England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE EMPLOYMENT APPEAL TRIBUNAL
Case No. UKEAT/0268/06/ZT

		Royal Courts of Justice Strand, London, WC2A 2LL
		31/07/2007

Lord Justice Wall :

Introduction

1. In a reserved decision promulgated on 15 February 2006, and after a hearing lasting three days (with a fourth spent considering its decision in chambers), the Employment Tribunal sitting at Ashford in Kent (the Tribunal) ruled that Mrs. Suzanne McAdie (the claimant before it and the appellant in this court) had been unfairly dismissed by her former employer, the Royal Bank of Scotland (the Bank). At the same time, the Tribunal reduced the compensation payable to the appellant by 50% pursuant to the decision of the House of Lords in Polkey v A.E. Dayton Services Limited [1988] AC 344 and dismissed her parallel claim based on sex discrimination. It fixed a remedy hearing for 4 April 2006 at which it awarded the appellant the sum of £53,083.75 by way of compensation for unfair dismissal.
2. The Bank appealed to the Employment Appeal Tribunal (the EAT) which heard its appeal, in a constitution comprising Underhill J, Mr. D Evans CBE and Mr. M Worthington, on 5 October 2006. In a reserved judgment, delivered on 29 November 2006, the EAT allowed the Bank's appeal and dismissed the appellant's claim. She now appeals to this court, permission having been given on paper by Sir Henry Brooke on 25 January 2007. At no stage, either in the EAT or in this court has the appellant sought to resurrect her claim for sex discrimination, nor are we in this appeal concerned with the amount awarded to the appellant by the Tribunal on 4 April 2006.
3. The general question raised by the appeal relates to the circumstances in which an employer can fairly dismiss an employee on the ground of that employee's "incapability for performing work of the kind which he was employed by the employer to do" (a potentially fair reason within section 98(1) and (2)(a) of the Employment Rights Act 1996 (ERA 1996)) when the employer's conduct has either caused, or materially contributed towards the employee's incapability.
4. This is a question on which there is divergent authority in the EAT, and in giving the appellant permission to appeal, Sir Henry Brooke commented that it seemed to him appropriate for this court to consider the earlier EAT authorities.

The statutory provisions

5. There is no dispute about the right not to be unfairly dismissed contained in ERA 1996, section 94(1). The position is governed by the relevant parts of ERA 1996, section 98, under the hearing Fairness, which read as follows:

98 General

(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 (or, if more than one, the principal reason) for the dismissal, and

(b) that it is either a reason falling within subsection (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 subsection 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.

(3) In subsection (2)(a)—

(a) "capability", in relation to an employee, means his capability assessed by reference to skill, aptitude, health or any other physical or mental quality.

(4) [In any other case where] the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)—

(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case.

6. In the instant case, it is common ground that the reason for the appellant's dismissal was "capability" within ERA 1996, section 98(2)(a) and (3)(a).

The facts

7. I take the facts largely from the Tribunal's findings, which have not been the subject of any criticism, either in the EAT or in this court.
8. The appellant was born on 20 October 1964. She left school at 17 and went to work on 6 September 1983 for the National Westminster Bank (Nat West). Her employment was transferred to the Bank when it took over Nat West. She was thus continuously employed from 6 September 1983 to the date of her dismissal, which occurred on 22 December 2004 and took effect on 16 March 2005. Over the course of her employment she had, in the Tribunal's phrase "moved through the ranks" and had been a valued employee. In 1995, she was in the position of Assistant Corporate Manager based in Croydon in South London. That was, the Tribunal found, a senior post. She had responsibility for some 45 members of staff, and was responsible for borrowings of up to £80 million. She also acted as the Personal Assistant to the Corporate Manager.
9. In 1995, the appellant was treated for breast cancer, and decided to opt for what was known as the Bank's "Option to Change" package. This involved a part-time post with less stress attached to it. The Tribunal found that the appellant was concerned that stress could be a trigger for cancer, and that she wanted to take all possible steps to remove unnecessary stress from her life.
10. The upshot was that the appellant moved to a post at the Bank's branch at Bromley in Kent as a customer service officer working 14 hours a week. In 1998, she moved into retail banking. In 2000 / 2001 she had a period of maternity leave.
11. On her return to work, a Mr. O'Shaughnessy became her manager. The appellant was concerned to learn on her return from maternity leave that Mr. O'Shaughnessy had reduced her assessment grade, and she submitted a grievance to the Bank. That grievance was upheld, and the Grade 3 awarded by Mr. O'Shaughnessy was increased to Grade 4, although the grievance officer did not accept that the appellant had been marked down by Mr. O'Shaughnessy because she had been on maternity leave.
12. In June 2003, Mr. O'Shaughnessy became the director of commercial banking in Bromley. In the following months, Mr. O'Shaughnessy identified staffing problems at the Bank's Swanley branch where one senior member of staff was leaving, and another was about to commence maternity leave. Mr. O'Shaughnessy then canvassed with the appellant a transfer from Bromley to Swanley. The appellant was reluctant to move. She lived in Eltham, and had created careful child care arrangements around the fact that she worked in Bromley. She also suspected that she was being asked to move because of the previous grievance she had raised against Mr. O'Shaughnessy On this point, the Tribunal made the following finding of fact:-

On balance, we accept that Mr. O'Shaughnessy weighed up these matters before coming to his decision that (the appellant) , due to her long experience and skills, would be the best person to send to Swanley. We find that the (appellant's) previous grievance had no bearing on that decision. He assured (the appellant) that the transfer would be for a period of six months only after which the other member of staff would be returning from maternity leave. In addition, he was satisfied that the travelling distance between Eltham and Swanley was not very much more than the travelling distance between Eltham and Bromley. The Tribunal also noted that (the appellant), albeit reluctantly, agreed to go to Swanley on this basis and understood why she had been selected, ie because of her skills and experience. It was confirmed to (the appellant) in writing that the transfer would be for a period of six months only.

9. The Tribunal therefore concludes, whilst understanding (the appellant's) uneasiness given her previous grievance against Mr. O'Shaughnessy that his decision was made on the basis of information available to him about the staff which could transfer to Swanley and it was not based on any wish to seek revenge in respect of that grievance.

13. It is also perhaps worth pointing out that it was a term of the appellant's employment that she could be asked to transfer her place of work to an alternative office within a reasonable travelling distance of her existing workplace. It does not appear to have been suggested in the hearing before the Tribunal that Swanley was not within a reasonable travelling distance from Bromley.
14. On 3 July 2003, the appellant sent Mr. O'Shaughnessy an Email in which she gave a number of reasons why she wished to remain in Bromley. These included "the stress or upset of being forced to move to another office". She said she that might consider resigning from the bank. Should she do so, her reason would be the transfer to Swanley. She also registered her concern that Mr. O'Shaughnessy had contacted the managers of the Croydon office and the retail office in Bromley to discuss her "releasibility", and thereby to ensure that neither offered her a post which prevented her move to Swanley. The Tribunal thought it unlikely that Mr. O'Shaughnessy had behaved in this way, but accepted that it remained a matter of concern for the appellant.
15. The Tribunal also found that on3 July Mr. O'Shaughnessy had a conversation with the appellant, in which the latter explained her previous medical history to him. He was thus aware from that point that the appellant wished to avoid stress, but did not alter his decision to transfer the appellant to Swanley. He also sent a copy of the appellant's Email to his manager, Mr. Geerts, warning him that he was likely to get a complaint from the appellant.
16. On 4 July, the appellant did indeed send an Email to Mr. Geerts complaining about the situation. He arranged to meet the appellant on 17 July 2003. In the meantime, the appellant began to work in Swanley on 10 July 2003.
17. The appellant told the Tribunal that the meeting with Mr. Geerts on 17 July had been both "open and positive". She left feeling she had been able to raise all her points. However, she was not sent a note of the meeting until 18 August. The appellant was dissatisfied with the note, which had been taken by a Ms Jones. The appellant took the view that there were a number of omissions in respect of matters which had been discussed at the meeting. In her evidence to the Tribunal, Ms Jones accepted that there were indeed omissions, but that the note had not been intended as a verbatim account of the meeting.
18. The Tribunal's finding was that the matters omitted from the note of the meeting on 17 July 2003, and the Bank's subsequent failure to tackle them, lay at the heart of the case. The Tribunal made the following finding on this point:

17. The Tribunal finds that the matters omitted from that note were the history of the previous grievance against Mr. O'Shaughnessy and the (appellant's) concerns that that might have influenced his selection of her to transfer to Swanley; the (appellant's) concerns about the reasons for her transfer and whether or not she had been displaced from a member of staff transferring from Croydon; the (appellant's) concerns about her health; her concerns about travelling. The Tribunal finds that the (appellant's) concern about Mr. O'Shaughnessy's unsympathetic handling of the mater is contained in the note, as is the (appellant's) concern abut "blocking", although not in any detail.

19. Having discussed the matter with the appellant on the telephone, Ms Jones then referred it to Mr. Geerts. The latter then spoke to the appellant on the telephone. There was a dispute between the appellant and Mr. Geerts about the content of that telephone call. The Tribunal made the following findings of fact about it: -

20. Mr Geerts spoke to the (appellant) in an increasingly firm manner, as confirmed by Ms Jones during her evidence. At the Tribunal, Mr. Hunter (a senior employee of the Bank, who heard the appellant's appeal against her eventual dismissal – see below) described Mr. Geerts' behaviour as "unfortunate but within the bounds of reasonableness". The Tribunal considers it not surprising that the (appellant) felt bullied and intimidated. The Tribunal funds that Mr. Geerts raised his voice to make his point. He told the Tribunal that the (appellant) interrupted him; we find that he interrupted the (appellant) and consequently they spoke across each other to a certain extent. We find that Mr. Geerts became increasingly frustrated at the (appellant's) attempts to put her point of view and, in Ms Jones's words to the Tribunal, said "listen to me, listen to me" in evident frustration, rather than allowing the (appellant) to put her points. The (appellant) became increasingly upset and nothing was achieved. In arriving at these findings, the Tribunal has taken account of the evidence of the three people involved in that telephone call and has noted their demeanour at the hearing. The Tribunal was satisfied that Mr. Geerts had acted in the manner described by the (appellant) and that Mr. Hunter, although not a witness to the conversation, accepted that that was the case from the (appellant's) description to him. This suggests to the Tribunal that such behaviour from Mr. Geerts did not cause Mr. Hunter any surprise.

20. Following the telephone call, Mr. Geerts asked Mr. O'Shaughnessy to consider bringing forward the appellant's return to Bromley. Mr. O'Shaughnessy was willing to do so immediately, but Mr Geerts suggested her return should be delayed until 1 November. The Tribunal found that he did so "in order to stamp his authority on the situation, particularly in view of his opinion that (the appellant) was used to getting her own way". The Tribunal also found that this approach was characteristic of his approach to the appellant during their telephone call.
21. On 4 September 2003, Mr. O'Shaughnessy spoke to the appellant about her return to Bromley. Her reaction was significant. The Tribunal found on this point:-

24. Mr O'Shaughnessy had spoken to the (appellant) on 4 September 2003. The (appellant) felt that if she could be moved back to Bromley fairly quickly then it may not have been necessary to transfer her in the first place and this caused her added concern. She told the Tribunal that she felt that "they were playing with me".

22. On 9 September 2003, Mr. Geerts wrote to the appellant apologising for the delay in getting the notes of the meeting on 17 July to her and asking for her comments on the matters she said had been omitted. He also explained that he had asked Mr. O'Shaughnessy to discuss the transfer back to Bromley with her. This, of course, Mr. O'Shaughnessy had already done.
23. In the event, the appellant was signed off sick from 10 September 2003, and did not therefore return to work. What happened was that she wrote to Mr. Geerts on 17 September setting out the points she asserted were missing from the notes. She also made a reference to the telephone conversation on 4 September, saying: "I am extremely upset and concerned at the tenor of our conversation on 4 September and found you manner to be extremely intimidating and bullying". She received no reply to that letter, and sent a reminder on 15 October.
24. Mr Geerts replied on 20 October. He stated that it was not his intention to be intimidating and bullying and did not believe he had been. The Tribunal found, however, that the tone of his letter illustrated that "Mr Geerts was still frustrated at the situation".
25. The appellant submitted her first grievance to the Bank on 6 November 2003. It was not well handled. Mr. Geerts did not reply until 1 December, and the Tribunal expressed its concern that "such a large organisation as the (Bank) with a Human Resources Department would countenance such a delay in dealing with a formal grievance letter".
26. The essence of the appellant's grievance was her complaint about the transfer to Swanley and her belief that she had been displaced by a member of staff from Croydon. She also complained about Mr. Geerts' conduct on the telephone and about the minutes of the meeting of 17 July.
27. The person initially identified as hearing the grievance turned out to be junior to Mr. Geerts and eventually the Managing Director of Commercial Banking South, Mr. James May, referred it to a Ms Magson, who was the Regional Director for another region. The manner in which Ms Magson dealt with the appellant's grievance was also not satisfactory. She dismissed the bulk of the appellant's complaints, but accepted that there needed to be an apology to the appellant about the delays in responding to the appellant's correspondence. The Tribunal held that it was not clear to it why that part of the grievance could not have been upheld.
28. Ms Magson wanted to get the appellant back to work. However, the appellant now explained that because of the way she felt, she was unable to go to Bromley to shop and could not contemplate returning to work there:- see paragraph 42 of the Tribunal's reasons.
29. On 23 February 2004, Mr. Geerts wrote to the appellant apologising for his delays in dealing with the appellant's letters. However, the appellant was not satisfied and took her grievance to the next stage. This was considered by Mr. May.
30. On 22 April 2004, Mr. May wrote to the appellant with his decision not to uphold the grievance. The Tribunal recorded its findings in this regard in paragraphs 46 to 48 of the judgment:

46. Mr May considered the grievance at Stage 2. The (Bank's) grievance policy at page 78 says that at Stage 2 there will be a meeting "where necessary". He considered that it was not necessary to meet with the (appellant) and therefore carried out a review on the papers. He had invited the (appellant) to provide any further information she wanted to and she had done this on 6 April 2004 (page 249). In that letter, in answer to Mr May's question, what would she see as a suitable resolution, she said "it is extremely difficult to verbalise exactly how I feel after 20 years in the bank's employment. I am not experienced in these matters, but the only suitable resolution in my opinion, albeit not one that I wish to take, would be for the bank to offer me recompense for the losses I would incur if I were to leave the bank employment." (my emphasis)

47. On 22 April 2004 Mr May wrote to the (appellant) with his decision not to uphold the grievance. He reiterated the apologies for the delays in correspondence. With regard to Mr Geerts' conduct he drew the (appellant)'s attention to the Dignity at Work policy but said that he had considered the matter and, based on Ms Magson's investigation, considered that there was no evidence to suggest that there had been any inappropriate comments, intimidation or bullying by Mr Geerts. The Tribunal notes that Ms Magson had only carried out an initial investigation which had involved speaking to Mr Geerts and Ms Jones on the telephone. Mr May, although purporting to deal with that part of the complaint, based his decision on Ms Magson's initial investigation. Therefore, the Tribunal finds that that matter was never properly investigated before the grievance was rejected.

48. Mr May went on to offer the (appellant) a return to work at either Bromley, Croydon or Swanley or another location outside of commercial banking if she wished. Mr May assured the (appellant) that she was a valued member of staff. The (appellant) told the Tribunal that she accepted that Mr May had done his best to get her back to work. It was her view that, by then, it was too late and her health had been affected. (my emphasis)

31. The appellant remained dissatisfied, and took her complaint to Stage 3 of the grievance procedure. The Bank took the view that there was not enough new evidence for the matter to go to stage 3, although the grievance was considered by a Ms Tordoff, another senior official of the Bank. Nothing, however, came from Ms Tordoff's investigation, and on 19 July 2004, the Bank sent a letter to the appellant inviting her to a "long-term sickness absence meeting on 4 August 2004". Following the collection and consideration of medical reports on the appellant, she was eventually dismissed at a meeting called by the Bank on 22 December 2004. The letter of dismissal, written by Mr. May on 23 December is in our papers: it rejected the appellant's claims about the manner in which she had been treated, and asserted that the grievance procedure had been properly implemented. Mr. May also stressed that he had:-

always been keen to facilitate a return to work for you in terms of either a return to Bromley Commercial Centre or by assisting you in seeking redeployment to an area of your choice within the Bank of the RSB group.

Mr. May, however, noted, the following:

You also confirmed on a number of occasions in our meeting that you are unable to consider any form of return to work now or in the short term.

Having then recorded the appellant's terms for resolving the matter (those already recorded in paragraph 29 of this judgment) Mr. May stated: -

This proposal, however, is not an acceptable resolution for the Group.

I must therefore advise you that given the medical evidence I have reviewed your situation. In our discussions yesterday, you confirmed that you are unable to consider a return to work and that you do not see that there is a suitable resolution that could enable you to return to work. On the basis that you have now been absent since 10^th September 2003, you ongoing absence cannot be maintained indefinitely.

Accordingly, as outlined above, you were advised that I had decided that you were to be dismissed from the service of the Group for Capability on the grounds of ill health.

32. The appellant unsuccessfully appealed against her dismissal. That appeal was heard by Mr. Hunter, to whom reference has already been made.

The medical evidence

33. The appellant was seen by her general practitioner, the Bank's Occupational Health and Safety Consultant and an Occupational Health Physician (Dr Harvey). The Tribunal's findings in relation to the appellant's health were as follows:-

63. The Tribunal finds that the Claimant's medical condition was, as described by Dr Harvey, "a severe adjustment disorder secondary to alleged workplace issues including harassment". She was not taking any medication for this condition and had not received any psychological treatment at the time she saw Dr Harvey. He was not convinced that any treatment would make a substantial difference because of "the depth of her ill-feeling towards the employers and the strength of her sense of injustice". He thought that recovery would realistically only happen if there were satisfactory resolution of the issues at work which he commented "now appears impossible". Dr Harvey doubted that a return to work was feasible "since the employee would require a complete reversal of the bank's position, presumably some recompense and I do not see how she could return to work in the same environment as she did previously".

The Tribunal's conclusions

34. The Tribunal expressed its conclusions on the issue of unfair dismissal in paragraphs 81 to 88 of its reasons, which I propose to set out in full:-

Unfair Dismissal

81. The Tribunal concluded that the reason for dismissal was capability. This is a potentially fair reason for dismissal. The Respondent had obtained medical reports about the Claimant's medical condition and had discussed the matter with the Claimant before dismissing her.

82. However, the Tribunal considered that to decide the unfair dismissal on this basis would be to oversimplify the circumstances of this case. The Tribunal concluded that the Claimant's health condition had been caused by the Respondent and the way in which they had dealt with her grievance. We should therefore take this into account in considering the fairness of the dismissal.

83. We concluded that the reason for the Claimant's incapacity was the failure of the Respondent to address her original grievance in respect of Mr Geerts and in particular his failure to amend the minutes to reflect the discussion that had taken place and the way in which he had spoken to the Claimant on the telephone on 4 September 2003. The Tribunal concluded that these two issues were never properly addressed despite the lengthy procedure that had occurred.

84. The Tribunal concluded that Ms Magson had missed the point with regard to the minutes and had not properly investigated the allegations with regard to the telephone call, believing that she could not deal with that matter. Although she felt that she could not deal with it she recommended that the Claimant did not pursue it. Mr May then dealt with it, but on the basis of Ms Magson's incomplete investigation. Therefore, the matter was never properly resolved and nothing was done to ensure that the Claimant and Mr Geerts could work together in the future. The Tribunal concluded that any reasonable handling of this grievance would have ensured that this was one of the outcomes.

85. The Tribunal noted that during his evidence Mr Hunter referred to the telephone call and in particular Mr Geerts' manner as "unfortunate". This had never been recognised by the Respondent or conveyed to the Claimant. In fact, the opposite had happened and her grievance had not been upheld in respect of this complaint.

86. The Tribunal concluded that the Respondent had gone through the motions in respect of their procedure but had never properly addressed the complaint that was being made. This in turn had had an effect on the Claimant's health.

87. Having reminded itself that the Tribunal must not substitute its own view of what should have occurred, the Tribunal were satisfied that no reasonable employer would have dismissed in these circumstances because no reasonable employer would have found themselves in these circumstances. A reasonable employer would have investigated the matter properly at an early stage. If, despite such an investigation, the outcome was not satisfactory to the Claimant the employer would have been on firm ground to consider termination of employment in due course.

88. The parties had invited the Tribunal to consider a Polkey reduction.

The Bank's appeal to the EAT

35. The Bank appealed to the EAT. Its principal ground of appeal was that the Tribunal had erred in law by asking itself the wrong question in paragraph 87 of its reasons. It should have asked itself: "Having contributed to the illness, what would a reasonable employer do in these circumstances, particularly given the evidence that Mrs. McAdie (at that point the respondent to the Bank's appeal) was not going back to work in any circumstances?" The consequence, it was argued, was that where an employer had caused the condition for which the employee was dismissed, the employer could never fairly dismiss the employee.

The judgment of the EAT

36. Having set out the facts and the Tribunal's conclusions, the EAT examined the three decisions of previous constitutions of the EAT in which an employer had dismissed an employee on account of ill-health or incapacity for which the employer had been wholly or partly responsible. These were: (1) London Fire and Civil Defence Authority v Betty [1994] IRLR 384 (Betty); (2) Edwards v Governors of Hanson School [2001] IRLR 132 (Edwards); and (3)Frewin v Consignia Limited (unreported EAT / 0981 / 02) (Frewin).
37. In relation to those authorities, the EAT commented in the following terms:-

In Betty Morison P appeared to say that the fact that the employer had been responsible for the incapacity which was the reason for a dismissal should as a matter of principle be ignored in deciding whether it was reasonable to dismiss for that reason. But Bell J in Edwards and Judge Reid QC in Frewin expressed the view that, if that was what Morison P meant, it over-stated the position. We agree. It seems to us that there must be cases where the fact that the employer is in one sense or another responsible for an employee's incapacity is, as a matter of common sense and common fairness, relevant to whether, and if so when, it is reasonable to dismiss him for that incapacity. It may, for example, be necessary in such a case to "go the extra mile" in finding alternative employment for such an employee, or to put up with a longer period of sickness absence than would otherwise be reasonable. (We need not consider the further example, suggested by Bell J in Edwards, of a case where the employer, or someone for whose acts he is responsible, has maliciously injured the claimant, since there is no suggestion that those are the facts here. But we should say that we find some difficulty with the implication that in such a case there could never be a fair dismissal.) However, we accept, as did Bell J and Judge Reid, that much of what Morison P said in Betty was important and plainly correct. Thus it must be right that the fact that an employer has caused the incapacity in question, however culpably, cannot preclude him for ever from effecting a fair dismissal. If it were otherwise, employers would in such cases be obliged to retain on their books indefinitely employees who were incapable of any useful work. Employees who have been injured as a result of a breach of duty by their employers are entitled to compensation in the ordinary courts, which in an appropriate case will include compensation for lost earnings and lost earning capacity: tribunals must resist the temptation of being led by sympathy for the employee into including granting by way of compensation for unfair dismissal what is in truth an award of compensation for injury. We also agree with Morison P in sounding a note of caution about how often it will be necessary or appropriate for a tribunal to undertake an enquiry into the employer's responsibility for the original illness or accident, at least where that is genuinely in issue: its concern will be with the reasonableness of the employer's conduct on the basis of what he reasonably knew or believed at the time of dismissal, and for that purpose a definitive decision on culpability or causation may be unnecessary.

38. The EAT thus proceeded on the basis that the Tribunal had not erred in principle in being prepared to take into account the fact (as it found) that the Bank was responsible, and culpably so, for the appellant's ill-health. The EAT went on, however, to add the following observations: -

it is important to focus not, as such, on the question of that responsibility but on the statutory question of whether it was reasonable for the Bank, "in the circumstances" (which of course include the Bank's responsibility for her illness), to dismiss her for that reason. On ordinary principles, that question falls to be answered by reference to the situation as it was at the date that the decision was taken. Thus the question which the Tribunal should have asked itself was "was it reasonable for the Bank to dismiss Mrs. McAdie on 22 December 2004, in the circumstances as they then were, including the fact that their mishandling of the situation had led to her illness?"

That was not the approach which the Tribunal avowedly took. The elegantly-expressed reasoning at para. 87 of the Judgment - "no reasonable employer would have dismissed in these circumstances because no reasonable employer would have found themselves in these circumstances" – focuses explicitly not on what it was reasonable for the Bank to do in the circumstances in which it found itself (however culpably) but on whether it should have got into those circumstances in the first place. If that is really the approach taken by the Tribunal it was plainly a misdirection. It would apply in any case where the employer has negligently injured an employee and would have the result, which as we have said above is not the law, that the employer in such circumstances could never fairly dismiss.

We have considered whether this may not be a case where the Tribunal surrendered to the temptation of a pithy phrase and in so doing misrepresented what were in fact its real reasons. But the entirety of the reasoning in the paragraphs set out above is in keeping with para. 87. The focus is wholly on establishing that Mr. Geerts had behaved badly towards Mrs. McAdie; that the Bank had never properly resolved the grievance arising out of that conduct; and that that was the cause of Mrs. McAdie's illness. There is no consideration of what, having reached that regrettable situation, it was reasonable for the Bank to do. It is also worth noting that in its reasoning on the Polkey issue, the hypothetical fair procedure considered by the Tribunal was one in which either Ms. Magson or Mr. May had fully investigated Mr. Geerts' conduct at stage 1 or stage 2 of the grievance procedure – i.e. over six months previously.

39. The EAT then considered the question of what would have happened had the Tribunal not misdirected itself: -

It remains for us to consider whether, if the Tribunal had asked itself the right question, it could properly have concluded that the Bank's decision to dismiss Mrs. McAdie was outside the range of reasonable responses: if so, the right course would be for us to remit the case for the Tribunal for further consideration. But we do not believe that such a conclusion would be open on the facts of this case. The position as at 22 December 2004 was very stark. The medical evidence was unequivocal both that Mrs. McAdie was unfit for work and that there was no prospect of recovery: even if the Bank had been able to offer some solution (perhaps involving a re-opening of the grievance or a full apology) that was not going to be acceptable – see para. 1(6) above. Mrs. McAdie herself said the same, both to the Bank and in her evidence to the Tribunal - see paras 1(4), (7) and (8). She wanted the employment to terminate, but she wanted compensation. This was not therefore a case of the kind to which we refer at the end of para. 4 above, where there was something more which the Bank, having caused the illness, could and thus should have done to try to save Mrs. McAdie's employment. Mr. Over, who appeared for Mrs. McAdie both before us and in the Tribunal, submitted that if Mr. May had, on 22 December, acknowledged the Bank's failings up to that point and given her the chance to reconsider her position in the light of that recognition, there was a good chance that she might have done so and a return to work have been negotiated: instead, the Bank was, up to the last, making sympathetic noises but refusing to acknowledge that it had done anything wrong. But even if there was some chance that a belated recognition of error might have borne fruit (which the available evidence hardly supports), the question is whether it was unreasonable of Mr. May not to have taken that course. We do not see how it could be. The crucial point is that neither the doctors nor Mrs. McAdie herself were suggesting that there was any possibility of the employment continuing. Mrs. McAdie was saying the opposite, and in emphatic terms. There was in truth no alternative to dismissal.

9. In these circumstances we must allow the appeal and dismiss Mrs. McAdie's claim. We do not do so without feeling real sympathy for her. The Tribunal found that the Bank failed to carry out its own grievance procedures properly. Even if that factor contributed to, rather than wholly causing, Mrs. McAdie's break-down in health, it is very regrettable that that has led to her losing her employment after twenty years' loyal and valued service. But the Tribunal was not hearing a claim for damages of the Eastwood v Magnox or Majrowski type (see [2005] 1 AC 503 and [2006] ICR 1199). It was only entitled to award compensation if the Bank's decision to dismiss Mrs. McAdie was unreasonable in the circumstances in which it was taken.

Discussion

40. I have cited at length from the EAT's judgment because I find myself both in complete agreement with it and, at the same time, reluctant to add to it. For the appellant, Mr. Christopher Over was, in my judgment, placed in an impossible position. He was constrained to argue that because of its behaviour and its responsibility for the appellant's condition, the Bank, as a matter of law, was simply unable fairly to dismiss the appellant. Any dismissal on these facts, Mr. Over argued, would have been, and was, unfair.
41. In my judgment, that argument is plainly unsustainable, both on the authorities and for the reasons given by the EAT. The EAT was plainly right, for the reasons it gave, to find that the Tribunal had misdirected itself in law in paragraph 87 of its reasons.
42. Mr Over was constrained to accept, in argument, that it was possible on the authorities for an employer who had negligently been responsible for personal injuries suffered by an employee in the course of his employment nonetheless subsequently to dismiss the same employee on the ground of capability without rendering the employer liable to a claim for unfair dismissal. Given that the reason for the dismissal in the instant case – an indefinite incapability on the part of the appellant to do her job – and given that the manner in which the appellant was dismissed was procedurally fair – Mr. Over was quite unable to provide a rationale which distinguished the appellant's case from the case of the employee who had been dismissed following an industrial accident which had rendered that employee incapable of continuing in his employment.
43. Mr. Over's other principal difficulty seemed to me to stem from the facts as found by the Tribunal. The appellant had made it crystal clear that – no matter what anybody said or did – she was not coming back to work for the Bank – see; (1) the terms of the dismissal letter set out at paragraph 31 above; (2) paragraph 48 of the Tribunal's reasons set out at paragraph 30 above; and (3) the terms of the medical evidence which the Tribunal summarised in paragraphs 63 of its reasons (see paragraph 33 of this judgment). It might have been different if the appellant's case had been that she was willing to try again – but, plainly, she was not. In my judgment, therefore, Mr. Over had no answer to the question: "what was the Bank to do in these circumstances?" save to fall back on the mantra that the Bank's behaviour had been so poor, and its responsibility for the appellant's condition so total that there were no circumstances in which it could, fairly, dismiss the appellant. As I have already indicated, that proposition is, in my judgment, simply untenable.

The authorities

44. Mr. Over sought to attack the EAT's analysis of the three authorities identified in its judgment by submitting that in finding; (1) that Betty remained good law, and; (2) that by holding that much of what Morison J had said in that case was "important and plainly correct" the EAT had misdirected itself, since the ratio decidendi of Betty was that an Employment Tribunal should not investigate the cause of an employee's incapacity which had led to that employee's dismissal. By relying on Betty, he argued, the EAT had wrongly criticised the Tribunal for focusing on what had happened in the past, and on whether or not the Bank's past behaviour was reasonable. By wrongly relying on Betty the EAT had also failed to make the distinction between a culpable act in the past and a continuing and culpable course of behaviour running right through the grievance and dismissal process.
45. In short, Mr. Over submitted, this was a case in which the EAT had misdirected itself on the authorities. This was, accordingly, one of those cases in which the employer's conduct, and its responsibility for its employee's incapability for performing her work was such as render its subsequent dismissal of its employee unfair.
46. In my judgment, the EAT did not misdirect itself on the authorities. I have taken the opportunity afforded by the period over which this judgment has been reserved to re-read both the three cases identified by the EAT and the EAT's analysis of them. Having done so, I not only agree with the EAT's analysis of the authorities, but find myself unable either to add to, or improve on it.
47. In my judgment, the EAT's analysis is a wholly accurate summary of the effect of the three cases to which it refers, and should henceforth be followed by both Employment Tribunals and the EAT itself. Like the EAT we do not think it necessary to consider the further example, suggested by Bell J in Edwards of a case where the employer maliciously injures the claimant. No doubt if such a case arises, it will fall to be considered on its facts and in the light of the judgment of the EAT in the instant case. It is sufficient, I think, to say that on the facts of this case, the Bank's culpability in bringing about the appellant's incapability is plainly not a basis upon which it can be said that her dismissal was unfair.
48. In giving permission to appeal, Sir Henry Brooke, as I have already stated, commented that it would be appropriate for this court to consider the earlier EAT authorities referred to in the judgment of the EAT in this case. In the event, however, having done so, I do not think it either necessary or appropriate for this court to do anything other than express its agreement with the EAT's analysis.
49. For all these reasons, I would, accordingly, dismiss this appeal.

Lord Justice Rix

50. I agree.

Lord Justice Buxton

51. I also agree.