England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
HH JUDGE GORE QC
HQ14X01477

		Royal Courts of Justice Strand, London, WC2A 2LL
		24/01/2017

Lord Justice Elias:

1. Mr Adesokan was employed by Sainsbury's for some 26 years before he was summarily dismissed for gross misconduct. At the time of his dismissal he was a Regional Operations Manager, one of the more senior posts in the company, and was responsible for twenty stores. He sued for wrongful dismissal. The question for the court was whether he had committed gross misconduct so as to justify summary dismissal. HH Judge Gore QC, sitting as a Deputy Judge of the High Court, held that he had and that the summary dismissal was therefore lawful. Mr Adesokan now appeals that finding.

The facts

2. The background was set out in detail in the decision below but for the purposes of the appeal the relevant facts can be stated more briefly.
3. The heart of the case against the appellant is that by his actions, or more accurately his inactions, he undermined what Sainsbury's call the Talkback Procedure (TP). The philosophy behind this procedure is the desire to ensure that staff should be engaged, motivated, and take pride in their work. It is believed that this will improve customer service which in turn leads to happier and more loyal customers.
4. TP is the process whereby the level of engagement of Sainsbury's staff is quantified and assessed. It is deemed to be very important that all members of staff throughout the country are involved in the exercise, giving information in absolute confidence about their working environment and their relationships with their colleagues, especially line and senior management. The process has been operating for many years. It is, as the judge accepted, deeply engrained in Sainsbury's culture and is a critical part of Sainsbury's strategy for achieving a desirable working environment. Moreover, it is not just a procedure for determining the level of staff engagement; the results also influence performance progression, target setting and even decisions about pay, bonus and staff deployment.
5. The judge found that the appellant, like all managers, would have been "under no illusion that Talkback must not be interfered with or influenced by management." Great emphasis is placed on the integrity and validity of the process to ensure that the feedback genuinely reflects the full range of staff views.

The alleged misconduct

6. As a Regional Operations Manager, the appellant worked alongside a Human Resources Partner, Mr Briner. In June 2013 about a third of the stores were involved in the TP exercise then being undertaken. Mr Briner sent a wholly inappropriate email to five relevant store managers under the appellant's jurisdiction in which he said this:

"Here is our opportunity to show everyone how amazing we are at colleague engagement….

I think you should focus predominantly on getting your most enthusiastic colleagues to fill in the survey; using your huddles and briefings as a way of engaging these people. Slightly different to other years 100% completion is less important as long as you have a completion rate above 60% you will get a well- rounded view of your store.

So focus on the Colleague Engagement Index questions and less on 100% completion; let us know how it goes and please do ask us for any help and guidance!"

7. The email was ostensibly sent by the appellant and Mr Briner jointly, although in fact it is accepted that at the time the appellant knew nothing about it. The email was sent via a time delay function so as to be received on the day the TP began, which was 17 June. As the judge observed, the advice conveyed in the email offended the philosophy of Talkback and risked compromising the results. The appellant ought to have appreciated that fact. It sought to distort the true position in the stores by focusing on the views of the more committed staff members.
8. The appellant became aware that the email had been sent out on 24 June when the TP still had ten days to run. He told Mr Briner to "clarify what he meant with the store managers". Mr Briner did not do this and the appellant did not check to ensure that he had done so. Indeed, the offending email was re-circulated twice as part of a chain of emails.
9. By 1 July, when the TP was still running, the appellant learnt that Mr Briner had not followed his order to clarify the email. But he did nothing to remedy the problem. He failed to contact the store managers themselves, who were directly answerable to him, to contradict the approach suggested by Mr Briner, nor did he alert more senior management to what had occurred.
10. Sainsbury's CEO was anonymously sent a copy of the email on 13 September. He caused an investigation to be carried out by the appellant's line manager which led to disciplinary charges being instigated against the appellant. It was eventually accepted that the appellant was not complicit in any way with Mr Briner.
11. On 25 October, at the conclusion of the disciplinary process, the appellant was told that he was being summarily dismissed and the reasons for that decision. He was subsequently sent a formal letter notifying him of the decision which succinctly explained the reasons for the finding of gross misconduct as follows:

"You were accountable for Talkback on your region, the key colleague satisfaction metric.

You were aware that your HR partner had communicated to stores in a way that deliberately set out to manipulate the Talkback scores on your region.

You failed to take any adequate steps to rectify this serious situation.

Together, it is my belief that these demonstrate gross negligence on your part which is tantamount to Gross Misconduct."

12. The question for the judge was whether the appellant had committed gross misconduct and if so, whether it justified summary dismissal under the contract.

The terms of the contract

13. Clause 4 of the contract states that an employee will be dismissed without notice if he commits gross misconduct. There is no definition of gross misconduct as such in the contract itself, but the Company's Disciplinary and Appeals policy, which is incorporated into the contract by clause 18 of the contract, provides a very general definition of gross misconduct which is in the following terms:

"Gross misconduct is a breach of our standards or rules that is so serious that it can lead to summary dismissal when you are dismissed immediately without notice."

There then follows a number of examples illustrating what will constitute gross misconduct. For the most part they envisage intentional or deliberate misconduct but some of the examples, such as breach of health and safety rules, could be committed in a negligent or deliberate way. The final example in the list is

"any other serious breach of procedure or policy that leads to a loss of trust and confidence."

14. This refers to the term of trust and confidence which is implied in all contracts of employment. It is to the effect that neither party will, without reasonable and proper cause, act in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence: see Malik v BCCI [1998] AC 20 p.45 per Lord Steyn.
15. The judge found that although the appellant was not dishonest and had not made a conscious decision not to take steps to eliminate the effects of Mr Briner's email, nonetheless his failure to take active steps to remedy the situation amounted to gross misconduct. The judge gave his reasons as follows:

62. "… He either knew or ought to have known that, first, this was breach of a core part of the defendants' operating process and philosophy. People got sacked for offending it and he knew that. Secondly, he knew or ought to have known that it had the potential to affect the integrity of the results and therefore the impact that that would have on measuring performance, comparing performance, measuring changes in performance, setting performance targets and potentially also on deployment of staff. Thirdly, even if he did not adjudge it necessary to do anything about that, he either knew or ought to have known that either or both of his and Mr Briner's managers would need to consider that in order to adjudge either to agree with and support what the claimant had done or, alternatively, decide whether any and, if so, what further measures needed to be taken.

63. In my judgment, therefore, it was or should have been obvious that this needed to be reported …"

16. The judge then noted that the evidence was that in fact, notwithstanding the email, the results from the stores did not lack integrity and it was decided that it was not necessary to carry out the exercise again. He rejected an argument that this mitigated the gravity of the misconduct:

"64. In other words the offending email's potential had not been realised and the results did not lack clarity. But that is not the point; they might have. Someone had to make that judgment. That someone, if there was potential that the process had to be re-run, was not the claimant but a manager or managers superior to him and how could they make that judgment if they did not have the knowledge by matters being reported to them?

65. The other aspect that crosses the threshold is that it is not good enough simply to tell the offender to correct. There was a failure to ensure that the correction was delivered and acted upon. The claimant was the enforcing line manager for the store manager and he had to satisfy himself that the offending e-mail had been ignored and not acted on. He did not do anything on the evidence that I have heard to do so."

17. The judge then asked himself whether this gross misconduct so undermined the trust and confidence in the employment relationship as to justify summary dismissal. He concluded that it did:

"69. … Although these were omissions not actions, in my judgment they did have the effect, when viewed by reference to the claimant and not simply Mr Briner, to amount to a serious breach of policy or procedure for which he had guilt by association. He failed to stop it as was his direct responsibility or to report it.

70. I cannot, therefore, accept that this was not gross misconduct and I do accept that, tested objectively, this did so seriously damage the trust and confidence in the claimant such that the defendants could not be regarded as obliged to continue to employ him. It matters not to this conclusion that I have not found the claimant to have been either wilful or dishonest. These were failures that objectively called into question the ability or willingness of the claimant to actually see to it that the core Talkback process actually operated and that its integrity was maintained."

18. I would observe that in my view it was not apt to describe the appellant's wrongdoing as "guilt by association". The wrongdoing of the appellant was quite independent of the acts of Mr Briner, as the judge found. In substance the judge concluded that the appellant was in serious dereliction of his own duty to the company, given his obligation to ensure that the TP was properly carried out. He was not simply tarnished with the wrongdoing of Mr Briner.

The grounds of appeal

19. Ms Romney QC, counsel for the applicant, challenges the judge's conclusions on three grounds. Her first and principal submission is that the conduct of the appellant was not capable, as a matter of law, of amounting to gross misconduct. For someone with such long and unblemished service who was not even responsible for sending the email, it was too harsh to dismiss the appellant without notice for a single act of negligent wrongdoing. The neglect was not so egregious as to warrant the epithet "gross". Moreover, in practice the appellant's failure to remedy the problem did not cause the company harm because, as the company accepted, the results from the stores were sufficiently robust.
20. The other two grounds turn on the construction of the contract. Ms Romney submits that even if the appellant's failings could properly be characterised as gross misconduct, the employer was not entitled to dismiss for this particular category of gross misconduct under the contract. First, she submits that the examples of gross misconduct do not envisage negligent acts, or if they do, only negligent acts against third parties. Second, the judge was not entitled to find that there had been a "serious breach of policy or procedure", as he did in para. 69 of his decision (reproduced in para.17 above), since the acts of the appellant did not amount to a breach of the PT procedure as such at all. It was not in itself a breach of procedure to fail to correct a breach of the PT procedure for which he was not directly responsible. Nor was it a breach to fail to notify more senior management of the breach by Mr Briner.

Was the misconduct gross?

21. Under the contract, the employer is entitled to dismiss summarily for gross misconduct. So when can misconduct properly be described as "gross"? In my view a useful starting point in answering that question in the context of this case is the judgment of Lord Jauncey acting as the Visitor to Westminster Abbey in Neary v Dean of Westminster [1999] IRLR 288 para. 22:

"Whether misconduct justifies summary dismissal of a servant is a question of fact. In Clouston and Co. Ltd v Corry [1906] AC 122, which concerned summary dismissal for drunkenness, Lord James of Hereford delivering the judgment of the Board said at p. 129:-

'Now the sufficiency of the justification depended upon the extent of misconduct. There is no fixed rule of law defining the degree of misconduct which will justify dismissal. Of course there may be misconduct in a servant which will not justify the determination of the contract of service by one of the parties to it against the will of the other. On the other hand misconduct inconsistent with the fulfilment of the express or implied conditions of service will justify dismissal.'

His Lordship went on to observe that

'the question of whether the misconduct proved establishes the right to dismiss the servant must depend upon facts - and is a question of fact.' "

22. The judge then considered and rejected a submission that gross misconduct was limited to cases of dishonesty or intentional wrongdoing:

"I am fortified in this view by the decision of the Court of Appeal in Sinclair v Neighbour [1967] 2 QB 279. Sellers LJ at p.287C said

'But whether it is to be described as dishonest misconduct or not, I do not think matters. Views might differ. It was sufficient for the employer if he could, in all the circumstances, regard what the manager did as being something which was seriously inconsistent - incompatible - with his duty as the manager in the business in which he was engaged.'

Davies LJ expressed views to similar effect at p.289 B

'The judge ought to have gone on to consider whether even if falling short of dishonesty the manager's conduct was nevertheless conduct of such a grave and weighty character as to amount to a breach of the confidential relationship between master and servant such as would render the servant unfit for continuance in the master's employment and give the master the right to discharge him immediately.' "

23. The focus is on the damage to the relationship between the parties. Dishonesty and other deliberate actions which poison the relationship will obviously fall into the gross misconduct category, but so in an appropriate case can an act of gross negligence.
24. The question for the judge was, therefore, whether the negligent dereliction of duty in this case was "so grave and weighty" as to amount to a justification for summary dismissal. The role of this court, however, is more limited. We are conducting a review and can interfere only if the judge's decision was wrong: see CPR 52.11. The determination of the question whether the misconduct falls within the category of gross misconduct warranting summary dismissal involves an evaluation of the primary facts and an exercise of judgment. The primary facts in this case are not in dispute. It is now well established that where that is the case, when determining whether the judge was wrong in reaching his decision, this court ought not to interfere unless satisfied that the decision of the judge lies outside the bounds on which reasonable disagreement is possible: see Generali Spa v Arab Insurance Group [2003] 1 WLR 577 per Clarke LJ paras.16-17; Datec Electronic Holdings Ltd v United Parcels Service Ltd. [2007] 1 WLR 1325 per Lord Mance pages 1347-1349; and R (on the application of Sky Blue Sports and Leisure Limited) v Coventry City Council [2016] EWCA civ 453, para.12 per Tomlinson LJ. It is not a question of this court simply asking whether it would have held the misconduct to be gross. Having said that, in my judgment the parameters available to a judge in a case of this kind are limited; it ought not readily to be found that a failure to act where there was no intentional decision to act contrary to or undermine the employer's policies constitutes such a grave act of misconduct as to justify summary dismissal.
25. However, I have come to the view that this was a conclusion open to the judge in the particular circumstances of this case. In my view the critical feature justifying this conclusion is that the appellant, as Regional Manager, was responsible for ensuring the successful implementation of the TP in his region. He was not the person who would carry out the exercise – that would have been the responsibility of Mr Briner - but once it became known to him that the integrity of the process was being undermined or at least was at risk of being undermined as a result of the email, it was his duty to ensure that this was remedied. Given the critical role which TP played in the culture of Sainsbury's, he had to correct the message sent by Mr Briner in the email, or at least take steps to ensure that this was done. The step he did take, requiring Mr Briner to clarify the situation, was not enough, or at least it was plainly insufficient once he knew that this order had been ignored and thereafter he did nothing further about it.
26. Given the significance placed by the company on the TP, the judge was entitled to find that this was a serious dereliction of his duty. He found that this failing constituted gross misconduct because it had the effect of undermining the trust and confidence in the employment relationship. The appellant seems to have been indifferent to what in the company's eyes was a very serious breach of an important procedure.
27. Ms Romney suggested that the applicant had specifically exercised a judgment not to notify the branches because he was satisfied that they would not pay attention to the email in any event. That, however, is totally at odds with the finding of the judge that this was not a deliberate decision to do nothing. As to the fact that there was in fact no harm caused, in my view the judge was right, for the reasons he gave at para. 64 (para.16 above) to say that this is not a mitigating factor.
28. As to the other two arguments, I do not accept that the contract did preclude a finding of gross misconduct. As Ms Romney conceded in argument, the examples of gross misconduct do in fact envisage acts of negligence constituting gross misconduct in an appropriate case, and furthermore, they are in any event only examples. There is no rational basis for her alternative point that the negligence must affect third parties before it can constitute gross misconduct.
29. Nor, in my view, was the judge wrong to say that the dereliction of duty constituted a serious breach of policy or procedure. In my judgment, it is a natural construction of that example of misconduct for it to include acts which undermine the operation of a policy or procedure even if they are not direct breaches of it. In any event it was a serious breach of the standards expected of him, and therefore fell within the definition of gross misconduct in the Company's Disciplinary and Appeals Policy.
30. It follows that, in my view, Sainsbury's was entitled to dismiss summarily for gross misconduct.
31. In the result it is not necessary to engage with a further issue which was raised by the appellant, namely whether if it was an unlawful dismissal, damages would have been limited to the notice period. The argument was based on the submission that this principle, most recently re-asserted by this court in Gunton v Richmond-Upon-Thames London Borough Council [1981] Ch 448 had been undermined by the decision of the majority of the Supreme Court in Geys v Societe Generale [2013] 1 AC 523. Suffice it to say that I do not believe that Gunton is inconsistent with that decision, and that it therefore remains binding upon the Court of Appeal. Indeed, Lord Wilson specifically stated at para.78 that the principle enunciated in Gunton was not being challenged in that appeal. In my view, it will be for the Supreme Court itself to change the law, if it considers that to be appropriate.

Disposal

32. For the reasons given in this judgment, I would dismiss the appeal.

Lord Justice David Richards:

33. I agree.

Lord Justice Longmore:

34. I also agree.