Does a Successful Appeal Revive the Employment Contract?
The Court of Appeal addressed the issue of a successful appeal against a dismissal reviving the employment contract in the recent case of Patel v Folkestone Nursing Home Ltd, and whether it means that the employee cannot consider himself dismissed.
The Facts
Mr Patel was employed as a care assistant at Folkestone Nursing Home (FNH). FNH operated a disciplinary procedure, which was contained in the Staff Handbook and expressed as being incorporated into Mr Patel's contract of employment.
Mr Patel was subjected to disciplinary action by FNH on two counts; firstly that he had been asleep whilst on duty, and secondly that he had recorded false information by recording in advance that residents at the care home had slept through the night. Mr Patel responded to these allegations by saying that he was asleep whilst on his break, and that this method of recording residents' sleep was common amongst employees at FNH.
FNH held a disciplinary hearing and Mr Patel was dismissed with immediate effect for gross misconduct. FNH also referred Mr Patel to the Disclosure and Barring Service (DBS) on the basis that residents had been put at risk by his method of recording their sleep.
Mr Patel appealed the decision and, following an appeal hearing, a letter was sent to Mr Patel by FNH which stated that, as Mr Patel had been on an unpaid break when he was found asleep, he was not in breach of any company rule or procedure and the decision to dismiss him would therefore be revoked. The letter made no reference to the second allegation of falsifying records or the referral to the DBS. The letter went on to state that FNH would contact Mr Patel to arrange a date for him to return to work.
Mr Patel was dissatisfied with this outcome and sought clarification on the latter points, but this was not provided and Mr Patel declined to return to work and instead brought claims in the Employment Tribunal, including a claim for unfair dismissal.
The Employment Tribunal Proceedings
FNH submitted that the Tribunal had no jurisdiction to hear Mr Patel's claim of unfair dismissal on the basis that Mr Patel had been reinstated on appeal and accordingly should be treated as if he had never been dismissed. However, the Tribunal rejected this argument and held that Mr Patel had been dismissed on the basis that he could not be bound by the outcome of his appeal as the appeal procedure did not expressly state what the outcome of the appeal could be; and also owing to the lack of clarity in the appeal outcome letter. The Tribunal went on to find that the Claimant's dismissal had been unfair and awarded compensation.
The Employment Appeal Tribunal Proceedings
FNH appealed the decision and the EAT upheld the appeal on the basis that Mr Patel had not been dismissed. In reaching this conclusion, EAT noted that there was no need for a disciplinary policy to expressly refer to a successful appeal reviving the contract since it was implicit within any system of appeal that the appeal panel had the right to reverse the original decision. Mr Patel appealed.
The Court of Appeal Proceedings
The Court of Appeal dismissed the appeal, agreeing with the EAT that the effect of a successful appeal was that both the employer and employee were bound to treat the employment relationship as having remained in existence throughout the contractual appeal process. The Judge noted that, on occasions, an employee may be motivated to pursue an appeal for reasons other than reinstatement (such as to clear their name), but stated that even where an employee does not wish to continue in employment, the effect of a successful appeal is that the employee is treated as if they were never dismissed.
However, the Judge went on to state that, in this particular case, the appeal outcome letter was in "curious and unsatisfactory terms", and that he considered that this, and the failure of FNH to withdraw any complaint it had made to the DBS, meant that it was strongly arguable that FNH were in breach of the implied duty of trust and confidence, therefore entitling Mr Patel to treat himself as constructively dismissed. The Judge also stated that, in his view, this was an argument that Mr Patel had sought to advance in his original claim form; and he therefore invited parties to make further submissions on this point.
Best Practice
The case raises two important points for employers who operate a contractual disciplinary procedure or appeal process. It should be noted that contractual policies of this sort are relatively rare outside certain sectors and it is unclear whether this case will apply in the same way to non-contractual appeal processes.
- Firstly, it offers some reassurance that if an employer realises, during an appeal process, that it made an error when dismissing an employee, then the employer can reinstate the employee, regardless of whether the employee wishes to be reinstated, and doing so will cancel the dismissal with the effect that the employee is prevented from pursuing a claim for unfair dismissal based upon the original dismissal.
- However, it also provides a cautionary reminder that if the appeal process itself is flawed, even where the appeal outcome is to overturn the original dismissal, then if the flaws in the appeal process are so serious as to amount to a fundamental breach of the implied term of mutual trust and confidence, the employee will be able to treat themselves as constructively dismissed. Employers should therefore ensure that, when upholding an appeal, they are careful to respond fully to all issues raised and ensure any follow up action is taken.