Where there is no prejudice to the claimant the employment tribunal may substitute a reason for the dismissal different to that pleaded in the ET3

Where there is prejudice an appeal may "very well succeed"

Screene v Seatwave Ltd ( Unfair Dismissal ) [2011] UKEAT 0020_11_2605

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• The labelling (and relabelling) of the reason to dismiss is less important that the validity of the reasoning
• "where there is a shift by the employer of the label placed upon the reason for the dismissal, then there must be the fullest opportunity allowed to the employee, to meet the circumstances that arise from that change."
• If the claimant is prejudiced by the relabelling that will be good grounds for appeal

In the case of Screene v Seatwave the EAT has decided that although the ET3 gave a different reason for his summary dismissal "with immediate effect without payment in lieu of notice.” ('incapability') than the employment tribunal which found 'gross misconduct', the ET's finding could stand (the dismissal letter had claimed "misconduct").

Mr Screene's employer lost over £1m through fraud and Mr Screene a financial controller failed to discover it. This was seen by his employer as grossly negligent and a summary dismissal followed.

The dismissal letter having given misconduct as the reason for dismissal contrasted with the ET3 stating 'incapability'. The ET3 did not prevent the tribunal from proceeding on the basis of misconduct as the EAT following Waite J in Hotson v Wisbech Conservative Club [1984] ICR 859 ruled that if there is no prejudice to the claimant then the tribunal is allowed to substitute its own reason for the dismissal (conduct) for that of the employers stated reason (capability). There was no prejudice to the claimant as he admitted having been negligent.

The case in depth:

The employer denied that the Claimant was unfairly dismissed. The Respondent argued in the dismissal letter that the Claimant was dismissed fairly in accordance with section 98(2)(a) of the Employment Rights Act 1996 on the grounds of capability.

The Tribunal found "that the dismissal was due to both capability and conduct under section 98(2)(a) and (2)(b) Employment Rights Act 1996 but the primary reason for dismissal was conduct under section 98(2)(b) specifically the failure of the Claimant to adequately monitor the cash position on the company’s German bank account which meant that the company was unaware that they were incurring significant losses perhaps as much as €1.7m over a period of a few months surrounding June 2008.”

The claimant argued that the case was one of capability case as identified in the ET3. and that the Employment Tribunal had been clear that if the reason had been capability, then the employer’s procedures leading up to the dismissal were not fair, that the Employment Tribunal having impermissibly substituted for the Respondent’s asserted reason (capability), its own perceived reason (conduct) was an error of law. If it had of directed it would have found that the reason for dismissal was capability. And in respect of a capability dismissal the employer’s procedures were wanting leading to a finding of unfair dismissal.

The EAT quoted Cairns LJ in Abernethy v Mott, Hay and Anderson [1974] ICR 323 that “A reason for the dismissal of an employee is a set of facts known to the employer or, as it may be, of beliefs held by him which cause him to dismiss the employee.”, Lord Denning said:“The employer has [...] to show the reasons for the dismissal [...] it must be a reason in existence at the time when he is given notice. It must be the principal reason which operated on the employer’s mind.” And from Kilner Brown J, in the case of Sutton & Gates (Luton) Ltd v Boxall [1978] ICR 67 a statement of general principle was made (paragraph 11):

“We have had occasion to indicate more than once that it may not necessarily be that there is a wide range in the field of incapability, but that incapability ought to be treated much more narrowly and strictly than has been done in the past, and cases where a person has not come up to standard, through his own carelessness, negligence or maybe idleness, are much more appropriately dealt with as cases of conduct or misconduct, than of capability.”

Substituting one dismissal reason for another was investigated by Waite J in the case of Hotson v Wisbech Conservative Club [1984] ICR 859 where an employee had been dismissed after thefts at a club. The asserted reason for the dismissal was for incompetence in managing the finances, but had as the case progressed, became one of suspected dishonesty.

Waite J said, “The position according to authority appears to be as follows: on satisfying the Industrial Tribunal as to the reason for dismissal under Section 57 of the 1978 Act, the employer is not tied to the label he happens to put on the particular facts relied upon. Thus he may say “I made the employee redundant”, but he will not be prevented from saying later, “no, I have changed my mind. It was really a case of incapability”. Nor will he be prevented from running the two as alternatives, either redundancy or lack of capability. By the same token, the Industrial Tribunal may, it appears, of its own motion, declare that the reason relied upon by the employer was not a real reason, for the real reason may be something that he shrank from mentioning, either through ignorance of the technicalities involved, or perhaps through sheer kindness of heart or natural delicacy. In the same way, some other substantial reason [...] may be advanced by the employer, or found by the Tribunal to be the real reason for dismissal, differing from the sole or principal reason, such as redundancy and capability that may have been advanced by the employer himself.”

The Employment Appeal Tribunal there stressed that "where there is a shift by the employer of the label placed upon the reason for the dismissal, then there must be the fullest opportunity allowed to the employee, to meet the circumstances that arise from that change. In short, fairness requires that he or she must not be prejudiced by an employer’s change of tack."

Hannan v TNT-IPEC (UK) Ltd [1986] IRLR 165 shows that even where an Employment Tribunal fiinds a dismissal fair for an unpleaded reason there may be no error if the matter is only one of relabeling. If there is prejudice to the employee then an appeal may succeed.

Here the EAT found that the decision to dismiss was based on the same set of facts with the claimant agreeing that he had been summarily dismissed for gross misconduct.

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