Daughters v Aqua Financial Solutions Ltd

In a misconduct dismissal, a tribunal must address each element of the Burchell inquiry. It must determine whether the employer had reasonable grounds for its belief and had carried out a reasonable investigation in the circumstances. It cannot treat materially conflicting accounts as undisputed without resolving, or properly addressing, the conflicts.

A powerful shareholder's threatened withdrawal of business cannot properly be treated as merely an evidential factor where the threat makes dismissal inevitable and is founded on an allegation not upheld in the disciplinary process. A tribunal considering wrongful dismissal must also resolve material factual disputes and must not rely on misconduct findings which the employer itself did not make.

The claimant, an independent financial adviser and former owner of the respondent, was summarily dismissed after a drinking meeting with clients in a bar. She admitted drinking and offending a client, but disputed important aspects of the clients' account, including whether she disclosed confidential financial information about the respondent's chairman.

The Employment Tribunal dismissed her claims for unfair dismissal and wrongful dismissal. It held that the employer had a genuine belief after sufficient investigation, that dismissal fell within the range of reasonable responses, and that the chairman's stated intention to move her business if the claimant were reinstated was a relevant factor.

The claimant appealed. The central issues were whether the Tribunal had correctly applied the requirements for a misconduct dismissal, adequately dealt with disputed evidence and shareholder pressure, and properly determined the contractual claim.

1. Appeal allowed. The claims for unfair and wrongful dismissal were remitted for rehearing before a fresh Employment Tribunal.

2. The Tribunal erred in its treatment of the requirements in British Home Stores Ltd v Burchell [1980] ICR 303. There were serious conflicts between the claimant's account and the account supplied by the clients through the chairman. The Tribunal wrongly described there as being little dispute of fact. It did not address whether the employer had reasonable grounds for its belief in misconduct.

3. The Tribunal also applied the wrong formulation by asking whether there had been a “sufficient investigation”. The question was whether there had been a reasonable investigation in all the circumstances. It did not consider the decision not to obtain independent evidence from the clients, whether by statements or attendance, despite the disputed accounts. The EAT did not substitute its own assessment of the investigation, but held that the Tribunal had failed to ask and answer the correct question.

4. The Tribunal was wrong to discount the chairman's pressure. Although this was not an ordinary third-party-pressure case, her letter deliberately sought to influence the decision-makers and threatened the survival of the business if the claimant were reinstated. In those circumstances dismissal was inevitable. The Tribunal could not characterise the threat as an evidence-based opinion or a factor in the general mix, particularly when it relied on alleged disclosure of financial information which the disciplinary panel had not found proved.

5. The wrongful-dismissal conclusion could not stand. In making its own contractual assessment, the Tribunal had to resolve the serious factual differences. It instead relied upon an alleged disclosure of confidential information which was not a finding of the disciplinary panel.

6. The Tribunal was nevertheless entitled to find that the identified procedural complaints did not affect fairness. The witness statements subsequently seen by the EAT added nothing to the employer's case. The reasons for finding a genuine belief were clear, although mistaken, and the perversity challenge failed.

• Employment Appeal Tribunal: Allowed the claimant's appeal and remitted both dismissal claims for rehearing by a fresh Employment Tribunal: [2012] UKEAT 0149_11_1403.
• Employment Tribunal, London South: Dismissed the claimant's unfair-dismissal and wrongful-dismissal claims, and upheld the respondent's contractual repayment claim.