United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR G PRICHARD (of Counsel) Instructed by: Mr I BeKen Legal Department Retail Motor Industry Federation 201 Great Portland Street London W1N 6AB
For the Respondent	MR G FOXWELL (of Counsel) Messrs Austin & Carnley Solicitors 36-40 Liverpool Road Luton Bedfordshire LU1 1RS


 


MR JUSTICE KIRKWOOD: This is an appeal by an employer from a majority decision of an Industrial Tribunal sitting at Bedford on 19th January 1996, that the applicant employee was unfairly dismissed. Also before us on the papers is an appeal by the employer against refusal of the Chairman to review its decision. That appeal, as we understand it, is not proceeded with. Finally, there is an appeal against the remedy decision.

On 30th June 1995 the employer, Bizlink (Europe) Ltd, took over the franchise of Q8 Petrol Station at Luton Airport. In addition to the sale of petrol and other commodities, the business encompassed the sale of cigarettes and an automatic car wash. The latter was operated by a token purchased from the cashier, the cost of which depended on the quality of car wash that was being purchased. The car wash transactions were mechanically recorded, an audit being a simple matter of reconciling the recorded data with tokens used and takings. The appellant received 8% of the net turnover on the car wash.

On taking over the franchise the employer also took over the employment of the employee, Mr Mulji. He had worked there for about four years. He had previously had some managerial responsibility but with the appellant was a sales assistant, albeit at a higher hourly rate of pay than other staff.

On 10th July 1995, Mr Balfour, an area manager for Q8, did an unannounced audit. He found a discrepancy. Some 100 car washes at the top programme of £4.50 each had been recorded as cheaper car washes at £2.25, and the loss was put at £164.25.

The same day Mr Balfour together with Mr Garcha, the appellant's operations co-ordinator, saw Mr Mulji and asked him about the discrepancy. Mr Mulji offered no substantial explanation. Mr Garcha told the Industrial Tribunal that Mr Mulji shrugged his shoulders and went off colour. In evidence to the Industrial Tribunal, Mr Mulji said that he had explained that it could be due to a promotion in June, discounting the £4.50 car wash to £2.25, being carried on into July. At some other stage Mr Mulji offered another explanation that there could have been some trouble with the car wash. He had been called in on a Monday evening to assist a customer who was having difficulty with it, but the employer's enquiry showed that not to have happened.

The following day, 11th July, Mr Balfour apparently did another audit, again without a prior warning, and there were further discrepancies found. There was subsequently also found to be a shortage of cigarettes in the store room. Mr Mulji was asked about that. He denied any dishonesty. In the result, that matter was not pursued. However, 19th July 1995, Mr Mulji was suspended on full pay. The letter of suspension refers simply to "further investigations into irregularities at the site", and did not specifically specify what the reason for suspension was.

On 24th July 1995 a disciplinary hearing was held. Mr Mulji said to the Industrial Tribunal that he went to it thinking it was to be solely about the cigarettes. The respondents for their part were clear that it was primarily about the car wash discrepancies.

Mr Mulji attended with a witness, Miss Hughes. Before the hearing the employer had decided that in the absence of an explanation or an adequate explanation from Mr Mulji, he would be dismissed. In fact Mr Mulji said nothing in response to the allegation of dishonesty in relation to the car wash. The matter, it was said, was put to him plainly. He did not deny it. He said nothing about it at all, and his explanation to the tribunal was that he thought he was being set up for dismissal.

The Industrial Tribunal reminded itself of the criteria for investigating unfair dismissal propounded by Arnold J in the case of British Homes Stores v Burchell [1978] IRLR 379. It did not have the advantage of the decision of the Employment Appeal Tribunal in Boys & Girls Welfare Society v McDonald [1996] IRLR 129, for the very good reason that that case was reported in the March issue of that series of reports, two months after the case.

The latter decision explains the need for a modified application of the Burchell criteria, in the light of legislative change that removes from the employer the burden of proving reasonableness. Prior to 1980 and at the time that Burchell was decided, the employer had to satisfy the Industrial Tribunal that it had acted reasonably in treating the reason for dismissal as a proper ground for dismissal, but the law had changed.

The relevant legislative provision at the time of this case was in s.57 of the Employment Protection (Consolidation) Act 1978 which says:

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

(a) what was the reason (or, if there was more than one, the principal reason) for the dismissal, and

(b) that it was a reason falling within subsection (2) ...

(2) In subsection (1)(b) the reference to a reason falling within this subsection is a reference to a reason which -

...

(b) related to the conduct of the employee ...

(3) Where the employer has fulfilled the requirement of subsection (1), then, the determination of the question of whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether 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."

Accordingly, it is law that it is for the employer to establish the reason for dismissal and that it fell within subsection (2). On this aspect the Industrial Tribunal found that the employer had discharged that burden. It is then for the Industrial Tribunal to find whether the dismissal was fair or unfair in the light of the criteria of subsection (3). One of the ingredients in the question of fairness is whether the employer had reasonable grounds for his belief in the existence of the ground for dismissal. That in turn depends on whether he made such investigation in respect of it as was reasonable in the circumstances. If the tribunal finds that the employer did have such reasonable grounds, it will go on to consider whether in all the circumstances referred to in s.57(3) and having regard to equity and the substantial merits of the case, the employer acted reasonably in treating that ground as a ground for dismissal.

Having directed itself in accordance with the Burchell case, the decision of the majority begins with these words:

"15. ... the lay members of the Tribunal are of the view that the Respondents did not have reasonable grounds upon which to sustain their belief and that there was not a reasonable investigation for the following reasons: ..."

It then gives two reasons related to the loyal service of the employee for four years and the absence of previous disciplinary action, which do not in fact go to the question of investigation, but go to all the circumstances and the equity and substantial merits. The placement of those two considerations in that part of the decision, does hint, if not more, to some confusion of thinking as to the proper approach by the majority of the tribunal.

In subsequent subparagraphs of paragraph 15, the majority of the tribunal set out the various factual matters they have found and upon which they rely to justify their conclusion that the dismissal was not fair. Then paragraph 15 concludes with these important words:

"The majority members of the Tribunal conclude that the Respondents, in all the circumstances, failed to discharge the onus of demonstrating that they had acted fairly as set out in the British Home Stores Ltd v. Burchell test."

It is plain from that, that the majority approached the question of reasonableness on the basis that the burden of proving reasonableness lay on the employer. It is quite plain from s.57(3) that it was not; and the majority were wrong in that direction that they gave themselves.

Although it was the decision of the Employment Appeal Tribunal in Boys & Girls Welfare case that brought together the decided cases, and emphasised the absence of a burden of proof in s.57(3), that state of affairs had been made clear in earlier decisions. For example, in Post Office Counters Ltd v Heavey [1989] IRLR 513, Wood J, who was then President of the Employment of Appeal, said this a paragraph 9:

"It is then, thirdly, for the Tribunal to consider 'reasonableness', and to carry out the duty cast upon it by s.57(3). The history of this subsection shows that it had its origins in the Industrial Relations Act 1971 and was maintained in force by s.1 and Schedule 1 of the Trade Union and Labour Relations Act 1974. By para.6(8) of that Schedule the burden of proof was upon the employer; the relevant words were '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'.

The present wording was effected by the amendment made by s.6 of the Employment Act 1980. This fresh wording became effective in any case where the effective date of termination was after 1 October 1980. As a result there is no burden of proof. ...

[Paragraph 12:]

It will be seen from what we have said above that when considering those reported cases containing guidelines on the application of s.57(3), it is going to be important to bear in mind that the important date is 1 October 1980, and that where those cases deal with dismissal before that date, then it is the old law which is being examined and not the new 'neutral' s.57(3).

We would refer in particular to ... [then there is reference to British Homes Stores Ltd v Burchell].

As the Court of Appeal has indicated on many occasions, the correct direction for a Tribunal to give itself is to use the actual wording of the statute, and to remind itself 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."

It is necessary to make passing reference to the minority decision, that of the Chairman. He too appears to have thought that s.57(3) imposed a burden of proof on the employer, but that the employer had discharged it. His reasons are given at paragraph 16 of the extended reasons. I mention that only in passing, because it is the majority decision that is material and it is, the majority decision that is manifestly flawed by the misdirection as to the law upon which it was based.

There is another matter raised in this appeal which has caused us concern. It appears that Counsel for the employer read certain responses and interjections from the Chairman of the Tribunal as indicating that the Chairman was with the employer and against the employee. It appears from the tribunal's decision, that Counsel may have read the tentative thoughts of the Chairman correctly, although of course as the Chairman himself said, he kept an open mind until the case had been fully heard.

This always presents a difficulty for an advocate. To labour a point that the tribunal, whatever the tribunal or forum may be, has already taken, to knock at an open door, in other words, runs the risk of losing the ear of the tribunal. To pursue a cross-examination or submission in the face of an indication that it is of no assistance, runs the risk of overburdening or wearying the tribunal. On the other hand, can the advocate be fully confident that the tribunal has indeed taken the point that the advocate seeks to make, or that the tribunal is with him?

In this case a number of points are made on the appellant's behalf.

The first is that in his evidence Mr Mulji raised a number of points and, in particular, gave an explanation for a possible discrepancy that had not been raised before. Counsel apparently asked for, but was not permitted time to take instructions to cross-examine Mr Mulji on those aspects. The Chairman seems to agree with that. He did not consider that it was necessary. Secondly, the Chairman did not allow any detailed submissions on the evidence.

The appellant makes a number of other points on this aspect of the case.

Included amongst those are that the majority decided that the applicant had not contributed towards his own dismissal. That was notwithstanding that, as Counsel asserts and the Chairman does not contradict, the hearing did not address contributory fault and certainly no submissions were made about it. Indeed, Counsel's own recollection is that at the end the Chairman said that if the tribunal decision was in the employee's favour, the question of contribution would be dealt with at a subsequent remedy hearing.

It is clear, however, that at the end of the extended reasons the majority view and finding was set out that the employee did not in any way contribute to his own dismissal. That, I stress, is the view of the majority, that is to say of the lay members.

The problem that has arisen in this case, as it seems to us, is that in conducting the proceedings as he did, and in the light of his own appreciation of the key issues, the Chairman did not, as it turns out, have the mind of the lay members with him. So we understand and are concerned by Mr Prichard's submissions to the effect that he did not fully develop aspects of his case because it was his appreciation of the situation that the Chairman did not need to hear more from him, but that the indications from the Chairman were in fact, as it turns out, misleading as to the developing state of mind of the two lay members.

We heard argument upon the burden of proof and the procedural irregularity, if it is properly so described, and having done so we indicated to Counsel our decision, namely that the decision of the Industrial Tribunal could not stand, and further that we were minded to think that the case would have to be remitted to another tribunal for a fresh hearing.

Counsel for the appellant then sought to persuade us with further argument on a different aspect, that we should in fact substitute our own decision for that of the Industrial Tribunal.

The Employment Appeal Tribunal can and will take such a course when there has been a misdirection as to the law and when a proper direction as to the law applied to the facts as found by the tribunal inevitably leads to a conclusion other than that reached by the tribunal. Mr Prichard's argument here is directed to the reasons for the majority set out in paragraph 15 of the extended reasons. Having sought to attack those, Mr Prichard then takes comfort from the decision of the Chairman, the minority, which is set out in paragraph 16. But essentially Mr Prichard seeks to argue that the majority wrongly substituted its own view for that of the employer. That it departed from a range of reasonableness test; that the majority made unexplained and wrong selectivity of evidence; and that in one instance there was an insufficiency of reasons for a conclusion of fact.

The argument against Mr Prichard would no doubt start with the challenge that the reasons must be read as a whole and not be analysed piecemeal. We did not however reach that stage.

Whatever merit there may or may not be in the individual points made by Mr Prichard, it became clear to us that this is not a case of applying a proper direction of law to facts as found. Facts as found in this context of course encompassing facts from primary evidence; facts established by inference; and weight to be attached to the various aspects of such findings. This is not a case for substitution of our own decision. It is not necessary or desirable in the light of the course we propose to take, that we make any further determination on Mr Prichard's argument on this aspect than that. The case will be remitted for a full hearing, de novo, by a freshly constituted tribunal.

The case was originally heard in January 1996. It was first listed for hearing before The Employment Appeal Tribunal as an ex parte preliminary hearing on 19th June 1996. It had to be adjourned to a date to be fixed. Due to circumstances outside the control of the Employment Appeal Tribunal it has not come on for hearing until today, having in the meantime suffered, I think, two further adjournments in the last two or three months. However, that history does demonstrate that there has been, to put it mildly, a slippage in the determination of this case, which is regrettable and undesirable. Accordingly I am going to include in this judgment a fervent invitation to the Industrial Tribunal to do their best to ensure that the fresh hearing is listed as soon as that can be achieved. It is worth noting that the earlier hearing was concluded within the course of one day.

No order for costs.