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The Dismissal of Employees Under the Unfair Dismissal Law in the United Kingdom and Labor Arbitration Proceedings in the United

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The Dismissal of Employees Under the Unfair Dismissal Law in the United Kingdom and Labor Arbitration Proceedings in the United Cornell International Law Journal Volume 16 Article 1 Issue 1 Winter 1983 The Dismissal of Employees under the Unfair Dismissal Law in the United Kingdom and Labor Arbitration Proceedings in the United States: The Parameters of Reasonableness and Just Cause Barry I. Mordsley Steven R. Wall Follow this and additional works at: http://scholarship.law.cornell.edu/cilj Part of the Law Commons Recommended Citation Mordsley, Barry I. and Wall, Steven R. (1983) "The Dismissal of Employees under the Unfair Dismissal Law in the United Kingdom and Labor Arbitration Proceedings in the United States: The aP rameters of Reasonableness and Just Cause," Cornell International Law Journal: Vol. 16: Iss. 1, Article 1. Available at: http://scholarship.law.cornell.edu/cilj/vol16/iss1/1 This Article is brought to you for free and open access by Scholarship@Cornell Law: A Digital Repository. It has been accepted for inclusion in Cornell International Law Journal by an authorized administrator of Scholarship@Cornell Law: A Digital Repository. For more information, please contact [email protected]. CORNELL INTERNATIONAL LAW JOURNAL Volume 16 Winter 1983 Number 1 ARTICLES THE DISMISSAL OF EMPLOYEES UNDER THE UNFAIR DISMISSAL LAW IN THE UNITED KINGDOM AND LABOR ARBITRATION PROCEEDINGS IN THE UNITED STATES: THE PARAMETERS OF REASONABLENESS AND JUST CAUSE Barry I Mordsley* and Steven A Wall** INTRODUCTION This article examines practice under British law and American labor arbitration agreements relating to the dismissal of an employee * Principal Lecturer in the Faculty of Law, City of London Polytechnic, England; Visiting Scholar and Lecturer at the Cornell Law School, 1981-82. L.L.B. (Hons.) 1969, London University (London School of Economics and Political Science); L.L.M. (Hons.) 1972, London University (London School of Economics and Political Science). ** Associate, Morgan, Lewis & Bockius, Philadelphia, Pennsylvania; J.D. 1983, School of Law, Cornell University; B.S. 1979, School of Industrial and Labor Relations, Cornell University. Mr. Wall prepared this Article while a student at the Cornell Law School. 2 CORNELL INTERNATIONAL LAW JOURNAL [Vol. 16:1 for misconduct or incapability. The article addresses the question of when the dismissal of an employee for misconduct or incapability is appropriate. The discussion focuses upon three major concerns in the law on unfair dismissal: (1) a comparison of the British require- ment of "reasonableness" in dismissal cases with the American arbi- tration requirement that there be a "just cause" for dismissal; (2) a comparison of the procedures followed and factors used to evaluate the appropriateness of an employer's decision to discipline and to discharge; and (3) a comparison of the authority afforded British tribunals' and American arbitrators to modify an employer's deci- sion to discharge. After examining these issues in some detail, this article recom- mends that the United States adopt a comprehensive statute permit- ting all employees, in a procedurally fair and uniform manner, to challenge the propriety of their dismissals. In formulating such a statute, legislators in the United States should critically evaluate the experiences of the British under their unfair dismissal statute. In Great Britain, the adherence to an objective standard of reasonable- ness and, generally, a greater concern with the substantive fairness of a discharge, would rectify many of the inadequacies now associated with the operation of the unfair dismissal statute. 1. Industrial tribunals, under the Employment Protection (Consolidation) Act, 1978, provide a first-tier review of the fairness of an employer's decision to discipline. See Employment Protection (Consolidation) Act, 1978, ch. 44, § 67 [hereinafter cited as EPCA]. Pursuant to regulations issued by the Secretary of State for Employment, an industrial tribunal consists of three persons, a legal chairperson and two laypersons. Both management and labor submit nominations of the laypersons who sit on an indus- trial tribunal, and there will be a layperson representative from both sides at the hear- ings, except in exceptional cases. See EPCA, 1978, ch. 44, § 128. The members of the tribunals, of course, have an expertise in industrial relations. Parliament apparently pre- sumed that a familiarity with problems in labor relations would be more likely to satisfy the parties and would provide "a more competent body to review the employer's discre- tion." Elias, Fairnessin Unfair DismissaL" Trends and Tensions, 10 INDUS. L.J. 201, 202 (1981). For a discussion of the origins of the English tribunal system, see C. GRUNFELD, THE LAW OF REDUNDANCY 258-63 (1971); and ROYAL COMMISSION ON TRADE UNIONS AND EMPLOYERS' ASSOCIATIONS 1965-1968, REPORT, CMB, 3623 (1968) [hereinafter cited as DoNovAN REPORT]. The Employment Appeal Tribunal [hereinafter referred to as EAT] has jurisdiction to review questions of law "arising from any decision of, or arising in any proceeding before, an industrial tribunal." EPCA, 1978, ch. 44, § 136(1). The EAT consists of a High Court judge and laypersons with "special knowledge or experience in industrial relations, either as representatives of employers or as representatives of workers." EPCA, 1978, ch. 44, § 135(3). The role of the EAT in unfair dismissal cases is largely a function of the willingness of the EAT to intervene insofar as "fairness is most accurately described as a mixed question of law and fact." Elias, supra at 203. 19831 REASONA4BLENESS AND JUST CA USE I HISTORICAL BACKGROUND A. THE DEVELOPMENT OF THE BRITISH STATUTORY LAW REGULATING UNFAIR DISMISSALS The British legislators formulated their unfair dismissal legisla- tion against the background of the industrial strife of the 1960's. The large number of employee lay-offs occurring in Great Britain during the early 1960's led to the passage of the Redundancy Payment Act (RPA) in 1965. 2 The RPA attempted to attenuate the industrial con- flict associated with those massive lay-offs by giving a discharged employee a lump-sum payment as compensation for the loss of his job. Industrial strife in Great Britain continued despite the RPA, however, with some 2,196 unofficial strikes reported between 1964 and 1966.3 Parliament established the Royal Commission on Trade Unions and Employers' Associations to discern the causes of this pronounced increase in industrial strife, including the causes of the dramatic increase in the number of unofficial strikes.4 The Commis- sion, commenting on the increase in the number of strikes, noted that a "right to secure a speedy and impartial decision on the justifi- cation for a dismissal might have averted many of these [work] stop- pages."' 5 The Commission also recommended the enactment of nationwide legislation providing employees with protection from unjust dismissals. 6 Such legislation, the Commission concluded, should avoid the harshness that is characteristic of the common law of wrongful dismissal, while providing better protection for employ- ees and promoting "the 'rule of law' in what was increasingly seen to 2. The EPCA incorporated the redundancy provisions of the 1965 Act. See EPCA, 1978, ch. 44, § 81. Under the 1978 Act, redundancy exists when an employee loses work because the employer has completely closed down his business, a particular aspect thereof, or when work of a particular kind is no longer necessary to the production pro- cess. Perhaps the most common example of redundancy occurs when new machinery replaces a worker in the production process. For a discussion of the British law on redundancy, see C. GRUNFELD, supra note I. 3. See DONOVAN REPORT, supra note 1, at 101. See also Collins, CapitalistDisci- pline and CorporationistLaw-Part , 11 INDuS. L.J. 78, 87 (1982). 4. See DONovAN REPORT, supra note 1, at 101. 5. Id at 143. 6. Id at 146. The Commission members carefully weighed the comparative advan- tages and disadvantages of legislative action. They concluded that legislative action would provide employers with an incentive "to see that dismissals are carried out under a proper and orderly procedure." Id at 143. Most importantly, the Commission members observed that legislative action had "the immediate advantage of making possible an immediate raising of standards to a much more satisfactory level." Id Finally, the Commission noted that legislation would provide employees with a broader range of remedies and would provide protection for employees in industries where voluntary methods of resolving industrial dispute currently are ineffective (in smaller businesses and in poorly organized industries, for example). Id at 145-46. 4 CORNELL INTERNATIONAL LAW JOURNAL [Vol. 16:1 be an embattled field where the law had an inadequate presence."'7 In response to the recommendations of the Commission, the Industrial Relations Act, 1971, included provisions regulating unfair dismissal. The Trade Union Labor Relations Act, 1974, repealed many of the provisions of the 1971 Act, but retained the provisions relating to unfair dismissal. The Employment Protection (Consoli- dation) Act, 1978, (EPCA) currently embodies the 1974 provisions relating to unfair dismissal.8 Section 67 of the EPCA provides that any employee protected by the Act may present a complaint to an industrial tribunal within three months of his termination date. At a hearing on the complaint, the tribunal will inquire into the "fair- ness" of the dismissal. A determination of "fairness" involves two inquiries. First, the employer must establish a valid reason for the dismissal.
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