United Docks Ltd v De Spéville (Mauritius)

Under section 32(1)(b)(i) of the Labour Act 1975, summary dismissal for alleged misconduct is justified only where the employer cannot in good faith take any other course. The question is whether dismissal was the only reasonably open course in all the surrounding circumstances, not merely whether the misconduct supplied a valid reason. A misdirection on that statutory inquiry permits the appellate court to conduct the inquiry itself. A normal-rate severance payment described as goodwill and notwithstanding alleged misconduct may be treated as without prejudice, although its wider context can give it some evidential weight. Where interest was claimed at a rate within the statutory discretion and was not challenged, separate reasons for awarding it were unnecessary.

The company summarily dismissed its senior accountant after an alleged Rs 8m overpayment to a former general manager and related workplace charges. The Industrial Court found gross misconduct and dismissed his claim for punitive severance allowance and salary in lieu of notice. The Supreme Court of Mauritius allowed his appeal on 5 June 2017 and ordered payment of approximately Rs 9.5m, subject to deduction of a normal-rate severance payment, with interest at 12% per annum. The company appealed as of right. The central issues were the proper construction and application of section 32(1)(b)(i) of the Labour Act 1975, the effect of an uncharged criticism concerning the board minutes, the significance of the severance payment, and the interest award.

The Board dismissed the appeal by a majority. Lord Wilson delivered the judgment, with Lady Hale, Lady Black and Lord Briggs agreeing. The company was ordered to pay the respondent’s costs.

1. Statutory test. Section 32(1)(b)(i) of the Labour Act 1975 required the company to show that it could not in good faith take any course other than dismissal. This was a different inquiry from whether the misconduct supplied a valid reason for termination. The relevant question was whether dismissal was the only reasonably open course in all the surrounding circumstances.
2. Earlier authority and appellate correction. The Board explained the scope of Saint Aubin Limitée v de Spéville [2011] UKPC 42. Its valid-reason approach concerned unjustified terminations governed by section 36(7) where section 32 did not apply. It did not govern summary dismissal for misconduct under section 32(1)(b)(i). The magistrate had therefore misdirected herself. The Supreme Court was entitled, and obliged, to conduct the correct inquiry itself. The Board saw no reason to interfere with its conclusion that the company had failed to prove that dismissal was its only option. The uncharged failure to consult the board minutes might independently have justified the Supreme Court’s decision under section 32(2)(a), but the Board preferred the broader statutory ground.
3. Severance payment. The normal-rate payment was expressed as a goodwill gesture notwithstanding the company’s view that the respondent had committed gross misconduct. Taken alone, it could properly be treated as without prejudice. Its surrounding circumstances gave some support to the Supreme Court’s interpretation, but the Board declined to attach the same weight to it.
4. Interest. Section 36(9) conferred discretion to award interest up to 12%. Since the respondent had claimed interest at 12% and the company had never challenged that claim, the Supreme Court was not required to explain separately why it selected that rate.

Lady Arden dissented. She considered that the second statutory condition concerned the seriousness of the misconduct. In her view, the senior accountant’s failure to ensure documentary vouching and an adequate audit trail for substantial payments showed that he could not be trusted to work without supervision. She would have allowed the appeal.

• Privy Council — Appeal dismissed; the company was ordered to pay the respondent’s costs.
• Supreme Court of Mauritius — On 5 June 2017, the employee’s appeal was upheld and an award of approximately Rs 9.5m, subject to deduction of Rs 1.1m, plus interest at 12% per annum, was ordered.
• Industrial Court — On 20 June 2014, the employee’s claim was dismissed after the magistrate found that the summary dismissal was justified.