EAT rules HR consultants not liable for dismissal decision
The EAT has clarified that external HR consultants involved in grievance or disciplinary procedures are not automatically liable for an employer’s decision to dismiss, even where their reports form the basis of that decision.
Background
In Handa v The Station Hotel (Newcastle) Ltd and others, the claimant brought claims of whistleblowing detriment against a group of respondents. Two of those were external HR consultants: one had conducted a grievance investigation; the other chaired the disciplinary hearing that led to the claimant’s dismissal.
The claimant argued that both consultants were agents of the employer and therefore jointly liable for the dismissal, which he alleged was driven by his protected disclosures. The employment tribunal struck out the claims against the consultants on the basis that they had no reasonable prospect of success.
The EAT’s decision
The EAT held that the tribunal had erred in concluding it was not arguable that the consultants acted as agents in carrying out their respective procedural roles. The fact that they were independent contractors did not preclude them from being treated as agents in law, insofar as they were authorised to perform grievance or disciplinary functions on the employer’s behalf.
However, the EAT upheld the strike-out of the claims because the claimant had only pleaded detriment in relation to three acts: suspension, removal as a director, and dismissal. There was no claim that the consultants themselves carried out or implemented any of these acts, nor any allegation that they had treated the claimant detrimentally in the course of their own processes. The claim that they were co-liable for the dismissal as agents was therefore unsustainable in law.
The EAT also rejected arguments that their involvement in the chain of events leading to dismissal, such as producing reports that the employer relied on, was sufficient to establish agency liability for the dismissal itself.
Learning points for employers
This case reinforces the importance of clearly distinguishing between procedural roles and decision-making authority. External HR consultants may, in some circumstances, be treated as agents of the employer when carrying out grievance or disciplinary functions. However, that does not make them co-liable for dismissal decisions unless they have themselves taken or implemented the dismissal action.
Employers remain solely responsible for the dismissal decision, even where they rely heavily on external reports. To minimise confusion and potential risk, it is sensible to ensure that consultancy contracts clearly define the consultant’s remit and confirm that final decisions rest with the employer.