GM Packaging (UK) Ltd v Haslem [2014] UKEAT 0259_12_2901 concerned the alleged unfair dismissal of two employees after they engaged in sexual activities in the workplace.

This case is noteworthy for concluding that it is not appropriate to only look at the principal acts of misconduct when considering the reasonableness of a dismissal. One must have regard to all constituent parts of the reason.

Facts of the case:

GM Packaging was a national supplier of disposable catering products and food packaging, with 9 employees at the relevant time. Mr Haslem began working for GM Packaging in March 1997 and was promoted to General Manager in April 2011. Ms Ottey began working as a sales representative for GM Packaging in August 2009.

The relevant details of the case are as follows:

  1. Around 12 April 2011, rumours circulated the office that Mr Haslem and Ms Ottey allegedly engaged in sexual activity on the premises after work
  2. On 14 April 2011, Graham Montague, the Managing Director of GM Packaging, challenged Mr Haslem on what had happened. He admitted to having an affair with Ms Ottey and kissing her on this occasion, but he denied having full sexual intercourse
  3. Mr Montague referred to Ms Ottey as a “tart”, then confronted her on 14 April 2011, and summarily dismissed her on the spot
  4. On 18 April 2011, Mr Montague discovered a dictation machine in the office which captured the conversation between Mr Haslem and Ms Ottey, in which they spoke of Mr Montague in derogatory terms. Mr Haslem was subjected to an investigatory hearing, after which he was suspended with full pay
  5. Mr Montague sent a letter to Ms Ottey on 26 April 2011, addressing the reasons for her dismissal and informing her that she had a right of appeal. She appealed by letter dated 3 May. Her appeal hearing was conducted by Dawn Powell, who recommended Ms Ottey’s appeal be dismissed. Mr Montague authorised this, and Ms Powell wrote a letter to Ms Ottey on 3 June formally dismissing her appeal
  6. On 3 May 2011, Mr Haslem attended a disciplinary hearing before Ms Powell. Ms Powell made further enquiries before seeking the authority to dismiss Mr Haslem. Mr Montague approved this, and Mr Haslem was summarily dismissed on 6 May by telephone
  7. On 26 May 2011, Mr Haslem appealed this decision before Judy Pearson who sought, and obtained, Mr Montague’s authority, to dismiss the appeal. She did so by letter dated 3 June 2011

Mr Haslem brought a case for unfair dismissal against GM Packaging. His case was first heard by the Employment Tribunal and was later appealed to the Employment Appeal Tribunal.

The Employment Tribunal’s decision (first hearing):

The Employment Tribunal (ET) centred their judgment around two questions:

  1. Who were the dismissing and appeal officers? It was held that, since Mr Montague had to authorise the recommendations for Ms Powell and Ms Pearson, Mr Montague was the dismissing officer. Since Mr Montague was a witness, he could not deal with the disciplinary matters alone
  2. What was the principal reason for the dismissal? The ET concluded that the principal reason for dismissal was the sexual activity between Ms Ottey and Mr Haslem that occurred on company premises

The Employment Tribunal concluded that sexual activity on the company premises does not amount to gross misconduct, and therefore, dismissal on these grounds “fell outside the band of reasonable responses”.

(See the case summary for Iceland Frozen Foods Ltd v Jones for a further look at this concept).

It was recognised that Mr Haslem did contribute to the conduct, and that such contribution was made up of 30% concerning the sexual activity and 20% concerning the recorded comments. Therefore, after deducting Mr Haslem’s contributions, he was awarded £17,398.25.

The Employment Appeal Tribunal decision (appeal hearing):

Mr Montague appealed the ET’s decision.

The Employment Appeal Tribunal (EAT) began by outlining the statutory question as the reason for dismissal. Under section 98(1) of the Employment Rights Act 1996, the reason “… is the set of facts known to the employer or, it may be, of beliefs held by him which cause him to dismiss”. When these facts have been determined, one can then ascertain the reasonableness of the decision. Since the disciplinary function had been delegated to Ms Powell and Ms Pearson, the issue was whether the reason for the dismissal and rejection of the subsequent appeal was apparent in the minds of Ms Powell and Ms Pearson or not.

The EAT found that the ET had been mistaken in their ruling in three respects:

  1. The disciplinary function was rightly delegated because it was “genuine and proper procedure for a small business”. Mr Montague had accepted the recommendations of Ms Powell and Ms Pearson and the reasoning for those recommendations was theirs respectively
  2. The ET erred in using the term “principal reason”. The sexual activity and the tape recording were both in the minds of Ms Powell and Ms Pearson when giving their recommendations. Therefore, it was erroneous of the ET to focus solely on the sexual activity as the principal reason for dismissal, when it was, in fact, the whole of the conduct leading to Mr Haslem’s dismissal
  3. The ET ultimately found that sexual activity in the workplace after hours would not result in gross misconduct. That “was a plain example of the tribunal impermissibly substituting its view for that of the employer”

Therefore, the EAT overruled the findings of the ET and ruled that Mr Haslem’s dismissal was fair.

Summary:

To summarise, the reasons for Mr Haslem’s dismissal were both the sexual activity and the tape recording. The ET was wrong in focusing solely on what they believed to be the “principal reason” for dismissal. Instead, the whole of the conduct leading to the dismissal must be considered in determining whether the dismissal was reasonable or not.