We consider the recent Employment Appeal Tribunal (EAT) decision in Stratford v Auto Trail VR Ltd (UKEAT/0116/16), in which an employer had taken into account an expired warning when deciding to dismiss an employee. Did that necessarily make the dismissal unfair?
Mr Stratford started work for Auto Trail VR Ltd (Auto Trail) in November 2001. He had a poor disciplinary record. The last two disciplinary issues in a list of 17 items were a warning for failing to make contact while off sick and a warning for using company machinery and time for what the ET described as preparing materials for personal purposes. Both of these warnings had expired by the time of the events for which Mr Stratford was dismissed.
In October 2014 Mr Stratford was seen with his mobile phone in his hand on the shop floor, which the employee handbook described as “strictly prohibited”. Mr Stratford was invited to a disciplinary hearing to discuss the allegation. He put forward various explanations and excuses but Auto Trail decided to dismiss him. Auto Trail found that Mr Stratford was not guilty of gross misconduct and confirmed he was being given a final written warning. However, it went on to say that Mr Stratford had been given every chance and had given it no reason to believe that they would not be having a similar discussion in the future. Auto Trail concluded that Mr Stratford did not understand the consequences of his actions and it did not believe that this would change. As such, it decided to terminate his employment with pay in lieu of notice.
Mr Stratford brought a claim of unfair dismissal in the ET.
Employment tribunal decision
Despite the fact that Auto Trail had found that Mr Stratford’s conduct was not gross misconduct, and despite the fact that his previous disciplinary warnings had expired, the ET found that his dismissal was fair.
In reaching its decision the ET considered section 98(4) of the Employment Rights Act 1996. This states that where an employee’s dismissal is for a potentially fair reason:
“the determination of the question of whether the dismissal is fair or unfair (having regard to the reason shown by the employer) –
(a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and
(b) shall be determined in accordance with equity and the substantial merits of the case.”
The ET decided that this wording was sufficiently wide to allow an employer in certain circumstances to take account of expired disciplinary warnings. The ET held that Mr Stratford’s disciplinary record and the belief that, as a consequence of that record, he would not improve were the reasons why the employer decided to dismiss him. However, this needed to be balanced against the normal employment practice that once a warning has expired, the slate should be wiped clean.
The ET considered that the employer had reached the end of its tether and had decided that enough was enough, and that in these circumstances the decision to dismiss fell within the band of reasonable responses open to the employer. As such it found that the dismissal was fair.
Mr Stratford appealed this decision to the EAT.
The EAT rejected Mr Stratford’s appeal and found that he had not been unfairly dismissed. In reaching this decision, it reviewed previous case law relating to expired warnings. Like the ET, it particularly focused on the wording of section 98(4) of the Employment Rights Act 1996, and concluded that this was sufficiently widely worded to allow some circumstances where an expired disciplinary warning could be taken into account in deciding to dismiss an employee. It found that in the individual circumstances of Mr Stratford’s case it was open to the employer to take this approach.
The EAT has confirmed that it is not always the case in every conceivable circumstance that an expired disciplinary warning must be disregarded when deciding whether to dismiss an employee. However, what is much less clear is in what circumstances an expired disciplinary warning may lawfully be taken into account. Each case will be considered on its own facts as to whether a dismissal is fair.
In Mr Stratford’s case it is notable that he had a poor disciplinary record, with 17 previous (expired) items on his record. It is likely that this made the employer’s conclusion that Mr Stratford would not change in future more reasonable. The outcome of this case may well have been different had the employer dismissed Mr Stratford in circumstances where he had only one previous expired disciplinary warning on his record.
Furthermore, the EAT noted that there were some other cases where Mr Stratford had not been subject to formal disciplinary action for his behaviour and therefore the issue of a disciplinary warning expiring did not apply when considering those other cases, as there was no disciplinary warning to expire.
As the EAT focussed on the individual facts of Mr Stratford’s case, rather than drawing wider lessons from it, it is difficult to predict how this decision will be applied by ETs considering unfair dismissal claims where an employer has taken account of an expired disciplinary warning in other circumstances. Although the EAT did not refer to it in this decision, it is possible that one factor which may be relevant is the wording of the employer’s disciplinary procedure. If this indicates that in all circumstances an expired disciplinary warning will be disregarded by the employer when applying the disciplinary procedure, this may make it more difficult for an employer to have regard to an expired disciplinary warning in the case, for example, of a repeat offender (especially where the disciplinary procedure is contractual), as this would be a departure from the employer’s own disciplinary procedure. It may be advisable for employers to review their disciplinary procedures to consider whether they allow for any flexibility in exceptional circumstances, in the light of this decision.
An employer may be in a stronger position in taking into account an expired disciplinary warning where that expired warning had been given in relation to a similar act of misconduct for which the employee could have been dismissed at the time but the employer had decided to be lenient and give a warning instead.
Previous case law indicates that it is not permissible to use an expired disciplinary warning as a justification for treating a non-dismissable offence as a dismissable offence. It appears from the case law that this is to be distinguished from having regard to previous conduct, regardless of the fact that it was the subject of an expired warning, when deciding on the sanction for a dismissable offence. However, in many cases this will not be an easy distinction for employers to make.
In any event, employers should not interpret this decision as carte blanche to take expired disciplinary warnings into account in dismissing employees. The usual rule is that it will be unfair for an employer to have regard to an expired disciplinary warning when deciding whether to dismiss an employee. Each case should be decided on its facts but cases where doing so is found to be fair are likely to be rare. If an employer is considering taking into account an expired disciplinary warning when considering whether to dismiss or discipline an employee, we would strongly recommend taking legal advice prior to taking any steps.