United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR BEAN (of Counsel) The Solicitor The Post Office Impact House 2 Edridge Road Croydon CR9 1PJ
For the Respondent	MR FORD (of Counsel) Messrs Simpson Millar Solicitors 101 Borough High Street London Bridge London SE1 1NL


 


MR JUSTICE KEENE: The respondent to this appeal, Mr Hoy, was employed as a finance cashier by the Post Office, the appellant. Mr Hoy worked for the Post Office from April 1981 until he was dismissed on 15th December 1995. His dismissal was on the grounds of misconduct in that he was accused of stealing money belonging to the Post Office. The Industrial Tribunal concluded that the appellant employer had not carried out as much investigation as was reasonable in all the circumstances before forming its belief in his guilt, and the tribunal therefore decided that the respondent had been unfairly dismissed. It ordered his reinstatement.

The appellant now appeals both against that decision as to the unfairness of the dismissal and against the order of reinstatement.

The relevant facts were that in October 1995 Mr Hoy worked as a cashier at the South East London Revenue billing unit. That unit was being relocated to the North London office and in October 1995 he was working alone at the office in its then premises in Borough High Street. The office was due to move to the North London site on Friday 27th October. But Mr Hoy's last day in that Borough High Street office was in fact Tuesday, 24th October because he was about to take three days leave. In addition to his usual duties of opening and processing all the cheques proffered to the billing unit he would issue stamp stock to all the London sorting offices and also reimburse petty cash vouchers for various departments and would administer reward and recognition awards. Finally he would deal with articles found loose and would administer the South East staff fund. In order to prepare for the office move Mr Hoy was asked by his line manager, Mr Gates, to destroy all the old out of date documentation which had to be torn up and put into confidential waste bags.

The Post Office Investigation Department ["POID"] conduct as a matter of routine honesty tests on cashiers from time to time. Such a test was now carried out in respect of Mr Hoy. He was sent a registered letter containing £60. He signed for the receipt of the envelope on 24th October 1995, his last working day at the Borough High Street office.

On the following Monday, 30th October 1995 he came back from leave and began work at the office now located in North London. On that same day another employee, Mr Spicer, transferred to him a number of registered items which had been signed for during Mr Hoy's absence. Mr Hoy then signed for the total number of those registered items. He did not sign in respect of each individual item. The next day Mr Gates conducted a check of Mr Hoy's stock and cash together with any registered items on hand. He did so at the instigation of the POID. He found that the test item for which Mr Hoy had signed the previous Tuesday was not contained within the registered items. In addition, Mr Gates found two items of post where there were discrepancies: in one case £15 instead of £65, and in another a £5 shortfall. These were items originally signed for by Mr Spicer.

Mr Hoy was interviewed by POID in accordance with the Police and Criminal Evidence Act guidelines. He replied to the questions regarding where the missing articles of money might be by saying "I haven't got a clue". As regards the two items which were found to be open but with a shortfall, Mr Hoy said that he had not yet processed that mail. He described his work practice as being one whereby he would deal with matters in order of priority. First of all he would process cheques. Then, as a matter of priority, he would process stamp sales which he described as being usually recognisable even if they were not stamped because they came in particular small registered envelopes. Other envelopes would, he said, be put to one side to be dealt with later. If he was in any doubt he said that he would slit the ends of the envelope with a paper knife so as to identify the contents by the documentation but he would not physically remove the contents. He would then put the documentation to one side until he had got to that point in his priorities. If he then ascertained when he came to deal with an envelope that there was a shortfall he would contact the originating office to ascertain if the amount they had marked on the documentation was accurate or not. Only if there appeared still to be a discrepancy would he tell his line manager.

Mr Hoy, when he was asked about the £60 test packet for which he had signed, agreed that he had accepted that he had received it but he did not know what he had done with it. The possibility he suggested was that he had discarded it and had accidentally thrown it away, as the previous Monday and Tuesday were very hectic as he was preparing for the move to the site in North London.

There was then a disciplinary hearing conducted by the respondent's line manager, Mr Hillsden. It took place on 12th December 1995. Mr Hillsden concluded that on the balance of probabilities the most likely explanation for the disappearance of the registered test envelope and for the missing sums of money was that Mr Hoy had stolen them and he drew the conclusion that Mr Hoy should be dismissed. Mr Hillsden recognised that sometimes money within envelopes did not accord with the stated value, but he noted that that could not explain the disappearance of the honesty test envelope. He did not pursue the question of whether or not Mr Hoy's explanation, that the missing test item may have been caught up with the waste at the South East billing unit, was credible or not. By that stage Mr Hoy had also suggested that that envelope might have slipped accidentally into one of the waste collections. Mr Hillsden considered that the waste would have been cleared out the previous week and he did not think to pursue the question of whether it was a likely explanation with POID.

There was then an appeal heard by the Post Office Appeals Manager, Ms Guise. The hearing itself took place on 17th January 1996 but Ms Guise pursued a number of matters herself after the hearing, on each occasion informing the respondent of the results of her further enquiries so that he could comment. No criticism was made of the procedural aspect of that.

On 12th April 1996 she concluded that her enquiries had been pursued as far as she could and she drew the conclusion that it would be stretching coincidence too far, as there were three cases in which Mr Hoy acknowledged that he had received envelopes but could not provide a satisfactory explanation (as she saw it) for the missing money. She said "Whilst there is no actual proof that Mr Hoy took the money he had the opportunity to do so and could not provide a convincing explanation for the disappearance of three sums of money on three different occasions. I therefore believe that on the balance of probabilities he did take the money i.e. theft." She consequently dismissed his appeal against his dismissal.

Before the Industrial Tribunal Mr Hoy denied taking the money and described his work practices in the way which we have already set out. He also called evidence from a fellow employee, Mr O'Donnell, who said that he did the same job as Mr Hoy and he too would have had unchecked registered items in his stock and would not necessarily tip out the contents. He confirmed that he too had had discrepancies in his stock and had been interviewed by POID but this had not resulted in any disciplinary action.

Mr Yates, also a Post Office employee, was called as a witness by the respondent. He confirmed that money in registered envelopes would sometimes go missing and that one of the first places to look would be the waste.

The Industrial Tribunal in approaching the issue of the fairness of the dismissal reminded itself of the well-known decision dealing with misconduct cases British Home Stores Ltd v Burchell [1978] IRLR 379. It summarised the approach there as follows:

"(i) there must be established by the employer the fact of the belief of misconduct;

(ii) that the employer had in his mind reasonable grounds upon which to sustain that belief and

(iii) the employer at the time when he formed that belief had carried out as much investigation into the matter as was reasonable in all the circumstances of the case."

Both parties before us accept the applicability of those guideline tests.

The tribunal was critical of the investigation carried out by the appellant. It stated as follows:

"15 The tribunal noted that the investigation of the alleged theft was limited to an examination of Mr Hoy and his desk and its contents. There was no serious examination of the way in which Mr Hoy worked; there was no examination of how realistic was the explanation being put forward by Mr Hoy namely that the test item had gone into the waste. Neither Mr Hillsden nor Ms Guise in the course of their enquiries talked to any employees other that Mr Hoy's line manager Mr Gates and a Mr Utting of POID. The failure to conduct as broad an investigation as possible meant that there was an essential procedural defect in the approach followed by the Post Office in dealing with Mr Hoy. Mr Hoy before the tribunal called witnesses who described their work methods as being the same as that of Mr Hoy namely that they would open envelopes but not actually examine in detail the contents of those envelopes merely ascertain the type of contents. Mr Hoy called a witness to deal with the question of losing registered items in the waste. The Post Office investigating a potentially very serious allegation of theft particularly in relation to an employee of 15 years with a previous exemplary record should have considered any explanation put forward and tested it to ascertain if it had any foundation. The failure to do so meant that the investigation itself could only ever lead to one conclusion namely that there was a dishonest explanation only, not the possibility of any innocent one.

16 Mr Hillsden in conducting the original hearing did not at any point consider any of the broader aspects of any investigation. It was clear to the tribunal that the work practices described by Mr Hoy had the potential to lay himself open to suspicion. Mr Hillsden did not enquire at all as to whether this was widely based practice. This omission could have been corrected on appeal when Ms Guise conducted a more in-depth enquiry into certain aspects but she too did not make any direct enquiries but relied exclusively on asking for technical information from Mr Gates. Neither Mr Hillsden nor Ms Guise at any point explored the question of whether or not the explanation regarding the item being caught up in the waste was a possible explanation. Both appeared to discount it and yet had they enquired further they might have ascertained as indeed evidence was adduced before the tribunal that this was not an infrequent occurrence.

17 The tribunal therefore concluded that the Post Office as employer had not at the time they formed belief that Mr Hoy was guilty of the misconduct alleged carried out as much investigation as was reasonable in all the circumstances, and that as such they had jumped to the conclusion that the only explanation was that Mr Hoy had stolen the items concerned. ..."

Consequently the tribunal below upheld the complaint on unfair dismissal.

The appellant now challenges that decision on a number of grounds. The first argument put forward is that the tribunal, though referring to British Home Stores v Burchell, did not in fact adopt that approach. Mr Bean who has appeared on behalf of the appellant today submits that one finds "mere genuflection" in the direction of Burchell in the tribunal's decision. Consequently there has been, he argues, an error of law in the tribunal's approach. In support of that argument he points to the expression used by the tribunal in paragraph 15 of its decision when it referred to the "failure to conduct as broad an investigation as possible". That it is said departs from the Burchell test. Mr Bean rightly points out that Burchell was decided at a time when there was a burden of proof on the employer which there no longer is. He submits that the reasonableness of the employer's investigation and decision must be considered in the light of the evidence available to the employer at the time of the investigation and decision and not in the light of subsequent evidence. The tribunal here heard evidence from two fellow employees, Mr Yates and Mr O'Donnell, who had not been put forward as witnesses or potential witnesses by the respondent during the disciplinary hearing or the subsequent appeal.

Emphasis is placed by the Post Office on the lengthy investigation which was carried out in this case, a three stage process, and it is contended that the point which eventually found favour with the tribunal was not taken at all during the course of that investigative process. That is the point that the employer should have made enquiries of the respondent's colleagues. However, Mr Bean does accept that the mere fact that a point has not been raised by the employee during such an investigative process is not conclusive as to the reasonableness or otherwise of the scope of such an investigation.

In considering this first submission we bear in mind that whether an employer has carried out an investigation which is reasonable in the circumstances is a question of fact for the tribunal below. This appeal tribunal can only interfere if there has been an error of law by the tribunal or if its decision is perverse. At this stage the submission which has been advanced amounts to one that the tribunal in this case misdirected itself by applying the wrong test. We consider that submission.

Subject to the point made about the burden of proof, the appropriate approach is to be found in the Burchell decision which was itself approved by the Court of Appeal in the case of Weddel & Co v Tepper [1980] ICR 286. There is no dispute between the parties that the appropriate approach is to be found in that Burchell decision. The tribunal in this present case refers expressly to the guideline tests suggested in Burchell. It is true in the course of its analysis at paragraph 15 the tribunal uses the expression now criticised, but that is preceded by an express reference to the guidelines in Burchell at paragraph 14 of the decision, and then subsequently at paragraph 17 of its decision the tribunal reaches the conclusion that the employer's investigation had not been one which "was reasonable in all the circumstances". Consequently one finds that the tribunal was reminding itself of the correct test to be applied both before and after the particular sentence which is criticised. We bear in mind what has been said by the appeal tribunal in many decisions, namely that the proper approach to be adopted by this appeal tribunal is to look at a decision as a whole and not to scrutinise in too much detail a single sentence taken in isolation. We regard the expression which is criticised here as being merely a statement that the employer should have investigated more widely. Given its context, we do not accept that the expression to which we have been referred indicates that the tribunal departed from the proper legal approach as indicated in Burchell.

The evidence of Mr Yates and Mr O'Donnell was relevant to the issues before the Industrial Tribunal because it went to illustrate what the appellant could have discovered had it carried out a fuller investigation and spoken to other employees occupying similar positions to that of the respondent. That would have enabled the appellant to discover more, both about the experience of those employees as to documents ending up in the waste when they should not have done, and as to the working practices of those who held a similar position to that held by the respondent. As we read the tribunal's decision, the tribunal treated the evidence of Mr Yates and Mr O'Donnell on that basis. It was not seeking to place itself in the shoes of the employer, although it is in any event right to note that the test of a reasonable investigation is an objective one. The tribunal is not primarily concerned with whether the employer regarded it subjectively as a reasonable investigation or not.

The tribunal in considering the reasonableness or otherwise of the investigation conducted was not confined merely to those arguments raised at the hearings which took place, by which we mean the hearings conducted by the employer. That would have the effect of placing a burden on the employee to suggest what should and should not be investigated, and in our opinion that cannot be right. Once the employee has put forward his explanation to deal with the allegations made against him, it is then for the employer to conduct a reasonable investigation, which is then to be objectively judged by any industrial tribunal before which the matter is raised. Of course the presence or absence of such suggestions by the employee may be relevant as to what constituted a reasonable investigation in all the circumstances, because that is one of the circumstances. In the present case, however, the respondent had raised matters which the tribunal could properly regard as requiring an investigation of the practices and experience of other employees. For example, at the disciplinary hearing his representative had asserted that discrepancies between the stated amount in a registered envelope and its actual contents were not uncommon; unless that proposition were accepted it could properly be seen as calling for investigation. When Ms Guise was conducting her enquiries the respondent's representative wrote to her on 21st March 1996 saying:

"In my research since the appeal I have been informed by some of Mr Hoy's colleagues that it is not uncommon for registered items to arrive with money missing and that on occasions registered items have been lost."

It is quite true that that was stated more with the object of comparing the form of disciplinary action in those cases and in Mr Hoy's case, but it should nevertheless have drawn attention to the need to check on a wider basis whether the respondent's explanations might be credible. We therefore cannot accept that the tribunal below in practice departed from the Burchell guidelines. It seems to us that it was not merely referring to those guidelines but it was also in reality seeking to apply them.

We then ask ourselves whether its decision as to the failure of the appellant to carry out a reasonable investigation was one which can be categorised as perverse.

What had happened here was that there were really two categories of allegations against the respondent. First of all, there was the test item deliberately sent to the respondent by the POID. Secondly, there were two registered items which had less inside them than should have been present. What the tribunal was saying in effect was that a reasonable investigation would have involved more checking of the explanations which Mr Hoy gave in respect of each of those two accusations, including inter alia, asking questions of other employees as to their practices. Mr Hoy's explanations were, as to the test item, that it may have been accidentally thrown away into the waste or may have slipped off into the waste. So far as the two registered letters with a shortfall in them were concerned, his explanation was that he had not processed them as yet and that it was his practice to check with senders before raising discrepancies with his line manager and that he had not at that stage got to that particular point in his working practice.

Counsel for the appellant draws attention to the sentence in paragraph 15 of the tribunal decision where the tribunal said that "there was no examination of how realistic was the explanation being put forward by Mr Hoy namely that the test item had gone into the waste". Mr Bean asks, rhetorically, what more could the employer have done? It is right that the Post Office faced certain problems in investigating this aspect of the matter. By the time it came to investigate it could no longer check the ordinary waste paper output from the respondent's office. That was, it seems, largely because the appellant had chosen to send the test letter at a time when the Borough High Street office was about to move and when the respondent was about to take three days leave. It was a full week after the respondent had received the letter that POID moved in. By then, in the circumstances which we have described earlier, it had no doubt become extremely difficult to carry out a proper check on the ordinary waste paper from that office. But those were difficulties largely, it seems to us, of the appellant's own making. It had made the task of investigating such a possibility very difficult, but that does not mean that it can then regard the respondent's explanation as incredible or unsustainable. Mr Bean readily acknowledged that in the course of argument when he accepted that if the test envelope stood alone as an allegation, the fact that the waste could not be searched would put him in some difficulties on this appeal. He concedes that that factor increases the importance of the other two items where there was a shortfall. Yet remarkably enough the official who conducted the disciplinary hearing put the emphasis the other way around. It was said by Mr Hillsden in his written reasons for his decision to dismiss Mr Hoy that:

"... It is true that from time to time there are variancies between monies forwarded by local offices to the Cashiering Department where the actual contents do not agree with the stated value prepared by the local manager. In the case of the honesty test, clearly this is not the case as we have clear evidence that the money was put into the envelope and that Mr Hoy signed for the money."

Moreover, it seems that the initial investigation by the POID could properly be criticised as being incomplete. The principal officer concerned in conducting that investigation, Mr Utting, is on record saying subsequently that he was not aware of the six bags of confidential waste produced by Mr Hoy's office, and that if he had been so aware he would at least have considered the possibility of checking them without drawing attention to his actions. He did not concede that he would have done that but he did at least acknowledge that he would have considered that possibility. We therefore have come to the conclusion that the Industrial Tribunal was entitled to decide that there had not been a reasonable investigation of that particular aspect concerning the test envelope.

As for the other category of allegations which relate to the envelopes with shortages in them, the tribunal's conclusion that the Post Office should have checked whether other employees adopted the same practice of putting such letters to one side, so as to deal with matters of higher priority, was not, in our judgment, a perverse conclusion. The letters in question had not at the stage when the POID intervened been entered in the ledger by Mr Hoy, nor had the value of their contents. There was thus no evidence that the respondent was falsifying such entries. His explanation for the shortages was simply that he had not processed them yet and consequently had not noticed the discrepancies nor sought to raise those discrepancies with the senders or with his line manager. Consequently the crucial question was whether his putting them on one side for a time was credible or not as a working practice. It was open to the tribunal below to conclude that that question required more investigation than the Post Office gave it, especially given the unusual circumstances here of a build up of letters while the respondent had been away on three days leave.

Mr Bean emphasises that the strength of the Post Office's case was the coincidence of all three discrepancies arising at the same time. But this coincidence is only as strong as the validity of its individual components. Thus, if the two registered letters had not been processed at the time in question and if that was a credible explanation, there was no coincidence. We therefore do not regard the tribunal's conclusion as one which falls outside the range of permissible decisions for an Industrial Tribunal to have reached on the facts as they found them to be. In those circumstances this appeal must be dismissed in so far as it relates to the unfairness of the dismissal of the respondent.

We turn finally to the issue of reinstatement. Mr Bean on behalf of the appellant submits that on even on Mr Hoy's own case he was at least careless, particularly in relation to the test item. Consequently, it is submitted that it would be wrong to order reinstatement where the employer's confidence in the reliability of the employee has legitimately been undermined. That contends Mr Bean is the situation here.

Mr Ford on behalf of the respondent emphasises that the Industrial Tribunal found that it was satisfied that:

"... although it was critical of the way in which Mr Hoy carried out his cash handling functions ... these were issues that should have been addressed by management as he was not alone in carrying out his work in this fashion. It was not a matter that could be said to be attached to him exclusively and personally such that he had contributed to his own dismissal."

Mr Ford then draws our attention to the provisions of s.116 of Employment Rights Act 1996 which deals with the exercise of the tribunal's discretion on remedy. S.116(1) reads as follows:

"(1) In exercising its discretion under section 113 the tribunal shall first consider whether to make an order for reinstatement and in so doing shall take into account-

(a) whether the complainant wishes to be reinstated,

(b) whether it is practicable for the employer to comply with an order of reinstatement, and

(c) where the complainant caused or contributed to some extent to the dismissal, whether it would be just to order his reinstatement."

Here, contends Mr Ford, the tribunal found that the complainant did wish to be reinstated. That is true and that cannot be subject to any challenge. Mr Ford then contends that the tribunal also found that it is practicable for the employer to comply with an order for his reinstatement. There does not seem to be, so far as we understand the position, any real argument as to the practicability of reinstatement of the respondent in an organisation as large as the Post Office.

What about the third factor to which the tribunal was bound to have regard by virtue of s.116(1)(c)? It is right that the tribunal here found that the respondent had not contributed to his dismissal. Moreover, there is no challenge in the Notice of Appeal or indeed the skeleton argument to the tribunal's finding in that respect. In those circumstances we cannot properly say that the tribunal here has exercised its undoubted discretion perversely or in a way which is legally at fault. It seems to us that the conclusion which it reached as to remedy was one which was properly open to it in the circumstances. It had not closed its mind to any consideration which it ought properly to have taken into account, and in that situation we do not have the power to interfere. It follows that this appeal must in its entirety be dismissed.