England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand London
		26th May 2000

1. LORD JUSTICE BUXTON: This is an appeal from the Employment Appeal Tribunal brought by Mr. Gary Andrew Wilson who was employed as a postman by the post office, the respondent to this appeal, from 1992 until he was dismissed from that employment as long ago as October 1997. This court is still concerned in the year 2000 with whether or not that dismissal was unfair. The employment tribunal to whom Mr. Wilson complained found the dismissal to have been unfair. The Employment Appeal Tribunal determined that that finding had been reached on an erroneous basis and themselves substituted a finding of fairness.
2. As the Employment Appeal Tribunal said, and indeed so did the Employment Tribunal, central to the case is an agreement between the Royal Mail and Mr. Wilson's union, the Union of Communication Workers, in 1992. The agreement establishes a procedure against which absenteeism can be evaluated and dealt with. It is relevant to quote from the introduction to the procedure which is set out by the Employment Appeal Tribunal at page 1 of its determination:

"This procedure is designed to help Royal Mail serve its customers by encouraging the high standards of attendance normally achieved and maintained by the vast majority of employees so that a reliable staffing base can be maintained. It

- applies to frequent and/or lengthy absences from work (whether covered by a Self-certificate or a Doctor's Certificate) because of medical conditions which do not justify medical retirement:

- applies to all employees of Royal Mail except casual/seasonal staff:

- consists of a series of stages which employers would be encouraged, through advice and guidance given at an interview, to improve their pattern of attendance.

The stages are progressive and specifically intended to help employees maintain appropriate patterns of attendance and so avoid formal action which may lead to dismissal".

3. There is a three stage procedure. Stage 1 is brought into operation by unsatisfactory attendance on the part of the employee and involves the giving of informal warning and advice. At stage 2, if there is not the required improvement, there is a formal interview with a formal warning that that attendance must improve. Stage 3 is set out as follows:
4. "If, after receiving a formal warning, there is insufficient improvement in the employee's attendance and the manager dealing considers that dismissal may be appropriate, the employee should be invited to put forward reasons why they should not be dismissed".
5. There are further provisions for interview and for an appeal against a stage 3 dismissal, such a dismissal being a dismissal on grounds of unsatisfactory attendance.
6. Mr. Wilson unfortunately had a history of absence from work. In each case the absence was because of a medical reason. It is unnecessary to go through them in detail. In 1995 he had two absences from work involving a total of 65 days, but one of those absences was because of injury in the course of employment, and therefore is not counted within the procedure. In 1996 he had one absence for a period of 25 days. In February 1997 he was away with a viral illness, and received as a result of that absence a stage 1 informal warning. Then after another two absences for one day and two days respectively, he received a stage 2 warning. The warning was in the following terms:
7. "If your attendance does not improve and you either incur two separate absences or a total of ten days or more in any six month period during the 12 month period following the receipt of this letter, consideration would be given to progressing to stage 3 of the attendance procedure which will lead to consideration of termination of service on grounds of unsatisfactory attendance".
8. In October of 1997 that stage 3 procedure was initiated because he was absent as a result of injuring his neck playing football for the post office team and was away for ten days. He was given notice on 28th October 1997. This complaint was initiated very shortly after that, and in December of 1997 his employment was terminated.
9. There was an appeal procedure conducted by an independent member of the post office staff by way of interview, details of which were given to the tribunals in this case, but the decision to dismiss Mr. Wilson was upheld. Mr. Wilson very promptly, and no doubt assisted by his union, entered a complaint of unfair dismissal. On 21st October 1997 he filled in the application form, and when asked for details of his complaint said "Unfair application of the Royal Mail attendance procedure".
10. The employer entered an appearance and gave particulars of the grounds upon which the application was resisted. That is to be found in the document headed "Grounds of Resistance". The document referred in some detail to the agreement and explained the reason for the agreement, and the fact that the applicant did not comply with the requirements of that agreement. The document then continued:

"The applicant received various warnings in accordance with the RMAP about his unsatisfactory attendance record which culminated in the Respondent writing to the applicant in October 1997 in order to inform him that consideration was being given to the termination of his services on the grounds of unsatisfactory attendance and the Applicant was invited to put forward reasons why his employment should not be terminated."

11. The investigation procedure was then set out in the document, and it concluded by saying that the manager who was responsible "concluded that the applicant should be dismissed by reason of his unsatisfactory attendance record".
12. So far, it is clear on both sides that the dispute was about whether the employer had acted fairly and reasonably in dismissing Mr. Wilson by reason of his attendance in accordance with, and under the terms of, the agreement. However, in the section of the notice of appearance that requires the employer to state reason for dismissal, the employer said this as the reason for dismissal: "Incapability by reason of unsatisfactory attendance record". It is that statement that causes a difficulty in this case.
13. If we turn to section 98 of the Employment Rights Act 1996 which governs the procedure in relation to unfair dismissal, section 98(1) says:

"(1) in determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show -

(a) the reason.....for the dismissal, and

(b) that it is either a reason falling within sub-section (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2) A reason falls within this sub-section if it -

(a) relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

(b) relates to the conduct of the employee,

(c) is that the employee was redundant."

14. By using the word "incapability" in the notice of appearance, the employer was interpreted by the Employment Tribunal as having given as the reason for dismissal a reason falling under section 98(2)(a), that is a reason relating to capability.
15. In looking at the proper interpretation of an approach to section 98, it is important to bear in mind what was said in this court by Cairns LJ in Abernethy v Mott, Hay and Anderson [1974] ICR 323:
16. "A reason for the dismissal of an employee is a set of facts known to the employer, or it may be beliefs held by him, which cause him to dismiss the employee".
17. Therefore, the question is the set of facts relied on by the employer, and section 98(1) and (2) have the effect of requiring it to be shown that those reasons fall under one or other of these categories. It is quite clear in this case that the reason that the employer had or thought he had for dismissing Mr. Wilson was that his attendance record had not met the requirements of the agreement, and that is indeed what was said in the notice of appearance. If one is to take literally the use of the word "incapability", and concluded that the employer had limited himself and the tribunal to consideration only of section 98(2)(a) of the 1996 Act, then it is very difficult to see that there was any appearance in this case at all. That is because in section 98(3) "capability" is defined as meaning the employee's capability for performing the work that he is employed to do, assessed by reference to skill, aptitude, health or any other physical or mental quality. But in this case the employer did not rely upon skill, aptitude, health or other physical or mental quality. He relied on the unsatisfactory attendance record. There was therefore a situation of some confusion as to the legal structure of the case, though not as to its essential issues and merits, when the matter came before the Industrial Tribunal, a confusion that Mr. Niemen for the employee perhaps understandably says was the fault of the employer for using the wrong word in the notice of appearance.
18. In its determination the Employment Tribunal, having set out a number of agreed facts, says that the tribunal had to decide what was the reason shown by the respondent for the dismissal and, if that was a reason within section 98(2), whether the dismissal was fair. It then asked itself what was the reason for the dismissal and said at paragraph 6:
19. "The tribunal found that the reason shown by the respondent for the absence was one of capability on the grounds of health under section 98(2)(a) and (3)(a) of the Act".
20. It is difficult to see how that could have been right. The reason given by the employer was the attendance record. True it is, as Mr. Niemen urges, that the attendance record had been caused by Mr. Wilson's ill health, but the latter was not the reason why he was dismissed. He was dismissed because he failed to comply with the requirements of the agreement.
21. That characaterisation of the reasons for dismissal was not merely a formal issue, because the tribunal went on to say that it could only consider the question of fairness in the context of the reason found for the dismissal. That meant that it felt itself obliged to assume that Mr. Wilson had been dismissed on grounds of health and did not direct itself to the actual reason why Mr. Wilson had been dismissed, that is to say that he did not fulfil the requirements of the attendance agreement. In the light of what was said in Abernethy, it is in my judgment a question of legal analysis to determine under which part of section 98 the reason in fact given by the employer falls. Here the tribunal erred in assuming, simply on the basis of one sentence in the notice of appearance, that this was a case of capability. Having determined that, they then had to find a ground of capability that fell under section 98(3), and health was the only contender. But those two steps meant this case was approached by the tribunal on a basis that was not the basis upon which the employer had dismissed Mr. Wilson and was not, as we have seen from the exchanges before the tribunal hearing, the basis upon which either side came to court.
22. Having taken that step, however, the tribunal at paragraphs 12 to 15 of their determination decided the matter as to whether the dismissal had been fair on the assumption that it was a dismissal on grounds of ill health. They highlighted a number of considerations that pointed against that, for instance that Mr. Wilson had no chronic condition, that he had been certified as fit to work, and other matters that related to the health ground. In paragraph 16, the tribunal said this:
23. "The tribunal was not satisfied that where the reason for dismissal was capability on the grounds of ill health, the respondent had acted reasonably in concluding that it should dismiss, where the applicant was declared fit by the respondent's doctor, was given and worked five weeks notice and had no underlying or chronic conditions which caused repeated absences".
24. It therefore found that the dismissal had been unfair because it had been unreasonable for the employer to determine that Mr. Wilson should be dismissed on grounds of health.
25. The Employment Appeal Tribunal was concerned, for the same reasons as we have set out, at the fact that the Employment Tribunal had approached the matter by a misapprehension of the correct characaterisation of the reason for dismissal. The Employment Appeal Tribunal expressed itself thus at page 7C of its judgment:

"Having fixed upon 'capability' as the reason, the industrial tribunal logically focussed upon factors bearing upon the applicant's health when addressing section 98(4), thereby inevitably giving emphasis to matters that so far from reflecting the attendance procedure were potentially inimicable to it if over-emphasised - for example, giving some weight to the fact that the applicant had no underlying or chronic condition and was indeed fit for work. We agree that if the industrial tribunal had correctly based its section 98(4) deliberation upon a sui generis attendance procedure dismissal then the underlying and continuing health of the applicant could not be excluded as a wholly irrelevant factor, but it could not have acquired the prominence appropriate to a 'capability' dismissal. Doing our best to construe the difficult passages in paragraphs 16 and 17 of the extended reasons and cited above, we think that the industrial tribunal are acknowledging the potential unreality of an adjudication based on 'capability' and chiding the parties for excluding 'conduct.' As is apparent, we are satisfied that neither concept covered what was truly 'some other substantial reason'. It is plain that the Industrial Tribunal's decision was irredeemably flawed by reason of an error of mixed law and fact: the selection of the 'reason'."

26. It is for those reasons that they allowed the appeal.
27. I, for my part, without necessarily adopting the whole of the reasoning of the Employment Appeal Tribunal, am satisfied that they were right so to determine. This case was approached on the wrong basis by the Industrial Tribunal and by reason of the fact that they identified an inappropriate reason for dismissal and found themselves constrained in their consideration of the case by that determination.
28. Mr. Niemen for the employee, in a sustained and determined argument, says however that even if that were so, such a step was not open to the Employment Appeal Tribunal. He cited two authorities which he said precluded the tribunal from taking the course that it did. The first was Nelson v British Broadcasting Corporation [1977] ICR 649, where Mr. Niemen relied upon a particular observation in the judgment of Roskill LJ, where the judge said that it was not a technical point but a point of substance that once an employer had identified a particular reason attributable to a particular paragraph under section 98, it was not open to him thereafter to complain that the dismissal had been for a different reason. So, a fortiori, in this case it is not open to the Employment Appeal Tribunal to say that the dismissal is to be characterised as for some other substantial reason when it was originally formulated by the employer in terms of capability.
29. I do not think that Roskill LJ intended to lay down a rule as extensive as that, and certainly not to apply it to a case of this type. Nelson was a very particular case. The employer said that Mr. Nelson was redundant. It was only at a later stage that he relied before the tribunal, not on Mr. Nelson's redundancy, but on the fact that he had not co-operated reasonably with the employers in seeking to resolve the problems that arose from the termination of the original function in which he served the employer. Wholly different issues arise and wholly different considerations arise in a redundancy claim on the one hand and a conduct claim on the other. In Nelson's case, the employer indeed did seek to change the nature of the case, and the employment appeal tribunal as a result decided the matter on a factual basis different from that which the employer had originally asserted. That is not this case at all. The essential issues have remained the same throughout. The parties have known what the essential issues are throughout. It is simply a piece of nominalism and nothing more that causes it to appear that the basis upon which the employer is pursuing the matter has altered.
30. The second reason why it was said that the Employment Appeal Tribunal was not entitled to reach the conclusion that it did is that it, not once but twice, that the Employment Tribunal's error had been an error of mixed law and fact. Mr. Niemen referred the court to the judgment of Sir John Donaldson MR in O'Kelly v Trust House Forte [1983] ICR 728 in which he said that an Industrial Tribunal could only be reversed if it had made an error of law. It was not enough to talk of mixed questions of fact and law. It is necessary for an appellate body to go through a process which Sir John Donaldson referred to as 'purification' to extract out of the situation a discrete question of law. Mr. Niemen says that the Employment Appeal Tribunal did not go through that process. True it is that it did not do so in terms, but it is absolutely clear, despite the reference to mixed questions of fact and law, that the error in this case was an error of law. It was an error of characaterisation, an error of thinking that because the word 'capability' had been used in the proceedings, the case had to be characterised under section 98(2)(a): when in fact, as the Employment Appeal Tribunal rightly found, as a matter of legal identity it fell under section 98(1)(b).
31. There was therefore an error of law in this case on the part of the Industrial Tribunal, and that gave the Employment Appeal Tribunal jurisdiction to intervene. The Employment Appeal Tribunal was therefore right to say that the Employment Tribunal had erred. It erred by construing the case as one involving dismissal on grounds of capability by reason of health, where it should have characterised the case as one involving dismissal for another substantial reason, that is to say Mr. Wilson's failure to meet the requirements of the attendance procedure agreed by him through his trade union.
32. The Employment Appeal Tribunal went on to conclude that the matter should be decided by them and not remitted to the tribunal. They said this at page 9C:

"We think that in reliance upon the Industrial Tribunal's findings of fact in the agreed documentation we are in as good a position to resolve this matter."

33. On that basis they dismissed the complaint and found that Mr. Wilson had been fairly dismissed.
34. Again in a helpful argument Mr. Bruce Carr for the employers has urged us to uphold that part of the Employment Appeal Tribunal's reasoning. He says, and rightly says, that there are no further facts to be found in this case. He agrees that the mere fact that the Employment Appeal Tribunal is in as good a position as the Industrial Tribunal to resolve the matter is not a conclusive ground for the Employment Appeal Tribunal resolving it, but says that remitting the matter will be otiose and unnecessary because no reasonable tribunal could conclude other than that Mr. Wilson had been fairly dismissed. He rightly reminds us that the tribunal's job is not to substitute its own judgment for that of the employer, but to ask itself whether no reasonable employer could have acted otherwise than the employer did in these circumstances. If the matter goes back on the correct basis, which is that Mr. Wilson was dismissed because of his failure to comply with attendance procedure, Mr. Carr says there can be only one answer to that question.
35. In support of that argument Mr. Carr cited another Employment Appeal Tribunal case, International Sports Company v Thompson [1980] IRLR 340 where, in dealing with the correct way of disposing of an appeal in a case which had some similarity to the present, Sir Ronald Waterhouse, in giving the judgment of the tribunal, said at paragraph 18:

"We have reached the further conclusion that an Industrial Tribunal properly directing themselves in the light of the principles being discussed will inevitably reach the conclusion that the appellants have made out their case on the basis of the evidence that we have discussed and the relevant findings of fact".

36. Whilst I do not necessarily say that the inevitability of the result is the criterion that we should adopt, we have to remember that although the Employment Appeal Tribunal itself has of course industrial experience, it sits as an appellate tribunal from the Industrial Tribunal. The Industrial Tribunal is not merely a fact finding body, it is an industrial jury. That is not merely a phrase, but a concept that is to be taken seriously. It is only going to be in an extreme case, one that is very clear, that it is going to be possible for an appellate body properly to say that a jury would have inevitably reached the conclusion that the Employment Appeal Tribunal reached, when in the original case, albeit proceeding upon an incorrect basis, the Industrial Tribunal had come to a contrary conclusion. I do not think it is possible to say confidently in this case that if the matter is remitted on the basis that this court has indicated, it is inevitable that an industrial jury will consider that Mr. Wilson was fairly dismissed.
37. There are a number of considerations that are at least ones that should properly be considered by the tribunal which has the duty of considering fairness and unfairness, over and above the fact (which Mr. Carr very properly emphasises) that Mr. Wilson undoubtedly did not fulfil the requirements of the procedure and, so far as one can see, nobody has actually criticised the machinery or procedure by which the employer operated that procedure. I do not intend to say any more on that issue because in my view this matter should go back to the Employment Tribunal, and it would be inappropriate to appear to be giving them any guidance, save to say that they will no doubt have very clearly in mind the limits of their jurisdiction that Mr. Carr urged upon us.
38. In my judgment, therefore, this appeal must be allowed to the extent that the matter is remitted to the original industrial tribunal (if available) for the application to be re-considered in the light of the guidance given in this court and by the Employment Appeal Tribunal: that is to say on the basis that Mr. Wilson was dismissed for reasons of failure to comply with the attendance procedure and not on grounds of capability by reason of health. To that extent I will would this appeal.
39. MR. JUSTICE HOOPER: I agree.

No order as to costs.