9 Gough Chambers Employment Law Bulletin – Case summary: Reilly v Sandwell Metropolitan Borough Council

Articles | Mon 26th Mar, 2018

Ms Reilly was the head teacher of a primary school. Ms Reilly was in a relationship with a Mr Selwood. During their relationship Mr Selwood was convicted of making indecent images of children. Ms Reilly became aware of Mr Selwood’s convictions but failed to disclose them to the governors of the school.

In June 2010 the governors of the school were put on notice of Mr Selwood’s convictions and of Ms Reilly’s relationship with him. Ms Reilly was thereafter suspended and ultimately dismissed from her position for failing to disclose to the governors her relationship with a man convicted of sexual offences towards children. The Respondent claimed that Ms Reilly had committed a serious breach of an implied term of her contract of employment which amounted to gross misconduct.

The employment tribunal held that Ms Reilly’s actions did amount to gross misconduct, that the Respondent genuinely held this belief and it had reasonable grounds to hold this belief. The tribunal found that the Respondent’s decision to dismiss Ms Reilly was within a reasonable band of responses. However it found that Ms Reilly’s appeal hearing had been deficient but a Polkey reduction was made of 90% as the tribunal held that even if the appeal hearing had been satisfactory there was a 90% chance Ms Reilly would have been dismissed in any event. The tribunal also found that Ms Reilly had contributed to her dismissal by 100%. Ms Reilly appealed both of the tribunal’s findings which were dismissed by the ETA and Court of Appeal.

Lord Wilson gave the presiding judgment. The Supreme Court confirmed that s.1-3 of the Employment Rights Act 1998 requires that the employer must show the reason for the dismissal, that the reason for the dismissal fell within sub-section 2, or that the reason otherwise justified a dismissal. The Supreme Court unanimously found that Ms Reilly’s failure to disclose Mr Selwood’s convictions was a breach of an implied term of her contract of employment and did amount to misconduct.

Lord Wilson went on to consider the ‘second’ part of the inquiry governed by s 98(4) ERA, namely;

4. (where) the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer):

• (a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and
• (b) shall be determined in accordance with equity and the substantial merits of the case.

In determining whether an employer has acted reasonably in accordance with s.98(4) ERA for almost 40 years tribunals have been invited to consider the classic test out in British Home Stores Ltd v Burchell [1980] ICR 303. Under Burchell a tribunal is asked to consider whether the employer genuinely believed that an employee was guilty of misconduct and whether it had reasonable grounds for that belief having carried out a reasonable investigation. 

Lord Wilson queried whether in fact whether the Burchell test reflects the statutory intention of s.98(4) ERA. Lord Wilson stated that ‘no harm has been done by the extravagant view’ taken by Arnold in Burchell or the test widely adopted by tribunals but questioned whether the Burchell test is ‘consonant with the obligation under s. 98(4) to determine if the employer acted reasonably or unreasonably in dismissing an employee.’ Lady Hale agreed with Lord Wilson. However with respect to Lord Wilsons comments about the appropriateness of the Burchell test she went on to observe that no court before it has attempted to re-define the Burchell test, nor had parliament taken any opportunity to clarify its intentions regarding s.98 (4)ERA. Finally Lady Hale confirmed that neither employees nor employers have sought to challenge the Burchell test or called for a review of the obligations of an employer under s.98(4)ERA.

Therefore, although Lord Wilson’s comments appear to open a door to a potential challenge to the Burchell test, I suggest that Lady Hale’s closing remarks reflect a reluctance by the Court to review a system of law which has been in operation without complaint for almost 40 years.

Lady Hale went on to observe that this case may have presented an opportunity for the Court to consider ‘two points of law of general public importance’ of whether:

• A dismissal based on an employee’s conduct could ever be fair if that conduct is not in breach of the employees contract of employment, ie can there be non-contractual conduct within the meaning of s.98(2)(b) ERA; and/or
• Whether non- contractual misconduct could justify dismissal within the meaning of s.98(1)(b) ERA.

However, as neither question had formed part of the appeal before the Court Lady Hale did not comment on either issue any further.

Therefore while the Burchell test appears to remain unchallenged this case has highlighted that Supreme Court considers that there is pupil importance in determining whether non –contractual misconduct can or should give rise to a dismissal. This judgement is therefore a salient reminder to employers to ensure that its contracts of employment are well drafted with express terms setting out what could be considered as gross misconduct and misconduct.

Article by: Natasha Partos