Thursday, 9 March 2000

EAT changes its mind

The Employment Appeal Tribunal has departed from its previous decision in Haddon v Van Den Burgh Foods - the case that purported to abolish the range of reasonable responses test.

In Midland Bank v Madden [EAT, 7th March 2000, Lindsay J. (president)], the EAT overturned its decision in Haddon in the course of a lengthy and detailed analysis of section 94 of the Employment Rights Act 1996. Unfortunately, the decision raises as many issues as it clarifies.

The EAT endorsed the traditional British Home Stores v Burchell test for deciding whether an employer had shown the reason for dismissal - i.e. that the employer believed the reason to be the true reason and had sufficient objective evidence to demonstrate reasonable grounds for that belief.

In a confusing part of the decision, Lindsay J. states that an employment tribunal is free to substitute its own views for those of the employer when considering each of the 3 limbs of the Burchell test (i.e. (1) did the employer believe the reason to be the true reason for dismissal; (2) did the employer have reasonable grounds; and, (3) had the employer carried out a full investigation). Thus an employment tribunal is free to say that it does not think the employer had carried out a full investigation, or that the employer had reasonable grounds for its belief.

If the employer passes the Burchell 3-stage test, the EAT states that the tribunal cannot then substitute its views for those of the employer as to the reason shown by the employer for the dismissal. One may say this follows as a matter of logic.

Lindsay J. goes on to say that the tribunal is free to substitute its own views for those of the employer as to the reasonableness of a dismissal as a response to the reason shown for it.

MOST IMPORTANTLY, Lindsay J. made it clear that no court below the Court of Appeal can discard the band of reasonable responses test as a determinative test - and the EAT in Haddon was wrong to do so. The range of reasonable responses test is now reinstated.

By way of comment, Lindsay J. pointed out that although it is conceptually difficult to distinguish the 'range of reasonable responses' test from a 'perversity' test, "whatever the position in logic, one has to accept that this is not algebra and that words can have been intended to have an effect short of that which the strict reading of them could lead to. Here the precedents plainly show that the band test has always been intended not to lead to one of perversity. We are not free, as we see it, to discard the band but until the Court of Appeal deals with the problem the least violence to precedent will be caused, and the circle most nearly squared, if the band continues to be used as a test but not as, of itself, invariably determinative."

So - the range of reasonable responses test is reinstated, but it is not 'invariably determinative'. This raises the issue of when the 'range of reasonable responses' test is not determinative and, when it is not determinative, what is the true test?

Haddon is awaiting the grant of permission to appeal. It is not known whether Madden will be appealed.

If any subscribers come across any decisions (1st instance or appellate) where detailed consideration is given to the conflicting decisions in Haddon and Madden, I would be grateful for copies (and will distribute them - with acknowledgments if requested - via these bulletins).

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