Effect of Successful Appeal Against Dismissal

The EAT has ruled that a decision on appeal that an employee’s dismissal was unsafe automatically resulted in her employment contract being revived. There was no need for a decision to reinstate her, nor for her to be told the result of the appeal.

In Salmon v Castlebeck Care (Teeside) Ltd (in administration) and Danshell, S was dismissed for gross misconduct by Castlebeck on 10 July 2013. She exercised her contractual right of appeal. On 4 September 2013, Castlebeck’s business transferred to Danshell. On 17 September 2013, S’s appeal was heard by Castlebeck’s HR Director whose employment had transferred to Danshell under TUPE. He deemed her dismissal “unsafe”. However, no decision was taken to reinstate her or to indicate that her original contract had revived as a result. Instead Danshell instructed its advisers to arrange a settlement agreement with her. S was not told of the outcome of appeal.

S claimed unfair dismissal against Castlebeck and Danshell. The employment tribunal upheld her claim against Castlebeck but dismissed her claim against Danshell, finding that it had never been her employer. The judge considered that the contract could only be revived if there was a clear decision to reinstate, together with communication of that decision to the employee. S had not therefore been employed immediately before the transfer and her employment had not transferred under TUPE.

The Employment Appeal Tribunal upheld S’s appeal. The tribunal had been wrong to look for a separate decision to reinstate. If an employee’s appeal is successful, the employment contract revives automatically. Likewise, there was no need for a decision to reinstate to be communicated.

Employers need to be aware that upholding an employee’s appeal against dismissal automatically results in the employment contract being revived and in the dismissal disappearing. There is no need to take a decision to reinstate the employee, nor to communicate that decision. As the dismissal disappears, the employee's continuity of employment is not broken, the employee will be entitled to back-pay for the period between “dismissal” and reinstatement (unless there is a contractual provision to the contrary) and will not be able to bring an unfair dismissal claim since there will have been no dismissal.

In G4S Justice Services (UK) Ltd v Anstey, it was held that the contractual obligation to hear appeals post-transfer against dismissals effected pre-transfer lies with the transferor employer. It is not clear why S’s appeal in this case was heard by the transferor and not the transferee, but it is possible that there was no one left at the transferor to hear it.

As this case demonstrates, a successful appeal after a TUPE transfer against a pre-transfer dismissal results in the employee being employed at the time of the transfer and their employment transferring under TUPE. Transferee employers should seek indemnities to cover off the risk of liabilities in respect of employees of the transferor who have not been identified as transferring to them.