When defending unfair dismissal claims an employer normally has to show:
- that they dismissed one of the valid reasons – conduct, capability, redundancy, breach of a statute or “some other substantial reason”
- that they acted reasonably in deciding to dismiss – for “some other substantial reason” the size and resources of the employer are taken into account
In the recent case of Docherty v SW Global Resourcing Ltd, the employer moved his staff onto zero-hours contracts in an attempt to cut costs (by removing a guaranteed minimum payment), prevent redundancies and make the business more competitive. However, the employer was ignorant of the fact that this would change their employment status and cause them to lose their accrued statutory rights (redundancy pay etc.).
Consequently, the employees handed in their notices and claimed constructive dismissal. The employer claimed that they were dismissed fairly for “some other substantial reason”.
What did the courts think?
The Employment Tribunal initially held that the employees were unfairly dismissed. They rejected the argument that the company’s motive of making the business more profitable equated to “some other substantial reason”. They agreed that the removal of the guaranteed minimum payment constituted a sound business reason, but the same could not be said in respect of the resulting change in employment status.
The case was appealed and the Employment Appeal Tribunaloverturned the judgement, finding that the dismissal was indeed for “some other substantial reason” and was fair. The EAT held that the contractual changes were the result of good business reason, and therefore the claimants had been fairly dismissed. Since the employer had no expertise in employment law, and hadn’t taken advice, it had not appreciated the consequential change in employment status. Furthermore, it had engaged in full consultation with staff regarding the need to cut costs.
The Inner House of the Court of Session after further appeal has since confirmed that an employer’s ignorance or mistaken view of the law may mean that a dismissal is fair but this will be just one of the factors to be determined. Consideration must also be given to whether the employer’s ignorance was excusable. This involves deciding whether professional advice ought to have been taken if the employer had thought things through. The case has therefore been passed back to the Employment Tribunal to apply these tests to the facts.
What conclusion can we draw?
This case shows that ignorance of the law may be a defence to unfair dismissal claims, but as with most employment law issues, the facts of the case must be carefully examined. Of course, by the time this examination takes place, you are already at the Employment Tribunal – not the ideal or cheap situation!
The much better option is to take professional advice before making major changes to your employment contracts and avoid the Tribunal in the first place. Here at Backhouse Solicitors, we are expert employment law solicitors and can provide your business with the friendly, professional advice you need to keep on the right side of the law. Contact us today to find out how we can help you:
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