The EAT has clarified the test to be applied by tribunals in cases where the fairness of an earlier final written warning is challenged. The EAT says that in a capability unfair dismissal case, if a claimant asks an employment tribunal to re-evaluate the merits of a final warning, the tribunal should only do so where that warning was ‘manifestly inappropriate’ and should otherwise accept the warning’s validity. It is an approach that is well recognised for misconduct dismissals but the EAT has confirmed in this case that the same test applies to capability dismissals. It is a useful case for employers, and we will come onto that shortly, but first the facts, briefly.
The case was brought by Mr Fallahi who had been employed in a senior post for the research and technology business, TWI. They had raised concerns about his performance which they initially managed through an informal procedure, setting various objectives and targets to be met over the following 12 months. However, before the first deadline arrived, Fallahi’s manager felt there was not enough progress and so held a formal capability hearing after which he issued a final written warning which included a three-month review period, with further objectives and targets being set. However, two months into this the manager felt insufficient progress had been made and so Fallahi was dismissed on capability grounds. At tribunal, Fallahi argued that the dismissal was unfair on grounds that the sudden use of a final written warning was not justified. He wanted to open up the circumstances surrounding the issuing of the warning and examine the manager’s motives. The tribunal rejected that and said that approach would only be possible in cases where the earlier warning was ‘manifestly inappropriate’ which it was not the case because Fallahi’s performance issues were long standing and TWI’s capability procedure did allow them to go straight to a final written warning. Fallahi appealed but on appeal the EAT agreed that the test applied by the tribunal in this case was the correct one.
So clearly a helpful case for employers knowing that tribunals won’t look behind warnings and examine an employer’s motives unless the issuing of the warning was clearly inappropriate. Earlier, Sarah Munro joined me by video-link to discuss the case. I started by asking if she agrees it’s a useful case for employers:
Sarah Munro: “Yes, without a doubt it’s useful because it's the first case which has really looked at whether you need to go behind a final written warning in a capability case. There has been quite settled case law for a number of years in relation to whether you look behind the final written warning in a misconduct case and both the EAT and the Court of Appeal have held that it's only in really rare cases that you must look behind a final written warning and the test that they have used, and the one which has now been applied in this case to capability dismissals, is whether the issuing of the final written warning prior to any dismissal was ‘manifestly inappropriate’. So what the tribunal will do is they will look at this dismissal case in front of them and they will realise that the individual has only been dismissed because they were already sitting on a final written warning and they will not look into the reason why that final written warning was issued, and the fairness of that, unless or something glaringly obvious. So, where for example the claimant says this manager had a real grudge, he gave me a final written warning for something so small nobody would ever have done that, and if we can produce that evidence to show how inappropriate it was to issue the final written warning, then the tribunal may be minded to look behind it. However, employers shouldn't worry because that is only going to happen very rarely. Most tribunals will look at a final written warning and be comfortable that a normal and fair process has been followed and not go any further and then the employer can rely on that final written warning to justify the subsequent dismissal. Now that has been the case for a number of years in misconduct dismissals and this case is helpful because it moves that test, this ‘manifestly inappropriate’ test, to capability dismissals but my view is it's not as key in capability dismissals because capability dismissals are different. An individual will have been on a performance improvement plan, and not improving, so they will have been issued with various warnings. They will have been issued with the final written warning as a red flag to say look if your performance doesn't improve soon you could be dismissed and, ultimately, when they are dismissed it's not just because they have that warning on their file, it's because their performance hasn't improved. So it's a subtle difference - in a misconduct case the reason you're dismissed is because you have a final written warning on your file for an act of misconduct, you have then committed a different act of misconduct and it's only because you have a final written warning that second act of misconduct results in dismissal. In performance cases, you have a final written warning but that's because there's been a steady decline or lack of improvement in your performance and the warnings are more like red flags than the real reason that you're ultimately dismissed. What you're ultimately dismissed for is your performance. So in summary, it is helpful without doubt, but I don't think it's going to be as relevant as the case law in how and when you look behind a final written warning in misconduct cases.”
Joe Glavina: “This case was about asking a tribunal to look back at an earlier warning and re-examine it. If we go back a step, what if the employee asks the employer to review an earlier sanction?”
Sarah Munro: “Like in any situation where an employee raises something at a disciplinary hearing, you must address it. You can't just ignore it or that could go to the fairness of the dismissal and a tribunal will say ‘the employee raise this point, why haven't you looked into it’? But it's how far you look into it. That's what we have to decide what's appropriate. So if an employee says to you I should never have been given that final written warning, you as the employer have to look back at the paperwork and check that there's been a process, check the reason for the final written warning, and provided that all looks in order then I don’t think there's a requirement for you to go much further and delve into the reasoning, the investigation and all the detail behind the final written warning, because otherwise you'd be constantly reopening closed disciplinary cases. So again, similar to the tribunal, unless there's something glaringly obvious in that earlier issuing of the final written warning that is wrong or doesn't sit right with you as the decision maker at the dismissal stage, I think you would be able to the individual, I note what you said about this, I’ve checked back and it looks like her process was followed fairly and I'm comfortable that that final written warning should be issued. So the message really is don't ignore an employee raising that question, but you don’t need to fully reopen it unless there's something really obvious that has gone wrong. The other interesting point is a lot of employees, when they're issued with a final written warning, are so delighted that they've not been dismissed that they often don't appeal that final written warning at that time and that is also a helpful point an employer can make and they can say well if you were really upset about being issued with that final written warning, why didn't you appeal it at the time? You’re only now raising that because you realise you might be dismissed. So that is another way of justifying not fully reopening an earlier disciplinary warning because you've got to make it manageable for you as the employer. So it's balancing what's appropriate for you to do against bearing in mind all the time that you have to be reasonable in your decision making to justify any fairness in test, or argument, at a tribunal at a later date.”
That case is the EAT’s decision in Fallahi v TWI Ltd and if you would like to read it for yourself you can – we have put a link to it in the transcript of this programme.
- Link to case report: Fallahi v TWI Ltd