In this case, an order for re-engagement was overturned on appeal. The employment tribunal had erred by failing to assess the practicability of re-engagement from the perspective of the respondent.
Background
If an employment tribunal (ET) makes a finding of unfair dismissal, before addressing financial compensation, it is required to explain to the claimant the possibility of making a re-employment order and to ask the claimant whether they wish to seek this.
Re-employment orders can take one of two forms:
- Reinstatement i.e. be put back into old job on same terms and conditions, or
- Re-engagement i.e. be put back into a different, but comparable role.
If a claimant says they would like re-employment, the ET must look at reinstatement first and, if that is not workable, re-engagement. The two key legal tests that the ET has to grapple with are:
- Is it practicable for the employer to comply with either form of re-employment order?
- Did the claimant cause, or contribute to, the dismissal and, if so, would it be just to make a re-employment order?
In this context, "practicable" means that re-employment is not merely possible but is capable of being carried into effect with success.
If an ET orders re-employment at a remedy hearing, it must set a date for compliance and specify a figure for back-pay and benefits, essentially putting the claimant back in the financial position they would have been in if the dismissal had never happened.
If the employer does not then comply with that order, and cannot persuade the ET at a follow-up hearing that it was not practicable to comply, then the ET will make two awards:
- An award of compensation for unfair dismissal in the normal way, and
- An “additional award” – this is a punitive award of between 26-52 weeks’ pay (based on the statutory definition of a week’s pay).
Significantly, the usual limit of 52 weeks' pay for unfair dismissal, subject to the statutory maximum, may be exceeded to the extent necessary to enable the aggregate of the compensatory and additional awards to fully reflect the amount payable by the employer as specified in the original order.
Facts
The British Council is the United Kingdom's international organisation for cultural relations and educational opportunities. The claimant, Mr Sellers was employed by the Council as country director for Italy.
Mr Sellers and his wife hosted a social gathering at their flat in Rome, which was attended by an employee of the British Embassy in Italy, "ZZ". After the event, ZZ complained to the Embassy, alleging inappropriate sexual behaviour by the claimant. Mr Sellers has at all times denied this allegation of inappropriate conduct. Following an investigation and a disciplinary hearing, Mr Sellers was dismissed for gross misconduct. His appeal against that decision was rejected.
Mr Sellers brought an unfair dismissal claim which was upheld. The ET found that, while the relevant decision-taker genuinely believed Mr Sellers had touched ZZ in a sexual manner, the investigation was flawed on multiple fronts and the conclusions reached were unsustainable. The appeal process had failed to rectify these deficiencies. A separate remedy hearing was listed. After receiving the judgment, the Council instructed an external, independent investigator to undertake a fresh investigation into the allegations. The investigator concluded that ZZ had been truthful, and the employer upheld its gross misconduct finding.
At the remedy hearing, Mr Sellers sought re-engagement. The Council did not argue that Mr Sellers had caused or contributed to his dismissal in any way. Instead, it argued it was not practicable to re-engage because it had lost all trust and confidence in Mr Sellers and believed him to be guilty of a sexual assault (based on the findings of both its internal investigations and subsequent independent investigation). The fact that Mr Sellers had also refused to vacate the Council's property and failed to return artwork to the Council added to the loss of trust.
The ET rejected these arguments. It found that the second investigation was also fundamentally flawed, reliance on its conclusions was unreasonable, and it would be practicable to re-employ Mr Sellers. The ET then went on to consider whether Mr Seller's conduct had contributed to his dismissal notwithstanding that the Council did not put forward this point. It found that on the balance of probabilities the sexual assault did not happen and so Mr Sellers had not contributed to his dismissal. The ET made a formal re-engagement order.
The Council appealed the remedy judgment, arguing that the approach taken was an error of law and the outcome perverse. The EAT agreed and upheld the appeal. The EAT made clear that, when re-employment is being explored as a remedy, there is no requirement for the tribunal to make a finding on whether the claimant’s conduct contributed to their dismissal. Only if the tribunal has made such a finding (either at the liability stage or because the point was actually raised by the parties at the remedy stage) must it then take that into account when considering whether it would be just to order re-employment.
Here, no such findings had been made at the liability stage and, in fact the Council had expressly withdrawn arguments about contributory conduct. The ET wasn't supposed to determine if the claimant had committed the alleged act and by doing so had overstepped its mandate.
The EAT also held that the tribunal had lost sight of the fact that practicability of re-engagement had to be determined from the perspective of the respondent. It should have focused on whether, as a matter of fact, re-engaging Mr Sellers was likely to be practicable in circumstances in which the Council had accepted the finding of an independent report that Mr Sellers had sexually assaulted an employee of the British Embassy at a social function. Instead, the tribunal had fallen into error by testing the reasonableness of the investigation.
The re-engagement order was set aside – which meant that financial compensation would be subject to the normal statutory cap.
What does this mean for employers?
Orders of re-employment are the exception rather than the rule. However, when ordered they will have a significant impact on the employer and failure to comply will be very costly. As stated above, a tribunal must look at the practicability of re-employment from the perspective of the employer. Therefore, if an employer wishes to argue against such an order, they should put together evidence of why re-employment would not be capable of being carried into effect with success.
