United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR N RANDALL (of Counsel) Ivor Walker Solicitor 5c Frognal Mansions 97 Frognal London NW3 6XT
For the Respondent	MR O SEGAL (of Counsel) K E Davis & Sons Solicitors Warley Chambers Warley Road Hayes Middlesex UB4 0PU


 


MR JUSTICE KIRKWOOD: This is an appeal by an employer, National Car Parks Ltd, from a decision of an Industrial Tribunal sitting at Stratford on 18th November 1996. The extended reasons of the tribunal were sent to the parties on 29th November 1996. The Industrial Tribunal found that National Car Parks Ltd had unfairly dismissed Mr Nyarko whom the company had employed as a car park attendant at its premises at the Drill Hall Car Park.

The employer had dismissed the employee on the ground of misconduct. For the purposes of this appeal the relevant facts can be stated fairly shortly.

The Drill Hall Car Park is quite a small one, with parking for 50 cars. Payment for parking was either by cash or by prepaid season ticket. Upon arrival the car driver collected a ticket from the attendant in his kiosk and kept the ticket. The ticket bore a number. The ticket recorded the time of arrival. Before departure the driver took the ticket to the attendant. The ticket was stamped with the departure time. The parking fee was calculated according to the length of stay. The cash customer paid cash, the cash amount due. The attendant wrote on the ticket the amount of cash paid and retained the ticket. A season ticket holder presented his season ticket, which was a plastic card which was very like a credit card. On it in raised print was the season ticket number, the name of the individual or company season ticket holder, and the date of the ticket's validity. The attendant put the parking ticket and season ticket card into some sort of machine which embossed on to the parking ticket the information on the season ticket card. In this instance the attendant wrote on the parking ticket the registration number of the car which he should, strictly, have obtained by observation, but which in practice he commonly took at the dictation of the driver. The attendant then returned the season ticket card to the driver, or was supposed to do so, and retained the parking ticket. On all occasions the attendant entered into a company internal document called "NCP 14" a record of the parking ticket number and the of the car registration number.

On 8th December 1995, Mr Nyarko was given a first oral warning on suspicion of manipulation of tickets. On 2nd February 1996, Mr Bryden, the company's security inspector installed close circuit television and video equipment at the Drill Hall Car Park and set it to operate so as to record all activities at the car park over the next 24 hours. From the resulting video film, Mr Bryden fed into the computer the registration numbers of all cars using the car park in that period together with times of arrival and departure. He then reconciled that information with the form NCP 14 filled in by Mr Nyarko. There were three discrepancies. Car number M 515 KPL seen on the video had issued to its driver a ticket number 288327. Against that ticket number on the form NCP 14 was shown a different car registration number G 573 DKK. The related parking ticket also had on it the registration number G 573 DKK. It was endorsed in manuscript with the word "B'gate" indicating, it was supposed, that it was a season ticket holder who did not have his season ticket with him. The other two irregularities were the same in all respects, save that in the other two instances, the parking ticket had recorded on it the detail from the season ticket cards both in fact issued to Cooper of Bishopsgate Ltd, a bulk holder of season tickets.

An enquiry of the owner of the cars whose registration numbers had been recorded by Mr Nyarko revealed that none of them had in fact parked there that day. Only one of the owners of the cars seen on the video to have arrived could be found and spoken to. The one who was seen by Mr Bryden said that he used the car park about twice a week and always paid cash or by cheque.

Other records showed that one of the other two cars, that is to say M 741 CRK was regularly parked in the car park and had been on 30th and 31st January and 1st February and that the driver always paid cash. The inference the company drew was that Mr Nyarko was falsifying the records so as to show a ticket issued to a driver who is fact paid cash was issued to a season ticket holder. The suggestion was that Mr Nyarko pocketed the cash.

A disciplinary interview conducted by Mr Etheridge, the Divisional Support Manager for the area, took place on 20th February 1996. Mr Etheridge had all this evidence. Mr Nyarko's answer was that season ticket holders would lend their cards to other drivers and that this was what must have happened. Mr Nyarko was dismissed. He appealed unsuccessfully. He applied to the Industrial Tribunal.

The Industrial Tribunal plainly investigated the detail of the alleged misconduct carefully. It found that there had not been a reasonable investigation. It found that the dismissal was unfair.

The principle ground of the appeal by the employer is that the Industrial Tribunal misdirected itself as to the law. In that regard, the relevant passages of the extended reasons are paragraph 17, 18 and 19(a), the read as follows:

"The reason for the dismissal

17 The reason given by the Respondents for the dismissal was manipulation of tickets causing loss of revenue to the Respondents. This is a reason relating to conduct which is a reason for dismissal under section 98(2)(b) of the Employment Rights Act 1996.

The fairness of the dismissal

18 Under section 98(4) of the Employment Rights Act 1996 the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) depends on whether in the circumstances the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee. This is to be determined in accordance with equity and the substantial merits of the case.

19 In reaching our decision, the Tribunal took the following matters into account:-

(a) The Tribunal was mindful that we should not substitute our own decision for that of the Respondents. It is merely for the Tribunal to determine whether the Respondents had a reasonable suspicion amounting to a belief in the guilt of the employee in accordance with the test set out in British Homes Stores Ltd v Burchell [1980] ICR 303. The Respondents have to establish the fact of the belief, that the Respondents did believe it and that the employer had in his mind reasonable grounds upon which to sustain the belief and that the Respondents have carried out as much investigation into the matter as was reasonable in all the circumstances of the case."

S.98 of the Employment Rights Act 1996 reads in its relevant parts:

"(1) In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show-

(a) the reason for the dismissal, and

(b) that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held."

Subsection (2)(b) reads:

"(2) ... (b) relates to the conduct of the employee,"

Subsection (4) of s.98 is in these terms:

"(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)-

(a) depends 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

(b) shall be determined in accordance with equity and the substantial merits of the case."

S.98 it is to be noted, imposes upon the employer the burden of proving the reason for dismissal, and that it was a reason falling within subsection (2). Subsection (4) does not impose a burden of proof one way or the other. It requires the Industrial Tribunal to decide whether the dismissal was fair or unfair and that depends on whether the employer acted reasonably or unreasonably.

Under the heading "The fairness of dismissal" in the extended reasons, the Industrial Tribunal said, at paragraph 19, that it "took the following matters into account", and the first of these was what it had to determine by reference to the decision of the Employment Appeal Tribunal in the case Burchell. The Industrial Tribunal summarised the so-called "Burchell test" importing into its summary some of the words used by Arnold J in that decision. What Arnold J said at 304D:

"What the tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the ground of the misconduct in question (usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time. That is really stating shortly and compendiously what is in fact more than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief. And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds, at any rate at the final stage at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further."

A little later in the judgment Arnold J emphasised that in every case that it was a question of reasonableness from start to finish.

At the time Burchell was decided, the relevant statutory provision was contained in s.6(8) of the Trades Union and Labour Relations Act 1974. By that provision the question of reasonableness:

"shall depend on whether the employer can satisfy the tribunal that, in the circumstances, having regard to equity and the substantial merits of the case, he acted reasonably in treating it as a sufficient reason for dismissing the employee."

There is there a burden of proof imposed upon the employer, but the statutory provision has changed since then. The changes and their consequences were outlined by His Honour Judge Peter Clark in the decision of the Employment Appeal Tribunal in Boys and Girls Welfare Society v McDonald [1996] IRLR 129. In the course of his judgment, His Honour Judge Peter Clark said this at paragraph 23:

"The amendment to s.57(3) affected by s.6 of the Employment Act 1980 produced the following wording:

'... The determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, should depend on whether in the circumstances ... 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.'

Thus, as a result of the 1980 amendment it was no longer necessary for the employer to satisfy the tribunal that it had acted reasonably. The burden of proof on the employer was removed. The question was now a 'neutral' one for the industrial tribunal to decide.

The risk that by following Sir John Arnold's test in Burchell a tribunal may fall into error by placing the onus of proof on the employer to satisfy it as to reasonableness is not confined to industrial tribunals. In Post Office (Counters) Ltd v Heavey [1989] IRLR 513, this Appeal Tribunal presided over by Wood J, reviewed the legislative history and observed at p.515, paragraph 14:

'As the Court of Appeal has indicated on many occasions, the correct direction for an industrial tribunal to give themselves is to use the actual wording of the statute, and to remind themselves that there is no burden of proof on either party. A "neutral" issue is indeed strange to those brought up with our adversarial system. It is not for the employer "to show", nor for the tribunal "to be satisfied" - each of which expressions indicate the existence of a burden of proof.'"

That of course was in reference to the reasonableness test which is now contained in s.98(4) of the 1996 Act.

It was common ground at the Bar in this appeal, that the right approach is this:

(1) the burden of proving the reasons for dismissal and that it falls within s.98(2) of the 1996 Act rests on the employer;

(2) the employer does not have to prove more than the reason upon which he acted. If it was, as here, misconduct, that he proves that he believed that there had been misconduct is sufficient;

(3) the reasonableness of that belief and the reasonableness of the investigation that led to that belief, are all matters that fall within in subsection (4) as to which there is no burden of proof. That subsection has been said to be "neutral" in that regard.

The appellant's argument is that the Industrial Tribunal misdirected itself as to the burden of proof when it took into account, as it said it did, in paragraph 19(a) of the extended reasons to which I have referred, that the respondent, the employer, had to establish that the employer had in his mind reasonable grounds upon which to sustain the belief, and that the respondents have carried out as much investigation into the matter as was reasonable in all the circumstances of the case. The respondent to this appeal concedes that if that was in truth a direction to itself by the tribunal as to law it was a misdirection. The appellant's case is that it plainly was a misdirection as to the law, and as such it inevitably flaws the decision making process that the Industrial Tribunal undertook.

In paragraph 19, the Industrial Tribunal said in terms that it took it and other matters into account. In paragraph 20 the Industrial Tribunal said again that it had taken those matters into account. Accordingly, the appellant's case on this aspect is that the case should now be remitted to the same Industrial Tribunal to apply the facts it found to a proper direction on the law.

The respondent to the appeal argues as follows. First, that in paragraph 19(a), the Industrial Tribunal is doing no more than to identify the various headings under which it should consider the facts; namely, in addressing the question of reasonableness under s.98(4), it should consider first, whether the employer had reasonable grounds for its belief; and secondly, whether there was a reasonable investigation. Counsel for the respondent points to the proper approach to the finding and to the finding as to the reason for dismissal that is contained in the extended reasons at paragraph 17. He points to the proper direction as to s.98(4) set out in the extended reasons at paragraph 18. He points out that paragraph 18 is properly silent as to a burden of proof. Counsel for the respondent then takes us to paragraph 20 of the extended reasons which is in these terms:

"20 Having taken these matters into account, it is the unanimous decision of the Tribunal that the Respondents did not conduct a reasonable investigation and, upon the investigation that they did conduct, they could not have formed a genuine belief that Mr Nyarko was guilty of the conduct complained of without further questioning him. The Tribunal was of the view that Mr Nyarko should have been questioned about how he obtained a season ticket and further evidence should have been obtained from the vehicle owners."

The respondent's argument is that the Industrial Tribunal did not decide this case upon a burden of proof. Far from deciding it on the basis that the employer had not discharged the burden of proving reasonableness, the Industrial Tribunal made the unequivocal finding that the employer did not carry out a reasonable investigation and did not have reasonable grounds to sustain its belief. So the burden of proof and any possible misdirection as to it, was not in any way determinant of the Industrial Tribunal's decision, and that point is therefore immaterial.

Counsel for the respondent further asks us to look at the extended reasons as a whole and to refrain from isolating any particular passage out of the context of the whole.

Ultimately the questions that we have to decide are first, whether the Industrial Tribunal misdirected itself. Looking at the way in which the introductory words of paragraph 19 and the words of paragraph 19(a) are put, we conclude that it did. Secondly, whether notwithstanding that misdirection in paragraph 19, the Industrial Tribunal did not follow its own misdirection, but taking the decision and the reasons as a whole, can be seen to have applied the correct test. That point is arguable either way. Our difficulty is in discerning just what was in the mind of the Industrial Tribunal if it were not the matters they said they took into account. We have concluded that we cannot properly let this decision stand. So that on this point the case must go back to the Industrial Tribunal to apply the correct tests in law as to the facts as found by them.

The second ground of appeal argued before us is one of perversity. The argument is focused upon one of the cars only, M 741 CRK, which in the previous three days had been left in the car park by a driver who paid in cash. The argument, the detail of which we do not need to elaborate, is that the investigation went far enough to provide a reasonable basis for the employer's belief.

All the information upon which the employer relied was gathered before the employee was asked to give an explanation. He gave the explanation that people would lend their season tickets to other drivers. Amongst a number of matters to which the Industrial Tribunal were referred in finding that the investigation was not reasonable were these:

"19. (i) In their evidence, Mr Bryden and Mr Etheridge accept that season tickets can be used by holders for any car and in practice, may be lent to other drivers."

"(l) There was no evidence before us that the three season ticket holders from Cooper Bishopsgate had been asked whether they lent their season tickets to any third party."

The Industrial Tribunal was in fact looking to see whether there was a reasonable investigation. That is to say an investigation that laid reasonable foundation for the employer's belief in misconduct, and that made dismissal reasonable. In that consideration, it was in our judgment, open to the Industrial Tribunal to hold that a reasonable employer would in the circumstances have made the enquiry as to the employee's innocent explanation to which it referred. We are quite unpersuaded that the decision was perverse. So that that ground of appeal does not succeed.

In the result this case will be remitted to the same Industrial Tribunal for consideration with a proper direction in its mind as to the law.