Introduction

Kelly v. PGA European Tour ([2021] EWCA Civ 559) is a pivotal decision from the England and Wales Court of Appeal (Civil Division) that addresses the complexities surrounding orders for re-engagement in cases of unfair dismissal. This case elucidates the proper approach courts must adopt when determining the practicability of re-engaging an unfairly dismissed employee, especially under circumstances questioning the employee's capability and integrity.

The appellant, Scott Kelly, served as the Group Marketing Director for the PGA European Tour for 26 years before his dismissal in 2015. Kelly alleged that his dismissal was unfair and discriminatory based on his age. Although the Employment Tribunal acknowledged the unfair dismissal, it dismissed the age discrimination claim and ordered Kelly's re-engagement in a vacant role. The Employment Appeal Tribunal (EAT) subsequently overturned this order, leading to the significant appellate proceedings.

Summary of the Judgment

The Court of Appeal upheld the decision of the EAT to set aside the Employment Tribunal's order for re-engagement. The key findings include:

• The Employment Tribunal erred in ordering re-engagement to the role of Commercial Director, China, as Kelly did not meet essential job requirements, notably proficiency in Mandarin.
• The Tribunal failed to appropriately consider whether re-engagement was practicable, given the respondent's genuine and rational belief regarding Kelly's capability and the breach of trust resulting from his secret recordings.
• Section 116(5) of the Employment Rights Act 1996 was correctly interpreted by the EAT, which stated that tribunals need not consider already filled positions when ordering re-engagement.
• The Court emphasized that findings of fact at the liability stage must inform the remedies stage, preventing tribunals from substituting their views for those established during liability determinations.

Ultimately, the appellant's appeal was dismissed, reinforcing the standards and boundaries within which tribunals must operate when considering re-engagement orders.

Analysis

Precedents Cited

The judgment extensively references several key cases that have shaped the landscape of unfair dismissal remedies:

• Farren v United Lincolnshire NHS Foundation Trust [2017] I.C.R. 513: Established that re-engagement is only practicable when an employer does not hold a genuine and rational belief regarding the employee's capability or integrity.
• Polkey v AE Dayton Services Ltd [1988] AC 344: Introduced the concept of a Polkey reduction, where compensation for unfair dismissal may be reduced if the dismissal would have occurred regardless of the unfair procedure.
• Great Ormond Street Hospital v Patel [2007] UKEAT 0085/07/LA: Emphasized that findings at the liability stage must be considered during the remedies stage, adhering to principles of issue estoppel.
• Port of London Authority v Payne [1994] ICR 555 and Lincolnshire County Council v Lupton [2016] I.R.L.R 576: Affirmed that tribunals must not order employers to create unsuitable roles for employees as a remedy for unfair dismissal.

Legal Reasoning

The court's reasoning centers on the interpretation of section 116 of the Employment Rights Act 1996, which governs the ordering of reinstatement and re-engagement as remedies for unfair dismissal. The critical points include:

• Practicability of Re-Engagement: Tribunals must assess whether it is practicable to re-engage an employee, considering the employer's genuine and rational belief about the employee's ability or integrity.
• Consideration of Filled Positions: Section 116(5) explicitly states that tribunals need not consider positions that have been filled prior to the remedies hearing, reinforcing that re-engagement orders should not compel employers to recreate roles that are no longer vacant or have been suitably filled.
• Issue Estoppel: Findings of fact at the liability stage regarding the reasons for dismissal must inform, but not entirely bind, the remedies stage. However, substantively relevant findings, such as beliefs about an employee's capability, must be honored to prevent tribunals from overruling factual determinations without sound legal basis.
• Integrity and Trust: Conduct undermining trust and confidence, such as secretly recording meetings, can render re-engagement impracticable if the employer's belief about the employee's integrity is genuinely held and rationally based.

Impact

This judgment sets a clear precedent on the boundaries of re-engagement orders in unfair dismissal cases:

• Strengthened Standards for Practicability: Employers can more effectively argue against re-engagement orders by demonstrating a genuine, rational basis for doubts about an employee’s capability or integrity.
• Clear Interpretation of Legislative Provisions: Section 116(5) has been unequivocally interpreted to exclude consideration of already filled positions, preventing tribunals from overstepping by mandating re-engagement into roles that are obsolete or have been filled.
• Emphasis on Factual Consistency: Tribunals are reinforced to align their remedies with findings of fact established during liability hearings, promoting consistency and fairness in employment law adjudications.
• Guidance for Future Cases: Future tribunals are guided to meticulously assess the practicability of re-engagement, considering all relevant factors without infringing upon established factual findings.

Complex Concepts Simplified

Re-Engagement

Re-engagement is a legal remedy wherein an unfairly dismissed employee is offered a new position within the same organization or a successor organization. This new role should be comparable or suitably different, aligning with the employee's skills and the organization's needs.

Practicability

Practicability refers to the feasibility of the employer complying with a re-engagement order. It assesses whether re-engagement can be effectively and successfully implemented, considering the current organizational structure, available roles, and any concerns about the employee's ability or trustworthiness.

Trust and Confidence

In employment law, trust and confidence represent the foundational relationship between employer and employee. If an employer loses trust in an employee's integrity or capability, it may deem re-engagement impracticable, thereby influencing the tribunal's decision on remedies.

Issue Estoppel

Issue estoppel prevents parties from re-litigating issues that have already been conclusively determined in previous proceedings. In this case, factual determinations made during the liability hearing regarding the reasons for dismissal must inform, but not unilaterally determine, the remedies hearing.

Polkey Reduction

The Polkey reduction allows for the dismissal compensation to be reduced if it can be shown that the employment loss would have occurred even if the employer had followed a fair procedure. It acknowledges that procedural unfairness can sometimes be interlinked with the substantive reasons for dismissal.

Conclusion

Kelly v. PGA European Tour serves as a clarifying beacon in the realm of unfair dismissal remedies, particularly concerning re-engagement orders. The Court of Appeal has reinforced the necessity for tribunals to rigorously assess the practicability of re-engagement, ensuring that such orders are both feasible and justifiable based on the employer's legitimate concerns about an employee's capability or integrity.

Key takeaways include:

• Re-engagement orders must respect the practical realities of organizational roles and should not compel employers to recreate or modify positions inadequately.
• Tribunals are bound to honor established factual findings, especially those concerning the reasons for dismissal, when determining remedies.
• The integrity and trust underlying the employer-employee relationship are pivotal in assessing the viability of re-engagement.
• Legislative provisions, such as section 116 of the Employment Rights Act 1996, provide clear boundaries for tribunals, preventing overreach in remedy determinations.

This judgment not only clarifies existing legal standards but also sets a precedent that will guide future unfair dismissal cases, ensuring that remedies like re-engagement are applied judiciously and within the bounds of practicability and fairness.