Gondalia v Tesco Stores Ltd

In a misconduct dismissal, an employee’s subjective state of mind and the objective character of the conduct are both relevant circumstances under section 98(4) of the Employment Rights Act 1996. A tribunal is not, however, required to import the criminal-law Ghosh direction into the unfair-dismissal assessment.

Written reasons must reveal how material and contested issues were resolved. A tribunal does not give adequate reasons by asserting an employer’s conclusion without explaining why significant evidence and submissions, including open conduct, managerial authorisation and the employee’s state of mind, did not affect the statutory assessment. Where that failure is fundamental, the proper course is a complete rehearing before a differently constituted tribunal.

The claimant, an experienced cashier with an unblemished record, was summarily dismissed after obtaining refunds under the employer’s “Double the difference” policy for Easter eggs which she knew had been incorrectly priced. She contended that she had acted openly, that managers had authorised the refunds, and that she had not initially believed her conduct was wrong.

An Employment Tribunal dismissed her unfair-dismissal complaint. It found that the employer genuinely believed she had committed misconduct on reasonable grounds and that dismissal was within the range of reasonable responses.

On appeal, the claimant challenged the absence of a Ghosh analysis, alleged that the Tribunal had treated gross misconduct as making dismissal automatically fair, and contended that the decision was perverse or inadequately reasoned. The central issue was whether the Tribunal’s reasons showed a lawful assessment under section 98(4) of the Employment Rights Act 1996.

1. Appeal allowed. The Employment Tribunal’s decision was inadequately reasoned and was set aside. The claim was remitted for a complete rehearing before a differently constituted Employment Tribunal.

2. The claimant’s subjective understanding of her conduct was relevant, as was its objective character. Where personal gain, unacceptable conduct and loss of trust are relied upon, those matters must be evaluated amongst all the circumstances when deciding whether dismissal falls within the range of reasonable responses under section 98(4) of the Employment Rights Act 1996.

3. The Employment Judge did not err merely by failing to give a Ghosh direction. It was unnecessary to decide whether criminal-law jury directions on dishonesty should be imported into unfair-dismissal law. The decisive question was whether the statutory circumstances had been considered.

4. The reasons did not disclose how important disputed matters had been resolved. They did not explain why the claimant’s open conduct, the alleged managerial authorisation of refunds, or her asserted initial belief that she had done nothing wrong did not affect the assessment. Nor did they identify a finding supporting the conclusion that she knew she was not legitimately entitled to act as she had.

5. The reasons therefore failed to meet paragraph 62(5) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013 and the standards in Meek and Greenwood. The defect was fundamental, not one capable of cure by supplementary reasons. A rehearing before the same judge would also give an inappropriate second opportunity to decide the case.

6. The EAT declined to review its conclusion so as also to uphold the separate complaint that the Tribunal had treated gross misconduct as automatically justifying dismissal. The reasons were insufficient to establish that particular error; the failure was one of reasoning.

• Employment Appeal Tribunal: allowed the appeal for inadequate reasons and remitted the unfair-dismissal claim for a complete rehearing.
• Employment Tribunal: Employment Judge Ryan dismissed the claimant’s unfair-dismissal complaint on 1 November 2013; written reasons were sent on 20 January 2014.