medical. The tribunal must not substitute its own view for that of the reasonable employer, either when assessing the grounds for the belief or the fairness of dismissal under Employment Rights Act 1996, section 98(4). An order restoring pension rights must be certain and limited to matters within the employer’s power.

The employee, a production manager in a safety-critical rail freight role, was dismissed on capability grounds after work-related stress and competing medical and occupational evidence about his ability to return. The Employment Tribunal found the dismissal unfair and ordered reinstatement, compensation and restoration of pension rights.

The employer appealed against the liability and remedy decisions. The employee cross-appealed on the pension order. The central issues were whether the Tribunal had applied the correct approach to the employer’s assessment of capability and whether the reinstatement order was legally certain and enforceable.

1. Appeal allowed and case remitted. The employer’s reason related to capability, a potentially fair reason under sections 98(1) and 98(2) of the Employment Rights Act 1996. Under section 98(4), the Tribunal had to consider whether the employer genuinely believed in the stated reason, whether the belief followed a reasonable investigation, and whether reasonable grounds supported it [57]-[59].
2. The approach in East Lindsay District Council v Daubney [1977] ICR 566 did not require a higher standard of investigation in medical capability cases than in misconduct cases. Its requirement to ascertain the true medical position supported the reasonable-investigation aspect of the Burchell approach [33].
3. The employer was entitled to consider both the employee’s wellbeing and the employer’s operational interests. Expert reports could inform the decision, but the ultimate decision whether an employee could safely return, or should be dismissed for capability, was managerial. It was not dictated by any expert report [35], [57].
4. The Tribunal had impermissibly substituted its own view for that of the reasonable employer. It had no proper basis for criticising the obtaining or professional independence of the occupational psychologist’s report. The report identified a real risk of renewed stress-related illness in the demanding safety-critical role, and it was open to the employer to rely on it alongside the other evidence [60]-[65].
5. The Tribunal’s separate section 98(4) reasoning was also flawed. It relied on irrelevant speculation about an earlier possible dismissal, treated an unenforceable undertaking as material, imposed an impermissibly demanding standard of a proactive employer regarding alternative vacancies, and assessed future risk by reference to past absence of safety incidents. These matters did not support its conclusion that dismissal was outside the range of reasonable responses [66]-[68].
6. The Tribunal’s pension order was uncertain and unlawful. Under sections 114(2)(b) and 117 of the Employment Rights Act 1996, an order could require restoration only of rights and privileges which the employer had power to restore. The cross-appeal seeking an unconditional order was dismissed [69].

• Employment Appeal Tribunal: allowed the employer’s appeal and remitted the case to a freshly constituted Employment Tribunal for rehearing. The employee’s cross-appeal concerning pension rights was dismissed [69]-[70].
• Employment Tribunal: found the employee unfairly dismissed and ordered reinstatement, compensation and restoration of employment and pension rights.