United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 605_93_2501

Appeal No. EAT/605/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 25 January 1995

Before

THE HONOURABLE MRS JUSTICE SMITH

MR P DAWSON OBE

MR A D SCOTT

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UNITED NORWEST CO-OPERATIVES LTD          APPELLANTS

(1) MRS P BIDDLE

(2) MRS N GILL

(3) MRS P WHITE          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MRS J WOODWARD

(Of Counsel)

J P Palmer

Solicitor

Messrs Croftons

Television House

Mount Street

Manchester

M2 5FA

For the Respondents MR D BROWN

(Of Counsel)

G McLean

Representatives

USDAW

(Legal Dept)

188 Wilmslow Road

Fallowfield

Manchester

M14 6LJ


 


MRS JUSTICE SMITH: This is an appeal from the decision of an Industrial Tribunal sitting at Manchester on 11 to 13 May 1993. The unanimous decision of the Tribunal was that the three Applicants, Mrs Biddle, Mrs Gill and Mrs White, had been unfairly dismissed by the Appellants, United Norwest Co-Operatives Ltd. The Tribunal adjourned the question of remedies to another date.

The Industrial Tribunal heard a great deal of evidence and we have seen the Chairman's notes of evidence taken over three days. The facts as found by the Industrial Tribunal, can be summarised as follows, as taken largely from their Reasons.

The three employees (Respondents to this appeal) were all checkout operators at the Appellants store, Shopping Giant at Droylsden, near Manchester. The Appellants employed 24 such checkout operators working in three shifts. The Droylsden store was one of several large supermarkets operated by the Appellants. The dismissals concerned the alleged misuse by these checkout operators of the coupon redemption system. These are coupons which upon presentation to a till operator, will be accepted in reduction of the purchase price of the goods to which they relate. That, at any rate, is how the system ought to work.

There are two different types of coupon with which the Tribunal was concerned. Manufacturers' coupons are promoted by the manufacturer of a specific product. They should be presented at the purchase of the item specified on the coupon and the price is then reduced by the face value of the coupon. The shop, having accepted the coupons, would send them to a central collecting house where they would be redeemed by the manufacturer. The shop would suffer no financial loss. It was accepted that these Appellants did not insist on the strict operation of the system in respect of manufacturers' coupons except in the wines and spirits department. In general, they allowed customers and staff to present a manufacturer's coupon and set it against the cost of any item so long as the coupon product was stocked in the store.

The other type of coupon was that offered by the Co-operative Society itself. Strictly speaking, those should be set against the specified own brand Co-operative item, but once again that system was not strictly enforced by the Appellants and it was acknowledged that such coupons would be accepted against any item, provided the product was stocked in the store.

The Tribunal found that the three employees had been given no training in the way in which coupons should be dealt with, save as to how they should be rung up on the till. Both types of coupon were freely available in the Appellants' store, particularly in a promotional paper called "Shopping News" which was published by the Appellants. There was some evidence before the Tribunal that members of staff took such newspapers into the staff room and cut out the coupons for presentation at the tills.

In addition to the relaxation of the rules in relation to coupons, to which we have already referred, there were other practices which the Appellants accepted were condoned by them. In particular, some staff adopted a system whereby they would accept any coupon against any item, but only on a "one coupon for one item" basis. In other words a customer or member of staff presenting say, 12 items at the checkout, would be allowed to present 12 coupons to set against the total purchase price.

Another practice was described by the till operators in evidence and accepted by the Tribunal. Sometimes the store manager would require till operators to ring up bundles of coupons which were about to expire or which had been provided for in-store promotions. Those coupons would be presented to the operators in bundles of a value between £1 and £4 and the operator would key in the value of the bundle.

The Appellants contended at the Tribunal that the checkout operators were aware of the rules relating to the acceptance of coupons because there was a notice on each till at the shop. That notice explained the rules which were to operate, namely that only in respect of the item named on the coupon would the coupon be accepted. The Tribunal rejected the Appellants' evidence in that regard. The checkout operators gave evidence that there were no such notices on their tills at Droylsden and the Tribunal accepted that.

The events which led to the dismissal of these women took place on Friday, 28 February 1992. That afternoon, security officers visited the store and carried out a check on a member of staff named Mrs D.B. It was found that she had left the store with articles which had not been paid for. In addition to that, those articles which had been paid for, had been paid for in large part by coupons. The total value of the goods which had been put through the till was £9.54 and £8.40 of that sum had been paid for by coupons. Mrs Gill, one of the Respondents to this appeal, was the checkout operator who had served Mrs D.B. Mrs Gill, who had gone off duty by the time the check was carried out, was telephoned, asked to return to work and was suspended until the following Monday, 2 March 1992.

Mrs Gill was required to attend a disciplinary meeting on 2 March. There was available to Miss Worthington, the Area Personnel Officer who conducted the meeting, a report on the events of the Friday afternoon. Also there were available the till roll and coupons from Mrs Gill's till. Unfortunately, no proper record of that disciplinary meeting was kept. However, a brief note of the proceedings was before the Tribunal. It said:

"Coupons. Admitted knew one off per item. [Mrs D.B.] asked her to take coupons off so did. Staff - common practice. Ring in collectively because takes too long. Told can take any coupons against any item as long as sell products but could not remember who told her, did not believe a supervisor had said so".

We should mention that on that occasion Mrs Gill was accompanied by a trade union representative. She was summarily dismissed at the end of that meeting. The letter confirming her dismissal was sent to her on 4 March. It states in part:

"In summary, we established and confirmed that you had broken till procedures when serving [Mrs D.B.] by not registering all her purchases. You also flagrantly abused the coupon reimbursement system by fraudulently accepting them in large numbers in payment for those goods. In effect, you allowed the coupons to replace cash for the majority of those goods".

Thereafter, the Appellants carried out a further and more extensive investigation into the procedures of the till operators in respect of coupons. That investigation covered all the till operators who worked at any time on 28 February 1992. Their coupons and till rolls were still available and they were examined in detail. Subsequently, a check was made of till rolls to see how many coupons had been accepted by the remaining till operators on their latest day of duty before 28 February. It was found that on 28 February, six operators had accepted coupons only against the items specified and seven had accepted them more widely.

An enquiry of a more general nature was conducted by Mr Harrison, the Regional Internal Auditor. His enquiry involved an examination of audit rolls and produced information giving the value of the coupons accepted within the store in each week since Christmas. His evidence to the Tribunal, which we have seen, was that around Christmas the usual level of coupons accepted was to a value of about £150 to £200 a week, but that in February the value of coupons had risen and had been £373, £588, £615 and £881, that last figure being the value accepted in the weekending 29 February 1992.

After that extended enquiry had been conducted, further disciplinary proceedings were held. Three further till operators were summarily dismissed, including the two Respondents, Mrs Biddle and Mrs White. The third operator to have been dismissed had less than two years' service and did not therefore claim that she had been unfairly dismissed. A supervisor, Mrs McDermott, resigned rather than face disciplinary proceedings. Five other checkout operators were given written warnings. The employers found they had accepted multiple coupons against single items, although to a lesser extent than the three Applicants, and had apparently been given authority to do so by one of the supervisors. It appears that there were in fact only two supervisors, Mrs McDermott, who resigned and another supervisor, Mrs S.B. who was herself disciplined. She was given, as we now know, a final written warning for having passed multiple coupons on her own account at the checkout. Whether the detail of that evidence was before the Tribunal has remained unclear to us during the hearing of this appeal.

In any event Mrs Biddle and Mrs White were summarily dismissed following their disciplinary hearings. Their letters of dismissal dated 10 March 1992 say in part:

"In summary we established and confirmed that you have flagrantly abused the coupon reimbursement system by fraudulently accepting extremely large numbers in payment for goods instead of the required cash payment".

The Tribunal recorded the seriousness of the three Respondents' misconduct in the following way. The employers had found evidence that Mrs Biddle had accepted 16 coupons for 4 items on one transaction and 22 coupons for 5 items on the second transaction. Mrs White had accepted 81 coupons worth £16.40 against a bill of £25.99 for 24 items and 36 coupons worth £16.60 against a bill of £19.09 for 18 items; also 36 coupons worth £6.60 against a bill of £17.20 for 20 items. We have already indicated the extent of Mrs Gill's offending in respect of the transaction involving Mrs D.B.

All three employees appealed against their dismissals. The appeals were heard on 3 April 1992 by Mr Travis. The employees were represented by a trade union representative. Again, there was no formal written record of the meeting, but it is clear that the defence advanced by all three employees was that the practice of accepting multiple coupons was "custom and practice". In essence, they were saying, "everyone has been doing it". The Tribunal record that Mrs White and Mrs Gill told Mr Travis at the appeal hearing that one of the supervisors, Mrs S.B. had given permission for the acceptance of multiple coupons. As a result of that Mr Travis adjourned the meeting and asked Miss Worthington to carry out further enquiries by speaking to the supervisor, Mrs S.B. Miss Worthington reported back to Mr Travis that Mrs S.B. had denied giving Mrs White permission to accept multiple coupons. We interpose to say that it was Mrs S.B., who was herself disciplined for having passed multiple coupons, albeit apparently to a much lesser extent than these three Respondents. The Tribunal then record that no one else was asked if Mrs S.B. had given permission or had presented multiple coupons.

The Applicants' dismissal was confirmed by letter dated 13 April 1992. Each letter was in different terms. We have looked at them, as indeed did the Industrial Tribunal. We summarise them by saying that in each case Mr Travis rejected the argument which had been advanced on behalf of the employee, that this conduct was custom and practice and wide-spread within the store. He expressly accepted Mrs S.B's denial that she had given permission to Mrs White to present or accept multiple coupons.

The Tribunal then asked themselves whether Mrs Gill, who it will be recalled had been dismissed upon two grounds, should be considered separately or whether all three employees were in the same position before the Industrial Tribunal. At Mrs Gill's appeal it had been expressly accepted that she had not acted dishonestly, in so far as it had been suggested that she had failed to pass items through the till which Mrs D.B. had had in her trolley. That allegation was withdrawn. The Tribunal therefore came to the conclusion that all three employees were to be dealt with on the same basis. No criticism is made of that conclusion before this Appeal Tribunal.

The Tribunal then went on to consider the relevant law. They cited to themselves Section 57(1) and (2) of the Employment Protection (Consolidation) Act 1978 and they came to the conclusion, not criticised before us, that the employer had shown, on the balance of probabilities, that the reason for dismissal in each case was the misuse of the coupon redemption scheme. The Tribunal then considered Section 57(3) of the 1978 Act. At paragraph 8 they said:

"8. We take into account all the circumstances of this case, including the size and administrative resources of the respondent and make our decision in accordance with equity and the substantial merits of the case. We asked ourselves, as it is suggested in British Home Stores Ltd v Burchell [1978] IRLR 399 we should, whether the respondent had a genuine belief in the misconduct of the applicant, which was based upon a reasonable amount of investigation giving rise to a reasonable amount of information. The respondent's investigation of the till rolls had been limited to certain days. The reason stated for not carrying out a wider investigation of till rolls was that the actual coupons were no longer present in the tills or in till bundles. Document R51 shows, however, that even though the coupons were no longer present it was possible to extract information about the number of coupons used in any one transaction. The till rolls of several operators who were not working on 28 February were examined and information extracted from them. This information provided grounds for disciplinary action against some of them. No information about whether 28 February was a representative day. After [Mrs D.B.] had been interviewed by the Security Officers, at about 3.15 pm, the police called and Mrs Gill interviewed, it perhaps was not a representative day. But the respondent [employer] had not made any investigation of this".

We come now to the passage which the Appellants submit is most crucial.

"The respondent ascertained on the basis of the enquiry that 11 of the 24 till operators had accepted multiple coupons. They did not then investigate further to establish if this practice was accepted by management. We consider that the respondent did not have regard to equity and the substantial merits of the case by concluding that there was not a widespread practice at Droylsden to accept multiple coupons".

That, as we have indicated, is a crucial part of the decision. However, for the sake of completeness we read paragraph 9, the concluding passage:

"9. Malpractices were revealed by the investigation. We then asked whether to dismiss the applicants for that conduct was within the band of reasonable responses which a reasonable employer might make. The respondent concluded that the applicants were acting in breach of a rule and that this breach merited summary dismissal although it is not so listed in either Staff Handbook. We accept the applicants' evidence that no training on the handling of coupons had been given and that no checks had been carried out either by management, the security officers or questions asked by the cashier or accountants. Apart from the instruction by the Wines and Spirits Supervisor there had been no instruction by supervisors or manager. The result of no instruction, and no training, was confusion. To dismiss for the misconduct in these circumstances was not within the band of reasonable responses which a reasonable employer would make".

They found the dismissal unfair. In this appeal the Appellants first submitted that nowhere has the Industrial Tribunal appreciated the seriousness of the misconduct found to have been committed by these checkout operators. Miss Woodward, for the Appellants, submitted that this misconduct was plainly dishonesty, tantamount to theft and that the Industrial Tribunal did not seem to have realised that. She submitted also that, as each of the employees had acknowledged that they had accepted multiple coupons, they had in effect admitted their fault and it must therefore, be reasonable for the employer to dismiss them.

The only basis upon which that argument may be pursued on this appeal is as part of a general submission that the Tribunal's decision was perverse. We observe that whereas Miss Woodward submits that these are plainly offences of dishonesty tantamount to theft, we do not find either in the decision or indeed, in the notes of evidence that it was accepted by these checkout operators that what they had done was dishonest. They had accepted at their disciplinary hearings that what they had done was wrong, but in our judgement there is a world of difference between the two and it must not be thought that they had made an admission of dishonesty. Nor indeed, as we read the papers, does it appear that the employers investigated the matter as one of dishonesty. Be that as it may, we will return to the question of whether the Industrial Tribunal's conclusion was perverse, at a later stage.

Miss Woodward's second submission is that the Industrial Tribunal misdirected themselves in respect of the tests laid down in the case of British Homes Stores v Burchell [1980] ICR 303. She acknowledges that they were right to refer themselves to that case but she submits that they have misapplied the guidance given in that case. At page 304C

Arnold J., said this:

".... What the tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the ground of the misconduct in question (usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time. That is really stating shortly and compendiously what is in fact more than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief. And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds, at any rate at the final stage at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further".

Miss Woodward submits that after referring to the case of Burchell the Industrial Tribunal only considered whether the Respondent had a genuine belief in the misconduct of the employees, which was based upon a reasonable investigation giving rise to a reasonable amount of information. She submits that they have run together the second and third considerations.

It is true to say that the Tribunal have not referred to the need for the employer to have reasonable grounds for his belief, but in our judgment this is a perfectly proper approach to the questions raised in this case as described in Burchell. The employer cannot reach a reasonable conclusion until he has carried out an adequate investigation. What this Tribunal were concerned about was the adequacy and the reasonableness of the investigation. That is what they were considering at paragraph 8.

Miss Woodward then submitted that the Industrial Tribunal should not have criticised the adequacy of the investigation. "What more", she says, "could these employers have done?". The Tribunal noted that the Respondent had ascertained that 11 out of 24 of their till operators had accepted multiple coupons. They had been guilty, to some extent, of the misconduct under examination. The employers did not then investigate further to establish if this practice was condoned or accepted by management. That, as it appears to us, was the crux of the case in the view of this Industrial Tribunal. These three women had admitted what they had done. In essence, although this did not appear fully until the appeal hearings, the mitigation advanced was that everybody was doing the same thing. Mrs White and Mrs Gill had said that a supervisor had permitted it.

We think the Industrial Tribunal were directing themselves quite properly when they took the view, as it seems to us that they did, that an employer could not claim to be acting reasonably in deciding to dismiss, without first finding out the extent to which the admitted practice had been condoned by management. As we indicated earlier, it is not clear to us exactly what information the Industrial Tribunal had as to the extent to which the supervisors had been involved. It is not clear whether they knew, as we know, that were only two supervisors of whom one had resigned rather than face disciplinary proceedings and the other had been given a final warning for passing multiple coupons herself. However, we do know that there was evidence before the Industrial Tribunal that Mr Travis, who conducted the appeals, suggested to Mrs Worthington, the Area Personnel Officer, and to Mr Harrison, the Internal Auditor, who accompanied him at the hearing of the appeal, that further investigation should be made as to whether it would reveal a general use of multiple coupons and that they had said "No".

It does seem to us therefore, that the Tribunal had a proper basis upon which to reach the conclusion that the employer's investigation into the background of this misconduct was inadequate.

The only passage in paragraph 8 which has caused us any anxiety is the final sentence. Having observed that the employer had found that 11 of the 24 till operators had accepted multiple coupons, and having observed that there had been no investigation to establish if this practice had been accepted by management, they said:

".... We consider that the respondent did not have regard to equity and the substantial merits of the case by concluding that there was not a widespread practice at Droylsden to accept multiple coupons".

There it appears to us that the Tribunal have taken the words "having regard to equity and the substantial merits of the case" from the test which they themselves should have applied under Section 57(3) and have inserted these words so as to suggest a duty on the employer to have regard to equity and the substantial merits of the case. It seems to us that what they should have said and what they meant to say was that the Respondent had not acted reasonably by concluding that there was not a widespread practice at Droylsden to accept multiple coupons. Their conclusion was based upon the inadequacy of the investigation to which they had just referred.

It is clear to us, from their reasoning, that this was not an error of approach but the erroneous adoption of a form of words. In our judgment, the Tribunal had applied Burchell and had found that the employer had not conducted an adequate investigation into the background of the case.

We repeat that it is clear to us that what concerned the Industrial Tribunal here, and properly concerned them, was the failure of the employers to find out to what extent this misconduct had been condoned, so they could set the admitted misconduct into its proper context. Of course, we accept as Miss Woodward submits, that an employee cannot avoid criticism and cannot claim exemption from wrong-doing by pointing to the fact that others have been doing likewise. But, in the context of the shop floor or the supermarket floor, the fact that supervisors had or may have committed the same type of misconduct as a more junior employee must have an effect in the mind of a reasonable employer in considering the penalty which he will impose upon the junior employee. Indeed, these employers recognised that it did. Those check-out operators who said, in the course of their disciplinary hearings, that they had accepted multiple coupons but had been told that they could do so by a supervisor, were not dismissed; they were only warned. We bear in mind that those checkout operators were treated differently, not only because they had received permission from a supervisor but because they had offended to a lesser extent. We accept that, but we also consider that the employers recognised that the permission given by a supervisor must have a significant effect upon the gravity of misconduct of this kind. We would go further and say that any reasonable employer must also appreciate that it is not only what a supervisor says which may influence the conduct of a subordinate but also what a supervisor does, by way of example.

Thus, we do not accept any of the criticisms made by Miss Woodward in respect of paragraph 8, nor do we consider that the Tribunal have misdirected themselves in the final sentence of that paragraph. In so far as paragraph 9 is concerned Miss Woodward submitted that the Industrial Tribunal had substituted their own view of the case for that of the employers. She accepts that they have set out the proper test, namely whether the decisions to dismiss the Applicants for the misconduct found were within the band of reasonable responses which a reasonable employer might make. She accepts too that the Tribunal have used the appropriate words at the conclusion of that paragraph where they say that they do not consider that to dismiss for misconduct, in these circumstances, was within the band of reasonable responses for a reasonable employer. But she submits that the correct form of words conceals what is in truth substitution of their own view.

We have looked carefully at that paragraph and we bear in mind also the matters which the Tribunal had referred to in the previous paragraph where they had expressed criticism of the investigation. We consider that the Tribunal did not substitute their own view of this case for the employers' and we consider that they did apply loyally the appropriate test, namely whether the employer's decision fell within the band of reasonable responses.

In effect, that disposes of the appeal save as to the question of perversity. It was set out at some length in the Notice of Appeal that this decision was perverse in a number of respects. As a result of that an application was made, and acceded to, for the provision of the Chairman's notes.

The Chairman, in providing her notes, observed that it had taken her about six hours to dictate them and that that took no account of the time spent in typing and copying that which she had dictated. In the event, before us the issue of perversity has not been pursued with any real vigour. This is not a criticism of Miss Woodward, who did not draft the Notice of Appeal and, as I understand it, was not responsible for the application for the notes. To the extent that we have looked into the notes of evidence, they provide ample support for every finding of fact. Miss Woodward has submitted that the decision was broadly perverse in that the Industrial Tribunal did not understand the seriousness of the misconduct alleged. However, given the basis of the decision, we see no warrant for the suggestion that the Industrial Tribunal fell into error by failing to understand or appreciate the serious effect of these abuses on the Appellants' business.

We have come to the conclusion that there is no sound basis upon which this Industrial Tribunal's decision can be criticised and for that reason the appeal will be dismissed.