England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL – CIVIL DIVISION

		Room E307 Royal Courts of Justice Strand London WC2A 2LL

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LORD JUSTICE UNDERHILL:

1. The Respondent is a global supplier of business process management services. The Appellant was employed by it from July 2011 in what was known as a vertical sales lead ("VSL") role. His responsibilities covered several business sectors. He had the status of a Senior Vice President with a salary of £90,000 per year, plus car allowance and bonus.
2. The Appellant has the misfortune to suffer from a serious back condition, which it is common ground amounted at all material times to a disability within the meaning of the Equality Act 2010. He underwent surgery in February 2012 and was off work for almost a year thereafter. In the beginning of the second half of 2012 there were discussions about his return to work. The Respondent was not prepared to allow him to return straightaway to his full VSL role, but proposed that initially on return he would have responsibility for the manufacturing sector only. That does not appear to have been only, or even perhaps mainly, for medical reasons but because the Respondent believed that he needed to get back up to speed and prove himself after so long an absence. The Appellant was not prepared to return to work on that basis or any basis, except in his full VSL role. Although he formally returned to work on 16 January 2013, he did no actual work. He initiated an internal grievance, complaining about how he had been treated and saying that it constituted discrimination. The Respondent regarded his stance as unacceptable. Disciplinary proceedings were initiated, which in due course led to him being summarily dismissed for misconduct on 9 April 2013. The dismissal decision was taken by the Respondent's Chief Sales Marketing Officer, Mr Garber.
3. The Appellant brought proceedings in the Employment Tribunal for disability discrimination, victimisation, unfair dismissal and wrongful dismissal. By a reserved judgement sent to the parties on 29 April 2014, a Tribunal sitting at Watford, chaired by Employment Judge Manley, allowed the claim for disability discrimination in part only. The aspect on which he succeeded was described at paragraph 1 of the judgment as follows:

"The Respondent treated the Claimant unfavourably for reasons arising from his disability when it demoted him, and failed to give him any clear indication of when he could return to work in his substantive position. The Respondent cannot justify that unfavourable treatment."

That is not a finding of direct discrimination, but of so-called disability-related discrimination of the kind identified in section 15 of the 2010 Act. The Tribunal dismissed the remainder of the discrimination claim, including claims that the Appellant's dismissal was unlawfully discriminatory and that the Respondent had failed to make reasonable adjustments. As for the claim for unfair dismissal, it held that the dismissal was procedurally defective and for that reason unfair, but it also made a finding that the Appellant's refusal to return to work on the limited basis proposed by the Respondent constituted gross misconduct such as would have justified his dismissal, if a fair procedure had been adopted. The effect of that finding was that the Appellant is liable to receive only very limited compensation for unfair dismissal in accordance with the so-called Polkey principle. Another effect of the finding was that the claim for wrongful dismissal failed. The claim for victimisation was also dismissed. The Tribunal directed a remedy hearing, but that has not yet taken place.

4. The Appellant appealed to the Employment Appeal Tribunal against, in substance, the finding that he had been guilty of gross misconduct. That is formally slightly odd, since that finding was not as such a decision of the tribunal, but no-one has objected to it since it is a finding pregnant with consequences for the remedy decision, and in any event it is the basis of the Tribunal's dismissal of wrongful dismissal claim. There was no cross-appeal by the Respondent in respect of the issues on which the Appellant had succeeded. By a judgment handed down on 24 September 2015, His Honour Judge Peter Clark dismissed the appeal.
5. This is an appeal against that decision with the leave of Lewison LJ. The Appellant has been represented by Miss Daphne Romney QC, leading Ms Dee Masters. The Respondent has been represented by Ms Suzanne Mckie QC, leading Mr Deshpal Panesar.
6. I have already summarised the essential facts, but I must give a little more detail of the reasoning of the Employment Tribunal on the disability discrimination claim, since this is material also to the unfair dismissal claim; and also of the findings and reasoning on the unfair dismissal claim itself.
7. So far as the disability discrimination claim is concerned, the aspect on which the Appellant succeeded was formulated in the agreed list of issues before the Tribunal, under two heads, as follows.

"2.5.1 Failing to give the Claimant any clear indication of when he would return to work in his substantive position, on the following occasion: various contacts between the Appellant, and his managers and the HR department between November 2012 and March 2013 are then listed.

2.5.3 On 16 January 2013, demoting the Claimant on his return to work."

8. The Tribunal's essential findings of fact as regards those two issues, are at paragraphs 6.71-72 of the reasons, which read as follows:

"6.71 In any event, it is clear that no one from the respondent told the claimant unequivocally that he would return to his full VSL role at the end of the phased return.

6.72 The tribunal find as a fact that the refusal to allow the claimant to return to a VSL role was a demotion. It carried with it a clear loss of status and responsibilities. To be handling one part of the vertical, albeit a significant and important part, is not the same as being the lead for the whole vertical with one or two people reporting to you."

9. The Tribunal addressed issue 2.5.1 at paragraphs 9.4-6 of the Reasons. At paragraph 9.4 it repeated its finding that there had been no clear indication to the Appellant of when he would return to his substantive position. At paragraph 9.5 it found that that failure constituted unfavourable treatment for a reason related to his disability within the meaning of section 15(1)(a) of the 2010 Act. The question then was, by section 15(1)(b), whether the treatment in question constituted a proportionate means of achieving a legitimate end – in other words, whether it was justified. As to that, the Tribunal said at paragraph 9.6 that neither the medical reports available to the Respondent not any other factors justified requiring the Appellant to undertake a lesser role on his return to work.
10. As for issue 2.5.3, the Tribunal said, at paragraph 9.9:

"We then turn to the slightly more difficult issue 2.5.3. This is said to be the claimant was demoted on his return to work. We repeat that we find that the loss of status and responsibilities on his return without any clear indication of when full VSL role would be carried out by the claimant amounts to a demotion. We are of the view that the return which was suggested to the claimant that he carry out only a sub-sector of the vertical when he had been responsible for the whole sector, that he had no line management responsibilities and that the internal support was taken away from him is quite clearly a loss of status. Whilst of course we accept that he retained the title of SVP with consequent pay and benefits, we do not believe that that means it is not necessarily a significant change to his duties. Whilst we can see that it might not fit a more common definition of a 'demotion' which would normally include a reduction in pay and benefits, we are of the view that it is a significant and less responsible role. That, in our view, is unfavourable treatment and also, in our view, is specifically because of the need for him to have a phased and supported return to work and a possible need to accommodate his disability in the future. The claimant has proved facts from which we could conclude that there was unfavourable treatment. As with the failure to give the claimant a clear indication of when he might return to the VSL role, in our view, there is no legitimate aim based on the respondent's view of the claimant's medical condition and the respondent cannot show that a demotion is a proportionate means of achieving such an aim."

As the Tribunal acknowledges in that passage, the Appellant's 'demotion' was of a limited nature, since he suffered no loss of money or benefits, or indeed of his Senior Vice President status, and consisted only in the removal – said to be temporary though of uncertain duration – of a large part of his responsibilities. However, Ms McKie acknowledged that that was still a significant matter for the Appellant and could properly be described as demotion.

11. I ought also to set out the Tribunal's reasons for rejecting the claim that the dismissal itself constituted disability-related discrimination within the meaning of section 15. It found at paragraph 9.11 that the dismissal was because of something arising in consequence of the Appellant's disability, but at paragraph 9.12 it found that it was justified. It said:

"This is where we do accept the respondent's explanation. By the time of the disciplinary action the claimant had had a number of opportunities to show that he could do some of the work which was suggested by the respondent. Whilst we accept that he might have had grave concerns about what he was being asked to be, we are of the view that this does not justify his continued refusal to do any of it. Our view is that the reason the respondent felt that it had no alternative but to commence disciplinary action was because of the claimant's refusal to do even that work which he was capable of, in particular the manufacturing client target list. The process had been going on for some time. It seems to us that there is now a move in the reason at this stage for the respondent's treatment which has shifted away from matters connected directly with the claimant's disability towards his attitude in refusing to do any of the things that he was asked to do and indeed, not suggesting anything further. We are satisfied that there is no discrimination in the disciplinary action, the dismissal or the upholding the dismissal on appeal. If we are wrong about that we would find that the respondent's actions were justified on the basis of a legitimate aim of an employee carrying out work they are able to do and a refusal to do so leading to disciplinary action being a proportionate means."

There is no challenge to that reasoning.

12. As for the claim of unfair dismissal, what the Tribunal found, in short, was – consistently with what it had held in paragraph 9.12 in connection with the discrimination claim – that the Appellant had been offered work which he was unquestionably able to do and that he had refused to do it. At paragraph 9.18 it said:

"The Tribunal's view is that the Claimant's continued refusal to undertake work in the manufacturing sector, and refusal to do anything about the manufacturing target client list [that was a particular task which he had been asked to do] are matters which do constitute misconduct."

It then continued at paragraph 9.19:

"In essence, then, our main concern was that the Claimant was not doing any sales-related work for the Respondent, including that which he was obviously capable of. Whilst we appreciate that he had grave concerns about carrying out that work, and believed he should be returned to the VSL role, we do not believe that it is open to an employee to refuse to do anything at all which was clearly within the Claimant's sphere of competence and role previously. At this point it seems sensible to go on and consider whether, on a balance of probabilities, that refusal amounts to gross misconduct and allows for summary dismissal. We believe such a refusal, after a number of warnings and a number of discussions, is indeed gross misconduct. This was a senior employee receiving full pay and, whilst we understand the concerns that the Claimant raised, it seems to us that it must amount to gross misconduct to continue to refuse to do any work whatsoever. We say that particularly in relation to the manufacturing target client list which the Claimant accepted he was more than able to do."

13. The second half of that paragraph is, as the Tribunal acknowledges, by way of digression, though one that fits in at this point, in order to deal with the wrongful dismissal claim. However, the finding in it also has, as I have already said, Polkey consequences; and this was spelt out at paragraph 9.26 where the Tribunal said:

"For completeness, we should say that we do think dismissal would have been within the range of reasonable responses, given that we have found gross misconduct, but that of course would have had to happen after a fair process."

14. Finally, for completeness I should say that the procedural defects which the Tribunal found were, in summary (a) that the disciplinary investigation which led to the dismissal decision and the dismissal itself were the responsibility of Mr Garber, who had already been too closely involved in the Appellant's management to be impartial; (b) that the disciplinary hearing had been held with unnecessary haste and in circumstances where the Appellant had insufficient opportunity to prepare; and (c) that the appeal process was perfunctory.
15. I need not set out at this stage Judge Clark's reasoning in the Employment Appeal Tribunal, but I will refer to aspects of it as necessary as I proceed.
16. There are four grounds of appeal, directed inevitably at the reasoning of the Employment Tribunal rather than the EAT. I will take them in turn.
17. The first is that the Tribunal was wrong to characterise the reason for the Appellant's dismissal as 'conduct', and thus as constituting an admissible reason of one of the kinds identified in section 98(2) of the Employment Rights Act 1996. Ms Romney submits that in truth the reason for the Appellant's dismissal was his refusal to acquiesce in his demotion. I do not accept that. The Tribunal clearly found, and was entitled to find, that Mr Garber dismissed the Appellant because he believed that his refusal to do any work constituted misconduct. The Appellant's reason for that refusal might be very relevant to the reasonableness of dismissing him for it, to which I will shortly turn, but it does not alter the character of Mr Garber's own motivation. This was, it seems to me, clearly a dismissal for misconduct.
18. I turn therefore to the second ground, which is the real heart of the argument before us. Ms Romney argues that the Tribunal was wrong in law to find that it was reasonable for the Respondent to dismiss the Appellant for his refusal to work when that refusal was itself a reasonable response to its own refusal to allow him to return to his full previous role which the Tribunal had found to constitute unlawful discrimination. As she put it, the requirement that he return to a much more limited version of his previous role was a requirement that he acquiesce in an act of discrimination against him, and that was wrong in principle.
19. I do not accept that submission, which in my view creates a spurious point of principle out of what is, properly analysed, simply a question of what conduct was reasonable on the part both of the Appellant and of the Respondent in the circumstances of this particular case.
20. The starting-point is that the Tribunal found that the work that the Appellant was being asked to do was within the scope of his contractual duties and that he was fit to do it. It was thus, on the face of it, a breach of contract – or to put it another way, misconduct – for him to refuse to do that work, and in fact to do any work at all, notwithstanding that he was being paid; and if the refusal was persisted in such misconduct would, other things being equal, obviously constitute gross misconduct which would justify dismissal – and indeed, to anticipate, summary dismissal.
21. However, that is all subject to other things being equal. It is well settled that an employee will sometimes be justified in refusing to work, in which case it will not be reasonable for the employer to dismiss them for not doing so. That was recognised, for example, by this court in Piggott Brothers v Jackson [1992] ICR 85. The question, therefore, in this case is whether the fact that, as the Tribunal found, there had been an unlawfully discriminatory failure to allow the Appellant to resume his full role at once, or to tell him at what stage in the future he would be allowed to do so, justified him in refusing to do even the work that he was required to do, so that it was unreasonable of the Respondent to dismiss him. That must be a question of fact and degree.
22. It is clear that the Tribunal did not believe that the fact that the Appellant should have been allowed to return to his old role in full was a sufficient reason for him refusing to perform any part of that role. I cannot regard that as a perverse view on the part of the Tribunal. If the Appellant were right, it would have the consequence that he was entitled, in the context of a bona fide dispute, to refuse to do anything at all, notwithstanding that he was fit to work and receiving full pay, unless and until the Respondent yielded to his position on that issue, which was, as I have said, genuinely in dispute. The Tribunal was, in my view, entitled to regard that position as unacceptable, even though it found that the Appellant was in fact right on the issue in dispute. It is important in this connection to emphasise that the finding of discrimination which the Tribunal made was not based on direct discrimination, or on any kind of conscious or deliberate wrongdoing by the Respondent. It depended on a judgement about the justifiability of not allowing him to return straightaway to his full role as VSL after a long period off work, on which the Respondent's view, though held to be wrong, was not self-evidently so, and was not found to have been advanced in bad faith.
23. The Tribunal also said in terms that by the time the dismissal decision was taken the rights and wrongs of the dispute about the terms of the return to work could and should be distinguished from the question of whether the Appellant was entitled to do no work at all. As it put it at paragraph 9.12 of the Reasons, the situation had 'shifted away'. That was in my view a legitimate assessment. As Ms Romney conceded, the fact that the Appellant was being asked to do the work in question was not discriminatory in itself, and the tasks in question were all tasks that were well within his contractual role. His complaint, and the one that was eventually upheld, was, rather, that he was not being permitted to perform other tasks. That is obviously a related matter, but it is not the same thing. I do not accept that the fact that the Respondent had acted – or, more accurately, failed to act – discriminatorily against the Appellant, even in a closely related way, gave him an absolute right to refuse to work. Generally, the fact that one party to a contract has committed a prior wrong against the other, whether in the form of a breach of contract or tort or any other wrong, does not constitute an automatic solvent of his or her continuing obligations, and there is nothing special about discrimination in this regard. Acts of unlawful discrimination are not uniquely heinous: like other wrongs, they come in all shapes and sizes, and how it is reasonable to respond to them in any given case is a matter for the assessment of the Tribunal.
24. Judge Clark's reasoning on this point was, as I read it, to essentially the same effect. In particular, at paragraph 11 of his judgement he said:

"What the Appellant was not entitled to do, so the ET permissibly found, was simply to refuse to do any work, draw his full pay after a year off sick, and allow the disciplinary process to unfold, having been warned of the consequences of his stand."

However, he sought to support that by adopting a submission of Ms McKie to the effect that the proper course for the Claimant to take in the circumstances was to resign and claim constructive dismissal, or to work under protest. Ms Romney objected to that observation, asking why the Appellant should have to do either. As she put it in her skeleton argument, 'the ET accepted there had been discrimination and as such he must have been entitled not to accept that discriminatory conduct and to demand reinstatement in his original role'.

25. I am not sure that whether Judge Clark was right that this ought to be the real focus of the argument. In my view, as I have said, the essential question is straightforwardly whether it was reasonable for the employer to dismiss in all the circumstances, including its own prior discriminatory failures; but perhaps the question of what it was open to the Appellant to do in these circumstances is one aspect of that question. In any event, I can see nothing wrong in what Judge Clark said. He did not, importantly, say that resignation was the only option. I can well understand why the Appellant might prefer not to resign and claim constructive dismissal: he might reasonably prefer to have a job rather than a tribunal claim, especially as he could not be certain that the Respondent's conduct would be held to be unlawful, or, even if it was to be, sufficiently grave to constitute a repudiatory breach. However, I do not see anything objectionable in principle in the suggestion that he could have remained at work and done what was, as the Tribunal found, reasonably asked of him, while, if he still felt that his continuing demotion and/or, the uncertainty as to its duration was unlawfully discriminatory, bringing Employment Tribunal proceedings. As I have already said, it is not the law that an employee who is the victim of a wrong can in all circumstances simply refuse to do any further work unless and until that wrong is remedied. He may in some circumstances have to seek his remedy in the courts.
26. Ms Romney suggested that by continuing to work under protest in that way the Appellant might have prejudiced his substantive claim, and she referred us to the decision of the Employment Appeal Tribunal in Robinson v Tescom Corporation [2008] IRLR 408. I need only say that I was unable to see how his rights would have been prejudiced in any way if he had chosen to take that course.
27. Ms McKie also submitted that the Appellant had never in fact himself sought to justify his refusal to work on the basis that doing so would constitute acquiescence in his own discriminatory demotion. Instead, she showed us, by reference to the Tribunal's findings and contemporary documents, that he advanced other justifications which were not upheld by the Tribunal. I can see some force in this point, but I would not put it at the forefront of my own reasoning on this ground since the Tribunal itself did not focus on it.
28. For those reasons I would dismiss ground 2.
29. Ground 3, as pleaded, reads as follows:

"The ET identified flaws in the disciplinary process so significant that the Respondent could not have acted reasonably in dismissing the Appellant, a principle of law recognised by this court in Taylor v OCS Group Limited [2006] ICR 1602 at paragraphs 47 to 48."

30. I have been unable to understand this ground and Ms Romney was unable to explain it to me. The point made in the paragraphs referred to from Taylor v OCS, and in particular paragraph 48, is that whether procedural defects are sufficient to render a dismissal unfair will be affected by all the circumstances of the case, including the seriousness of any misconduct relied on. However, there is no issue here that the procedural defects rendered the Appellant's dismissal unfair: the Tribunal has made a finding to that effect. Rather, the Appellant's problem is its finding that, if the procedure had been fair, dismissal would have been within the range of reasonable options, and on that point, Taylor v OCS has nothing to say.
31. Ground 4 relates to the dismissal of the claim of wrongful dismissal. It was common ground before us that this ground stood or fell with ground 2, since the Tribunal's finding in paragraph 9.19 was in terms that the Appellant's refusal to work constituted gross misconduct, justifying summary dismissal.
32. For those reasons I would dismiss this appeal.

Lady Justice King:

33. I agree.

Mr Justice Hildyard:

34. : I also agree.
End of Judgment