Under section 98 of the Employment Rights Act 1996, employers can rely on a number of potentially fair reasons to challenge a claim of unfair dismissal.

In Perkin v St Georges Healthcare NHS Trust, the Court of Appeal has said that employers can dismiss a difficult employee by relying on "some other substantial reason".

 

What were the facts?

Mr Perkin was the finance director at the trust from September 1986 until he was asked to resign at the end of July 2002 because of his abrasive management style and poor interpersonal skills. He refused and was suspended.

The disciplinary hearings were chaired by Ms McLoughlin (who was also the chair of the trust), although she had previously been involved in discussions about preparing an "exit strategy" for him.

At the hearings, a series of senior colleagues reported their concerns about Mr Perkin, saying that he was aloof, stubborn and intimidating. For his part, Mr Perkin accused the chief executive of being a bully and lying about his qualifications.

He was finally dismissed with effect from 4 December 2002. In the letter Ms McLoughlin said that the principal reason for his dismissal was his poor relationships with other senior colleagues. However, she added that his conduct at the disciplinary hearing would in any event have led to his dismissal.

 

What happened at the tribunal?

Mr Perkin claimed that his dismissal was automatically unfair because he had made a number of protected disclosures. The trust said he had been dismissed for a reason related to his conduct, and/or for some other substantial reason (SOSR), namely the "irretrievable breakdown in relationships to which his behaviour had given rise.

And the tribunal agreed that Mr Perkin had been unfairly dismissed. It was critical of the trust for allowing Ms McLoughlin to chair the meeting. However, the tribunal was certain that he would have been dismissed, whoever had conducted the hearings. It also said that he contributed 100 per cent to his dismissal by his conduct during the disciplinary process.

And the EAT essentially agreed, although the reason for dismissal, in its view, was SOSR rather than conduct.

 

What did the parties argue at the court of appeal?

Mr Perkin said he had been dismissed because of his personality, which could not be categorised as "conduct" under section 98(2)(b) of the Employment Rights Act (ERA)1996. If, however, the dismissal was for SOSR, he said that the tribunal had not provided any factual basis for its decision.

For its part, the trust argued that an employer must have the right to take action to address problems of personality, particularly where they impinge on the issues of trust and confidence and are adversely affecting the trust.

In this case, it said that the reason given by the trust for Mr Perkin's dismissal could be characterised as a reason related to his conduct (the way he conducted himself in his dealings with colleagues), or as SOSR (the serious and disabling breakdown of trust and confidence between him and his colleagues).

 

What did the court of appeal decide?

The Court agreed with Mr Perkin that personality, of itself, cannot be a ground for dismissal within section 98. "For there to be a potentially fair reason for dismissal, an employee's personality must, it seems to me, manifest itself in such a way as to bring the actions of the employee, one way or another, within the section." Provided the employer can justify the facts, however, then section 98(4) kicks in.

The Court of Appeal also thought this was a case that fell within SOSR, rather than conduct (requiring a different fairness test), but that the tribunal was entitled to come to the conclusion that the trust had a potentially fair reason to dismiss Mr. Perkin.

Finally, although the dismissal was procedurally unfair, the tribunal was entitled to decide not to award any compensation and to find that Mr Perkin contributed 100 per cent to his dismissal.