Breakdown in employment relationship – Unfair dismissal?

15 June 2016

This week judgment was delivered by the Employment Appeal Tribunal (EAT) in another interesting SOSR case i.e. dismissal for Some Other Substantial Reason.

The case of Express Medical Limited v O’Donnell UKEAT/0263/15/DA concerned procedural fairness and the applicability of a Polkey deduction.

At Employment Tribunal Mr O’Donnell won his unfair dismissal claim and no Polkey deduction was made (i.e. on the basis that the employee would have been dismissed in any event). Express Medical appealed.

O’Donnell and Dr Hegarty (the figurehead of Express Medical) ran a business together. They had worked together and been friends for over 18 years. The employment relationship broke down after a falling out relating to the company’s website re-design and accompaying issues. O’Donnell owned one third of the business and Hegarty owned two thirds; both were directors.

In the weeks succeeding the fall out the two sides attempted to conclude separation terms. This was never resolved and the Tribunal found that ultimately O’Donnell was dismissed.

There was a fair reason for dismissal: SOSR relating to a loss of trust and confidence between employer and employee. The Employment Judge found that the procedure followed by the company was unfair and outside the range of reasonable responses of a reasonable employer.

However, the Employment Judge did not specify how the procedure was unfair. It was not at all clear what the employer company should have done in the circumstances to make the procedure fair. O’Donnell agreed that he was leaving the business but had said he wanted some salary in order to do so.

The EAT concluded: “… the finding of unfairness was predicated not just upon its possible prematurity but upon some unspecified procedure that the Judge had in mind as making the difference between that which would have been fair and that which was unfair.  I do not know what he had in mind.

The other element of the appeal related to the failure to make any Polkey deduction at the Tribunal level. The EAT concluded that it was perverse for the Tribunal to effectively have said O’Donnell’s employment would have continued in circumstances where the breakdown in relations was acknowledged by both sides and it was clear O’Donnell wanted to leave employment. HHJ Langstaff at the EAT stated: “I am satisfied that the Judge here could not safely have concluded that there was insufficient material upon which to assess the chances here that the employment would have terminated by dismissal or, as it may be here, by consensual termination or resignation and to establish in his best judgment when that might be”.

Both grounds of appeal were successful and the issues – the procedural fairness and (if unfair dismissal was made out) the Polkey deduction – were remitted to a fresh Employment Tribunal.

The full EAT judgment can be found here.

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