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/ 22 Sep 2014

Shifting sanctions on appeal: considerations for the prudent employer

This summer the Court of Appeal heard the interesting case of McMillan v Airedale NHS Foundation Trust [2014] EWCA Civ 1031, in which the court had to address whether employers are able to increase the severity of disciplinary sanctions if employees exercise their right to appeal.


By way of background, all employers are required to provide employees with a written statement on the terms of their employment. The statement given must include details regarding disciplinary procedures, including the protocol for disciplinary decisions and appeals. Alternatively, an employee must be referred to another document containing such information to this effect, such as a staff handbook. There is also a statutory, yet non-binding, code produced by ACAS which lays out recommendations on how employers should handle disciplinary procedures.

Facts of the case

This case concerned Miss McMillian, who was employed as a consultant obstetrician and gynaecologist by the Airedale NHS Foundation Trust, hereinafter “the Trust”. The Trust initiated disciplinary proceedings against Miss McMillan on the basis of an allegation that she had given inconsistent accounts about an adverse incident concerning a patient who faced complications whilst giving birth by caesarean section.

The Trust’s disciplinary procedure was incorporated into Miss McMillian’s employment contract and was laid out in two documents. One of the documents contained the Trust’s formal disciplinary procedures and misconduct guidance. The other presented the Trust’s code, detailing appeal procedures and identifying the ACAS Code as an ‘associated policy’. By virtue of this code, an employee was allowed to appeal against a warning or dismissal, with no further right of appeal.

Before the Tribunal

The Trust’s disciplinary panel upheld the allegations of misconduct and issued Miss McMillian with a final written warning. She appealed this decision and the appeal panel, on the same evidence, again upheld the allegations made against her. A rehearing was arranged by the appeal panel to decide upon the appropriate sanction. Significantly, this implied that the Trust would be considering whether her punishment should be upgraded to a dismissal. This plan suggested that Miss McMillan’s employers were within their right to uphold, reduce or increase her sanction.

Prior to this hearing taking place, Miss McMillian withdrew her appeal and applied to the High Court for an injunction to prevent her employer from reconsidering her sanction. The Court agreed with Miss McMillian and granted a permanent injunction to prevent the Trust from doing so. The Court held that Miss McMillan’s employment contract did not permit the appeal panel to upgrade the sanction due to the lack of an express power to do so.

The Trust’s appeal

The Trust then appealed to the Court of Appeal, who unanimously dismissed their application and upheld the injunction. The Trust sought to rely on the fact that there was nothing in Miss McMillian’s employment contract which precluded them from increasing the severity of her sanction. However, this argument was rejected by the Court, who held that the silent contract could not be interpreted as giving parties the right to agree on a harsher sanction on appeal or indeed allow the Trust to impose the same unilaterally. Hence, an increased sanction would amount to a breach of contract by the Trust.

Further, the Court held that the Trust’s appeal procedure was in place to benefit the employee and should by no means be used as a continuation of the disciplinary process. The policy was not drafted to enable the Trust to reconsider a sanction they later felt was too lenient. Additionally, the Trust’s policy did not permit employees a further right of appeal, meaning that if Miss McMillian’s sanction was increased to a dismissal, she would be left with no recourse. These factors meant that, in this type of scenario, employees would effectively be discouraged from exercising their important statutory right to appeal against disciplinary sanctions.

The Court noted the ACAS Guide on Discipline and Grievances at Work, which states expressly that penalties should not be increased upon appeal. Nonetheless, it did state that employers may expressly reserve the right to increase sanctions upon appeal in their disciplinary procedures. The Trust’s problem, in this case, was that the Court was not prepared to imply this power when the contract of employment was silent.

What is the impact of the decision for employers?

The case highlights the type of rare occasion in which injunctive relief is granted in disciplinary proceedings, demonstrating what both the Tribunal and the Court of Appeal considered to be an urgent need to stop the Trust from committing a breach of Miss McMillian’s employment contract.
This case has raised significant lessons for employers to learn. The most fundamental message arising out of the case is that employers must ensure that their disciplinary policy expressly permits for a higher sanction to be imposed upon appeal if they seek to exercise such a right. Whilst the employer could consider expressly reserving this right, they should tread carefully for, as mentioned, this does not sit well with the ACAS code and could lead to undesirable problems from employees. If an employer seeks to act as the Trust did in this case, they should ensure that their decision is a reasonable one and be prepared to face challenges. Further, in light of the judgment, it would perhaps be prudent to introduce a fresh right of appeal in the event that an employee’s sanction is increased in such circumstances, not least to put the employer in better stead in the face of resulting unfair dismissal claims. To avoid such problems from the outset, employers should be mindful to carry out thorough disciplinary investigations and strive to arrive at correct decisions first time, thereby restricting the need for a change of mind at a later date.

By Sehaj Lamba
Trainee Solicitor in the Employment, Company and Commercial department at Hanne & Co

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