Judicial guidance regarding the meaning and application of s.98(4) of the Employment Rights Act 1996 in the context of misconduct dismissals is well settled and familiar. Among the key principles are the following:
(a) In assessing the reasonableness of the decision to dismiss the tribunal has to consider the decision against the objective standards of the hypothetical reasonable employer, rather than by reference to the ET’s own subjective views. It has to consider whether the employer has acted within a “band or range of reasonable responses” to the particular misconduct found of the particular employee.
(b) That is not the same as saying that a decision of an employer to dismiss will only be regarded as unreasonable if it is shown to be perverse.
(c) The tribunal must not substitute its own view as to whether or not they think that the dismissal was fair for that of the employer.
Although well known, the guidance (I would suggest) contains an inherent contradiction: the “band of reasonable responses” is conceptually indistinguishable from a perversity test, so although we have it on high authority that the two are different, it is unclear how they differ.
In Tayeh v Barchester Healthcare Limited  EWCA Civ 29 the Court of Appeal was expressly asked to clarify the difference. Rimer LJ (giving the leading judgment, with which Pill and Hughes LLJs agreed) acknowledged the problem… before neatly side-stepping it (at paragraph 50):-
Whilst the guidance in Foley excludes any need for a tribunal to find that an employer’s decision to dismiss was perverse before it can conclude that dismissal was unreasonable, I admit to some difficulty in understanding the nature of that guidance. If the tribunal’s application of the band of reasonable responses approach informs it that dismissal in the particular case fell outside the band of reasonable responses that might be adopted by the hypothetical reasonable employer, that would appear to be equivalent to a conclusion that dismissal was a decision that, on the facts, no reasonable employer could have made. That would be akin to a finding of perversity. That said, I accept that the guidance in Foley, binding upon this court, is to the effect that appeals to concepts of perversity are out of place in the consideration of the reasonableness or otherwise of the dismissal: the approach that has to be applied is simply that of the ‘band of reasonable responses.’
I would tentatively suggest the reason that the CA is bound by guidance it does not fully understand is something like this:-