United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 450_93_1711

Appeal No. EAT/450/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 17 November 1994

Judgment delivered on 12 December 1994

Before

THE HONOURABLE MR JUSTICE HOLLAND

MR W MORRIS

MR A D SCOTT

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CHARLES ROBERTSON (DEVELOPMENTS) LTD          APPELLANTS

(1) MRS G WHITE

(2) MRS S HOBBS          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR N MOORE

Solicitor

Messrs Stephens & Scown

Solicitors

26-28 Southernhay East

Exeter EX1 1RS

For the Respondents No appearance by or on

behalf of the 1st or 2nd

Respondent


 


MR JUSTICE HOLLAND: This is an appeal from a decision of an Industrial Tribunal sitting at Plymouth on the 2nd April 1993. There were before that Tribunal two complaints of unfair dismissal by two former employees, Glenys Mary White and Sylvia Ann Hobbs against Charles Robertson (Developments) Ltd. In the event the unanimous decision of the Tribunal was that the dismissals were unfair but that compensation should be limited in each case to one half of the basic award so that Mrs White should receive £242.31 and Mrs Hobbs, £278.82. The employers ("the appellants") appeal against the decision, taking two points. First, they contend that findings of unfair dismissal could not be based on the facts as found by the Tribunal. Second, they contend that as a matter of law the Tribunal having reduced the respective compensatory awards by 100% pursuant to Section 74(6) Employment Protection (Consolidation) Act 1978 should similarly have reduced the basic awards pursuant to Section 73(7B).

The facts giving rise to these applications were short and painful. Both applicants worked in the stationery department of the appellant's departmental store in Liskeard. At the beginning of November 1992 a video surveillance camera was positioned in a storeroom at the premises. Use of this camera on the 7th, 8th and 9th November resulted in both applicants being videoed as they took small quantities of sweets from stock in this room. The matter was reported to the Police who seemingly secured confessions and consequently dealt with the complaints by way of cautions. For the respondent employers the immediate concern was disciplinary. As to this, each applicant's contract of employment permitted summary dismissal for theft of the employers' property but the relevant procedure for achieving such involved recognition of `employee's rights', such including a right to be heard before any decision be taken and a right of appeal. In the event, and with respect to Mrs Hobbs, the Industrial Tribunal made findings:

"When (the Store Manager, Mrs Curnow) came to interviewing Mrs Hobbs, both ladies were greatly upset. They had known each other well, they had been on friendly terms, and it is clear neither of them knew quite what to say. It was a very short interview. Mrs Curnow's mind was clearly made up and the dismissal took place. It was not really an interview, it was more an announcement that dismissal was inevitable, and that was the end of the matter.

Mrs Curnow did not invite Mrs Hobbs to have a representative present. That is contrary to the Code of Practice issued by ACAS concerning disciplinary procedures, the relevant part of which as follows:

`Before a decision is made or a penalty imposed, the individual should be interviewed and given the opportunity to state his or her case, and should be advised of any rights under the procedure, including the right be accompanied.'

Mrs Curnow told us that she did not go through that procedure because she felt it would simply make matters worse and embarrass Mrs Hobbs even more, and she was anxious to let the blow fall as gently as possible."

Subsequently Mrs Hobbs wrote to the appellants specifying "I hereby give notice that I intend to appeal against this decision". Unhappily, this did not trigger any appeal procedure so that the merits of the matter were effectively left to the Industrial Tribunal.

With respect to Mrs White, she was seen by the Police on a subsequent occasion but was similarly left distressed, so much so that she did not then wish to attend for an interview with Mrs Curnow, as the latter was told by telephone. In these circumstances, Mrs Curnow made no further attempt to interview her but sent her forthwith a letter of dismissal. She did not make any intimation of an appeal.

Turning to the law, the appellants had plainly no difficulty in establishing a reason relating to the conduct of each employee so as prima facie to justify dismissal, see Section 57(1)(b) and (2(b) Employers Protection (Consolidation) Act 1978. Inevitably their problem was Section 57(3) "Where the employer has fulfilled the requirements of sub-section (1), then ..... the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and the question shall be determined in accordance with equity and the substantial merits of the case."

The Tribunal tackled this issue as follows:

"21 We have already pointed out that there was no proper interview with either applicant, and we will deal first with Mrs Hobbs. She was not offered a representative, contrary to the Code of Practice. We explained the reason why Mrs Curnow did not think it necessary. Mrs Curnow did concede, questioned by the Tribunal, that it might have been better to delay matters and organise a disciplinary meeting at a later date. That simply did not occur. In our judgment, that should have been offered, although we understand Mrs Curnow's point that both sides were extremely distressed on this particular day. Another day should have been offered to Mrs Hobbs, by which time she could gather her thoughts, organise a representative had she wished to do so, and marshall her facts. She could have said anything in her defence which she wanted to say - presumably what she told us today. She wanted to bring an appeal. To most employers, the letter would have indicated this and an appeal should have been set up. For those reasons we find that in Mrs Hobbs' case, the dismissal was unfair, having regard to the procedural faults. She had no proper interview and no appeal at all.

22 In Mrs White's case, although we appreciate that her partner said that she was too embarrassed to come in and she knew then that Mrs Hobbs has been dismissed, precisely the same consideration should have been given. Both sides were highly charged at this point. There should have been an offer of a disciplinary interview. She should have been advised of her rights, and if then she did not want to attend the interview, she need not have done so: not to offer her the opportunity of a proper interview, in our judgment, was unfair and made the decision unfair.

23 The question of amount of loss by the respondents has been pursued to some extent. It was not great but as Mrs Curnow said, theft is theft, whether it is a very small amount or a large amount. Unless there are unusual circumstances in such case, an employer is justified in reaching a decision to dismiss.

24 We do not consider these are cases in which an employer need not hold a proper interview. We find the dismissals unfair; but in that respect only."

To us Mr Moore, in a conspicuously moderate and clear address, based his submissions as to these findings of fact and the conclusion drawn therefrom upon a passage from the speech of Lord Mackay of Clashfern Lord Chancellor in Polkey v Dayton Ltd (1988) ICR 142 at 153. With specific reference to Section 57(3) he said:

"..... the subject matter for the Tribunal's consideration is the employer's action in treating the reason as a sufficient reason for dismissing the employee. It is that action and that action only the Tribunal is required to characterise as reasonable or unreasonable. That leaves no scope for the Tribunal considering whether, if the employer had acted differently, he might have dismissed the employee. It is what the employer did that is to be judged, not what he might have done. On the other hand, in judging whether what the employer did was reasonable it is right to consider what a reasonable employer would have had in mind at the time he decided to dismiss as the consequence of not consulting or not warning.

If the employer could reasonably have concluded in the light of the circumstances known to him at the time of dismissal that consultation or warning would be utterly useless he might well act reasonably even if he did not observe the provisions of the code. Failure to observe the requirement of the code relating to consultation or warning will not necessarily render the dismissal unfair. Whether in any particular case it did so is a matter for the Industrial Tribunal to consider in the light of the circumstances known to the employer t the time he dismissed the employee."

We interpose: see also Lord Bridge of Harwich at 162 - 163 to similar effect.

Mr Moore submits that with respect to each applicant, the matter was so clear cut that a disciplinary interview adequate to fulfil the specified employer's rights would have been `utterly useless' so that the failure to hold such prior to the dismissal was reasonable. For or part, we reject such submission. Each applicant was a well established employee in terms of service and each theft, whilst inexcusable as such, was not of the most heinous nature - hence the understandable decision by the Police merely to caution. In either case a disciplinary interview, so far from being useless, had a potential value as an aid to a balanced decision as to dismissal, and one that could be seen to be fair. With respect the first ground of appeal, we reject such: findings of unfair dismissal properly flowed from the facts as found.

Turning to the second ground of appeal, this arises out of paragraphs 25 - 28 of the Reasons:

"25 Turning to the question of compensation. There are two elements in compensation:

There is the Basic Award, the calculation of which is the same as the redundancy payment. We are entitled to reduce that, having regard to contributory fault, if we consider it just and equitable. Limiting ourselves solely at the moment to considering the Basic Award, we do not consider it just and equitable to reduce it by 100%. They each lost an important right. The employers are a substantial employer, and it is a serious matter not to afford employees their rights before dismissal. To reflect the loss of that right, we consider that an appropriate amount, having regard to the total Basic Award, which is not large in any event, would be 50% of the Basic Award in each case.

26 When it comes to the question of the Compensatory Award, we accept the respondent's contention: that whatever these two applicants had said, certainly from what we heard today, it would have made no difference. The result would have been precisely the same. There was nothing they could say to counter the video evidence and we do not accept for one moment that they would have persuaded Mrs Curnow that they were entitled to take the sweets as they claimed or that the amount was so small that it should be disregarded.

27 We have heard from Mrs Curnow and we consider the chances of her reaching any other conclusion were negligible and that her conclusion would have been reasonable. We have already emphasised that this is not a criminal case. It is a question of whether her view would have been a reasonable one.

28 We make no compensatory award, on the basis that there has been 100% contribution to the dismissal by the two applicants."

Before setting out and considering Mr Moore's submissions, it is helpful to remind ourselves of the statutory provisions that underpinned the unappealed decision to make no compensatory award. Thus,:

Section 72(1) "Where a Tribunal makes an award of compensation ..... the award shall consist of:

(a) a basic award calculated in accordance with Section 73, and

(b) a compensatory award calculated in accordance with Section 74."

Section 74(1) "..... the amount of the compensatory shall be such amount as the Tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.

(6) Where the Tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding."

It is apparent from a Court of Appeal decision, Rao v Civil Aviation Authority (1994) I.C.R. 495 that these subsections provide for a two stage approach to the assessment of a compensatory award. Per Sir Thomas Bingham M.R. at 501. "It would seem to me appropriate that those making this calculation should first of all assess what is the amount of the loss which the employee has sustained under subsection (1) and thereafter, and in the light of that finding, make their decision as to the extent to which the employee caused or contributed to the dismissal and on the question of what reduction it would be fair and equitable to make having regard to that finding."

Turning to the instant dismissals, the enquiry pursuant to Section 74(1) further involves, per Harvey, Vol 1, paragraph 2541: "..... a consideration of two factors. The first is that the Tribunal must take a view as to what would have happened but for the unfair dismissal. Would the employee have continued in employment indefinitely, or for a limited period, or was there a realistic chance that he would have been dismissed? The second is the calculation of the actual loss for the period which is considered appropriate." In the event, the Tribunal dealt with the assessment of compensatory award in the robust, succinct terms of paragraphs 27 and 28, already set out above. It is manifest that the two stage approach advocated by the Court of Appeal in Rao, op. cit., has not being followed but we are entirely confident that had it been followed the result would have been the same. Thus (following Section 74(1)) it may not have been impossible for Mrs Hobbs to continue in employment had there been the opportunity to make representations by way of a disciplinary interview or an appeal, but, having regard to the attitude of Mrs Curnow, such being found to be reasonable, continuing employment was improbable. It followed that there may well not have been an award at all thrown up by stage one, but (following Section 74(6)) any such award as might be made to reflect proven loss would be justly reduced to nil having regard to the extent that her dismissal was caused or contributed to by the actions of Mrs Hobbs herself. We would interpose out of deference to the Tribunal: the decision in Rao was subsequent to the decisions under appeal.

Now we turn to the basic award. Section 73(1) - (6) set out the methods for calculating a basic award, which methods, in contrast to that specified by Section 74(1), do not involve the concept of that which is just and equitable having regard to the loss sustained by the complainant in consequence of the dismissal. The calculations are mandatory and mechanical. Discretion is introduced by Section 73(7A) and (7B); it is the latter subsection which is material: "Where the Tribunal considers that any conduct of the complainant before the dismissal (or, where the dismissal was with notice, before the notice was given) was such that it would be just and equitable to reduce ..... the amount of the basic award to any extent, the Tribunal shall reduce ..... that amount accordingly."

Mr Moore submits that, given an apparent decision made pursuant to Section 74(6) to reduce the compensatory award by 100%, a judgment pursuant to Section 74(7B) should as a matter of law lead to the same reduction, so that a contrasting reduction of 50% only had to reflect a misdirection as to law, further alternatively, such had to be perverse, in either event so as to be subject to appeal to this Tribunal. The strength of Mr Moore's submission lies in a short passage from the judgment of the EAT in Chaplin v H.J. Rawlinson Ltd (1991) I.C.R. 553. At 563 Wood J. said: "It is clear that if contribution is to be found, on principle, it should be found equally in proportion both to the basic award, and to the compensatory award and that is to be found in R.S.P.C.A v Cruden (1986) I.C.R. 205." Unhappily, and with great respect, it is not possible to discern a foundation for that proposition in the latter judgment of this Tribunal. Thus, at 217 that judgment includes: "It should be made clear that Mr Birts accepted that there is a discretion, and that any suggestion that the mere fact that the Tribunal has not reduced the basic and the compensatory awards in precisely the same proportions is necessarily indicative of a failure properly to exercise their discretion cannot be sustained." Again, at 219, following some analysis of the two subsections, the Tribunal concluded: "Plainly both subsections involve the exercise of a discretion, and the wording of each, while sufficiently different to admit of differentiation in cases where the Tribunal finds on the facts that it is justified, is sufficiently similar to lead us to conclude that it is only exceptionally that such differentiation will be justified."

The passage from Chaplin relied upon by Mr Moore is further discredited as statement of principle by two subsequent Court of Appeal decisions. In Parker Foundry v Slack (1992) I.C.R. 302 Woolf L.J. pointed out that prior to repeal by the Employment Act 1982 the terms of Section 73(7) almost exactly equated with those of Section 74(6); by inference Parliament sought to introduce some contrast by way of the substitute subsections 73(7A) and (7B). Hence at 307 and referring to Section 73(7B) he said, "The language of the subsection is different from the language contained in Section 74(6) to this extent, that it does not expressly restrict what can be considered as conduct which was causative of the dismissal of the dismissal of the complainant. It allows the Tribunal to look beyond that, but, as with Section 74(6), it is focusing on the conduct of the complainant." He was thus able to cite the passage from R.S.P.C.A. v Cruden, op. cit. at 219, commenting at 309 "With regard to that general approach I say no more than that it accords with what I would expect to be the position. The relationship between the two subsections does, in the majority of cases, lead to similar approaches."

Then in Rao v Civil Aviation Authority, op. cit, Staughton L.J. said at 502: "It may turn out that the deduction which is just and equitable under Section 73(7B) of the Act of 1978 is not the same as that which is just and equitable under Section 74(6). The reason for that could be that in the case of Section 74 there would already have been a deduction under subsection (1) by reason of the Tribunal's conclusion as to the likelihood that the employee would not have remained further employed in any event. That can affect what is just and equitable under subsection (6)."

We are now in a position to summarise the relevant law as we conceive it to be:

1. Section 73(B): in adjudging whether it would be just and equitable to reduce a basic award, further or alternatively in adjudging the extent of any such reduction, the Industrial Tribunal may take into account any conduct of the complainant (that is, the applicant) before the giving of notice of dismissal, or absent notice, the dismissal. Neither causation nor contribution are necessary findings. The relevant judgment is thus essentially ` one stage'.

2. Section 74(1) and 74(6): pursuant to the former subsection, the Industrial Tribunal is concerned with the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer. Pursuant to the latter subsection, the Industrial Tribunal is concerned with the dismissal itself.

3. Section 74(6): in adjudging whether to reduce a compensatory award assessed pursuant to Section 74(1), the Industrial Tribunal has first to find whether any action of the complainant to any extent caused or contributed to the dismissal. In adjudging the proportion of any such reduction, the Industrial Tribunal should consider what is just and equitable having regard to that first finding. The total judgment is thus two stage. At the second stage the Tribunal should take into account as a possible factor bearing upon its judgment, any deduction already made for the purposes of Section 74(1) to reflect the chance that the complainant would have lost the employment in any event.

4. Section 73(7B) and 74(6): a judgment made pursuant to the former subsection reflects factors that are materially different from those bearing upon a judgment made pursuant to the latter subsection, and vice versa. That said, the circumstances of any particular case may readily result in like reductions being made under both subsections.

Following on from the foregoing, we are driven to reject Mr Moore's submission. The discrepancy in reduction (total with respect to the compensatory award and one half with respect to the basic award) is not wrong in principle but reflects the discretion vested in the Industrial Tribunal by the statute as construed with the aid of the authorities. We have therefore to dismiss this further head of appeal.