United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR KEVIN FLETCHER (Solicitor) Messrs Jackson (Solicitors) 1-15 Queens Square Middlesbrough Teeside TS2 1AL
For the Respondent	MRS PATRICIA HAITINK (of Counsel) Messrs Church Bruce Hawkes Brasington & Phillips (Solicitors) 51-54 Windmill Street Gravesend Kent DA12 1BD


 


JUDGE J HULL QC: This is an appeal to us by employers, British Bakeries Ltd of Erith in Kent against a decision of the Industrial Tribunal sitting under the chairmanship of Mr de Saxe with two Industrial Members at Ashford in Kent on 5 August 1996.

Mr Bruce Adam Denny, the Respondent to the appeal here, was the complainant to the Industrial Tribunal. He complained to the Tribunal on 29 February 1996 that he had been unfairly dismissed, asking for a remedy which I think he later abandoned for practical reasons. He asked for reinstatement but it became a claim for compensation.

The Respondents, as they were before the Industrial Tribunal, the employers, put in their answer saying that he had been dismissed for gross misconduct; the nature of the case being that he had been dishonest.

The facts, shortly, are these. Mr Denny was employed latterly as a despatch section leader at the employer's premises in Erith; it is a very large concern, something like 600 or more people there and he had a responsible position. He was first employed on 2 July 1984 and, therefore, he had been employed for more than 11 years when the events which we are concerned with arose.

In the week ending 28 October 1995 he had been absent unwell between Wednesday and Friday and then he had been absent - we gather he frequently worked overtime - on the Sunday also.

Under the scheme which was operated by the employers, an employee was not entitled to sick pay for the first three days absence during the week, although in the circumstances that we have mentioned, for Saturdays and Sundays, the statutory sick pay scheme operated. So all that Mr Denny would have been entitled to rightly was his pay for the Sunday, which indeed he received; but through a mistake by an inexperienced clerk, a Miss Lisa Shorter, who was number 3 in the Wages Department, he was in fact paid - ostensibly under the employer's scheme - for the three days of his absence and there is no doubt that that was a mistake. What happened is described by the Industrial Tribunal. He went up to discuss his wages in the Wages Department, as he often did, and pointed out (or, at any rate, it was discovered as a result of this discussion) that he had been overpaid. What followed thereafter was of considerable importance. The senior lady there, the Wages Supervisor, was a Mrs Denny who was, in fact, Mr Denny's wife. She had an assistant, a Miss Valerie Driver. Apparently the two ladies did not get on terribly well, that was part of the story. Then there was the Miss Lisa Shorter, who is a junior assistant and, apparently, not only junior but did not come in full time to that Department.

It is probably convenient for me to refer for the rest of the facts to what was said by the Industrial Tribunal in their decision. After setting out the matters to which I have referred they said that Mr Denny, in reporting the matter, was guilty of an irregularity. He should have reported the matter to his supervisor, who was a gentleman in his Department, but they accepted that he very frequently did go to the Wages Office. The Tribunal found that on this occasion, when Mr Denny went to the office and it emerged that he had been overpaid, he said:

"That's lovely: I'll have that."

The Tribunal go on to say that:

"We find that Mr Denny made that remark in jest."

and they record that Mrs Denny, the Wages Supervisor, completed an input sheet for the correction of the mistake. They say:

"On the evidence before us, it is not clear what happened to that sheet. The correction instruction was not carried out by the computer staff.

(12) The overpayment was not recovered from Mr Denny in the period up to 9 December 1995.

(13) Mrs Driver realised that the deduction had not been made.

(14) She was afraid to take the matter up with Mrs Denny, because she feared that Mrs Denny's reaction would be 'a load of abuse'.

(15) Mr Denny told us, and we accept:

(i) that he does not read his payslips with any attention, but simply looks at the final 'net pay' figure.

(ii) he did not know what figure was going to be deducted from his pay;

(iii) since there were marginal variations in his pay from week to week, he did not know whether or not the figure had been deducted;

(iv) having reported the matter, he assumed that it would be dealt with; and

(v) he forgot all about it."

All that the Tribunal accepted from Mr Denny.

They go on to deal with the history as it developed:

"In the fifth week after the overpayment, Mrs Driver, who had not reported the matter either to |Mr McClure, the Financial Accountant, or to Mr Day, the Financial Controller, eventually reported the matter to Ms Eccles, the Training and Development Manager.

(17) Eventually, the matter was reported to Mr Crookes, who held investigative meetings with Mr Denny on 19 December and with Mrs Driver ... At this point, Mr Denny had been suspended from work on full pay."

They report on Mr Crookes' further enquiries and a disciplinary hearing which he held on 28 December. They were satisfied with the way that that was held and:

"(20) Mr Crookes concluded that, although Mr Denny had acted honestly in reporting the over-payment, he had subsequently dishonestly decided to keep the amount overpaid when the company took no action to recover it.

(21) Mr Crookes imposed the sanction of summary dismissal.

(22) The basis of Mr Crookes' decision was (as he set out in his admirable letter of dismissal to Mr Denny) that he preferred Mrs Driver's evidence to that of Mr Denny.

(23) Mr Denny appealed, as he was entitled to do. His appeal was heard by Mr D T Lovell, Sales and Distribution Controller. "

They refer to the notes. The appeal was unsuccessful.

They refer to the submissions which were made to them, the Tribunal:

"9. Mr Denny made a very brief submission. As he saw it, he had made two mistakes. The first was for reporting the over-payment, and the second for relying on his wife, as wages supervisor, to deal with the over-payment.

10. Mr Fletcher, for the Respondents, submitted that it was clear that both Mr Crookes and Mr Lovell had an honest belief that Mr Denny had committed gross misconduct. There had been a thorough investigation. Mr Fletcher then addressed the question of whether there was evidence to support Mr Crookes's (and Mr Lovell's) belief. He submitted that the evidence of Mrs Driver was damning if Mr Crookes chose to believe it. The error, which Mr Denny had reported, had gone uncorrected, and, what was very suspicious, the input sheet which Mrs Denny had corrected had gone missing. Mrs Driver had told Mr Lovell that she thought that Mr Denny had meant seriously his remark 'I'll have that' when she had told him that there was an over-payment. There was evidence from Mrs Denny (which she had given in the investigation of her own disciplinary proceedings) that Mr Denny knew of the amount of the over-payment. Putting it at its lowest, Mr Denny knew that he had been overpaid, and that he was retaining money to which he was not entitled. Mr Crookes and Mr Lovell had been entitled to draw the inference that Mr and Mrs Denny had dishonestly decided to retain this money. It was inconceivable that they should not have discussed the situation. Mr Fletcher submitted that there was clear evidence, after careful investigation, that Mr and Mrs Denny had together taken the decision to take advantage of the over-payment which had been made. In the circumstances, dismissal was necessarily within the reasonable range of responses."

Pausing there, it was in fact the case, although little is said about it in this decision, that the employers had also, perhaps not surprisingly, investigated the position of Mrs Denny. They had heard a disciplinary case against her. They had decided that she was dishonest. They had summarily dismissed her. She had applied to this same Tribunal, constituted with the same Members. That Tribunal had heard her claim and evidently dismissed it. Clearly, that is a very important matter. The employers were perfectly entitled, if they were acting fairly about it and going properly about it, to take into consideration all the material which they had in their possession, including what they had discovered by investigating the suggestions which were made against Mrs Denny. Of course, Mr Denny would be perfectly entitled and would, indeed, be bound to deal with those matters and they should be put to him, but those were among the matters which were considered by the employers. Clearly, they must have had them in their minds at the appropriate times after seeing Mrs Denny and so that was material which, although it might not have been put before the Tribunal on this occasion, would be quite properly in the minds of the employers and they would be entitled to act on it if they acted fairly and properly and justly.

The Tribunal, going on with their decision, at paragraph 11 direct themselves quite correctly about the statutory test which they had to apply to see whether Mr Denny was unfairly dismissed and they go on to say this; and this is the most important part of their decision:

"We accept Mr Fletcher's submission that Mr Crookes and Mr Lovell both held a genuine belief that Mr Denny had committed misconduct. We accept his submission that the quality of the investigation cannot be challenged. Those two matters mean that the employers have complied with two out of the three guidelines set out in British Homes Stores v Burchell [1980] ICR 303 N and approved by the Court of Appeal in W Weddel & Co Ltd v Tepper [1980] ICR 286. But it seems to us, with all possible respect to Mr Fletcher's submission, that the Respondents, whose procedure cannot be criticised, proceeded on the basis of evidence which was quite insufficient to support a finding of dishonesty. In saying that, we are conscious of the need to avoid substituting our judgment for that of the Respondents. But it seems to us that there must be some concrete evidence of dishonesty before the Respondents can make that serious finding against a long-serving and previously well regarded employee. In this case, the only substantive evidence is that Mr Denny reported an over-payment, and assumed that, having reported it, it would be dealt with. The Respondents failed to deal with it. That does not strike us as being evidence from which any reasonable employer, even given the situation that Mr Denny had been overpaid, and his wife was the wages supervisor, can safely draw a conclusion of dishonesty. It seems to us that the foundation for such a conclusion simply is not there."

There the Tribunal were asking themselves, of course, the correct question. It is not for them to say whether the employer should have dismissed, whether the employer was right to reach a conclusion that the employee was dishonest. They are entitled to ask and must ask, whether the employer acted reasonably and had a reasonable basis for his decision, that is to say, not one on which the Tribunal necessarily, or another employer necessarily, would have formed the same conclusion but one from which a just and reasonable and sensible employer could form such a conclusion; so that the Tribunal is fully entitled to look at the material which the employer had before him. They have said that the only substantive evidence is that Mr Denny reported an over-payment and assumed that having reported it, it would be dealt with. Is that a correct statement? It seems to us, with all respect to the Tribunal, that it is about as wrong as anything could be. We do not know, of course, entirely what was before the employer. We have not been shown all the matters which relate to Mrs Denny's disciplinary proceedings which, of course, the employers were entitled to have regard to if they acted fairly but some material which was before the employer we do know about. I will refer shortly to some matters which were most certainly in front of the employers. When we look at the letter of dismissal the writer of that letter, Mr Crookes, the Distribution Controller, writes at the bottom of the first page that:

"You said you did not know how much the overpayment was, although Mrs Denny has indicated that you did. I believe there would have been some mention of the subject if only to clarify how much you had been overpaid. This would have reminded you to raise the matter again."

If an employer decides, when he asks an employee for an explanation, that the employee has not told him the truth and, moreover, sets out the ground on which he does not believe that the employee has told him the truth, and he is enquiring into a matter of dishonesty, that is a matter of the first importance. So there is a matter which the Tribunal has entirely overlooked. Over the page the employer gives further reasons for not accepting Mr Denny's account of the matter. He says that variations in his wages were not enough to, in effect, conceal £92. He did not accept that Mr Denny would not have noticed the £92 deducted. Also:

"Additionally, you have stated that it was not until you attended our meeting on 19 December that you became aware of the reason for your suspension from work. I find it hard to believe that this was the case as despite the fact that you said you do not retain your wage slips you went on to produce 4 or 5 and among them was the slip for the week in question."

Another important matter, a contradictory statement made by the employee. The letter continues:

"Finally, there are several discrepancies between the statements made by you, Mrs Denny and Mrs Driver. I have given the matter careful consideration and I prefer to accept Mrs Driver's version of events as opposed to yours.

I have ... concluded that ... you made a conscious decision not to raise the matter [of this over-payment] again."

That was what Mr Crookes wrote after conducting his enquiries. Those were matters before the employer. How can the Industrial Tribunal say that there was nothing else, apart from the matter which they have mentioned, in front of the employer?

I go on to other points. At page 23 there is a most important matter which was before the employer and before the Tribunal. This is the statement of Mrs Driver. She gave her account of what happened when Mr Denny reported this matter of his pay and it was decided that he had been overpaid because of the mistake which I have mentioned. "Bruce", that is Mr Denny, was told. Mrs Driver said:

"'Oh dear, that's sick pay you're not entitled to.' Bruce's reaction was something like, 'That's alright, I'll have that.' He then left the office.

Julie [Mrs Denny] came off the phone and I told her about the mistake. She had a look at the payroll to check where it was wrong and said, 'Oh yeah. We'll forget it shall we.' I said 'No, you can't. You can't overlook it. It will be picked up in the costings then you'll be in trouble.' So, Julie completed an input sheet."

And, again, according to material which was in front of the employer and in front of the Industrial Tribunal, it was then Mrs Denny's job to make sure that that over-payment was put right. Did she deal with it correctly? It should have been put in a file, which was set aside for such matters. According to Mrs Driver two lines down:

"Normally, she would put it in an input folder on the shelf but this time I am 99-100% sure she put it in her desk. I think she held onto it, just in case someone did pick it up."

That is what Mrs Driver said. Then she said lower down, bottom of the page:

"...(the money) hadn't come back. And then the following week, it still hadn't. I knew it wasn't going to. I think that I knew the minute the comments were made in the office that it wasn't coming back. I thought and worried about it all the time."

That was evidence which emerged at the employer's enquiry which was before both the employer and the Industrial Tribunal.

There was an interview held on 20 December. Mr Day was there, Mr Crookes and Mrs Driver was there. They asked Valerie Driver about this. They wanted to go into it. She repeated her evidence that:

"VD Bruce said that's fine - I'll have that. Then he walked out of the office."

CTD In what way did Bruce say this?

VD Oh, he did laugh.

CTD Was he joking?

VD No, I don't think he was."

Then she went into why she had not mentioned this again to Julie. She thought Julie would give her a load of abuse. Julie was the supervisor. At page 27 - and this is very important - Mr Ferguson, the Personnel manager, said:

"Whose responsibility is it to check the amendments are done?

VD The person who does the input sheet."

And that, of course, was Mrs Denny.

How, in those circumstances, could this Industrial Tribunal say that the only substantive evidence was what they mentioned? Before they could say what was and was not in front of the employer, they would of course have to look into that matter. They would have to look at the matters I have mentioned, which were before them. They would have to ask the employer what else was in front of them. They had enquired into a disciplinary case against Mrs Denny. What information did they gather there? Did they make use of that information? Did they put it fairly to Mr Denny so that he could deal with it and say whether his wife was wrong or not? They did not do that.

It is necessary to go back and see how they came to make this remark. We look back at paragraph 8. Mr Fletcher, who appears today as he did below, has referred us to various findings which they made. We do not need to go right through it. At page 8 at the top, after recording Mr Denny's trip to the Wages office to report that he had been overpaid or, at any rate, where it was discovered that he had been overpaid, they record Mr Denny's remark:

"That's lovely: I'll have that."

The Tribunal say

"We find that Mr Denny made that remark in jest."

They say that they accepted his evidence, that he was, they thought, honest. What business had they to make that finding? Of course, they were entitled to form a view of Mr Denny and say so but the essential finding was not whether they thought that remark was made in jest but whether the employers thought that it was made in jest. The only evidence before the employers, so far as the other witnesses were concerned, was that it was not made in jest. If it was not, that is a most important matter. How could the Tribunal say that the employers were not entitled to have regard to that matter? They say in subparagraph (11):

"On the evidence before us, it is not clear what happened to that [input] sheet."

that Mrs Denny had made. The employer had been told by evidence which, so far as we know, was not contradicted, by Mrs Driver, that Mrs Denny had put that into her desk instead of putting it in the proper place. How can the Tribunal say that it is not clear what happened to that sheet? The answer must be, it seems to us, most probably that the Tribunal were putting themselves in the position of the employer and retrying this case, so far as the employer was concerned. They say that:

"The correction instruction was not carried out by the computer staff."

That is correct. The computer staff, so far as the evidence went before the employer, were not given this input sheet because it was simply not put in the right place. Then they go on to say in paragraph 15, which I have already read:

"Mr Denny told us, and we accept"

various matters, contrary to the findings of the employers. In particular, he did not know what figure had been deducted, he assumed it would be dealt with and he forgot all about it and that, coupled with their finding that they found Mr Denny a perfectly honest witness, meant that they were accepting his case, that it was his case before the employer that counted. But it was for the employers to say, not on the evidence which was before the Industrial Tribunal but on the evidence which was before them, whether they found that Mr Denny was dishonest and, unhappily, they did. It was for the Tribunal to say whether the employers were entitled to reach their conclusion on the basis of the evidence before the employers.

It seems to us, first of all in paragraph 8 the Industrial Tribunal were arrogating to themselves the duty of the employer to decide on these matters and, in effect, substituting their view for that of the employers. They are reminding themselves in paragraphs 10 and 12 that they ought not to do that but, having done that, they make a complete misstatement concerning the matters which were in front of the employers. It does appear to us that the Tribunal had not been sufficiently into that to make any statement about "all that was before the employers" for they had not been, on this occasion, into the question of what the employers had gained from their other enquiries. But, even from what was laid before the employers and before the Industrial Tribunal, in other words, these statements of Mrs Driver and the other enquiries of the employer, it is manifest that when the Tribunal say that the only substantive evidence was that Mr Denny reported an over-payment and assumed that having reported it, it would be dealt with, they were completely wrong.

It is suggested that the employer was wrong to believe that there had been a conversation between husband and wife about this. We reject that submission. It is not a breach of the Sex Discrimination Act to make that most obvious inference. Mrs Denny was the senior wages clerk. It was found by the employers, unhappily, that she was dishonest and the Industrial Tribunal had found (evidently) that the employers were entitled to reach that conclusion regarding her.

Mr Denny had made a remark which was very damaging for him, if the employers had taken it seriously, as they did. He was saying, "I'll have that" and there was plenty of evidence that Mrs Denny had not proceeded with the matter regularly. If she was dishonest, would she not have mentioned it to Mr Denny? Otherwise, she would be running the most extraordinary risk, because Mr Denny would have gone round, perhaps, and blurted it out again. The most obvious inference, one would have thought is that they had chatted about it. The employers were entitled to make that inference. It was not for the Industrial Tribunal to say whether they, the Tribunal, would have reached that inference but the question for them was whether the employers were entitled to.

We reject as entirely spurious the suggestion that such an inference was contrary to the provisions for gender equality in the Sex Discrimination Act and Equal Pay Act. We think that that is a misconceived submission. We find that this Tribunal appears to have lost sight of the true basis on which they should have proceeded.

We are not going to say anything about the burden of proof. We think that that is a far less important point and, if it had stood alone, it might very well be that we should have not felt entitled to interfere. In our view, the directions which this Tribunal gave to themselves show that they were mistaken in law about their correct approach to the question whether the employers were entitled to act as they did.

We of course know no more than the Industrial Tribunal, indeed, probably a very great deal less about what exactly was before the employers and how the employers acted on those various pieces of information. We think that the only proper course for us, since we detect an error of law in the Industrial Tribunal's decision, is to say that this case must be remitted to an Industrial Tribunal differently constituted, so that they can rehear the matter and we hope will direct themselves in accordance with law and decide in accordance with law the matters which they have to decide on the Applicant's complaint.

Those are the reasons of us all.