Is Culpability Relevant in a Conduct Dismissal?

In JP Morgan Securities v Ktorza [2017] UKEAT 0311-16-1105 the Employment Appeal Tribunal (EAT) considered whether there was a requirement for an employer to establish that an employee’s conduct was culpable when determining whether the reason for a dismissal was conduct.

Mr Ktorza was a senior employee who worked on JP Morgan’s foreign exchange desk. He carried out an activity called “short-filling” (i.e., only partially carrying out) trades for clients, allegedly in contravention of JP Morgan’s specific instructions not to do so. He was dismissed and contended that his dismissal was unfair as he had not been aware of the instruction not to short-fill, which had only recently been introduced. His claim for unfair dismissal was upheld by the Employment Tribunal. JP Morgan appealed.

The EAT allowed the appeal. It highlighted that in unfair dismissal cases, it was for the employer to establish that the reason for dismissal was one of the five potentially fair reasons prescribed by law (which include conduct). When considering the reason for the dismissal, the Employment Tribunal had been wrong to find that the employer was required to establish that the employee’s conduct was culpable and that the employee must have been aware that their conduct was culpable; the EAT confirmed that there were no such requirements. The EAT further clarified that once the reason for the dismissal has been established, it is then for the Employment Tribunal to decide whether the employer acted reasonably in treating the reason as sufficient for dismissal, taking into account all of the circumstances of the case (which could include the employee’s culpability). The EAT remitted the case to a freshly constituted Employment Tribunal to consider.