Ignorance or a Mistaken View of the Law may Render a Dismissal
In Docherty and another v S W Global Resourcing Ltd  CSIH
72 the Inner House of the Court of Session ruled that a dismissal
may be fair where an employer takes action against an employee
which amounts to a dismissal and does so without having considered
the legal consequences, or on a mistaken view of what those
consequences would be. However, that the action was taken in such
circumstances will not automatically render the dismissal fair.
The employer's ignorance of the law is only one element to
be considered when determining fairness and it is for a tribunal to
assess whether the employer's mistaken or incomplete view of
the law is excusable. Ultimately, whether the dismissal is held to
be fair will depend on a consideration of all the facts and
circumstances and having regard to the equity and the substantial
merits of the particular case.
Following a downturn in business, the respondent gave its
employees 12 weeks' notice that their guaranteed weekly salary
would be abolished and that they were to be engaged on zero-hours
contracts instead. Under the new arrangement there was also
provision that the respondent would give employees their P45s if
there was no work for two months. The claimants, who had been
employed by the respondent from 1997, claimed unfair constructive
The employment tribunal found that the respondent had failed to
show the dismissals were for "some other substantial
reason" under section 98(1)(b) of the Employment Rights Act
1996. The tribunal added that even if it were wrong about this, the
dismissals would still have been unfair, as there was no
consultation on the zero-hours contracts which changed employment
status from employee to worker. The employees would not therefore
have appreciated that they would lose their accrued statutory
rights, such as the right to a redundancy payment, and no
reasonable employer would have dismissed the claimants for refusing
to agree to such a variation.
The EAT substituted the view that the claimants had been
dismissed for some other substantial reason, finding that there had
been "good, sound business reasons" for the changes and
that the respondent had not appreciated the effect of the changes
on employment status. The claimants then appealed to the Court of
Session, challenging the finding that their dismissals had been
The Inner House of the Court of Session allowed the appeal. The
court stated that there had been a failure to consider whether the
respondent's ignorance of the law was excusable and, if it was,
whether that was a decisive consideration or one that was
outweighed by other factors. It said generally that the
defensibility of an employer's ignorance of the legal
implications of its actions would partly depend on whether
professional advice should have been taken and that that might
depend on factors such as the size and administrative resources of
the employer, or whether the radical nature of the proposed changes
should have put the employer on notice of the possibility of there
being a legal problem.
The substantive fairness of the changes implemented by the
respondent was also relevant in the instant case. The actual
destructive effect of the change to the employee's statutory
rights concerned the court. However, the court also disliked that
even if the respondent had been right in thinking that employee
status would have been retained, the employees would still have
faced the possibility of having to make themselves available for
work for up to two months without receiving work or pay and then
being dismissed as result of the radical change.
The case was therefore remitted to the tribunal to consider
whether the dismissals were fair in all the circumstances.
Considerations for Employers
Although the decision confirms that employers may rely on their
ignorance or mistaken understanding of the effect of the law when
defending an unfair dismissal claim, it is not automatically the
case that a dismissal will thereby be made fair. Fairness will be
assessed on the particular facts and circumstances and having
regard to the equity and the substantial merits of the case.
It is therefore advisable for employers seeking to any implement
changes to their contracts of employment to seek professional
advice as to the legal effects of those proposals.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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