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“But I was just doing what I was told…” – Unfair Dismissal & the Nuremberg Defence

“But I was just doing what I was told…” – Unfair Dismissal & the Nuremberg Defence

The reporting of the unfair dismissal claims brought by former Citibank ForEx traders following their dismissal by the bank has raised an interesting issue, which may become relevant if there are potential investigations into the recent scandal which has hit the car industry.

According to the reports of the Employment Tribunal proceedings, a key aspect of the claims is that the individuals were just doing what their managers asked/told them to do.

This raises the interesting issue of whether the so called “Nuremberg Defence” will result in the dismissals being held to be unfair. The same issue could come up if Volkswagen employees in the UK are dismissed as a result of involvement in the emissions rigging that has recently been exposed. The key question is:

Can an individual who is dismissed for engaging in activity that is unlawful or a regulatory breach argue that he or she has been unfairly dismissed because he or she simply followed instructions from management to engage in that activity?

By way of reminder, under s98 of the Employment Rights Act ("ERA") there are five fair reasons for dismissal (i) misconduct; (ii) capability; (iii) redundancy; (iv) illegality; and (v) some other substantial reason. If there is a potentially fair reason to dismiss an employee, the dismissal will only be fair if the sanction of dismissal is reasonable in the circumstances and the employer follows a fair process in effecting the dismissal.

The starting point is the test in section 98(4) ERA of whether the employer acted reasonably. This is an objective test and it is for the employment tribunal to decide whether the employer's decision to dismiss the employee fell within the range of reasonable responses that a reasonable employer in those circumstances and in that business might have adopted. Importantly:

  • the tribunal must not "substitute its view" for that of the employer; and

  • the tribunal must assess the reasonableness of the employer's conduct, not the level of injustice to the employee.

This is an area where the particular circumstances of the case will be critical. On the one hand, if an employee has done something that is obviously illegal or in breach of relevant regulatory requirements simply because his boss told him to (and without questioning his boss or other senior employees), the dismissal is likely to be fair.

On the other hand, take the example of a junior employee who is asked to do something that she feels is wrong, but which she did not know was actually illegal and which was not obviously illegal. If the employee has raised her concerns, but her boss assures her that the course of action is acceptable, it is likely to be reasonable for the employee to defer to her boss's greater knowledge and experience. In this scenario, it is likely to be unfair to dismiss the employee. This will be especially the case if the employee also raised her concerns with another superior member of staff or a specialist department such as Legal or Compliance.

Another potential scenario is where an employee knows that she is being asked to do something illegal and she raises this concern to her boss, but her boss tells her that if she does not follow his instructions she will be dismissed. In this situation, it is far less clear whether subsequently dismissing the junior employee for doing what she was told would be fair. The employee knows she is doing something illegal, but she has raised this and has been threatened with dismissal if she does not do as she has been told. On balance, dismissing the employee is likely to be unfair, although the employee would be in a better position if she had also raised her concerns with another more senior employee or a specialist department such as Legal or Compliance who had also told her just to do as her boss had told her.

Employers may face the situation where employees are providing different versions of what happened. For example, a more junior employee may allege that he raised concerns but was forced by his manager to carry out her instructions, whereas the manager may state that the employer never raised any concerns. In this scenario, the case of Monie v Coral Racing Ltd [1981] ICR 109 is instructive. In that case, it was decided that if an employer, despite carrying out a full investigation, cannot identify the particular culprit(s) who is/are responsible for the misconduct, it may be reasonable to dismiss all those who could have been responsible.

This is a very difficult position for an employer. A balance needs to be struck between taking firm action in relation to staff who have committed serious acts of misconduct and ensuring that employees are treated fairly. In high profile cases like the ForEx scandal, adverse publicity can easily cause an employer to lean more towards taking firm action, even if there is the risk of facing claims from a dismissed employee.

However, it is important for the employer to bear in mind that, if the employee has raised concerns about the illegality of instructions, any employment tribunal claim is likely to include a whistleblowing claim, which will remove the cap on unfair dismissal compensation. This can result in the employer facing significant potential legal liabilities if a number of employees are dismissed and/or the employees who are dismissed are high earners. It may also mean that the employer could be in the employment tribunal very quickly if the employee, having alleged whistleblowing, applies for an interim hearing within seven days. Notwithstanding the potential claims an individual may have, in this type of case any award is likely to be reduced to some degree on the basis that the employee has contributed to his/her dismissal.