United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR N GRUNDY (of Counsel) Instructed by: Mr T Knowles Messrs Croftons Solicitors Television House Mount Street Manchester M2 5FA
For the Respondent	MR S J MAJUMDOR (of Counsel) Instructed by: Mr D W Parry Messrs Mallam Lewis Solicitors 21 Beaumont Street Oxford OX1 2NH


 


JUDGE PUGSLEY: In this case the appellants, the employer, appeal from a decision made by the Reading Industrial Tribunal on 20th March 1996 in which they held that the applicant, Mr Berezny was unfairly dismissed.

We pay tribute to the comprehensive and clear way in which the background is set out; we note that this whole case was concluded in one day and that the Chairman managed to promulgate a decision within a fortnight of that hearing.

The facts are that the applicant had been employed by his employers from 30th April 1990 to 30th October 1995, and in his final stage he held the post of the Assistant Service Manager at their garage in Abingdon Road, Oxford. In early August of 1995 the applicant was called to a meeting with the general manager, Mr Edwards, and a discussion took place concerning the applicant's management of his staff at Abingdon Road. The upshot of that meeting was that the applicant received a letter dated 10th August containing very clear instructions for the future. In mid August another manager audited the books. As a result of that the applicant was accused of offering too many discounts on hire vehicles, he was suspended from work in order to attend a disciplinary hearing on the following day the 16th August. As a result of that meeting he was given a formal verbal warning which is recorded in the documentation. Two days later on 18th August, the receptionist/administrator at the garage, a Miss Amanda Dolton, complained that the applicant had made an inappropriate remark to her of a sexual nature. This was not the first time that such complaints had been made, but on previous occasions the matter had been dealt with informally by a member of the staff, a Mrs Wiseman.

On receipt of that complaint the applicant was interviewed twice by Mrs Wiseman. He did not dispute the remark but claimed that it related to the fact that the employee concerned, Miss Dolton, had been inappropriately dressed. Mrs Wiseman concluded that there was a case to answer with regard to the applicant's management of staff in general, and his treatment of Miss Dolton in particular. She therefore suspended the applicant and he was required to attend a disciplinary hearing on 26th September.

Prior to that meeting, the applicant had an informal meeting with Mrs Wiseman, and during the course of that he adverted to a matter that was ultimately to lead to his dismissal. He claimed that two tyres belonging to the employer had been fitted some months previously to a car owned by Miss Dolton.

The disciplinary hearing took place on 26th September. That ranged over many aspects of the applicant's management practice style including the complaint made by Miss Dolton. The applicant raised a number of grievances. At the conclusion of the hearing the applicant was told by Mr Edwards that his actions had seriously undermined the trust and confidence that management had in him, and he said that it was the intention that he should be dismissed. As an alternative to dismissal the applicant was offered a different job amounting to a demotion as a senior receptionist at Kidlington. Initially the applicant agreed to take this course. Thereafter he changed his mind about accepting the demotion and instead decided to appeal the decision to dismiss him.

The appeal was heard on 13th October. A range of matters were raised by the applicant as set out in the Industrial Tribunal decision. Near the end of the meeting the applicant raised again the matter that two of the company's tyres had been fitted to Miss Dolton's car. The appeal hearing was adjourned shortly afterwards and was reconvened on 23rd October when there was a further discussion. When the meeting was reconvened the issue of the two tyres was not mentioned. The applicant was told that his appeal failed. He had the alternative of accepting dismissal or being demoted.

Following the conclusion of the reconvened appeal hearing, the applicant was informed that he was to be suspended from further work pending a further disciplinary hearing which arose out of his allegation that Miss Dolton had had two tyres fitted on to car which were company property.

The employer had been investigating the matter between the disciplinary hearing on 13th October and its reconvening on 23rd. The upshot was that Miss Dolton and a fellow employee, a Mr White the sales supervisor, had been interviewed, and they had been summarily dismissed on 18th October after separate disciplinary hearings.

On 20th October, Mr Brown who was carrying out the investigation, took a statement from a Mr Darren Pannell who was a mechanic. It would have been obvious to Mr Pannell by that stage that both Miss Dolton and Mr White had been dismissed. In the course of Mr Pannell's statement he made an allegation that the applicant in the case had been involved in the theft, his statement contained the following:

"During the evening of the same day Paul came to me before work ended and asked me to change two wheels from a Peugeot in stock and put them on Amanda's car. This was to be done after hours. I did the change of wheels as instructed and Amanda went home with the vehicle."

On 30th October a disciplinary hearing took place at which the applicant had to answer the allegations of theft. The applicant tape-recorded the hearing and there was full transcript before the tribunal. The hearing was conducted by a Mr Dyson. He had seen the statements of Amanda Dolton and Michael White and also their disciplinary hearing notes, and also had seen the statement from Darren Pannell. In the course of the hearing Mr Dyson read out the statement written by Pannell but the applicant was not told of the content, or of the existence, of the statements made by Amanda Dolton and Michael White, and in the tribunal's view neither of those two statements incriminated in any great extent the applicant in the matter. At the conclusion of his hearing Mr Dyson summarily dismissed the applicant for theft.

In paragraph 7 and 8 of the tribunal's decision they set out their directions as to law. In paragraph 7 it is pointed out that it is for the employer to show what the reason for the dismissal was, and that it was a potentially fair reason. The tribunal was satisfied that Mr Dyson genuinely believed that the applicant was guilty of theft and dismissed him for that reason, and so the employer satisfied the burden imposed by section 57(1) of the act.

In paragraph 8 the tribunal then go on to consider the provisions of section 57(3) of the Act and they correctly state the statutory test directing themselves from the pure words of the section. However, they then go on to quote the seminal judgment of Arnold J in British Homes Stores Limited v Burchell [1978] IRLR 379, and in particular, they go on at the conclusion of that quotation to use the words "It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further."

As has been recently reasserted in the case of Boys and Girls Welfare Society v McDonald [1996] IRLR 129, the dictum of Arnold J has a seductive attractiveness which can mislead the unwary. That decision was decided before the statutory changes introduced in the Employment Act 1980 which removed the section 57(3) burden from the employer and imposed the somewhat strange statutory creation of a neutral burden of proof.

Mr Grundy, who appears for the appellant employer, has argued that the Industrial Tribunal has misdirected itself as to the burden of proof by its citation of Arnold J's dictum in Burchell as set out in paragraph 8. He goes on to submit that the tribunal has at paragraph 10 substituted its own view of the matter. He further goes on to say that in paragraph 11 and 13 of the tribunal's decision, the tribunal is guilty of not directing itself to the question of whether it was open to a reasonable employer to have formed the view that the applicant had been guilty of misconduct, but had strayed into evaluating whether they believed the applicant was guilty of misconduct.

The submission as to a tribunal substituting its own view is one that is frequently heard at the Employment Appeal Tribunal. Any tribunal required to consider the question of reasonableness having regard to the statutory test which includes the equity and substantial merits of the case, is bound in the final analysis to make certain value judgments about the witnesses called before it.

Nevertheless, as the case of Morgan v Electrolux Ltd [1991] IRLR 89 makes clear, it is not for an Industrial Tribunal to substitute its own evaluation of a witness for that of an employer. The Court of Appeal approved the proposition of law stated in the case of Linfood Cash & Carry Ltd v Thomson [1989] IRLR 235. In that case at paragraphs 22 and 23 the then President of the Employment Appeal Tribunal Wood J, pointed out that:

"If a Tribunal is to say that this employer could not reasonably have accepted a witness as truthful, it seems to us that the decision must be based upon logical and substantial grounds - good reasons. Instances might be - that the witness was a bare-faced liar, who must have given that impression to the employer at the relevant time; that the witness was clearly biased - provided that such a bias should have been clear at the relevant time, that documents available at the relevant time clearly showed the witness to be inaccurate and that such documentary evidence was ignored by the employer.

However, there could be other less obvious situations where mere vagueness and uncertainty would not be sufficient, and it should never be forgotten that cross-examination by experienced advocates may produce a picture not made evident during the disciplinary procedure. For the Tribunal merely to prefer one witness to another might well not be sufficient as this could be to substitute their own view. The employers have the peculiar advantage over the Tribunal of having an intimate knowledge of the geography, the nature and workings of the business, and the various members of the staff."

Counsel for the respondent has very forcibly submitted to us that the decisions the tribunal made were ones were properly within the range of options open to a tribunal. He has reminded us of the well-known decisions of Hereford & Worcester County Council v Neale [1986] IRLR 168 at 174, and Piggott Bros & Co Ltd v Jackson [1991] IRLR 309 at 312. In an able résumé of these principles, it is submitted that if one looks with broad brush at the whole decision, then the position is that the tribunal have set out clearly the statutory test, and the fact that they have included a part of a judgment which though correct at the time has subsequently become inaccurate by virtue in the change of the law, should not be taken as any indication that the tribunal did not have that matter in its view.

Counsel for the respondents has submitted that it was open to the tribunal to consider the material before Mr Dyson and that it could not properly consider the question of reasonableness without make such a judgment. In particular it is contended that the tribunal's finding in paragraph 14 that:

"that material was woefully inadequate to justify the formation of a belief in the Applicant's guilt of theft without further enquiries being conducted."

was a proper and permissible conclusion to which the tribunal could come.

This is not a case in which there is a crude misdirection in law in that the tribunal unequivocally misdirects as to the burden of proof or in terms substitutes its own judgment for that of the employer. It is quite wrong to subject a tribunal decision to detailed textual analysis to find some minor blemish when it is quite clear from the decision as a whole that the tribunal is applying the correct tests. Yet in quoting the extended direction from Arnold J in Burchell as providing guidance to the interpretation of section 57(3) we are concerned that the tribunal may have fallen into error as to the burden of proof as to the reasonableness of the decision to dismiss. It is essential that it is apparent from the decision that the correct test has been identified and applied.

Similar considerations apply to the contention that the tribunal substituted its own evaluation of the witness for that of the employer. Subject to the qualifications laid down by Wood J in the Linfood case it is open to the tribunal, as that judgment recognises, for a tribunal to say that the quality of evidence was such that there were not reasonable grounds for the employer's belief in the employee's misconduct. There is a conceptual difference between a tribunal concluding that no reasonable employer could have formed the belief as to the employee's misconduct on the evidence before the employer and a tribunal concluding that they would not have dismissed the applicant in the light of their assessment of the evidence before them.

Our concerns are heightened that the tribunal may not have identified and applied the correct test by the tribunal's failure to distinguish the two claims which were before them. The tribunal announced that there were two complaints upon which they had to adjudicate namely whether the dismissal was unfair and/or wrongful. The extended reasons deal solely with the claim for unfair dismissal. The two claims cannot be equated; they raise different issues and the role of the tribunal is not the same in the two actions. In an action for unfair dismissal a tribunal is primarily concerned with the employer's perception of the employee's conduct and, as the House of Lords held in Devis (W.J.) Sons Ltd v Atkins [1977] AC 931 misconduct discovered after the dismissal is irrelevant to the issue of whether the dismissal was unfair although it may be relevant to the issue of compensation. In an action for wrongful dismissal the tribunal is required to decide whether there has been a breach of contract and it is well established by such cases a Boston Deep Sea Fishing Co v Ansell [1988] 39 Ch.D 339 that it is sufficient if there was a fundamental breach of contract justifying a dismissal whether or not the employer knew of it at the time of dismissal.

In the context of this case in adjudicating on the wrongful dismissal claim the tribunal was required to decide whether the applicant had been in breach of his contract by acting dishonestly in relation to the tyres and in discharging that task the tribunal's view of the credibility of the witness as to that allegation was central to the determination of the issue.

Where there are two such claims it is vital that a tribunal clearly identifies the tests it is applying to each of the claims. Whilst there may be cases in which an application will succeed or fail on both cases it is equally obvious that an applicant could fail on one claim and succeed on the other. For example, if an employee is dismissed without being given any opportunity to put his case it is likely that his claim for unfair dismissal would succeed. In such a case the fact that when he was being escorted back to his locker after he had been dismissed it was discovered that he had been stealing the company's property might affect the compensation he would receive but it would not be relevant to the fairness of the decision. Such a fundamental breach of contract would be fatal to the applicant's wrongful dismissal claim albeit that the reason for his dismissal had nothing to do with this dishonesty. Conversely there may well be cases in which the tribunal decides that it was open for an employer to conclude that the employee had been guilty of misconduct with the result that the unfair dismissal case fails but for the tribunal to decide that the applicant succeeds on wrongful dismissal because in the tribunal's view of the evidence there was no fundamental breach which justified summary dismissal.

Sadly we have come to the view that this decision is fundamentally flawed. We cannot be sure that the tribunal applied the correct test as to the burden of proof as to the reasonableness of the decision to dismiss. Further we are concerned as to whether the tribunal correctly identified its proper function in an unfair dismissal action. In any event the tribunal appear to have made no finding at all as to the wrongful dismissal case. We therefore direct that the case is remitted to be reheard by a differently constituted tribunal.