Case update (3): Unfair dismissal – Poor Financial Prospect – No Bar to Claim

Summary:  Can an unfair dismissal claim proceed even if there is no real possibility the employee will be awarded financial compensation?

Yes, says the EAT in Evans v London Borough of Brent (available here).

Facts:  Dr Evans, the employee, was Deputy Head Teacher of the Copland Community School, the employer.  Allegations were made that members of the senior management team, including Dr Evans, had been guilty of misconduct and financial mismanagement. The employer suspended Dr Evans and conducted an investigation, following which it invited Dr Evans to a disciplinary hearing.

The employer sent Dr Evans a copy of the investigation report about two weeks before the hearing.  The report was about 800 pages.  Dr Evans applied for a postponement of the hearing on the grounds that he needed longer to consider the paperwork, and that he wanted his sister (who was abroad and had accompanied him to a previous meeting) to accompany him at the disciplinary hearing.

The employer refused Dr Evans’ request for a postponement.  Following the disciplinary hearing Dr Evans was dismissed for (among other things) receiving unlawful bonuses and receiving payments that should not have been made or accepted for work on a construction project.

Dr Evans brought a Tribunal claim for unfair dismissal. The claim was stayed pending the outcome of a criminal case, where Dr Evans pleaded guilty to false accounting during his employment. Shortly after, the employer issued High Court proceedings for repayment of the unlawful payments received by Dr Evans. The Tribunal claim was again stayed. The High Court found that the employer had proved its case on the allegations against Dr Evans in the disciplinary proceedings and also that Dr Evans had received more than £250,000 in overpayments (however, much of this was irrecoverable).

Tribunal decision

When the stay on the Tribunal claim was lifted, the employer applied for the unfair dismissal claim to be struck out.  The Tribunal struck out Dr Evans’ claim on the basis that there was no reasonable prospect of a finding that i) either the employer did not have a reasonable belief in Dr Evans’ misconduct; or ii) the dismissal was outside the range of reasonable responses.

The Tribunal acknowledged that there was a question of procedural fairness in relation to the decision not to postpone the disciplinary hearing. However, the Tribunal struck this ground out on the basis that any compensation would inevitably be reduced to zero as a result of Dr Evans’ contributory conduct. Finally, in light of the High Court judgment and the fact that around £200,000 of overpayments to Dr Evans was irrecoverable, the Tribunal considered that it would not have been just and equitable to make any payment of compensation to Dr Evans.

EAT decision

Dr Evans appealed to the EAT. The EAT commented that, at the heart of the appeal, was the question, “what is the value of a finding of unfair dismissal absent any financial award or other remedy?” Allowing Dr Evans’ appeal, the EAT held that the Tribunal had been wrong to decide that a finding of unfair dismissal, without financial compensation, would have no value. It could not be said that a mere finding of unfair dismissal would be of no value, or that it is not in the interests of justice to hold an employer to account for procedural unfairness in deciding to dismiss a long-serving employee, even if that cannot lead to any financial award. The unfair dismissal claim was therefore allowed to proceed.

Implications:  An unfair dismissal claim will not be struck out simply because there is no prospect of the employee obtaining compensation. Employees may want to pursue claims purely to establish that a dismissal was unfair.

Therefore, even in extreme cases of gross misconduct, unless employers are prepared to admit liability on procedural grounds, they should act reasonably by following all procedural steps. This will help employers avoid the time and costs in defending an unfair dismissal claim.