Veitch Penny LLP - Exeter | Crediton, Devon

Case

Kelly-Madden v Manor Surgery
Employment Appeal Tribunal - (4 October 2006)

Issues

(1) Dismissal and Disciplinary Procedures;
(2) Misconduct;
(3) Section 98A of the Employment Rights Act 1996

Facts

Ms Kelly-Madden had been employed as a Practice Manager for the Manor Surgery (“the Surgery”). Disciplinary proceedings were commenced against her following allegations that she had dishonestly paid herself overtime. She claimed that a predecessor had told her verbally that she would be entitled to overtime payments and that one of the Surgery partners had checked those payments. During the disciplinary procedure, the truth of her allegations remained unchecked. She was dismissed and Kelly-Madden claimed unfair dismissal.

At the Tribunal, the panel had to consider the application of Section 98A(2) of the Employment Rights Act 1996 (also often described as the partial reversal of Polkey). This section states that “a failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded……. as by itself making [the dismissal unfair] if he shows that he would have decided to dismiss the employee had he followed the procedure.” This defence can only be argued if an employer has properly complied with the requirements of the statutory dismissal procedure.

At first instance, the Tribunal found that the main reason for her dismissal had been her misconduct. It found that the Surgery had genuinely believed that she had been guilty of the misconduct alleged. However, the Tribunal did not feel that the dismissal procedure overall had been fair because the investigation was inadequate and not all the proper enquiries had been made. Despite this, the Tribunal went on to conclude that the dismissal overall was fair because the Surgery would have come to the same conclusion even if the correct procedure had been followed applying Section 98A(2) outlined above. They went on to state that, even if their decision was wrong, then in any event the basic compensatory award should be reduced by 100% because, by reason of Kelly-Madden’s conduct, she had brought about the disciplinary proceedings by her conduct.

On appeal, Kelly-Madden argued:-

1. The Tribunal had been incorrect to find that she had not been unfairly dismissed and by finding that she would have been dismissed even if a fair procedure had been allowed; and
2. The Tribunal’s alternative finding that any compensation should be reduced by 100% was incorrect in law. She argued that the Tribunal had not given sufficient reasons for making that conclusion.

The matter was accordingly referred to the Employment Appeal Tribunal (EAT).

Decision

The EAT considered Section 98A of the Employment Rights Act. Following the case of Alexander and Hatherley v Bridgen Enterprises, the EAT found that whenever a tribunal was minded to find that a dismissal was unfair for procedural reasons alone, then it was for the employer to demonstrate that proper completion of that procedure would, on the balance of probabilities, have made no difference to the ultimate outcome. If the employer could satisfy that burden and none of the procedural defects were in breach of the requirements of the statutory dismissal procedure, then the dismissal would be fair. The EAT highlighted that it had been open to the tribunal to find that the Surgery would have dismissed Kelly-Madden in any event and, accordingly, its finding that the dismissal was fair had to be confirmed. With regard to the second ground of appeal, the 100% finding of contributory fault was unsustainable given the tribunal’s criticism of the Surgery’s internal procedures. The finding would not have been upheld but this was not material to the decision in the case. Accordingly, the appeal was dismissed.

Comments

The application of Section 98A(2) of the Employment Rights Act 1996 remains subject to a conflict of case law, due to a conflicting judgment in Mason v Ward End Primary School.

Consequently, employers should not rely on Section 98A to provide themselves with a reprieve. Employers must follow the statutory dismissal and disciplinary procedure but should also consider each case on its facts to ensure that a proper and thorough disciplinary or dismissal procedure is carried out.