Determining Whether Dismissal for Misconduct was Fair

Midland Bank plc v Madden (EAT [2000] 2 All ER 741)

The tests applicable for determining whether a dismissal was unfair under ss98(1) and (2) of the Employment Rights Act 1996 were whether, at the time, the employer had genuinely believed that the employee was guilty of misconduct, whether the employer had had reasonable grounds in his mind to sustain such a belief and whether he had carried out as much investigation into the matter as was reasonable in the circumstance at the stage when he formed that belief on those grounds. An employment tribunal is free to substitute its views for that of the employer in determining each part of the test. Although, once the test had been satisfied, a tribunal was not free to substitute its own views for those of the employer as to the reasons shown, it was free to do so in determining for the purposes of s98(4) the reasonableness of dismissal as a response to that reason. In determining that question, the ‘band of reasonable responses’ test remained binding on tribunals and was determinative, but that test should not become one of perversity. The tribunal should always remind itself of the terms of the question posed by s98(4), namely whether the employer had acted unreasonably in treating the shown reason as a sufficient reason for dismissing the employee. In the present case there was no basis for interfering with the tribunal’s view that the bank’s investigation had been inadequate, its investigators having closed their minds to any possibility other than the employee’s guilt and the person conducting the disciplinary hearing having accepted the investigation report uncritically. Accordingly the bank had not shown a substantial reason for the dismissal for the purposes of ss98(1) and (2) and its appeal was dismissed.