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Case update - appeal against dismissal can automatically revive a contract

Napthens - January 27th 2015

A recent case has decided that where an employee successfully appeals against a dismissal, communication of the appeal outcome is not necessary to revive the employment contract. The contract is revived automatically without the employer taking a specific decision to reinstate the employee.

Facts

In the case of Salmon v Castlebeck Care (Teesdale) Ltd and others the Claimant, Mrs Salmon, was dismissed for gross misconduct prior to a TUPE transfer.  She appealed against the dismissal in accordance with her employer’s contractual appeal procedure.

After the TUPE transfer, Mrs Salmon’s appeal was heard by the transferring HR Director, who held that her dismissal was “unsafe”.  However, the HR Director did not inform her that her appeal was successful or make any direction as to reinstatement. Instead, she directed an employment consultancy to draw up a settlement agreement and negotiate an exit package with Mrs Salmon (although this never occurred).

Mrs Salmon sought to bring a claim against her new employer, DH Ltd (the TUPE transferee) in respect of her dismissal. DH Ltd defended the claim by arguing that Mrs Salmon was dismissed prior to the TUPE transfer, therefore she was not employed by them at the time of transfer and they could not be liable.

Decision

At first instance, the Employment Tribunal found in favour of DH Ltd.  The Tribunal held that in order to revive an employment contract, there must be a clear decision on the employer’s part not just to allow the appeal, but to reinstate the employee.The judge also thought it relevant that no clear decision had been communicated to Mrs Salmon, commenting that “a decision is not a decision until it is communicated to the employees involved in the appeal process”.

Appeal

Mrs Salmon appealed to the Employment Appeal Tribunal (EAT).

The EAT held that once an appeal against dismissal under a contractual appeal procedure has been upheld, the contract is automatically revived.  There is no need for a separate decision to reinstate the employee, or for the decision to be communicated.  The situation is different to where an employee is notified of a dismissal (in which case, the decision only becomes effective when it is communicated to the employee).

As a result of the successful appeal, Mrs Salmon’s contract was automatically revived.  She was therefore employed immediately before the TUPE transfer and entitled to pursue her claim against DH Ltd.

Practical steps

  • As a matter of good practice, an employer should ensure that an appeal outcome is communicated to an employee without delay.  However, any failure to do this will not affect employment status.  The employee’s contract will automatically be revived as a result of the successful appeal, with the effect being as though his/her employment had never terminated.  In these circumstances, the employee will be entitled to back pay for the period between the date of dismissal and the date of the appeal decision.
  • Where there is a TUPE transfer, a transferee should carefully consider information regarding employees who have recently been dismissed by the transferor because these employees may, in the event of a successful appeal, be deemed to have transferred to the transferee under TUPE.