United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 635_95_0108

Appeal No. EAT/635/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 13th May and 9th July 1996

Judgment delivered on 1st August 1996

Before

HIS HONOUR JUDGE PETER CLARK

MR L D COWAN

MS S R CORBY

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J W BATTY & OTHERS          APPELLANTS

BRITISH STEEL PLC          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants GAVIN MILLAR

(of Counsel)

Messrs Jones Walker

Solicitors

4th Floor

Brazenose House

Brazenose Street

Manchester

M2 5AZ

For the Respondents ANDREW CLARKE

(of Counsel)

Messrs Jacksons

Solicitors

1-15 Queen's Square

Middlesborough

Cleveland

TS2 1AL


 


JUDGE PETER CLARK: This is an appeal by four former employees of British Steel PLC against a majority decision of the Industrial Tribunal sitting at Carlisle on 22nd-25th August and 12-19th December 1994, dismissing each of their complaints of unfair dismissal. Full reasons, extending to 29 pages, for their reserved decision are dated 9th May 1995.

The Facts

The length of hearing, and of the Industrial Tribunal's reasons, may give the impression that this was a complex case. Stripped down to essentials, it was not.

The appellants were long-serving employees at the respondent's Workington plant. They worked on the Roller Straightener machine ["the straightener"]. It was operated by a crew of four men in two shifts. The principal member of the crew was the No.1; the next man was the No.2 who acted up in the absence of the No.1. The appellants Mr Grisdale and Mr Martin were No.1s; Mr Batty and Mr McKeating were No.2s; the latter two men also held lay office in the Cumbria No.1 Branch of the Iron & Steel Confederation, the relevant trade union.

The process in which they were engaged on the straightener involved straightening and restraightening rails. When the machine was not operating they cut up scrap rails with a burner.

The crews were under the direction of two supervisors, Mr Millbourne and Mr McAllister, one for each shift. Above them were two foremen and, in rising order, the section manager, Derek Routledge and then the operations manager, Mr Poulter, who was appointed to that position in May or June 1990.

The system of payment included a bonus system contained in a formal agreement made between management and the union in October 1982, subject to later variations. The tribunal found that the precise terms of the subsequent variations were not reduced to writing, and indeed the union resisted attempts to clarify its finer nuances.

Originally the shift records ["SRs"] upon which bonus payments were based were completed by the supervisors. However, there came a time in 1989 when that system changed. Printed forms were issued which were to be completed by the No.1s and counter-signed by the supervisors. The tribunal found that all the appellants were aware of how the time entries made in the SRs could affect their earnings under the bonus scheme.

In October 1992 a logging system ["the logger"] was introduced. Its purpose was to record the details of the straightening process such as the quantity of rails processed and in particular precise timings at which each rail went through the straightener or whether a rail was being initially straightened or restraightened.

From June 1993 the logger was in operation on more days than not. It then dawned on Mr Poulter that there were discrepancies between the times recorded by the logger and those manually recorded in the SRs. By comparing the logger records with the corresponding SRs Mr Poulter found that the appellants, with the exception of Mr Batty, had physically entered incorrect times. When compared with an average time of one minute per restraight he found that considerably longer times had been recorded on each occasion.

Consequently a disciplinary investigation was commenced affecting the eight crew members, including the appellants, on both shifts.

A preliminary hearing was held on 19th October 1993. The eight crew members were present and represented by a trade union lay official, Mr Robertson. Due to Mr Batty's involvement, he being the union branch secretary, the union divisional officer, Mr Lewis was informed of the proposed enquiry by telephone on the previous day. At the meeting Mr Poulter read a prepared statement, setting out the allegation of malpractice involving the obtaining of money for work not done, and the nature of the proposed investigation. Some explanations were proffered by the men on that occasion.

The next stage involved individual interviews. All eight operators were presented with 18 questions, the same in each case, which they answered. In addition, both supervisors were interviewed by management and their accounts set down in writing although not signed by the supervisors.

Thereafter Mr Poulter decided that the four appellants had a case to answer on a change of gross misconduct, and the remaining four operators on a charge of serious misconduct.

Disciplinary hearings were held on 22nd October 1993. Later that day at a final disciplinary hearing, the four appellants were summarily dismissed. The other four operators, Mr Ritson and others, were awarded three weeks suspension without pay.

On 26th October the appellants, with the exception of Mr Martin who was unable to attend, had their internal appeals against dismissal heard and dismissed. Mr Martin's appeal was heard and dismissed on 10th February 1994.

The tribunal decision

The tribunal found unanimously that the reason for dismissal in each case was that the appellants were implicated in falsifying records for financial gain and profited from such falsification. This was a reason relating to conduct.

It also unanimously rejected the contention that Mr Batty and Mr McKeating were dismissed for trade union activities. Against that finding there is no appeal.

Where the tribunal members parted company was over the question of the reasonableness of the dismissals under Section 57(3) of the Employment Protection (Consolidation) Act 1978. A majority, the Chairman and one member, found that the respondents had acted reasonably in dismissing the appellants; the minority member would have found that the dismissal were unfair. The majority view prevailed. The complaints were dismissed.

The Appeal

The Notice of Appeal, settled by Counsel, Mr Millar, who appeared below, runs to 24 pages. For the purposes of the appeal hearing he favoured a 42 page written submission, rather than a skeleton argument.

We take this opportunity to remind advocates of the recent Practice Direction which came into force on 15th April 1996, superseding earlier Practice Directions.

Under paragraph 8. Skeleton Arguments, it is directed:

"(1) Skeleton Arguments should be provided by all parties in the case of all appeals, unless the EAT otherwise directs in individual cases. It is the practice of the EAT for all the members to read the papers in advance. A well structured Skeleton Argument helps the members and the parties to focus on the point of law raised by the appeal and thereby makes the oral hearing more effective.

(2) A Skeleton Argument should be concise and should identify and summarise the points of law, the steps or stages in the legal argument and the statutory provisions and authorities to be relied upon, identifying them by name, page and paragraph and stating the legal proposition sought to be derived from them. It is not, however, the purpose of a Skeleton Argument to argue the case on paper in detail."

The approach taken on behalf of the appellants in this case is wholly at odds with that direction. Whilst the industry of Counsel cannot be questioned, the lengthy factual narrative and diffuse points made give the impression that this is an appeal on fact dressed up as law. Having examined the submissions both on paper and in oral argument that extended, mainly on the appellants' part for 1¹/₂ days, that initial impression is, for the most part, confirmed. Of the eleven points identified in a written summary of the appellants submissions prepared by Mr Millar, all but two are unsustainable in our view. We have been left to retrieve what we regard as the two arguable points of law in this case from the morass of detail with which we have been inundated. This case therefore illustrates the importance of focusing on the real issues in appeals on points of law to this tribunal.

Accordingly we reject, without more, the various arguments raised by Mr Millar, save for the two identifiable points of law, which relate to the position of the supervisors and Mr Batty.

The Supervisors

We have earlier referred to the fact that both supervisors were interviewed during the course of the disciplinary investigation. Mr Millbourne was seen first by Mr Poulter and two members of the personnel team on 20th October 1993. He told them that, apart from querying the odd time, he took the details entered on SRs on trust. He expected the delay times to be accurately recorded. His explanation for signing inaccurate SRs was that he had a large area of the plant to cover and could not know the exact details of the timings on the straightener during each shift.

Mr McAllister was seen by the same management team the following day. He also stated that the SRs had to be taken on trust. He did not think that anyone on the shift would book incorrect times. He said that he was unaware of any increase in earnings for the crew produced by restraights.

During the ensuing disciplinary hearings the trade union representatives asked for copies of the notes of interviews with the supervisors. This request was refused on the grounds that it was not normal to provide copies of management notes unless they were agreed minutes. The appellants were, however, aware that the supervisors did not support their claims. The representatives did not ask for the supervisors to be produced so that they could be questioned and challenged.

In his closing submissions to the Industrial Tribunal Mr Millar contended that failure to show the supervisors statements, which were unsigned, to the appellants amounted to procedural unfairness. He relied on the decision of this Appeal Tribunal in Louies v Coventry Hood & Seating Co Ltd [1990] IRLR 324.

That contention was rejected by the majority of the tribunal (reasons paragraph 50) but accepted by the minority member, who dealt with the point at paragraph 77 of the reasons.

In this appeal, Mr Millar submits that the finding by the majority was perverse. That submission requires analysis of what this Appeal Tribunal was saying in Louies.

Mr Louies was dismissed on grounds of misconduct in that he was allegedly involved in the theft of a roll of carpet worth some £200 from the company's stores. During the company's investigation statements were taken from the supervisor, Mr Cooper and a dispatcher, Mr Hurdley. During the disciplinary hearing he was told that the employer had two independent statements relating to his involvement in the incident. At a subsequent appeal hearing he was told that two people had seen him with a roll of carpet on the day of the theft. He asked to see the statements made against him, but this request was refused. His appeal failed.

An Industrial Tribunal dismissed his complaint of unfair dismissal. His appeal against that decision succeeded. In giving the judgment of the Employment Appeal Tribunal Wood J said this at paragraph 11 of the report:

" It does seem to me that it must be a very rare case indeed for the procedures to be fair where statements which have been given in writing by witnesses and upon which in essence the employer is going to rely almost entirely and that is this case; that an employee should not have a sight of them or that he should not be told very clearly exactly what is in them or possibly have them read to himself."

Having considered the unusual case of informers Wood J continues:

"However, where the essence of the case, the main substance of the case, is contained in two statements which this employee asks to see and which he is refused without reason and upon which substantial reliance is placed, then prima facie to me it seems to be unfair."

In these circumstances this Appeal Tribunal concluded that there was a sufficient error in law for the decision of the Industrial Tribunal to be flawed. They remitted the case for rehearing before a different tribunal.

It should be understood that Louies lays down no statement of principle applicable in every case where the employer declines to provide copies of statements taken during the course of investigation to the employee being disciplined or his representative. Were that to be its effect it would place an unjustified gloss on the statutory test contained in Section 57(3).

As a matter of practice it will ordinarily be desirable that the employer does reveal the contents of statements which he obtains to the affected employee. If he does not do so, he runs the risk of a finding by the Industrial Tribunal that the dismissal is unfair on the grounds of a procedural irregularity. However, in this case the majority considered the point, which was put squarely before them, and rejected it. In our judgment they were entitled to do so. In Louies the contents of the two statements were the substance of the case against him. Natural justice required that he should have the opportunity to refute them. Here, the essence of the case was that the appellants had been party to the recording of false information on the SRs with a view to financial gain. The supervisors evidence was not central to that allegation. In our view, the reasoning in Louies may be distinguished on the facts of this case, as it was on the facts of the later decision of this Appeal Tribunal in Fuller v Lloyds Bank PLC [1991] IRLR 337.

Mr Batty

At paragraph 49 of the reasons the majority of the tribunal addressed the question as to whether the respondent had reasonable grounds for their belief that the appellants had been guilty of gross misconduct. In the cases of Mr Grisdale and Mr Martin (the No.1s) the majority firmly conclude that a reasonable employer could well come to the view that they had falsified SRs in order to increase their bonus earnings. With less certainty they reached a similar conclusion in relation to Mr McKeating. The same, in their judgment, could not be said of Mr Batty. However, they further concluded that since all the times were checked by Mr Batty and Mr McKeating (the No.2s), a reasonable employer could conclude that they would know about any false bookings.

Mr Millar submits that in Mr Batty's case he was dismissed for falsifying SRs, but the Industrial Tribunal found that no reasonable employer could reach that conclusion. It follows that his dismissal was unfair. To reach a different conclusion, as the majority did, necessarily involves an error of law. He relies upon the reasoning of the House of Lords in Smith v Glasgow City District Council [1987] ICR 796, 804D.

In order to test that submission it is necessary to trace the reason for dismissal as articulated at various stages by the respondent, and as found by the Industrial Tribunal.

First, the nature of the allegation against the appellants read out by Mr Poulter at the pre-disciplinary hearing:

"After due consideration we consider that a disciplinary case exists, and that money has been obtained fraudulently. In your case we see you as having deliberately falsified records for gain amounting to gross misconduct.

We base this on the following issues:

- Active involvement

- Written evidence

- You have profited with intent"

Second, the statement read out at the final disciplinary hearing when the appellants were orally dismissed:

"Our belief is that the offence of committing gross misconduct - having deliberately falsified records for financial gain - has taken place in which you were implicated and from which you have profited."

Next, the letters of dismissal dated 25th October 1993, which state:

"... management believe that:-

i) Money has been obtained fraudulently in which you were implicated and from which you have profited.

ii) You have deliberately falsified records for financial gain."

In the forms IT3, drafted by solicitors, it is said:

"... dismissal ... on the grounds that Management believed that they [the appellants] had deliberately falsified records for financial gain and had thereby profited by obtaining payments from the Respondents which they were not entitled."

The Industrial Tribunal's conclusion, expressed unanimously in paragraph 47 of the reasons, was that:

"47 We all find that the reason for the dismissal of all the applicants was that they were implicated in falsifying records for financial gain and profited from such falsification. This related to their conduct."

In our judgment the tribunal was entitled to reach that conclusion, which accords closely with the reason for dismissal stated orally at the final disciplinary hearing at which the appellants were dismissed. That reasoning encompasses not only those who filled in the SRs, but also those who checked them. That includes Mr Batty. The employer drew a permissible distinction between the four appellants who had completed or checked the SRs, and the remaining operators who had benefitted from the resulting overpayments. We reject the distinction which Mr Millar seeks to draw between those who completed and those who checked the SRs. In these circumstances this case is distinguishable from that of Smith, where one of the discreet grounds for dismissal was found to be neither established in fact, nor believed to be true on reasonable grounds.

Conclusion

In the result we are unable to discern any error of law in this tribunal decision. Indeed, we pay tribute to the careful approach to this case shown by each member of the Industrial Tribunal, and in particular the well-reasoned opinion of the dissenting member. Such reasoning gives a clear insight into the depth of deliberation which went into this tribunal decision. It also demonstrates the range of responses open to a properly directed tribunal. The discretion is theirs, not ours. The appeals are dismissed.