Orr v Milton Keynes Council

The Court of Appeal considered whether, for the purposes of an unfair dismissal inquiry under section 98 of the Employment Rights Act 1996, knowledge possessed by an employee’s manager but withheld from the officer who investigated and decided to dismiss may be attributed to the corporate employer and therefore render the dismissal unfair. The court analysed the statutory test in s.98(4)(a) and (b) and the established authorities (notably Burchell and Foley) on the employer’s reasonable belief and reasonable investigation. It also considered principles of attribution derived from Meridian for when an individual’s knowledge or state of mind counts as that of the corporate employer.

The majority held that the tribunal must assess whether the person deputed to investigate and decide on dismissal had the relevant knowledge or could reasonably have obtained it; it is not generally permissible to impute to that decision-maker all relevant knowledge held elsewhere in the organisation. The majority therefore rejected the submission that the manager’s undisclosed knowledge was automatically the employer’s knowledge for s.98 purposes and dismissed the appeal. A minority (Sedley LJ) would have allowed the appeal and remitted issues about attribution and whether dismissal for the first incident alone would have been fair.

Background and procedural posture:

• Trevor Orr, a part-time youth worker of Jamaican origin, was dismissed by Milton Keynes Council for alleged gross misconduct arising from two incidents in October 2005.
• After an internal disciplinary process and an unsuccessful internal appeal, Mr Orr brought claims of unfair dismissal and unlawful race discrimination. An employment tribunal initially upheld the fairness of dismissal but found discrimination; the EAT remitted the whole case. A second tribunal (five‑day hearing) on 29 August 2008 found that Mr Madden had made a racially discriminatory remark and that both incidents amounted to gross misconduct, but nonetheless held dismissal was fair. The EAT ([2009] UKEAT/0506/08/SM) declined to import the tribunal’s factual finding of provocation back into the disciplinary inquiry.
• The case reached the Court of Appeal on the narrow issue whether facts known to the employee’s manager but withheld from the decision‑maker are to be treated as facts known to the employer when deciding fairness under s.98 ERA.

Nature of the claim / relief sought: Mr Orr sought a declaration and remedy for unfair dismissal and relied on the tribunal’s finding of provocation and direct race discrimination to argue that the employer, via its manager, had known exculpatory or mitigating facts at the time of dismissal which should be attributed to the employer.

Issues framed by the court:

1. Whether knowledge held by an employee’s manager but not disclosed to the decision‑maker is to be imputed to the corporate employer for the purposes of s.98(4) ERA; and
2. If such knowledge is imputable, whether it would render the dismissal unfair and whether the issue required remittal to an employment tribunal for determination.

Reasoning and disposition: The majority (Moore‑Bick LJ and Aikens LJ) held that attribution must be narrowly construed. Following the Burchell/Foley line the tribunal’s task is to assess whether the employer (through the person deputed to investigate and decide) had reasonable grounds and conducted a reasonable investigation before dismissing. Attribution of knowledge to the employer should not be extended to encompass undisclosed matters known to other employees unless the person was clearly deputed to represent the employer for that purpose or other principles of attribution (Meridian) apply. Section 98(4)(b) (equity and substantial merits) does not permit the tribunal to substitute its own view for the employer’s reasonable decision‑making in the absence of information reasonably available at the time. Accordingly the appeal was dismissed. Sedley LJ (dissenting in part) would have allowed the appeal and remitted questions about attribution to a fresh tribunal, but accepted that complex doctrinal issues (including the role of s.98(4)(b)) might require resolution at a higher level.

Wider context: The judgment reaffirms the Burchell/Foley framework on reasonable investigation and reasonable belief, emphasises the limits of tribunal substitution of judgment for employers, and applies Meridian principles when considering attribution of knowledge to corporate employers. Sedley LJ recorded the potential tension between discrimination findings and fairness of dismissal, and saw scope for a narrower rule of attribution in some managerial contexts; the majority preferred a restrained rule to preserve the statutory focus on the employer’s state of mind at the time of dismissal.

Appeal dismissed by majority. The majority held that for the purposes of s.98(4) ERA the tribunal must assess whether the person deputed to investigate and to decide on dismissal had the relevant knowledge or could reasonably have obtained it; it is not appropriate generally to impute to the decision‑maker all relevant facts known elsewhere in the organisation. The statutory Burchell/Foley framework bounds the tribunal’s role and section 98(4)(b) does not permit substitution of the tribunal’s view for the employer’s reasonable decision in the absence of information reasonably available at the time. Sedley LJ (dissenting in part) would have allowed the appeal and remitted issues of attribution to a fresh tribunal.

Claim heard first by an employment tribunal at Bedford which found dismissal fair but unlawful discrimination; EAT remitted the case. A second tribunal sat (five days in March–April 2008) and issued a determination on 29 August 2008 finding discrimination but that dismissal was fair. The EAT ([2009] UKEAT/0506/08/SM) considered the case and that decision led to this appeal to the Court of Appeal ([2011] EWCA Civ 62).