The Employment Appeal Tribunal (EAT) has ruled (Simmonds v Milford Club) that if the facts of a case give an Employment Tribunal (ET) reason to believe that a material previous disciplinary sanction may have been manifestly inappropriate, it should hear evidence and decide, on the relevant facts, whether or not it was.

Mr Simmonds was employed by Milford Club, a private social club, from 2 September 2002 until his dismissal on 24 April 2011. One of his duties was to bank the club’s takings. In September 2010, he was unable to find a parking space near the bank and so waited in his car whilst his wife paid in the money. This came to light after a query was raised about that day’s banking. The club secretary was concerned because Milford Club’s insurance policy did not cover money in the custody of someone who was not one of its employees. Disciplinary proceedings ensued and Mr Simmonds was given a final written warning.

In January 2011, Mr Simmonds was asked to attend an investigatory meeting after he failed to comply with his employer’s instruction to give the six members of staff a Christmas bonus of wine up to the value of £15 and instead gave each employee £15 in cash. Other matters regarding alleged breaches of confidence were also discussed. The club secretary found Mr Simmonds’ explanations unsatisfactory and, as he had already been given a final warning, he was dismissed from his post.

Mr Simmonds brought a claim for unfair dismissal. The ET found, by a majority, that the dismissal was fair. In its view, the club secretary had carried out a reasonable investigation into the bonus issue but not the breach of confidence issue. Whilst the disciplinary procedure adopted was flawed, there were reasonable grounds for Mr Simmonds’ employer to believe that he had not obeyed its order with regard to the Christmas bonuses and the procedural error was not sufficiently serious to affect the fairness of the outcome. As to whether or not dismissal was a reasonable penalty in the circumstances, the ET turned its attention to the earlier final warning, without which Mr Simmonds would not subsequently have been dismissed. The ET found that there had been no written procedures in place as regards banking the club’s takings and Mr Simmonds had not been given adequate instructions in this regard by his predecessor. However, the majority of the ET held that it was reasonable for the club to conclude that Mr Simmonds, who had previously worked as a publican, must have known, whether he had specifically been told or not, that it was wrong to ask his wife to do the banking for him. Accordingly, the dismissal was fair.

Mr Simmonds appealed. The EAT found that the ET had erred in failing to consider whether the final written warning, which was decisive in its finding that the decision to dismiss him was not unfair, was a sanction that was manifestly inappropriate. The ET had failed to consider whether the sanction was consistent with the disciplinary procedure under which it was given, which should of itself have given rise to concern as to its appropriateness.

The EAT went on to say that it is only where there is a real concern that a sanction may have been manifestly inappropriate that it will be necessary for the ET to examine the circumstances in which it was applied. In such cases, a high level of scrutiny of the facts is required and the test as to what is ‘manifestly inappropriate’ has a higher threshold than that which applies when determining the reasonableness of a dismissal.

The case was therefore remitted to the ET to determine whether the sanction of the final written warning was one that was manifestly inappropriate and, in light of this decision, to decide on the fairness or otherwise of the dismissal.

In a further case on this topic (Davies v Sandwell Metropolitan Borough Council), the Court of Appeal confirmed that it is only in exceptional cases, where the earlier final warning was issued in bad faith or was manifestly inappropriate, that the ET should go behind the sanction to conclude that it was unreasonable for the employer to later rely on it to justify dismissal of an employee.