SOSR Dismissal: Some Other Substantial Reason2 October 2014
In this guide we’re looking at recent developments in SOSR dismissals and how employers can benefit from this fast developing area of law.
Part One: SOSR Dismissals
When establishing that an employee has been dismissed fairly, an employer must first show that the reason for the dismissal falls within one of five potentially fair reasons:
- Capability/qualifications of the Employee;
- Conduct of the employee;
- Frustration by an enactment of statute (illegality); and
- Some other substantial reason.
Owing to the vagueness of the statutory provision, ‘some other substantial reason’ (SOSR) has been defined, almost entirely, by case law. Potentially, SOSR could encompass any reason for termination not dealt with by the remaining four potentially fair reasons. It is for the employer to show that a reason falls under this classification and that termination is reasonable and equitable in the circumstances.
Significant examples of reasons upheld as SOSR are as follows:
- Business re-organisation (i.e. where dismissals are not technically redundancies under S139 of the Employment Rights Acts 1996);
- Refusal to accept changes to terms and conditions;
- Breakdown in relations/personality disputes;
- Conflicts of interest; and
- Third party “pressure”.
The ACAS ‘Code of Practice on Discipline and Grievance’ will be considered by a Tribunal in a dismissal where conduct or capability is the reason for dismissal. The EAT decided in Lund v St Edmund’s School that in SOSR cases “where disciplinary proceedings are, or ought to be, invoked against an employee” the ACAS Code should also be applied. The ACAS Code does not apply to redundancy dismissals or the non-renewal of fixed term contracts.
The ACAS Code sets out six elements to a disciplinary or grievance process:
- Employers and employees should raise and deal with issues promptly and should not unreasonably delay meetings, decisions or confirmation of those decisions;
- Employers and employees should act consistently;
- Employers should carry out any necessary investigations, to establish the facts of the case;
- Employers should inform employees of the basis of the problem and give them an opportunity to put their case in response before any decisions are made;
- Employers should allow employees to be accompanied at any formal disciplinary or grievance meeting; and
- Employers should allow an employee to appeal against any formal decision made.
A tribunal will also look at whether an employer has followed its own disciplinary procedure. If an employer does not follow its own disciplinary procedure, or at least the essential elements, this may result in a finding that the dismissal was unfair.
Part Two: Situations held to be SOSR
Breakdown in relations
The case of Ezsias v North Glamorgan NHS Trust established that a breakdown in relations can be classified as SOSR. In this case Mr Ezsias was dismissed due to a breakdown in the working relationship between him and his colleagues. The employer put forward that the dismissal was due to the breakdown rather than the employee’s conduct which lead to the breakdown. The Employment Tribunal held that Mr Ezsias was dismissed for SOSR rather than misconduct.
The case of Governing Body of Tubbenden Primary School v Mrs K Sylvester also shows that a breakdown in relations can be cited as SOSR, however it also provides that the circumstances leading up to the breakdown in relations i.e. the conduct of the parties is relevant in deciding whether a dismissal is fair or unfair.
Refusal to accept changes to terms and conditions;
An employer may wish to vary the terms of an employee’s contract. This should only be done in line with the terms of the contract, or on both parties’ agreement. Should an employee refuse to accept a proposed change to the terms and conditions of their contract and they are consequently dismissed, this may be deemed as a dismissal for SOSR. Sandford and another v Newcastle upon Tyne Hospitals NHS Foundation Trust dealt with an example of this.
In Sandford, the employer had re-banded the posts of 22 employees in a reorganisation. Two of the 22 employees refused the change and were consequently dismissed. The employees brought proceedings for unfair dismissal. The employer relied on SOSR for the reason of dismissal. The tribunal found that SOSR had been established.
The Sandford case shows that where a significant majority of employees accept the changes to the terms and conditions of their contracts, it is unlikely that the dismissal of the dissenting few will be deemed unfair, if the dismissal is based on their refusal to accept the changes.
An employer must be able to demonstrate that a unilateral change to a contract was not imposed arbitrarily but for a sound business reason. The reason does not need to be crucial to the survival of the business. Where a change amounts to a fundamental breach of contract, an employee may resign and bring proceedings for (unfair) constructive dismissal.
A business may undergo a restructuring without imposing any redundancies. In this event, related dismissals could be for SOSR. The recent case of Killen v Brunel University confirmed this. In this case the employer restructured and the employee was consequently required to interview for her position and subsequently dismissed in favour of a more impressive candidate. The ET in this instance found that SOSR could be relied upon. There had not been a relevant reduced requirement for employees, and therefore a redundancy situation had not arisen.
Conflicts of interest
A situation which creates a potential conflict of interest to the employer’s business interest may also qualify as a SOSR (although a serious conflict may also be ground for misconduct).
For SOSR to arise, an employer will be required to show that the employee had access to confidential information, had close connections with a competitor or employee of a competitor and there was a legitimate fear that the employee would share such information. An employer must show that it would create a real commercial risk to continue to employ the employee.
Occasionally an employer will dismiss an employee due to a third party e.g. at a client’s request. The importance of a third party’s business and the seriousness of any threat to leave must be considered. It would also be advantageous if the employer had anticipated the scenario in the employment contract.
The recent case of Jafri and Lincoln College is an example where a third party may result in the dismissal of an employee and therefore fall under SOSR. In this case the employee was employed by a college and was required to carry out his role at a prison. Due to a complaint which was subsequently found to be false, the employee was excluded from the prison and subsequently reinstatement was refused by the prison governor. The employee was found to have been dismissed due to SOSR. The dismissal was found to be fair due to the employer’s endeavours to reverse the employee’s exclusion from the prison and to find him alternative employment.
The recent case of Tarzi v Securitas Security also serves as an example of when a third party can lead to the dismissal of an employee. In this instance Gatwick Airport’s refusal to accept a security guard (involved in a previous incident) was found to be an SOSR dismissal.
Part Three: SOSR effecting a fair dismissal
In 2010 the Employment Tribunal (ET) in Cummings v Siemens Communications Ltd dealt with whether the ACAS Code should be applied to SOSR dismissals. The ET found that even though SOSR dismissals are not expressly covered by the Code, they did nevertheless apply. As this is a Tribunal decision it is not binding, however, it serves as some guidance for employers and has led to ET’s and the Employment Appeal Tribunal (EAT) to develop the position. We look at these below.
In 2013 the position in respect of ACAS and SOSR dismissals was further clarified in Lund v St Edmund’s School. In this case Mr Lund was dismissed without notice following conduct and capability issues which lead to a breakdown in trust and confidence in the employment relationship. The reason for the dismissal was established as SOSR.
At first instance the ET found that the ACAS Code did not apply as Mr Lund had contributed to his own dismissal and because the dismissal had been due to SOSR. On appeal, however, the EAT concluded that the Code could apply to SOSR. Furthermore they found that as Mr Lund had not contributed to the employer’s failure to comply with the Code, only to his own dismissal – of which he had already been penalised by a 65% reduction of the compensatory award, the Code was still applicable. This meant that Mr Lund was eligible for up to a 25% uplift to his award due to the employer’s failure to comply with the ACAS Code.
The EAT found that the ACAS Code was intended to apply to occasions where disciplinary action was appropriate, but not necessarily where dismissal would result. Emphasis was laid on the initiation of the process rather than the outcome, i.e. the dismissal of an employee due to conduct or capability did not trigger the requirement to comply with the ACAS Code, rather the conduct or capability of the employee which leads to disciplinary proceedings, or should do, triggers the requirement to comply with the Code.
Failure to comply with the ACAS Code will not automatically result in a finding of unfairness however it will be taken into account when a Tribunal is considering whether the dismissal was fair in all the circumstances. If the Code does apply, an ET can adjust compensation by +/- 25% depending on the circumstances. To ensure optimal protection from potential claims for unfair dismissal an employer should therefore invoke the ACAS Code in parallel with its own disciplinary procedures when issues of conduct or capability arise.
If there are any questions on SOSR dismissals or you have a matter that you would like to speak to us on, please contact 0203 178 5360.