Julie Logan, who was sacked during her one-year probationary period as the principal engineer at Future Technology Devices International Ltd, argued that the ET’s relabelling the reason for dismissal from a conduct matter to “some other substantial reason” breached her right to a fair trial.

But the Inner House of the Court of Session ruled that the appellant had been given reasonable notice of the facts upon which the tribunal based its decision and that the employment judge was entitled to find that the real reason for the dismissal was the breakdown of the relationship with the contractor and the resulting stoppage to a development project.

The Lord Justice Clerk, Lady Dorrian, sitting with Lord Menzies and Lord Malcolm, heard that the appellant applied to the Employment Tribunal after being dismissed from her position as principal engineer with the respondent on 15 April 2008, having been employed subject to a probationary period of one year. 

After an evidential hearing, it was asserted for the respondent that the appellant had been dismissed for conduct reasons, namely an inability to work with colleagues and contractors in an appropriate way, intransigence in respect of her attitude to the critical contractor, and a refusal to work with him, which was estimated to cost the company between £240,000 and £400,000, as well as repeated criticisms of him and others as incompetent, or dishonest. 

But the appellant maintained the reason was that the CEO was angry over the content of certain emails she had sent, at her threat to resign and at her statement that she would not work further with the contractor in question.

The ET considered that there was no dispute that the material facts in the case related to difficulties between the appellant and the contractor, which led to the stoppage in production, to the appellant’s email that it was time to move on, and her request not to work further with the contractor.

However, it disagreed with the employer’s classification of the dispute as a conduct matter.

The circumstances effectively left the managing director of the respondent to choose between the employee and the contractor, which was the “real reason” for the dismissal.

On the basis of the case of Abernethy v Mott, Hay & Anderson [1974] ICR 323, it was open to the ET to apply the correct label, which was in fact “some other substantial reason” of a kind capable of justifying dismissal, namely that the appellant could/would not work with the critical contractor - a “potentially fair reason”.

The dismissal was nevertheless unfair since proper procedures had not been followed. 

Under reference to Polkey v A E Dayton Services Limited [1988] ICR 142 the ET considered what might have happened had the correct procedure been followed, and found that there was an 85% chance that the appellant would still have been dismissed. 

The ET accordingly reduced the compensatory award by that amount, and also reduced the award by a further 10% because it considered that the appellant’s actions caused or contributed to her dismissal because she failed to follow instructions to “sort out” progression of the project with the contractor.

But the award was increased by 15% because of the employer’s failure to follow the relevant statutory procedures when dismissing the appellant, which had rendered the dismissal “automatically unfair”.

However, on appeal it was submitted that the ET in the present case had “misdirected” itself to its role.

By substituting the employer’s reason and label for one of its own, not advanced by the parties at the hearing it acted in breach of Article 6 of the European Convention on Human Rights and in “breach of natural justice”.

It therefore fell to the court to substitute the tribunal’s finding for one that the employer had failed to show a principal qualifying reason under the ERA 1996 for the appellant’s dismissal and set aside the Polkey deduction.

Delivering the opinion of the court, the Lord Justice Clerk said: “It is axiomatic that a tribunal which proceeded to decide a case on the basis of material not aired in the proceedings, and of which the parties thus had neither notice nor opportunity to comment would be acting unfairly. However, as can be seen from the preceding paragraph, that is not what occurred in the present case. 

“The essence of the employer’s case was that whilst the claimant was dismissed because they understood it was an action open to them without consequence during the probationary period, the reasons which led them to that course of conduct were the breakdown in communications which had led to the expensive business stoppage. Notice of this had been given in advance, had been the subject of repeated discussions and emails with the appellant, and had featured in the evidence led at the ET without objection. 

“The possibility that the situation might have amounted to some other substantial reason was specifically aired during submissions, and the cases cited by the appellant confirm that she must have been aware of the possibility that the ET might make a finding that this was the real reason for dismissal, on the same facts.”

Lady Dorrian concluded: “We consider that on these findings the appellant did have sufficient notice of the underlying facts upon which the ET eventually based its reasons, and in particular that the employer’s frustration with her attitude to the contractor was known to her; further, that these facts were known to the employer and featured in the decision to dismiss, even though the employer believed it could simply dismiss because the probationary period had not concluded; and that on the principles enunciated in Abernethy and subsequent cases in which that principle has been refined the ET was entitled to make a finding that the real reason for the dismissal was some other substantial reason, namely the crisis with the contractor and the stoppage.”