Vodafone Ltd v Nicholson

In determining whether a dismissal is fair, an employment tribunal must identify the employer’s real, operative reason as the facts and beliefs which caused dismissal. It should not allow labels such as conduct, capability or gross incompetence to obscure that inquiry.

The Employment Rights Act 1996 test remains whether dismissal for the established reason fell within the range of reasonable responses. The common-law question whether conduct was repudiatory, and therefore justified summary termination, is distinct from statutory fairness.

A tribunal’s reasons are adequate if, read fairly as a whole, they make its decision and essential reasoning sufficiently clear. Contributory fault requires findings about the employee’s culpable or blameworthy conduct. It is not excluded merely because shortcomings may be characterised as incapability.

Vodafone summarily dismissed its store manager after a member of staff stole high-value telephones. The manager had failed to maintain stock controls, reconcile records, and ensure independent checking of customer agreements. The parties agreed that the reason for dismissal was misconduct, although Vodafone had described the allegations as gross incompetence.

The Employment Tribunal upheld claims for unfair and wrongful dismissal. It concluded that dismissal was outside the range of reasonable responses and made no deduction for contributory fault. Vodafone appealed against liability and contribution. It also appealed a costs order, which the parties accepted had been made without a proper opportunity for oral representations.

The central issues were whether errors in the Tribunal’s reasoning vitiated its unfair-dismissal decision and whether its refusal to find contributory fault could stand.

1. The appeal was allowed in part. The costs appeal was allowed by agreement. The appeal against the finding of unfair dismissal was dismissed. The appeal concerning contributory fault was allowed and that issue was remitted to a fresh tribunal.

2. The Tribunal had wrongly been diverted by the label “gross incompetence”. The agreed reason was misconduct. A reason for dismissal is the facts known or beliefs held by the employer which caused dismissal, rather than the statutory label alone. The manager’s failures to maintain stock control, reconcile accounts and prevent staff from checking their own documents were properly characterised as conduct.

3. The Tribunal also erred by treating common-law gross misconduct as decisive of statutory fairness. Whether conduct is repudiatory and permits summary termination is distinct from whether dismissal was fair under section 98(4) of the Employment Rights Act 1996. The Burchell analysis is an aid to the statutory inquiry and must not be applied mechanically.

4. Those errors did not invalidate the unfair-dismissal decision. Read as a whole, the Tribunal had identified the real reasons for dismissal and had clearly concluded that dismissal fell outside the range of reasonable responses. It was entitled to take account of the absence of deliberate wrongdoing or gross negligence, the absence of a relevant policy or warning, the lack of exploration of training, the seriousness of the episode, and the manager’s previously unblemished record. Its reasons were sufficiently clear and it had not substituted its own view for that of the employer.

5. The refusal to make a contributory-fault deduction could not stand. The Tribunal wrongly assumed that a capability characterisation precluded contribution, gave inadequate reasons, and failed to focus on the employee’s conduct. Even in a genuine incapability case, contribution may be substantial where the incapability results from the employee’s fault, such as negligence or failure to improve. The question was remitted to a fresh tribunal. The Appeal Tribunal indicated, without deciding the remitted issue, that a 60 per cent deduction might be appropriate on the material then available.

• Employment Appeal Tribunal: allowed the costs appeal by agreement; dismissed Vodafone’s appeal against the finding of unfair dismissal; and allowed the appeal concerning contributory fault, remitting that issue to a fresh tribunal.
• Employment Tribunal (Lincoln): Employment Judge Walker upheld the claims for unfair and wrongful dismissal and made no contributory-fault reduction. The liability decision was dated 20 September 2012, with reasons sent to the parties; a costs decision followed on 6 November 2012.