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Cite as: [1992] UKEAT 584_90_3010

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BAILII case number: [1992] UKEAT 584_90_3010

Appeal No. EAT/584/90

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 30 October 1992

Judgment delivered on 12 January 1993

Before

THE HONOURABLE MR JUSTICE KNOX

MR D G DAVIES

MR J H GALBRAITH CB

MR E CLARKE APPELLANT

(1) TRIMOCO MOTOR GROUP LTD

(2) MRS S SHORT RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellant MR C BUTLER

(of Counsel)

Messrs Harrison Golds &

Rushworth

Solicitors

16 Regent Street

Nottingham NG1 5DB

For the 1st Respondent MR C BAYLIS

(of Counsel)

Motor Industry Legal

Services Ltd

108 Beaufort Street

Chelsea

London SW3 6BU

For the 2nd Respondent NO APPEARANCE BY OR

ON BEHALF OF THE 2nd

RESPONDENT

MR JUSTICE KNOX: Mr Clarke, the appellant before us, was employed by Trimoco Motor Group Ltd ("the Company"), a very substantial company operating garages and petrol stations, at the petrol filling station near a public house, the Boot and Shoe by the Great North Road. Both Mr Clarke and a fellow employee at the Boot & Shoe filling station, Mrs Short, were dismissed by a letter dated the 18th May 1990 and written by Mr Booker, a Senior Operations Manager with the Company. That letter stated the reason for the dismissal in the following terms:

"Your dismissal is for gross misconduct in that you contravened not only Company rules, but also criminal law, by falsifying company financial records. You have admitted this offence to both Mr McCombie and myself."

The Industrial Tribunal sitting at Leeds on the 23rd July 1990 by a decision the full reasons for which were sent to the parties on the 2nd October 1990 held that Mr Clarke and Mrs Short were not unfairly dismissed. Mr Clarke alone appeals.

The misconduct relied upon on behalf of the Company concerned the operation of the Esso voucher system operated by Mr Clarke and Mrs Short at the Boot & Shoe service station in relation to lorries operated by hauliers C.M. Lane (Hauliers) ("Lanes"). An officer of Lanes called Butler contacted Mr Booker on 23rd January 1990 to express his concern at the fuel purchases by Lanes' lorries at the Boot and Shoe service station, saying that the lorries involved appeared to be doing only two miles to the gallon, far below the normal mileage and the numbers on successive fuel vouchers showed the vehicles being filled on consecutive days with consecutive vouchers. Mr Butler came to see Mr Booker two days later in a meeting also attended by Mr McCombie the service station manager concerned. As a result of what Mr Butler said and showed to Mr Booker and Mr McCombie they went the same day the 25th January 1990 to interview Mr Clarke and Mrs Short who were the only persons operating the Boot and Shoe service station except for Mrs Short's daughter who worked at weekends on a part-time basis.

Both Mr Clarke and Mrs Short were seen by Mr Booker and Mr McCombie. The specific allegation put at these interviews was found by the Industrial Tribunal to have been that Mr Clarke and Mrs Short were forging the drivers' signatures on bogus vouchers which went through the till and were counter-balanced by a corresponding cash withdrawal by Mr Clarke or Mrs Short. This would of course result in Lanes paying for fuel they never received. It is also to be observed that this type of fraud would almost certainly not involve Lanes' drivers since it would hardly be necessary to forge their signatures if they were involved in the fraud. Other possible frauds leading to Lanes being overcharged would have been for the drivers to siphon off the fuel (and that would not be likely to involve Mr Clarke or Mrs Short) or for there to be bogus vouchers signed by the drivers but not reflected by fuel deliveries with the cash equivalent being divided between the lorry drivers and Mr Clarke and Mrs Short. The last mentioned fraud would plainly have involved both drivers and Mr Clarke and Mrs Short. However on the 25th January 1990 all that was put to the latter was the possibility that they were forging the drivers' signatures. Both denied this but admitted that they had post-dated vouchers by one day at the request of the drivers who it was said by Mr Clarke and Mrs Short asked for this to be done in connection with overnight stays with their lorries at the Boot and Shoe service station when they left early before it opened and wished to have purchases of fuel actually made the night before to be recorded as having been made the following day when they left in the early morning. This was the only admission of irregularity ever made by Mr Clarke or Mrs Short and no inference to the contrary should be drawn from the use of the word "initially" in the sentence in the Industrial Tribunal decision

"Initially the only admissions that were made by each applicant was that they had post-dated some of the fuel vouchers at the specific request of the drivers."

There was no evidence of any later admission nor was it suggested to us in argument on behalf of the Company that there was any such admission.

As a result of that interview Mr McCombie wrote on behalf of the Company a letter dated 7th February 1990 in which he identified as the main content of the interview on the 25th January the admissions made by Mr Clarke and Mrs Short that they had on a number of instances post-dated Esso chargecard vouchers at the customer's request and gave a formal written warning in respect of such conduct which was not unnaturally regarded as improper. The letter ended:

"This letter constitutes the only written warning you shall receive on the above and will remain on your personnel file for a period of 12 months. I am aware that the police are investigating other matters, therefore until such time as they feel that they have enough evidence I propose that we proceed no further with this particular matter."

Although the phraseology of that letter could no doubt be improved upon, it constituted material upon which the Industrial Tribunal could properly conclude that Mr Clarke and Mrs Short were put on notice that they had not necessarily heard the last of questions of falsified vouchers and that in particular, if the police discovered evidence implicating them in misconduct beyond post-dating vouchers, further disciplinary steps might be taken against them.

The police very shortly did carry out an investigation at the instance of Lanes and within a month (the Industrial Tribunal decision reads "In the fullness of time" but the notes of evidence show that it occurred before the 5th March 1990) that investigation elicited confessions from two drivers that they had been implicated in a system whereby fictitious fuel vouchers were signed by them for fuel which did not go into Lane's lorries but the cash equivalent was taken out of the till and divided as to one third to Mr Clarke and the other two thirds to the driver concerned. The results of this fraud would clearly be that Lanes would be charged for fuel their lorries never received and that the Company's fuel sales would be recorded as having been greater than they were although the receipts from sales would correspond with what was sold and delivered. The latter aspect of the matter was never investigated so far as the notes of evidence and the Industrial Tribunal decision record. The over-charge to Lanes is recorded.

The police informed the Company of their investigation and the above mentioned confessions by the two drivers. The police also taxed Mr Clarke and Mrs Short with the fraud involved in the confessions but Mr Clarke and Mrs Short denied any complicity to the police. The Industrial Tribunal decision contains the bare statement that they denied any complicity which might suggest that the denial was made to the Company. There was no evidence of this. The interrogation of Mr Clarke and Mrs Short was exclusively conducted by the police and not by any officer of the Company.

Mr Booker wrote a letter to each of Mr Clarke and Mrs Short on the 5th March 1990. The Industrial Tribunal decision does not mention its terms but it is in our view of considerable importance. It was before the Industrial Tribunal and its terms are not in doubt. It included the following:

"Following a telephone call from Garforth CID on the afternoon of the 5th March, I understand that you have been charged by the police in connection with irregularities regarding Esso Chargecards, and drivers working for C.M. Lane Transport Ltd.

I am aware that you have admitted to altering dates on Esso Chargecard vouchers to Mr McCombie and myself at an earlier interview. Since the matter has now reached more critical proportions Trimoco have no alternative but to suspend you from your duties without pay until such times as the outcome of the court case is known. At that stage a decision will be taken as to whether you will remain with the company or resume normal duties."

As that letter indicates Mr Clarke and Mrs Short were charged. They were to appear before magistrates on a date in April 1990. The Industrial Tribunal found that the Company felt that they had enough information from their own investigations and suspicions and the documents before them in addition to the police investigation to dismiss but Mr Booker thought that in view of the imminent court hearing he had better do a "belt and braces" job. Hence the letter quoted above which suspended rather than dismissed.

The notes of evidence record Mr Clarke as having testified to the Industrial Tribunal, after saying that the two drivers mentioned above had made a statement that he, Mr Clarke, was involved and that he and Mrs Short were putting cards through the machine and splitting the money,

"But Mr McCombie found I was not on duty on the dates in question."

There is no record of Mr Clarke having been cross-examined about that, nor did Mr McCombie give evidence. The significance of this, it seems to us, does not go beyond showing Mr Clarke challenged the evidence against him and that this was known to Mr Clarke's superiors in the Company. It does not prove that the Company had evidence that established that the charges against Mr Clarke were proved to be false. We say this because the notes of evidence also show that a third driver had also implicated Mr Clarke and he did not say Mr McCombie had verified that and found that Mr Clarke was not on duty on that day. There are no findings made about this aspect by the Industrial Tribunal and it is mentioned here because it was relied on in the appeal before us to show that the Company was aware that Mr Clarke was not guilty of the offence charged. We are not satisfied that this was satisfactorily proved.

Equally we reject the argument that was also advanced in support of the appeal that Mr Booker was guilty of gross deception in saying as he did in the letter we have quoted from that a decision would be taken when the outcome of the court case was known. This was primarily based on the fact that the notes of evidence reveal that Mr Booker in cross-examination by Mrs Short said about the events of the 16th May

"a decision to dismiss had been taken long before."

In our view it was open to the Industrial Tribunal to place the interpretation that it did on Mr Booker's decision to write the letter of the 6th March 1990 suspending, rather than dismissing, Mr Clarke and Mrs Short. On that interpretation Mr Booker, while being of the opinion that he could legitimately dismiss, decided not to do so while the court case went forward. No deception was involved in that.

The magistrates in April adjourned the first hearing of the cases against Mr Clarke and Mrs Short to the 16th May and then adjourned them again to the 20th June. Mr Clarke and Mrs Short both telephoned Mr Booker on the 16th May telling him of the second adjournment and Mr Booker thereupon told them that they would be dismissed. The Industrial Tribunal refers to that adjournment by the magistrates as "the final adjournment" which does not appear to be quite accurate because there was, on the unchallenged evidence of Mr Clarke, another adjournment on the 20th June and on the 29th June Mr Clarke was told that the case against him would not be proceeded with. However this is of marginal relevance in that it occurred after the dismissal.

The Industrial Tribunal's findings about the dismissal are as follows:

"They had telephoned him on that day and so he had spoken to each of them. They knew that it was in his mind to dismiss them. They knew that a discussion had taken place between himself and Mr McCombey (sic). Yet knowing that they were to be dismissed, they did not ask to implement the grievance procedure against such a decision being taken by them. Nor did they make further representations. Indeed on 5th March, when they were suspended, neither of them involved the company in the grievance procedure despite the fact that each was strongly denying any implication in the criminal activities with which they were charge. There was a further opportunity on 16 May for them to make representations of which they did not avail themselves. The consequence was that on 18 May they were sent letters terminating their contracts of employment for gross misconduct. The employer had in his mind the fact that the police had told them that each of the applicants had had a cut out of the money which the lorry drivers accepted they had taken. Mr Booker could not imagine why their own employees should be implicated by these drivers if that were not the truth. It is fair to say that neither of the two applicants was called in by Mr Booker to make representations before they were ultimately dismissed. But there was the opportunity to involve the company in the grievance procedure a) when they were suspended and b) on the 16th during telephone conversation and c) when they received their letters of dismissal. But the 2 applicants did not avail themselves of those opportunities. That is how they were dismissed."

Here again the Industrial Tribunal does not state the terms of the dismissal letter which so far as relevant was as stated at the outset of this judgement. As a matter of construction of that letter we have no doubt that what it refers to is the misconduct which Mr Clarke and Mrs Short had admitted on the 25th January 1990, that is to say post-dating the vouchers, an offence for which they both received the final warning quoted above. It is we think at least possible that Mr Booker meant what he said, taking the view that it would be safest to rely on the admission rather than the as yet uncertain outcome of the magistrate's court proceedings. However the only way in which this aspect is touched upon by the Industrial Tribunal in its decision is in para 11 of its decision which includes the following:

"The employers had carried out an enquiry on 25 January: that did not result in anything other than a warning. But it was well known to all parties that the police were continuing to make enquiries. It must have been more than obvious that anything which the police learnt would be imparted to the employers. It must have been very obvious when, for example, Mr Clarke was asked about splitting of money as between himself and the drivers that the information upon which the police were asking him questions would be made available to the employers. The applicants assumed that the police had told Trimoco. Indeed it was obvious to them that that was the reason why each was dismissed on the date when it occurred."

The last sentence appears to be the only one which addresses the question what was the precise reason for Mr Clarke's dismissal and it answers the question in a substantially different way from the reason given in the letter of dismissal dated the 18th May 1990. That discrepancy is nowhere noted, let alone dealt with by the Industrial Tribunal in its decision. In fairness it should be recorded that both Mr Clarke and Mrs Short appeared in person before the Industrial Tribunal, whereas we have had the benefit of a full argument by Counsel for Mr Clarke.

Before turning to what we consider to be the two principal issues in a difficult case we should dispose of one argument in support of the appeal which in our view has no substance. That is that there was inconsistency of treatment between the three employees at the Boot and Shoe petrol station in that Mr Clarke and Mrs Short were dismissed but Mrs Short's daughter was not. There was evidence before the Industrial Tribunal that the police had told the company the Miss Short would not be involved and that Mr Booker did not see her as being involved. The fact that she, in common with her mother and Mr Clarke, admitted having post-dated some vouchers is neither here nor there, because the Industrial Tribunal found that Mr Clarke and Mrs Short were dismissed for participating in the much more serious fraud later investigated by the police and apparently admitted by at least two of Lane's drivers. On this basis Miss Short falls into quite a different category and no question of inconsistency of treatment arises.

Mr Clarke's Originating Application seeking relief for unfair dismissal referred to the warning letter received by him from Mr McCombie and his suspension on the 5th March and continues:

"I then received a letter dated 18th May 1990 from Mr Booker termination of my employment immediately. In the employment handbook it states in all instances I am entitled to have a representative of my choice present during any discussions, in the letter sent by Mr Booker states that Trimoco had reviewed the matter that a decision had been reached. I was not asked to attend the meeting, plus the fact that our manager was not even told about it or the fact that our employment was being terminated."

The references to the dismissal letter, part of which is quoted at the outset of this judgement, are substantially accurate in saying that Trimoco had reviewed the matter and a decision had been reached whereby his employment was to be terminated.

The Company's notice of appearance stated its case as follows:

"The Applicant admitted falsifying company records in breach of the Disciplinary rules and procedures, and was therefore dismissed for gross misconduct. Further the respondent had reasonable suspicion amounting to a belief in the guilt of the Applicant and there were grounds to sustain that belief."

That was signed by the member of the bar who conducted the case before the Industrial Tribunal and before us so there is no call for allowances to be made for lack of legal expertise.

As a matter of construction of the Company's dismissal letter of the 18th May and its notice of appearance we have no doubt that the reason given for the dismissal was the misconduct which Mr Clarke and Mrs Short admitted on the 25th January 1990, that is to say the post-dating of vouchers. Equally it is clear that the Industrial Tribunal found that the reason for dismissal was the much more serious fraud which was the subject of the police investigation the results of which were from time to time communicated to the Company and the Industrial Tribunal found that Mr Clarke was aware of the reason for his dismissal. The two important issues which arise and neither of which is directly addressed by the Industrial Tribunal decision, are these.

First, does the fact that the reason stated in the dismissal letter and the reason relied upon in the Company's notice of appearance are a different reason from the reason found by the Industrial Tribunal to be the real reason for dismissal, render the latter unfair?

Secondly, can the dismissal without any interview of, or contact with, Mr Clarke by the officer of the Company responsible for the decision to dismiss, after the 25th January 1990, be fair, given that it was specifically stated on behalf of the Company in the letter of the 5th March 1990 that Mr Clarke was suspended without pay "Until such times as the out come of the court case is known" and that at that stage a decision would be taken whether he should remain with the Company whereas he was dismissed before the outcome of the court case was known.

The fact that the outcome was in Mr Clarke's favour is irrelevant to that question since it occurred after the dismissal.

We turn to the first question, the effect of the mis-statements of the reason for dismissal. Different considerations apply to the mis-statement in the dismissal letter and the notice of appearance.

So far as the dismissal letter is concerned in our view the critical question is whether the employee was aware of what we shall call the real reason for dismissal and whether the facts in relation to that real reason were therefore available to him to challenge in the Industrial Tribunal proceedings. We take as our guide what was said by Cairns L.J. in Abernethy v. Mott Hay and Anderson [1974] I.C.R. 323 at 330.

"A reason for the dismissal of an employee is a set of facts known to the employer, or it may be of beliefs held by him, which cause him to dismiss the employee. If at the time of his dismissal the employer gives a reason for it, that is no doubt evidence, at any rate as against him, as to the real reason, but it does not necessarily constitute the real reason. He may knowingly give a reason different from the real reason out of kindness or because he might have difficulty in proving the facts which actually led him to dismiss: or he may describe his reasons wrongly through some mistake of language or of law.."

A rather less detailed way of putting much the same point was given by Lord Denning M.R. at p.329 in relation to the requirement of the employer to show the reasons for dismissal as follows:

"It must be a reason in existence at the time when he is given notice. It must be the principal reason which operated on the employer's mind. . . . . . It should, I think, be known to the man already before he is given notice, or he must be told about it at the time. But I do not think that the reason has got to be correctly labelled at the time of dismissal. . . . . the employer can only rely on the reason in fact for which he dismissed the man, if the facts are sufficiently known or made known to the man."

In the Abernethy case the dismissal was at the time it occurred stated to be for redundancy but before the Industrial Tribunal successful reliance was placed on incapability on the same facts as were said to constitute redundancy. No injustice was caused by the correction of the incorrect label on the single set of facts.

We were also referred on this subject to Hotson v. Wisbech Conservative Club [1984] I.R.L.R. 422. In that case the applicant was responsible for running the bar in the respondent club and was dismissed because the receipts fell and there was a shortfall of cash as compared with the amounts invoiced to the bar. The applicant refused to operate a till. She was asked for an explanation for the shortages in cash takings or stock or both and was unable to do so and was dismissed. She was not at the time charged with dishonesty, since the committee in question by a majority decided to proceed in a low key. Nor was she charged with dishonesty but only inefficiency in the club's notice of appearance. It was only when a club witness was giving evidence that, as a result of the Chairman of the Industrial Tribunal saying "In effect, what you are claiming is that she was dishonest isn't it?", the case was run on the part of the club on the basis of dishonesty as an alternative to inefficiency. The Industrial Tribunal found that she was fairly dismissed on the grounds of suspected dishonesty but that was reversed by the Employment Appeal Tribunal on the basis that a great deal more than a change of label was involved and that she was deprived of a proper opportunity of dealing with the much more serious allegation of dishonesty and of being sufficiently prepared to state her answer at the hearing.

The critical findings of fact on this issue are contained in para.11 of the Industrial Tribunal's decision already quoted above.In particular the finding that it was obvious to Mr Clarke and Mrs Short that the reason why each of them was dismissed was the information given to the Company by the police about the splitting of monies between Mr Clarke, Mrs Short and the drivers places this case just, but in our view only just, on the side of the line which is governed by the principle stated by Cairns L.J. in the Abernethy case and distinguishes it from the Hotson case. It was submitted to us that there was no evidence upon which the Industrial Tribunal could make the findings in para.11 of their decision but we reject that submission. The notes of evidence show that Mr Clarke accepted that he knew that the police were saying that he, Mr Clarke, was splitting the money with two of the drivers and he also said that Mr McCombie found he, Mr Clarke, was not on duty on the dates in question. It is in our view an entirely possible inference from these two statements that Mr Clarke realised that the Company was dismissing him because of that police allegation. This does not of course mean that Mr Clarke accepted the validity of the charge, merely that he was aware it was made and that the Company knew about it and was dismissing him because of it.

We say this case is only just on the Abernethy side of the line because it is distinguishable from that case in that in the Abernethy case the discrepancy between the reason given at the time for dismissal and the real reason was one of legal analysis of the single set of facts. It was originally called redundancy and later called incapability. That is truly a labelling error. The present case is different in that the conduct relied upon in the dismissal letter, the post-dating of vouchers, is different conduct from the conduct relied upon for dismissal, that is to say implication in a different and much more serious fraud in putting through the till fictitious vouchers and abstracting a corresponding amount of cash. It is for this reason that we regard this issue as very finely balanced but in the end it seems to us that the dominant consideration is that it was found that it was obvious to Mr Clarke and Mrs Short what was the reason they were dismissed. It is on any view unfortunate that this point was not dealt with at all by the Industrial Tribunal.

The second principal issue relates to the complete absence of contact between Mr Booker, the dismissing officer, and Mr Clarke between the 25th January when a relatively venial offence was admitted and the 16th May 1990 when the dismissal for a different offence was announced as an existing decision. That by itself would be disquieting to any Tribunal investigating the fairness of such a dismissal but it is made much more disquieting by the terms of the letter of suspension of the 5th March with its unequivocal statement that a decision would be taken when the outcome of the court case was known. That again was not necessarily a matter which irrevocably committed the Company to awaiting the result of the court case, however long it took, but it is the combination of the statement that the Company would await the outcome of the court case with the departure from that stated intention without any prior notice or offer of a substitute for the opportunity that Mr Clarke and Mrs Short were going foreseeably to have of defending themselves in court.

We assume that the Industrial Tribunal was aware of this point since they included in their judgement:

"It is fair to say that neither of the two applicants was called in by Mr Booker to make representations before they were ultimately dismissed."

The answer which the Industrial Tribunal gave was the opportunity to involve the Company in the grievance procedure. Three distinct stages were identified when there was such an opportunity, a) when they were suspended i.e. 5th March b) on the 16th May during the telephone conversation and c) when they received their letters of dismissal which were dated 18th May. It is at this point that we consider that the Industrial Tribunal made an error which is in our view an error of law but if that be wrong we would be prepared to hold that the decision on this issue was a perverse one or if there is a difference not a permissible option on the facts found.

The error of law in our view lies in equating the availability of a grievance procedure with the affording to an employee of an opportunity of defending himself or herself against a serious charge of dishonesty. The two seem to us to be significantly different in kind. So far as the three occasions which were identified as constituting opportunities to take advantage of the grievance procedure are concerned they hardly bear examination as genuine opportunities which can properly be treated as an adequate substitute for an opportunity for stating their case. On the first occasion, the 5th March, Mr Booker's letter was crystal clear in saying that the disciplinary issue would await the outcome of the court case and in those circumstances it seems to us perfectly proper and understandable for Mr Clarke to take the view that he would keep his powder dry for the court case and defend himself there. The second occasion, a telephone call announcing a decision to dismiss, was somewhat late in the day to put forward a defence, the decision was there. A fortiori the letter of dismissal was even later in the day. However these are considerations of fact concerning the genuine availability to Mr Clarke of an opportunity to state his case.

The basic requirements of natural justice have often been stated. We take them from Byrne v. Kinematograph Reuters Society Ltd [1958] 1 W.L.R. 762 at 784 where Harman J. said of a domestic tribunal:

"What then are the requirements of natural justice in a case of this kind? First, I think that the person accused should know the nature of the accusation made. Secondly, that he should be given an opportunity to state his case: thirdly, of course, the tribunal should act in good faith."

The first and third are not seriously in issue here but the second is.

In support of the appeal we were referred to the eloquent words of Megarry J. in John v. Rees [1970] Ch.345 at 402 emphasising the importance of the rules of natural justice and the danger of relying

"on the open and shut cases which somehow are not."

Somewhat closer to the detailed subject in hand is the decision in McLaren v. National Coal Board [1987] I.C.R. 410 but the authority of that case in the Employment Appeal Tribunal is somewhat diminished in that, although the decision was upheld on appeal by the Court of Appeal, it was upheld for different reasons. See [1988] I.C.R. 370. We prefer therefore to rely on the latter decision as authority for the proposition that an employee before being dismissed for misconduct must, in order to satisfy the requirements of natural justice, be given an opportunity of giving an explanation save in those rare cases where there is no possibility of the employee giving any explanation of the conduct alleged or if it is plainly admitted so that there may be no cause to ask for an explanation. See per Sir John Donaldson M.R. at p.377. The present case is quite plainly not in either of those exceptional categories. Mr Clarke throughout denied his involvement in the serious fraud for which he was dismissed and it was not submitted to us that the case against him was so strong that there was no possibility of his giving an explanation. The unchanging standards of fairness did therefore apply to require the Company to give Mr Clarke the opportunity of explaining himself. There is we consider significance in the requirement to give an opportunity. The possibility of an employee using a procedure by way of grievance does not in our view constitute the giving of an opportunity of explanation. One requires a step by the employer, the other a step by the employee and there is in our view a significant difference there. There is nothing in the notes of evidence to suggest that Mr Booker at any relevant stage drew the attention of Mr Clarke or Mrs Short to their rights under the grievance procedure. Mr Booker had no contact at all between the 25th January and the 16th May when he received phone calls announcing the second magistrate's court adjournment. Of these conversations he is recorded as saying:

"They rang me on 16 May, both of them rang me. They said the case against them had been adjourned. I said we shall have to dismiss you. They indicated they were not happy about it. But they did not suggest that I could not reach a proper conclusion without waiting to see what the result of the criminal case would be."

He only mentioned the grievance procedure in cross-examination by Mrs Short when he said:

"I would have invited you both in but it seemed impossible that anything you could say would change our minds. You did not give effect to the grievance procedure."

That seems to us to be a claim that because the grievance procedure was not operated, he, Mr Booker, was justified in treating the case as one where no opportunity to give an explanation need be given. This seems to us, in the context of known denials of liability on the part of Mr Clarke and Mrs Short, to be flying in the face of the well established requirements of natural justice.

If the Company is entitled, as we believe it is, to rely on the investigations carried out by the police on the basis that the fruits of those investigations were communicated to the Company and known to be such by Mr Clarke and Mrs Short, by the same token the Company is fixed with knowledge that Mr Clarke and Mrs Short were denying liability to the police. It therefore seems to us impossible to sustain the case that this was one of those cases so plain that no opportunity of explanation need be offered. Indeed that was not argued before us. What was said was that the Industrial Tribunal was entitled to take the view which it did, namely that the existence of the grievance procedure was an adequate substitute for, or the equivalent of, an opportunity to explain. For the reasons already given we do not agree.

It was also submitted to us that the Industrial Tribunal stated the law as laid down in British Home Stores v. Burchell (1978) I.R.L.R.379 quite correctly and applied the test in s.57(3) of the Employment Protection (Consolidation) Act 1978. It has already been pointed out that there are dangers in treating what was said in Burchell as exhaustive of the duty of an Industrial Tribunal in seeking to apply s.57(3) For example in Louies v. Coventry Hood Co.Ltd. [1990] I.C.R. 54 Wood J. said:

"The third element in the Burchell test [1980] I.C.R.303, 304E, deals with the effect of the failure of procedure on the actual belief of the employer. That is to look at one side of the equation. It does not look at what I believe to be an essential, the other side of the equation, namely the procedural fairness. . . . .it seems to me that inadequate consideration was given in this case to the balance between the investigation and the belief, and the fairness of the disciplinary proceedings which take place after the initial investigation and belief. Taking the wording of Slynn J. in the Bentley Engineering v. Mistry case [1979] I.C.R. 47 it does seem to me that there is sufficient error in law for the decision to be flawed."

In the present case there were no internal disciplinary procedures whatsoever. Such contact as there was with Mr Clarke between the 25th January 1990 when he was taxed with and admitted a different and much less serious offence than the one for which he was dismissed, and the 16th May when he was told he was dismissed over the telephone consisted at most of the intimation to Mr McCombie that Mr Clarke and Mrs Short were not on duty when they were accused by the police of having been guilty of fraud. Mr Booker had no contact with them so far as the evidence goes.

In our view the Industrial Tribunal, in finding that the Company acted within the range of reasonable responses of an employer concentrated unduly upon the employer's belief and the basis upon which it was founded and, apart from equating the availability to an employee of a grievance procedure with the giving by the employer of an opportunity to state the employee's explanation, which for the reasons already given we consider to be wrong in law, there was no consideration given to the adequacy of the procedure adopted of relying solely on a police investigation. That there can be adequate grounds for an employer's belief in the employee's misconduct and yet an unfair dismissal is clear beyond argument. W. Weddel & Co. Ltd v. Tepper [1980] I.C.R.286.

For these reasons we consider that the Industrial Tribunal's decision was fatally flawed and we allow the appeal and remit the case for reconsideration before a differently constituted tribunal.