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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> LOGAN AGAINST A DECISION OF THE EMPLOYMENT APPEAL TRIBUNAL AGAINST FUTURE TECHNOLOGY DEVICES INTERNATIONAL LTD [2019] ScotCS CSIH_46 (10 September 2019)
URL: http://www.bailii.org/scot/cases/ScotCS/2019/2019_CSIH_46.html
Cite as: 2019 GWD 30-480, [2019] CSIH 46, [2019] ScotCS CSIH_46
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SECOND DIVISION, INNER HOUSE, COURT OF SESSION
Lord Justice Clerk
Lord Menzies
Lord Malcolm
OPINION OF THE COURT
[2019] CSIH 46
XA43/19
delivered by LADY DORRIAN, the LORD JUSTICE CLERK
in the Appeal
by
JULIE LOGAN
Appellant
against
A DECISION OF THE EMPLOYMENT APPEAL TRIBUNAL
against
FUTURE TECHNOLOGY DEVICES INTERNATIONAL LTD
Respondent
10 September 2019
Appellant: Party
Respondent: No appearance
Background
[1] The appellant was dismissed from her position as principal engineer with the
respondent on 15 April 2008, having been employed subject to a probationary period of one
year. She applied to the Employment Tribunal (“ET”) claiming that her dismissal had been
unfair.
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[2] Part of the appellant’s role within the company came to be liaison with an external
contractor, a former company employee, whose relationship with the company and
continued work for them was critical to the success of the company. A dispute arose
between the appellant and the contractor about the use and application of certain coding
standards. This dispute extended to involve senior managers within the company, and
eventually resulted in a production stoppage. By email of 11 April 2008 to the appellant, the
contractor and internal managers the Managing Director said “I don’t honestly care how
you sort it out but work together and get it sorted ASAP”. The appellant responded that she
did not think she had the MD’s full support, that she believed it was time to move on, that
she wished to leave on good terms and wished to ensure she had support in the form of a
reference. In an email of 14 April 2008 she asked to be excused working on any project with
the contractor in question. At a management meeting on 14 April 2008 certain emails sent
by the appellant were considered to have been inappropriate, as were the threats to resign.
It was noted that she was still within the probationary period of her contract and the
decision was taken that a “clean break” should be made, terminating the appellant’s
employment and paying two weeks’ notice in lieu. In acting this way the respondent
believed that the appellant would not obtain employment protection rights.
[3] The respondent admitted dismissal but denied that this had been unfair, under
reference to alleged concerns relating to the appellant’s conduct and performance in relation
to effective communication with sub-contractors. They relied on the fact that the appellant’s
contract provided for dismissal any time during the probationary period, and their
understanding that this meant that dismissal could follow without further consequences.
The respondent however averred that there had been difficulties with the appellant,
specifically referring to problems which had developed in her working relationship with an
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essential contractor. The employer averred that this working relationship with the
contractor was causing “great difficulty” and was effectively stopping the development of a
project. It was averred that the operations manager had offered to mediate between the
appellant and the contractor but the appellant refused this offer. Thereafter the situation
was described as becoming “almost impossible”. It was averred that following an issue with
certain project documentation “the entire production line was on hold for over two weeks
whilst the Applicant held this matter up. The cost to the company in terms of revenue for a
single product line being inoperative would be fairly stated at being at least $300,000 US
Dollars and potentially up to half a million US Dollars”. By email of 12 April 2008 the
appellant indicated her intention to seek alternative employment and requested a reference.
The decision to dismiss the appellant was taken at a management meeting on 14 April 2008.
Although the decision was based on the (erroneous) belief that during the probationary
period the appellant would not have acquired employment rights and could simply be
dismissed, it was averred that “high in the mind of the management meeting was the
ongoing business efficiency situation which required ongoing effective communications
with sub-contractors”.
[4] In the course of proceedings, the respondent subsequently admitted, in an amended
ET3, that the dismissal was unfair on the basis of a failure to follow procedure, but
elaborated upon the reasons for dismissal, asserting that any award should be reduced to
reflect Polkey principles and contributory conduct. It was asserted that had proper
procedures been followed, the likely outcome would have been a fair dismissal based upon
conduct, largely an inability to interact appropriately with both internal staff and external
contractors, which included a refusal to continue to work with the aforesaid critical
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contractor. The appellant’s repeated and inappropriate threats to resign had also been a
feature, having regard to the respondent’s need to consider business efficiency.
[5] After an evidential hearing, it was asserted for the respondent that the appellant had
been dismissed for conduct reasons, namely an inability to work with colleagues and
contractors in an appropriate way, intransigence in respect of her attitude to the critical
contractor, and a refusal to work with him, as well as repeated criticisms of him and others
as incompetent, or dishonest. The appellant maintained the reason was that the CEO was
angry over the content of certain emails she had sent, at her threat to resign and at her
statement that she would not work further with the contractor in question.
The Tribunal’s decision
[6] The ET recognised that the onus lay with the employer to show the reason for
dismissal, and that it was a potentially fair reason within the terms of the legislation such as
was capable of justifying dismissal. The reason for a dismissal was a set of facts known to
the employer, or beliefs held by him, which caused him to dismiss the employee (Abernethy
v Mott, Hay & Anderson [1974] ICR 323). The approach of the Tribunal was to discover the
real reason for dismissal by examining the facts and beliefs which led to it. It did not have to
accept the employer’s stated reason where supporting evidence was poor or where an
ulterior motive was suspected (Associated Society of Locomotive Engineers and Firemen (ASLEF)
however, the Tribunal may nevertheless conclude that those facts, when the correct label is
applied, were sufficient to justify dismissal. If the facts were known to the employee, the
fact that the wrong label was attached was of no moment, if the facts correctly labelled
would justify dismissal.
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[7] The ET noted that general issues relating to the appellant’s working practices,
relationship with other employees and so on had not been raised with her at the time, and
concluded that these were neither material nor the reason for dismissal, and indeed were
introduced to pad out the reasons for dismissal. It did not accept that there was dismissal
for conduct. However the ET considered that there was no dispute that the material facts in
the case related to difficulties between the appellant and the contractor, which led to the
stoppage in production, to the appellant’s email that it was time to move on, and her request
not to work further with the contractor. The ET was satisfied that it was the loss of
fabrication time which brought matters to a head. The company was faced with an
employee still during the probationary period who refused to work with a critical contractor
and who now indicated that they were considering leaving. This effectively required the
MD to choose between the employee and the contractor.
[8] This was the real reason for the dismissal. The employer classified this as a conduct
matter. The ET disagreed with this label: however, on the basis of Abernethy it was open to
the ET to apply the correct label, which was in fact “some other substantial reason” of a kind
capable of justifying dismissal, namely that the appellant could/would not work with the
critical contractor. This was a potentially fair reason.
[9] The dismissal was nevertheless unfair since proper procedures had not been
followed. The respondent had been under a duty to (i) provide the appellant with a
statement of grounds for action and an invitation to a meeting; (ii) arrange a meeting, at
which the appellant might be represented, to allow an opportunity to respond to the
grounds; and (iii) allow an opportunity to appeal. Under reference to Polkey v A E Dayton
Services Limited [1988] ICR 142 the ET considered what might have happened had the correct
procedure been followed. The ET considered that had such procedures been followed, there
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was an 85% chance that the appellant would still have been dismissed. The ongoing
relationship with the external contractor was crucially central to the company. While the
statutory procedure may have afforded the company and the appellant with an opportunity
to discuss continued employment and options therein, this had to be balanced with the fact
that the appellant appeared to be a difficult person to work with. The ET accordingly
reduced the compensatory award by that amount. It also reduced the award by 10%
because it considered that the appellant’s actions caused or contributed to her dismissal.
The appellant had been instructed to “sort out” progression of the project with the
contractor. While resolution was not entirely within her hands and she had sought
assistance from a representative of the employer she had not complied with this instruction.
She was blameworthy. There was an overriding duty on her to find a solution to progress
the project, and the failure resulted in a crisis point which should never have been reached.
The award was increased by 15% because of the employer’s failure to follow the relevant
statutory procedures when dismissing the appellant, which had rendered the dismissal
automatically unfair.
Leave to appeal
[10] Leave to appeal was granted by the procedural judge who noted that:
“It is arguable that the facts and circumstances of Abernethy are distinguishable from
the present, in that in Abernethy there was no issue as to the reason communicated at
the time for the dismissal, only as to how it was described, or “labelled”…. The
question arises as to whether, and if so when, a tribunal can make a finding of a
potentially fair reason for a dismissal on (a) a set of circumstances not communicated
at the time, and (b) on a ground different not only from that advanced at the time,
but also from that founded upon by the employer after the proof, all by way of
“relabelling” of the reason for dismissal? A further question arises; namely, if and
when a tribunal proposes to do this, what procedural safeguards, if any, are
appropriate to ensure that the rules of natural justice are observed? In so far as the
present case is concerned, were the rules of natural justice and fairness followed?”
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Submissions for the appellant
[11] A detailed note of argument was lodged and relied upon by the appellant. It
covered a number of issues some of which concerned historical decisions by the ET
concerning inter alia document production, outwith the scope of issues for review by this
court. The principal argument advanced via a number of threads was that the reason relied
upon by the ET and the label given by it were new and raised for the first time in its written
judgment. As a consequence the appellant was not put on notice and was prevented from
answering it. This had resulted in a breach of adversarial procedure, natural justice (see
Byrne v Kinematograph Renters Society Ltd 1958 1 WLR 762) and the appellant’s right to a fair
hearing in reasonable time within the terms of Article 6.
[12] The burden of proof under the Employment Rights Act 1998 (“ERA 1998”) was on
the employer to establish the reason and label for dismissal. That statutory right could only
There was no statutory authority for an ET to pick out a reason not used by the employer.
[13] In adversarial proceedings it was incompetent for a tribunal to act of its own motion
[2010] UKEATS 0023/10/2611. To do otherwise was a breach of Article 6: Affaire Clinique de Acacias
et Autres v France (Application numbers 65399/01, 65406/01, 65405/01 and 65407/01) at
para 43. The ET required to decide a case on the basis of what was before it, not on the
construction it would have adopted. Esto a tribunal could so act, which was denied, the
facts or law relied upon required to be put to the parties - Duraliyski v Bulgaria 2014 ECHR
45519/06, 4 March 2014. This had not happened. A tribunal must confine its enquiry to the
statutory tests, and to the powers defined in its rules - Sokurenko and Strygun v Ukraine 2006
ECHR 757, 29458/04; 29465/04, 20 July 2006. The ET had failed to do so. If the ET could
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substitute its own reasoning for that of the employer’s it would have the effect of shifting the
statutory onus of proving the reason for the dismissal from the employer - a proposition
emphatically rejected by the Court of Appeal in Kuzel v Roche Products Ltd [2008] EWCA Civ
380.
[14] The appellant submitted that the ET in the present case had misdirected itself to its
role (see para 87 of its decision). By substituting the employer’s reason and label for one of
its own, not advanced by the parties at the hearing it acted in breach of Article 6 and natural
justice. It fell to the present court to substitute the ET’s finding for one that the employer
had failed to show a principal qualifying reason under the ERA 1996 for the appellant’s
dismissal and set aside the Polkey deduction.
[15] The ET3 in the present case did not disclose the assertion founded upon by the ET
that a breakdown in working relationships forced the employers to choose between the
parties, nor that continued employment for the appellant required her working with the
contractor in question. The ET3 raised matters of conduct and capability but did not state
that the dismissal fell to be determined as one due to capability. In concluding that some
other substantial reason (“SOSR”) was the reason for dismissal the ET proceeded on
findings in fact of which the parties had not been given notice. Nelson v BBC (No 1)
[1977] IRLR 148 prohibited facts which had been found in relation to one test being applied to
another possible but unpled defence.
[16] There was no obligation upon the ET to seek out a reason even when one wasn’t
advanced by the parties - Kuzel; ASLEF. The fall-back position was to hold that the
employer had not established the reason. The ET had not done so.
[17] The ET incorrectly applied Abernethy. An employer was only permitted to rely upon
a different label where it had made all the facts and beliefs known prior to dismissal. The
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employer had not done so here. Nor was there notice contained in the ET3. Hotson v
Wisbech Conservative Club [1984] IRLR 422 was authority for the proposition that a
subsequent change of label or reason must not prejudice the claimant. The ET erred in
concluding that there was a breakdown in the relationship between the appellant and the
contractor which forced the employer to choose the contractor. Such a position was not
advanced in the ET3 nor in evidence. The ET even acknowledged the fact no evidence had
been led in its decision but still came to the conclusion that it did. Per Smith v City of
Glasgow District Council [1987] IRLR 326 where any part of a reason has not been established
in evidence, a tribunal could not adopt that reason. Other errors by the ET included an
incorrect reliance upon a finding that there was no dispute that the appellant was party to a
situation where planned fabrication was stopped (paras 94, 127). The appellant had
disputed this. There was no assertion by the employer or in the ET3 that the manufacturing
process was on hold at all. Merely that it was a possibility.
[18] The ET had failed to consider or expressly ignored evidence advanced by the
appellant, particularly in respect of items which it labelled as falling within Protected
Disclosure. It failed to consider the employer’s minutes which showed that the true reason
for the appellant’s dismissal was the complaints in the emails she had made, rather than a
breakdown in the relationship as the ET found. The minutes constituted strong prima facie
evidence of the true reason: Maund v Penwith District Council [1984] IRLR 24.
[19] In adopting McCrory v Magee t/a Heatwell Heating Systems [1983] IRLR 414 the ET had
erred.
[20] The ET erred in holding (at para 85) that a reason did not need to justify dismissal for
it to be a qualifying reason. The statutory test in fact provided the exact opposite. It was
also incorrect to say that its reason for dismissal required no fault on the part of the claimant
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- see Wadley v Eager Electrical [1986] IRLR 93 - and that blame and fault could not save her
(para 110).
[21] The ET erred in its consideration and application of Polkey. The employer’s reason
for dismissal not having been established no deduction should therefore have taken place.
Esto it was open to the ET to adopt its own reason for dismissal, it could not lawfully adopt
that reason and use it for the purposes of applying a Polkey deduction. The ET did not
conduct a wider examination of all the circumstances, and in particular, the actions and
omissions of the employer. It had wrongly applied the “no difference” test to the Statutory
[22] The principles quoted by the ET from Software 200 Ltd v Andrews and Others
[2007] IRLR 568, in support of its approach related to redundancy only and were not applicable in
the present case. Triangle Cars v Hook [1999] UKEAT/1340/98 (1 July 1999) was, however,
relevant but had not been applied.
[23] The ET correctly concluded that allegations of the appellant’s conduct in relation to
other individuals were unfounded; that “tittle tattle” was never raised with her nor
investigated; that these were issues upon which it did not require to adjudicate and that they
had played no part in the decision to dismiss (para 50 and 90). However, it wrongly took
these matters in to consideration when applying and making a Polkey deduction (para 120),
contrary to Swanston New Golf Club Ltd v Gallagher [2013] UKEAT/0033/13/BI.
[24] In calculating the uplift for failure to apply any of the statutory procedures, the ET
erred in assessing only the intent and effect on the outcome (para 133 and 134). The penalty
was not related to the effect on loss, but was to be judged by the degree to which the failure
inhibits the goal of clarifying the reason for dismissal prior to an ET claim: Alexander & Anor
v Bridgen Enterprises Ltd [2006] UKEAT/0107/06/DA.
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Analysis
[25] The real issues here are (i) whether the appellant had reasonable notice of the
underlying facts on which the ET based its decision; (ii) whether those underlying facts
featured in any way in the decision to dismiss, regardless of the label attached by the
employer to the dismissal; and (iii) whether the label attached by the ET was one which the
underlying facts might reasonably bear. The appellant maintains that the facts relied upon
by the ET relating to the alleged breakdown of relations with the contractor and the
stoppage of production had not been raised in the ET3 and had not been addressed in
evidence. It will be seen from the summary of the original ET3 noted above, and from the
findings of the Tribunal, that this was not the case.
[26] The original ET3 was not produced by the appellant; nor were various orders of the
ET and EAT which would have enabled this court to have a much clearer understanding of
the procedural steps which had been taken in the case, which has had a long and protracted
history. At the court’s request the original ET3 was produced, as were certain orders of the
Tribunal. It was apparent that the employer had been given leave to amend the ET3. The
terms of the original ET3 and that of the amendment, both of which appeared as a “paper
apart” are summarised at paras [3] and [4] above. It is not clear to us whether the second
paper apart was to be in addition to, or substitution for, the original. The ET made an order
seeking confirmation of this point from the employer, but since it, with numerous other
orders, has not been lodged, we do not know what the ultimate position was. However, this
appears to be of no moment. It is clear that the ET3 as originally provided gave the
appellant notice of matters which then featured in the ET’s decision. Moreover, it is clear
that evidence on these matters was led without objection. Not only was the stoppage and
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the breakdown referred to, the ET3 noted that at the time of dismissal the issue of
communication with contractors and their importance to business efficiency featured in the
decision making process.
[27] The ET made certain findings in fact which were based on the evidence led before it.
These included a finding that an email from one of the employer’s managers, Mr Mills,
indicated that he had (a) spoken to the appellant suggesting she “grow up”; (b) spoken to
both the appellant and the contractor offering effectively to mediate but that the appellant
“is not up for that”. The appellant advised Mr Mills that she was thinking of resigning. The
Tribunal made a specific finding that the situation between the appellant and the contractor
“culminated in a production stoppage” and also led to the email of 11 April 2008 from the
Managing Director to inter alia the appellant referred to above. In response the appellant
again said she intended to leave, stated that she wished to do so on good terms and asked
for a reference. In respect of the management meeting which led to dismissal the ET made a
finding that “rather than finding workable solutions, it was felt the claimant had become
uncompromising in her way of working”. In the discussion which led to the conclusion that
a “clean break” dismissal within the probationary period was the way forward, the ET
found that the appellant’s stance and emails threatening to resign had featured. The ET
found Mr Mills to be a credible witness. He gave evidence that there was an onus on the
appellant as a senior employee of the company to find a resolution in the company’s
interests; that she had been given a lawful instruction to make progress on the project; but
that instead of doing so she made it plain she would not work with the contractor and was
considering resignation. The ET plainly accepted this evidence, as it was entitled to do.
Mr Mills accepted that issues relating to the appellant’s relations with internal staff had not
been raised with her, but made it clear that the situation with the contractor had been raised
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with her (see eg para 43). Mr Mills attended the management meeting at which the decision
to dismiss was taken. At para 44 of its decision the ET noted that:
“Mr Mills believed the claimant’s inability to move work forward in an appropriate
manner by working with [the contractor], together with her clear desire to leave the
company and request a reference were two critical factors which, when taken
together with the history of difficulties in the engineering department and the
inability of the claimant to work well with other staff led to the decision to terminate
the claimant’s employment.”
The ET did not in general criticise the credibility of the appellant, but clearly had issues over
her reliability, saying that “we accepted that she fundamentally believed what she told us.”
The ET specifically rejected her evidence that she had been given specific authority by the
Managing Director to deal with the contractor as she saw fit, even to the extent of removing
him from the project. They gave a valid and reasoned basis for doing so.
[28] During the hearing before the ET, the appellant made submissions regarding Polkey
and the basis upon which deductions may validly be made; and cited a total of 53
authorities which she subjected to a case by case analysis. It is instructive to note that these
included Abernethy; Software 2000; Devis; Nelson; ASLEF and Kuzel. It appears therefore that
the options which might be available to the ET, both in respect of finding a reason for
dismissal, and as to how to address the issue of deductions all featured in the discussion.
The appellant’s inability to work with the relevant contractor, and intransigence in that
regard, featured in the respondent’s submissions, which were that dismissal had been for
capability and conduct. It was submitted that her actions and attitude had “brought the
company to a crisis point in their operational progress.” It was submitted that the
appellant’s refusal to work with the contractor was “an invitation to the respondent to back
either the claimant or [the contractor] and the outcome of this choice was inevitable.” For the
company it was accepted that the statutory procedures had not been followed, but it was
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asserted that it may have been open to the company to “have contemplated some other
substantial reason given the factors when combined”. Submissions were then made as to
the making and level of a Polkey deduction.
[29] It is axiomatic that a tribunal which proceeded to decide a case on the basis of
material not aired in the proceedings, and of which the parties thus had neither notice nor
opportunity to comment would be acting unfairly. However, as can be seen from the
preceding paragraph, that is not what occurred in the present case. The essence of the
employer’s case was that whilst the claimant was dismissed because they understood it was
an action open to them without consequence during the probationary period, the reasons
which led them to that course of conduct were the breakdown in communications which
had led to the expensive business stoppage. Notice of this had been given in advance, had
been the subject of repeated discussions and emails with the appellant, and had featured in
the evidence led at the ET without objection. The possibility that the situation might have
amounted to some other substantial reason was specifically aired during submissions, and
the cases cited by the appellant confirm that she must have been aware of the possibility that
the ET might make a finding that this was the real reason for dismissal, on the same facts.
[30] The ET correctly directed itself on the issues arising from ASLEF and Abernethy, in
the terms noted at para [6] above. It is true that the ET misspoke in saying that there was
“no dispute” regarding the material facts relating to the contractor, which brought the
company to a crisis, led to the stoppage, and the 11 April email. However, it is clear that
these were the facts which the ET found to be established, and from its survey of the
position of the appellant and summary of her submissions there is no indication that it erred
in its assessment of the extent to which the appellant took issue with these matters. Her
position was clearly understood by the Tribunal which records her submission that she did
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not consider herself to be at fault for the stoppage. The ET noted that the appellant was not
spoken to about the developing situation with the contractor, but recorded that action was
taken to try to resolve the situation through the use of an intermediary, and we have noted
above the findings in facts which were made in this respect. We consider that on these
findings the appellant did have sufficient notice of the underlying facts upon which the ET
eventually based its reasons, and in particular that the employer’s frustration with her
attitude to the contractor was known to her; further, that these facts were known to the
employer and featured in the decision to dismiss, even though the employer believed it
could simply dismiss because the probationary period had not concluded; and that on the
principles enunciated in Abernethy and subsequent cases in which that principle has been
refined the ET was entitled to make a finding that the real reason for the dismissal was some
other substantial reason, namely the crisis with the contractor and the stoppage. The ET
noted the appellant’s submission relating to Triangle Cars but stated that they were satisfied
that the respondent had taken steps to resolve the situation, and that when these failed (due,
as they had already noted, to the appellant’s unwillingness to engage), this led to the
employer having to make a direct choice between the appellant and a critical contractor.
We have been unable to identify any error by the ET in its approach to the Polkey deduction,
or that it misdirected itself in respect of Nelson. The issue of blame was considered in terms
by the ET. Criticisms were also directed at the 10 per cent deduction for contributory
conduct and at the 15 per cent uplift for failure to follow proper procedures, but suffice to
say that they were without merit. The appeal must therefore be refused.