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Stephen Levinson, KLegal
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Title: Industrial Law Society Workshop on Unfair Dismissal. An overview and some reflections
16 September 2000
Overview:
1 In Haddon v Van den Berg Foods Limited [1999] IRLR 672 Morison J attacked the need to consider the "band of reasonable responses" test when considering the issue of fairness of a dismissal. He said that, in reality, there was no such band to consider, and that referring to it led tribunals into the error of judging fairness by reference to extreme cases, and to what amounts to a perversity test. This reasoning required the Judge to propose that a band of "reasonable" decisions is capable of having extreme cases at either end.
2 The reference to a band of reasonable responses was a reference to the fact, long recognised by the judiciary, that a given set of circumstances may result in one employer (reasonably) deciding to dismiss and another (equally reasonably) employer deciding not to dismiss. So in British Leyland U.K. Ltd. v Smith [1981] IRLR 91, a decision of the Court of Appeal, Lord Denning M.R. said: "it must be remembered that in all these cases there is a band of reasonableness, within which one employer might reasonable take one view: another quite reasonably take another view. One would quite reasonably dismiss the man. The other would quite reasonably keep him on. Both views may be quite reasonable. If it was quite reasonable to dismiss him , then the dismissal must be upheld as fair: even though some employers may not have dismissed him". In the same case Ackner L.J. said: "As has been frequently been said in these cases, there may well be circumstances in which reasonable employers might well react differently. An employer might reasonably take the view, if the circumstances so justified, that his attitude must be a firm and definite one and must involve dismissal in order to deter other employees from like conduct. Another employer might quite reasonably on compassionate grounds treat the case as a special case."
3 There are many other cases in which the band has been recognized. They include: Rolls Royce v Walpole [1980] IRLR 343; NC Watling & Co v Richardson [1978] IRLR 255; Iceland Frozen Foods v Jones [1983] ICR 17 and Neale v Hereford and Worcester County Council [1986] IRLR 168. Please also refer to the separate case list.
4 When Morison J. criticised the use of the band test he was clearly aware of all of these cases as he cited all of them. He also said in his own judgement: "there may be cases where a decision not to dismiss would be reasonable and a decision to dismiss would also be reasonable. This point is based upon logic. Because course A would have been reasonable, it does not follow that every other course is unreasonable. In other words, in some marginal cases, the tribunal might well consider that a dismissal by the particular employer was reasonable even though another reasonable employer might not have dismissed."
5 In these circumstances it is hardly surprising that the views expressed in Haddon left many tribunals confused and many commentators wondering what had happened to the doctrine of precedent; these commentators clearly included Lindsay J.
6 The other well established test that was attacked in Haddon was the statement that a tribunal should not substitute its own views for those of the employer. According to Morison J. this "is simply another way of saying that the tribunal must apply the reasonableness test by going somewhat further than simply asking themselves what they themselves would have done. It is likely, however, that that what the tribunal themselves would have done will often coincide with their judgement as to what a reasonable employer would have done."
7 The general argument accepted by Morison J. was that the use of these two tests by tribunals has led to them adopting what amounts to a perversity test of reasonableness and to depress the chances of success for applicants. (emphasis added). Tribunals, stated the judge, have been shrinking from the task which Parliament had imposed upon them to pass judgement on the fairness or otherwise of the dismissal and had diminished the right not to be fairly dismissed. It should be noted that all of these arguments were plainly directed to setting out the appropriate tests to apply to s98(4) Employment Rights Act 1996 and that at no time did Morison J. address himself to ss98(1) or 98(2).
8 How did Lindsay J. deal with all of this in Midland Bank Plc v Madden [2000] IRLR 288? He began by noting the controversy caused by Haddon and the then uncertain position of its future progress through the courts. He set out his views of that decision at considerable length no doubt because of his concern about the effect the it might have on tribunals throughout the country.
9 His first approach was a close analysis of s98 Employment Rights Act 1996 in conjunction with the decision in British Home Stores v Burchell [1978] IRLR 379. He sought to make a distinction between the requirements of ss98(1) and (2) and the requirements of s94(4) Employment Rights Act 1996. According to Lindsay J the well known tripartite test in Burchell was directed to the first two subsections and not the third. It is worth setting out the well known preamble of Arnold J. to his expanded test which is as follows: "What the tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the grounds of the misconduct in question(usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time." He then went on to set out the test the fact of the belief; reasonable grounds for the belief and reasonable investigation.
10 Lindsay J. plainly took the view that these words addressed only the provisions of the act dealing with the reasons for the dismissal. He said: "When Arnold J. in British Home Stores continued: "It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further", all that he had been thus far addressing was the nature, belief in and objectively-judged adequacy of the grounds for the reason alleged to be shown for the dismissal. It was so to speak, a s98(1) and (2) question that was then being addressed."
11 According to Lindsay J. it followed that the expression that the tribunal should not substitute its own view for that of the employer applies to the employer who has satisfied the Burchell test about the reasons for the dismissal and for this purpose it continued to be applicable and could be salutary. However it applied only to the questions relating to the reasons for the dismissal. The Judge said: "…this is far from saying that the observation that the tribunal must not substitute its views for those of the employer is in any way appropriate when the tribunal turns to s98(4) and thus turns to look not at the nature of the reason shown, but rather to the reasonableness of the employer’s response to it." In relation to this issue the tribunal has the sole power to determine whether the dismissal decision was fair/reasonable or not.
12 When Lindsay J. reviewed what Morison J. had to say about the range of reasonable responses test he was dismissive. He said that it was obvious that the test had been endorsed by several cases in the Court of Appeal and it was not open to the Employment Appeal Tribunal to overrule it or indeed regard it as anything but determinative.
13 Lindsay J. then attempted to tackle the same problem Morison J. was addressing when he attacked the "mantras" as he so described the band of reasonable responses test and the saying that the tribunal should not substitute its own view. This is the perception that it may become more difficult than it should be to win cases. As long ago as 1976 it was recognised in Vickers Ltd v Smith [1976] IRLR 11 that the test of requiring the employer to act reasonably could be put in these terms by a tribunal which disagreed with the employer’s decision to dismiss – was the decision of management so wrong that no sensible or reasonable employer could have arrived at that decision. This formulation worried many tribunals and courts and in Iceland Frozen Foods Ltd v Jones [1983] [ICR] 17 the tribunal at first instance said why: "It certainly seems to us that if a test on the lines of Vickers v Smith is the true test, then it will result in the number of successful cases for unfair dismissal…being very much reduced"
14 In Iceland Browne-Wilkinson J. accepted this reasoning whilst trying to say that the statement of law in Vickers was "entirely accurate in law". He said that tribunals should not address themselves by reference to it as it was capable of being misunderstood so as to require such a high degree of reasonableness to be shown that nothing short of a perverse decision to dismiss can be held to be unfair.
15 Having called the band of reasonable responses test determinative and binding on the Employment Appeal Tribunal Lindsay J. then went on to suggest that because there were other authorities which had expressed concern as to its use it was clear that there was a risk of the band test being regarded as a perversity test and that care should be exercised to ensure that it was not.
16 The Court of Appeal have confirmed that Lindsay J. did not correctly analyse Burchell and have endorsed the "band of reasonable responses test", regretting the turmoil cased by the combined efforts of Morison J and Lindsay J. They did so in Madden and Post Office v John Foley which appeals were heard together on 25 and 26 July 2000. Oral judgment was given on 31 July (transcript not yet available). The Court of Appeal cited with approval the views expressed by Judge Peter Clark in Beedell v West Ferry Printers Limited [2000] IRLR 650 who took the opportunity of that case to review and dismiss what he considered were the heterodox views of Morison and Lindsay JJ. The elegant put-down of the interpretation of Burchell by Lindsay J will live in the memory: "We confess to having some difficulty with that analysis…. It has the refreshing originality of a construction of the section untrammeled by authority. However we fear that we must take a more conservative view."
17 Accordingly the Burchell test is approved as it was previously understood and tribunals should apply "the band of reasonable responses" test when considering s 98(4) as that test was formulated in Iceland. So the mantra lives and Morison J’s views respecting that case were an unwarranted departure from binding authority. Tribunals continue to be enjoined from substituting their own views of what is fair and reasonable and must apply the statutory tests to the decisions reached by the employer.
Some (random) reflections
Perversity
18 Orthodoxy may have been restored but the underlying difficulty that caused the revolt has not gone away. The fear will remain that it is difficult to distinguish between an application of the band of reasonable responses test and a perversity test. Are tribunals are really incapable of distinguishing between perverse actions and reasonable conduct? Our workshop endeavours to explore these issues. It is understood that Mummery LJ has considered this point in Foley and has emphasised that it is Parliament’s job to make the law and the judiciary’s role to interpret it. Apparently the point was made that the Iceland/Burchell approach has been in existence for some 20 years during which time Parliament has not sought to change the statute. From this fact an inference was made that Parliament must be content with the use being made of the statute. This will not strike many as a compelling argument. We will all have to wait for the written judgements but approach has the appearance of an issue ducked.
19 Alternatively perhaps one should combine the views of Mummery LJ who says Parliament is currently content with the following observation of Lindsay J in Madden: "For our part we see it as inevitable to follow, if the ‘band of reasonable responses test’ is, without further consideration and on its own, to be regarded as determinative, that the test would be likely to become one of perversity or something remarkably close to it". Perhaps, in the current climate, it would be salutary to recognise that it should become more difficult for applicants to win claims for unfair dismissal than it has been in the past. Howls of protest currently emanate from the HR press about the number of claims being made and especially that a high proportion of these are said to be frivolous. Maybe all the concern about the problems of winning such cases that has exercised so many judicial minds and fuelled union-promoted "designer litigation" campaigns has been entirely misplaced.
Uncertainty
20 We have to accept two categories of uncertainty in the statutory scheme. The first is created by the fact that more than one view may reasonably be taken of some factual situations by different employers. The second is that different tribunals will reasonably disagree about the reasonableness of those decisions by employers. This dual level of uncertainty must have been what Parliament intended so perhaps it is wrong to complain too much about either uncertainty of outcome or regional variation.
The balancing act
21 Is the balancing process called for by s98(4) (now left in place by the Court of Appeal) reconcilable with current and long-standing practices of Tribunals? Consider the number of occasions, for example, when the effect of dismissal on the personal circumstances of an individual really changes the view of a tribunal that employee who behaves aggressively and becomes involved in a fight on the factory floor (subject to fair procedures) deserves to be dismissed. This workshop has been set the task of trying to isolate the principles on which this balancing exercise should be based but the suggestion is that for a number of categories of case no such "balancing" takes place, or at least, that it is rare for it to do so.
The reckoning
22 All tribunals are currently the subject of a review being carried out by Government. The shambles that has constituted the case law of the employment tribunal and the Employment Appeal Tribunal over the last twelve months reflects badly on the lawyers involved. Could a better example have been provided of what goes wrong when a process of dispute resolution designed to be implemented by industrial juries becomes dominated by the legal profession and an excessive regard for precedent and certainty? Those who think long these lines have been given plenty of ammunition.
Stephen Levinson, KLegal Solicitors, associated with KPMG 107 111, Fleet Street London EC4A 2AB 020 7694 2652 stephen.levinson@kpmg.co.uk
16 September 2000