Neeraj Handa v The Station Hotel (Newcastle) Ltd
Neeraj Handa v The Station Hotel (Newcastle) Ltd and Others EAT 62
The Facts
Parties: Neeraj Handa (Claimant/Appellant) was an employee and director of The Station Hotel (Newcastle) Limited (First Respondent/Employer). Steven Duncan (Fourth Respondent) was an external HR consultant, and Helen McDougall (Fifth Respondent) was another external HR consultant.
Protected Disclosures: The Claimant alleged financial impropriety in the business, claiming these were protected disclosures.
Grievances and Investigations: Following the Claimant's allegations, several staff members raised grievances against him for bullying and harassment.
The Fourth Respondent, Steven Duncan, was retained to investigate these grievances. He found two substantiated and recommended they proceed to a disciplinary hearing, explicitly stating it was a recommendation.
The Fifth Respondent, Helen McDougall, was then retained to conduct the disciplinary hearing. Her report concluded that the First Respondent would be justified in dismissing the Claimant for gross misconduct.
Claimant's Dismissal: The Claimant was suspended (6 April 2023), removed as a director (13 April 2023), and subsequently dismissed with immediate effect for conduct (17 April 2023) by the First Respondent.
Employment Tribunal Claim: The Claimant brought claims of unfair dismissal (ordinary and whistleblowing) against the First Respondent. He also complained against the Fourth and Fifth Respondents, alleging they subjected him to detrimental treatment (suspension, directorship termination, and dismissal) as agents of the First Respondent due to his protected disclosures.
Held
The Employment Tribunal, at a preliminary hearing in December 2023, decided to strike out the claimant's complaints of detrimental treatment against the Fourth and Fifth Respondents as having no reasonable prospect of success.
The Tribunal's reasoning included:
It was not arguable that an agency relationship existed between the First Respondent and the Fourth or Fifth Respondents.
It concluded that the Fourth and Fifth Respondents were contractors providing services for the benefit of the First Respondent, rather than acting on its behalf or under its authority. The Tribunal found that their recommendations could be accepted or rejected by the First Respondent, indicating their independence.
The Tribunal stated that the concept of agency "requires there to be a fiduciary relationship" and that there was no reasonable prospect of establishing such a relationship.
It dismissed the "joint enterprise" argument put forth by the Claimant, stating it had no place in employment law.
The Tribunal concluded that the factual basis for establishing agency for the Fourth and Fifth Respondents was "so weak that an arguable case could not be established," viewing their roles as performing tasks under contract rather than exercising authority conferred by the First Respondent.
It also noted that if agency had been established, it would not have struck out the claims on the subsidiary point of whether they subjected the claimant to detriment, as the procedure leading to dismissal was "interwoven with the act of dismissal itself".
Principle it Establishes
The case provides observations on the approach to be taken to the application of the common law concept of agency to whistleblowing and discrimination claims in the employment tribunal. Key points include:
Agency vs. Service Provision: The mere fact that one person provides services for the benefit of another under a contract does not, by itself, establish an agency relationship. Something "over and above the mere provision of services under a contract" is required.
Fiduciary Relationship and Authority: While a fiduciary relationship is a consistent feature of agency, and the power to affect the principal's legal relations with third parties is a common hallmark, these are not necessary conditions in every type of case.
Agency in Employment Context: In the context of an employment relationship, the material issue for determining if an external provider is an agent is whether the services they are contracted to provide relate to a significant aspect of the employment relationship.
Someone retained to carry out an employment-related procedure, such as a grievance or disciplinary investigation, could be regarded as the employer’s agent in the course of carrying out those functions. The fact that they act independently in their findings does not necessarily preclude an agency relationship for the purpose of their remit.
No "Chain of Causation" for Agency Liability: The fact that an employer heavily relies on an agent's report or investigation as a "material cause" in a decision (like dismissal) does not, by itself, create agency liability for the ultimate decision itself if the agent did not actually make or implement that decision. The agent is liable for actions done "in the course of carrying out the functions he is authorised to do," not for subsequent decisions made by the principal.
Comment
The Employment Appeal Tribunal (EAT) dismissed the Claimant's appeal, upholding the strike-out of the claims against the Fourth and Fifth Respondents, but with some crucial clarifications:
EAT Identified Tribunal Errors on Agency Concept: The EAT found that the Employment Tribunal did err in concluding that it was not arguable that the Fourth and Fifth Respondents were acting as agents of the First Respondent in respect of carrying out their respective remits (the grievance investigation and disciplinary hearing). The EAT clarified that being an independent contractor or lacking the power to affect third-party legal relations does not automatically preclude an agency relationship, especially when the services relate to a "significant aspect of the employment relationship".
No Agency for Dismissal Decision Itself: However, despite these errors, the EAT affirmed the ultimate strike-out because the Claimant's specific claims against the Fourth and Fifth Respondents were for co-liability for the dismissal (and other detriments, which were abandoned on appeal).
The EAT held that there was no arguable doctrinal basis for concluding that the Fourth or Fifth Respondents were co-liable for the dismissal itself as agents.
Arguments based on a "chain of causation" (e.g., the employer heavily relying on their reports for the dismissal decision) or "collusive control" were deemed insufficient to establish agency liability for the dismissal itself, as the actual decision to dismiss was taken and implemented by the First Respondent (via the Third Respondent), not by the HR consultants.
Pleading Importance: The EAT noted that the Claimant had not pleaded any detrimental treatment by the Fourth and Fifth Respondents in relation to the conduct of their respective processes or the contents of their reports. The specific detriments pleaded were limited to the suspension, directorship termination, and dismissal.
Final Outcome: The appeal was dismissed because, while the Tribunal's reasoning on the general concept of agency for carrying out HR functions might have been flawed, its ultimate conclusion that there was no arguable basis for holding the HR consultants co-liable for the dismissal itself, through agency, was correct.
