Z v A (Unfair Dismissal : Reason for dismissal including substantial other reason)

An allegation of historic sexual abuse may be capable of constituting some other substantial reason for dismissal, but it does not make dismissal inevitably fair. Under section 98 of the Employment Rights Act 1996, the employer must establish a substantial reason of a kind justifying dismissal. Fairness then depends on all the circumstances.

An Employment Tribunal may find dismissal unfair where the employer acts on an unsupported allegation which it treats as conclusive regardless of credibility or outcome. The welfare of children is paramount but not exclusive. The Tribunal must also assess procedural fairness as a whole, including whether the employee had a proper opportunity to answer material relied on.

A compensatory award for illness-related loss requires sufficient evidence that the dismissal caused the illness and consequent economic loss.

A, a school caretaker, was dismissed after the police notified the school of an allegation of historic sexual abuse. The police investigation had not resulted in a charge or an opinion endorsing the allegation. The governors treated the fact of the allegation, and the perceived safeguarding and reputational risk, as sufficient even if A were exonerated.

The Employment Tribunal held the dismissal substantively and procedurally unfair and awarded compensation of £5,155.52. It did not award loss flowing from A’s depression because it was not proved that dismissal had caused or contributed to it.

The employer appealed against liability. A cross-appealed against remedy. The central issues were whether the Tribunal’s assessment of SOSR and fairness was legally flawed or perverse, and whether the evidence established a causal link between dismissal and A’s ill-health.

1. Both appeals were dismissed. The Employment Tribunal’s conclusion that the dismissal was unfair was an evaluative finding of fact. It was not perverse and disclosed no error of law.

2. The approach in A v B and Leach v Office of Communications was applicable. An allegation of abuse, including one reported by the police, does not create a presumption that dismissal is fair. The employer must first establish a substantial reason of a kind justifying dismissal under section 98(1)(b) of the Employment Rights Act 1996. If it does so, fairness under section 98(4) is assessed in all the circumstances, without a burden on either party to prove or disprove fairness.

3. Where an authoritative body expresses the view that an employee poses a risk to children, the employer may in principle rely on it, subject to safeguards. The employer must not take an uncritical view of the information. Even an authoritative assessment does not automatically justify dismissal. Here, unlike A v B, the police had not endorsed the allegation as their own assessment of risk.

4. The Tribunal was entitled to find that the school dismissed A because of an unsupported suspicion and treated the allegation itself as decisive, irrespective of its credibility or the outcome of the investigation. The children’s interests carried greater weight, but were not exclusive. The Tribunal was also entitled to consider the school’s procedures, the delay, the absence of further enquiry before appeal, and the failure to disclose material strategy-meeting notes in deciding that the overall procedure was outside the range of reasonable responses.

5. Under section 123(1), compensation must be for economic loss sustained in consequence of dismissal and attributable to the employer’s action. Illness-related loss may in principle be recoverable, but A bore the burden of proving causation. The evidence did not establish that dismissal caused his depression. The Tribunal was also entitled to find that the May events relied upon were not part of the dismissal process. The remedy cross-appeal therefore failed.

• Employment Appeal Tribunal: Employer’s appeal from the unfair-dismissal liability decision, and employee’s cross-appeal from the compensatory-award decision, were dismissed.

• Employment Tribunal, East London: Employment Judge Pettigrew held the dismissal unfair on 15 October 2012 and awarded £5,155.52 compensation in reasons delivered on 16 January 2013.