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United Kingdom Employment Appeal Tribunal
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Brick Services Ltd v. Thompson [2002] UKEAT 885_01_2111 (21 November 2002)
URL: http://www.bailii.org/uk/cases/UKEAT/2002/885_01_2111.html
Cite as:
[2002] UKEAT 885_01_2111,
[2002] UKEAT 885_1_2111
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BAILII case number: [2002] UKEAT 885_01_2111 |
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Appeal No. EAT/885/01 |
EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
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At the Tribunal |
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On 4 July 2002 |
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Judgment delivered on 21 November 2002 |
Before
MS RECORDER COX QC
MR J HOUGHAM CBE
MR D A C LAMBERT
BRICK SERVICES LTD |
APPELLANT |
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MR J B THOMPSON |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
Revised
© Copyright 2002
APPEARANCES
For the Appellant |
MISS E MELVILLE (of Counsel) Instructed by: Messrs Ward Hadaway Solicitors Sandgate House 102 Quayside Newcastle Upon Tyne NE1 3DX |
For the Respondent |
MR D STILITZ (of Counsel) Instructed by: Messrs Arnison & Co Solicitors 1 St Andrews Place Penrith Cumbria CA11 7AN |
MS RECORDER COX QC
- This is an appeal from a decision of the Carlisle Employment Tribunal, promulgated on the 7th June 2001, upholding the applicant's complaint of unfair dismissal. The Appellant employers contend that the Tribunal erred in law in deciding that the Appellants had not established the real reason for dismissal. Such a finding, it is alleged, was perverse. Alternatively it is contended that the Tribunal's reasoning was wholly inadequate and poorly expressed so that there is, in what we may refer to as Meek terms, insufficient analysis and explanation both as to why the Tribunal did not accept the Appellants' stated reason for dismissal and as to why they found that the disciplinary procedure was flawed and not remedied by the appeal hearing. The Respondent employee, on the other hand, submits that no error of law can be shown and that the Tribunal, in a careful and well-reasoned decision, was entitled to conclude that this dismissal was unfair.
- The issue in this appeal is therefore whether the Tribunal's decision, that the Appellants had not discharged the burden upon them of establishing the real reason for dismissal, was perverse; alternatively the extent to which, if at all, the Decision is insufficiently reasoned for it to be sustained.
Background
- The Respondent to this appeal joined Brick Services as Area Sales Manager for the North West in February 1999. His terms and conditions of employment, set out in letters of 31st December 1998 and 15th January 1999, included a salary of £20,000 per annum and participation in a bonus scheme, the first £5000 of which was guaranteed but which, it was believed, could amount to £10,000 each year. There was also a provision regarding contribution to the Respondent's pension scheme. In April 1999 Brick Services was acquired by the Charlton Group and became a limited company. In September 1999 the Respondent was sent a new contract of employment, which referred to a salary of £25,000 with no mention of any bonus. Nor was there any mention of an employers' contribution to pension. The Respondent refused to sign it. There then followed a series of discussions and disagreements, between December 1999 and May 2000, about the differences between the Respondent's original terms and the terms in the new contract, which the Appellants wished him to sign.
- Mr. Robinson, Group Sales and Marketing Manager of the Appellants, ultimately wrote to the Respondent on 22nd May 2000 asking him to attend a meeting when, due to his refusal to sign the new contract, the company would need to consider whether they could continue with the Respondent's employment. This meeting was arranged for 1st June. However, before this meeting took place, Mr. Robinson commenced a separate investigation into an expenses claim by the Respondent. Following his investigation the Respondent was asked to attend a disciplinary hearing for gross misconduct, namely obtaining by deception from the company the sum of £27 and false accounting by altering a hotel invoice. The disciplinary hearing took place on 23rd June and was conducted by Mr. Robinson. The Respondent stated that he had not intended to deceive the company out of any money and expressed concern about the true reason for these investigations and disciplinary proceedings, which had been commenced at the time he was raising issues about his contractual and bonus entitlements under the new contract. Mr. Robinson concluded that the Respondent had made a fraudulent expenses claim, that this was an act of dishonesty and constituted gross misconduct, which merited summary dismissal. The Respondent was dismissed with immediate effect and his appeal against dismissal was subsequently dismissed on 12th July.
- The Respondent complained of unfair dismissal to the Tribunal in an application dated 9th August 2000. He alleged that the Appellants used the expenses claim as a pretext to justify a decision that had already been taken to dismiss him; and that the true reason for his dismissal
was his refusal to accept the changes in his terms of employment. The Appellants resisted the claim, contending that the Respondent was fairly dismissed for gross misconduct after a proper investigation. The hearing lasted two days and, in a reserved Decision, the Tribunal upheld the Respondent's complaint.
The Tribunal's Decision
- The Tribunal's findings of fact are set out at paragraphs 3 – 23 of the Decision. The material findings in relation to this appeal are as follows. In September 1999 the Respondent was sent a new contract of employment, which contained less favourable terms and which he decided he would not sign until he had received revised commission/bonus proposals (paragraph 5). Following a meeting between the Respondent, Mr. Rutter (Sales Director) and Mr. Robinson on 10th December 1999 Mr. Robinson wrote to the Respondent on 5th January 2000, confirming the company's decision to withdraw his existing bonus scheme as of 31st December 1999 and attaching a working model of how the new scheme would operate. The Respondent concluded that, even with the proposed salary increase, he would not receive the same level of earnings and, based on the 1999 results, would in fact be £3,500 per annum worse off (paragraph 7)
- Mr. Robinson wrote again on 24th March 2000 indicating that the bonus element of his contract was to be removed. The Respondent raised this with Mr. Rutter on 14th April when, the Tribunal found, "Mr. Rutter warned him against being confrontational" (paragraph 9). The Respondent met Mr. Robinson on 21st April and was told that no-one would be receiving any bonuses until the auditors had approved the accounts. Mr. Robinson then told the Respondent that he should sign the new written terms and conditions. After a further meeting on 16th May Mr. Robinson wrote a letter to the Respondent, which included the following paragraph (see paragraph 10):
"(a) The company must have your signed contract of employment by Friday 19th May 2000, should you still feel unable to sign this contract of employment we will require you to attend a meeting to discuss your future employment with the company. As stated it is unlikely under such circumstances that the company will be able to continue with your employment."
- The Applicant replied, pointing out the reduction in his earning potential under the new bonus scheme and referring to the concern and distress being caused by the issue. He wrote a further letter the next day containing some counter-proposals. Mr. Robinson wrote again on 22nd May, stating (see paragraph 12):
"We are disappointed that following our meeting of 18 May you have failed to return your signed contract of employment by the specified deadline of 18 May, it therefore appears that you are not prepared to work under the terms and conditions offered by the company.
It is a legal requirement that the company has in operation written terms and conditions of employment for all of its employees. As a consequence of your refusal to accept the terms and conditions offered by the company we need to convene a meeting to discuss whether the company can continue with your employment. Under the circumstances the company may have to consider the termination of your employment by notice."
- At paragraph 13 the Tribunal found that, by the same post, the Respondent received a letter from Mr. Howes of the Appellants querying an expenses claim of £27.00 he had made in respect of a client function at a hotel on 7th October 1999. The Respondent replied immediately, stating that this claim covered additional personal costs, which he had incurred at the function. On 31st May Mr. Robinson wrote again to the Respondent, stating:
"We are due to meet at 10.00 am on Thursday 1 June 2000 to discuss your contract of employment. I wish to defer the subject matter of that discussion as a separate and unrelated issue has come to light which I need to investigate on behalf of the company.
Robert Howes wrote to you on 19 May concerning an expenses claim which you submitted by way of an invoice dated 7 October 1999 from the Lisdoonie private hotel in Barrow in Furness.
The invoice is for £74.00 and I enclose a copy. The invoice appears to have been altered by someone from a total of £47.00 to £74.00, the original total figure of £47.00 on the face of it having been tippexed out and the figure of £74.00 inserted.
You appear to have made a payment of this amount by Visa. I wish to discuss with you the circumstances in which this invoice was altered.
In order to assist in the investigation I would be grateful if you could bring with you your duplicate Visa slip relating to the transaction and your Visa statement showing the entry for 7 October 1999.
Depending on your explanation disciplinary proceedings may ensue and in all the circumstances I believe it is in your best interests to be accompanied at the meeting by a friend or work colleague who should not be associated with the circumstances giving rise to the claim. Ailene Charlton will be present at this meeting to take notes.(101)"
- The Respondent then attended the investigation meeting held on 6th June, by which stage Mr. Howes had obtained a copy of the invoice from the hotel, which contained the B. & B. charge of £47.00 only. The Respondent's Visa statement also showed a payment of £47.00. At this meeting with Mr. Robinson the Respondent claimed that the £27.00 related to drinks he had purchased during the course of the evening and which he had paid for by Visa on leaving the hotel the following morning. On being presented with the hotel bill and Visa receipt the Respondents said that Mr. Rutter had approved the receipt given to him for £74.00 as being for legitimate expenditure and he then declined to answer any further questions. The Respondent was suspended and told that there would be a disciplinary hearing (paragraph 15).
- Immediately after this meeting the Respondent wrote to Mr. Robinson admitting that he had not paid the £27.00 by Visa but that he had asked the hotel receptionist to add the sum to his receipt so that he could recoup in part personal expenditure which he had incurred at the function on the previous evening for which he had no receipts. He repeated that Mr. Rutter had approved the receipt and denied that he had intended to deceive the company out of £27.00. He explained his previous reluctance to provide this explanation on the basis of his uneasiness about the company's motives in the light of their continual threats to discipline him and terminate his employment because he had raised issues concerning his new contractual and bonus entitlements (paragraph 17).
- The disciplinary hearing date was changed to 23rd June and, in the meantime, Mr. Rutter confirmed in a written statement that he had approved the payment for a "table" at the function but that the Respondent had not discussed it with him. The findings as to what took place at that hearing are set out in paragraphs 19 – 20 and are as follows:
"19 The disciplinary hearing took place at Hexham as arranged. The applicant was not accompanied. The meeting was recorded with the applicant's prior knowledge, and a note was also taken. During the course of the meeting the applicant confirmed that no sandwiches had been purchased, and the drinks had been bought elsewhere. He accepted that he had not been truthful at the meeting on 6 June, and that he had deliberately submitted a falsified document as a claim for expenses. He maintained that the explanation set out in his letter of 6 June was correct. (111-112). Following the meeting, Mr Robinson analysed the discrepancies in the applicant's different version of events. His conclusions are set out at pages 157-159. In a note he prepared in advance of the subsequent appeal, he concluded that the applicant had made a fraudulent expenses claim in respect of the £27.00 added to the hotel bill. His story had changed several times and he had failed to give a full disclosure of the circumstances despite being given every opportunity to do so.
20. Accordingly, having decided that the applicant should be dismissed, Mr Robinson wrote later that day confirming this. (140-141). He said:-
"After consideration of the evidence presented at the disciplinary hearing of 23 June I have concluded that you have made a fraudulent expenses claim in respect of the receipt for £74.00 from the Lisdoonie Hotel. You have in fact admitted that you were fully aware that the entry for "Dinner and Drinks £27.00" was in fact fraudulent, and you claim you asked a member of the hotel to make this entry onto your bill in the full knowledge that it did not refer to expenditure made at the hotel.
As you have previously submitted expenses claims which were not supported by receipts and which have been paid, it is difficult to accept that you believed such actions were an appropriate method to claim legitimate expenses. In reaching this decision I have taken into account both the responsibilities of your position, and the contradictory nature of the evidence you have given in this matter, and your reluctance to make a full and frank disclosure of the circumstances surrounding this claim despite being given several opportunities. For this reason I cannot accept that this invoice was ever approved by John Rutter, and choose to accept his statement of 22 June as an accurate record of events.
This was an act of dishonesty and therefore represents gross misconduct on your behalf. After weighing up the appropriate disciplinary action I have reached the conclusion that the company has no alternative but to terminate your employment with immediate effect."
He advised him of his right to appeal to Mr Charlton."
- The Respondent appealed on the grounds that, whilst the bill over-stated his expenditure at the hotel, he had incurred more than that amount in buying drinks for the company's guests. He had neither defrauded nor misled the company and Mr. Rutter was aware that the bill had been amended and passed the bill for payment. His initial reticence had been due to his contractual dispute, when he was already being threatened with dismissal. The decision to dismiss was excessive and harsh. The appeal was heard by Mr. Charlton on 12th July who found, amongst other things, that:
"…..Mr. Robinson had dealt with the investigation fully; his findings of fact were logical and fair and he could see no reason to overturn his decision"
and subsequently wrote telling the Respondent "
"…….I have decided to uphold Ian Robinson's decision to dismiss you for gross misconduct."
(see paragraphs 22-23).
- At paragraphs 27 and 28 the Tribunal set out the directions in law, including the relevant, applicable statutory provisions contained in Sections 98(1)(a) and 98(4) of the Employment Rights Act 1996. They referred also to dicta in the well-known cases of British Home Stores v Burchell [1978] IRLR 379, Post Office v Foley and HSBC Bank v Madden [2000] IRLR 82 and to Iceland Frozen Foods Ltd. v Jones [1982] IRLR 489, all of which provide guidance to Tribunals faced with the task of determining the fairness of a dismissal. It is common ground that these were correct directions in law.
- The Tribunal's detailed reasoning for their decision is contained in paragraphs 29 – 37. They observed that the disciplinary investigation was carried out against the background of Mr. Robinson's letters to the Respondent of 18th and 22nd May (see paragraphs 7 and 8 above) and that they needed to examine the circumstances of the dismissal in seeking first to establish the reason for dismissal. At paragraph 30 they found that:
"The applicant was very obviously being threatened with dismissal for failing to sign his contract of employment……..Mr. Robinson's letters were quite intimidatory, threatening the applicant in the clearest possible terms with dismissal if he did not accept the revised (and inferior) terms."
- In the light of these threats the Tribunal considered that it was inappropriate for Mr. Robinson to have conducted the disciplinary proceedings against the Respondent when he could have left it to others to pursue, Mr. Howes or Mr. Rutter for example. They considered that Mr. Robinson's position had been compromised by his threats to dismiss the Respondent and that it was no surprise that he thought Mr. Robinson's mind was made up, which went some way, in their view, to support his explanation as to his initial lack of candour (paragraph 31).
- They further found (paragraphs 32-34) that Mr. Robinson had failed properly to investigate the Respondent's explanation for what had occurred. Whilst the Respondent accepted that he had submitted a false receipt as to the additional £27.00 he had always vehemently denied that he had made a fraudulent expenses claim. His case was that he had genuinely spent more than that sum during the previous evening on drinks for the guests, for which he had no receipts. He therefore asked for it to be added to his hotel bill and the receipt had been approved by Mr. Rutter. The Tribunal noted Mr. Dudson's evidence that it is not unusual for cash payments to be add to hotel receipts. They also found that the claim as to genuine expenditure on drinks could have been investigated further and was not. The Tribunal considered that the Respondent's explanation went to the heart of whether his conduct could properly be described as dishonest:
"33 …Mr Robinson had claimed that the applicant was guilty of gross misconduct on what were effectively two counts (see paragraph 16 above). The Disciplinary Procedure defines gross misconduct as including "theft, attempted theft or other dishonest behaviour". (34) Whilst the applicant admitted submitting a false receipt, he vehemently denied having made a fraudulent claim, i.e. that he had claimed for expenditure which he had not incurred on the company's behalf. This could have been investigated further. Had it been, the company would have been able to establish whether the applicant had incurred expenditure on drinks (which would have been quite likely in the circumstances). An offence of false accounting is less serious than fraud. Both Mr Dudson and Mr Rutter thought that the applicant had been "silly". But did that amount to dishonesty such as to justify dismissal? We were aware of the recent EAT decision in John Lewis plc -v- Coyne [2001] IRLR 139, although we did not have the report available during the course of the hearing. The point about that case, as we see it, is that the EAT said that using an employer's telephone for personal calls is not necessarily dishonest, and the employers had acted unfairly in dismissing the applicant for that reason without investigating the seriousness of the offence. In the present case whilst Mr Robinson did investigate this matter, he was clearly influenced by the contradictory nature of the applicant's explanations in deciding that this was "a fraudulent expenses claim".
34 If it is accepted that the applicant had incurred the expenditure on drinks, then one needs to ask whether the submission of an altered receipt, particularly when that alteration is very obvious, is "dishonest" in those terms. Did the applicant realise that what he was doing was, by those standards, dishonest? Had Mr Robinson approached this question with a completely open mind, we believe that he would have investigated further. The applicant had said that his original explanations had not been truthful, his reason being that he was concerned that he was facing the threat of dismissal over his failure to agree the revised contract."
- The Tribunal's conclusion, having analysed the facts, appears at paragraph 35:
"35 For the reasons we have set out above, there do appear to have been flaws in the disciplinary process, not least Mr Robinson's personal involvement in it. Justice must not only be done; it must be seen to be done. It is that factor that leads us to conclude that the real motivation for the dismissal was the applicant's refusal to accept the revised contract. Whilst Mr Robinson had claimed that he was significantly influenced by the applicant's several changes of his story, one has to bear in mind the threat of dismissal the applicant was already facing. The correspondence suggests strongly that Mr Robinson was preparing the ground to dismiss the applicant, and that the expenses claim gave him a ready-made opportunity. The misconduct was not such as to admit of only one answer, and we think that, given the size and resources of the company, the procedure was flawed, and was not remedied by the appeal hearing."
For these reasons the Tribunal concluded that the dismissal was unfair. However they also found that the Respondent contributed to his dismissal by submitting the original receipt and failing to give a true explanation at the investigation meeting. His contribution was assessed at 40%.
The Appeal
- The original grounds of appeal, submitted by solicitors for the Appellants, sought to attack the Tribunal's findings in relation to the disciplinary procedure followed by the Appellants and were grouped under the headings "failure to make primary findings of fact", "perverse findings" and "the Tribunal has erred in law". However, none of them sought to challenge the Tribunal's fundamental finding that the Appellants had not established that misconduct was the reason for dismissal, the real reason being the Respondent's refusal to agree to the new and less favourable terms and conditions which the Appellants had sought to impose on him.
- Thus the Respondent prepared his response to this appeal, in respect of which there was no Preliminary Hearing, on the basis that none of the grounds was of any assistance to the Appellants even if they were well-founded, which was denied. Misconduct had been rejected by the Tribunal as the real reason for the dismissal, the burden of establishing which was upon the Appellants, and there was no appeal against that fundamental finding.
- The skeleton argument prepared by Daniel Stilitz of Counsel, on behalf of the Respondent, dated 20th June, addressed the grounds of appeal on this basis. However, the skeleton argument from Elizabeth Melville of Counsel, for the Appellants, indicated that the Appellants were intending to argue that the Tribunal's decision as to the reason for the dismissal was perverse. We were surprised and displeased to receive, only on the morning of the hearing of this appeal, amended grounds of appeal and an amended skeleton argument from the Appellants. Mr. Stilitz objected to the application made by Ms. Melville at the outset to amend the Notice of Appeal to enable her to argue this point, on the basis that it was made too late and was a weak attempt to rescue a fatally flawed appeal. Ms. Melville acknowledged that, without amendment, the appeal was doomed and that the point should have been covered in the original Notice, but pointed out that the Respondent had had about 10 days' notice of the arguments to be advanced from her first skeleton argument. Having heard from both sides we decided, in the circumstances, to allow the application to amend in the interests of justice. Mr. Stilitz had fairly told us that he would be able to deal with the new grounds advanced before us and did not need to seek an adjournment. The appeal therefore proceeded on this basis and we were grateful to both counsel for the assistance they gave us.
- Ms. Melville makes a number of points in relation to her argument that the decision as to the real reason for dismissal was perverse or, alternatively, inadequately reasoned within the meaning of Meek v City of Birmingham City Council [1987] IRLR 250. We shall deal with these in turn.
- Firstly she submitted that it was clear from the Decision that the Respondent was almost certainly about to be dismissed in any event. She contends that the Tribunal's analysis at paragraph 30 of the legal position, had dismissal on the original ground taken place, was flawed because they have confused a unilateral variation of contract with a dismissal following an employee's refusal to sign a new contract. This latter scenario involves an actual, not a constructive dismissal. Thus, she says, there was no advantage to the Appellants in dismissing for gross misconduct as opposed to "some other substantial reason" and, no doubt, they would have faced a complaint of unfair dismissal in both cases. If they were going to find that the Appellants dismissed the Respondent on a pretext they should therefore have asked themselves why, given that there was no advantage to them in doing so. This they did not do.
- We accept that it is clear from the Tribunal's findings that the Appellants were preparing to dismiss the Respondent because of his refusal to agree to the new terms and conditions and to sign his contract. However, the problem for the Appellants is that they would have had no acceptable reason for dismissing him fairly on the grounds that he would not agree to new, less favourable contractual terms. They had been trying unsuccessfully for some time to persuade the Respondent to sign and, as the Tribunal found, threatening him with dismissal and writing letters which were "intimidatory", findings which we consider they were entitled to reach on the facts.
- We agree, further, that, in paragraph 30, the Tribunal confused actual and constructive dismissal, in stating as follows:
"It is clear that the applicant had thought that he was being asked to accept a revision of his contract with significantly inferior conditions as to pay and particularly bonus than those on which he had agreed to join British (sic) Services. To have dismissed him in these circumstances would potentially have involved a fundamental breach of contract by the company, which the applicant would have been free to accept or reject. Had he done the latter he could have resigned claiming constructive dismissal. It would then have been for the company to show that either it was not a fundamental breach of contract, or that they had an admissible reason for dismissing him."
However, the point being made by the Tribunal in this paragraph in our view is a valid one, a point undisturbed by this confusion, and one we consider they were entitled to make, namely that the Appellants had a motive for using the expenses claim as a pretext for dismissal because they would be unable, lawfully, to impose new contractual terms on him without his consent.
- We therefore do not accept Ms. Melville's submission that there was no advantage to the Appellants here in going down the misconduct route to dismissal, rather than the route contemplated, which was more problematical for them. There was, in our view, a clear advantage to them in doing so in the circumstances.
- Ms. Melville next submits that, in rejecting the reason given by the Appellants, in circumstances where the misconduct was admitted, they would have to have expressly disbelieved the evidence of Mr. Robinson. No such finding was made and the Tribunal's reasoning is insufficient for the Appellants to understand why his evidence was disbelieved and why they concluded that misconduct was a pretext for the dismissal. Further, she says, the Respondent's admitted misconduct was so serious that dismissal was well within the range of reasonable responses for the employer. It is unclear why the finding in paragraph 35 that the misconduct was not such as to admit of only one answer has led to the conclusion that misconduct was not the reason for dismissal. The mere fact that one reason for dismissal is overtaken by another, genuine reason for dismissal is, she contends, insufficient to permit a finding that the second reason is a pretext, unless they expressly reject Mr. Robinson's evidence as untruthful. This they did not do.
- We are unpersuaded by these submissions. We consider that it is plain from the Tribunal's Decision that they did disbelieve Mr. Robinson's evidence. It is hard, otherwise, to see how they could have found in terms, as they did, that misconduct was not the real reason for dismissal, as Mr. Robinson claimed, but that the real motivation here was the Respondent's refusal to accept the revised contract. Further we consider that the Tribunal's reasons why they rejected Mr. Robinson's evidence appear clearly from paragraphs 29 – 30, where they refer to his threats and intimidatory letters, and paragraphs 31 – 34, where they set out their findings as to the procedural flaws in the disciplinary process, having regard to the size and resources of the Appellants. Their specific findings related to the involvement of Mr. Robinson at all, given that his position was compromised, the fact that he appeared to the Respondent already to have made up his mind and the fact that he failed to investigate adequately the Respondent's explanation that the expenditure claimed had in fact genuinely been incurred by him.
- The suggestion that the misconduct was admitted here is misplaced. We agree with Mr Stilitz' submissions that the Tribunal recognised, correctly, a qualitative difference between simply claiming expenses which had not been incurred, which would be fraudulent, and submitting a false invoice for expenses which the employee had in fact incurred. In our view the Tribunal, in contrasting "false accounting" and "fraud" at paragraph 33, was seeking merely to draw a distinction between submitting a false receipt on the one hand and dishonestly gaining at the employer's expense on the other. This approach is consistent with the approach prescribed by this Appeal Tribunal in the case of John Lewis plc v Coyne [2001] IRLR 139,
where it was held that "dishonesty" contains both subjective and objective elements.
"The company took a serious view of employees using company phones to make personal calls. A guide for employees warned that " You must not use the departmental telephones for making personal calls. Any breach of this regulation is viewed very seriously and may lead to dismissal if the circumstances justify it" That warning was reiterated in a management bulletin containing an official notice generally forbidding private telephone calls which was circulated to all employees in May 1998. Mrs Coyne was aware of the rules in connection with personal calls, although it was not made clear to her that the employers regarded the making of personal calls as a form of dishonesty." [Headnote]
At paragraph 27, Bell J. stated that:
"Mr Wicks, in his submissions, equated use of Peter Jones's telephone for any personal reason with dishonesty. But the test of dishonesty is not simply objective. What one person believes to be dishonest may in some circumstances not be dishonest to others. Where there may be a difference of view of what is dishonest, the best working test is in our view that propounded by Lord Lane CJ in the R v Ghosh [1982] QB 1053 75 Criminal Appeal Reports at 1054. In summary, there are two aspects to dishonesty, the objective and the subjective, and judging whether there has been dishonesty involves going through a two-stage process. Firstly, one must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. Secondly, if so, then one must consider whether the person concerned must have realised that what he or she was doing was by those standards dishonest. In many, but not all, cases where actions are obviously dishonest by ordinary standards, there will no doubt about it. In the present case, in our view, it was not necessarily obvious that using the appellant's telephone for personal calls was 'dishonest'. Much might depend upon the circumstances of the particular case. The appellant, however, did not investigate the question of dishonesty. It assumed it from the making of any personal calls, putting it into the same category, in effect, as stealing money. Mr Wicks is entitled to argue that a reasonable employer would be entitled to regard what Mrs Coyne admittedly did as dishonest. But even so, her dishonesty, such as it was and if it was, did not in our view mean that the appellant necessarily had to dismiss her. Yet Mr Hunt clearly, on our interpretation of the tribunal's finding at paragraph 23, took the view that dismissal was an inevitable consequence. The disciplinary code highlighted that dishonesty was normally regarded as serious misconduct, normally leading to dismissal, and indeed gave it as an example of gross misconduct that is particularly likely to lead to dismissal. But that terminology must, in our view, mean that it did not inevitably lead to dismissal, or at least that the information given to the employee by the employer was that it did not inevitably lead to dismissal. In all those circumstances, in our view, as the tribunal concluded, the duty on the appellant to act fairly and reasonably required that it should investigate the seriousness of the offence in the particular case."
The Tribunal refers to this case in paragraph 33 of their Decision and we consider that they were entitled to find as they did in relation to the qualitative difference between the two distinct forms of misconduct.
- Nor do we accept that, as a matter of law, a Tribunal cannot reject the reason for dismissal given by the employer and find it to be a pretext for the real reason unless they expressly reject the employer's evidence as untruthful. The employer has the burden of proving the reason for dismissal under Section 98(1)(a) of the 1996 Act. The fact that they found the hotel receipt and brought disciplinary proceedings against the Respondent does not place any additional burden on an applicant to disprove misconduct as the reason for dismissal. In Timex Corporation v Thomson [1981] IRLR 522 the appellant employers argued that, the evidence of redundancy being clear, in the absence of compelling proof or some other reason, the employment tribunal ought to have found that redundancy was the reason. The EAT held however that the employment tribunal had not erred in law in holding that, notwithstanding that there was a redundancy situation, the appellants had failed to satisfy them on the evidence that the reason for the respondent employee's dismissal was redundancy. Browne-Wilkinson J. stated, at paragraph 5:
"….Even where there is a redundancy situation, it is possible for an employer to use such situation as a pretext for getting rid of an employee he wishes to dismiss. In such circumstances the reason for dismissal will not necessarily be redundancy. It is for the Industrial Tribunal in each case to see whether, on all the evidence, the employer has shown them what was the reason for dismissal, that being the burden cast on the employer by….the Act. The evidence in this case…. certainly raised the possibility that redundancy was used as a pretext for getting rid of Mr. Thomson. The Industrial Tribunal was entitled to hold that they were not satisfied as to the reason for dismissal. On this basis the employers' defence to the claim failed at the first hurdle and a finding of unfair dismissal followed as of course."
- Further, in Maund v Penwith District Council [1984] ICR 143 Griffiths L.J. stated, at pages 148E –149C:
"…..the Act of 1978 places the onus on the employer to show the reason, and if more than one reason the principal reason, for the dismissal; and to show that the dismissal was for one of the reasons set out in section 57(2), or for some other, substantial reason of a kind such as to justify the dismissal. If the employer is unable to show any such reason, the decision must be deemed to be unfair…. If an employer produces evidence to the tribunal that appears to show that the reason for dismissal is redundancy, as they undoubtedly did in this case, then the burden passes to the employee to show that there is a real issue as to whether that was the true reason. The employee cannot do this by merely asserting in argument that it was not the true reason; an evidential burden rests upon him to produce some evidence that casts doubt upon the employer's reason. The graver the allegation, the heavier will be the burden….. But his burden is a lighter burden than the legal burden placed upon the employer; it is not for the employee to prove the reason for his dismissal, but merely to produce evidence sufficient to raise the issue or, to put it another way, that raises some doubt about the reason for the dismissal. Once this evidential burden is discharged, the onus remains upon the employer to prove the reason for the dismissal."
- We take the view that this Tribunal had ample evidence, as set out in their findings in paragraphs 29 – 34, on which they could find that the Respondent's evidential burden had been discharged. It follows that we reject the Appellants' submissions both that the Tribunal's finding as to the real reason for dismissal was perverse and that their decision as to the reason fails the Meek test and should be set aside because it was inadequately reasoned. This Tribunal was entitled to find that the Appellants had failed to establish that the real reason for the Respondent's dismissal was gross misconduct.
- In these circumstances, the Appellants having failed to establish that the dismissal was one of the prima facie fair reasons, as defined in sections 98(1)(b) and 98(2), their defence failed at the first hurdle and the dismissal was properly held to be unfair (see Timex and Maund above). The Tribunal's finding of unfairness therefore remains undisturbed and this appeal fails even if Ms. Melville's criticisms as to their findings on unfairness are well-founded. We shall therefore deal with these remaining matters more shortly than would otherwise be the case.
- Her criticisms are made on the basis that: (1) Inadequate reasons were given for the finding at paragraph 35 that the procedure was flawed and not remedied on appeal; (2) such criticisms as were made by the Tribunal were perverse and/or wrong in law because (a) they displayed an approach to the evidence which was expressly disapproved in the case of HSBC Bank v Madden [2000] IRLR 827 where the Employment Tribunal was criticised for substituting itself as the employer in assessing the quality and weight of the evidence, instead of judging the matter by the standards of the reasonable employer; and (b) they failed to apply the guidance given in Whitbread v Hall [2001] IRLR 275 that, where misconduct is admitted, the requirement of reasonableness in section 98(4) of the 1976 Act and the band of reasonable responses relate also to the procedure used in reaching the decision to dismiss.
- The matters relied upon by Ms. Melville, in her submissions under these heads, are as follows: the criticisms made by the Tribunal as to the involvement of Mr. Robinson in the disciplinary process at all; their suggestions, at paragraphs 33 and 34, that Mr. Robinson should have carried out further investigation into the Respondent's explanation that he had incurred the expenses claimed, when he had admitted falsifying a document and when Mr. Robinson did not believe his explanation; the fact that they apparently went behind Mr. Robinson's conclusion that he disbelieved the Respondent; their failure to distinguish Coyne , given the admitted false receipt and the initial lack of candour by this Respondent; and the finding that an offence of false accounting is less serious than fraud, which was irrelevant to the one question they had to answer, namely whether the dismissal fell within the range of reasonable responses.
- We reject the submissions as to inadequate reasoning on the part of the Tribunal on the basis we have already referred to above when dealing with the specific findings made by them at paragraphs 29 – 34. Nor are we persuaded that this Tribunal sought to substitute its own view of the evidence, contrary to the decision in Madden. In paragraphs 32-34 the Tribunal is clearly questioning why Mr. Robinson is not addressing his mind to the qualitative difference between the alleged and the admitted misconduct and to the Respondent's dishonesty. At no stage do they make any finding that they themselves would not have regarded the Respondent as having acted dishonestly. They rather point out the inadequacies in Mr. Robinson's analysis, which does not in our view offend the approach prescribed in Madden.
- Similarly, this being a case where the misconduct alleged was not admitted, because of the qualitative difference referred to above, there was in our view no failure to follow the guidance in Whitbread.. This Respondent never admitted theft or improper gain and the situation which existed in Whitbread therefore simply does not arise. Nowhere in this Decision does the Tribunal, in our view, substitute its own view as to the procedure used. Indeed they expressly refer to taking into account the Appellant company's size and resources, as they are required to when considering the fairness of a dismissal under section 98(4). Nor do we see a distinction between this case and Coyne for the reasons we have already given above.
- Finally, in respect of the finding that the initial, flawed procedure was not remedied on appeal, we conclude as follows. Firstly, the appeal could not have rendered the dismissal fair in circumstances where the Tribunal found that misconduct was not the real reason for dismissal but was a pretext for the dismissal which was already being planned by the Appellants. Secondly, whilst the Tribunal does not expressly state whether the appeal here took the form of a complete re-hearing or a review, it seems to us from the findings at paragraphs 22(d) and 23 that the appeal was more consistent with a review. The question Mr. Charlton asked was not "what happened here?" but, rather, "is there a basis for interfering with what Mr. Robinson has done?" An appeal taking this form in the circumstances of this case would in our view be insufficient to remedy the earlier defects in the disciplinary process identified by the Tribunal, applying the decisions of this Appeal Tribunal in Whitbread & Co. plc v Mills [1988] IRLR 501 and Byrne v BOC Ltd. [1992] IRLR 505.
- For these reasons we agree that this appeal should be dismissed. There is one further matter we must deal with. Mr. Stilitz applies for costs to be awarded against the Appellants. The Respondent is legally aided. He submits that the perversity challenge to the Tribunal's key finding never had any reasonable prospect of succeeding, the application to amend the Notice of Appeal was made at the very last minute and, to that extent, the proceedings were unnecessary and the Appellants' conduct in pursuing the appeal unreasonable, so as to merit an order for costs against them under Rule 34(1) of this Appeal Tribunal's Rules of Procedure. Ms. Melville submits that the Tribunal's Decision was not clear and that there were reasonable grounds for challenging the basis on which they arrived at their conclusions. The Amended Notice of Appeal was not entirely hopeless and there were arguable grounds on the issue of procedural fairness. Further, though the application to amend was made late, the Respondent had been on notice as to the arguments being advanced having received the Appellants' skeleton argument some ten days before the hearing of the appeal; and Mr. Stilitz had been able to respond to the points made without seeking an adjournment.
- We have considered this application carefully but in our view it could not be said that the amended grounds of appeal were unnecessary or hopeless and doomed to fail. Secondly, the lateness of the application to amend did not on this occasion result in any additional costs being incurred. The situation might have been very different if that were not the case. However, we will make no Order for costs in the circumstances.