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
HHJ PETER CLARK
UKEAT/0427/06/RN (BAILII: [2007] UKEAT 0427_06_1210 )

		Royal Courts of Justice Strand, London, WC2A 2LL
		23/07/2008

Lord Justice Mummery :

The appeal

1. Until he dismissed them on 5 March 2005 for misconduct the appellant employed the three respondents as receptionists in his general medical practice at Deane Clinic. The dismissals followed interviews and suspensions on 6 January 2005 and a disciplinary hearing on 9 February 2005. The employees appealed on 8 March 2005. Their appeals were heard on 4 July 2005 and dismissed on 8 July 2005.
2. The employees' numerous claims against the employer in the employment tribunal (ET) included ordinary and automatic unfair dismissal. Their case is that the employer is liable to them for ordinary unfair dismissal under section 94-98 of the Employment Rights Act 1996 (the 1996 Act), alternatively for automatic unfair dismissal under section 98A as a result of procedural unfairness on his part in not completing the applicable statutory procedure within a reasonable time.
3. The employees failed on both sorts of unfair dismissal in the ET, which sent its judgment to the parties on 23 May 2006. Their appeal to the Employment Appeal Tribunal (EAT) met with partial success. On12 October 2007 their appeal was allowed on the claim for automatic unfair dismissal, but was dismissed on all other grounds. The EAT remitted the automatic unfair dismissal issue to the ET for re-hearing.
4. On 12 December 2007 Sir Henry Brooke granted the employer permission to appeal on that issue to this court. On 14 January 2008 I granted the employees permission to appeal from the dismissal by the EAT of the remainder of their appeals. The ET and the EAT had rejected their claims for ordinary dismissal and for wrongful dismissal and an additional claim by one of them (Ms Sandra Wilmot) for disability discrimination.

The law

5. The employer's appeal raises a procedural point of general application in unfair dismissal law. A line of recent EAT decisions lends support to the employees' case: Khan v. Home Office (17 November 2006-UKEAT/0026/06); Patel v. Leicester City Council (20 December 2006-UKEAT/0368/06); Sovereign Business Integration PLC v. Trybus (15 June 2007-UKEAT/0107/07); Yorkshire Housing Ltd v. Swanson (12 June 2008-UKEAT/0057/07.) This is the first time that the point has been considered in this court. It turns on the construction of the automatic unfair dismissal provisions in cases of procedural unfairness covered by section 98A of the 1996 Act. The section states that-

"(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if-

(a) one of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 (dismissal and disciplinary procedures) applies in relation to the dismissal,

(b) the procedure has not been completed , and

(c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.

(2) Subject to subsection (1) failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of section 98(4)(a) as by itself making the employer's action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure.

(3) For the purposes of this section, any question as to the application of a procedure set out in Part 1 of Schedule 2 to the Employment Act 2002, completion of such a procedure or failure to comply with the requirements of such a procedure shall be determined by reference to regulations under section 31 of that Act."

6. It is common ground that section 98A(1)(a) is satisfied. The "Standard Procedure" in Chapter 1 of Part 1 of Schedule 2 to the Employment Act 2002 (the 2002 Act) applied in relation to the dismissal of the employees. The applicable Dismissal and Disciplinary Procedure (DDP) stipulates that three procedural steps are to be followed in relation to a dismissal – statement of grounds for action and invitation to meeting (Step 1); meeting (Step 2); and appeal (Step 3). The dispute is whether or not the DDP was "completed" within the meaning of section 98A(1)(b).
7. The employer successfully argued in the ET that the procedure had been completed. All three steps, including the Step 3 appeal, had taken place. There were no more steps left for the employer to take. The procedure was all over and done with-finito. However, the employees successfully argued in the EAT that the procedure had not been completed. The EAT agreed with them that, in relation to Step 3, the employer had not complied with the "General Requirements" in Part 3 of Schedule 2 to the 2002 Act. The general requirements are procedural standards (e.g.reasonableness) to be observed in the process rather than procedural steps to be followed through from beginning to end. Thus paragraph 12 of Part 3 (Timetable) provides that-

"12. Each step and action under the procedure must be taken without unreasonable delay."

8. The employees' case is that there was unreasonable delay on the part of the employer in relation to the Step 3 appeal (4 months to dispose of the appeal.) The combined effect of section 98A and regulations made in 2004 under section 31 of the 2002 Act is, it was submitted, that the procedure has not been completed. That fact was attributable to the failure of the employer to comply with the general requirement that Step 3 must be taken without unreasonable delay. Non-compliance with the requirement made the dismissal automatically unfair within section 98A.
9. The employer denies that there was unreasonable delay in the appeal, and argues that, even if there was, that does not make the dismissals automatically unfair, as the procedure has in fact been completed. "Completed" is an ordinary English word. It has a settled meaning in the English language. It is not given any special meaning in the 1996 Act, the 2002 Act or the 2004 Regulations. On any sensible reading of section 98A(1)(b) the procedure was "completed" when the appeal was dismissed on 8 July 2006. There were no more steps left that the employer could take.
10. The cross references in section 98A to the Secretary of State's power to make regulations and to the regulations made in 2004 pursuant to the power under the 2002 Act make it necessary to consider what effect (if any) they have on the construction of section 98A(1)(b).
11. Under section 31(6) of the 2002 Act the Secretary of State may for the purposes of the section by regulations

(a) make provision about the application of the statutory procedures;

(b) make provision about when a statutory procedure is to be taken to be completed;

(c) make provision about what constitutes compliance with a requirement of a statutory procedure;

(d) make provision about circumstances in which a person is to be treated as not subject to, or as having complied with, such a requirement;"

12. Pursuant to section 31(6) the Secretary of State made the Employment Act 2002 (Dispute Resolution) Regulations 2004 (the Regulations). Regulation 2 states that

"(1) In these Regulations-

"non-completion" of a statutory procedure includes non-commencement of such a procedure except where the term is used in relation to the non-completion of an identified requirement of a procedure or to circumstances where a procedure has already been commenced."

13. Regulation 12 deals with failure to comply with the statutory procedures-

"(1) If either party fails to comply with a requirement of an applicable statutory procedure, including a general requirement contained in Part 3 of Schedule 2 then, subject to paragraph (2), the non-completion of the procedure shall be attributable to that party and neither party shall be under any obligation to comply with any further requirement of the procedure.

(2) Except as mentioned in paragraph (4), where the parties are to be treated as complying with the applicable statutory procedure, or any requirement of it, there is no failure to comply with the procedure or requirement."

The ET decision

14. The ET was against the employees on this point.

"42. In this case the procedure was completed and consequently there was no failure to comply with the statutory requirements. Consequently the submission that the claimants were automatically unfairly dismissed pursuant to section 98A Employment Rights Act 1996 is not well founded and is dismissed."

The EAT decision

15. The EAT rejected the ET's reasoning based on the proposition that the DDP had been completed. Rather than substitute a finding of automatically unfair dismissal the EAT remitted the matter to the ET for a finding as to whether or not the delay in holding the internal appeal was reasonable. The facts had not been determined by the ET in view of its finding that the statutory procedure was completed.
16. The EAT reached its conclusion after a detailed consideration of the statutory provisions and the EAT authorities on this point. The EAT held that the weight of authority favoured the employees. Although not strictly bound by those authorities, it was in the interests of comity that it should strive to follow the earlier decisions, unless they appeared to be manifestly incorrect. I agree with that approach. Procedural consistency is preferable where possible.
17. Authorities apart, the EAT recognised the force of the employer's argument that in section 98A non-completion of the procedure and non-compliance with its requirements are distinct concepts and that to "complete" simply means to finish, but concluded as follows-

"49.Notwithstanding the forceful argument presented by Miss Woodward, we are not persuaded that we should depart from the earlier decisions of Khan, Patel and Trybus. These cases all proceed on the basis that a failure to comply with the requirements of the statutory procedure preclude completion of that procedure. In particular the passage cited from the judgment of Keith J in Patel demonstrates that the argument advanced by Miss Woodward in the present case was considered and rejected in that case."

18. In the relevant passage of his judgment in Patel Keith J said-

"32. …..A procedure will only have been completed if it has been completed in accordance with the requirements of Schedule 2 to the 2002 Act. One of those requirements is that the steps required to be taken be taken without unreasonable delay. If a step is not taken without unreasonable delay, the procedure will not have been completed in accordance with the requirements of Schedule 2. If the position was otherwise, there would be no sanction for employers who unreasonably delay completing any of the steps set out in the statutory procedures."

19. HHJ McMullen QC reached the same conclusion in Khan at paragraph 88 and Mrs Justice Cox in Yorkshire Housing at paragraph 67 ("though not without some unease".)

Discussion and conclusion on automatic unfair dismissal

20. Mr Peter Oldham, who appeared for the employees in this court (but not in the Tribunals below), not surprisingly relied on the fact that the EAT's construction in this case accorded with prior EAT decisions. Due weight should be given to the repeated view of the specialist appeal body in this field.
21. In any case, he said, the EAT's construction of section 98A was plainly right. The timetable requirement was "adjectival" meaning that it was to be implied into the procedure to be followed. The EAT's construction was also consistent with the expansive interpretation given to "non-completion" in Regulation 2(1) quoted in paragraph 12 above.
22. On the employer's construction Mr Oldham said that the employee would be put to an election either to continue to participate in the DDP, despite delay which might be unreasonable, or to cease to participate and hope that an ET agreed with him that the delay was unreasonable. If the employee ceased to participate and the ET held that the delay was not unreasonable, the employee would risk losing up to 50% of the value of his claim in respect of dismissal, because he would not have complied with a requirement of the DDP for the purposes of section 32(2)(b) of the 2002 Act. Parliament, said Mr Oldham, could not have intended to put employees to an election fraught with adverse consequences in circumstances in which an employer had complete control of the timetable and the employee had to react to it.
23. Miss Woodward supported the employer's appeal with the submission which she had made to the EAT. She developed it along the following lines. The intention of Parliament, as expressed in section 98A, was to distinguish between the completion of the steps in the procedure and non-compliance with the requirements of the procedure. "To complete" a procedure signifies, in its ordinary meaning, to finish it. In this case the three steps in the standard procedure have been completed. There was nothing more that needed to be done in order to complete it. There is no justification for adding to section 98A(1)(b), as the employees would, the words "in accordance with the requirements of Schedule 2 to the 2002 Act."
24. Miss Woodward pointed out that the effects of non-compliance with the requirements were dealt with in the Regulations, in particular in Regulation 12 (1). An employee facing delay was left with the choice of agreeing to complete the procedure and claiming an increase in compensation, if the ET agrees that the delay in completing any of the steps under the applicable procedure is unreasonable, or of refusing to comply with any further requirement of the procedure. If he chooses the latter, the procedure will not be completed, but the non–completion will be attributed to the employer. Even if the delay did not make the unfair dismissal automatically unfair, it would be relevant to the issue of reasonableness of ordinary unfair dismissal under section 98(4) of the 1996 Act.
25. With the benefit of fuller argument than has been available to any tribunal in reaching its decision, I have reached the conclusion that there was no error of law in the ET's decision on the construction of section 98A. In my judgment, the section distinguishes between three things: the applicable procedure, the completion of the procedure and compliance with the requirements of the procedure. The question whether the procedure applies obviously has to be addressed before the question whether the procedure has been completed. If the procedure does not apply in relation to the dismissal, the question whether it has been completed never arises. Similarly, the question whether the procedure has been completed must be addressed before the question of non-compliance with the general requirements of the procedure. If the procedure has been completed, the question whether there has been non-compliance with the general requirements of the procedure never arises.
26. Completion of the procedure is not made expressly or impliedly conditional on, or subject to, compliance with the general requirements. All the prescribed steps in the applicable procedure may be completed, even if there has been non-compliance with other procedural requirements, such as the timetabling standards.
27. In other words, non-compliance with the stipulated requirements is relevant to deciding, in a case where there has not been completion, who is responsible for the non-completion. Where there has been completion of the procedure, as here, it is futile to inquire to whom the "non-completion" is to be attributed.
28. In my judgment, neither the 2002 Act nor the Regulations have an impact on this case. The interpretation provision in Regulation 2 simply makes it clear that non-commencement of a procedure is included within expression "non-completion." In dealing with failure to comply with the statutory procedures, however, Regulation 12 clearly proceeds on the assumption that the statutory procedure has not been completed. It then directs that the non-completion of the procedure is to be attributed to the party, who has failed to comply with a requirement, including a general requirement in Part 3 of Schedule 2 : for example, the person guilty of delay. Regulation 12 can have no application to a case like this where there has been completion of the procedure.
29. I would allow the employer's appeal.

The employees' appeals

30. The ET rejected the employees' claims for unfair dismissal and for wrongful dismissal. The ET held that the employees were dismissed because of their conduct in claiming and being paid for unauthorised overtime and that was a potentially fair reason for dismissal. The employer had carried out a thorough investigation into the issue of unauthorised claims for overtime and holidays, involving a painstaking investigation into records and interviews with the employees. When the disciplinary hearings took place the employees were supplied with the results of the investigation in the form of an appendix detailing discrepancies. The employees did not seriously challenge the findings. They were accompanied by their trade union representative and had the opportunity to seek further information or to put forward information. Before the ET they admitted that payment was made for overtime before it was worked.
31. On theses findings of fact the ET concluded that it

"39. …was satisfied that the respondent had carried out a reasonable investigation and that he had a reasonable belief in the claimants' misconduct. The nature of the misconduct was such that their dismissal was within the band of reasonable responses open to the respondent. The Tribunal was satisfied that in view of its findings dismissal was not in breach of contract."

32. The EAT dismissed the employees' appeals against the rejection of their claims for ordinary unfair dismissal and wrongful dismissal. Not all of the arguments run before the EAT have been advanced on this appeal and it is not therefore necessary to deal at all with some of points that the EAT had to consider.
33. In this court Mr Oldham took two main points on the ETs treatment of the ordinary unfair dismissal and wrongful dismissal claims.
34. The first is that the ET wrongly took into account what they understood to be an admission by the employees that they had been paid overtime. The admission was irrelevant, he said, as it related to the pre-payment of overtime for a period which was not under consideration by the employer in deciding whether to dismiss the employees and so cannot have been relevant to the reason for dismissal. This point was not taken in the EAT or in the grounds of appeal and does not, in any case, disclose any error of law in the decision of the ET.
35. I agree that the admission made in the ET is irrelevant. What matters is what the employer believed and had reasonable grounds for believing at the time when he made the decision to dismiss the employees, and, in particular, what evidence of the employees' conduct was available to him as a result of his investigation into the conduct of the employees.
36. It is still sometimes thought that the ETs determine the guilt or innocence of employees accused of misconduct. That is not the case. The ET is not a court in which the issue of misconduct is tried to determine whether the person dismissed for misconduct did or did not do what was alleged. The issue for the ET is whether the dismissal was unfair. That depends on the belief of the employer that there was misconduct, on his having reasonable grounds for that belief at the time of dismissal, on the reasonableness of his investigation and other factors. What the employee later admits in evidence to the ET is not really to the point. In my judgment, the ET in this case was simply stating that an admission had been made, but that statement in no way invalidates its relevant findings of facts on the issues affecting the fairness or otherwise of the dismissal or its conclusions on the claims for unfair dismissal or wrongful dismissal.
37. The second point related to the appendix. The complaint is that the employer relied on the appendix in taking the decision to dismiss and that the pages containing the information on which the appendix was based were not disclosed to the employees prior to their dismissal or at their internal appeal against dismissal. This defect made the dismissal unfair as a matter of natural justice.
38. This ground does not raise a question of law. The ET found as a fact that when the disciplinary hearings took place the employees had been supplied with the results of the employer's investigations in the form of an appendix detailing the discrepancies. The employees did not seriously challenge the findings of the investigation. They were accompanied by their trade union representatives and did have the opportunity to seek further information or to rebut the allegation but did not do so. It is impossible to say in the face of those findings that there was a breach of natural justice.
39. The ET rejected the claim of Sandra Wilmot for disability discrimination contrary to the Disability Discrimination Act 1995. First, she alleged that she was dismissed for a reason related to her disability i.e. her "severe loss of vision" due to retinal detachment. This failed because the ET found, as explained above, that she was dismissed by reason of her conduct, as were the other two employees who were not disabled.
40. Secondly, it was claimed that there had been disability discrimination in the employer's failure to comply with his duty to make reasonable adjustments pursuant to section 3A(2) of the 1995 Act. The ET found that this complaint was not well founded and dismissed it. On her own evidence she had no difficulty in undertaking her duties and there was no evidence of any complaint to the employer. Her duties consisted of obtaining patients records for her employer, answering the phone, making appointments, generally manually, as she could not use the computer. Adjustments were put in place following the receipt of an Access to Work report. The adjustments related to non-computer related activities and were sufficient to enable her to carry out her duties, which did not usually require her to use a computer.
41. I am unable to find any error of law in the conclusions of the ET on the disability discrimination claim. The EAT considered in detail submissions that the ET had erred in failing to consider the employer's statutory duty under section 4A of the 1995 Act, in failing to apply the detriment tests and in failing to consider whether Sandra Wilmot was at a substantial disadvantage in comparison with her able bodied colleagues. The EAT concluded that her case failed on the findings of fact by the ET that she had no difficulty in carrying out her duties, which did not require her to use a computer, apart from making some appointments. An adjustment had been made in not requiring her to use a computer in the same way as her colleagues. That adjustment prevented her from being put at a disadvantage when compared with her able bodied colleagues.
42. I would dismiss the employees' appeals against the rejection of their claims for ordinary unfair dismissal /wrongful dismissal and Sandra Wilmot's claim for disability discrimination.

Result

43. Accordingly I would allow the employer's appeal on the automatic dismissal point, but dismiss the employees' appeals on all grounds.

Lord Justice Wilson:

44. I entirely agree and add a few words on the employer's appeal only out of courtesy to the various constitutions of the EAT, including in the present case, which have reached a different conclusion about the meaning of the words "the procedure has not been completed" in s.98A(1)(b) of the 1996 Act (inserted by s.34(2) of the 2002 Act).
45. The key is to look at that whole subsection, which Mummery LJ has set out at [5] above. The requisite fact at (b) is that "the procedure has not been completed". The requisite fact at (c) is that "non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements". Each of those facts has to be established. Analogous provisions are to be found in subsections (2)(b) and (c) and (3)(b) and (c) of section 31 of the 2002 Act.
46. Were every failure by the employer to comply with a requirement of it to mean that the procedure had not been completed, the obligation to establish the fact at (c) as well as the fact at (b) would make no sense. The terms of the requirement at (c) show that non-completion is one thing and that failure to comply is another; and the enquiry which it mandates in each case is whether the former is wholly or mainly attributable to the latter. Attribution is not automatic.
47. It would at least be odd if regulations made under the 2002 Act – indeed under subsection (6) of the same s.31 of it – were not loyal to the dichotomy there drawn between non-completion, apparently there given its every-day meaning, and non-compliance with a procedure. In this regard the debate surrounds Regulation 12(1) of the 2004 Regulations (SI 2004/752). Mummery LJ has set it out at [13] above. It is not well-drawn. I lift from it only the following words:

"If either party fails to comply with a requirement … the non-completion of the procedure shall be attributable to that party …".

The dispute is best identified as follows: that, according to Ms Woodward, the word "non-completion" means any non-completion which may result from any such failure, whereas, according to Mr Oldham, it means the non-completion which inevitably results from every such failure. I prefer Ms Woodward's construction. If the rule-maker had wished to introduce so strained a definition of the "non-completion" of a procedure as to include all cases of non-compliance with the general requirements in Part 3, then, even assuming that he had power to do so, he needed to cast the definition in words much more clear than are to be found in Regulation 12(1) or elsewhere in the 2004 Regulations.

48. Take step 2, as we did in our discussion in court. Assume that the employer invites the employee to attend that first meeting at an unreasonable time; that the employee nevertheless attends at it; that following the meeting the employer proceeds to dismiss the employee; that the employee appeals; that the appeal meeting is conducted in accordance with the general requirements; and that the appeal is dismissed. Mr Oldham was constrained to submit that in such circumstances the statutory procedure had not been completed by reason of non-compliance with the requirement that the timing of the first meeting should be reasonable. I cannot subscribe to that.

Lord Justice Stanley Burnton:

49. I agree. Since we are overruling a line of authority, I add a few words.
50. Ordinary language distinguishes between the failure to complete a procedure and a failure, for example, to carry it out in a reasonable time. Clear words would be required to equate a failure to complete with completion of a procedure in a non-compliant way. Far from containing such words, the statutory provisions express and confirm the distinction. Section 98A of the 1996 Act distinguishes between an applicable procedure not having been completed (the subject of subsection (1)(b)) and a failure by the employer to comply with the requirements of a procedure ((the subject of subsection (1)(c)). Subsection (1)(c) would be otiose if failure to comply with the requirements of a procedure were synonymous with a failure to complete it. Subsection (3) similarly distinguishes between completion of a procedure and failure to comply with its requirements. The distinction is maintained in section 31 of the 2002 Act.
51. It follows that a failure to comply with a requirement of a procedure is not of itself a failure to complete it. Hence the appeal must be allowed.