United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 651_93_1710

Appeal No. EAT/651/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 17 October 1994

Before

THE HONOURABLE MR JUSTICE PILL

MR A C BLYGHTON

MISS A MACKIE OBE

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MISS A RENWICK          APPELLANT

(1) MR D BROWNE

(2) CABLE LONDON PLC          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR A GUMBITI-ZIMUTO

(of Counsel)

Messrs. Johns & Saggars

193-195 Kentish Town Road

London NW5 2JU

For the Respondents MR A SENDALL

(of Counsel)

Messrs Allen & Overy

9 Cheapside

London EC2V 6AD


 


MR JUSTICE PILL: This is an appeal from the decision of the Industrial Tribunal held at London (North) on 16 June 1993 whereby the Tribunal held unanimously that the Applicant's complaint of unlawful racial discrimination failed.

The Applicant, Miss A Renwick, commenced employment with the Respondents, Cable London Plc, as a sales representative, on 13 May 1991. The Respondent Company carries on the business of cable communication franchising in four areas in London.

The Company recruits and trains direct-sales representatives to work under a residential sales supervisor or team leader. The residential sales supervisor for the Camden area was Mr A Browne. The Tribunal found that he and Mr N Vyas devised for the use of sales representatives a simple weekly sales diary. In that diary the representative would enter particulars of contracts concluded in the course of a week.

The Applicant received a salary of £10,000 a year. She soon became a successful sales representative and, in addition to her salary, earned commission averaging £1,000 a month. From a quite early stage, beginning in August 1991, Miss Renwick experienced, as the Tribunal put it:

"a problem in her relationship with Mr Browne".

There ais set out in the Tribunal's reasoned decision a series of events concerning not only Miss Renwick but other employees of the Respondent Company. We do not need to set these out in detail, especially having regard to the findings of fact, which the Tribunal made and as they are in the Tribunal's decision. The events relate to Mr Vyas, to a Mr Ashwin Hansora (otherwise Patel), Mr Devon Appajee, Mr L M Dorling, Mr F Flood and Miss Carmel McMorrow, Mr Harvey Walters, Mr Lee Dorling and Mr Jason Grant.

The common factor is a series of decisions taken by Mr Browne in his capacity as supervisor. Some of the complaints made in the relevant events do have implications of racial discrimination, others do not and we note that Miss Renwick's complaint that she was allocated fewer releases, that is, fewer residential properties to cover, than others, made clear that:

"it was not a complaint that white representatives were more favourably treated".

It is right to say that specific complaint was made of a particularly unfortunate remark which Mr Browne was held to have made in relation to Miss Renwick and to the fact that she did suggest that Mr Browne wanted the white representatives to earn more than the Indian representatives.

In January 1992 there was an alteration in the arrangements for payment of commission. Representatives were required to submit their weekly sales diaries for a period late in 1991. Enquiries were then made of her as a result of entries in the diary, which appeared to show that more contracts had been made than had in fact been made and as the Tribunal put it at paragraph 14:

"In the absence of an explanation from Miss Renwick the duplication of entries was seen as a deliberate attempt to inflate her commission and bonus payments."

Mr Browne took the matter up with Miss Renwick and the subsequent course of events is set out in detail in the Tribunal's recent decision. We need not set it out in full. Eventually on Friday, 24 January 1992, Mr Browne said, according to the evidence which the Tribunal accepted, that he was:

"afraid that he had to let her go. He said he was dismissing her because of the contracts which could not found and for which she could not supply information."

Miss Renwick sought an interview with the personnel manager but her attempts to have the matter considered further were unsuccessful.

The Tribunal concluded that:

"There can be no doubt that Miss Renwick was unfairly dismissed."

They then set out criticisms of the conduct of the employers in relation to her dismissal. They also set out that at least in certain respects it would have become clear had further enquiries been made that the conduct of Miss Renwick had not been fraudulent. At most, they conclude:

"the contracts would have been included in the calculation of her bonus entitlement which was the only financial benefit derived from particulars contained in the Weekly Sales Diary, which is not an accounting record.

... if the allegations had been properly investigated and there was a fairly conducted disciplinary hearing it would have been established"

and they go on to state that any suggestion of fraud was, in those respects, unsubstantiated.

The conclusion of the Tribunal was that:

"The dismissal procedure adopted by the respondents was deplorable. Mr Browne was virtually permitted a free hand to dismiss an employee without having regard to the elementary principles of fairness and without even informing the Personnel Manager."

The Tribunal, however, continued in this way:

"it was his belief that Miss Renwick had fraudulently boosted her sales performance in order to obtain commission and bonus to which she was not entitled. Although it now appears that his belief was ill-founded it was the reason for the dismissal. An unfair dismissal procedure was adopted but Miss Renwick was employed for less than 2 years and had no entitlement to statutory protection against unfair dismissal. The tribunal can only accord her a remedy if it is established that she was treated on racial grounds less favourably than the respondents treated or would treat others and that they discriminated against her by dismissing her."

The Tribunal stated their conclusions in this way at paragraph 23:

"Where there is a complaint of racial discrimination it is accordingly necessary to look at the general background to the employment relationship to establish whether inferences of less favourable treatment on racial grounds can be inferred. In this instance we have had regard to the following matters:-

(a) The respondents are multi-racial employers. They engage the services of a recruitment agency and it is in their commercial interest that their sales representatives should reflect the racial and cultural market in which they operate. There is, however, evidence that indigenous white employees, regardless of sales performance or length of service, were promoted by Mr Browne as team leaders. We accept that this may be the personal preference of Mr Browne and we also accept that sales achievement is not a necessary yardstick of qualification for appointment as a team leader, but there is no evidence that the respondents took any steps to check or monitor his selection and preferment.

(b) There is some evidence that Mr Browne considered Miss Renwick in racial terms (eg, his derogatory reference to her following the dispute in August 1991).

(c) There is also evidence that Mr Browne was a manager who operated impulsively, that he feared competition and harboured favourites, and employees were more favourably treated because he liked them and less favourably treated when they upset him. It was not only black employees who were treated badly (eg, the dismissal of Mr Dorling).

(d) We have received no explanation why Miss Renwick's name was omitted from the roll of sales representatives in the booklet "Sales Budgets and Procedures" January/March 1992. It is some evidence from which it may be inferred that the termination of her employment was already envisaged in December 1992.

(e) The respondents overstated the case against Miss Renwick in their notice of appearance in asserting that the duplication of customer contracts 'led to overpayment of commission' and bonus being paid to her.

(f) White sales representatives obtained the full benefit of the December bonus without earning it.

(g) Mrs Tilling took no effective steps to prevent the unfair dismissal of Miss Renwick in flagrant breach of the contractual disciplinary procedure ... which required a personnel representative of the company to be present at every stage of the disciplinary procedure, including the suspension stage.

We find the conduct of Mr Browne and the inaction of the respondent company reprehensible. Mr Browne appears to have been given a free hand to run the residential sales office without any form of control and there is strong evidence that white representatives were more favourably treated than others. However, when it comes to the point of establishing why Miss Renwick was dismissed on 24 January 1992 we conclude that she was dismissed because it was Mr Browne's genuine (but misguided) belief that she had fraudulently duplicated sales contracts in her Weekly Sales Diary for financial gain. We find that Mr Browne was not seeking an excuse for dismissing her and that he did not initiate the audit which revealed the duplication of the contract numbers. Applying the test suggest in James v Eastleigh Borough Council [1990] IRLR 288 'would Miss Renwick have received the same treatment from Mr Browne but for her race?' the answer must be 'yes, Mr Browne would have dismissed any sales representative regardless of sex or race in that manner for a supposed offence of that kind'. The dismissal for that reason and in that manner may have been unfair but the remedy is by way of complaint of unfair dismissal if the complainant has sufficient qualifying employment. With considerable regret, because Miss Renwick was treated unfairly, it is the unanimous decision of the tribunal that her complaint of unlawful racial discrimination fails."

It may be noted that witnesses were called on behalf of the Applicant, Miss Renwick, for the Tribunal. Mr Browne, who was a Respondent along with the employers, did not attend the hearing and was not represented. The employer's personnel manager, Mrs Tilling, who appeared for the Company, informed the Tribunal that Mr Browne had left the Company's employment and was living in the United States. The Tribunal went on to find:

"The only direct evidence received from Mr Browne was his circumstantial statement of events leading up to Miss Renwick's dismissal which is annexed to the notice of appearance and in considering that we took account of the fact that Miss Renwick was unable to cross-examine him on his written statement."

It is common ground on this appeal that the Tribunal were entitled to look at Mr Browne's memorandum and to treat it as evidence. They also had in mind, as they stated, that the statement had not been made in circumstances in which it was open to those representing Miss Renwick to cross examine him upon it and that could and would be expected to influence the weight which the Tribunal gave to the memorandum.

It is also common ground that the Tribunal applied the correct test in the passage which we have cited and also they applied the correct test in relation to the drawing of inferences, that is, the test expressed in King v The Great Britain China Centre [1991] IRLR 513 by Lord Justice Neill in the Court of Appeal. The summary of the guidelines expressed by Lord Justice Neill in King, which the Tribunal set out, is accepted as an accurate and appropriate summary, though Mr Zimuto, who appeared for the Appellant, also invited us to have in mind the statement which Lord Justice Neill made in Baker v Cornwall County Council [1990] ICR 452 at page 460, where Lord Justice Neill alerted industrial tribunals to situations where racial discrimination was present without it being expressed or without there being direct evidence of it.

On behalf of the Appellant, Mr Zimuto submits that the Tribunal have erred in law. The question which he posed was whether the conclusion of the Tribunal was one which was open to them upon the findings of fact which they made. It can be noted that the findings of fact could hardly have been more favourable to Miss Renwick upon the evidence presented.

Mr Zimuto addressed the Court particularly on the question of Mr Browne's:

"genuine (but misguided) belief"

as the Tribunal had found it to be. He submitted that on the evidence it was not open to the Tribunal to say that the belief was a genuine one. Upon the evidence, he submits that was a perverse conclusion. Upon the evidence, the belief was not a reasonable belief and the Tribunal could not conclude that it was an honest belief in the absence of further explanation. There was no basis, he submitted, for the conclusion that the belief was a genuine one. The belief was not reasonable because it could not have existed along with the system which had been devised. The Tribunal could also draw an inference that racial discrimination was involved from the unsatisfactory reply which the employers had made to the questionnaire submitted to them.

Mr Zimuto also relied upon the earlier events involving Miss Renwick and other employees to establish what he submitted was a tendency to act unreasonably. He submitted that Mr Browne's tendency to act unreasonably could not be used to defeat the Applicant's suggestions that he, Mr Browne, had acted on racial grounds.

It appeared to us at one stage that Mr Zimuto was going as far as to submit that in the absence of a rational explanation from employers, a Tribunal was obliged as a matter of law to conclude that there was a racial reason for the dismissal. When the point was put to him he submitted that it was in this case the Industrial Tribunal was obliged to draw the inference on the evidence and because of the evidence of Mr Browne's conduct.

Mr Zimuto submits that the Applicant has gone as far on the evidence as any Applicant could be expected to go and it was unreasonable not to reach a conclusion which was favourable to her.

On behalf of the Respondents, Mr Sendall stated that in order to succeed the Appellant had at least to challenge successfully the genuineness of Mr Browne's beliefs. He submits that the conclusion reached by the Tribunal was a permissible option upon the evidence before the Tribunal. Questions of the weight to be given to evidence were essentially for the Tribunal. It was open to a Tribunal to draw inferences but equally it was open to them upon the evidence not to draw inferences. Mr Sendall mentioned that there could be a case where the Tribunal would not know whether to draw inferences, if they decided to draw adverse inferences, upon racial grounds or upon sexual grounds or upon some other grounds.

Having regard to the subsequent investigations into the sales diary, Mr Sendall said that while it may have been demonstrated later to Mr Browne that Miss Renwick had not been fraudulent, it was nevertheless open to the Tribunal to find that at the time of dismissal he had a genuine belief that her conduct was unsatisfactory.

It has not been submitted on the Applicant's behalf that the lack of procedures which the Tribunal found to be reprehensible, was because of Miss Renwick's race or that the absence of investigation, while deplorable in other ways, itself provided further evidence that the dismissal was upon racial grounds.

We have considered the submissions of Counsel. In our judgment the Tribunal were entitled to reach the conclusions they did. They have expressed themselves plainly. They have set out the evidence. They have set out the facts found by them and they have set out their conclusion. Indeed, in its form, the reasoned decision is a model of its kind. They were entitled to hold, in our judgment, upon their findings of facts that the conduct of the employers, though reprehensible to the point of being intolerable, was not motivated in any way by race. They were entitled to answer the question, would Miss Renwick have received the same treatment from Mr Browne but for her race, with the answer "yes". They were entitled to conclude that Mr Browne's belief, albeit misguided, was genuine. Even if an explanation given for a dismissal is misguided or irrational, a Tribunal is not obliged as a matter of law, to conclude that the real reason was because of the employee's race. Inferences involve keeping in mind all the relevant evidence and applying judgment and commonsense to that evidence. Of course, if the reason given is found by the Tribunal to be a dishonest reason, it will often be the case that the Tribunal will conclude that the reason has been given as an attempt to prevent the true reason for dismissal from emerging and to infer that the real reason was racial.

We can find no error of law in the decision of the Tribunal and this appeal must be dismissed.