The mind of the decider (2): The effect of Jhuti

The Supreme Court’s long awaited decision in Jhuti has now been delivered which is one all employee reps would do well to be aware of. The legal issue which the judgement addresses was surveyed a few weeks ago in which I expressed hope that the Court of Appeal’s decision in Orr would be overruled. To recap, under Orr an employment tribunal when considering whether an employee has been unfairly dismissed must generally consider only the facts known to the person who made the decision to dismiss an employee, not the knowledge of the Respondent generally.

The Case in Jhuti

In Jhuti the case was a complaint of unfair dismissal by reason of whistleblowing, not an ordinary unfair dismissal claim. The claimant argued the reason for her dismissal was because she had alleged breaches of the Respondent’s ethical and anti-bribery policies which was a protected act. The Respondent, in turn, argued that the reason for the dismissal was the claimant’s poor performance. So far, this is a typical whistle-blowing case with a dispute of the principal reason for dismissal.

What made the case different was that the tribunal found as a matter of fact that invocation of the poor performance was because of the claimant’s whistle-blowing and that this was a decision made by the claimant’s line manager. However, the manager who was responsible for considering the Poor Performance was not aware of the whistle-blowing. Given the decision in Orr, discussed previously, the argument of the employer was that because the person dismissing the claimant was not aware of the the whistle-blowing and considered the case in good faith the whistle-blowing was not in the mind of the decision manager and therefore whistle-blowing could not be the principle reason for dismissal. This was the decision the Court of Appeal upheld and which was  under appeal at the Supreme Court.

In a well drafted judgment by Lord Wilson (representing the unanimous position of the justices) the Supreme Court did not overrule the decision in Orr which means the general position that the reasonableness of a dismissal will be determined by what the decision maker (and subsequent appeal manager) knew at the time of the decision. It is still the mind of the decider rather than knowledge of the Respondent that is the determining factor.

However, Lord Wilson did recognise two scenarios in which the knowledge of other parties would transpose to the decision maker meaning a reason other than that directly held by a decision maker would be treated as knowledge held by the decision maker and therefore something for which a Respondent may be liable for in an unfair dismissal context. I will turn to those two scenarios shortly.

Sedley’s dissent

An important backdrop to the decision is the dissenting opinion of Sedley LJ (also author of the excellent book Lions under the Throne) in Orr. The following comments (emphasis added) can be found in paragraphs 28-29 of the Orr judgment:

The one thing we do know about Mr Madden is that he had the council’s authority to manage Mr Orr. In that capacity, it is cogently arguable that anything he knew about Mr Orr’s performance of his duties was in law known to the council. So, logically, was anything he knew about his own management of Mr Orr. While I have concluded that this is, even so, something which has to be properly investigated and decided, it seems to me entirely possible that it will be found that the relevant things which Mr Madden knew were known to him in his capacity as Mr Orr’s manager and in that relevant sense were known to the council.

If this is so, the fact that these things were not known to Mr Cove [the dismissing manager] is, with respect, irrelevant. Mr Cove, too, was a person acting in the name of the council. The appellant’s case does not involve imputing Mr Madden’s knowledge to him; it involves imputing it to the council, for it is what the council knew and did which determines whether the dismissal was fair or not. The relevant state of mind is not, with great respect to Lord Justice Aikens, the “real reason” for the dismissal. It is the totality of information which the employer holds when deciding whether or not to dismiss an employee. No corporation, and certainly not a public law body such as the respondent, can ordinarily plead that its left hand did not know what its right hand was doing.

Despite Sedley LJ’s dissent in Orr the end result and effect of the decision (which the respondent in Jhuti later tried to take advantage of) is that the court gave respondents a legitimate defence that they can  in fact “ordinarily plead that its left hand did not know what its right hand was doing” and in doing so evade liability.

Whilst there is a likely crossover with the reasonableness test in ordinary unfair dismissals it is helpful to recall that the specific issue in Jhuti is not the reasonableness of the dismissal but the reason for it, and whether a this can be the Respondent’s reason for dismissal even if this was not the reason of the dismissing officer herself. As alluded to above there are two scenarios where this was found to be possible.

The Manipulator

First, there is the situation recognised by the Court of Appeal (and so not new to the Supreme Court) but nonetheless endorsed by it of a manipulation of a formal process by someone other than the decision manager. This is referred to as the “Iago situation”, where the decision maker has “been manipulated by some other person involved in the disciplinary process who has an inadmissible motivation.” This did not apply in the specific case because the manager with malign motives in Jhuti who started the poor performance measures made no further attempt to influence the decision maker in the decision. When there is an ongoing manipulation by a ‘shadow decision maker’ – which while not common is certainly not a rare occurrence – then the reason for that manipulation can be imputed to the dismissal process, even if a decision maker is conducting the process in good faith.

Interestingly, before the publication of the decision in Jhuti, the EAT in Cadent Gas Ltd v Singh [2019] UKEAT 0024_19_0810 upheld a decision that a union representative was dismissed because of  the animus of the investigating officer, Mr Huckerby, to the claimant because of trade union activities which was found to be an example of an “Iago situation.”

Hierarchy of Responsibility

Whilst the manipulator scenario was not new to the Supreme Court the second carve out from Orr was. Lord Wilson explains the second circumstance in this way:

If a person in the hierarchy of responsibility above the employee (here Mr Widmer as Ms Jhuti’s line manager) determines that, for reason A (here the making of protected disclosures), the employee should be dismissed but that reason A should be hidden behind an invented reason B which the decision-maker adopts (here inadequate performance), it is the court’s duty to penetrate through the invention rather than to allow it also to infect its own determination. If limited to a person placed by the employer in the hierarchy of responsibility above the employee, there is no conceptual difficulty about attributing to the employer that person’s state of mind rather than that of the deceived decision-maker.

There is no clear definition given to a “hierarchy of responsibility” and I suspect that will become an issue in future caselaw but the common-sense interpretation is that this will apply to knowledge held at more senior levels to the employee within the Respondent’s organisation. In the case of the claimant in Jhuti – as will be the case in most cases – it was an immediate line manager.

The strict legal development in Jhuti is succinctly summarised in Lord Wilson’s closing comment:if a person in the hierarchy of responsibility above the employee determines that she (or he) should be dismissed for a reason but hides it behind an invented reason which the decision-maker adopts, the reason for the dismissal is the hidden reason rather than the invented reason.”

This does not overrule Orr but simply, as Lord Wilson noted, attaches “only a narrow qualification to it.”

There is no question that Jhuti provides an important additional safeguard against employers manipulating a disciplinary process and a patsy decision maker to secure dismissals for malign purposes. For employee representatives and employees it is also helpful in that if evidence of such manipulation only becomes apparent after the conclusion of disciplinary proceedings meaning there has been no opportunity for an employee make that allegation to the decision maker before the decision is made then then the employee now has options for redress that they may have been advised were not open to them before.

Thinking back to Sedley LJ’s dissent in Orr there is still a question whether unfair dismissal still countenances a position where a respondent “can ordinarily plead that its left hand did not know what its right hand was doing.” I will explore this in a later post.