United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 777_95_2301

Appeal No. EAT/777/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 23 January 1996

HIS HONOUR JUDGE J ALTMAN

MR R TODD

MRS R A VICKERS

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THE PEEL STREET PHARMACY LTD          APPELLANTS

MRS J HOPPER          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR F J WEARDEN

(Employment Law Consultant)

Thornleigh

Oldfield Drive

Heswall

Wirral

L60 6SS

For the Respondent MR B WENTWORTH

(Employment Law Adviser)

Merseyside Trade

Union Community

& Unemployed Resource Centre

24 Hardman Street

Liverpool

L1 9AX


 


JUDGE ALTMAN: This is an appeal from the decision of the Industrial Tribunal sitting in Liverpool on 25 April 1995, the reasons in extended form having been promulgated on 12 June 1995. It arises from a finding of unfair dismissal and the full basic award but no compensatory award relating to the Applicant's employment with the Respondents at one of their chemist shops in Chapel Street in Southport.

The appeal has proceeded upon the findings of fact of the Tribunal in essence, coupled with our being told the evidence that was before the Tribunal as to whether or not there was a dismissal. The Tribunal had to consider the preliminary issue as to whether or not there was a dismissal and then, if there were such a dismissal, whether or not it was unfair.

The Applicant is the Respondent before this Tribunal but we shall refer to the parties in the capacity they occupied before the Industrial Tribunal. The Applicant began work for the Respondents some 10 years before her dismissal and not long after the shop manager, Mr Freedman, had set up this business and it was, either then or later, a part of the Respondents' organisation, a chain of chemist shops particularly in the North West of the country.

As an employee the Applicant was regarded as efficient and was a personal friend of Mr Freedman. Suspicion was aroused, however, about her at the end of 1994, when a report was made to Mr Freedman by another member of staff that the Applicant had taken money from the till. This was not pursued as a disciplinary matter and never formed part of any action by the Respondents in that connection but it did set in train a request that other employees should keep an eye on the situation. It appears that Mr Freedman was able to call upon substantial loyalty from other members of staff.

As a result, the incident which gave rise to the issues before the Tribunal took place on 14 December 1994, when Mr Freedman received a report, from a fellow employee of the Applicant, that the Applicant had been seen taking goods from a shelf and putting them in her bag before the Applicant left the shop, leaving her bag behind to go on an errand. Mr Freedman checked the staff purchase book which, as procedure required, was the place where anyone wishing to purchase goods had to enter them if an employee. He checked the shelves and he checked the Applicant's bag and found at the bottom of the bag a tube of toothpaste belonging to the Respondents.

When the Applicant returned there was then a conversation which was the essential issue that the Tribunal had to resolve on the preliminary point. The Applicant agreed that Mr Freedman should look in her bag, he did so and found some items belonging to the Respondents. The Applicant gave evidence in accordance with her Originating Application that she replied "I'm sorry Stan, its a mistake. I've not done this on purpose". Mr Freedman was alleged to have replied "Oh no!" and the Applicant contended that she repeated "It was not done

on purpose". She alleged that Mr Freedman then said "I think we had better terminate, don't you?" The Applicant said that she replied "If that's what you want" and that Mr Freedman went on "I

think it would be best, don't you? You realise I will have to ask you for your keys". That was a rigidly affirmed reply before the Industrial Tribunal, but Mr Freedman told the Tribunal that the Applicant said, "I've made a mistake, I didn't intend to steal. I don't know how they got there". And after the procedures were pointed out to her Mr Freedman said that she said to him "I suppose this means I'll have to leave". Mr Freedman, we were told, denied before the Tribunal that he said anything like "I think we had better terminate" but told the Tribunal that he agreed and accepted it, referring to the sentence "I suppose this means I'll have to leave".

Upon that finding the Tribunal of fact came to its conclusion and much time has been spent in considering the way in which the Industrial Tribunal came to find that there had been a dismissal. At paragraph 15 the Tribunal said this:

"15. It is axiomatic that for a claim of unfair dismissal to succeed there must have been a dismissal. We are prepared to accept that Mr Freedman believed that the meaning of the words used by Mrs Hopper on 14 December was that she had resigned. However, he was clearly anxious that he should avoid having to undertake formal disciplinary proceedings against her and the majority view was that this led him to interpret what was said by her incorrectly.

16. We cannot be sure precisely what words were used but the majority believed Mr Freedman indicated to Mrs Hopper that her employment would end. She may well have replied, "If that's what you want", but that was no more than an acknowledgement that Mr Freedman was, in fact, dismissing her. The impetus for the termination, on this view, came unequivocally from Mr Freedman. What he said would have been understood by anyone overhearing him and was in fact understood by Mrs Hopper to be a termination by him of her contract.

17. The minority view was simply that Mrs Hopper had simply resigned and used words which indicated that was her intention."

On that basis the Tribunal came to the conclusion that there had been a dismissal.

Mr Wearden, on behalf of the Respondents, argues that that was a perverse conclusion. He says that once the Tribunal was unable to be sure what was said, in a case in which there was evidence (at least from the Applicant) of very precise words, it was impossible for the Tribunal to come to a view of what the facts were that could enable them to conclude, on the balance of probabilities, that the burden of proof had been discharged, and that there was in fact a dismissal. Being unable to find what words were used, Mr Wearden says the Industrial Tribunal should have concluded that they were unable to decide, one way or the other, whether or not there had been a dismissal, as a result of which the Applicant would have failed to discharge the burden of showing that she had been dismissed.

Whether or not there is a dismissal in a particular case depends on what is said; it depends on what the parties understood by what was said and depends on all the circumstances. But the test which would be applied because it is a contractual matter is what objectively happened, and frequently the test that is put is what an independent observer standing by (an officious bystander as it is sometimes described) someone being nosey and looking at something which they were not involved in and had no business to be involved in at all, would think. What the Industrial Tribunal here find is that, for understandable reasons of possibly embarrassment and of a desire to avoid proceedings genuinely, Mr Freedman was led to interpret the conversation as a resignation but in fact they find that he was wrong.

In making his submissions to us, Mr Wearden agreed that if Mr Freedman was correct and had he agreed or indicated an acceptance of the Applicant's words, "I suppose this means I'll have to leave", it is open to interpretation either way as to what was meant by that. Was that the Applicant in effect asking the employer "Are you asking me to leave?" or was it the employee telling the employer, "Well in these circumstances I'll leave". But in the very concession of Mr Wearden of course is implicit a factual situation which requires interpretation by an Industrial Tribunal and what the Tribunal found, it seems to us, in a way which is (with great respect) quite unexceptionable was that, although they could not be sure precisely, and the Tribunal uses the word "precisely", what words were used, they make a finding of fact that Mr Freedman indicated to Mrs Hopper that her employment would end. And they make a further finding of fact, that the impetus for the termination on this view came unequivocally from Mr Freedman. And they make a further finding of fact that what he said would have been understood by anyone overhearing him and was in fact understood by Mrs Hopper to be a termination by him of her contract, although in a sense it is a mixed question of fact and law because it is whether the words said amount to a dismissal.

But those, it seems to us, are findings which were open to the Tribunal to make on either the evidence of the Applicant or of the Respondent and we have allowed, in this appeal, exceptionally Mr Wearden to refer to his notes of evidence of what was said, possibly to the disadvantage of Mr Wentworth, who appears for the Applicant but who was not at the Industrial Tribunal.

In order to get to the point at this stage, which we understood was being argued, that was it seems to us a finding of fact which the Tribunal were entitled to make on the evidence before them and we cannot agree with Mr Wearden that we should say to ourselves, "My goodness, that was certainly wrong".

The matters were before the Industrial Tribunal. More importantly the witnesses themselves were before the Tribunal but furthermore the Tribunal heard the case much closer to the events themselves, albeit sadly much longer after the usual period when tribunals try to hear cases, and it seems to us that we would be substituting our views for those of the Industrial Tribunal if we were to do anything other than uphold the Tribunal on that particular point.

Mr Wearden argued that the mere acquiesence of the Applicant at that time was not consistent with dismissal; she lodged no appeal nor asked for any documents but went so quietly that it is impossible to see that as a dismissal and that there should have been a finding that there was a resignation because of the decidedly odd and stilted words which the Applicant said that she used and that the minority view was the better view. But those are all arguments (with great respect to Mr Wearden) for the Industrial Tribunal and the very fact that this Industrial Tribunal was split just goes to show that they listened to the evidence, considered the facts and came to a judgment upon it which is set out in the decision in a way that led to a difference of view. That is not something with which this Employment Appeal Tribunal would interfere.

Mr Wearden argued that on the question as to whether or not there was a dismissal and how to view the conversation that took place between the Applicant and Mr Freedman, the proper test would have been for the Tribunal to ask itself what a reasonable employer would have interpreted and whether the interpretation was within the band of reasonable responses. While we get so used to that test in Industrial Tribunals that it is perhaps tempting to apply it to everything that comes, that was not the test to apply. The question was for the Industrial Tribunal to decide on the facts whether or not there was a dismissal; that at least is something the Tribunal is entitled to decide for themselves.

Having found dismissal, the Industrial Tribunal went on to consider whether the dismissal was fair. Strictly speaking of course, the question is whether or not it was unfair under the provisions of Section 57 of the Employment Protection (Consolidation) Act 1978 to which the Tribunal very properly directed themselves. They point out in paragraph 19 the following words:

"19. ... It is certainly arguable that there can be no `reason' (in the sense of a fact which motivates the decision to dismiss) where there is no conscious decision to dismiss. On that basis, the respondents would fall at this first hurdle."

But Mr Wearden says that it is quite possible to say that although the employer fails on the issue of whether or not there was a dismissal, the Industrial Tribunal then has to consider, if there was indeed a dismissal, what was the reason for it. All that was happening in this case, he says, is that there was an alternative stance, as so often happens, by a party to any court or tribunal, firstly to say there was no dismissal but that if there was to say that it was for an admissible reason. Of course in principle that is an argument that can be sustained but the requirements of the statute provide that it is for the employer to show what was the reason for dismissal and that it was an admissible one.

We have some sympathy with the proposition in those circumstances that the task is a one within the litigation for the Respondent to come and show the reason for dismissal and that it may be that an employer can say "at the time I may have been wrong about whether or not there was a dismissal, but this must have been the reason". But the statute requires there to be a reason for the dismissal, not a reason that could have been for dismissal or a potential reason. The Industrial Tribunal have to look at the facts as they occurred and if an employer dismisses without reason the fact that there may have been a reason does not, it seems to me, alter the logic of the Industrial Tribunal, nor to the members of this Tribunal does it appear to show anything more than that there is this question which the Industrial Tribunal put no higher than being arguable, that where there is no conscious decision to dismiss there cannot be any reason for the dismissal because after all a reason for the dismissal requires a degree of conscious determination on the part of the employer.

So there seems to us to be nothing wrong with the approach of the Tribunal on that, particularly as they did not make that their final judgment in the matter because they went on in paragraph 20 to deal with the question of whether or not the Respondents acted reasonably or unreasonably in treating the reason for dismissal as justifying dismissal.

It has been argued by Mr Wearden that the Industrial Tribunal made no finding as to the reason for dismissal but with respect they do in the first sentence of paragraph 20 when they say that "even if this was a dismissal by reason of conduct ..." and they go on to deal with the situation that would then arise.

Mr Wearden has suggested and said to us that he was prevented from arguing what are called generally the Burchell principles of dishonesty which have been so often referred to in Tribunals as to become almost binding guidelines, but not quite, of the approach of an employer if he is to show that he is acting reasonably in a case of alleged dishonesty as an allegation of misconduct. He has told us that he was prevented from adopting the test or making submissions to the Tribunal and was told by the Chairman that that had got nothing to do with the case. As a result of that he did not say the sort of things that he would have said. But we have looked at paragraph 20 of their decision and they say this:

"20. In any event, and even if this was a dismissal by reason of conduct (one of the potentially fair reasons), we would have to conclude that the respondents acted unreasonably in treating that conduct as justifying the dismissal. The Company adopted none of the procedural safeguards (such as a disciplinary hearing) that would, in our view, be required in a case such as this to render the dismissal fair."

They were there directing themselves to that part of the Burchell guidelines which suggest that an employer must take reasonable steps to satisfy himself of the truth of the allegations which would generally include giving the employee an opportunity to explain, and that is, of course, what a disciplinary hearing is all about. Furthermore of course, the Burchell test simply sets out guidelines which are not rules of law, each case must be looked at on its own facts, each Tribunal must look at a case and its own facts and they came to a decision, on the facts, that a disciplinary hearing would be required in a case such as this to render the dismissal fair in terms of procedure.

We are disappointed if the effect of what the Chairman said was to make Mr Wearden abandon submissions that he really wished to make. We cannot believe, having read that part of the decision, that the Chairman could have intended, by telling Mr Wearden that they were not interested in Burchell or that they did not want to hear about Burchell, to have said that that aspect of the case was irrelevant and it is a shame if Mr Wearden so understood it because clearly the Tribunal thought it was relevant. We suspect that they were simply telling Mr Wearden that they did not need to hear about that aspect of legal principle because it was so well known to them. We were concerned about it and it is a matter which has weighed with us considerably because it is always desirable that any representative before an Industrial Tribunal should have an opportunity of arguing all the relevant points fully and where we are satisfied that there has been a clear denial, during the course of the hearing, of any argument on a substantial point, then of course this Tribunal might well intervene.

However, this is a case in which Mr Wearden has shown himself to be a succinct and very experienced advocate in these areas and we are sure that had this matter really been rejected as a complete irrelevance he would have made an opportunity for himself or ought to have made an opportunity for himself, to argue before the Industrial Tribunal as to why it was relevant and therefore that is not a matter, it seems to us, which should lead us to interfere as a matter of law in this particular case.

We then come to the question of compensation. The Industrial Tribunal came to the conclusion that even if there had been a procedure which made the dismissal fair or even if there had been a proper procedure and had the company, in the words of the Tribunal, "dealt with this matter properly" there would still have been a dismissal. So they found that in effect the Applicant did not lose any money and that therefore there was no compensatory award.

They then considered the basic award. First of all they made a calculation as to what it was which is not challenged before us. They then referred to Section 73(7)(B) of the 1978 Act and asked themselves whether "the applicant's conduct is such that it would be just and equitable

to reduce the Basic Award" and they came to the conclusion as follows:

"26. ... The consideration of a reduction on this ground involves us reaching decisions as to whether in fact there was misconduct on Mrs Hopper's behalf as opposed to what a reasonable employer might have believed. On the basis of the evidence before us, we could not conclude, on balance, that Mrs Hopper was indeed guilty of the dishonesty alleged against her. Accordingly, there was no ground on which the Basic Award could or should be reduced."

Mr Wearden has raised a number of matters. First, he says that he would wish to rely on the chain of authority which indicates that generally speaking there would be no difference between a reduction on the compensatory award and a reduction on the basic award. However much sympathy we may have with that submission, it does not apply and could not apply in this case because the Tribunal did not reduce the compensatory award because of contributory conduct. They reduced it simply because there was no loss which is a wholly different matter and it had nothing whatsoever to do with the issue of conduct except indirectly in the suggestion that it would have led to a fair dismissal. But of course, in any event, there is quite a different test because on the compensatory aspect of an award, the conduct has to be contributory where it does not in a basic award.

Furthermore, says Mr Wearden, there are many ways in which the basic award can be reduced because of the conduct of an Applicant and it does not require the truth of the allegation of misconduct. By restricting it to that, he says the Tribunal shut out the possibility of considering other aspects of the case or relevant circumstances and he asks us to consider the example that he himself set out in the Notice of Appeal at page 3 of the bundle which was the wilful and consistent obstruction of the investigative processes preceding dismissal. But the Tribunal must be assumed to be saying what it does in the light of the facts of the case before them, and there was no issue in the case whatsoever of wilful obstruction.

It may be considered that there was the possibility that some other conduct of the Applicant may have been relevant such as the fact that she did not and was unable to explain the presence of goods in her bag however innocent it may have been. We would have had some sympathy with that submission were we not tied by principles of law which have established in the Court of Appeal that the conduct referred to in that section of the Act, must be culpable or blameworthy to some extent, even if only foolish or unreasonable. The reasons, we understand it, for those arguments are that it could not be just or equitable to reduce a basic award unless the conduct was to some extent blameworthy. Had the matter been left to us to decide, we may well have felt that the discretion given to a Tribunal by the Act was a wide discretion and should not be restricted in that way for one can imagine just and equitable grounds for reducing a basic award as a result of conduct where it is not blameworthy. We would have suggested that where one is considering a situation where a Respondent is going to have to pay a basic award to an Applicant, the words "just" and "equitable" must be treated as looking at both parties and what is fair to both, not just fair to one and there must be situations, particularly under the "no difference" type of situation which arises in other cases, where that is the case. But we are bound by decisions of higher Courts and the only blameworthy conduct that was referred to in this case, was whether or not the Applicant had stolen the goods. And therefore, what the Tribunal is saying there is not as a matter of law there restricted, but that on their assessment of the facts that that was the only issue upon which there could be a reduction and it was an issue that they were unable to find in favour of the Respondents. That seems to us to be a matter on the facts before them that was within their discretion.

The Industrial Tribunal, it seems to us, in this case addressed the facts, made appropriate findings of facts, directed their attention to the principles of law applicable to those facts and then proceeded to apply the facts as they had found them to the law in a way which was within their discretion to so apply.

In those circumstances, it seems to us that there is no arguable ground of appeal when one looks into it, and however sceptical one may be about the position of the Applicant in this case the Tribunal had an opportunity of considering the matter and it is not a decision where this Appeal Tribunal feels there is any point of law which should lead us to interfere. Accordingly, this appeal is dismissed.

I was asked by Mr Wearden to explain what we meant when we said that the Industrial Tribunal found that there was no compensatory award because in fact there was no loss. The Tribunal found at paragraph 24:

"24. Our view is that even in that situation the overwhelming likelihood was that Mrs Hopper would have been dismissed, and dismissed fairly. Indeed, the likelihood is so overwhelming that we do not believe any award of compensation is warranted."

In those circumstances it is clear that what happened to Mrs Hopper would have been no different if a fair procedure had been followed and therefore she would have lost no money because her job would have gone fairly in any event. So in a shorthand way that is what we were meaning because it does appear to us that from the meticulous way in which the Tribunal addressed the question of conduct in the basic award and made no reference to it in the compensatory award, they were not considering it in relation to the compensatory award.