Eastland Homes Partnership Ltd v Cunningham

In assessing misconduct dismissal under section 98(4) of the Employment Rights Act 1996, the established staged guidance remains a helpful application of the statutory question. It is not, however, exhaustive.

Where an employer treats conduct as gross misconduct, the tribunal must consider, among all the circumstances, whether that characterisation was objectively justifiable or reasonably believed. It need not create a separate formal stage for that question, but it errs if it leaves the matter out of account when judging whether dismissal was within the range of reasonable responses.

The tribunal must apply the objective standard of the hypothetical reasonable employer and must not substitute its own subjective view.

The claimant, a residential caretaker with long and previously unblemished service, was summarily dismissed after he and his wife benefited under a tenant’s will and he delayed disclosing the bequest. The employer treated the matter as gross misconduct under its Code of Conduct.

An Employment Tribunal held the dismissal unfair, reduced compensation by 25% for contributory conduct, and upheld the claimant’s wrongful-dismissal claim. The employer appealed the unfair-dismissal and contribution rulings. It contended that the tribunal had failed to consider whether the employer could reasonably characterise the conduct as gross misconduct and had substituted its own view.

The central issue was whether the tribunal’s assessment under section 98(4) of the Employment Rights Act 1996 had properly addressed the significance of the employer’s gross-misconduct characterisation.

1. Appeal allowed. The Employment Judge misdirected himself when deciding whether dismissal was a reasonable response under section 98(4) of the Employment Rights Act 1996.

2. The familiar Burchell and range-of-reasonable-responses analysis is guidance for applying the statutory question: whether, in all the circumstances, the employer reasonably treated the conduct as a sufficient reason for dismissal. It does not prescribe a separate formal finding that conduct was gross misconduct.

3. Nevertheless, where the employer has characterised the conduct as gross misconduct, the tribunal must consider as a relevant circumstance whether that view was objectively justifiable, or whether the employer could reasonably believe the conduct to be gross misconduct. An employer cannot simply label conduct gross misconduct and thereby make summary dismissal reasonable regardless of mitigation.

4. The Employment Judge found misconduct warranting disciplinary action but did not analyse whether the conduct was capable of gross misconduct or whether the employer’s belief in that characterisation was reasonable. The distinction between conduct actually amounting to gross misconduct and conduct reasonably regarded as doing so was material. The omission was an error of law.

5. The Judge had not, however, fallen into the prohibited substitution mindset. Read as a whole, the Tribunal had identified misconduct and had purported to apply the standard of the reasonable employer, rather than its own personal view.

6. The EAT did not finally determine the employer’s challenge to the 25% contribution finding. Since the unfair-dismissal issue required reconsideration, contribution also had to be reconsidered. The matter was remitted for a complete rehearing before a differently constituted Employment Tribunal, because the original Judge had reached a clear conclusion and a fresh tribunal avoided any appearance of pre-judgment.

• Employment Appeal Tribunal: Allowed the employer’s appeal and remitted the unfair-dismissal and contribution issues for a complete rehearing before a differently constituted Employment Tribunal: [2014] UKEAT 0272_13_0701.
• Employment Tribunal, Manchester: Employment Judge Goodman held the dismissal unfair, reduced compensation by 25% for contributory conduct, and held that the claimant had been wrongfully dismissed. The written judgment was sent to the parties on 27 February 2013.