Anderson v Chesterfield High School UKEAT/0206/14

Why care?

Under the Employment Rights Act 1996, there are five fair reasons for dismissal: conduct, capability, redundancy, illegality (breach of a statutory restriction), and some other substantial reason of a kind as to justify the dismissal (SOSR).  In addition to a fair reason, a fair dismissal must also follow a fair procedure.

The House of Lords held in Polkey v A E Dayton Services [1988] ICR 142 that, even if a Claimant is successful in his or her unfair dismissal claim, the compensation that might otherwise be awarded can be reduced to reflect the likelihood that the Claimant would have been dismissed in any event and that any procedural errors would have made no difference.    In addition, a tribunal may reduce both compensation and the unfair dismissal basic award to reflect the Claimant's own blameworthy contributory fault which led in some way to the dismissal, provided that it is just and equitable to do so.

In this case, the EAT had to consider what compensation, if any, should be given to the elected Mayor of Liverpool, who had been unfairly dismissed from his position at a local school.

The case

The Claimant was employed by Sefton Metropolitan Borough Council ("Sefton") at Chesterfield High School. Whilst working there, he was elected a Councillor of Liverpool City Council, the Leader of the opposition on the Council and then Leader of the Council (a full time post with an annual allowance of around £50,000). When he was elected Leader of the Council in May 2010, Sefton agreed that he should continue as its employee but would not be required to carry out any duties and would be paid 208 hours per annum (the maximum paid leave available to employees to hold public office) and pension contributions.

During 2011, the School prepared to convert to academy status and during that period, the Governors decided that the arrangement with the Claimant would be terminated because his salary would now be coming directly from the School's own funds. However, nothing was done and on 1 October 2011, all Sefton's employees working at the School transferred to its employment, together with the Claimant.

In May 2012, the Claimant was elected Mayor of Liverpool, a full time position with a four year term which entitled him to an annual allowance of about £80,000. The Claimant wrote to the School asking them if the cap on paid leave for time off continued to apply to him. The Governors interpreted this as a request to increase his pay and a Governors' meeting took place on 12 September at which the arrangement with the Claimant was discussed and in the event, it was agreed that his employment should be ended a termination letter should be prepared, and he should be asked to return all payments received since his election as Mayor in May. However, the next salary payment date was 15 September.  Before the meeting, the headteacher decided to instruct the payroll providers to cancel the Claimant's salary payment due to be paid that day. The payroll company processed this as a termination and sent the Claimant a letter stating "We have been informed by your manager that your employment has ended" and enclosing his P45. Unfortunately, the Claimant had been given no notice that the Governors were considering the termination of his employment and return of salary paid to him, nor an opportunity to make representations before the decision was made, and was not offered an appeal. Unsurprisingly, he brought a claim for unfair dismissal (amongst other claims which were unsuccessful).

The Employment Tribunal held that although the School had a number of legitimate reasons for the Claimant's dismissal, including its inheritance of an inequitable arrangement whereby the Claimant received £4,500 per year with no benefit to the pupils, that he would not be financially reliant on the School's payments, that there was a genuine risk of instability at the School as a result of the arrangements, and that the Claimant had "fundamentally changed" the nature of the arrangement by taking on the elected fixed term role of Mayor without consulting the School. However, even though the School had a potentially fair reason for dismissal, the procedure was "woefully deficient" and would in an ordinary unfair dismissal case be "patently unfair". The Tribunal held that any compensation awarded to him should be reduced by 25% to reflect his contributory fault by not telling the School of his intention to stand for Mayor.  In any event, the Tribunal then went on to find that since the Claimant had not done any work for the School since 2010 and would be unable to do so for another four years, it was 100% likely that he would have been dismissed in any event, and so applying Polkey, he should not receive any compensation at all.

The EAT dismissed the Claimant's appeal. In a brief discussion and conclusion, HHJ Serota QC held that "the principal reason for the "dismissal" was obvious.  The realisation that a continuation of an arrangement whereby the Claimant, an elected official of a neighbouring Local Authority, was paid (albeit a modest amount) by a publicly funded school without having to provide any services for an indefinite period was considered to be of no value to the Respondent and might lead to significant criticism if the arrangement became public." This reason was a "clear example of an SOSR [some other substantial reason]".

It was within the range of reasonable responses open to a reasonable employer that this was a misuse of public funds, and that the Claimant's behaviour in not informing or discussing his intention to stand for Mayor with the School to be blameworthy, in particular that he should have considered how the arrangement would be perceived by others. There was no doubt that the finding that he would have been dismissed in any event if a fair procedure had been followed was correct.

What to take away?

It is surprising that the Claimant ever thought this would end well for him – even if he won, it would have been almost impossible to see this payment as anything other than a misuse of public funds which could have damaged his reputation.

The EAT held that – notwithstanding the headteacher's decision to arrange for the payroll provider to send the letter and issue the P45 before the Governors' meeting – it was the Governors who made the decision to dismiss.

The Claimant's original claim to the Employment Tribunal included an argument that he had been dismissed contrary to the Equality Act 2010 because of his "philosophical belief in public service and the need to engender in others a desire and commitment to serve the community for the common good". He cited that he had set up a charity called Sefton Welfare of Pupils to raise money to buy school uniforms to encourage school attendance, that he had supported the release of a Liverpool FC fan wrongly convicted in Bulgaria, his opposition to Everton FC's new stadium, his participation in planning events for Liverpool's year as European City of Culture in 2008, his service on the board of an organisation dedicated to the economic development of Liverpool and that he was "Liverpool, through and through". The tribunal recognised that he held a philosophical belief worthy of protection, but dismissed his claim of discrimination.