St James Management Services Ltd v Power

Section 98A(2) of the Employment Rights Act 1996 can cure a dismissal that would otherwise be unfair because of a failure to follow a fair procedure, provided the employer proves that the employee would have been dismissed anyway. The provision is not confined to minor or technical procedural breaches. It does not apply where the unfairness arises from the substance of the decision, including an improper reason or an arbitrary approach to selecting the employee for dismissal. The whole background must be considered. An Employment Tribunal’s judgment should be read generously, without a pernickety or hyper-critical approach, where its legal direction and application can fairly be understood.

The respondent dismissed the claimant in a redundancy situation. The Employment Tribunal found that there had been no adequate warning, meaningful consultation, financial information or disclosed selection criteria. It also found that the managing director’s approach was materially influenced by a previous sexual relationship with the claimant and that he had acted arbitrarily.

The Tribunal held that section 98A(2) did not make the dismissal fair, although the respondent could rely on Polkey at the remedy hearing. The respondent appealed to the Employment Appeal Tribunal on the question whether the defects were merely procedural and therefore within section 98A(2).

1. Appeal dismissed. The case was remitted to the same Employment Tribunal for a remedy hearing.
2. Section 98A(2) is not limited to written employer procedures or to minor and technical breaches. It extends to any procedure which, in fairness, the Tribunal considers should have been followed before the employer decided to dismiss.
3. That construction does not assist an employer where the unfairness is not caused by procedural defects alone. A fundamental failure engaging section 98A(1) prevents section 98A(2) from applying. The Tribunal must assess the entire background and identify whether the decision itself was arbitrary or otherwise substantively unfair.
4. The findings that the managing director’s decision was materially influenced by the previous sexual relationship, and that he arbitrarily decided to dismiss the claimant, went to the heart of the decision-making and were not merely procedural.
5. Applying Fuller v London Borough of Brent and Bowater, the EAT read the Tribunal’s reasons generously and found no clear error of law. The dismissal remained unfair, subject to any compensation reduction considered at the remedy hearing under Polkey.

• Employment Tribunal, East London Hearing Centre: upheld the claimant’s unfair-dismissal claim and dismissed her sex-discrimination and sexual-harassment claims. Reasons were registered on 6 September 2010.
• Employment Appeal Tribunal: dismissed the respondent’s appeal concerning section 98A(2) and remitted the matter to the same Tribunal for a remedy hearing.