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The ‘Catch All’ Device to Justify Dismissal

The ‘Catch All’ Device to Justify Dismissal

The notion of ‘some other substantial reason’ (SOSR) forms part of the five potentially fair reasons for dismissal in employment. Once an employee has established that they are qualified to claim for dismissal, the burden of proof shifts to the employer to prove, firstly, the reason for the dismissal and, secondly, that the particular reason falls under one of the potentially fair reasons laid out in Section 98 of the Employment Rights Act 1996 (ERA). Neither task should cause the employer any difficulty because the categories are widely construed.

Section 98(1)(b) of the ERA states that a dismissal can be justified if it is for:

some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

This formulation has been greatly criticised, in that its vagueness means that almost any reason could qualify, subject only to the qualification that it must be ‘substantial’.

Cases over the years have shown a range of reasons that justify dismissal under this ground, giving extra emphasis to the fact that it is not difficult for employers to establish a potentially fair reason for dismissal. Two of the most common class of cases which arise under SOSR is (1) for the well-being of businesses and (2) where there is pressure from a third party.

When an employee is dismissed because of a re-organisation of the business, within which the employee cannot or will not fit in, his dismissal may be fair. Thus, in RS Components v Irwin [1973] IRLR 239 NIRC, the dismissal of an employee who refused to accept a new contract of employment because it stated that he could not work for a competitive company for a year after employment was held to be a fair and ‘substantial reason’ for dismissal. Similarly in Hollister v National Farmers Union [1979] ICR 542, the Court of Appeal held that the tribunal should only ask whether the re-organisation was such that the most sensible thing to do was to terminate the employee’s contract unless he would agree to the new arrangement.

In both of these cases, the employers had negotiated with the employees to try and reach a mutual agreement for the changes. However, in Willow Oak v Silverwood [2006] EWCA Civ 660, the Court of Appeal upheld the Employment Appeals Tribunal’s (EAT) findings that the dismissal was unfair because the employer had not engaged in consultation, nor warned employees, that failure to agree to the restrictive covenants would result in dismissal. Hence, the justification under SOSR could not be relied upon by the employing company.

A question which often emerges is the extent to which an employer can change their employee’s conditions for the worse, and still justify it as a SOSR. In St John of God v Brook [1992] IRLR 546, a hospital offered new inferior contracts to the workforce. Not all the employees accepted the new terms and, as a result, were dismissed. The Employment Tribunal found that the re-organisation was a ‘substantial reason’ for the dismissal, but they had been unfair as it was unreasonable for the employer to expect the workers to bear such losses. The EAT reversed this decision and remitted the case, considering that dismissals, even in extreme circumstances, were capable of being fair. Due to the employer’s financial problems, they had a legitimate business need to implement the changes. Hence, it seems that the strength and importance of maintaining an effective business may sometimes override an employee’s rights to seek a remedy under unfair dismissal. Employers can go a long way in justifying the extreme changes in the conditions of their employees under SOSR.

Where customers or other employees provide pressure on the employer to dismiss, even though the employee has not particularly done anything to warrant dismissal under one of the five headings of potentially fair reasons, dismissal under SOSR may be fair and appropriate. Thus, in Treganowan v Knee [1975] ICR 405 the employee was dismissed without notice because she had had an affair. As she had committed no fundamental breach of contract, it would have been wrongful dismissal at common law. This illustrates that whether notice is given or not is largely irrelevant in unfair dismissal cases. The main legal interest in this case lies in its clear differentiation between wrongful and unfair dismissal. As a result, the EAT held that this was a wrongful dismissal because no notice was given, but it was not unfair. The EAT could not therefore make any award at all. If the applicant wished to obtain contractual damages, she would have to take separate proceedings in the ordinary courts.

A different kind of personality clash was established in Perkin v St Georges’s Healthcare NHS Trust [2005] EWCA Civ 1174. The Court of Appeal stated that personality could not itself be a substantial reason for dismissal, but where it manifested itself in behaviour which caused such a breakdown in confidence between colleagues, that it became almost impossible to work together, this could be a substantial reason to defend dismissal.

It must be noted that if the pressure that is exerted from other employees takes the form of a threat to take industrial action, a tribunal should take no account of it in deciding whether or not the dismissal is fair under SOSR, according to Section 107 of the ERA.

The problems in relation to allowing third party pressure to validate dismissal under SOSR, is that the third party’s reasons and intentions for wanting the dismissal may be unfair if relied on wholly by the employer. In Dobie v Burns International Security [1984] EWCA Civ 11, the airport authority refused to allow the claimant to carry on with his job after receiving complaints about him. Consequently, they offered him an alternative job at a lower rate, which he refused. In these circumstances, the Court of Appeal held that his dismissal was capable of being fair.

Aside from the needs of businesses and third party pressure, other reasons have been developed to justify SOSR. In Terry v East Sussex [1976] IRLR 332 EAT, it was concluded that the expiry of a fixed term contract without renewal was capable of being a dismissal for SOSR. The onus will be placed upon the employer, however, to demonstrate the fair reason for the non-renewal, to convince the tribunal that it was ‘substantial’ and show that the employer acted reasonably in the given circumstances.

Additionally, under the Transfer of Undertakings Regulation 2006, dismissals in connection with a transfer may constitute SOSR. Therefore, it will be subject to the scrutiny of the tribunal to assess whether or not it was reasonable in the circumstances.

Under Section 92 of the ERA, an employee is entitled to ask for the reasons for dismissal to be declared in writing. If the employer refuses to comply, the employee could be awarded two weeks’ pay. Such a statement may be of beneficial use to the employee in that the employer will then lack credibility if the attempts to put forward some additional or alternative reason at a tribunal hearing.

In summary, it is for the employer to act reasonably in treating the reason as a ‘sufficient’ one for dismissal. Originally, the employer maintained that burden. However, since 1980, the burden of proof has been neutral. Under Section 98(4) of the ERA, it is for the Employment Tribunal to decide whether the employer acted reasonably or not, giving regards to all the merits of the case. In practice, the employer will need evidence about the reasonableness of the decision and their reasons for dismissal. This means that if an employee is qualified to claim, it will be for the employer to put their case first.

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