United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MICHAEL FORD (of Counsel) Messrs J P Donegan & Co Solicitors 36a Duke Street Brighton BN1 1AG
For the Respondents	JOHN CAVANAGH (of Counsel) Messrs Eversheds Solicitors Fitzalan House Fitzalan Road Cardiff CF12 1XZ


 


JUDGE J HULL QC: This is an appeal to us by Mr Colin Michael McCullough, a gentleman of 30 years of age, who was employed by the Respondents, the well known firm of Stena Sealink Ltd, in what has been described as "Grade II General Utility". In fact, he acted as a steward on one of their ships. He was first employed on 10 August 1992 and, apart from one or two matters with which we are not concerned in any way, everything apparently went without any hitch until 12 June 1995 when it was alleged that he had committed an act of dishonesty.

What was alleged was this. An American passenger had bought a meal for two and paid the appropriate price for a meal for two. Mr McCullough (it was said it was he who had taken the money) had deleted one of the entries on the till by pressing a button provided for that purpose and, so far as accountancy was concerned, only one of the meals apparently would require to be accounted for. So, in other words, all the money was taken for two meals but only one would be accounted for. If that was done innocently, of course one would expect that at the end of the day or night, when the till came to be totalled up, there would be a surplus. In this case, I think it would have been $5 or $6 which would have shown up.

So far as the passenger was concerned, it was he who looked carefully at his receipt, saw that a line had been deleted, or was marked to be deleted, and reported the matter to the Respondents. The Respondents carried out an investigation and there followed a disciplinary hearing. The alleged act of dishonesty occurred on 12 June and when Mr McCullough returned to duty on 4 July, after some enquiries had been held there was a hearing by Captain Pitman, the Captain of the ship. He found that the charge of dishonesty was made out and he dismissed Mr McCullough from the ship and gave confirmation on 6 July.

What happened then was what ought to have happened and did happen, under the disciplinary rules, but it happened out of time. Within five days there should have been a hearing by a senior executive on shore to see whether dismissal should be confirmed. In fact, it was not until 14 July so there was a delay there, it was outside the five days allowed. This shore enquiry was held by Mr Norman, the Senior Hotel Manager and the appropriate person to hear it. He decided that the charge of dishonesty was made out and he confirmed the dismissal, which was finally put in writing on 18 July, and that was the effective date of termination.

Mr McCullough appealed, as he was entitled to do. The appeal should have been heard under the rules within 21 days. In fact, it was not heard for considerably longer than that, not until 4 September 1995 when Mr Hultberg, the National Operations Manager for Stena Sealink, heard the appeal and dismissed it.

Then on 22 September Mr McCullough launched his proceedings in the Industrial Tribunal. He complained of unfair dismissal and wrongful dismissal (wrongful dismissal, of course, was making a complaint of breach of contract against the employers) and he asked for reinstatement. On 3 November the Respondents put in their Notice of Appearance saying that the dismissal was by reason of his conduct.

The Industrial Tribunal sat to hear the complaint for two days, 20 February and 13 June 1996 at Brighton under the chairmanship of Mr Edwards, with two industrial members. They found that there had been unfairness, that there had been certain irregularities in the disciplinary proceedings which they thought unfair (I will go into this more fully in a few minutes). They thought that Mr McCullough should receive his basic award only, not in any way diminished or cut down, but that it was unjust that he should receive any compensatory award, which in the circumstances would probably have been a larger sum. They gave their extended reasons in July and this appeal was launched on 4 September. It came before our Tribunal under our Practice Direction and leave was given for the appeal to proceed, on the basis of an amendment to the Notice of Appeal, which we allowed and it therefore now proceeds on the amended Notice of Appeal only, which deleted certain of the earlier grounds of appeal and concentrated simply on the matter which I shall refer to in a moment.

There is a cross-appeal by the Respondents which I shall also deal with. They seek to uphold the finding of the Industrial Tribunal, both on the grounds stated by the Tribunal and on further grounds too.

It is common ground between Counsel who appear before us today, to both of whom we are greatly indebted for the clarity and shortness of their arguments, that this is a decision by the Industrial Tribunal which, so far as reasons go, can be criticised. It is not perfect, but the criticisms of course are not the same.

So far as the amended Notice of Appeal is concerned, what is said by Mr McCullough is this, in paragraph 7:

"(a) The Tribunal reduced the compensatory award of the Appellant under s.123(6) of the Employment Rights Act (the 'Act') 1996 on the basis that the Respondents had a reasonable belief that the Appellant was guilty of misconduct.

(b) As a matter of construction, s.124(6) [should be s.123(6)] of the Act requires that the Tribunal decides that an employee did, on the balance of possibilities, [probabilities I think that should be] engage in the action which caused or contributed to his or her dismissal. It is not sufficient that an employer had a reasonable belief in the fact that the relevant conduct had occurred."

Before I read the decision of the Industrial Tribunal, I think it would be better for me to refer to these statutory provisions, so that it can be understood what we are talking about. Under Section 123 of the Employment Rights Act 1996, which repeats earlier legislation, there are two provisions with which we are concerned under which the compensatory award can be reduced. Under subsection (1) there is the following:

"Subject to [various matters] ... the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

That is a somewhat complex provision. There are all sorts of circumstances which have been held to fall under it. For example, if an employee has, in fact, been guilty of the behaviour for which he is being dismissed, but the dismissal did not follow the rules properly and is indeed unfair, it may be that an Industrial Tribunal will say, "It is not just and equitable to give this Applicant anything. He has been guilty of whatever it is the employers suspected him of (for example, theft or some other serious matter) which would certainly justify dismissal. The procedure may have been unfair, but it is not just and equitable that he should receive any award".

The Tribunal might reach such a conclusion, even if other matters were proved against the Applicant, which were not the subject matter of their enquiry immediately. Again, it has been held that it is quite proper for the Tribunal to consider that, for example, the job would in any event have ceased to exist very shortly. All sorts of matters may be considered under this general provision that the amount of the compensatory award shall be such as the Tribunal considers just and equitable in all the circumstances. But there is another provision under Section 123 and that is subsection (6):

"(6) Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding."

That is not the same provision, although there clearly may be an overlap. If the Tribunal is going to invoke that provision, it must clearly find what is the action of the complainant on which they are to found their decision. Has he done something wrong? Has he omitted to do something right? Having decided what the action of the complainant is, then it must look to see whether the dismissal was to any extent caused or contributed to by that.

Clearly, as I say, there is an overlap. A Tribunal might find that, for example, an employee failed to turn up at a disciplinary hearing, or made the disciplinary hearing impossible, failed to produce documents which he later produced - all sorts of matters of that sort - and that that conduct of his contributed to his dismissal and so it might be right to reduce compensation on that ground. Where they overlap, where the Tribunal makes findings under both headings then, of course, the Tribunal have to decide what is just and equitable under each head and the Court of Appeal has suggested how they should go about that task. Clearly, these are two different headings, not only is that obvious from the wording but if we look to the basic award we see there that, although the Tribunal can reduce the basic award under Section 122(2) where the Tribunal considers that any conduct of the complainant was such that it would be just and equitable to reduce the amount, there is no corresponding provision to the just and equitable reduction in all the circumstances which Section 123(1) refers to, or to the provision for reduction for conduct causing or contributing to the dismissal in Section 123(6).

Those provisions have to be in one's mind when one looks at what the Tribunal said in this case and so we do turn to look and see what they said. They went into the facts and gave more detail about them than I have given, but I hope I have sufficiently set them out for present purposes. Then they embark on their decision, having set out the conduct which was alleged they say, in paragraph 15 (page 15 of our papers):

"We should make it clear that we are not concerned with whether the Applicant was actually guilty of such conduct or not, but only whether there were reasonable grounds for the Respondent to believe that the Applicant was guilty of such conduct. In the proceedings before us, the Applicant has denied any dishonesty."

So that makes it clear (if I may break off) that they were quite clearly putting out of their minds any duty to decide whether he was in fact guilty of dishonesty. If that had been pressed on them by the employers, if the employers had said, "He was dishonest and we want you so to find. It is important to our case to show that he was guilty of dishonesty and we are going to call evidence to show that and persuade you of that", then the Tribunal might well have considered it their duty to decide that matter, but they did not. They go on, in paragraphs 16 and 17:

"We have then had to consider whether the respondents acted reasonably in treating the Applicant's conduct as the reason for the dismissal, bearing in mind the matters in Section 57(3) of the 1978 Act. We have taken into account the guidelines laid down by the Employment Appeal Tribunal in British Home Stores Ltd v Burchell [1978] IRLR 379, bearing in mind that there is no particular burden on either party to prove whether or not the Respondents acted reasonably.

Having heard the evidence, we are satisfied that the respondents did have the belief in the misconduct alleged. Such belief was held by Captain Pitman at the initial hearing on board the ship and by Mr Norman at the shore hearing [the first of the matters which the employers would have to be satisfied on]. We are satisfied there were grounds for the belief in that the Applicant at the time of the initial disciplinary hearing admitted that he was on duty at the till, and there was therefore no doubt about his identity. They also had the written evidence from the passenger."

So that was the second matter they had to enquire into, were there reasonable grounds for the belief? Then they go on, in paragraph 18:

"We have considered whether it was after a reasonable investigation. Although the investigation was not as thorough as it might have been, nevertheless, on balance, we feel that the investigation was just about satisfactory."

That, it is said by Mr Cavanagh for the Respondents, is using "investigation" in the wide sense as including the disciplinary hearings which took place and there the Tribunal was finding all three of the Burchell requirements (if I can call them that) in favour of the employers. But in the very next breath, the Tribunal go on, in paragraph 19:

"However, the Applicant has raised certain other procedural matters, namely:-

(i) He was not informed in advance in writing, the details of the offence alleged against him;

(ii) He was not given any opportunity of preparing his case before the Captain's hearing on board the ship;

(iii) He was not supplied with copy documents in accordance with the OBOSS procedure ...

(iv) The hearing on shore was not within 5 days of dismissal from the vessel;

(v) The hearing of the Appeal was not within 21 days of the offence in accordance with the OBOSS procedure ... .

20. Mr Hultberg merely dismissed these suggestions of time limits on the ground that he was too busy and that the OBOSS procedure was a guideline only.

21. We have to take account the size and administrative resources of the Respondents' undertaking. We note that they have some 8000 employees and are a very large organisation. There seems no reason why they could not have kept more in line with the OBOSS procedure, even thought we accept that they are guidelines only. However, for the whole process to take some 3 months, appears to us to be far too long.

22. Bearing in mind these procedural defects, we consider that the dismissal is rendered unfair."

There it seems to us they are saying, in terms, that the disciplinary hearings were rendered unfair by these matters. Clearly, they were perfectly entitled to say that. Delay is always an enemy of justice. Failure to give the Applicant in advance notice in writing of the details of the offence alleged against him, not to give him a proper opportunity of preparing his case, not to give him copies of documents - those were all matters which were perfectly capable of being unfairness in and about the disciplinary hearing. Are we to take it, as Mr Cavanagh would have us take it, that that is all covered by their finding in paragraph 18, just before this, that the investigation was just about satisfactory, or are we to say that the natural meaning of that was that the preliminaries to the disciplinary hearings were satisfactory, but the disciplinary hearings themselves were flawed and were unfair? It seems to us that the natural meaning of this, given that the Industrial Tribunal was clearly taking their duty very seriously and conducting this enquiry as they should, is that their findings about the investigation relate to the enquiries which the employer made before the disciplinary hearings and that they were well entitled therefore to find that the disciplinary hearings were unfair for the reasons which they state.

Then we go on reading the Tribunal's decision:

"23. The Applicant is entitled to a Basic Award because of these procedural defects, since he has not in any way contributed to those procedural defects, and they are peculiarly within the province of the Respondents."

So there they were saying, "We will not reduce his basic award under Section 122(2). It would not be just and equitable to do so. His conduct before the dismissal was not such that it would be just and equitable to reduce it". Then we come to the key paragraph, paragraph 24:

"24. We have considered whether the Applicant is also entitled to a Compensatory Award, but bearing in mind our remarks that the dismissal was due to the reasonable belief of the Respondents that the Applicant had been guilty of misconduct, we feel that the Applicant contributed 100% to his dismissal and that therefore it would not be appropriate for him to receive any compensatory award."

So here, on the face of it, they were using the language which is appropriate to Section 123(6); where the Tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, "It shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding". But, as is pointed out to us by Mr Ford, if they are to apply Section 123(6) they must find that there was an action of the complainant which caused or contributed to that dismissal and what they have, in fact, done is to say in terms, in the paragraph which I have read, that they will not consider whether he was guilty of dishonesty and that that is not to form part of their deliberations.

How then can they say here that the Applicant contributed 100% to his dismissal and therefore it would not be appropriate for him to receive any compensatory award? They could only do that, on the face of it, if they found what his conduct was and applied Section 123(6) or else convicted him of dishonesty in which case they would say, "Well, having regard to that conduct, under Section 123(1) it is not appropriate to give him any award". It is not open to them to say "Due to the reasonable belief of the Respondents that he had been guilty of misconduct, it would not be appropriate for him to receive any compensatory award".

It seems to us that they are muddling up the two sub-sections. Of course there may be cases where they overlap and of course it may be appropriate then to take, as Mr Cavanagh put it, a robust line and say the overlap is so extensive that we hardly need to worry about the language which we use. A case was cited to us, that was Charles Robertson v White [1995] ICR 349 and in that case it was found, and there was no doubt about this, that the employees had been stealing from the employers. They had been caught on videos doing just that and the Industrial Tribunal had used language which was more appropriate to one subsection than the other, but there was no need to worry about that.

But in the present case the Industrial Tribunal, having deliberately said that they were not going to consider the conduct of the Applicant, then purported to apply the language of Section 123(6) to say that it would not be appropriate for him to receive any compensatory award. They have done so without finding conduct contributing to his dismissal. What they have found instead is that because of the reasonable belief of the Respondents, it would not be right for him to receive any award. That, undoubtedly, is a muddle and a muddle which we are not able to resolve. Were they saying in fact, although they had earlier said exactly the contrary, that having considered all these matters later in their decision they had reached the conclusion that he had been guilty of dishonesty? Mr Cavanagh invited us to say that and to go as far as that. We do not think it would be right in any way to do so. Were they saying that they had found all the requirements, which are made of the employer by the legislation, satisfied? That all the Burchell matters had been satisfied and, in particular, that there had been a reasonable enquiry? That the employer had acted reasonably about the enquiry including the disciplinary enquiries? So that, in fact, the Industrial Tribunal should have said, "These other imperfections or blemishes which we detect, these breaches of the OBOSS Rules etc., are not to the point. They do not interfere with our conclusion that this was a fair dismissal".

We are certainly not able to say that, in view of the quite express language of the Tribunal.

We have come to the conclusion that, in the absence of a plain finding that the Applicant was guilty of dishonesty, there is no solid foundation for depriving Mr McCullough of all his compensatory award. It seems plain to us that the Industrial Tribunal have allowed themselves to become confused between the two subsections and that having deliberately put aside any question of considering his conduct, they have then directed themselves to the wrong matter, namely the reasonableness of the employer's belief.

We accept what is said to us by both Counsel, that this is a most imperfectly expressed decision, although the Industrial Tribunal plainly tried conscientiously to do their duty. They have, in fact, gone wrong in law because their decision fails to tell either party why they have arrived at their decision.

In those circumstances we think we are not in any position to substitute our own view of what the decision should have been. We have no alternative to remitting the matter to another Industrial Tribunal, differently constituted, so that they can hear this case anew without any regard to any of the findings of this Industrial Tribunal, so that all matters will be tried afresh by them.

Certainly, it appears from what we have been told today by Mr Cavanagh that one of the matters which the employers say will be essential to their decision is the question whether Mr McCullough was in fact guilty of dishonesty, and if that is the position then the Tribunal will have to decide that and having decided that, they will of course (if they think it appropriate) have to resort to Section 123(1) or Section 123(6) as they think right and will state what conclusions they reach under either or both those subsections. It may be, indeed, that they will think it right to look at Section 122(2) and the question of the reduction of the basic award as well.

That is the decision of all of us and those are the reasons of us all.