Muehlhan Industrial Services Limited v Murphy

Under section 98(4) of the Employment Rights Act 1996, a tribunal must decide whether dismissal was within the range of reasonable responses open to the objective reasonable employer. It may scrutinise the employer’s reasoning rationally for that purpose, but must not substitute its own subjective view of the appropriate sanction.

An erroneous formulation of an issue does not vitiate a decision unless it affects the tribunal’s operative reasoning. Equity and the substantial merits form part of the single statutory inquiry; they do not create a separate equity test.

The claimant, an offshore scaffolder with a clean disciplinary record, was summarily dismissed after two objects fell into the sea during scaffold work. He and a colleague did not stop work and report the first incident immediately. The employer treated the conduct as gross misconduct.

The Employment Tribunal held the dismissal unfair, while reducing compensation by 50% for contributory fault. It found that the employer had failed adequately to recognise available mitigation, including that the claimant intended to report the matter. The employer appealed, alleging that the Tribunal had substituted its own view and had applied a separate equity test under section 98(4) of the Employment Rights Act 1996.

1. Appeal dismissed. The Employment Tribunal made no material error of law in holding the dismissal unfair.

2. The Tribunal’s statement of an issue as whether the claimant had committed misconduct was legally erroneous. The first stage in British Home Stores v Burchell concerns the employer’s genuine belief in misconduct. The error did not infect the operative reasoning. There was ultimately no material dispute about the incidents or the employer’s belief; the central issue was whether dismissal lay within the range of reasonable responses.

3. A tribunal must apply the objective standard of the hypothetical reasonable employer. It must not decide what it would itself have done. It may nevertheless analyse the employer’s reasons rationally, since that is necessary to decide whether dismissal falls within the permissible range. Read in context, the Tribunal’s references to rational analysis and difficulty understanding the employer’s reasons did not show impermissible substitution.

4. The Tribunal was entitled to assess the employer’s failure to treat as mitigation the claimant’s intended later report, his record and the circumstances of the incident. The employer’s conclusion that there was no mitigation did not withstand the required objective scrutiny. The finding that dismissal was outside the range of reasonable responses was therefore open to the Tribunal.

5. Section 98(4)(b) does not impose a second or discrete equity inquiry. The Tribunal merely repeated the statutory language as part of the single inquiry under section 98(4), and carried out no separate equity analysis.

• Employment Appeal Tribunal: appeal dismissed; the Employment Tribunal’s finding of unfair dismissal was upheld.

• Employment Tribunal, Aberdeen: judgment dated 15 November 2017 held the dismissal unfair and made a monetary award reduced by 50% for contributory fault.