Patel v Folkestone Nursing Home Ltd

The Court of Appeal considered the legal effect of a contractual disciplinary appeal against dismissal and whether a successful appeal necessarily treats the earlier dismissal as of no effect. The court affirmed that an ordinary contractual right of appeal, read objectively, ordinarily has the effect that a successful appeal revives the employment relationship so that the original dismissal is treated as not having occurred. The court also held that, separately, an employer's failure in the terms of a letter upholding an appeal to address a serious allegation and to restore trust and confidence could constitute a repudiatory breach justifying constructive dismissal; on that alternative basis the Employment Tribunal had jurisdiction to hear the appellant's unfair dismissal claim.

Background and parties: The appellant was dismissed for alleged gross misconduct by letter dated 2 April 2014. He invoked the contractual disciplinary appeal procedure. An appeal was allowed by a letter dated 24 June 2014, but that letter did not address one of the two serious allegations (allegation of falsifying records) nor indicate withdrawal of a report to the regulator. The appellant refused to return to work and issued claims in the Employment Tribunal on 17 July 2014, including unfair and constructive dismissal claims.

Procedural history: The Employment Tribunal found that the appellant had been dismissed as at 17 July 2014 for two reasons: (i) the contractual appeal procedure did not contain any term that automatically erased the earlier dismissal so as to prevent a claim; and (ii) the respondent's letter of 24 June 2014 was unclear on the serious allegation and therefore the appellant was entitled reasonably to treat himself as dismissed. On the merits the ET found unfair dismissal and awarded compensation, increased under section 207A(2) of the Trade Union and Labour Relations (Consolidation) Act 1992 for ACAS Code breaches. The EAT allowed the employer's appeal on the jurisdiction point, holding that a successful contractual appeal revived the contract and meant the employee was not dismissed at the time the claim was presented. The appellant appealed to the Court of Appeal.

Issues before the Court of Appeal: (i) Whether an ordinary contractual right of appeal, when pursued and successful, has the effect that the original dismissal is treated as having no effect (thus defeating an unfair dismissal claim issued after that point); (ii) whether the appellant in any event had pleaded and proved constructive dismissal arising from the employer's handling of the appeal and the unsatisfactory letter; and (iii) ancillary issues relating to remedies and the EAT's handling of the cross-appeal and the ET's award under section 207A(2) TULRA.

Reasoning: The court held that, as a matter of objective contractual construction and consistent with authority, an ordinary contractual right of appeal ordinarily has the effect that a successful appeal revives the contract so that the original dismissal is treated as not having occurred. The court therefore dismissed the appellant's challenge to the EAT on that specific ground. However, the court found that the Employment Tribunal had also decided an alternative and arguable case that the employer’s failure to resolve the serious allegation and to clarify whether reports had been made to the regulator amounted to a breach of the implied duty to preserve mutual trust and confidence. That failure could justify the employee in refusing to return and in treating himself as constructively dismissed prior to issuing proceedings. The EAT had not adequately addressed that alternative reasoning. The Court of Appeal therefore allowed the appeal on that alternative basis, dismissed the employer's appeal in full and remitted certain matters to the EAT for consideration of the appellant’s cross-appeal.

Allowed in part. The court held that (i) as a matter of contractual construction an ordinary contractual disciplinary appeal, if pursued and successful, normally revives the employment relationship and treats the earlier dismissal as of no effect; but (ii) the Employment Tribunal was correct in any event to find an alternative basis for jurisdiction — that the employer’s inadequate letter and failure to address a serious allegation could amount to a breach of the implied term of trust and confidence, justifying constructive dismissal. The EAT had erred in failing to address that alternative reasoning and the court allowed the appellant’s appeal on that basis, dismissed the employer’s appeal, and remitted aspects of the cross-appeal to the EAT.

The claim began in the Employment Tribunal, which held that the appellant had been dismissed as at 17 July 2014 and found unfair dismissal; the respondent appealed to the Employment Appeal Tribunal (UKEAT/0348/15/DM and UKEAT/0006/16/DM) where HHJ Richardson allowed the respondent's appeal on the jurisdiction point citing Salmon v Castlebeck. The appellant then appealed to the Court of Appeal ([2018] EWCA Civ 1843); the Court of Appeal dismissed the appellant's principal ground but allowed the appeal on an alternative basis of constructive dismissal, dismissed the respondent's EAT appeal in full and remitted the cross-appeal matters to the EAT.