Can a Tribunal decide that a dismissal is for an alternative fair reason than that proposed by an Employer?

In order to fairly dismiss an employee, an employer must have a potentially fair reason for doing so, namely conduct, capability, illegality, redundancy or some other substantial reason (previously retirement as well).

When drafting a defence, it is normally considered essential for the employer to set out the alleged fair reason for the dismissal.  However, the case of Screene v Seatwave Ltd has considered to what extent a Tribunal can substitute its view of the reason for the dismissal for that pleaded by the employer.

In this case Mr Screene was the Financial Controller of the Company.  The Company was a victim of fraud and lost €1.7m from its German bank account.  It was Mr Screene's responsibility to monitor this account.

After a disciplinary investigation and hearing, Mr Screene was dismissed for gross misconduct, having been found "negligent in the completion of his duties".

Mr Screene brought a claim on the basis that he had been dismissed for gross misconduct.  The Company's defence stated that Mr Screene had been dismissed for the fair reason of capability.

At first instance, the Tribunal determined that Mr Screene had been dismissed for both conduct and capability reasons, but determined that the primary reason was conduct.  Mr Screene appealed on the basis that the Tribunal was not entitled to substitute its own reason for that put forward by the employer.

The Employment Appeal Tribunal (EAT) dismissed Mr Screene's appeal.  It considered that, in line with previous case law, it was appropriate for a Tribunal to make a finding that a dismissal was fair for a reason other than that pleaded, provided such decision does not prejudice the employee.

In this case, the EAT was satisfied that the decision to dismiss for either capability or conduct was based on exactly the same facts, namely, Mr Screene's failure to monitor the German bank account which amounted to negligence.  As the same facts applied, Mr Screene suffered no detriment and the Tribunal had acted justly in refusing to uphold his claim for unfair dismissal.

Whilst this case acts as a useful reminder that employers may get away with pleading the wrong reason in limited circumstances, this case does not remove the necessity of determining early on what reason applies to the dismissal and maintaining this reason throughout the process.  It is likely that failing to do so will mean that the wrong procedure is followed and therefore, whilst there may be a fair reason for the dismissal, the resulting dismissal would be procedurally unfair. 

The actions in this case did not clearly fall into either reason.  In most cases there will be a clear reason and trying to rely on something other than that which was pleaded is likely to result in prejudice to the employee.

It was also relevant to the proceedings that the employer had stated in the dismissal letter that the reason for the dismissal was gross misconduct and therefore the employee was aware of this element.  In a case such as this, it would have been wiser to plead both capability and conduct as an alternative reason to ensure that all positions were covered.