Case update (5):  Unfair dismissal – Who’s in the know?

What do we already know?

We updated you in our December 2019 Newsletter here on the Supreme Court decision in Royal Mail v Jhuti.  The Court decided that tribunals have a duty to look beyond a dismissing manager’s reason for dismissal if they are influenced by another manager (senior to the employee) who hides the real (unfair) reason behind an invented (fair) reason.

What’s new?

The EAT in Kong v Gulf International Bank (available here) has narrowed the scope of the Jhuti decision and clarified that tribunals can only look beyond a dismissing manager’s reason for dismissal in limited circumstances.

We consider this decision in more detail below.

Summary:  When is the knowledge of a person other than the dismissing manager, relevant to the fairness of a dismissal?

Only when the other person has direct management responsibility over the dismissed employee (or can otherwise manipulate the facts); actively seeks to secure their dismissal for an invented reason; and hides the real (unfair) reason from the dismissing manager.

Background:  The reason for dismissal is the set of facts known (or beliefs held) by the employer which cause them to dismiss the employee. Generally, the courts will look no further than the reasons given by the decision-maker to establish this. However, in Royal Mail Group Limited v Jhuti, the Supreme Court held that courts have a duty to look beyond the reasons of the decision-maker when they have been manipulated by a person of higher grade than the dismissed employee and the real (unfair) reason for dismissal is hidden behind their invented (fair) reason.

Facts:  The employee, Ms Kong, was employed by Gulf International Bank (UK) Ltd as Head of Financial Audit. Ms Kong raised concerns about a legal agreement relating to a new investment product. She emailed these concerns in a draft audit report to the Head of Legal, Ms Harding (who was responsible for the agreement) and to others. In raising these concerns, Ms Kong had made protected disclosures for the purpose of whistleblowing legislation.

Ms Harding disagreed with Ms Kong’s concerns and with the way in which she had raised these in the draft audit report. During a heated exchange and subsequent emails Ms Kong questioned Ms Harding’s awareness about the legal issues involved. Ms Harding considered Ms Kong had questioned her professional integrity and raised the matter with the Head of HR and others. The Head of HR, the CEO and the Group Chief Auditor came to the collective view that Ms Kong should be dismissed.  They met with Ms Kong to tell her this and the dismissal was confirmed in writing. The reason given was that her behaviour “fell well short of the standards of professional behaviour” expected; key stakeholders no longer wished to work with her; and trust and confidence had been lost.  They clarified that the dismissal was not about her professional capability and that all the concerns she raised would be included in the final audit report.  As a result of this final report the bank’s internal control processes were rated ‘generally unsatisfactory’.

Ms Kong unsuccessfully appealed against the decision.

Ms Kong brought claims in the Tribunal, including both ordinary unfair dismissal and automatic unfair dismissal for whistleblowing.

Tribunal decision

The Tribunal upheld Ms Kong’s ordinary unfair dismissal claim but dismissed her whistleblowing dismissal claim.  It held the principal reason for Ms Kong’s dismissal was her conduct towards Ms Harding, rather than the making of protected disclosures.  Although Ms Harding’s treatment of Ms Kong was influenced by the protected disclosures, these motivations could not be attributed to the decision-makers.  The principles in Jhuti did not apply.

Ms Kong appealed.  She said that she had been automatically unfairly dismissed for whistleblowing and Ms Harding’s motivations (resulting from the protected disclosures) should be attributed to the decision-makers under Jhuti.

EAT decision

The EAT dismissed the appeal.  It agreed with the Tribunal that the principles in Jhuti did not apply and the reason for Ms Kong’s dismissal was her conduct rather than her protected disclosures.

The EAT helpfully clarified that the general rule is that an employer’s motivation or reason for dismissal is only that of the decision-maker(s).   The decision in Jhuti only creates a narrow exception when the:

1. person whose motive for dismissal is attributed to the decision-maker, actively sought the employee’s dismissal for a wrongful or prohibited reason e.g. for raising a protected disclosure;
2. decision-maker particularly depends on that person as the source of underlying facts and information on which the decision to dismiss was based; and
3. person manipulating the reason for dismissal was in the hierarchy of responsibility above the employee or was the person depended on for facts and information.

In this case, Ms Harding’s comments to the decision-makers were just a factor in their decision to dismiss, not the principal reason.  In addition, Ms Harding was not looking for Ms Kong to be dismissed, did not mislead the decision-makers; and was not in the hierarchy of responsibility over Ms Kong (who reported direct to the Group Chief Auditor).

Implications: 

This is welcome confirmation for employers that:

• the general rule remains that it is only the motivation of the decision-maker which is relevant to a fair dismissal;
• employers should not be taken to have knowledge of all facts known to its employees; and
• the Jhuti exception to this only applies in narrow circumstances.

However, employers should remain alert to when the Jhuti exception applies (set out in the EAT’s above decision) and make sure that dismissing and investigating managers are trained to recognise this. In summary, the dismissing manager’s decision maybe tainted by the influence by another when that other person has direct management responsibility over the dismissed employee (or can otherwise manipulate the facts); actively seeks to secure their dismissal for an invented reason; and hides the real (unfair) reason from the dismissing manager.