Case update (1): Unfair dismissal – The ‘Vanishing dismissal’

Summary:  Where a dismissed employee brings an internal appeal, which results in their re-instatement, should they be treated as if the employment relationship had remained in existence throughout the appeal process?

Yes, says the EAT in Phoenix Academy Trust v Kilroy, available here, even if the employee made it clear when appealing that they have no intention of returning to their job whatever the outcome of the appeal.  This is a confirmation by the EAT of well established law.

Facts:  The employee, Mr Kilroy, was summarily dismissed by Phoenix Academy Trust, the employer, just before it received his resignation letter alleging constructive dismissal.  Mr Kilroy appealed against the decision, but his solicitors also wrote to the employer stating that, whatever the outcome, he wouldn’t be returning to work.  After that letter, but before the internal appeal was heard, the employee submitted a Tribunal claim for unfair dismissal.

When the internal appeal was eventually held, the employer reinstated him subject to a final written warning, requiring his return to work. The employee refused, instead continuing with his constructive unfair dismissal claim.

Tribunal decision

The Tribunal held that the employee had not affirmed his contract by invoking the appeal and that he had been unfairly (constructively) dismissed. This was, in particular, because the employee had made it clear to his employer on a number of occasions that he did not intend to return to his employment irrespective of the outcome of his appeal.

The employer appealed.

EAT decision

The EAT upheld the employer’s appeal and found that by invoking the appeal process, the employee treated the contractual relationship as continuing to exist.

The EAT also confirmed that where an employee’s internal appeal overturns their dismissal, then in law it will be as if no dismissal had ever occurred: even if the employee made it explicitly clear when submitting the appeal that they have no intention of returning to their job regardless of the outcome.

However, if breaches of the implied term of trust and confidence continue through the employer’s conduct of the appeal process, then the employee may be able to rely on the totality of the employer’s acts forming part of a series amounting to a fundamental breach of trust and confidence.

In light of the above, the case was sent back to the Tribunal for consideration of the employee’s complaints about the employer’s conduct during the internal appeal procedure.

Implications:  The essence of the decision (namely that a successful appeal cancels a  dismissal) was already well established in law but it is useful to have the EAT re-visit it for this review, especially when it involves the additional complicating factor of a constructive dismissal claim, where the Claimant actually wanted to argue the opposite.   The EAT confirmed that when an employee appeals against their dismissal, it is implicit that they are asking their employer to find that the dismissal decision was wrong and to return them to their pre-dismissal position.  The legal effect of a successful appeal against dismissal is that the earlier dismissal simply vanishes. The employer must treat the previous dismissal as having no effect and the employee is bound in the same way.  Accordingly, an unfair dismissal claim cannot succeed since there will not have been a dismissal. This will be the case regardless of whether the dismissal stood at the time that a claim was lodged at the Tribunal.

However, an employer does not have a clean slate when an employee has affirmed the employment contract by invoking an internal appeal. The employer remains at risk that a further act (or omission) by them may enable the employee to resign and claim constructive dismissal based on a cumulative repudiatory breach of trust and confidence.

Coronavirus (Covid-19): Beyond furlough – Job retention bonus scheme

What do we already know?

We updated you in our July and August Newsletter Coronavirus (COVID-19): Beyond furlough – A plan for jobs that the Government has introduced several measures designed to assist the economy as a result of the COVID-19 pandemic, including the Job Retention Bonus scheme.

What’s new?

We update you on further detail of the Job Retention Bonus scheme.

The Job Retention Bonus scheme is intended to support employers who retain their furloughed employees after the CJRS ends on 31 October 2020. The Government’s policy paper (available here) provides more detail about the proposed operation of the scheme.

The scheme will entitle employers to receive a one-off bonus payment of £1,000 (‘Job Retention Bonus’) for every employee who was furloughed under the CJRS, provided that they meet certain eligibility criteria.

Which employers are eligible to use the scheme?

All employers are eligible for the scheme, including recruitment agencies and umbrella companies.

Which employees are eligible for Job Retention Bonus?

Employers will be able to claim a Job Retention Bonus for all employees who meet the relevant criteria, and this will extend to office holders, company directors and agency workers, including those employed by umbrella companies. The criteria must be met regardless of the frequency of an individual’s pay period, hours worked and rate of pay.

Employers will be able to claim for employees who:

  • were furloughed and had a CJRS claim submitted for them that meets all relevant eligibility criteria for the scheme;
  • have been continuously employed by the relevant employer from the time of the employer’s most recent claim for that employee until at least 31 January 2021;
  • have been paid an average of at least £520 a month between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the 3 months). The employee does not have to be paid £520 in each month, but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via Real Time Information (RTI);
  • have up-to-date RTI records for the period to the end of January 2021;
  • are not serving a contractual or statutory notice period that started before 1 February 2021.

A claim may be made in respect of a fixed-term employee whose contract is extended or renewed provided they meet the other eligibility criteria.

Where employees have TUPE transferred to a new employer, the new employer may be eligible to claim the Job Retention Bonus in respect of those employees provided the transferred employees have been furloughed and claimed for under the CJRS by the new employer following a transfer taking place on or before 31 October 2020 (when the CJRS comes to an end).

What are the exclusions?

HMRC will withhold payment of the Job Retention Bonus where it believes there is a risk that CJRS claims may have been fraudulently claimed or inflated, until any enquiry is completed.

When can claims be made, and what should employers do now?

Employers will be able to claim the Job Retention Bonus after they have filed their PAYE information for January 2021, and payments will be made to employers from February 2021.

Full guidance on the operation of the scheme is due to be published by the end of September 2020, but employers who hope to take advantage of the scheme should consider its eligibility requirements now.

Employers should also ensure that they:

  • comply with their obligations to pay and file PAYE accurately and on time, including accurately reporting their employee’s details and wages on the Full Payment Submission (FPS) through the RTI reporting system for all employees and maintaining enrolment for PAYE online; and
  • keep their payroll and employee records up to date and accurate and address all requests from HMRC to provide missing employee data in respect of historic CJRS claims.


plan for jobs - group of workers

The Government’s new Kickstarter Scheme

The government has just launched what it is calling its Kickstarter Scheme, aimed at creating 6 month-long work placements for young people on Universal Credit who are at risk of long-term unemployment.   The idea is that the skills and experience they will develop will get them into work once they complete the scheme.

Funding is available for 100% of the relevant National Minimum Wage for 25 hours a week, plus associated employer National Insurance contributions and employer minimum automatic enrolment contributions. There is also £1,500 per job placement available for set-up costs, support and training.

The scheme benefits larger employers able to offer a minimum of 30 placements.  Smaller employers can ‘join forces’ with others to get to this minimum number (and there is a little extra funding available to manage the admin burden of doing so) but the scheme has been criticised for disadvantaging smaller employers.

More details of the scheme and how to apply can be found here.


Collective redundancy: Government guidance and HR1 form

The Government has published an updated HR1 form (available here) for employers to notify the Secretary of State of their intention to make 20 or more employees redundant within a period of 90 days or less.

The new form is intended to be shorter and more straightforward to complete.

The Government has also updated the accompanying guidance notes on how to use the HR1 form and collective redundancies more generally (available here).

A failure on the part of an employer to notify the Secretary of State of a proposal to make collective redundancies is a criminal offence, which can result in an unlimited fine being levied against the employer. Individual directors can also be prosecuted and found liable, if the offence has been committed with the consent or connivance of, or attributable to neglect on the part of, such individual.

Coronavirus (Covid-19): Returning from abroad – self isolation guidance

The Government has published new guidance (available here) for employers and employees on the rules relating to self-isolation after returning to the UK.

The guidance covers those who are returning from a country without an ‘air-bridge’ (i.e. a quarantine exemption).  For the list of those countries with air-bridges see here. The list is continuously updated with the most recent changes including the removal of Belgium, the Netherlands and France from the list, as well as Spain before that.

The guidance briefly sets out the possible options available to employees who are required to self-isolate after a period abroad, including working from home or taking a period of annual or unpaid leave. It also provides a strong reminder to employers that the dismissal of employees who are required to self-isolate should be a last resort, and states that Tribunals will consider all the relevant facts around a dismissal, which could include public health guidance on coronavirus.

Coronavirus (COVID-19) – All things furlough (again!)

What do we already know?

As explained in our April Newsletter All Things Furlough – FAQS and what we know so far, the Coronavirus Job Retention Scheme (‘CJRS’) has been a temporary scheme funded by the Government to create an alternative to implementing redundancies, lay-offs, unpaid leave or other measures employers might otherwise need to instigate during the current crisis.

We updated you in our July and August Newsletter Furloughed employees and Redundancy that the Government introduced new rules for the CJRS from 31 July 2020, to ensure that statutory payments for furloughed employees (of particular importance being statutory redundancy pay) are based on their normal pay, rather than their reduced furlough pay.

What’s new?

We provide more detail of this legislation and how to calculate such payments below:

Calculating Redundancy Pay:

  • For employees with normal working hours where pay doesn’t vary with the amount of work done, the new rules only apply where the calculation date for redundancy falls on or before 31 October.
  • For employees whose pay varies with the amount or time of work done, such as piece workers, shift workers or those with no fixed hours, their redundancy pay is averaged out over the 12 weeks before the calculation date for redundancy. Under the new rules, when calculating an ‘average week’s pay’, employers must treat any weeks an employee spent on furlough as if they were working on their pre-furlough wage.
  • The Regulations apply to the basic statutory redundancy pay (SRP) and do not affect any enhanced redundancy payments scheme that an employer may provide.
  • These rules will not apply to employees whose employment terminated for redundancy before 31 July, except if their statutory notice would have expired on or after 31 July if full statutory notice was given.
  • These rules do not affect the statutory maximum on a week’s pay for SRP purposes, which is currently £538.

Where employers need to make redundancies during furlough leave, the CJRS can continue to be used to fund employees’ notice pay where they are serving out their notice still in employment.  However, the CJRS cannot be used to find the redundancy payment itself. Nor can it be used to fund any payment in lieu of notice.  Employers making redundancies amongst furloughed staff should therefore chose carefully between opting for notice being served out in employment (on furlough) or paid in lieu, since the financial ramifications are very different.

Calculating Other Statutory Entitlements:

The Regulations are not limited to statutory redundancy pay, as the new law also impacts other employment rights which are calculated based on an ‘average weekly pay’ including:

  • Statutory Notice Pay (when served after 31 July 2020): under the Regulations, an employees’ notice pay must be based on their normal wage, rather than any reduced furlough wage.  For employees who are entitled to contractual notice of at least one week more than the statutory minimum, the new rules do not appear to apply.  However, our advice is always to pay full pay to any employee serving notice (or being paid in lieu) since we view the existing (pre-pandemic) law as already requiring temporary pay reductions not to count for the purposes of notice pay.  In this respect, the new regulations merely confirm this on a statutory footing.
  • Unfair dismissal awards:  the new Regulations ensure that basic awards for unfair dismissal claims are calculated based on a furloughed employee’s full wage, rather than any reduced furlough wage.  Again, we consider this a statement of the (pre-existing) obvious, although it is helpful to have it confirmed in statute.
definition of furlough

Government Reforms (1): Public sector exit payments – CAPS LOCK ON…

What do we already know?

We updated you in our October 2015 Newsletter Government reforms (1): Cap on exit payments and May 2019 Newsletter Government Reforms (1): Public Sector Exit Payments – CAPS LOCK ON… that the Government proposed that exit payments to public sector workers should be capped at £95,000 (which include pay in lieu of notice, redundancy and ex gratia payments).  The expectation was that the cap would likely become law in early 2017.  However, there was a delay and the Government’s consultation on the cap only closed on 3 July 2019.

What’s new?

On 21 July 2020, the Government finally published its Response to the Consultation on capping public exit payments (available here).  A couple of days later the Government published its latest draft of the relevant legislation, The Restriction of Public Sector Exit Payments Regulations 2020, available here.

The £95,000 cap will apply to the vast majority of public sector authorities and offices that are set out in a lengthy schedule to the draft 2020 Regulations. The cap will apply to any non-exempt termination payments that represent a cost to the employer, including redundancy payments, employer pension contribution top-up payments, ex gratia sums, voluntary exit payments, a payment in lieu of notice that exceeds one quarter of the employee’s annual salary, and shares and share options.

Any compensation payments made under the ACAS arbitration scheme or a settlement or conciliation agreement are also caught, but a special mandatory relaxation of the rule will apply in discrimination, whistleblowing, and health & safety detriment or dismissal claims. Relaxation of the rules will also be applied to payments made as a result of TUPE and there will be a discretion to relax the rule if applying it would cause undue hardship or significantly inhibit workforce reform.

Payments specifically exempt from the cap include death-in-service payments, injury compensation, pay in lieu of untaken holiday, payments made in compliance with a court order, and pay in lieu of notice that does not exceed one quarter of the employee’s annual salary.

Where two or more public sector exits occur in respect of the same person within a period of 28 consecutive days, the total amount of the exit payments made to that person cannot exceed the £95,000 cap, with the draft 2020 Regulations setting out the sequence in which exit payments will be considered paid when applying the cap.

Public sector workers will be obliged to disclose their departure and eligibility to an exit payment to any other interested or affected public bodies, for example those responsible for paying them as office holders.


Case update (2): Unfair dismissal – Personality clash S.O.S.R. dismissal

Summary:  Can a dismissal be fair in the absence of any procedure or right of appeal, when there is a personality clash between two senior members of staff resulting in an irreparable relationship?

Yes, says the EAT in Gallacher v Abellio Scotrail Limited available here.

Facts:   Mrs Gallacher, the employee, was a senior manager at Abellio ScotRail, the employer. Over the course of her employment, the relationship between herself and her line manager became strained as a result of various disputes relating predominantly to salary and recruitment issues.

A couple of meetings were held to discuss their relationship, but ultimately both parties felt that the relationship had broken down irreparably and the employee did not show any interest in repairing it. The employee openly made negative comments about her manager and admitted she did not behave towards anyone else in the same way.

When the employer began trading at a loss, changes needed to be made quickly. There were no signs the relationship could be repaired and no alternative roles for the employee. Therefore, after consulting with HR, the employee’s line manager decided to dismiss her during an annual appraisal meeting, citing an irretrievable breakdown of working relations. There was no procedure followed, particularly as the HR advice had been that, as the matter was not one of conduct or capability, there was no process which could help manage the situation. The employee was not offered the right of appeal and was paid in lieu of her notice entitlement.

The employee brought claims for unfair dismissal, disability, sex and age discrimination. The employer denied that it had knowledge of the disability relied upon by the employee, which were symptoms connected with the menopause and depression.

Tribunal decision

The Tribunal rejected the employee’s discrimination claims and found the dismissal to be within the band of reasonable responses available to the employer and to have been a fair dismissal since it came within the permissible dismissal category of ‘some other substantial reason’ (SOSR).  Here, the ‘substantial reason’ was the lack of trust and confidence between two employees at senior level.

The Tribunal acknowledged that the complete lack of dismissal procedure would, in most cases, result in the dismissal being regarded as unfair. However, in the particular circumstances of this case, the decision to dismiss was substantially and procedurally fair.

The Tribunal accepted the employer’s submission that an irretrievable breakdown in trust and confidence, particularly between two senior managers at a critical time for the business, did not naturally fit into any internal policy and would not serve any useful purpose.

The Tribunal found no evidence that the claimant was interested in retrieving her relationship with her line manager, and it considered any appeal would have been “going through the motions”.

The employee appealed to the EAT.

EAT decision

The EAT dismissed the claimant’s appeal, upholding the Tribunal’s decision. Though the EAT warned that any dismissal without procedure should be approached with a high level of caution, it confirmed that if a procedure is reasonably considered by the employer to be futile it can choose to dispense with it. There is no rule of law that the absence of any procedure necessarily renders a dismissal unfair – all the circumstances of the case need to be taken into account.

In particular, the EAT took into account the fact the claimant herself recognised the breakdown in her working relationship with her manager but had no interest in repairing it.


This is a rare example of where a dismissal with no procedure was still considered to fall within the range of reasonable responses available to an employer. In almost all cases involving a dismissal, as you will well know an employer is expected to follow at least a minimum procedure before making the decision to dismiss. It was significant here that the employee concerned was senior, showed no inclination to retrieve the situation, and that the business found itself in a particularly critical situation.

Whilst we would always advise extreme caution in dispensing with any dismissal procedure where an employee has unfair dismissal rights, this provides a useful reference point for employers who find themselves in situations whereby the relationship between two key employees has broken down past repair.

However, the case should not be viewed as a green light to dispense with a fair procedure before terminating employment! Had a fair process been followed in this case, it would have been harder for the claimant to argue her dismissal was unfair. This could well have saved the time and cost of defending expensive Tribunal proceedings.

Case update (3): Unfair dismissal – Anonymous witnesses

Summary:  Is it unfair for an employer to dismiss an employee based on the evidence of an anonymous witness?

Not necessarily, says the EAT in Tai Tarian Ltd v Christie, available here.

Background:  During the investigation stage of employers’ internal procedures there maybe witnesses who wish to remain anonymous. To rely on such evidence, the EAT in a previous case of Linfood Cash & Carry Limited v Thompson recommended guidance based on a balancing the need for a fair hearing with the protection of witnesses.  The guidance is that:

  • information provided by the informant should be written down in one or more statements;
  • the statements must be made available to the employee who is under investigation;
  • an employer should consider the background and motives of the witness in question;
  • at each stage of the investigation process the decision makers should interview the informant and satisfy themselves that weight is to be given to the information; and
  • written notes should be taken of all interviews with the witness.

Facts:  The employee, Mr Christie, was employed as a carpenter by Tai Tarian, the employer (a housing association) for over 14 years. The employer was informed that the employee made several homophobic comments to a tenant whilst carrying out work on her property. The employee denied the allegation against him maintaining he would never have made any such comments.

The tenant, who suffered from anxiety, was interviewed twice as part of the disciplinary investigation and indicated her concern about repercussions should her identity be disclosed. She was not asked to attend the subsequent disciplinary hearing and was unable to attend the appeal for personal reasons. Neither the disciplinary manager not the appeal manager were able to meet the tenant. During the disciplinary hearing the employee requested details of the tenant but they were not disclosed.

The employee was dismissed and his appeal was unsuccessful.  This was despite the appeal manager noting that she did not believe the employee was necessarily homophobic, and the provision of several character references which the employee believed proved he was not homophobic.

The employee brought a claim for unfair dismissal on the basis that the dismissal process had been unfair because of the reliance on evidence of an anonymous witness.

Tribunal decision

The Tribunal upheld the claim and found that, having acknowledged that other evidence demonstrated that the employee was not in fact homophobic, it did not accept that the employer’s decision makers held a genuine belief in the employee’s misconduct.

Further, the Tribunal found that the investigation was unreasonable and the decision to dismiss based on an anonymous witness fell outside the band of reasonable responses which were open to the employer. The employer had acted unreasonably in accepting the truthfulness of the tenant’s anonymous account, when the tenant had not been interviewed by either decision-makers.

The employer appealed.

EAT decision

The EAT upheld the employer’s appeal and ruled that the Tribunal had not met the test of demonstrating “logical and substantial grounds” to support its conclusion that the employer could not have reasonably accepted the tenant’s evidence as truthful.

The EAT referred to the guidance set out in Linfood Cash and Carry v Thomson and held it had been within the range of reasonable responses for the employer to preserve the anonymity of the tenant. It disagreed with the Tribunal’s rationale that reliance on the tenant’s statements, without having further evidence from her, was unreasonable.  Further, the Tribunal had been wrong to draw the inference that because the employee was not homophobic, he could not have made homophobic remarks.

The case was sent back to a different Tribunal for a re-hearing.

Implications:  The EAT’s decision here confirms that a dismissal based on anonymous witness evidence will not necessarily render the dismissal unfair. However, anonymity of witnesses should be avoided where at all possible, as it is likely to put the accused employee at a disadvantage. The ACAS guidance on conducting workplace investigations (available here) only recommends anonymising a witness statement where a witness has a genuine fear of reprisal.

Employers should take care to investigate why there is a need for anonymity, and whether the witnesses’ concerns can be alleviated by any other means.  Where the need for anonymity is justified, consideration should be given to the potential impact anonymity might have on the employee’s right to know the allegations made against them and the ability to respond.    Employers should ensure that they investigate the credibility of the witness, including trying to identify whether the witness may have any reason to fabricate evidence.  The relevant decision makers should also directly interview the witness where possible.

September 2020 Newsletter

Congratulations, you’ve made it to September!  Many of us feel a milestone has been reached, whether that is a child-free home at last or a full or part return to the office.  So, put the kettle on and pat yourself on the back as you browse this month’s Newsletter for the latest employment law developments and maybe chuckle at this one we saw recently:

“Dear September, I don’t want any trouble from you.  Just come in, sit down, don’t touch anything and keep your mouth shut.”  

In this issue you can expect an update on the resurrection of the cap on public sector exit payments, further details on statutory payments for furloughed employees and the Job Retention Bonus scheme, the newly create Kickstart scheme,  self-isolation guidance for those returning from abroad and updated HR1 form for collective redundancies.

In our case update, we focus on three unfair dismissal cases which respectively look  at ‘vanishing’ dismissals following successful appeals, a personality clash ending in a fair dismissal with no procedure, and dismissal relying on anonymous witness evidence.

We also share with you (in our ‘nothing about employment law bit’ at the end of the Newsletter) a very well thought-through blog from friend of Menzies Law and business psychologist Caroline Gourlay.  Now we know that working fully or partly from home will be with us for the long-term, Caroline offers some very practical tips for navigating work/life balance.

What we’ve been doing recently…

After a rather busy 5 months, most of the team managed a short break during August and we’re now back and ready to tackle whatever employment law conundrums you throw at us.  We’ve certainly seen a big increase in redundancies and restructures and a real rise in enquiries to Tamsin James (who specialises in advising individuals) from people questioning the fairness, objectivity or procedure (or all three) of their respective redundancies.  A sharp rise in claims is almost guaranteed (as mentioned previously).

Anne-Marie is busy preparing for our joint webinar on 15th Sept. She’ll join flexible working specialists Flexology, and culture & employee engagement experts Peopletopia, helping employers prepare for the array of changes they can anticipate in their workplaces.  There are still places available if you’d like to join the conversation:

Speaking of webinars, we’re continuing to plan for our next online events to replace our usual face-to-face Employment Law update.  Dates and full content will be ready to share with you soon.  As always, if there is a subject you are keen to hear about, please do tell Lindsey ().  On our list so far are:

  • The changing face of the Workplace – how has Covid changed our concept of work and what does that mean for employers?
  • Employment law – getting you ready for 2021. What’s on the horizon, things you may have missed, key themes we’re anticipating, cases from 2020 so far.
  • Pay & Reward – what impacts are businesses likely to see in the age of Covid plus Pay & Reward Surgery. Bring your Questions to our guru, Jane Baalam.
  • Home and flexible working are now in the spotlight. What do employers need to think about? What does it mean for your culture and communication?
  • Business Immigration – how are things going to change as of 1 Jan 2021 for bringing in employees from overseas?


Here are all of the items we cover this month:


And finally our ‘nothing to do with employment law’ bit

With increased home and remote working likely to be with us for the duration, Caroline Gourlay shares some tips in her blog to help you with that elusive work-life balance.