United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 913_94_2509

Appeal No. EAT/913/94, EAT/1190/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 25 September 1995

THE HONOURABLE MR JUSTICE TUCKER

MR D G DAVIES

MR J H GALBRAITH CB

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AERO & INDUSTRIAL TECHNOLOGY LTD          APPELLANTS

MR A R FLEMING          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR N GRUNDY

of Counsel

Cobbett Leak & Almond

Ship Canal House

King Street

Manchester

M2 4WB

For the Respondent MR J BENSON

of Counsel

Brian Thompson & Partners

Richmond House

Rumford Place

Liverpool

L3 9SW


 


MR JUSTICE TUCKER: This is an appeal by the employers who are the Aero & Industrial Technology Ltd, from a decision of the Industrial Tribunal, given at Manchester on 20 May 1994 whereby it was decided that the Applicant, the Respondent to this appeal,

Mr A R Fleming, was unfairly dismissed, but that he contributed to his dismissal to the extent of 25%.

The grounds of the appeal are that the Tribunal erred in law in that they substituted its own view of how the Appellant should have reacted; that they failed to address the fact that it was the Appellants' belief that the Respondent had been working in competition with the Appellants in his own time; that they concluded that the Respondent's use of the equipment of the Appellant for his own purposes, without authority, could be disregarded; that they decided that the Respondent contributed to his own dismissal to the extent of 25% but failed to conclude that any such contribution must constitute a breach of the duty of good faith and that the Tribunal reached a decision which no reasonable Tribunal would have reached.

The Originating Application, the IT1, contains a complaint by the Respondent that he was unfairly dismissed by the Appellants and he sought reinstatement. The details of complaint included the statement that he had been unfairly dismissed on grounds:

"1 Loyalty - conflict of interest.

2 Breakdown of trust confidence."

In the IT3, the Notice of Appearance, the Appellants stated that he had been dismissed for gross misconduct. These statements are all based on the contents of the letter of dismissal dated 27 August 1993, which set out these matters as the reasons for the dismissal.

It should be borne in mind throughout that the Respondent had been employed by the Appellants or their predecessors since September 1962, a period of over 30 years. His work was that of a Reliability Engineer. At first his employers were Lucas Aerospace. They split up and the Respondent became employed by Bimec Industries. The work involved the manufacture of aircraft components at Burnley.

The Respondent's work was providing various services for welding machines described as Audit and Calibration Services. That entailed the carrying out of certain tests and certifying that machines complied with them. For this purpose the Respondent's employers (who were in due course the present Appellants) provided him with sophisticated calibrating equipment.

It is clear, from documents placed before us, that Lucas and another company, Hurel Dubois (UK) Ltd, placed contracts with the Appellants for them to supply services to their welding machines. These services were provided by the Respondent on the Appellants' behalf and charged out by the Appellants at the standard rate of £22.50 per hour.

It is equally clear that Hurel Dubois Ltd also placed contracts with the Respondent personally for the supply of similar services at the lesser rate of £15 per hour. These services were performed by the Respondent during his own time, but as the Tribunal found, some of the work required would necessarily have to involve equipment of the Appellants, though only, as they said, to a minimal extent.

The Respondent did not inform his employers that he was doing this work and when confronted with the matter denied that he had used any of their equipment. He was, as the Tribunal found, able to secure a significant income from this spare time work.

When the Appellants found out about it in the third week of July 1993, this had been going on for about five years. They were justifiably extremely upset. They called the Respondent to a disciplinary hearing.

The Tribunal accepted that the Appellants carried out a thorough investigation and that they genuinely believed that the Respondent had been guilty of the conduct alleged against him; that is conflict of interest and breakdown of trust and confidence.

Implicit in these charges was the fact that the Respondent had been working in competition with the Appellants; that he had been using their equipment without which he could not have undertaken the work, and that he was undercutting their charges.

So far as use of their equipment is concerned, the employees' handbook expressly provided that:

"employees will be dismissed for using company's tools or other property otherwise than in the company's interest."

As stated, the Appellants took the view that this conduct merited dismissal and that was the decision that they reached. It was upheld on appeal.

This is not a case where there has been any allegation of procedural defect. The Respondent's case before the Tribunal was that his conduct was not such as to merit dismissal. With that the Tribunal agreed in that they concluded that the decision to dismiss was not within the band of reasonable responses and that a final warning would have been the maximum penalty.

The starting point for any consideration whether the dismissal was unfair or not must be Section 57(3) of the Employment Protection (Consolidation) Act 1978, the material part of which reads as follows:

"57(3) .... 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 that question shall be determined in accordance with equity and the substantial merits of the case.]"

The approach of the Tribunal to the problem was set out by the Employment Appeal Tribunal in the case of Iceland Frozen Foods Ltd v Jones [1982] IRLR 439 where, at paragraph 24 of the decision Browne-Wilkinson J., (as he then was) said this:

"Since the present state of the law can only be found by going through a number of different authorities, it may be convenient if we should seek to summarise the present law. We consider that the authorities establish that in law the correct approach for the Industrial Tribunal to adopt in answering the question posed by s.57(3) of the 1978 Act is as follows.

(1) the starting point should always be the words of s.57(3) themselves;

(2) in applying the section an Industrial Tribunal must consider the reasonableness of the employer's conduct, not simply whether they (the members of the Industrial Tribunal) consider the dismissal to be fair;

(3) in judging the reasonableness of the employer's conduct an Industrial Tribunal must not substitute its decision as to what was the right course to adopt for that of the employer;

(4) in many (though not all) cases there is a band of reasonable responses to the employee's conduct within which one employer might reasonably take one view, another quite reasonably take another;

(5) the function of the Industrial Tribunal, as an industrial jury, is to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted. If the dismissal falls within the band the dismissal is far: if the dismissal falls outside the band it is unfair."

In the present case it is submitted, with justification in our opinion, that the Tribunal did not heed this advice, but proceeded to substitute their view for that of the employers. We agree with the Appellants' submission as set out in their Counsel's skeleton argument, in that the Tribunal failed to ask itself the proper question, namely "whether it was open to the Appellants to reasonably believe that the Respondent had been acting in competition with the

Appellant, albeit in his own time".

In our view, it is right to submit that the Tribunal submitted its own view for that of the employers. The question "whether it was open to the Appellants as a reasonable employer to believe that the Respondent had been acting in competition or had been using their equipment in competition with them, and there had been a breakdown in trust and confidence" was not expressly answered.

It is rightly submitted that this occurred in a number of respects. We reject the counter submission that all the Tribunal were doing was to consider the degree, if any, of the Respondent's contributory fault as to which it is said, they were perfectly entitled to form their own view.

In particular the Tribunal do not, in any passage, of their brief extended reasons, appear to address the question of the Respondent's having worked in competition with the Appellants. They make no reference to the rule in the employees' handbook, nor to the fact that the Respondent was undercutting the Appellants' rates. They make no express finding as to whether they, the Tribunal, consider that the Appellants acted reasonably or unreasonably in regarding the Respondent's conduct as amounting to gross industrial misconduct. There is a reference in paragraph 2 of the Decision to the Respondent carrying out "strip and rebuild work" in his spare time, but this was work which could have been undertaken by the Appellants, and in so doing, the Respondent was working in competition with them.

It is not clear from the decision what the Tribunal's reasons were for concluding that the decision to dismiss was not within the band of reasonable responses. We think that there is substance in Counsel's submission that it was contradictory and illogical for the Tribunal to say that the dismissal lay outside that band. Having accepted that the Appellants carried out a thorough investigation into the alleged misconduct and that they genuinely believed that the Respondent had been guilty of the conduct alleged against him, it is difficult to see what could justify the Tribunal in saying that the dismissal was not the appropriate response.

Accordingly, we consider that the decision is flawed in a number of material respects and that it cannot stand. We allow the appeal and quash the decision of the Industrial Tribunal.

We were invited to deal with the matter ourselves and to substitute our own decision, but this we declined to do. The appropriate course is to remit the matter to a freshly constituted Tribunal for reconsideration and that we do.

There was a secondary appeal on the remedies relating to the calculation of the award. Since any award must depend upon the outcome of the re-hearing, it would be nugatory for us to deal with that matter and we remit it too for reconsideration if it should become necessary.