Does an Employee's Length of Service Matter in Cases of Wrongful Dismissal?
We consider a recent case, where the Employment Appeal Tribunal (the 'EAT') held that, whilst length of service should be borne in mind in cases of unfair dismissal, it is not a relevant factor when considering wrongful dismissal.
East Coast Mainline Company Ltd vs Cameron
Mr Cameron was employed by East Coast Main Line Company ('ECMLC') for over thirty years. Following an incident in which a train driver was brushed by a departing train that had been given clearance to proceed by Mr Cameron, it was found that he had failed to undertake adequate safety checks. As a consequence, he was dismissed by ECMLC without notice on grounds of gross misconduct. Having unsuccessfully appealed to his employer, Mr Cameron brought claims of unfair dismissal, discrimination and wrongful dismissal in the Employment Tribunal (the 'ET').
The ET dismissed Mr Cameron's claims of unfair dismissal and discrimination, allowing only his wrongful dismissal claim to proceed. In reaching its decision on the wrongful dismissal claim, the ET gave weight to Mr Cameron's "extremely long employment history" with ECMLC and concluded that, in the circumstances, Mr Cameron's conduct was not so serious as to justify dismissing him without notice. The ET therefore held that Mr Cameron had been wrongfully dismissed and that he was entitled to receive notice pay.
ECMLC appealed to the EAT on technical grounds, submitting that length of service was not a relevant factor in determining cases of wrongful dismissal. The EAT agreed, confirming that length of service had no bearing on the question of whether Mr Cameron's failure of duty was so serious as to justify summary dismissal (dismissal without notice). Whilst length of service is a relevant factor when considering unfair dismissal, it is irrelevant to wrongful dismissal.
What is the Difference Between Unfair Dismissal and Wrongful Dismissal?
There are important distinctions to be aware of when it comes to unfair dismissal vs wrongful dismissal.
Unfair Dismissal
As the name suggests, unfair dismissal concerns the right of employees not to be dismissed unfairly. This right is afforded to employees with the requisite length of service (in most cases two years). The fairness of a dismissal is determined by reference to three factors, namely:
1) the reason for dismissal (was it a potentially fair reason as set out in the Employment Rights Act 1996?)
2) the fairness of the procedure leading to the dismissal; and
3) the reasonableness of the employer in treating this reason as sufficient to justify dismissal
Therefore, the key questions are fairness and reasonableness. In making an assessment of what was fair and reasonable, tribunals will have regard to mitigating factors which, depending on the circumstances, could include the employee's length of service (amongst other things).
Wrongful Dismissal
Unlike unfair dismissal, wrongful dismissal does not concern fairness, but rather, it is a dismissal in breach of contract and as such, the only relevant considerations are the terms of the employment contract. The right not to be wrongfully dismissed applies to employees from day one. There is no qualifying service requirement.
As was the case in East Coast Main Line Company Ltd v Cameron, issues around wrongful dismissal often arise where employees are dismissed without proper notice (albeit this is by no means the only situation that could give rise to a wrongful dismissal).
This does not mean to say that all dismissals without notice will be wrongful - the starting point will be to consider the terms of the contract. For instance, it will not be wrongful to terminate without notice and make a payment in lieu of notice ('PILON') if the contract specifies that this is the approach the employer will take on termination.
Further, as was the case in East Coast Main Line Company Ltd v Cameron, employers may rely on repudiatory breaches of contract (ie serious material breaches or gross misconduct) to justify dismissal without notice. In these circumstances, as confirmed by the EAT in East Coast Main Line Company Ltd v Cameron, the relevant factor will be the severity of the breach and whether it justifies dismissal without notice. In many cases this will likely be a question of conduct. Length of service will not be a relevant factor in this determination.
Comment
This case serves as a useful reminder that the test for wrongful dismissal is different to that of unfair dismissal, and accordingly, there are different considerations to be borne in mind. Whilst length of service is a relevant factor when considering unfair dismissal, it is an irrelevant factor when considering wrongful dismissal.
HR Managers should have regard to the terms of the contract on termination and may wish to include in contracts examples of situations which may give rise to summary dismissal, albeit any lists should not be expressed to be exhaustive.