Beaumont v Costco Wholesale UK Ltd

Under section 98 of the Employment Rights Act 1996, the employer’s reason for dismissal is the set of facts operating on the employer’s mind. The tribunal must first identify that subjective reason and then assess objectively whether dismissal for that reason was within the range of reasonable responses.

A tribunal errs if it treats as decisive a fact which it considers would justify dismissal but which it has not found formed part of the employer’s reason. That substitution undermines both the fairness decision and any consequential assessment of contributory conduct or a Polkey reduction.

The Claimant, a long-serving baker, was summarily dismissed after his conviction for an assault. The Respondent relied on the conviction as affecting his suitability for employment or bringing the company into disrepute. At later stages, some decision-makers knew that the assault concerned a work colleague and followed an earlier workplace dispute.

The Watford Employment Tribunal rejected the claim for unfair dismissal. It found that conduct was the reason for dismissal and held that dismissal was fair. It also made alternative 100% findings for contributory fault and Polkey.

The Claimant appealed, principally contending that the Tribunal had treated the workplace connection as the decisive justification although it had not found that factor to have operated on the Respondent’s mind.

1. Appeal allowed. The Employment Tribunal’s decision on liability, and its alternative findings on contributory fault and Polkey, were unsafe. The case was remitted for a wholly fresh hearing before a differently constituted Employment Tribunal.

2. Section 98 of the Employment Rights Act 1996 requires the employer first to show the reason for dismissal. That is a subjective inquiry into the facts operating on the employer’s mind. The Tribunal must then determine objectively whether the employer acted reasonably in treating that identified reason as sufficient for dismissal, applying the range of reasonable responses test.

3. The Tribunal found that the Respondent’s reason was the conviction and its asserted effect on suitability for employment or reputation. It did not find that the fact that the assault concerned a colleague and arose from a workplace dispute formed part of the Respondent’s reason. Yet it treated that latter fact as the crucial factor making dismissal fair. That was an impermissible substitution of the Tribunal’s own view for the employer’s operative reason.

4. The error was material because the Tribunal had itself been critical of the Respondent’s stated conclusion that the conviction affected suitability or reputation. It also appeared to have relied on fuller facts not shown to have been before the Respondent, and on a matter not put to the Claimant as potentially relevant.

5. The alternative reductions could not stand. A contributory-fault assessment required clarity about the employer’s operative reasoning. A Polkey assessment required consideration of what this employer would have done, rather than what the Tribunal or another employer might have done.

6. Although appellate restraint was required, the fundamental error justified intervention. Applying the remittal criteria, a fresh hearing before a new Tribunal was appropriate to secure an entirely fresh approach and maintain confidence in the process.

• Employment Appeal Tribunal: Allowed the Claimant’s appeal and set aside the Employment Tribunal’s dismissal of the unfair-dismissal claim. The matter was remitted for a fresh hearing before a differently constituted Tribunal.
• Watford Employment Tribunal: Employment Judge Smail, sitting alone, rejected the unfair-dismissal claim in a judgment sent to the parties on 26 June 2014. It also made alternative 100% findings for contributory fault and Polkey.