United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 970_95_2203

Appeal No. EAT/970/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 22 March 1996

HIS HONOUR JUDGE N BUTTER QC

MRS T A MARSLAND

MR T C THOMAS CBE

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PEARL ASSURANCE PLC          APPELLANTS

J E PARKER          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MS V GAY

(Of Counsel)

Messrs Mace & Jones

Solicitors

Drury House

19 Water Street

Liverpool

L2 ORP

For the Respondent MR M SUPPERSTONE QC

Messrs Higgs & Sons

Inhedge House

31 Wolverhampton Street

Dudley

W.Midlands

DY1 1EY


 


JUDGE BUTTER QC: This is an appeal by Pearl Assurance Plc in respect of a decision of an Industrial Tribunal at Birmingham, held on 22 & 23 May and 21 June 1995. The reasons for the decision were sent out on 31 July. The unanimous decision of that Tribunal was that the Applicant had been unfairly dismissed and they found 20% contributory fault.

The background to the case is that the Applicant, Mr Parker, commenced work for Pearl Assurance as far back as 1967. He was a Senior Financial Consultant. He had what is accepted as a blameless record until the events of 1993. On 27 April 1993 a disciplinary hearing presided over by Mr Collins took place. Mr Collins concluded that there had not been a breach of Lautro Regulations, but that there had been a failure, by Mr Parker, to follow company rules in dealing with some pension applications and that these amounted to a clear breach of trust and confidence. The possibility of dismissal was considered, but the conclusion was reached that a final written warning was appropriate. That is dated 30 April. It says:

"Having considered all the facts it was decided not to terminate your contract but to issue a final written warning with an improvement period of 12 months, in addition the following sanctions will apply [a number of specific matters were set out by way of sanctions]. On satisfactory completion of the improvement period all records of this warning will be deleted, however, I would advise that in the event of a recurrence of these or any other offences involving your conduct during this period, that serious consideration will be given to move to the next stage of the disciplinary procedure."

In December 1993, investigations took place which revealed that on two occasions Mr Parker had inappropriately counter-signed proposals relating to the sale of Life Assurance products. The effect was that he indicated he was present at the sale, confirmed that company procedures had been completed and so became entitled to a 34% sales commission. In fairness to Mr Parker, there was no allegation as such that he had been dishonest, but a serious view was clearly taken by the employers, with the result that a disciplinary hearing took place on 17 December, again presided over by Mr Collins.

We turn to paragraph 17 of the reasons given by the Tribunal:

"Mr Collins concluded that the allegations had been proved. He said there was no alternative but to dismiss the applicant. ... He considered the applicant's future employment but he took into account the applicant had re-offended during the period of the warning and `the trust and confidence' had gone. He did not think they could trust him again, even if he were to be demoted. ... Mr Collins said he took into account the applicant had 26 years service and `we do not dismiss lightly'. It was known the applicant worked hard and had good sales results `but he knew the rules - he admitted this - yet he chose to take credit for business in which he played no part'. He had as a result been paid commission to which he was not entitled. He felt despite given the chance to improve, the applicant had not learnt his lesson. A letter of dismissal followed. The effective date of termination was 17 December 1993."

In paragraphs 36 and 37 of the decision the Tribunal state:

"36. ... We have to say the respondents have shown the reason for dismissal was misconduct, in that he [Mr Parker] failed to observe a company rule of which he would have been aware. Whether or not his actions amounted to gross misconduct would, we feel, depend on the view taken of what he did but we are satisfied the evidence does establish misconduct within the respondents rules."

37. We consider whether dismissal for that reason was fair or unfair. We have taken the view that we feel the decision to give him a final written warning some 6 or so months earlier, was a decision surrounded by some doubt...

However, there was no finding that no reasonable employer would have given such a warning.

Paragraph 38 is the paragraph which has been subjected to much consideration today in the course of argument. The Tribunal said:

"38. Having considered the matters set out in Section 57(3) we find the dismissal was unfair. The decision was we find largely based on his having transgressed during the currency of a final written warning, which itself could be called into question. It [that appears to relate to the final warning] was based on two instances where we find there was a complete failure to consider surrounding circumstances which ought to have been considered by a reasonable employer. We find Mr Collins' response was that since the applicant had committed an offence during the currency of the final written warning, he had no alternative but to dismiss despite the circumstances. Such a view cannot be that of a reasonable employer. We also find Mr Collins paid little or no regard to the applicant's substantial length of service and felt he had to dismiss rather than was it reasonable to dismiss. For these reasons we find the applicant was unfairly dismissed. His application succeeds."

They then went on to deal with the question of contributory fault.

Section 57(3) of the Employment Protection (Consolidation) Act 1978 is repeatedly cited to Industrial Tribunals and to the E.A.T. In respect of the present case, it is appropriate that I should read the major part of that sub-section:

"Where the employer has fulfilled the requirements of subsection (1), then, 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.]"

In paragraph 38 of the decision to which I referred a short time ago, the Industrial Tribunal specifically mentioned Section 57(3). Mention is not by itself necessarily sufficient, because we have to consider whether, in reality, the Tribunal did apply the correct test. It is important that it should be apparent from the Industrial Tribunal's decision, that the correct test has been identified and applied. We have been referred to one or two authorities. It may be convenient if I refer to one extract from the well-known case of British Leyland UK Ltd v Swift [1981] IRLR 91, where the then Master of the Rolls says at paragraph 11:

"... The correct test is: Was it reasonable for the employers to dismiss him? If no reasonable employer would have dismissed him, then the dismissal was unfair. But if a reasonable employer might reasonably have dismissed him, then the dismissal was fair. It must be remembered that in all these cases there is a band of reasonableness, within which one employer might reasonably take one view: another quite reasonably take a different view. One would quite reasonably dismiss the man. The other would quite reasonably keep him on. Both views may be quite reasonable. If it was quite reasonable to dismiss him, then the dismissal must be upheld as fair: even though some other employers may not have dismissed him."

There are also some helpful observations in the case of Conlin v United Distillers [1994] IRLR 169.

It is submitted on behalf of the Respondent to the appeal, Mr Parker, that no legal point arises and that the Industrial Tribunal was entitled to rely upon the so called "blinkered" approach of Mr Collins. We cannot accept this. We are unanimous in our conclusion that although the Industrial Tribunal referred to Section 57(3), they appear to have formed their own view, and did not address the vital issue as to whether, in the circumstances, the employer acted reasonably or unreasonably in treating the misconduct of the employee as a sufficient reason for dismissal. They seem to have concentrated on what Mr Collins' reaction was. In our judgment, they did not ask whether the dismissal was within the range of reasonable responses, or consider whether a reasonable employer could have dismissed the employee. In these circumstances, it follows that the appeal is allowed and it is unnecessary and inappropriate for us to go on to consider the question of contribution. In our judgment, it is not appropriate for us to substitute our own view of this case. We are led to the conclusion that we must remit the matter to a differently constituted Industrial Tribunal and we so order.