Can an employer’s loss of trust and confidence make re-engaging an employee impractical?

Can an employer’s loss of trust and confidence make re-engaging an employee impractical?

Employees who successfully bring a claim for unfair dismissal are entitled to compensation, re-engagement or reinstatement.

The latter two remedies are rarely requested. However, in the case of Kelly –v- PGA European Tour (‘PGA’), the Employment Appeal Tribunal (‘EAT’) had to consider whether an Employment Tribunal (‘ET’) had been right to order Mr. Kelly’s re-engagement when PGA argued that the working relationship had irretrievably broken down.

Mr. Kelly began his employment with PGA in 1989 as Marketing Director, eventually becoming Group Marketing Director. In 2015 a new Chief Executive was appointed and within 2 months, he decided Mr. Kelly should be dismissed over concerns about his performance and his willingness to “buy in” to the new CEO’s ideas. The parties entered into discussions to try and agree exit terms but an agreement could not be reached and Mr. Kelly was dismissed. Consequently, Mr. Kelly brought a number of claims against PGA, including unfair dismissal.

The ET decision

PGA conceded that the dismissal was procedurally unfair as a fair procedure had not been followed. The ET, therefore, only needed to consider a remedy.

Unusually, Mr. Kelly asked to be reinstated to his former role or, alternatively, re-engaged in a comparable role within the company. PGA objected to this arguing that concerns about Mr. Kelly’s performance had led to a loss of trust and confidence and that it was not, therefore, possible for the parties to continue working together. It was also discovered that Mr. Kelly had covertly recorded meetings with the Chief Executive thereby further underlining the breakdown between the parties.  

In spite of these arguments, the ET ordered Mr. Kelly’s reinstatement holding that PGA’s objections should not present a barrier. It felt that PGA had not taken sufficient account of Mr. Kelly’s 26 years of service and that if he were given enough time to prove himself to the new Chief Executive, any concerns about his integrity could be overcome. The ET ordered that Mr. Kelly be re-engaged in the role of Commercial Director in China, despite the fact he could not speak Mandarin; a requirement of the role. Mr. Kelly was good at languages and had expressed a willingness to learn therefore the ET considered that it was practicable to engage Mr. Kelly in the role.

PGA appealed the re-engagement order.

The EAT decision

The EAT allowed PGA’s appeal and overturned the re-engagement ordered by the ET.

The EAT rejected the argument that trust and confidence could only be relevant to the question of practicability where the dismissal is for conduct reasons. It held that the issue of trust and confidence could also be relevant to dismissals on the grounds of capability. Therefore, a genuine loss of trust and confidence may mean re-engagement is not practicable. 

The question at hand for the EAT was whether PGA had a genuine and rational basis for believing that trust and confidence had been lost. The EAT concluded that the ET had erred in considering whether trust and confidence had been damaged (rather than lost) and that it had imposed its own views as to whether the ability to speak Mandarin was essential for the role, rather than giving weight to the employer’s judgement on the matter. Where an employee does not meet an essential requirement of the role this will usually mean that re-engagement is not practicable. These errors meant that Mr. Kelly’s re-engagement was not practicable and the judgement could not stand.

The case will now be sent back to the ET to decide what compensatory award should be made to Mr. Kelly.

As indicated above, orders for reinstatement or re-engagement are rare although, if ordered by the tribunal, they can have significant consequences for the employer, including:

  • The employer will have to pay the employee’s lost salary and benefits from the date of dismissal to the date the employee is reengaged.
  • The employer has to re-employ the dismissed employee, which could be difficult due to potentially strained relationships.
  • If the employer refuses to reengage the employee they must pay an additional award of between 26 and 52 week’s pay. The amount of a week’s pay is capped for this purpose. The maximum award is £27,976 and the minimum is £13,988.

Each case is decided on its own facts, however, Mr. Kelly’s case clearly shows that tribunals are alert to the difficulties of re-engagement or reinstatement.

If you would like further information on the contents of this article, please contact Debbie Sadler on 01494 478671 or at djs@blasermills.co.uk.