Rawson v Robert Norman Associates Ltd

In a conduct unfair-dismissal claim, the tribunal assesses the employer’s conduct. It asks whether the employer reasonably believed the employee guilty after a reasonable investigation. It does not decide whether the misconduct actually occurred.

A contractual counterclaim for an employee’s breach requires a different inquiry. The tribunal must decide on the balance of probabilities whether the employee actually committed the alleged breach. A reasonable employer belief cannot establish contractual liability. The tribunal must identify the breach, the evidence proving it, and the loss caused by that breach.

The claimant, a site agent, was dismissed after the respondent concluded that he had been involved in the diversion of company timber and labour to build another employee’s porch. The Employment Tribunal dismissed his unfair-dismissal claim and upheld the respondent’s counterclaim for breach of contract, awarding £1,738.54.

Only the counterclaim was appealed. The central issue was whether the Tribunal had wrongly treated the respondent’s reasonable belief in misconduct, sufficient for the unfair-dismissal issue, as establishing that the claimant had actually breached his contract.

1. Appeal allowed. The counterclaim was dismissed. The Employment Tribunal had applied the wrong legal inquiry to the contractual claim.

2. For unfair dismissal under section 98 of the Employment Rights Act 1996, the relevant question in a conduct case is whether the employer reasonably believed the employee guilty, on reasonable grounds and following a reasonable investigation. The Tribunal was entitled to uphold the dismissal on that basis.

3. A claim that the employee breached the contract, including an employer’s contractual counterclaim, requires the Tribunal to decide what actually happened. The employee’s breach must be proved on the balance of probabilities. The employer’s reasonable belief, however sufficient for unfair dismissal, does not prove the breach.

4. The Tribunal had moved from its findings about the respondent’s belief to a conclusion that the claimant had breached duties of faith, fidelity, trust and confidence. It did not identify whether the claimant had authorised the work, taken materials, or merely failed to report others’ conduct. It also failed to explain the evidence supporting an actual breach.

5. There was no admissible material capable of proving the claimant’s involvement to the required standard. The evidence that might directly have done so had been accorded no weight. Allegations and costings did not establish either breach or causation. Further, the claimant’s precise role had to be established before the whole loss could be attributed to him.

6. Remittal was inappropriate. On the evidence presented, no tribunal could properly find an actual breach. The conclusion that the dismissal was fair was not inconsistent with the conclusion that the alleged misconduct had not been proved for the contractual counterclaim.

• Employment Appeal Tribunal: Allowed the claimant’s appeal and dismissed the employer’s contractual counterclaim.
• Employment Tribunal, Bury St Edmunds: In reasons dated 25 June 2012, dismissed the unfair-dismissal claim and upheld the employer’s counterclaim for breach of contract.