United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR D HUGHES (of Counsel) Messrs Hadens Solicitors Leicester Buildings Bridge Street Walsall West Midlands WS1 1EL
For the Respondent	MR J LEWIS (of Counsel) Messrs Brown Jacobson 44 Castle Gate Nottingham NG1 7BJ


 


JUDGE H J BYRT QC: This is an appeal from the decision of the Industrial Tribunal sitting at Nottingham on 31 October 1995 when it unanimously decided that the Applicant, now the Respondent, had been unfairly dismissed.

The Appellants, through a subsidiary, are a company which deals with waste disposal. The Respondent, until he was summarily dismissed on 31 March 1995, had been in the Appellant's employment for something like 10 years without any complaint being made about his performance or his integrity.

On 28 March 1995 allegations were made, and plainly put before him, by Mr Marks, the General Manager of the Eastern Region, in a letter. Initially, the charges made against him related to four matters and an additional allegation was put to him within a matter of minutes before he went into the first disciplinary hearing on 31 March.

The disciplinary hearing came to the conclusion that the allegations contained in that letter had been made out and, as a result, the Respondent, the employee, was summarily dismissed. He appealed but that was dismissed on 24 April. By that time, one of the allegations that had been put to him in the letter of 28 March had been discontinued or dropped.

The Respondent applied to the Industrial Tribunal alleging unfair dismissal. The hearing before the Tribunal took three days during the course of which they heard extensive evidence.

Mr Marks gave evidence himself and, in the course of it, accepted that the Respondent would not have merited dismissal for gross misconduct taking any one of the allegations made against him on its own, but that when taken in combination, the employers felt the proven misconduct merited summary dismissal. He had lost trust and confidence in the ability of the Respondent to manage the depot for which he was the manager.

The Applicant before the Industrial Tribunal, as indeed he had during the course of the disciplinary hearing, claimed that the allegations against him were 'a trumped up case', contrived in order to get rid of him. He did not dispute many of the facts, but said that the employers put an unreasonable interpretation upon them, leading them to the conclusion that they came to.

With regard to the law, the Industrial Tribunal directed themselves correctly when they said the burden initially fell upon the employers. In paragraph 7, they state:

"7. The onus is on the respondent [that is the employers] to prove the reason for the dismissal and that this was a potentially fair reason. ...".

The Industrial Tribunal then went on to state, quite accurately:

"... that the employer must establish a genuine belief on reasonable grounds after reasonable investigation that the employee is guilty of the conduct alleged against him. Conclusive direct proof is not a requirement but there must be a genuine and reasonable belief, [on the part of the employers] reasonably tested. ..."

That is how they directed themselves.

When they came to consider the facts of the case, they heard evidence from Mr Spaul, the managing director of the company, that the profits achieved at the Nottingham Depot where the Respondent was the manager, were significantly below budget. As a result, he made the decision to move him to another depot at Beighton, presumably with a view to providing him with a challenge and in order to test his competence in a new environment. But the factual basis of the allegations came to light at the very time the Respondent was due to move to Beigthon, namely 20 March. He had been on holiday for the previous week and, during that time it is said matters were discovered which led to the allegations being made against him.

The first one was that he had disobeyed instructions from senior management that he was to cease employing an outside welder but to use somebody from within the company. The Respondent agreed that he should stop employing the outside welder, but he contended before the Industrial Tribunal that he could not stop doing so all at once. He had tried out one in-house welder but it had not been successful. In the meantime, he had to continue to use the outside sub-contractor. The Tribunal came to the conclusion that the evidence did not disclose any deliberate flouting of his empoyers' instructions.

The second allegation was that he had given permission to a Mr Dickinson, a long-time serving employee of the company, to sell scrap and to retain the proceeds of such sale for himself. It was said that this was in contravention of general standing orders. The Respondent's answer to that was that he had asked the area manager about this, a Mr Mark Hunter, and he had given his permission that Mr Dickinson should be allowed to do this. The Tribunal accepted that evidence and rejected the suggestion that the Respondent had flouted the rules of the company. They said that if the systems were not strict enough, it was for them to devise something more watertight so that everybody would know where they stood.

Then it was said that the Respondent was unable to account for certain cash which had been obtained from selling scrap at the Nottingham Depot. He used to receive the proceeds in an envelope and put it straight in the safe, without indicating who or what it was from or how much was supposed to be inside the envelope. This caused difficulties in accounting. However, the Tribunal found there was no loss proved by the employers. Once more they said that if the systems were open to criticism, they had not, as yet, been criticised by the company's auditors or senior management. Once more they were not satisfied there had been any deliberate or wilful flouting of any rules or regulations of the Company.

The fourth charge related to a case where an employee of the company who was on maternity leave and in receipt of maternity benefit, had come back to assist the company on a part-time basis. The Respondent had made a payment to her of approximately £100 as cash in hand, and it was said that this was contrary to company regulations. Mr Marks accepted that he had himself authorised payments to be made to employees as cash in hand for petrol, even though this contravened the cash payment rules of the company. The Industrial Tribunal observed that no rules forbidding such payments had been put in evidence. They concluded again, that there was no evidence here of a deliberate and wilful flouting of the rules.

The overall conclusion the Industrial Tribunal came to was that the Respondent had probably been dismissed, not by reason of gross misconduct, as claimed by the employers, but for incompetence or failure to manage.

The Industrial Tribunal went on to consider whether the circumstances of the dismissal were fair. They concluded that, if he had been dismissed for incompetence, it was unfair that he should be summarily dismissed without giving him an opportunity of remedying his ways or demonstrating, by further performance, that he was able to come up to the company's standards. Accordingly, they found that the circumstances upon which the employers relied for proving gross misconduct, had not been proved and that, a fortiori, his dismissal was unfair.

They then proceeded to consider the question of contributory conduct. They concluded there was no conduct directly contributing to his dismissal and, as a result, they decided to make no deductions from the compensation they awarded.

At this stage, there is one point which needs to be picked up. When they made their order relating to compensation, they based the award upon the figures of the Respondent's gross pay instead of net pay. Both parties agreed that the net pay is the appropriate basis for any calculation, and that accordingly any order made, should be adjusted to take account of that minor error.

For the Appellants, Mr Hughes has argued that what is striking about the reasons is that the Tribunal do not, in certain specific instances, state the factual basis of their conclusions. He stressed that the test was the employer's reasonable belief of misconduct and where the Appellants sought to substantiate such a belief by evidence they adduced which was uncontradicted by the Respondent, the Tribunal should state their reasons for finding that the Appellant held no such reasonable belief.

In particular, Mr Hughes cited the instance of the charge that the Respondent had given Mr Dickinson permission to sell scrap and keep the proceeds. This was dealt with in extenso by the Industrial Tribunal in paragraph 10(2) of their reasons, but what Mr Hughes says is that they failed to take account of the evidence that the Respondent had, in the October of 1994, himself conducted a disciplinary hearing, at the end of which he had dismissed another employee called Mr Stojanovic for doing just the same thing. When Mr Stojanovic had advanced the argument that he had understood he had permission to do what he had done, the Respondent had replied in a letter to the effect that the explanation offered was ridiculous and totally unacceptable. This, they said, showed that the Respondent was fully aware of the employer's rules and regulations relating to taking of scrap and that what he permitted Mr Dickinson to do on this particular occasion, was in stark contravention of those rules. The Tribunal should have stated why they failed to find the Appellants had a reasonable belief that the Respondent had flouted the rules in this instance.

The Industrial Tribunal had that evidence in front of it. Contained in the bundle of documents is the letter the Respondent wrote. But there was also evidence to the effect that there was a distinction between that which Mr Stojanovic had done, and that which Mr Dickinson had licence to do. Mr Stojanovic was removing ferrous metals which are substantial, bulky and somewhat more profitable, whereas the charge against Mr Dickinson was that he had removed small non-ferrous objects of limited value. Bearing that distinction in mind, and the additional evidence the Industrial Tribunal had before it to the effect that the Respondent had the permission of Mr Hunter, the Tribunal could, if it thought it right to do so, come to the conclusion that it did, namely that there was no evidence in this particular instance which satisfied them that the Respondent had flouted the regulations of the company.

And of course, at the same time, the Industrial Tribunal also doubtless had in mind the concession made by Mr Mark that not one of the four or five charges made against the Respondent would, in themselves, have justified summary dismissal. It was argued before us that that conclusion was tantamount to saying that there was no one instance where there was evidence of a deliberate and wilful flouting of the company regulations, because, had there been such an instance, it would have justified summary dismissal.

All this was before the Industrial Tribunal and, although they do not state in specific terms all the evidence which led them to the conclusion they came to, that is not to say that they had failed to take into account matters they should have taken into account or ignored and disregarded other relevant matters.

We, as an appellate tribunal, have to consider whether there was evidence before the Industrial Tribunal which might have entitled them to come to the conclusion they did. We are satisfied that there was, and accordingly do not see that we can, in any of the instances cited to us by Mr Hughes, disturb the findings by the Industrial Tribunal. They, after all, are the tribunal of fact. There was a substantial body of evidence adduced before the Tribunal relating to the Dickinson charge as contained in the Respondent's evidence and in his cross-examination, and from their reasons, it is clear they had in mind the reasonably complex situation as it appertained to this particular charge. Accordingly, we do not accept the criticism Mr Hughes makes in respect of that matter.

Mr Hughes then went on to submit that, the Industrial Tribunal misdirected themselves as to the burden of proof when considering whether the dismissal was fair or unfair, and he directed us to a passage in paragraph 16 of the reasons, where it says this:

"16. ... we felt it appropriate to consider the provisions of Section 57(3) of the Act, namely whether the dismissal was fair or unfair in all the circumstances shown by the respondent....."

He construed that passage as saying that the Industrial Tribunal implicitly attributed to the employers the burden of proving the fairness of the dismissal.

We, as a Tribunal, did not on first reading construe that passage in that way. Later, in that same passage, the Tribunal, correctly directed themselves when they said:

"... It is not our function to substitute our view but we have to decide whether in the circumstances of this case the decision to dismiss the applicant fell within the band of reasonable responses which a reasonable employer might have adopted. We are unanimous in finding that it did not."

We think that we would be guilty of too analytical an analysis of this paragraph were we to construe those words Mr Hughes relies upon, in the way he suggests. One has to construe this paragraph as a whole to see whether the Tribunal have misdirected themselves. It is our view that we would need much clearer wording than that which Mr Hughes relies upon to convince us that the Tribunal had misled themselves on the burden of proof.

Mr Hughes next submits that the Tribunal's finding that the employers did not have a reasonable belief in the dismissal for gross misconduct was perverse. This charge of perversity runs very closely to the criticism Mr Hughes made in his first ground of appeal. We think there was some evidence before the Industrial Tribunal which might entitle them to come to the conclusion that they did, first, about Mr Dickinson's removal of scrap and secondly, the payment of cash to the lady on maternity benefit. If this be right, we do not feel that the charge of perversity is not sustainable.

Next, Mr Hughes submits that the Tribunal misdirected themselves in holding that, to be relevant, contributory conduct had to be directly contributive to a dismissal. He cited the case of Polentarutti- v Autokraft Ltd [1991] ICR 757 and Mr Lewis has drawn to our attention the case of Nelson v British Broadcasting Corporation (No.2) [1979]IRLR 349. We accept this criticism of the Tribunal's direction in paragraph 17. The appropriate direction is that contained in the latter decision of Nelson where Brandon LJ, addresses the three issues that have to be taken into account when considering whether there is conduct which should be regarded as being contributory to the dismissal in the relevant sense. He stresses, first, that the causal nexus does not have to be a direct one; it is sufficient that there is a causal nexus of some sort. Second, the conduct must have some element of culpability about it. Mr Lewis has accepted that, were it the Industrial Tribunal's finding that the Respondent had been dismissed because of incompetence, that would be culpable conduct within the meaning of Lord Brandon's judgment. And thirdly, the Tribunal have to be satisfied that it would be just and equitable to make a deduction.

So the Industrial Tribunal has to look at all those three matters and take them into account when deciding whether a deduction should be made. In our judgment, to say that the conduct must be directly contributory, is a misdirection by the Tribunal and may conceal a misapplication of the law in this case.

Our decision therefore is that the appeal must be allowed to this extent and accordingly the case should go back to the Industrial Tribunal, with a direction that they reconsider this issue to decide whether there should be a deduction made from the award of compensation.

We will need to consider whether it be to the same Tribunal or to a different one, and I shall invite Counsel to address us upon that.

There remains one further matter to be dealt with. Mr Lewis seeks leave to amend his Notice of Appeal in order to raise another issue relating to compensation. I shall wish to hear from him about that.

(Further Discussion)

Mr Lewis, I am afraid we are going to disallow your application for amendment. We are doing so because to allow it would be inviting the Industrial Tribunal to hear new evidence which was available at the original hearing and was not adduced then. This would be contrary to principle.