Why an 1888 court judgment is (unfortunately) still relevant for employees

Up until the early 1970’s a worker who was unfairly dismissed by an employer had three choices, do nothing, sue the employer for wrongful dismissal (which is a claim in contract only), or challenge the dismissal outside of the courts (for example, by an employer wide strike initiated by a trade union).

In 1968 Lord Donovan published the findings of the Royal Commission on Trade Unions and Employers’ Associations, one of the recommendations was the creation of a statutory right enforceable by employees that they may not be dismissed unfairly. The Industrial Relations Act 1971 introduced that right for the first time. Since then claims of unfair dismissal overtaken the claim of wrongful dismissal as by far the most commonly used legal device used by an employee to challenge an unjust dismissal. Nowadays, except for those with less than two years continuous employment a freestanding wrongful dismissal claim (in cases other than alleged constructive dismissal) is rare and preserved for anomalous cases such as those cases where a high paid executive has been ousted but the limitations on the amount of compensation caps available in unfair dismissal cases mean a case is considered ‘not being worth the effort for such meagre awards’ and instead sue for hundreds of thousands in the High Court. In other words, it’s not a problem for most union members!

Because of the contemporary emphasis on unfair dismissals the relevance of older caselaw on the employment contract in dismissal processes has been minimised and is rarely something a employee needs to concern themselves with except, perhaps, in the occasional unlawful deduction of wages complaint. In terms of allegations of misconduct I have advised and assisted union members on many an unfair dismissal claim but can think of only three cases where the complaint was on wrongful dismissal grounds alone. These usually follow the same pattern: member is unable to claim unfair dismissal because they do not have two years continuous service but has been summarily dismissed (i.e., dismissed without notice pay). The dismissal is considered unreasonable because either the employee did not do the misconduct alleged or they did but it is not so serious that it constitutes gross misconduct that could justify summary dismissal.  In both cases there is a possible wrongful (breach of contract) claim that can be made but the value is effectively limited to the notice period (often only 1-2 week’s pay). But, if that’s the only remedy available then sometimes that all you can do. 

The case of Boston Deep Sea Fishing and Ice Co v Ansall (1888) was like so many cases a case that originated in a boardroom spat about money. Mr Ansall was Managing Director of the company but other directors began to suspect he was engaging in dishonest conduct in taking commissions on sales of companies he was linked to to the detriment of the the company. It passed a resolution of shareholders and dismissed the Mr Ansall from his post, they also refused to pay him his contracted salary he had lost as a result of the dismissal.  At the time of the dismissal however there was no clear evidence at the time of Mr Ansall having defrauded the employer although there was, after the fact, evidence that this suspicion. 

Taking a moment to pause about the situation as it applied at the point of dismissal when the employer had no evidence of the misconduct, the dismissal in those circumstances certainly seems unreasonable. How can it possibly be fair for an employee to be dismissed for misconduct when the employer has nothing to back up those concerns other than suspicion alone? 

However, the House of Lords were not swayed by that unfairness and found that the task of a court (and now also tribunal) was not to engage in a subjective assessment of the minds and actions of the other directors but an objective adjudication of whether Mr Ansall had engaged in the misconduct) and whether the other directors could prove it at time. For that reason, the House of Lords found that Boston Deep Sea Fishing had been justified in dismissing Mr Ansell, even though they could not have known it at the time!

Following that decision in Boston Deep Sea Fishing and Ice Co v Ansall (1888) it has been established law that a court (and tribunal) assessing whether an employee’s dismissal for misconduct was wrongful must decide whether the employee engaged in conduct fundamentally inconsistent with continued employment. Whether the employer’s belief in the fact of the employee’s misconduct was reasonable at the time of dismissal is irrelevant.  

The consequence of this, as was seen in the relatively recent (2015) case of Williams v Leeds United Football Club (discussed here), is that there is an incentive for employers to seek to uncover wrongdoing after the fact to avoid costly notice period payments. 

However, what if a modern day Mr Ansall found himself in the same scenario – dismissed for gross misconduct but with no evidence to support the decision. Would he fare any better? If he were to pursue a wrongful dismissal case then the answer is no, he would find himself in the same difficulty. But what about unfair dismissal? 

Unlike the decision in Boston Deep Sea Fishing in unfair dismissal the focus in determining whether a dismissal is unfair is not the objective question ‘did Mr Ansall do an act of gross misconduct’ but the subjective question ‘at the time of the dismissal did the employer act reasonably in treating the the (alleged) misconduct as a sufficient reason for dismissal’? That is a question that focuses less on what happened and more on what did the employer know and reasonably believe at the time of the decision. That this is the emphasis for unfair dismissal was made explicit in a different  House of Lords decision, the comparatively recent Devis & Sons Ltd v Atkins (1977).

With that different emphasis it is likely Mr Ansall would have been much happier with the result as it is likely he would have had a finding that he was unfairly dismissed (he may not have been that happy because of contributory fault decisions, but that’s a very different subject for another day!). 

And so, in most contemporary cases it is the subjective test of unfair dismissal law that will be the paramount in an employee representatives mind (for example, by applying the Burchell Test). However, I do think the decision (or, more precisely, the principle) of Boston Deep Sea Fishing is one the trade union representatives would do well to keep in mind when advising members. 

When – as will often be the case for employees dismissed with less than two years’ continuous employment – the only viable option for an employee is a wrongful dismissal claim an objective assessment of what actually happened (i.e. did the union member actually punch their manager?) rather than just was the process unfair by, for example, having no independent investigation will be vital. The unfortunate side effect of that analysis may be that cases that a member wants to pursue at an employment tribunal should not be pursued because notwithstanding unreasonable processes the end result is always likely to be a case that is lost. That is not right as by the mere fact of employing an employee for less than two years the employer gets a free pass and license to disregard fair disciplinary processes but acknowledging that early on may prevent further heartache or, at the least, allow a member to proceed in full understanding of the risks. 

 

 

Want to stay updated? 

If you have found  this post helpful please think about subscribing to the email list, like me on Facebook or follow on Twitter @employmentwrite.

Enter your email address to follow this blog and receive notifications of new posts by email.