When Does a Failure to Apply Binding Authority Justify an Appeal to the Employment Appeal Tribunal?

A failure by the Employment Tribunal to apply a binding authority constitutes an error of law that justifies an appeal to the Employment Appeal Tribunal. Employment Tribunals are bound by decisions of the Employment Appeal Tribunal, the Court of Appeal, and the Supreme Court. Where a binding authority establishes the correct legal test, interpretation, or approach, the Employment Tribunal must apply it. A failure to do so — whether by ignoring the authority, misinterpreting it, or declining to follow it — is a clear error of law.

This ground of appeal arises in two principal ways. First, the tribunal may fail to apply the correct legal test as established by binding authority. Second, the tribunal may be aware of the authority but misinterpret its effect, applying it in a manner that does not accord with what the higher court actually decided. In either case, the Employment Appeal Tribunal has jurisdiction to correct the error under section 21 of the Employment Tribunals Act 1996.

Legal Framework

The Hierarchy of Authority

The Employment Tribunal sits at the base of the appellate hierarchy in employment law. It is bound by decisions of the Employment Appeal Tribunal, the Court of Appeal, and the Supreme Court. Where a higher court has determined the correct interpretation of a statutory provision or established a legal test, the Employment Tribunal must follow that authority.

The Employment Appeal Tribunal is itself bound by decisions of the Court of Appeal and the Supreme Court, but not by its own previous decisions. Where there are conflicting EAT decisions on a point, the Employment Tribunal must follow the one that it considers to be correct, and the Employment Appeal Tribunal may resolve the conflict in the appeal. Where an EAT decision is inconsistent with a Court of Appeal or Supreme Court decision, the higher authority prevails.

Failure to Apply a Binding Test

The most straightforward case is where a binding authority establishes the legal test that the Employment Tribunal should have applied, and the tribunal applied a different test. This is, in substance, a species of misdirection. The distinction is that the correct test is derived from case law rather than from statute, although in practice the two sources often overlap.

Examples include: failure to apply the burden of proof framework established by Igen Ltd v Wong [2005] ICR 931 and Madarassy v Nomura International plc [2007] ICR 867 in discrimination cases; failure to apply the range of reasonable responses test as restated in Foley v Post Office [2000] ICR 1283 in unfair dismissal cases; failure to apply the Polkey v AE Dayton Services Ltd [1988] ICR 142 principles in assessing the chance that the employee would have been dismissed in any event; and failure to apply the principles in Williams v Compair Maxam Ltd [1982] ICR 156 in redundancy selection cases.

Misinterpretation of Authority

A subtler category arises where the Employment Tribunal is aware of the relevant authority but misinterprets its effect. This may occur where the tribunal reads the authority too broadly, too narrowly, or in a manner that does not accord with the ratio decidendi. The Employment Appeal Tribunal will determine the correct interpretation of the authority and assess whether the tribunal applied it correctly.

This category is particularly common in areas of law where the leading authorities are complex or where subsequent decisions have refined the original principles. The burden of proof in discrimination cases is a notable example, where the relationship between Igen Ltd v Wong, Madarassy, and subsequent Court of Appeal authorities such as Efobi v Royal Mail Group Ltd [2021] ICR 1263 requires careful analysis.

Distinguishing and Declining to Follow

An Employment Tribunal cannot decline to follow a binding authority. If the tribunal considers that the authority was wrongly decided, it must still apply it. The remedy for the party that considers the authority to be wrong is to appeal to a higher court. However, a tribunal may legitimately distinguish an authority on its facts — that is, conclude that the facts of the case before it are materially different from those in the authority such that the principle does not apply.

The Employment Appeal Tribunal will scrutinise any attempt to distinguish a binding authority to ensure that the distinction is genuine and not a device for avoiding an inconvenient decision. A purported distinction that does not stand up to analysis amounts to a failure to apply binding authority and is an error of law.

Common Errors and Misconceptions

A common misconception is that the Employment Tribunal is only required to follow authorities that were cited to it by the parties. This is not correct. The tribunal is required to apply the correct law regardless of whether the relevant authority was cited. If the tribunal was unaware of a binding authority, that does not excuse the failure to apply it. However, in practice, the failure to cite an authority may explain the tribunal's error and may bear on the question of whether the error was material.

Another error is to assume that any reference to a case in the Employment Tribunal's judgment means the authority was correctly applied. The tribunal may cite an authority but misstate its effect or fail to apply it in its analysis. The Employment Appeal Tribunal will examine how the authority was actually applied, not merely whether it was mentioned.

Some appellants argue that the Employment Tribunal failed to follow a binding authority when the authority was, in fact, merely persuasive — for example, an Employment Appeal Tribunal decision that has not been approved by the Court of Appeal, or a first-instance decision from another jurisdiction. Persuasive authorities may be helpful but are not binding, and a failure to follow them is not, without more, an error of law.

A further misconception is that the failure to cite a particular authority in the judgment means the tribunal did not consider it. The tribunal is not required to cite every authority that was placed before it. The question is whether the tribunal applied the correct legal principles, not whether it referred to specific case names.

Practical Application

The practical task is to identify the binding authority that the Employment Tribunal should have applied and to demonstrate that the tribunal's approach was inconsistent with it. The grounds of appeal should set out the authority, the principle it establishes, and the manner in which the tribunal departed from it.

This ground of appeal is particularly effective because it involves a comparison between what the law requires and what the tribunal did. The sift judge can assess the ground by reference to the authority and the tribunal's written reasons without needing to review the evidence. Grounds that clearly identify the authority and the departure are among the most likely to pass sift.

In complex areas of law where the relevant authorities have been refined over time, it is important to identify the most current binding authority. The law in some areas — such as the burden of proof in discrimination cases, the definition of disability under the Equality Act 2010, or the test for indirect discrimination — has evolved through multiple appellate decisions. Grounds based on authorities that have been superseded or qualified are less effective.

Where the failure to apply binding authority resulted in the tribunal applying the wrong legal test, the ground overlaps with misdirection. In such cases, both grounds may be advanced together, with the binding authority ground providing the specific identification of the correct test.

Process and Timing

The 42-day time limit applies. Grounds based on failure to apply binding authority should identify the authority, the principle it establishes, and the specific manner in which the Employment Tribunal departed from it. The grounds should also explain why the departure was material to the outcome.

At the full hearing, the Employment Appeal Tribunal will consider the authority, its ratio, and the tribunal's approach. If the EAT concludes that the tribunal failed to apply binding authority, the usual remedy is a remission for rehearing. In some cases, where the facts as found are sufficient, the EAT may apply the correct legal test to the facts and dispose of the case without a remission.

When to Seek Specialist Counsel

This ground of appeal requires detailed knowledge of the relevant case law and the ability to identify where the Employment Tribunal's approach departed from it. A specialist in Employment Appeal Tribunal work will be familiar with the leading authorities in employment and discrimination law and will be able to identify a failure to apply them.

A specialist can also assess whether the authority relied upon is genuinely binding and whether the tribunal's departure from it was material to the outcome. Grounds that rely on persuasive but non-binding authority, or that identify a departure that did not affect the result, will not succeed and may attract adverse costs consequences.

Frequently Asked Questions