Sometimes employers, particularly small organisations, decide to bring in external HR consultants to deal with certain employment matters, such as disciplinary or grievance issues. This might be to assist them in showing that there is impartiality in any decision made, particularly if the issue intrinsically involves senior individuals in the organisation, or if there are not enough competent managers to deal with the matter.
The difficulty when an external consultant is brought in is that the decision still needs to be signed off by senior individuals within the organisation, and that can lead to the decision being challenged by employees. This is what happened in the case of GM Packaging (UK) Ltd v Haslem (2014)which was heard in the Employment Appeal Tribunal (EAT). The EAT said that, in this case, it was OK for small employers to rely on the recommendations of external consultants that they ask to deal with such matters for them.
Another recent EAT case (Kisoka v Ratnpinyotip (t/a Rydevale Day Nursery) 2013), also said that employers may not have to follow the decision of an external consultant, provided it is reasonable to do so in the circumstances.
This article provides comment on both cases.
GM Packaging (UK) Ltd v Haslem (2014)
GM Packaging (UK) Ltd is a small business, with only 9 employees. The managing director caught Mr Haslem engaging in sexual activity with a more junior employee (Ms Ottey) on work premises outside office hours. An investigation by the managing director also found dictaphone recording in which both Mr Haslem and Ms Ottey had spoken about the managing director in a derogatory manner.
The managing director dismissed Ms Ottey immediately the next day, but decided that disciplinary action was necessary against Mr Haslem. However, he was aware that his evidence would be crucial. Therefore, he engaged the services of an external HR consultancy (the aptly named Right Hand HR Ltd!) to conduct the disciplinary procedure. One consultant dealt with the disciplinary meeting and decision, and made a recommendation that Mr Haslem be summarily dismissed for gross misconduct. The managing director agreed and Mr Haslem was dismissed. A second consultant dealt with Mr Haslem’s appeal against that decision, and recommended that the decision to dismiss was upheld. Again, the managing director agreed with this.
Both employees brought claims in the Employment Tribunal for unfair dismissal. The Employment Tribunal decided that both dismissals were unfair because the principal reason for the dismissal was the sexual activity at the workplace, and that this fell outside the band of reasonable responses.
The Company appealed to the EAT against the decision. The EAT upheld the appeal by the Company. The held the Employment Tribunal had made the classic mistake of substituting its own views for that of the employer, rather than properly considering whether the decision had been within the band of reasonable responses. They felt that the Employment Tribunal had focused solely on the sexual activity, rather than also taking into account the derogatory comments. The HR consultant had made it clear that the decision to dismiss Mr Haslem was based on both actions considered together, and therefore it was within the ‘band of reasonable responses’ to dismiss. In any event, the EAT also felt that the sexual activity alone would be capable of justifying a summary dismissal for gross misconduct.
The EAT also had found that there was no issue with the managing director signing off the decision to dismiss and the appeal decision, as recommended to him by the HR consultants. The EAT felt that it was not surprising that HR consultants had been brought in to deal with the matter and that they advised the managing director to dismiss Mr Haslem. The decision had ultimately been taken by the consultant which was fine.
Kisoka v Ratnpinyotip (t/a Rydevale Day Nursery) 2013
This is another EAT case. In this case, Miss Kisoka was dismissed for gross misconduct based on the employer’s belief that she had started a fire at the nursery on 16 August 2011. Miss Kisoka appealed the decision and the company, for reasons relating to its size, arranged for an independent panel to carry out the appeal. The independent panel was an from an external consultancy service that the company used. There was no agreement put in place about how the panel’s decision would be dealt with by the company.
The panel overturned the company’s decision to dismiss mainly because it felt that there was insufficient evidence to implicate Miss Kisoka. The company was not happy with the panel’s decision and decided not to implement it. Miss Kisoka raised a claim for unfair dismissal.
In the Employment Tribunal, it was agreed that the investigation was reasonable, and as such, in the circumstances, the Tribunal ruled that the dismissal was fair. Miss Kisoka appealed on the grounds that the Tribunal had made an error in concluding that the Company was not bound by the panel’s decision.
The EAT dismissed the appeal and said that the fact that the employer did not implement the panel’s decision did not render the dismissal unfair. The Eat said there are “no fixed or inflexible rules” which apply to cases such as this one. The company did try to involve an independent appeal panel, and there is no legal requirement for the company to have done more or anything different from what it did.
The decision in the GM Packaging case demonstrates that the ‘band of reasonable responses’ test is fairly wide, giving employers some reassurance when making decisions on disciplinary matters. Secondly, the decision is useful in terms of confirming that employers employing only a small number of employees can, in appropriate circumstances, utilise the resources of external consultants and ask them to deal with disciplinary (or other) issues for them.
Our recommendation is that disciplinary matters are dealt with in-house as far as possible, but there may be times when an external consultant is appropriate. What must be noted is that it is of fundamental importance that a fair process is followed, whether or not the services of an HR consultant are engaged.
It is also important for any business to carefully consider whether it is prepared to allow an external person to make a decision on something which could be critical to the future of the business. This is one reason why in our experience an external person may not always be appropriate – on the face of things it can seem attractive to outsource disciplinary or grievance matters, but sometimes the nature of the issues means it is really important that they are dealt with by someone within the business (where possible/practical).
The decision is Kisoka also appears helpful for employers as it shows that employers will not always be bound to follow the recommendations of an independent panel of external consultants. However, the decision is quite surprising in some respects and should definitely not be seen as a blanket permission to disregard decisions made by external consultants just because they don’t fit. There were many factors that assisted the company in the case, such as the original investigation being reasonable and that there was no specific agreement with respect to how the panel’s decision would be treated or implemented by the company.
Finally, when writing about external consultants, we would not be doing our job properly if we did not mention the issue of legal privilege. This is a rule that means if someone is taking legal advice, the discussions and correspondence between that person and their legal adviser cannot be disclosed. That only applies where the legal advice is given by a member of the legal profession, and so would not include consultants who are not legally qualified. Bearing in mind the cases here, this may not matter if a consultant is simply appointed to get on with a disciplinary matter without much interference, but if there are other considerations on the cards then it is possibly something to bear in mind. Please see out previous article on legal privilege here.
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).