There was some encouraging news for employers this month with the Employment Appeal Tribunal (EAT) handing down its decision in the case of Nicolson Highlandwear Ltd v Nicolson UKEATS/0058/09/BI.
Nicolson Highlandwear Ltd v Nicolson
In short, this case concerned an appeal to the EAT by Nicolson Highlandwear Ltd (NHL) on the issue of whether the Claimant, Mr Nicolson, should be ordered to pay NHL’s costs which it incurred defending an Employment Tribunal claim brought by Mr Nicolson.
NHL’s principal activity was the retail sale of highland wear. Mr Nicolson was originally a director of NHL, however, following financial difficulties became employed as a retail manager. Thereafter, the remaining director made several requests for access to the accounts of NHL which Mr Nicolson resisted. Eventually it transpired that the company was in financial chaos with dual invoicing and substantial cash discrepancies. Even worse, Mr Nicolson had been running a separate business from NHL’s premises which he had been diverting NHL’s customers to.
The director of NHL concluded that Mr Nicolson had acted fraudulently and dismissed him.
At the time, the old statutory dismissal procedures applied and, as NHL had failed to follow the correct procedure, the Employment Tribunal found that it was an automatically unfair dismissal. However, the Tribunal found that Mr Nicolson’s conduct led directly to his dismissal and awarded him no compensation.
NHL made an application for Mr Nicolson to be ordered to pay their costs on the basis that he had been unreasonable in bringing a claim for unfair dismissal. This was rejected by the Tribunal and NHL appealed to the EAT which allowed the appeal.
The EAT in its judgment commented that it was unreasonable for a claimant to bring a claim in which he had been dishonest and had contributed significantly to his own dismissal. The EAT rejected Mr Nicolson’s argument that it was reasonable to bring the claim merely for a declaration that he had been unfairly dismissed.
The judgment offers some good news for employers who, given the general position in Employment Tribunal cases of each side bearing their own costs, often have to incur legal fees defending Employment Tribunal claims. In light of this case, employers may potentially be able to recover legal fees they have incurred defending technically correct yet otherwise meritless cases brought by aggrieved former employees.