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Relying on Previous Warnings: Clarification from the Court of Appeal

Martin Fodder

Warnings, verbal, written or final (or other various other descriptions)
are a critical element of the framework of industrial justice. The ACAS code is
to the effect that a warning is the default response to misconduct. A final
warning informs the employee that further misconduct within period set by a
final warning may result in dismissal or some other contractual penalty such as
demotion or loss of seniority. Employers’ disciplinary policies will invariably
provide for a system of warnings. Way v Spectrum Property Care Ltd [2015] EWCA Civ 381 considers what the ET’s approach should be where the
employee alleges that the previous warning was in bad faith. Lord Justice Christopher
Clarke gave the only substantive judgment.

Mr Way had been a
recruitment manager. He was dismissed for misconduct on 14 December 2013.
Previously, in December 2010 he had been given a final 12 month written warning
and informed of his right of appeal. That warning arose out of what was said to
be an appointment of an individual contrary to Spectrum’s procedures regarding
fair recruitment and the disclosure of any relationships. Mr Way contended that
that warning had been given by his manager, a Mr Brookes, to cover up Mr
Brookes’ own role in the appointment. The outcome had been predetermined. Mr
Way said he approached Mr Bryan, the company Managing Director and was told not
to appeal, as if an appeal was received, it could be escalated to dismissal. He
was told to forget about the whole thing and move on, as a result of this
conversation he did not appeal.

The warning letter stated
that the conduct/performance improvement expected was for Mr Way to ensure that
he was fully familiar with the Group Policies and Procedures as detailed in the
Staff Handbook. Spectrum’s computer usage policy was included in the Staff
Handbook albeit of course that the episode that had resulted in the final
warning was nothing to do with computers.

Both before and after the
December 2010 warning Mr Way had sent “inappropriate” emails which were not in
accordance with Spectrum’s policies. As part of a general crack down on
inappropriate email usage, management looked at Mr Way’s emails and judged them
to be in a “red” category which meant that they were regarded as slightly less
serious and warranting a final warning as opposed to gold which would have
meant that they were sufficiently serious to initiate the gross misconduct
disciplinary process or amber – which would have resulted only in a letter of
concern.

However because Mr Way was
already subject to a final written warning it was determined that should be the
subject of disciplinary process. Mr Way was duly dismissed. His appeal, when he
raised what he said was the bad faith of the previous warning, was dismissed. The
appeal officer (a Mr Mason) considered and rejected the bad faith contention.
Mr Mason concluded there was no real evidence to substantiate Mr Way’s
assertions, he noted that many of these had not been raised previously and that
Mr Way had not appealed against the decision to give him a final written
warning

The ET decided that the
fact that there was a “live”
final written warning, even though for a different type of offence, which
warned Mr Way that any further misconduct during the operative part of the
warning could lead to dismissal entitled Spectrum to decide that he should be
dismissed and this was within the band of reasonable responses. Mr Way appealed
to the EAT. Much of the Court of
Appeal’s judgment is concerned with whether the ET’s approach to what was and
what was not in dispute in relation to the warning and in particular whether Mr
Way had put want of good faith in issue. Further issues arose as to whether the
EAT had correctly analysed those issues and had been correct in declining to
remit the case. But the judgment of the Court of Appeal does make points of
wider significance.

The
two leading cases are firstly
Davies v Sandwell Metropolitan
Borough Council
[2013]
EWCA Civ 135: the essential principle
is that it is legitimate for an employer to rely on a final warning when
deciding to dismiss for a further offence, provided that
 

  • it was issued in good faith,
  • that there were at least prima facie grounds for imposing it and
  • that it must not have been manifestly inappropriate to issue it. 

Then
secondly in Wincanton Group PLC v
Stone
[2013]
IRLR 178 Langstaff J gave specific guidance to tribunals at para 37 saying:

If a tribunal is not
satisfied that the first warning was issued for an oblique motive or was
manifestly inappropriate or, put another way, was not issued in good faith nor
with prima facie grounds for making it, then the earlier warning will be valid.
If it is so satisfied, the earlier
warning will not be valid and cannot and should not be relied upon subsequently
.”

Langstaff J continued by
saying that
a warning for conduct may have greater
force if subsequent conduct is of the same type, but it could not sensibly be
suggested that if an employee was successively convicted of a number of
separate acts of misconduct, each quite different from the other but each
justifying a warning, then the employer would not be entitled to have regard to
the totality of the employee’s behaviour. He added that in the case of a final
warning, the industrial members of the EAT panel in particular were clear that
the usual approach would be to regard any further misconduct as usually
resulting in dismissal, though not necessarily inevitably so, whatever the
nature of that later misconduct.

Both of Davies and Wincanton cases had been
cited to the EAT in Mr Way’s case: the EAT had (in line with those authorities)
stated that:

When an Employment
Tribunal is considering whether an employer has acted reasonably in dismissing
an employee, the employer is entitled
to rely upon an earlier warning unless that warning was issued in bad faith,
with no grounds, or in circumstances which were manifestly inappropriate

However the EAT had gone
on to say that Spectrum “was entitled to have regard to the warning even if in fact it had
resulted from Mr Brookes’ bad faith”. That ruling assumed bad faith – or at least the
possibility of it. Perhaps unsurprisingly the Court of Appeal thought that
the decision of
the EAT had “a degree of illogicality”. The basis for the EAT’s conclusion was that in
all the circumstances Spectrum was entitled to have regard to the warning, the
principal circumstances being,
 

  • the
    warning was valid on its face and was not challenged by an appeal against the
    warning; and
  • there was
    the appeal to Mr Morris (against dismissal) in which Mr Morris had rejected the
    points made by Mr Way about the warning.
     

But if Mr
Morris had been correct to reject Mr
Way’s case that the warning was in bad faith then it was incorrect for the EAT to work on an assumption that the warning was
or might have been in bad faith.

As Clarke LJ put it in
the Court of Appeal, the fact that Mr Way had been given a final warning meant
that he had been found guilty of misconduct and told that, if he misconducted
himself again, he was likely to be dismissed. The warning had, therefore taken
Mr Way a step further down the disciplinary road to dismissal. That was highly
relevant to the reasonableness or otherwise of any subsequent decision to
dismiss him. On the findings of the Employment Tribunal it was the existence of
the warning which made it reasonable for Spectrum to dismiss him rather than
take a lesser course.

In
line with the earlier authority referred to above the Court of Appeal said that
a warning given in bad
faith is not, in circumstances such as these, to be taken into account in
deciding whether there is, or was, sufficient reason for dismissing an
employee. That was because an employer would not be acting reasonably in taking
into account such a warning when deciding whether the employee’s conduct was
sufficient reason for dismissing him; and it would not be in accordance with
equity or the substantial merits of the case to do so.

The fairness of Mr Way’s
dismissal could not turn on the reasonableness or otherwise of Mr Morris’
decision as to whether the final warning had been given in good faith or not.
If Spectrum had in fact issued Mr Way with a warning in bad faith, the fact
that it was erroneously thought that there was no bad faith did not entitle
Spectrum to rely on the warning.

The same logic must
surely apply to the other grounds on which a warning would be invalid- that
there were no prima facie grounds for
imposing it and/or that it was
manifestly inappropriate to issue it. Employers who take into account previous
warnings without listening to protests about those warnings from the employee
will do so at their peril but it will be up to the tribunal, not the employer,
to decide whether those protests were well founded. A doubt as to whether a
previous warning was “correct” may produce a greater focus on whether the
misconduct which has caused the employee to once again face the possibility of
dismissal justifies that result without reference to the previous warning.

 

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