The recent case of Handa v The Station Hotel (Newcastle) Ltd and others [2025] EAT 62 has provided some clarity into the scope of agent liability in the context of external HR Consultants being engaged by employers to conduct internal disciplinary and grievance procedures.
Case summary
Mr Handa (H) was a director of The Station Hotel. He made various alleged whistleblowing disclosures concerning financial mismanagement in the business. Following this, a number of staff at the hotel raised grievances against H, complaining that he had bullied and harassed them.
H’s employer appointed an external HR consultant (D) to investigate the grievances, and it was recommended that a disciplinary hearing be arranged. The employer then engaged a second external HR Consultant (M) to conduct the disciplinary hearing, which ultimately led to H’s dismissal for gross misconduct. In deciding whether to dismiss H, the employer relied on a report prepared by M in which she stated that the employer would be justified in dismissing H, without explicitly recommending this.
H brought claims in the employment tribunal against multiple respondents, including his employer, D, M and others. The question was whether D and M could be liable as agents for the employer’s decision to dismiss H.
Decision
The tribunal initially struck out the claims against D and M on the basis that there was no reasonable prospect of success. H appealed to the Employment Appeal Tribunal (EAT).
The first consideration was whether D & M could be agents of the employer and in this regard, the key question was whether their services related to a significant aspect of the employment relationship. The EAT found that there was no reason why, having been retained to carry out grievance and disciplinary processes, the external HR Consultants could not be the employer’s agents.
The EAT then moved to consider the scope of liability as agents in the circumstances. H had brought claims against both as individual respondents, however he did not actually allege that they made the decision which resulted in his employment being terminated. Both HR Consultants had made it clear that a decision to dismiss H was not in their remit and had not been taken by them. The fact that the employer had relied on the processes they had carried out in support of dismissing H did not make the external HR Consultants liable as agents in this case. It was clear that they had not made the decision to dismiss, and the dismissal letter sent to H was signed by the employer.
In the ever-common scenario of businesses engaging external HR Consultants to carry out internal processes, this case highlights that HR Consultants could potentially be liable as agents depending on their involvement in decision making. The key point for employers is to ensure that any external consultants are selected carefully and that the remit of their engagement and authority is very clear.
It further demonstrates the need for detail and clarity when a case is pleaded in the employment tribunal. A key aspect of the decision was H’s failure to set out a legal and factual basis for D and M’s alleged liability. Had he done this, the tribunal and EAT could have reached different conclusions.
Overall, it seems that one of the key deciding factors in the case lay in the fact that the HR Consultants made recommendations rather than decisions. The decision making was left to the employer and the dismissal letter was signed by the employer. Had the HR Consultants actually been part of the decision making and/or had M signed the letter then it’s certainly possible that the HR Consultants would have been co-liable along with the employer.
If you would like any further information, please contact a member of the Employment team at Glaisyers ETL.
