External HR consultants not liable for employer’s decision to dismiss

The Employment Appeal Tribunal (EAT) decision in Handa v Station Hotel (Newcastle) Ltd and Others offers valuable insights into the role and liability of external HR consultants in employment disputes, particularly concerning whistleblowing claims.

Case Overview: Handa v Station Hotel (Newcastle) Ltd and Others

Mr Neeraj Handa, formerly a director and employee of The Station Hotel (Newcastle) Ltd (SHNL), alleged that his dismissal was a consequence of making protected disclosures about financial improprieties within the company. He claimed that two external HR consultants, Mr Duncan and Ms McDougall, were co-liable for his dismissal, asserting they acted as agents of SHNL and subjected him to detriment due to his whistleblowing activities.

• Mr Duncan was engaged to investigate grievances against Mr Handa and recommended disciplinary proceedings based on substantiated complaints.
• Ms McDougall conducted the subsequent disciplinary hearing and recommended dismissal for gross misconduct.

Mr Handa contended that both consultants, by virtue of their roles, were agents of SHNL and thus shared liability for his dismissal under whistleblowing protections.

Tribunal Findings

The Employment Tribunal initially struck out the claims against the consultants, determining that they were not agents of SHNL in a manner that would render them liable under whistleblowing provisions. Mr Handa appealed this decision.

EAT Decision

The EAT upheld the Tribunal’s decision, clarifying the legal limits of the HR consultants’ liability in this case:

1. While the consultants were engaged by SHNL and could arguably be acting as its agents, there was insufficient evidence to establish that they acted as agents with authority to make binding decisions on behalf of the company regarding dismissal.
2. The consultants’ roles were limited to investigation and recommendation. The final decision to dismiss Mr Handa rested solely with SHNL. There was no indication that the consultants’ actions, within their defined roles, constituted detriment under whistleblowing laws.
3. The consultants operated within the confines of their contractual obligations, and there was no evidence to suggest they exceeded their authority or acted under the direction of SHNL in a manner that would implicate them in the dismissal decision.

Implications for employers

This case highlights several key considerations for employers and HR professionals when engaging external HR consultants in grievance investigations, misconduct investigations, or dismissal procedures:

• Clearly delineate the scope of authority and responsibilities of external HR consultants in contractual agreements to prevent ambiguity regarding decision-making powers.
• Maintain thorough records of the consultants’ and the company’s roles, findings, and recommendations, as well as in relation to the decision-making processes.
• Educate internal stakeholders about the legal distinctions between recommendations and decision-making to safeguard against potential liability claims.

Comment

This case serves as a reminder of the importance of clearly defining the roles of external HR consultants, including where they are responsible for decision-making. By doing so, organisations can protect themselves and their consultants from unintended legal exposure, particularly in sensitive matters involving whistleblowing and employee dismissals.

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