In McMillan v Airedale NHS Foundation Trust [2014] EWCA Civ 1031, the Court of Appeal has ruled that the Trust could not increase a disciplinary sanction on appeal, where its contractual disciplinary procedure did not expressly permit this.

Facts

Airedale NHS Foundation Trust (the Trust) employed Miss McMillan as a consultant obstetrician and gynaecologist.  The Trust's disciplinary procedure was incorporated into her employment contract and was set out in two documents.  The first document contained details of formal disciplinary procedures and misconduct.  The second document was the Trust's code.  This listed the Acas Code as an "associated policy" and contained details about investigations and first hearings, including sanctions.  The code also dealt with appeals, stating that an employee could appeal against a warning or dismissal and that there would be no further right of appeal.

The Trust issued a final written warning against Miss McMillan, following disciplinary proceedings for misconduct.  When she appealed against the warning, she was told that there would be a rehearing but that the appeal panel could review the outcome "in terms of the sanction applied", meaning that the panel could uphold or reverse the decision or reduce or increase the sanction.  Miss McMillan applied to the High Court for an injunction to restrain the Trust from potentially increasing her sanction to dismissal and tried to withdraw her appeal.

High Court decision

The High Court held that the employment contract did not allow the appeal panel to impose a more severe sanction than had been given by the original panel.  The main reason for this was that the contract did not expressly contain such a power.  Further, it would be contrary to the Acas guide (which accompanies the Acas Code), it might result in an increased sanction where there could be no further appeal and it would effectively grant the Trust a right of appeal that was not contained in its code.  The Trust appealed.

Court of Appeal decision

The Court of Appeal unanimously dismissed the Trust’s appeal, on the basis that Miss McMillan’s contract of employment provided her with the right to an appeal that could not result in an increased sanction and an increased sanction would amount to a breach of contract.

The Trust's code granted employees the right of appeal against a warning or dismissal.  That was the extent of an appeal.  The appeal was there to benefit the employee, not the employer.  It was not intended that the appeal should continue the disciplinary process and leave all options open.  In addition, the Trust's code clearly stated that there was no further right of appeal.  It would be surprising if an employee had the right to appeal against the sanction of a warning but not the more serious sanction of dismissal.

The Trust's code referred to the Acas guide, which was relevant to the contract's construction.  The Acas guide expressly stated that an appeal should not result in an increased sanction.  Although it was not statutory guidance, nor was it incorporated into the contract, the Acas Code was expressly referred to in the Trust's code and the Acas guide was reasonably available to all parties.  Against that, the notion of an appeal against a warning or dismissal meant that the process could not result in an increased penalty.

The Court had sympathy for the Trust's argument that a more serious finding of misconduct on appeal might mean that the employer would have to begin a new disciplinary procedure.  Lord Justice Underhill envisaged a scenario in which a rehearing uncovers graver misconduct than had originally been alleged.  However, he felt that the solution was not to construe the procedure's terms incorrectly.  Instead, it must be appreciated that an employee would not automatically have a legal remedy if the employer fails to follow a contractual disciplinary procedure.  Unfair dismissal hinges on reasonableness, rather than breach of contract, so an unfair dismissal claim would not help the employee.  An action for breach of a contractual disciplinary policy could lead to an injunction but that would be at the court's discretion.  If a court was satisfied that the employer was justified in acting outside the terms of its disciplinary procedure, and that substantial fairness had been observed, then the court would not be obliged to grant relief.

Comment

This case confirms that while in theory a disciplinary procedure may contain an express right for an employer to increase a disciplinary sanction on appeal, the procedure in this case did not and so to threaten to move to dismissal rather than a final written warning was, on these facts, unlawful.  If an employer wants to be able to impose a more severe sanction on appeal – which would be unusual – it must ensure that this is set out clearly in its disciplinary procedure and, in the light of the Court of Appeal's comments, it should consider giving the employee a further right of appeal.