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You are here: BAILII >> Databases >> United Kingdom Supreme Court >> Reilly v Sandwell Metropolitan Borough Council [2018] UKSC 16 (14 March 2018) URL: https://www.bailii.org/uk/cases/UKSC/2018/16.html Cite as: [2018] UKSC 16, [2018] IRLR 558, [2018] ICR 705, [2018] 3 All ER 477, [2018] WLR(D) 181, [2018] ELR 435 |
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THE COURT ORDERED that no one shall in connection with these proceedings publish or reveal the name and address of the school with which this appeal was concerned or of the Governing Body of that school.
Hilary Term
[2018] UKSC 16
On appeal from: [2016] EWCA Civ 766
JUDGMENT
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before
Lady Hale, President Lord Wilson Lord Carnwath Lord Hughes Lord Hodge
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JUDGMENT GIVEN ON |
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14 March 2018 |
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Heard on 12 December 2017
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Appellant |
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Respondent |
Martin Palmer |
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Sarah Hannett |
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Anna Bicarregui |
(Instructed by Spencer Shaw Solicitors) |
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(Instructed by |
LORD WILSON: (with whom Lord Carnwath, Lord Hughes and Lord Hodge agree)
1.
Ms Reilly,
the head teacher of a primary school, is in a close
relationship with Mr Selwood but it is not sexual and they do not live
together. Mr Selwood is convicted of making indecent images of children. Ms
Reilly
has previously been unaware of his criminal activities. She fails to
inform the school’s governing body of his conviction with the result that, when
it learns of it, her employer summarily dismisses her. The Employment Tribunal
(“the tribunal”) decides that, save in an irrelevant procedural respect, her
dismissal has not been unfair. Should the tribunal’s decision stand?
2.
The school is now an academy but
at the relevant time it was maintained by Sandwell
Metropolitan
District
Council
(“
Sandwell”),
which is the respondent to Ms
Reilly’s
appeal to this
court. Before the tribunal the school’s governing body was a second respondent
to her claim but, when it became an academy, the governing body ceased to exist
and its liabilities were transferred to
Sandwell.
This court orders an end to
its ghostly presence as a second respondent to the appeal.
3.
Ms Reilly
appeals against an order
of the Court of Appeal dated 19 July 2016, [2016] EWCA Civ 766, [2016] IRLR 779,
in which she was referred to as “A” and
Sandwell
was referred to as “B local
authority”. By a majority (Black and Floyd LJJ, the dissentient being Elias
LJ), the court dismissed Ms
Reilly’s
appeal against an order of the Employment
Appeal Tribunal (“the EAT”) dated 20 February 2014. The EAT (Wilkie J
presiding) had dismissed Ms
Reilly’s
appeal against the order of the tribunal disseminated
on 2 November 2012 that, save in the irrelevant procedural respect, her
dismissal had not been unfair.
4.
Ms Reilly
qualified as a teacher
in 1987 and, prior to becoming the head teacher of the school, she had been a
deputy head teacher in two other primary schools and an acting head teacher in
two others. Her disciplinary record was exemplary.
5.
Ms Reilly
met Mr Selwood in 1998 and
they became close friends. In 2003 they bought a property as an investment in
their joint names and set up a joint bank account out of which to pay the
mortgage instalments. Mr Selwood lived there without making any payment to Ms
Reilly.
She never lived there with him but she sometimes stayed there
overnight. One such night was 24 February 2009. Thus it was that, early the
following morning, she was witness to the arrival at the property of the
police, to their search of it and to their arrest of Mr Selwood on suspicion of
having downloaded indecent images of children online.
6.
One month previously Ms Reilly
had
applied for the post of head teacher at the school. During the progress of her
application in the following months Ms
Reilly
never disclosed Mr Selwood’s
arrest to
Sandwell.
It is possible that at first she considered him to be
innocent of the allegations against him. But there clearly came a time, not
identified in the evidence, when she realised that he was guilty and likely to
be convicted; and nothing turns on when that time came.
7.
Ms Reilly
was duly appointed to be
head teacher of the school and she took up the position on 1 September 2009.
8. On 1 February 2010 Mr Selwood was convicted of making indecent images of children by downloading them onto his computer. On a rating system under which level 5 is the maximum, the images were graded at levels 1 to 4. He was made the subject of a three-year community order; and of a sexual offences prevention order, which included a prohibition on his having unsupervised access to minors and a requirement to participate in a sex offender programme.
9.
Ms Reilly
became immediately aware of Mr Selwood’s conviction but in the
following months she decided not to disclose it to the governing body of the
school or indeed to
Sandwell.
Her close friendship with him continued. In April
2010 they went on holiday together. He named her as an authorised driver on his
motor insurance policy.
10.
In June 2010 Sandwell
learnt of Mr
Selwood’s conviction and of Ms
Reilly’s
close relationship with him. It
suspended her on full pay and in due course it summoned her to attend a
disciplinary hearing to answer an allegation that, in having failed to disclose
her relationship with a man convicted of sexual offences towards children, she
had committed a serious breach of an implied term of her contract of
employment, which amounted to gross misconduct.
11.
In May 2011 the disciplinary
hearing took place. The panel consisted of the chair of the governors of
another primary school and two governors of the school. Ms Reilly
was
represented by a solicitor. The panel upheld the allegation to which I have
referred and, particularly in the light of her continuing refusal to accept
that her relationship with Mr Selwood might pose a risk to pupils at the school
and that her failure to disclose it had been wrong, it decided that she should
be summarily dismissed. On 11 May 2011
Sandwell
confirmed her dismissal with
immediate effect. She appealed to an appeal panel which, in July 2011,
dismissed her appeal.
12.
In August 2011 Ms Reilly
presented
a claim to the tribunal that her dismissal had been unfair. The substantive
hearing of her claim took place over four days in September 2012, at which Ms
Reilly
had the benefit (which she has continued to have) of representation by
Mr Palmer.
13.
In its written judgment the
tribunal analysed with care the evidence placed before the disciplinary panel. It
noted that in her written statement to the panel Ms Reilly
had said that in
2009 and 2010 she had asked numerous people, including a police officer,
probation officers and officers of other local authorities, whether she had a
duty to disclose her relationship with Mr Selwood to the governing body and
that their answer had been that she had no duty to do so. The tribunal found,
however, that her evidence to it in this regard had been unclear; it noted that
two of the probation officers identified in her statement had given statements
in which they had denied that their advice to her had been as she had alleged;
and it observed that, shortly after Mr Selwood’s conviction, a third probation
officer had, by letter, advised her that it would be wise to disclose her
relationship with him.
14. The tribunal found
a) that
the reason for Sandwell’s
dismissal of Ms
Reilly
was that she had failed to
disclose her relationship with a convicted sex offender;
b) that
Sandwell
genuinely believed that the non-disclosure amounted to misconduct;
c) that
there were reasonable grounds for Sandwell’s
belief in that it was “obvious
that for a head teacher to have failed to disclose such information to her
governing body whether it is expressed in her contract of employment or not is
a matter of misconduct”; and
d) that,
notwithstanding Ms Reilly’s
exemplary disciplinary record but in the light,
among other things, of her continuing refusal to accept that her non-disclosure
had been wrong, her dismissal had been within the range of reasonable responses
open to
Sandwell.
15.
Nevertheless the tribunal proceeded
to find that the hearing of Ms Reilly’s
appeal by the appeal panel had been so
unsatisfactory as to render her dismissal procedurally unfair. In the light,
however, of its conclusion that, even had the hearing been satisfactory, there
was a 90% chance that her appeal would still have been dismissed, it directed
that her compensation be reduced by 90% in accordance with the approach
indorsed in Polkey
v
A E Dayton Services Ltd [1988] 1 AC 344. But the
tribunal went further: pursuant to section 123(6) of the Employment Rights Act
1996 (“the Act”), it also concluded that she had contributed to her dismissal
by blameworthy conduct and it assessed her contribution at 100%. Although,
including in her appeal to this court, she has challenged the tribunal’s
conclusions in both these respects, Ms
Reilly
accepts that the challenge would
become live only if the court were to set aside the tribunal’s decision that,
substantively, her dismissal was not unfair.
16.
A tribunal’s inquiry into whether
a dismissal is unfair is governed by section 98 of the Act. The first part of
the inquiry, governed by subsections (1) to (3), is whether the employer has
shown both the reason for the dismissal and that the reason relates to the
employee’s conduct or falls within another part of subsection (2) or otherwise
justifies dismissal. In this case the employer showed the reason for the
dismissal, namely the non-disclosure, and that it related to Ms Reilly’s
conduct.
17. The case turns on the second part of the inquiry, governed by subsection (4) of section 98 of the Act. It provides that the tribunal’s determination of whether a dismissal is unfair
“(a) depends on whether in the circumstances … the employer acted reasonably or unreasonably in treating [the reason shown by it] as a sufficient reason for dismissing the employee, and (b) shall be determined in accordance with equity and the substantial merits of the case.”
18.
A tribunal’s inquiry into whether
the employer acted unreasonably in treating the reason as sufficient for
dismissal seems simple enough in principle, albeit no doubt often difficult in
application. The later reference to a determination in accordance with the
merits of the case might have suggested that the tribunal somehow had a more
direct function in appraising the dismissal; but any such suggestion was
dispelled in the judgments of the Court of Appeal in Orr v
Milton Keynes
Council
[2011] EWCA Civ 62, [2011] ICR 704, at paras 62 to 64 and 91 to 98.
At all events the proper approach to the inquiry under subsection (4) is now
firmly established at the level of the Court of Appeal; and the parties to this
appeal do not invite this court to review it.
19.
The proper approach to the inquiry
under what is now subsection (4) has long been regarded to have been set out in
the judgment of the EAT (Arnold J presiding) in British Home Stores Ltd v
Burchell (Note) [1980] ICR 303. In the present case Elias LJ described it
as the “classic formulation of the employer’s obligation in misconduct cases”. In
the passage of the judgment at p 304 frequently cited, the EAT, through Arnold
J, held that the tribunal had to be satisfied first that the employer believed
that the employee was guilty of misconduct; second that it had reasonable grounds
to sustain its belief; and third that, prior to forming its belief, it had
carried out a reasonable amount of investigation into the matter.
20. It is at once apparent that the three requirements identified by Arnold J do not well fit the inquiry mandated by what is now section 98(4). It is indeed clear that, on the contrary, they were directed to the first part of the inquiry under what is now section 98(1) to (3). Unlike in the present case, in which the conduct - the non-disclosure - is an agreed fact, the employee’s alleged conduct is often disputed. So it was in the British Home Stores case. The issue there was whether, which she denied, the employee in the store had dishonestly abused her right to buy its goods at a discount. To the tribunal’s resolution of that disputed issue relating to her conduct, Arnold J’s three requirements, which all related to belief in the employee’s guilt, fitted perfectly. Applying them, the EAT held that the store had reasonable grounds for its belief that the employee had conducted herself dishonestly and - which was not separately considered because it followed so obviously - that therefore, under a precursor to section 98(4), it had been reasonable for the store to treat her conduct as a sufficient reason for her dismissal.
21.
But, although the judgment of
Arnold J on behalf of the EAT in the British Home Stores case did not
relate to the inquiry mandated by what is now section 98(4) of the Act, the
Court of Appeal has for long applied it to that inquiry. Thus, in Foley v
Post Office [2000] ICR 1283 Mummery LJ, with whom the other members of the
court agreed, stated at 1287-1288 that the tripartite approach there explained
by Arnold J governed not only the reason for a dismissal but its reasonableness
or unreasonableness. Since then the Court of Appeal has consistently adopted
the same
view
of the breadth of Arnold J’s judgment: see for example Turner
v
East Midlands Trains Ltd [2012] EWCA Civ 1470, [2013] ICR 525, para 1.
22.
Nevertheless, so far as I can see
albeit in the absence of full argument, no harm has been done by the
extravagant view
taken of the reach of the judgment of Arnold J in the British
Home Stores case. In effect it has been considered only to require the
tribunal to inquire whether the dismissal was within a range of reasonable
responses to the reason shown for it and whether it had been preceded by a
reasonable amount of investigation. Such requirements seem to me to be entirely
consonant with the obligation under section 98(4) to determine whether, in
dismissing the employee, the employer acted reasonably or unreasonably.
23.
On any view
it is clear that the
tribunal is at one remove from answering the direct question: was the dismissal
unfair? Instead it must answer the question: was the dismissal within the range
of reasonable responses to the reason shown for it by the employer? Indeed all
appellate bodies, namely the EAT and, in this case, also the Court of Appeal
and this court, are at two removes from answering the direct question. For,
under section 21(1) of the Employment Tribunals Act 1996, an appeal against the
tribunal’s decision lies only on a point of law and therefore, in the absence
of procedural error, can succeed only if for some reason the tribunal’s
decision was not open to it or, in other words, only if the tribunal had not
been entitled to reach it. Thus, in the present case, the EAT correctly
identified the question to be whether the tribunal had been “entitled to
conclude that … this was a case in which dismissal did fall within the range of
reasonable responses”. The exercise required of an appellate body is not always
easy. It might, for example, be an intellectual struggle for it to conclude:
“left to ourselves, we would not have considered that the dismissal fell within
the range of reasonable responses but the tribunal was entitled to conclude
that it did so.” But those of us required to determine these appeals must
conduct the exercise as best we can.
24.
Ms Reilly’s
challenge to the
tribunal’s decision rests primarily upon a challenge to its acceptance of the
panel’s conclusion that she was under a duty to disclose her relationship with
Mr Selwood.
Sandwell
responds that the tribunal was correct to accept that she
was under that duty. It seems that an employee’s “conduct” within the meaning
of section 98(2)(b) of the Act can precipitate a fair dismissal even if it does
not constitute a breach of her contract of employment: see the observation of
Phillips J on behalf of the EAT in Redbridge London
Borough
Council
v
Fishman [1978] ICR 569, 574, adopted by the EAT in Weston Recovery
Services
v
Fisher UKEAT/0062/10/ZT, [2010] UKEAT 0062_10_0710 at para 13. But in the present case
Sandwell
contends that the duty of disclosure did arise under Ms
Reilly’s
contract of employment.
25. Section 175(2) of the Education Act 2002 provides:
“The governing body of a
maintained school shall make arrangements for ensuring that their functions
relating to the conduct of the school are exercised with a view
to safeguarding
and promoting the welfare of children who are pupils at the school.”
Ms Reilly’s
job description included a requirement to
“advise, assist and inform the Governing Body in the fulfilment of its
responsibilities” and to “be accountable to the Governing Body for the maintenance
of … the … safety of all … pupils”. She was therefore, as she accepts, under a
contractual duty to assist the governing body in discharging its duty to
exercise its functions with a
view
to safeguarding the pupils. Indeed the
disciplinary provisions in her contract of employment identified a failure to
report something which it was her duty to report as being an example of conduct
which might lead to disciplinary action.
26.
But (asks Ms Reilly)
where was the
evidence which suggested that her particular relationship with Mr Selwood
engaged the governing body’s safeguarding functions? The panel proceeded on the
basis that the evidence existed. The tribunal observed that it was “obvious”
that her relationship engaged its functions. The EAT held that the tribunal’s
view
was open to it, as did Black and Floyd LJJ. Elias LJ, on the other hand,
held that the answer to Ms
Reilly’s
question was that there was no such
evidence.
27.
As it happens, Parliament has
itself recognised that sexual offenders towards children can represent a danger
to children not only directly but indirectly by operating through those with
whom they associate. The Childcare Act 2006 and regulations made under it
contain a good example, albeit not cited to the tribunal. Sections 34(1) and
53(1) require those providing childcare in specified circumstances for children
aged under eight to be registered. Regulation 4 of the Children
(Disqualification) Regulations 2009 (SI 2009/1547), made under section 75(2) of
that Act, would, subject to waiver, disqualify Mr Selwood from registration. But
what is significant for present purposes is regulation 9, which disqualifies
from registration a person who lives in the same household as a disqualified
person or in a household in which a disqualified person is employed. Although
the registration provisions do not apply to maintained schools and, even if
they did apply, would not have led to the disqualification of Ms Reilly,
who
did not live in the same household as Mr Selwood, they illumine the democratic
judgement about the danger posed to children by such an offender in operating
through his close associates. Although no doubt in some cases the offender can
persuade his associates consciously to assist him to gain access to children,
they can, as in her judgment Black LJ observed, be quite unaware of the use
which he makes of them in order to gain access. The particular case of Ms
Reilly
is that of a head teacher, likely to know more than any other member of
staff about the pupils, their circumstances at home, their personalities, their
routines at school and their whereabouts from day to day; and indeed likely to
be more able than any other member of staff to authorise
visitors
freely to
enter school premises.
28.
The tribunal found that Ms Reilly
“herself knew that she was subject to a duty to disclose because she would not
otherwise have made enquiries as to the circumstances in which disclosure was
triggered”. The proposition is, with respect, illogical. Nevertheless her
wide-ranging inquiries show how near to the border-line even she, with
understandable reluctance, recognised her case to be. The objective
decision-makers on the panel, all school governors, ruled that the case fell on
the side of the line which required disclosure. Mr Selwood was the subject of a
serious, recent conviction. The basis of his sentence was that he represented a
danger to children. His relationship with the head of the school created, to
put it at its lowest, a potential risk to the children. The risk required assessment.
It was not for Ms
Reilly
to conduct the assessment; it was a function of the
governors. As head teacher, she represented, as Ms Hannett on behalf of
Sandwell
submits, the eyes and ears of the governors in the school. Had she disclosed
her relationship to them, it is highly unlikely that she would have been
dismissed, still less that the tribunal would have upheld any dismissal as
fair. Far more likely would have been the extraction by the governors of
promises by Ms
Reilly
that she would not allow Mr Selwood to enter the school
premises and perhaps, for example, that outside the school she would not leave
information about pupils, for example stored electronically, in places where he
might be able to gain access to it.
29.
In my opinion the tribunal was
entitled to conclude that it was a reasonable response for the panel to have
concluded that Ms Reilly’s
non-disclosure not only amounted to a breach of duty
but also merited her dismissal. For her refusal to accept that she had been in
breach of duty suggested a continuing lack of insight which, as it was
reasonable to conclude, rendered it inappropriate for her to continue to run
the school.
30. So I would dismiss the appeal.
LADY HALE:
31.
I agree entirely, for the reasons
given by Lord Wilson, that Ms Reilly
was in breach of her contract of
employment by not informing her employers of her connection with Mr Selwood. Ms
Reilly
had a duty to “advise, assist and inform” the Governing Body in the
fulfilment of its safeguarding responsibilities towards the school’s pupils.
Those who are guilty of sexual offences against children pose a risk to the
safety of other children both directly and indirectly. There are many ways in
which Mr Selwood, should he choose to do so, might have used his friendship
with Ms
Reilly
to gain access to the school’s pupils: not only through being
allowed to
visit
the school but also through finding out information about the
pupils. Reporting the connection would have enabled a serious discussion to
take place about how those risks might be avoided. There is no reason to think
that it would have been a resigning matter. Issues could have been identified
and solutions found. It is the absence of that full and frank disclosure and
discussion which was the cause for serious concern. And it is the absence of
any acknowledgement of what she should have done which makes the decision to
dismiss her reasonable, indeed some might think it inevitable.
32. The case might have presented an opportunity for this court to consider two points of law of general public importance which have not been raised at this level before. The first is whether a dismissal based on an employee’s “conduct” can ever be fair if that conduct is not in breach of the employee’s contract of employment. Can there be “conduct” within the meaning of section 98(2)(b) which is not contractual misconduct? Can conduct which is not contractual misconduct be “some other substantial reason of a kind such as to justify the dismissal” within the meaning of section 98(1)(b)? It is not difficult to think of arguments on either side of this question but we have not heard them - we were only asked to decide whether there was a duty to disclose and there clearly was.
33.
Nor have we heard any argument on
whether the approach to be taken by a tribunal to an employer’s decisions, both
as to the facts under section 98(1) to (3) of the Employment Rights Act 1996
and as to whether the decision to dismiss was reasonable or unreasonable under
section 98(4), first laid down by the Employment Appeal Tribunal in British
Homes Stores Ltd v
Burchell (Note) [1978] ICR 303 and definitively endorsed
by the Court of Appeal in Foley
v
Post Office [2000] ICR 1283, is
correct. As Lord Wilson points out, in para 20 above, the three requirements
set out in Burchell are directed to the first part of the inquiry, under
section 98(1) to (3), and do not fit well into the inquiry mandated by section
98(4). The meaning of section 98(4) was rightly described by Sedley LJ, in Orr
v
Milton Keynes
Council
[2011] ICR 704, at para 11, as “both problematical
and contentious”. He referred to the “cogently reasoned” decision of the
Employment Appeal Tribunal (Morison J presiding) in Haddon
v
Van
den Burgh
Foods [1999] ICR 1150, which was overruled by the Court of Appeal in Foley.
Even in relation to the first part of the inquiry, as to the reason for the
dismissal, the Burchell approach can lead to dismissals which were in
fact fair being treated as unfair and dismissals which were in fact unfair
being treated as fair. Once again, it is not difficult to think of arguments on
either side of this question but we have not heard them.
34.
There may be very
good reasons why
no-one has challenged the Burchell test before us. First, it has been
applied by Employment Tribunals, in the thousands of cases which come before
them, for 40 years now. It remains binding upon them and on the Employment
Appeal Tribunal and Court of Appeal. Destabilising the position without a
very
good reason would be irresponsible. Second, Parliament has had the opportunity
to clarify the approach which is intended, should it consider that Burchell is
wrong, and it has not done so. Third, those who are experienced in the field,
whether acting for employees or employers, may consider that the approach is
correct and does not lead to injustice in practice.
35.
It follows that the law remains as
it has been for the last 40 years and I express no view about whether that is
correct.