Mr Neeraj Handa v The Station Hotel (Newcastle) Ltd and Others: [2025] EAT 62
Saltworks Law instructed counsel on behalf of the claimant in the case of Mr Neeraj Handa v The Station Hotel (Newcastle) Ltd and Others where the employment appeals tribunal was asked to consider whether or not external HR consultants who helped with a grievance investigation and a disciplinary hearing could be personally liable as “agents” of the employer for the purposes of whistleblowing or discrimination claims. The decision published on 2 May 2025, was that on this occasion, on the facts of the case, they were not but that they could have been, if the consultants had a more active role in decision making as opposed to advising or providing recommendations. Such an agency relationship has more commonly arisen in case law, where the employer subcontracts an external service to a third party rather than to deal with issues internally.
The case concerned Mr Handa, who was a director at the Station Hotel. He made several allegations of financial impropriety relating to the running of the business which he claimed were protected disclosures. Several employees raised harassment and bullying allegations against him because of his behaviour relating to these and he was subject to a grievance investigation and disciplinary hearing conducted by two separate independent HR consultants respectively: Mr Duncan who recommended that the employer undertake a disciplinary and Ms McDougall who produced a report stating that dismissal for gross misconduct could be justified.
Mr Handa added both the consultants as respondents to his claims of whistleblowing detriment, including unfair dismissal, arguing that they had acted as his employer’s agents. Mr Duncan and Ms McDougall applied to the tribunal to have their claims struck out claiming that they were not acting as “agents” under s.47B(1A)(b) of the Employment Rights Act 1996. The tribunal agreed and Mr Handa’s subsequent appeal was dismissed on the grounds that while, in principle, HR consultants could act as “agents” of the employer when carrying out their roles; the key consideration was whether the services they provided “relate to a significant aspect of the employment relationship, rather than some other aspect of the employer’s business or activities”.
The implications of this case are that HR consultants could be deemed agents of an employer if they take substantive decisions under the authority, or at the direction of, the employer, because they are essentially stepping into the shoes of that employer. Employers may therefore wish to consider appropriate legal insurance to protect against such a scenario arising – more likely in today’s modern outsourcing environment – and ensure that the terms under which such individuals are engaged are carefully reviewed. The appeals tribunal also considered that it was the employer that should shoulder the blame for any procedural faults in investigations and disciplinaries and not the external consultants. However, knowing whether or not agency principles are at play will dictate who is named as a respondent in an employment tribunal claim.