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Employment Law Cases
Re-engagement, loss of trust and confidence and capability dismissals
Kelly v PGA European Tour
An employer’s genuine and rational lack of belief in an employee’s capability can render it not practicable for the employee to be re-engaged following an unfair dismissal.
Mr Kelly had worked as the Marketing Director for the PGA from 1989 until he was dismissed in 2015 over concerns about his performance and willingness to ‘buy in’ to the newly appointed Chief Executive’s ideas. Before his dismissal, he covertly recorded two meetings at which the PGA tried to resolve the matter informally. He subsequently brought an unfair dismissal claim. The PGA admitted that his dismissal had been unfair due to a lack of proper procedure.
At a remedies hearing, the tribunal did not order re-instatement of Mr Kelly to his previous role but instead ordered that he be re-engaged in an alternative role of Commercial Director in China, for which the ability to speak Mandarin was an essential requirement. The tribunal held that neither the language requirement nor any trust and confidence issues arising from PGA’s doubts about Mr Kelly’s capability were significant enough to make such re-engagement impracticable.
The PGA appealed, arguing that the tribunal had mistakenly considered for itself whether trust and confidence had been damaged instead of asking whether the PGA had a rational basis for believing that it had. The EAT allowed the appeal. What matters, said the EAT, where re-engagement is concerned is the employer’s view of trust and confidence. This must be tested by the tribunal as to its genuineness and rationality – the employer cannot simply assert without more that trust and confidence has broken down to avoid an order for re-engagement. Moreover, trust and confidence cannot only be invoked where conduct dismissals are concerned; it will be equally applicable where capability dismissals are involved. As regards Mr Kelly’s covert recording, which only came to light following his dismissal, the EAT also held that there does not have to be conduct contributing to the dismissal to affect the question of re-engagement - all of the evidence available at the time of the remedy hearing must be considered. Events of which the employer was not aware at the time of the dismissal can be taken into account, and there is no reason in principle why a belief about capability or performance cannot be relied upon as causing trust and confidence to break down. The PGA had genuinely lost trust and confidence in the Mr Kelly’s capability and held a rational basis for that view.
While being bilingual was an essential part of the role in China, the tribunal had not taken proper account of whether PGA could comply with the order for re-engagement. Whilst Mr Kelly indicated that he expected to make good progress in acquiring Mandarin within a year, the EAT found that Mr Kelly did not meet the genuine requirement of the role and that PGA had to create a role for a non-Mandarin speaker. The tribunal’s decision to impose re-engagement had fallen on the wrong side of the line between what is practicable and possible. Mr Kelly appealed.
Court of Appeal decision
The appeal was dismissed.
The Court of Appeal approved the approach taken by the EAT on how the practicability test should be applied – did the employer have a genuine and rational belief that the employee engaged in conduct which broke the relationship of trust and confidence? It is for the employer to establish that genuine and rational belief. If it does, it is likely to be determinative of practicability. Mere assertion by the employer that it does not believe that the employee would be able to meet the demands of the role will not suffice. It is an objective question for the tribunal – but it must be judged from an employer’s perspective.
The court also rejected Mr Kelly’s argument that a tribunal had to consider filled vacancies when considering re-engagement. What a tribunal had to do was consider other comparable or suitable employment available at the date of any remedy hearing – it does not have to consider vacancies which arose after the dismissal but had already been filled.
Lord Justice Underhill (a previous President of the EAT) who did not give the main judgment in this case but concurred with it, added a note of his own:
'I would be sorry if the question of the “practicability” of reinstatement or re-engagement became subject to too many glosses. In particular, I am wary of tribunals becoming too focused on the language of “trust and confidence”, which may carry unhelpful echoes from its use in other contexts. In this context it simply connotes the common-sense observation that it may not be practicable for a dismissed employee to return to work for an employer which does not have confidence in him or her, whether because of their previous conduct or because of the view that it has formed about their ability to do the job to the required standard’.
Link to judgment: https://www.bailii.org/ew/cases/EWCA/Civ/2021/559.html
Applications for re-instatement/re-engagement may become more popular in this current climate and they have the added benefit of entitling the claimant to receive their back pay from the date of dismissal to the date of re-engagement – which given the backlog in the tribunal process may be significant.
It is also tactically a good idea to claim re-engagement/re-instatement as an employee because if the employer refuses, then a further award is made to them. The only exception to this will be claims for constructive dismissal as a desire to return to the employer you say has fundamentally breached your contract does not look convincing.
Employees who covertly record meetings have already been warned by the courts that this is potential gross misconduct and could mean that a tribunal does not award compensation. It is now clear that covert recordings can be taken into account when considering trust and confidence on reinstatement and re-engagement