An employer's ability to take into account an expired disciplinary warning when deciding to dismiss for misconduct, has recently been considered by the Court of Appeal in Airbus UK Limited v Webb.
Mr Webb had been employed by Airbus since 1990 as an aircraft fitter. He was subject to the company’s disciplinary rules and procedure by which the company was entitled to summarily dismiss an employee for gross misconduct including behaviour described as "theft or fraud or dishonesty involving the company, its employees, customers or visitors." The procedure stipulated that in exceptional cases a final written warning may be given as an alternative to dismissal.
Mr Webb was given a final written warning in August 2004 for the offence of misusing company premises and equipment and the fraudulent misuse of company time, that final warning having been the result of a successful internal appeal from an earlier decision to dismiss him.
The company’s disciplinary procedure provided that final written warnings were to be given a specified period for which they were "live" after the end of which time the warning would be removed from the employee’s personnel file. That is consistent with the ACAS Code of Practice on Disciplinary and Grievance Procedures which in relation to final written warnings gives the following guidance:
"The final written warning should normally be disregarded for disciplinary purposes after a specified period (for example 12 months)."
Mr Webb was duly informed the warning would in his case remain "live" for 12 months and so the warning expired at the end of August 2005. About three weeks later, on 20th September 2005, he and four other employees were found watching television while they should have been working. Mr Webb was summarily dismissed but the other employees, who had not had a previous warning, were not.
Mr Webb presented an unfair dismissal claim complaining of disparity in relation to his disciplinary sanction compared with the others and complaining too that his employers had taken into account his expired final written warning which was the reason for the disparity.
Both the Employment Tribunal and Employment Appeal Tribunal (seemingly with some considerable hesitation) found in his favour.
The question for the Court of Appeal was whether a dismissal was necessarily unfair if the employee would not have been dismissed but for the employer taking into account an expired disciplinary warning. Law
The issue fell squarely within s.98 Employment Rights Act 1996:
"…the determination of the question whether the dismissal is fair or unfair (having regard to the reasons 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."
However, the provisions of the ACAS Code as described above in the context of final warnings necessarily had to be taken into consideration and, furthermore, there were authorities in relation to the treatment of final warnings from both the EAT and Scottish Court of Session in the case of Diosynth which were understood to have the effect of deciding that an expired final warning should be disregarded for all purposes and in all circumstances.
The employer’s appeal succeeded.
The Court of Appeal in Airbus in fact did not disagree with Diosynth but found that it was distinguishable from Airbus on its facts not least of which was that in Diosynth the dismissal would not have occurred but for the "tipping point" of the final warning whereas in Airbus the employer satisfied the Tribunal that the principle reason for dismissal was the employee's misconduct and not the fact of the final warning; and that in any event Diosynth did not go so far as to establish a general principle that an expired final warning could never reasonably be taken into account by an employer.
That said, the judgment of Mr Justice David Richards in Airbus sounds an appropriate note of caution for employers:
"I would not regard the decision in this case as encouraging reliance on expired warnings as a matter of course."
Guidance in Relation to the Treatment of Warnings
The Court of Appeal identified and endorsed some sound practical guidance for employees and employers in relation to the treatment of warnings in the following terms from the EAT judgment:
"Perhaps the lesson for employers is to take care when giving warnings, particularly final warnings, to tailor them to the particular circumstances - as indeed this employer did in other contexts. As we have said, para 24 of the ACAS Code indicates that although final warnings should normally have a time limit of 12 months, that need not always be so. There is in our view no reason why it should not be longer if the nature of the misconduct justifies it, and in particular if the imposition of a lesser penalty is an act of leniency. An employer might also be justified in extending the period of the warning with respect to a later act of gross misconduct which is the same or substantially the same as that for which the earlier final warning was given.
"We recognise that to some extent there is a tension between the flexibility allowed to employers to consider expired warnings and the complexity of the warning provisions prescribed by the ACAS Code. If employers are going to be denied the right to have regard to expired warnings in any circumstances, then they must be allowed reasonable flexibility to formulate their rules to allow for exceptional cases. This will inevitably make them more complex. Of course, whatever the rules, they must always be carefully drafted and clearly drawn to the attention of employees."
An interesting aside is the way in which the Court of Appeal treated the Diosynth judgment of its Scottish equivalent, the Court of Session. It is at this second appellate level that the Scottish and English legal systems cease to become directly binding in the other’s jurisdictions so a Court of Session judgment is not directly binding on the EAT. Nonetheless, it is clearly recognised that while such judgments are not directly binding, the EAT should normally follow them as otherwise a confused situation is likely to develop in which the law of Scotland could differ from the law of England and Wales in relation to the provisions of the ERA.
The EAT in Airbus had sought to follow Diosynth (albeit it had erred in law in the way that it did so) and the Court of Appeal took considerable care in reconciling its judgment in Airbus with the Diosynth judgment.