Case Law Update: Moore v Phoenix Product Development Limited

The Employment Appeal Tribunal (EAT) has held that a claimant was not unfairly dismissed from the company he founded after not being offered the opportunity to appeal.

To make sense of this case we need to understand one of the five fair reasons for dismissal: SOSR.

SOSR stands for “some other substantial reason”. It’s a category that provides a potentially fair reason for dismissal when one of the other reasons doesn’t fit the circumstances. The following could amount to SOSR dismissals:

• The dismissal of a person employed as a temporary replacement for another employee taking maternity leave when the original employee returns to work
• The dismissal of an employee who has been imprisoned
• Dismissal resulting from the employer losing trust and confidence in the employee because of something they’ve done outside the workplace

Dismissal for SOSR is a fair reason for dismissal if the employer follows a fair procedure. An appeal will usually form part of a fair procedure. There are exceptions in limited circumstances after considering the process as a whole.

Moore v Phoenix Product Development Limited

Facts

The claimant was the inventor of a water-efficient toilet. He was the CEO of the respondent, Phoenix Product Development Limited, for 16 years. He stepped down in 2017, staying on as a director and employee of the company.

Although the claimant was no longer CEO, he was unable to accept that he no longer had significant control over the company’s affairs. He was later dismissed without appeal due to an irretrievable breakdown in relationships.

Bringing a claim to the ET, the claimant argued that his dismissal was “procedurally and substantively unfair”.

ET

The Employment Tribunal (ET) rejected the claim. They noted that the “irreparable breakdown” in his relationship with the company meant that he was dismissed for SOSR. For this reason, the dismissal wasn’t unfair.

The claimant appealed this decision to the EAT, on the following grounds:

1. The ET had failed to reach a “reasoned determination as to whether the dismissal was fair”
2. The ET erred in its application of relevant case law by finding that the respondent not offering an appeal did not make the dismissal unfair
3. The ET erred by assuming that he would not have appealed his dismissal if he had been offered the opportunity
4. The ET had failed to establish the correct facts and/or “apply the correct burden of proof in finding that the Claimant was 100% culpable for his own dismissal”
5. The ET’s reasons for dismissing the claim were inadequate

EAT

The EAT upheld the ET’s decision that the claimant was fairly dismissed despite not being given a right to appeal. The EAT found that an appeal would have been futile in these circumstances. It wasn’t necessary for the respondent to stipulate that there was a right to appeal.

Turning to each of the claimant’s grounds for appeal, the EAT held that the ET had not erred in its application of the law. Specifically, on the first ground, the EAT noted that the ET was right to find that the dismissal was fair. This was because the respondent was left with little to no choice but to dismiss. The reason for dismissal was the claimant’s inability to “let go of the reins” after stepping down as CEO.

On the third ground, the EAT decided that this was a conclusion that the ET was “entitled to reach”.

Note for employers

The reliance on a ‘breakdown of trust and confidence’ is not just a catch-all. It won’t always be accepted by a tribunal. However, there may be instances where it is an appropriate reason for dismissal.

Organisations should carefully analyse the facts and circumstances on which they are relying. In this case, for example, you’d want to ensure that the working relationship has truly broken down. You’d need to ensure this before seeking to rely on this reason.

Dismissal procedures in SOSR situations should still be fair and follow a fair procedure. This includes the right to be accompanied, given an outcome, and the right to appeal. However, the right to appeal an SOSR decision doesn’t have to be expressly stated to the employee.

Whilst it is unclear whether this case will be appealed further or what a higher court will find, the EAT’s decision sets a binding precedent.

Expert support

Be prepared for the implications of this ruling. Contact Croner today. We help you make sense of the rules affecting your business and help you stay on the right side of the law.

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