Unfair dismissal: “expired” warnings and final written warnings

When is it fair to rely on an “expired” warning when dismissing an employee? When is it fair to rely on a final written warning?

The short answer (rather unhelpfully) is “it all depends”. The starting point is the statute:

Section 98(4) of the Employment Rights Act 1996

(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) –

(a) 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

(b) shall be determined in accordance with equity and the substantial merits of the case.”

Nothing new there. But what about a situation where the final written warning relates to conduct which is unrelated (or dissimilar) to the dismissal conduct (i.e. the conduct which resulted in the dismissal)?

There is helpful guidance given in Davies v Sandwell Metropolitan Borough Council [2013] EWCA Civ 135 at para 22:

22 First, the guiding principle in determining whether a dismissal is fair or unfair in cases where there has been a prior final warning does not originate in the cases, which are but instances of the application of s. 98(4) to particular sets of facts. The broad test laid down in s.98(4) is whether, in the particular case, it was reasonable for the employer to treat the conduct reason, taken together with the circumstance of the final written warning, as sufficient to dismiss the claimant.

(emphasis added)

So, in principle, there is scope for argument: one can imagine a situation in which the final written warning is wholly unrelated to the dismissal conduct (suppose that the final written warning is about productivity on the factory floor, and the dismissal misconduct consists of smoking outside of a designated smoking area).

But case law indicates that final written warnings will very often (or usually) justify dismissal in the event of further misconduct.

In Wincanton Group Plc v Stone & Anor [2013] IRLR 178, [2013] ICR D6, [2012] UKEAT 0011_12_1110, the EAT issued guidance which is relevant both to final written warnings and expired warnings (more on those, later). The relevant passage is at para 37 and is worth citing in full:

[37] We can summarise our view of the law as it stands, for the benefit of Tribunals who may later have to consider the relevance of an earlier warning. A Tribunal must always begin by remembering that it is considering a question of dismissal to which section 98, and in particular section 98(4), applies. Thus the focus, as we have indicated, is upon the reasonableness or otherwise of the employer’s act in treating conduct as a reason for the dismissal. If a Tribunal is not satisfied that the first warning was issued for an oblique motive or was manifestly inappropriate or, put another way, was not issued in good faith nor with prima facie grounds for making it, then the earlier warning will be valid. If it is so satisfied, the earlier warning will not be valid and cannot and should not be relied upon subsequently. Where the earlier warning is valid, then:

(1) The Tribunal should take into account the fact of that warning.

(2) A Tribunal should take into account the fact of any proceedings that may affect the validity of that warning. That will usually be an internal appeal. This case is one in which the internal appeal procedures were exhausted, but an Employment Tribunal was to consider the underlying principles appropriate to the warning. An employer aware of the fact that the validity of a warning is being challenged in other proceedings may be expected to take account of that fact too, and a Tribunal is entitled to give that such weight as it sees appropriate.

(3) It will be going behind a warning to hold that it should not have been issued or issued, for instance, as a final written warning where some lesser category of warning would have been appropriate, unless the Tribunal is satisfied as to the invalidity of the warning.

(4) It is not to go behind a warning to take into account the factual circumstances giving rise to the warning. There may be a considerable difference between the circumstances giving rise to the first warning and those now being considered. Just as a degree of similarity will tend in favour of a more severe penalty, so a degree of dissimilarity may, in appropriate circumstances, tend the other way. There may be some particular feature related to the conduct or to the individual that may contextualise the earlier warning. An employer, and therefore Tribunal should be alert to give proper value to all those matters.

(5) Nor is it wrong for a Tribunal to take account of the employers’ treatment of similar matters relating to others in the employer’s employment, since the treatment of the employees concerned may show that a more serious or a less serious view has been taken by the employer since the warning was given of circumstances of the sort giving rise to the warning, providing, of course, that was taken prior to the dismissal that falls for consideration.

(6) A Tribunal must always remember that it is the employer’s act that is to be considered in the light of section 98(4) and that a final written warning always implies, subject only to the individual terms of a contract, that any misconduct of whatever nature will often and usually be met with dismissal, and it is likely to be by way of exception that that will not occur.

The problem is the phrase “of whatever nature”, which strongly suggests that there is no need for the dismissal conduct and the final written warning to be related.

What about a case where the final written warning post-dates the dismissal conduct? How (one might wonder) can it be fair to sack an employee for misconduct committed whilst on a final written warning, if they had not actually received the final written warning when the dismissal misconduct took place?

In Sweeney v Strathclyde Fire Board UKEATS/0029/13 the Appellant had sought to argue that there is an analogy between “expired” warnings (which should normally be disregarded) and final written warnings which post-date the dismissal conduct (because, in effect, they don’t cover the material time). The Appellant also pointed to the ACAS Code and argued that, since a final written warning is supposed to give an opportunity to improve, it would be unfair to rely on a final written warning in dismissing an employee if the final written warning post-dated the dismissal conduct (and so the employee couldn’t possibly have observed the warning). However, Lady Stacey commented, at para 36 (quoting selectively) that:

. . . While it is correct to argue that a warning is an admonition that tells the employee that future misconduct will have certain consequences, it is in my opinion more than that. It is also a recording of the commission of misconduct in the mind of both employer and employee. Mr Napier submitted that a warning is “Janus like” in that it looks both ways. I accept that submission. I am of the view that the Respondent was entitled to look at the Claimant’s record when deciding on the disposal in the disciplinary procedure relating to the criminal convictions. The Respondent was entitled to take notice of a finding of misconduct which was marked by the imposition of a final written warning . . .

So a final written warning is a powerful device. It will (usually) entitle an employer to dismiss for further misconduct, even where that misconduct is not similar to the conduct for which the employee received a final written warning. And it will (usually) entitle an employer to dismiss for misconduct which comes to the employer’s notice after the final written warning has been issued, even if the dismissal conduct pre-dates the final written warning.

What about expired warnings? Surely an employer should have to disregard expired warnings when deciding on disciplinary action?

In Diosynth Ltd v Thomson [2006] CSIH 5, 2006 S.C. 389 the employer had dismissed an employee for misconduct which would not normally have resulted in dismissal. It had dismissed the employee because it had taken into account an (expired) written warning. The Court in Diosynth (and note that Diosynth was heard in the Court of Appeal) referred to the ACAS Code, which says that warnings should normally be disregarded for disciplinary purposes after a certain period, and said that (at para 26, quoting selectively)

 . . . a warning which remains hanging over an employee’s head for an indefinite period would not normally be consistent with good industrial relations practice. It would be contrary to the spirit of para 15 [of the ACAS Code]

Furthermore (para 27 and 28, again quoting selectively)

[27] . . . the relevant warning was not stated to remain in force for an indefinite period but, according to the letter of 20 July 2000, was to stay on the respondent’s record for 12 months, a period which had expired before the acts of misconduct took place. Nevertheless, in regarding the warning as tipping the balance in favour of dismissal, the appellants acted as if it remained in force beyond the expiry of the 12-month period . . .

[28] The respondent was entitled to assume that the warning letter meant what it said, and that it would cease to have effect after one year. In seeking to extend the effect of the warning beyond that period the appellants, in our view, acted unreasonably. We therefore agree with the conclusion of the Employment Appeal Tribunal that the respondent was unfairly dismissed.

Diosynth remains good law, but its application has been clearly delimited by a later case, that of Airbus UK Ltd v Webb [2008] EWCA Civ 49, [2008] ICR 561, in which Mummery LJ observed, in short, that Diosynth does not establish any rigid principle of law; it does not establish that one can never rely on an expired warning. He commented, at para 73, that

73 The Diosynth case was addressing a different issue than that which arose in the tribunal in this case. As Lord Philip pointed out in para 27, on the facts of that case, the position of the employer was that the expired warning tipped “the balance in favour of dismissal” as the other factors taken together would not have justified dismissal . . . the expired warning . . . was the principal reason for the dismissal. As the warning had ceased to have effect, it was not reasonable for the employer to rely on it as the principal reason for the dismissal

but

[72] Diosynth is not authority for the general proposition of law that the misconduct, in respect of which a final warning was given, but has expired, can never be taken into account . . . it did not decide that the earlier misconduct and the expired warning are irrelevant circumstances of the case or are irrelevant to the equity and substantial merits of the case. It did not decide that the dismissal is necessarily unfair if account is taken of the expired warning . . .

and

[46] . . . I am persuaded that it is open to a tribunal to find that a dismissal for misconduct is fair, even though the employer, in his response to the reason for which the employee is dismissed, has taken account of the employee’s previous similar misconduct, which was the subject of an expired final warning.

One might wonder whether Airbus does leave at least some of Diosynth of potential use to claimant lawyers. Specifically, it does suggest (para 73, quoted above) that where an expired warning is the principal reason for the dismissal, it may not be reasonable for the employer to rely on it as such.

But the last word has to go to David Richards LJ in Airbus (again quoting selectively):

83 Common notions of fairness require that people should not go back on their word, to the detriment of others. This is particularly the case with those in authority, such as employers . . .

84 There cannot, however, be exact prescription where fairness is the statutory test . . .

Which is precisely what we should expect, given the wording of the statute.

To summarise:

  1. There is no principle of law which prevents employers from relying on expired warnings.
  2. There is no principle of law which prevents employers from relying (in dismissal proceedings) on a final written warning which post-dates the dismissal conduct.
  3. There is no principle of law which requires that the dismissal conduct and the final written warning conduct be the same (or even similar).
  4. A final written warning (almost) always implies that any misconduct of whatever nature will often and usually be met with dismissal, and it is likely to be by way of exception that that will not occur (Wincanton at para 37(6) again)
  5. Nonetheless, the test remains the broad test set out in s 98(4): whether the dismissal is fair in the circumstances, having regard to equity and the substantial merits of the case.