Employment Law Digest September 2025 – Case law update

Automatic unfair dismissal: whistleblowing

In Argence-Lafon v Ark Syndicate Management:

• The claimant, Mr Argence-Lafon, was a senior underwriter who transferred to Ark Syndicate Management (“Ark”) under TUPE in May 2018.
• He raised concerns about an insurance claim for loss submitted for an “underground blowout” related to oil drilling by an Italian company, ENI in 2019. He did not explicitly allege that it was a fraudulent claim but this was implicit in what he said.
• Ark investigated the issues raised by the claimant and found no fraud. Three drilling experts all agreed that it was probable or likely that a cross-flow had occurred and there had been an underground blowout. Zurich, the lead insurer, and the Lloyd’s lead were satisfied that they should pay out on that basis. However, the claimant, who was not a drilling engineer or an expert in the area, continued to voice concerns about the claim.
• In 2021, the claimant was considerably short of meeting his performance objectives and was told he would be the subject of a performance improvement plan (PIP). The claimant did not engage with the PIP process and continued to assert that the ENI claim was fraudulent. He asserted that the objectives he had been set and the subsequent PIP was punishment for his disclosure of the fraud. He argued it was detrimental treatment for making protected disclosures (that ENI was committing a criminal offence by making the loss claim and Ark would probably be in breach of its legal obligations if it paid the claim.)
• Mr Argence-Lafon was dismissed in August 2021 following a disciplinary hearing. Ark stated that his dismissal was due to a “complete breakdown in trust and confidence” referring to him continuing to maintain that there had been a fraud and that he alleged two Ark managers had been complicit in it and also because there was considered to be no way the PIP could realistically proceed in the absence of any measurable objectives being agreed, the claimant continuing to deny there were any issues with his performance and maintaining that the process was punishment for his disclosure of the fraud.
• The claimant’s appeal against his dismissal was heard by Ark and dismissed.

Mr Argence-Lafon brought a claim to the Employment Tribunal (ET) and claimed that the PIP was a detriment and his dismissal automatically unfair.

The ET found that:

• Mr Argence-Lafon’s initial statements about the potential fraud were protected disclosures. However, his statements following the investigation were not protected as it was not reasonable to continue to hold this belief in light of a full investigation (including two independent loss adjusters) having found no fraud.
• His protected disclosures were not the reason for the performance targets. Frustration with the claimant’s conduct after he made the disclosures – his unwillingness to accept the conclusions of the experts and his continuing to challenge the assessments – played a part in their setting the targets at the level which they did. That conduct followed on from the making of the protected disclosure, but it was distinct and separate from it. Therefore, Ark did not subject the claimant to that detriment because he had made protected disclosures.
• The reason for his dismissal was not the making of the protected disclosures.
• There were two main reasons for the dismissal – the Claimant had failed to engage in the PIP and it was unlikely that he would ever do so and he had made allegations that his managers had been complicit in fraud. Ark considered that the latter had led to a breakdown of trust and confidence. The former is a reason relating to conduct, the latter could be either a reason relating to conduct or some other substantial reason of a kind such as to justify dismissal.
• However, the ET found that the dismissal was unfair: Prior to the decision to dismiss, there had been no investigation into whether it was appropriate or reasonable to set those particular objectives in a PIP process in all the circumstances. If this had been investigated, it would have revealed that the claimant had not been given personal objectives like that before (in nearly 17 years as an underwriter), he had not had regular appraisals, it had not been made clear to him what targets he was expected to achieve, it had not been drawn to his attention that what he was achieving was significantly below what was expected, the targets set expected him immediately to double his premium income every month and to increase his submission and risk count to figures that were 7.5 and 5.5 times higher than what he had produced before. Ark failed to conduct such investigation as was reasonable and, had it done so, it might have come to a different conclusion.
• Further, when the claimant was invited to the disciplinary hearing, he was told the purpose of the hearing was to consider whether he should be disciplined for failing to engage in the PIP process. He was not told that it was going to consider whether there had been a breakdown of trust and confidence because of the allegation that his managers had been complicit in the fraud. The claimant should have been given advance notice that that was going to be considered at the hearing and that it might lead to his dismissal.

Mr Argence-Lafon appealed to the Employment Appeal Tribunal (EAT) who found that:

• The ET did not err in law in its analysis of protected disclosures, or in holding that the two detriments were not done on the grounds that the claimant made protected disclosures and that the reason, or principal reason, for dismissal was not the making of the protected disclosures.
• The ET failed to analyse the appeal process carried out by Ark when considering the fairness of the claimant’s dismissal. Ark pleaded that the process, including the appeal, was fair. It is arguable that the appeal process could have remedied the failings at the initial stage, particularly the lack of advance notice that Ark considered that there had been a breakdown in trust and confidence. The claimant was arguably able to address this point in the appeal. That issue was to be sent back to the ET to be reconsidered.

Unfair dismissal – reasonableness of the investigation

In Andrew & Kerr v Scottish Ministers:

• The claimants were employed by the Scottish Prison Service (“SPS”) as prisoner management officers. Following an allegation that they had used inappropriate force on a prisoner, SPS carried out an investigation. Disciplinary hearings were convened. The allegations were subsequently established and the claimants were summarily dismissed in March 2023.
• The claimants each brought claims for unfair dismissal.
• Following a hearing in March 2024, the employment tribunal (ET) dismissed the claims.

The claimants appealed to the Employment Appeal Tribunal (EAT). They argued that:

• The respondent had not met all of the legal test on unfair dismissal: the requirement to have reasonable grounds to sustain a belief in misconduct and having carried out as much of an investigation as was reasonable in all the circumstances of the case.
• The ET formed the view that matters not put for consideration during the respondent’s internal disciplinary proceedings could not be material to the reasonableness of the decisions to dismiss. The claimants argued that was too narrow an approach.
• By refusing to consider matters out with the disciplinary proceedings, the ET unnecessarily restricted its assessment of the reasonableness of the investigation to matters that the respondent had in front of it at the time. The ET could not critically and objectively assess whether the decision to dismiss was reasonable in all of the circumstances.
• Had the ET followed the correct approach, it would have considered whether it was reasonable for the respondent to decide not to (i) obtain a medical report to verify the alleged injuries to the prisoner in question, when the prisoner had consented to the respondent accessing his medical records; (ii) consider whether the prisoner was intoxicated and the impact that could have upon his physical abilities, mental health or ability to clearly recollect an incident; and (iii) examine whether the prisoner had any motive to lie.

The appeals were dismissed by the EAT:

• The decision of an ET must be read fairly and as a whole, without focusing merely on individual phrases or passages in isolation, and without being hypercritical.
• Much of what was relied upon by the claimants in respect of the unreasonable extent of the investigation had not been put to the respondent prior to their dismissals, or at appeal. The ET did not make an error in concluding that matters not put for consideration during the respondent’s internal proceedings could not be material to the reasonableness of the decision to dismiss. It was for the tribunal to consider the reasonableness of that decision in the particular circumstances of the case.
• To say that each line of defence by the employee must be investigated unless it is manifestly false or unarguable is to adopt too narrow an approach. The investigation should be looked at as a whole when assessing the question of reasonableness. As part of the process of investigation, the employer must consider any defences advanced by the employee, but whether and to what extent it is necessary to carry out specific inquiry into them will depend on the circumstances as a whole.
• The ET gave careful regard to the circumstances of the investigation and formed the conclusion that the extent of the investigation was within the reasonable band. The ET reached findings it was entitled to reach on the evidence.

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Take Me There

Employment status – the right of substitution

In BCA Logistics Ltd v Parker:

• The claimants were engaged to work as drivers to undertake vehicle collection, inspection, delivery and transport services for customers of BCA Logistics.
• At the time of the Employment Tribunal (ET) hearing, there were 422 claimants. They were engaged as self-employed contractors.
• They brought claims seeking to establish that they were in fact workers and were therefore entitled to national minimum wage and holiday pay.
• The standard-form contract contained a term which permitted the drivers to make use of a substitute. A central issue in the case was whether this substitution clause was “genuine”. It was not in dispute that an unfettered right to substitution meant that a contractor could not be a “worker”, and it was similarly not in dispute that a right to substitution contained in a written contract would carry no weight if it disguised the reality of the situation. Further, it was not in dispute that the ET can take into account evidence of whether and how far any drivers had, in practice, enquired about substitution, how BCA Logistics had responded to any such enquiries, whether they had made any arrangements to deal with substitution, how far it would have been practicable for substitution to take place, and whether, in reality, they would have been willing to accept the risks inherent in substitution in the circumstances of its business.

The ET decided that the substitution clause was not “genuine” and that the other aspects of the contract between the parties indicated that the claimants were “workers”. The ET focused on seven points:

• The claimants’ evidence about substitution was much more credible than that provided by BCA Logistics.
• There was no plan or process to deal with the practical problems that would arise if drivers used a substitute, including difficulties relating to trade plates, insurance, data protection and equipment. The ET said: “What became obvious at the hearing was that the respondent had given little thought as to how these difficulties could be overcome. Even if the issues … were surmountable there was no plan or process in place for what would happen in practice. This contributed to my very strong impression that nobody seriously expected a substitute to be used.”
• There was no training or guidance for drivers on how to engage and use a substitute.
• No training was offered to substitutes. The ET considered the fact that the respondent went to the time and expense of training self-employed drivers over a 4-day course, produced lengthy drivers manuals and ongoing updates and audits and that it was unrealistic for BCA Logistics to suggest it would be content for a substitute to be used without the respondent training them at all.
• It was unrealistic to think that substitutes could do inspections, or that BCA Logistics’ customers would be content for a possibly untrained substitute to do this work.
• It was unrealistic to think that BCA Logistics would be prepared to risk handing the customers’ vehicles over to someone they do not know.
• In just over 25 years, no driver had ever made use of a substitute.

BCA Logistics appealed to the Employment Appeal Tribunal (EAT) contending that the ET had erred in relation to two matters relating to the evidence, and that these errors had infected the decision on substitution, such that it should be set aside and the case sent back to the ET for redetermination.

The first alleged error was that the ET had referred in its judgment to a “striking gap” in BCA Logistics’ witness evidence in that it had not called any current or recent drivers as witnesses. They contended that the ET erred in law in considering that it was for them to call current or recent drivers as witnesses and had thereby placed a false burden on BCA Logistics, and/or that the ET erred in law by drawing adverse inferences or conclusions from their failure to call current or recent drivers as witnesses.

This ground of appeal was dismissed on the basis that, when the judgment was read as a whole, it was clear that the ET had not drawn an adverse inference against BCA Logistics in this regard, the ET had not treated the failure to call witnesses as a factor in its decision, the ET had not placed a false burden on BCA Logistics, and there was no misdirection of law. The EAT held that, even if the “striking gap” observation had been an error, it was not material and it did not amount to an error of law.

The second ground of appeal was that the ET erred in law by discounting evidence of interactions about substitutions on the basis that the evidence had been obtained by BCA Logistics with the litigation in view. This ground was also dismissed. The ET was entitled to place little weight on the evidence of these interactions, for the reasons given in the judgment, which included that the interactions relied upon by BCA Logistics all took place after the claims had commenced. There was no error of law: rather, BCA Logistics was seeking to invite the EAT to substitute its view of the weight to be placed upon this evidence for that of the ET.