Can ‘Conduct’ be a fair reason for dismissal if the employee was not at fault?
In the case of JP Morgan v Ktorza, a bank worker was dismissed for a working practice which he said he had not been told not to do i.e. he was not culpable for his actions.
Mr Ktorza worked in the sales team in JP Morgan’s foreign exchange desk. The desk also had a trader team, which Mr Ktorza worked closely with.
He was dismissed for a practice known as “short-filling”. This practice had previously been common and accepted amongst the sales team. However, JP Morgan maintained that they had delivered training to the sales team, which indicated that only the trading team were permitted to “short-fill”. Mr Ktorza denied this. There was no suggestion that Mr Ktorza was dishonest or seeking personal gain. The Employment Tribunal (ET) decided that Mr Ktorza’s dismissal was unfair on the grounds that they did not consider his conduct “culpable”.
In determining whether the dismissal of an employee is fair or unfair, it is for the employer to show the principal reason for the dismissal is a potentially fair reason (s.98(i) and (2) Employment Rights Act). Conduct is a potentially fair reason. It is then for the court to consider whether the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee (s.98(4)).
In this case, the ET had found that the dismissal was unfair. However, the EAT emphasised that an employer is not required to show that the conduct in question is actually culpable. The issue of culpability and fairness comes in at the next stage (s.98(4)), when determining whether the employer acted reasonably in treating the conduct as sufficient reason for dismissal.