The appellant employee (O) appealed against a decision (UKEAT/0506/08/SM) rejecting his claim for unfair dismissal against the respondent local authority. O, who was of Jamaican origin, had been employed by the local authority as a youth worker. He was subject to disciplinary proceedings for two incidents, one of which was an altercation with his manager during which O had been abusive and his manager had used racist language. O was dismissed for gross misconduct in respect of both incidents. He claimed for unfair dismissal and racial discrimination. The employment tribunal found that O's manager had provoked the altercation and had racially discriminated against him, but that his dismissal had been fair and non-discriminatory. On appeal, the Employment Appeal Tribunal held that the tribunal's favourable finding of fact that led to its finding of discrimination could neither be imported back into the disciplinary proceedings so as to render them unfair nor relied on so as to render the subsequent dismissal unfair. O argued that (1) as a matter of law the manager's knowledge that he had provoked the altercation was imputed to the local authority, and the failure by the person conducting the disciplinary proceedings on behalf of the local authority to take that information into account meant that the local authority's decision to dismiss had not been reasonable within the Employment Rights Act 1996 s.98(4)(a); (2) the discriminatory remark was a contributory cause of his dismissal and the dismissal had to be regarded as unfair to enable him to obtain an adequate remedy for that unlawful discrimination.

HELD: (Sedley L.J. dissenting) (1) Section 98 required a tribunal when determining whether a dismissal was fair to consider whether the employer believed that the employee was guilty of conduct justifying dismissal and whether he had reasonable grounds for holding that belief, British Home Stores Ltd v Burchell (1980) ICR 303 EAT applied. Since belief involved a state of mind, it was necessary to determine whose state of mind was "for this purpose" intended to count on behalf of the local authority, Meridian Global Funds Management Asia Ltd v Securities Commission (1995) 2 AC 500 PC (NZ) applied. Under the Act, that was the person deputed to carry out the employer's functions under s.98. In the instant case, the knowledge of O's manager was not to be treated as knowledge of the local authority so that it was imputed to the person conducting the disciplinary proceedings. It was doubtful whether an employee's knowledge of his wrongdoing was to be imputed to his employer, and, more importantly, it would impose a more onerous duty on the local authority than s.98 provided for (see paras 57-59 of judgment). If the investigation into the alleged misconduct was as thorough as could reasonably be expected, it would support a reasonable belief in the findings, whether or not some piece of information had fallen through the net. There was no justification for imputing to that person knowledge that he did not have and which he could not reasonably have obtained (para.60). Section 98(4) did not give the tribunal any scope for applying its own judgment to the facts as it found them when deciding whether the dismissal was unfair, HSBC Bank Plc (formerly Midland Bank Plc) v Madden (2001) 1 All ER 550 CA (Civ Div) followed and London Ambulance Service NHS Trust v Small (2009) EWCA Civ 220, (2009) IRLR 563 applied (paras 62-64). (2) The dismissal was not based on O's racial origin, and he had also been dismissed because of the other incident of gross misconduct. It followed that the act of discrimination had had no effect on the outcome. (3) (Per Sedley L.J.) The relevant state of mind was the totality of information that the employer held when deciding whether to dismiss an employee. In the instant case, it was irrelevant that the person conducting the disciplinary proceedings did not know that O's manager had provoked the altercation; it was what the local authority knew and did that determined whether the dismissal was fair. The question whether that information was to be imputed to the local authority should be remitted to the tribunal.

Appeal dismissed.