Imagine this. An employee brings a discrimination claim against your business in an Employment Tribunal. The allegations include what amounts to serious misconduct by another of your employees. Evidence is presented to the tribunal, which upholds the allegations and provides a judgment detailing the employee's misconduct. Would it be lawful to consider disciplinary proceedings against that employee without a further investigation?
A recent decision from the Employment Appeal Tribunal (EAT) suggests you can rely on the tribunal's findings.
A dismissal is unfair unless it's for a potentially fair reason and the employer acts reasonably in treating it as a sufficient reason for dismissing the employee. Misconduct is a potentially fair reason. In deciding whether the reason is sufficient for dismissal, a two-stage process is normally followed: (1) a fair investigation and (2) a fair disciplinary process based on the findings of that investigation.
In this recent EAT case, the employee argued that those two stages must, as a matter of law, be kept separate. The EAT disagreed. They said that ultimately the test is whether it was reasonable to treat the misconduct as a sufficient reason for dismissal. In a case like this, it was reasonable for the employer to decide that there was no further investigation to do – the facts as found by the tribunal spoke for themselves.
It's worth noting that the claimant in this recent EAT case was the managing director of a bank. Regulations required that role to be filled by a 'fit and proper' person. The previous claim was by him against the employer and the tribunal concluded that he wasn't credible as a witness and was often evasive. Those findings on credibility meant he wasn't a fit and proper person.
What this means for you
We provided a hypothetical example in our introduction because these principles have implications beyond regulated employees in financial services. The key point is that, very occasionally, it might not be necessary to conduct a comprehensive investigation of your own before considering disciplinary action. If the relevant facts have come to you from an authoritative source, then it would be fair to take them into account.
That said, although it might be lawful not to hold a separate investigation before the disciplinary hearing, the judgment does suggest it would be best practice to hold an investigation of some sort. The tribunal didn't say exactly what they thought the best procedure would have been. We'd suggest you hold a brief investigation to show that you've considered how the facts have come to light and that you've considered their validity and whether you need any further facts.
How we can help
Our series of disciplinary letters includes a number of relevant letters, in particular: Employee disciplinary meeting letter, Employee dismissal letter following previous disciplinary action and Employee dismissal letter for gross misconduct. Our Employee handbook also addresses disciplinary procedures and suspension.
You sell products online. You're aware this is considered a distance contract so that, in general, buyers have a right to return your products within 14 days from receipt. However, for reasons of hygiene, you don't think you have to allow customers to return mattresses if they're been opened. Is that right?
No. The European Court of Justice (ECJ) recently held that, like clothes, consumers must be allowed to return unsealed mattresses.
Here is a brief summary of the law:
What this means to you
If you sell mattresses online, the lesson from this ruling is clear. More generally, if you sell products to consumers, make sure you know when they are entitled to return them. That said, for commercial reasons, you may wish to go beyond the statutory requirements.
There are also strict requirements about what you must give consumers before a sale that's agreed at a distance. This includes, for example, information about any loss of the right to cancel the agreement.
How we can help
If you sell products online you may wish to use our Terms and conductions for selling consumer goods or services on a website, which includes a model cancellation form and guidance on these issues.
Your business throws a party for its staff. Beforehand you conduct a risk assessment specific to your business. What you don't consider is the risk of Employee 1 getting drunk, lifting Employee 2 off the ground, losing his balance and dropping them causing a serious back injury. Is the business vicariously liable for this misadventure?
The High Court has recently confirmed that it's highly unlikely that the business will be found liable.
As summarised in last November's bulletin, the general rule is that a business is vicariously liable for an employee's wrongs if there's a sufficiently strong connection between the position in which the person is employed and the wrongful conduct. This is a difficult test to apply as the misbehaving employee will normally be acting outside of their job description at the relevant time.
The case we summarised in November provided an example of how an employer might be found vicariously liable for actions at an afterparty following a Christmas party. The High Court stressed in that case that those were extreme and unlikely circumstances. The business was liable because the misconduct was by the managing director, who saw himself as the 'directing mind and will' of the business, and the wrong in question (punching an employee) was about exerting his authority.
This more recent case confirms that the above case really is unusual. The lawyer arguing for vicarious liability said that Employee 1's role at the business included networking, so their interaction with Employee 2 came within his relevant field of activities. The High Court disagreed. They said that for vicarious liability to apply, Employee 1 would have to have been at work doing what he was paid to do. He wasn't doing his job and he wasn't required to be at the party (and he had to pay for his ticket).
In addition, the High Court considered it an exaggeration to say that the business was holding the Christmas party for its benefit. The party was staff-led and organised by volunteers. Yes, it was good for staff morale and may have benefited the business indirectly. However, in reality, the business was responding to expectations from staff. As the relevant departmental head said in evidence, only a 'Scrooge-like' organisation wouldn't have allowed the party.
What this means for you
It's difficult to predict when vicarious liability will apply and when it won't. What if this party had been organised directly by the business, instead of by volunteers? What if it was compulsory for employees? And what if it was a networking event with people outside the business and employees were expressly told beforehand to be on their best behaviour?
This case confirms that you may hold after-work parties without fearing vicarious liability for all potential eventualities. However, you must be vigilant as all circumstances are different.
In any event, whether or not vicarious liability applies, we assume you don't want anyone suffering serious injuries.
How we can help
We have an Employee handbook, which could assist in motivating good behaviour and avoiding vicarious liability. Relevant policies include Conduct on business and hospitality events and Harassment.