Employment Law Cases

Moore v Phoenix Product Development Ltd

Where a dismissal is because of an irretrievable breakdown in the employer/employee relationship, the failure to offer/carry out an appeal post-dismissal will not always render a dismissal unfair.

Background

Mr Moore is the inventor of a water-efficient toilet, manufactured and marketed by Phoenix Product Development (PPD) of which he was the founder. He was the CEO for 16 years before being replaced in 2017, after when he stayed on as an employee and director. He had difficulty in accepting that PPD was no longer his company and that he was not in charge of it. Following a series of incidents, the remaining members of the Board lost confidence in his ability to change his ways, and he was dismissed without being offered a right of appeal. He claimed that the dismissal was procedurally and substantively unfair. The tribunal rejected his claim, finding that he was dismissed for some other substantial reason (SOSR) in that there was an irreparable breakdown in relations and that the dismissal was not unfair. Mr Moore appealed on various grounds including that PPD’s failure to offer/carry out an appeal rendered his dismissal unfair.

EAT decision

The appeal was dismissed (by the EAT President).

Whether a dismissal is fair or unfair depends on whether, in the circumstances, including the size and administrative resources of the employer’s undertaking, the employer acts reasonably or unreasonably treating it as a sufficient reason for dismissing the employee (ERA 1996, s. 98(4).

The EAT held that although an appeal will normally be part of a fair procedure, that will not invariably be so, because to take that fixed approach would be to disregard the clear terms of the statute, which dictate that the circumstances are to be taken into account. Here, those relevant circumstances included the fact that:

• Mr Moore was a board-level director and employee
• The employer was a relatively small organisation with no higher level of management
• The tribunal had found that Mr Moore himself had brought about an ‘irreparable breakdown’ in trust and confidence and that this was destructive, destabilising and a drag-factor for the company
• Mr Moore was unrepentant about his conduct and attitude and that he had not shown any sign that he was likely to change

It was open to the tribunal to conclude that an appeal would have been futile in these circumstances. Moreover, PPD wasn’t the kind of organisation where Mr Moore’s shortcomings and the consequent threat to PPD’s future could be addressed through some sort of re-training programme, or where different managers might be found to work with him more effectively. Additionally, an external OD and HR specialist who’d been commissioned to review the employer’s business, concluded that the fundamental problem lay with Mr Moore himself and that he ‘would attempt to sabotage any CEO coming into the business’.

Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2021/0070_20_2005.html

Comment

Fairness usually require that an employee is given the right to appeal internally, with any such appeal being heard, if possible, by a manager who was not involved at the dismissal stage. It’ll rarely be the case that procedural fairness will be made out where this doesn’t happen. However, this case is very helpful for those rare situations when it is quite clear that nothing further can be done to improve the relationship and so an appeal would be futile.