Reasonable Responses Returns

In deciding whether or not a dismissal is fair, the statutory test as set out in section 98(4) of the Employment Rights Act 1996 (ERA) is as follows:

‘... the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer:

1. 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
2. shall be determined in accordance with equity and the substantial merits of the case.’

The concept of the ‘band of reasonable responses’ was first formulated by the Employment Appeal Tribunal (EAT) in the case of Iceland Frozen Foods v Jones (1982 IRLR 439). There it was suggested that the tribunal should follow a number of steps in order to determine the fairness or otherwise of a dismissal.

It was said that the starting point should be the words of the statute itself. The Employment Tribunal should then consider the reasonableness of the employer’s conduct and in doing so should not substitute its decision as to the right course to adopt for that of the employer. In many cases, there is a band of reasonable responses to the employee’s conduct and it is the function of the Employment Tribunal to determine whether in the particular circumstances of each case the decision to dismiss fell within this band. If the dismissal falls within the band the dismissal is fair; if the dismissal falls outside the band it is unfair.

This view was followed and used until Morison J criticised the test saying it was unhelpful and ‘perverse’ in his judgement in Haddon v Van den Bergh Foods Ltd (1999 IRLR 672).

In this case, Mr H was dismissed after a reception at which he was presented with a good service award after completing 15 years with a clear disciplinary record with V. He was dismissed for failing to return to work after the ceremony in circumstances in which he had been supplied with alcohol at the reception. He was dismissed for disobedience. The Employment Tribunal found the dismissal fair. They considered that the request to return to work after the ceremony was not an unreasonable one. Further the employer’s disciplinary procedure stated that an employee could be dismissed without prior warning for an act of gross misconduct and that not carrying out proper and reasonable instructions was an example of such conduct. Therefore the dismissal was not outside the band of reasonable responses.

On appeal to the EAT, Mr H’s appeal was allowed. It stated that the range of reasonable responses test was unhelpful in that it led to tribunals applying what it thought amounted to a ‘perversity test’. This it was felt could have the consequence of leading to extreme reactions when tribunals came to consider the fairness of a decision. The tribunal should put itself in the employer’s shoes and ask itself what it would have done in the circumstances.

Commentators were uncomfortable with this approach. In particular, the EAT asserted that the tribunal had failed to consider the injustice to the employee when applying the statutory test. In making this point, the EAT apparently forgot that the possibility of an employee suffering injustice was said NOT to be a necessary ingredient in deciding the fairness of a dismissal by the House of Lords in Polkey (1987 IRLR 503). Further, the range of reasonable responses test goes hand in hand with the principle that the tribunal should not substitute its view for that of the employer. Because dismissal is the ultimate sanction, each employer may obviously have a different reaction to a situation; some employers may decide not to dismiss while others might decide otherwise. This would not render the decision to dismiss unreasonable and thus the application of the band of responses test had seemed quite a sensible tool to use.

A few months later, in Midland Bank plc v Madden, (2000 IRLR 288 EAT) a lending officer who had worked for the bank since 1986 was dismissed because the bank after an internal investigation and disciplinary hearing concluded that there had been gross misconduct on his part. The unanimous decision of the tribunal was that Mr M had been unfairly dismissed and that the bank had carried out an insufficient investigation.

The bank then appealed to the EAT on three points. First, that the tribunal had substituted its own view for that of the employer. Secondly, that the tribunal had applied too high a standard to the investigatory process, and finally, that it had not correctly approached the question of whether the bank had carried out a reasonable investigation.

The EAT dismissed the bank’s appeal. It reviewed Haddon and said it was not open to the EAT to overturn consistent EAT and Court of Appeal precedents in this area. It reminded itself that the statutory wording of section 98(4) is the ultimate guidance. However, it was commented in this case that there was nothing to stop the range of reasonable responses test becoming a test of perversity, which could be too pro-employer, and the EAT commented that this point needed to be resolved by the Court of Appeal.

The EAT in Madden undermined the existing law on two other fundamental issues:

• It held that the well-known rules on suspected misconduct dismissals in BHS v Burchell [1978] IRLR 379, EAT (belief in guilt; reasonable grounds; coming from reasonable investigation) - relied on countless times, but under fire from the Scottish EAT in Wilson v Ethicon Ltd [2000] IRLR 4, EAT - are in fact relevant to the question of whether the employer has established the reason for the dismissal (sections 98(1) and (2)), not to the question whether dismissal was fair (section 98(4)).
• It commented on when a tribunal may substitute its own decision for that of the employer. It said that it can do so when considering the reason for dismissal. It also said that a tribunal can substitute its own view on reasonableness under section 98(4), even though arguably that is inconsistent with applying the range of reasonable responses test (which elsewhere in the judgement the EAT actually approved!).

HSBC Bank plc (formerly Midland Bank plc) v Madden was heard by the Court of Appeal with another case - Foley v Post Office. The appeal judges decided to give the seal of approval to the band of reasonable responses test and in doing so dispel the present uncertainty about what law to apply. It said that tribunals were not to approach the issue of the reasonableness or unreasonableness of a dismissal by reference to their own judgement of what they would have done had they been the employer. Tribunals should continue to apply the law in section 98 of the ERA and use the band of reasonable responses test as expounded in Iceland.

Further, the three stage approach to the reason for and the reasonableness or otherwise of a dismissal for a reason relating to conduct as set out in Burchell remained binding on tribunals.

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.