Employment Contract

July 18th, 2018 by James Goudie KC

It is clearly implicit in a term in an employment contract conferring a contractual right to appeal against disciplinary action taking the form of dismissal that, if an appeal is lodged, pursued to its conclusion and is successful, the effect is that both employer and employee are bound to treat the employment relationship as having remained in existence throughout. This is not a matter of implying terms, but simply the meaning to be given to the words of the relevant contract, reading them objectively. By including a contractual right of appeal in the employment contract, the employer makes available to the employee a facility to seek to overturn the disciplinary decision made against him and to have the dismissal treated as being of no effect. If the appeal is successful, then subject to any other contractual provisions, the employee is entitled to be treated as having never been dismissed, to be paid all back pay and to have the benefit of all other terms of his contract of employment through the relevant period and into the future. Those terms include the usual implied duty of an employer to maintain trust and confidence. Conversely, if the employee exercises his right of appeal under the contract and does not withdraw the appeal before its conclusion, it is obvious on an objective basis that he is seeking to be restored to his employment and is asking and agreeing (if successful) to be treated as continuing to be employed under his contract of employment for the interim period since his previous dismissal and continuing into the future, so that that dismissal is treated as having no effect. It is not a reasonable or correct interpretation of the term conferring a right of appeal that a successful appeal results in the employee having an option whether to return to work or not. If an appeal is brought pursuant to such a term and is successful, the employer is contractually bound to treat the previous dismissal as having no effect and the employee is bound in the same way. That is inherent in the very concept of an appeal in respect of a disciplinary dismissal.

An employment contract involves significant obligations on each side, and each party has a clear interest in knowing where they stand in relation to the contract and those obligations, as to whether they exist or not. If a contractual appeal is brought against a dismissal for disciplinary reasons, a reasonable person in the shoes of the employee will expect his full contractual rights and employment relationship to be restored without more as soon as he is notified that his appeal has been successful. He would not think that any further action by him was required, in terms of saying that he agrees that this is the effect. He has asked for that to happen by the very act of appealing. Similarly, a reasonable person in the shoes of the employer will understand that this is the effect of a successful appeal as soon as the parties are notified of the outcome of the appeal, without any question of a further round of debate about whether the employee is prepared to accept this or not. The reason is the same: the employee has already asked for that to be the outcome by the very act of appealing. Any other possible reasons why an employee might wish to invoke a contractual appeal process are collateral to the object of having such a process included in the contract of employment. That object is, that the employee is contractually entitled to ask the employer to reopen its previous decision to dismiss and to substitute a decision that there should not be a dismissal. Where a contractual appeal is brought, that is the obvious purpose of the appeal, judging the matter objectively. The fact that an employee might have other motives for seeking to appeal does not affect the interpretation of the contract.

The foregoing is the analysis of Sales LJ on behalf of the Court of Appeal in Patel v Folkestone Nursing Homes Ltd (2018) EWCA Civ 1689.

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