Imputed knowledge and vicarious liability | Employment Law Advocates

The case of Orr v Milton Keynes Council has striking facts. The claimant was dismissed for two offences including shouting at his line manager but, unknown to the dismissing officer, the line manager had provoked him by, the tribunal found, attempting to reduce his hours and racially harassing him. The majority of the Court of Appeal found that the dismissal was incapable of being unfair because the dismissing officer had no idea about the mitigating circumstances.

That the result is not altogether satisfactory can be illustrated by considering a case with more extreme facts. If a manager were to deliberately frame a junior colleague for misconduct, the dismissal would be unfair if the manager himself carried out the disciplinary procedure but fair if another employee did so. This defies any common sense view of logic and fairness and so perhaps it is not surprising that Lord Justice Sedley avoided this conclusion by dissenting and, heretically, imputing the line manager’s knowledge to the dismissing officer.

However, there is another solution which was, with respect, missed by all three members of the Court of Appeal and, it seems, counsel for the appellant. The judgment includes a lot of discussion about section 98(4) of the Employment Rights Act 1996, which considers whether “the employer acted reasonably or unreasonably in treating (the reason for the dismissal) as a sufficient reason for dismissing the employee”. Unfortunately, this appears to have been taken to mean that the only conduct that is relevant to fairness is the conduct of the dismissing officer, particularly their mental processes in making the decision.

In my submission, this is wrong. As it is put in Polkey v AE Dayton Services, not considered in Orr, “it is not correct to draw a distinction between the reason for dismissal and the manner of dismissal as if these were mutually exclusive, with the industrial tribunal limited to considering only the reason for dismissal.” As a result of Polkey, a failure to follow a fair procedure will make a dismissal unfair, even where the unfairness of the procedure does not impact upon the mental processes of the dismissing officer. If a dismissing officer asks his secretary to inform an employee of the case against him but the secretary then fails to post the letter, a subsequent dismissal will be unfair, regardless of the fact that the dismissing officer is ignorant of the omission that was made by his secretary.

Imputed knowledge is, therefore, a red herring. An employer can be held liable, in an appropriate case, for the actions of its employees and, indeed, this is far from uncommon where constructive dismissal is alleged. Had Mr. Orr resigned in response to the actions of his line manager, there is no doubt that he would have succeeded in his claim. The same principle must surely apply to express dismissals as well so that, if the actions of the line manager were found to be outside the range of reasonable responses, the dismissal would then be unfair.