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Employment Law

Legal guidance - compliance - software

15 JUN 2016

Relationship breakdowns - when is it fair to dismiss?

Relationship breakdowns - when is it fair to dismiss?
Michael Halsey
Partner, Veale Wasbrough Vizards

While in most cases a fair dismissal will fall squarely within conduct, capability or redundancy, where there are been an intractable relationship breakdown between colleagues sometimes 'some other substantial reason' (SOSR) may provide a route to a fair dismissal.

The facts

In the recent case of Express Medicals v O'Donnell, a minority shareholder was dismissed by the majority shareholder following a breakdown in relations between the two. The two former friends had co-founded and worked together in the company over many years. They were the sole directors and shareholders.

In July 2014, the two fell out over a redesign of their website. This led to a subsequent heated exchange, during which the claimant alleged that the majority shareholder was a bully. There followed a period during which the parties discussed terms on which to part ways. When the claimant's employment was eventually terminated he sought to bring a claim for unfair dismissal.

The tribunals' decisions

At the tribunal the judge found the dismissal to be unfair, deciding that no particular procedure was followed and therefore the decision did not fall within the range of reasonable responses. The judge did not go on to explain the deficiencies in the procedure, not how this impacted on the reasonableness of the decision to dismiss.

On appeal to the Employment Appeal Tribunal (EAT), that decision had now been overturned and remitted to a fresh tribunal. The EAT held that there was insufficient explanation from the tribunal as to what deficiencies in the procedure were identified. It also criticised the judge's failure to assess the likelihood that, even had a fair procedure been followed, the claimant's employment would still have been brought to an end.

Given the fractured nature of the relationship between the shareholders, this was something the judge needed to assess when considering whether any award of compensation should be reduced.

Best practice

Employers may sometimes be faced with disputes between employees where relations become strained. In most cases, it will be possible for colleagues to continue to work together professionally with proper, effective management and support.

Where an employer finds that this is simply not feasible, and the breakdown in relations seriously impacts the performance of the organisation, a dismissal for SOSR can be considered. It must be stressed, however, that there is a high threshold to meet and a tribunal will expect employers to take all reasonable steps to solve the problem without resorting to dismissal, including considering mediation, redeployment or a change in working patterns.

Employers should also be careful to first consider why relationships are alleged to have broken down, particularly where the root of the breakdown is, in actual fact, misconduct on the part of one or both colleagues. In cases of differences of opinion, care should also be taken, especially if the difference relates to some form of protected characteristic which could give rise to claims of discrimination.

As ever, early intervention in disputes or disagreements between colleagues is frequently the best solution.
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