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Footballer Nicolas Anelka’s recent alleged anti-Semitic gesture has had significant consequences for his club who have lost one sponsor and face the prospect of losing more. What can you do if an employee’s actions cause damage to your business?

Background facts

After scoring a goal against West Ham United recently, West Bromwich Albion striker Nicolas Anelka celebrated with a quenelle gesture. Little was made of Anelka’s celebration at the time, but it has since transpired that it is an anti-Semitic gesture made notorious in his homeland France by a stand-up comedian, and friend of Anelka’s.

Whilst Anelka faces a lengthy ban from the Football Association, his employer, West Brom, have suffered more serious commercial consequences with its principal sponsor, Zoopla, terminating its £3 million contract and others, such as Jack Wolfskin, threatening to follow suit after insisting that they “strongly disapprove” of the gesture.

It seems unlikely that West Brom will dismiss Anelka in this case, but can an employer fairly dismiss an employee who brings its name into disrepute or significantly damages its commercial relationship with a third party?

What the law says

There are five potentially fair reasons for dismissal under section 98 of the Employment Rights Act 1996, one of which is ‘some other substantial reason’ (“SOSR”).

SOSR is a “catch-all” reason for dismissal which is not defined by statute, and nor is there any statutory guidance on what situations it covers. It therefore offers a degree of flexibility to employers in circumstances not caught by other potentially fair reasons for dismissal such as conduct, capability or redundancy. Case law does make clear, however, that the reason must be substantial – the interpretation of what is (or isn’t) substantial is subjective and will depend on the facts of a particular case.

Practical considerations

It was been held by the courts that where an employee acts in a way that damages (or poses a genuine risk to) their employer’s reputation, dismissal for SOSR can be a fair reason. However, it is clear from the authorities that the employer must be able to adduce evidence that reputational damage has actually been caused (or is highly likely to be caused) by the employee’s actions. It will not be enough for an employer to engage in speculation that an employee’s actions might or could damage its reputation if there is no evidence to support this.

Further, where a third party – such as a customer, supplier or sponsor – insists on the dismissal of an employee, this too has been found to be fair by reason of SOSR by the courts.

The case law in relation to third party pressure makes clear that the motive for the third party’s request is largely irrelevant. What will be more relevant is how important the continued business relationship is to the employer and how serious any threat by the third party is. Where a major client threatens to terminate a contract unless an employee is dismissed, dismissal is far more likely to be held to be fair than where a minor client expresses dissatisfaction with an employee without threatening to end the business relationship.

It has also been established through case law that, where an employer is considering dismissing an employee due to third party pressure, it must consider the injustice to the employee and any steps to alleviate that injustice including alternatives to dismissal such as redeploying that employee to an area of the business where he/she will have no contact with the complaining party.

Article by Richard Barker who is an associate at Shoosmiths