When can previous warnings be used to justify a fair dismissal

In a recent case decided by the Court of Appeal the issue of previous warnings and in what circumstances they can be taken into account when dismissing employees, has been decided.

The Law

In order to dismiss an employee fairly you must have one of five potentially fair reasons for dismissal being:

• capability or qualifications;
• conduct;
• redundancy;
• breach of a statutory duty or restriction;
• some other substantial reason

Once you have established a potentially fair reason it is necessary to look at the reasonableness of that decision.

Section 98(4) of ERA 1996 states;

The determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) –

(a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case.

From this there are then two distinct tests;

• Procedural fairness
• Substantive fairness

In deciding reasonableness you are entitled to rely upon an earlier warning as long as the warning was;

• Issued in good faith;
• Had good grounds;
• Given appropriately.

This means that an employer cannot give an employee several unreasonable and unnecessary warnings just to build a case for a ‘reasonable’ dismissal later on.

The Facts

In this case Mr Way was employed by Spectrum Property Care Limited (Spectrum) as Electrical Contracts Manager between October 1998 and December 2011.

Mr Way had been given a final written warning by Spectrum in late 2010 for the inappropriate appointment of a new employee contrary to their procedures regarding fair recruitment and the disclosure of relationships. The letter warning Mr Way stipulated that it would remain on his record for 12 months and stated that he must familiarise himself with policies and procedures of the company.

In July 2011 there was an investigation undertaken by Spectrum into inappropriate e-mails sent in breach of company policy, and Mr Way was found to have sent three e-mails: one, five days after the final written warning and one after 1 July 2011, when Spectrum had made it clear, in an e-mail to staff, that sending such e-mails would amount to gross misconduct.

Spectrum decided they had justification for dismissal because of his earlier warning and breach of company policy immediately after being told it would be dealt with as gross misconduct.

Mr Way disagreed with the decision and appealed internally stating one of the grounds for his appeal being that the earlier warning he had received had been unfair, this was despite the fact that he had not appealed against the warning at the time. In particular Mr Way argued that if he had not been given the earlier warning he would not have been dismissed.

When his appeal was unsuccessful Mr Way made a claim in the Employment Tribunal for unfair dismissal.

In the Employment Tribunal Mr Way made various allegations about the fairness of the procedure in the final written warning. The Judge decided that he would not allow evidence about the background to the previous warning to be heard and found in favour of Spectrum.

Mr Way appealed to the Employment Appeal Tribunal on the basis that the Tribunal Judge should have allowed evidence about the previous warning as it was relevant to the case and the decision as to whether his dismissal was fair or not.

The Employment Appeal Tribunal decided that the fact that Mr Way had raised issues about the fairness of the warning in his claim and evidence that was sufficient to question whether the warning had been given in good faith meant that the Tribunal Judge should have considered the issue.

In addition to this, despite the fact that Mr Way had not appealed against the warning at the time, both parties had concluded that the issue of whether the warning could be relied upon in the fairness of the dismissal was an issue to be decided in the case. Therefore the Judge should have allowed evidence to be heard and to have considered in the decision as to whether it was a fair dismissal or not.

Although the Employment Appeal Tribunal decided that the warning should have been considered by the Judge they then went on to decide that even if it had been considered it would have made no difference to the outcome of a fair dismissal. The reason for this was because they were satisfied that the issue of fairness of the warning were dealt with in Mr Way’s appeal against dismissal, and therefore this issue had been addressed by Spectrum.

Mr Way appealed further to the Court of Appeal.

The Decision

The Court of Appeal disagreed with the decision of the Employment Tribunal and Appeal Tribunal and concluded that a ‘warning given in bad faith is not, in circumstances such as these, to be taken into account in deciding whether there is, or was, sufficient reason for dismissing an employee. An employer would not be acting reasonably in taking into account such a warning when deciding whether the employee’s conduct was sufficient reason for dismissing him; and it would not be in accordance with equity or the substantial merits of the case to do so. To hold otherwise would be inconsistent’ with previous decisions.

Mr Way’s appeal was allowed and referred back to a differently constituted Employment Tribunal so that they could look again at whether or not Mr Way was unfairly dismissed.

Finally the Court of Appeal concluded that had the question of whether or not the warning was given in bad faith been addressed at the initial hearing it would have saved both appeals.

Points to Note

The outcome of this case is a useful reminder that when relying on warnings to justify dismissal for conduct which, without the prior warning, would not have resulted in dismissal, you should proceed with care.

If an employee raises an issue about the fairness of a previous warning you should consider revisiting the fairness of the earlier warning, even if the employee has not previously appealed the decision, and proceed with caution if you are relying on the warning to justify dismissal.

It should also be noted that when you give a final written warning you should state clearly in the warning that any future misconduct of any nature during the period that the warning is live could result in dismissal. This way it is more likely to be reasonable for you to rely on the final warning even if the type of misconduct is unrelated.

When taking the decision to dismiss an employee who has been employed for more than two years, I recommend that you consider seeking a second opinion before doing particularly if there is any doubt in your mind about the reasonableness of dismissal.

You can read the full judgement here: Way v Spectrum Property Care Limited