United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR J CAVANAGH (of Counsel) Messrs Browne Jackson Solicitors 44 Castle Gate Nottingham NG1 7BJ
For the Respondent	MR P GILROY (of Counsel) Messrs David Yablon Minton Ellis Solicitors Royal House 28 Sovereign Street Leeds LS1 4BJ


 


JUDGE PETER CLARK: These are appeals by the employer, Abbey National PLC, against first the liability decision and secondly the remedies decision, promulgated with extended reasons respectively on 29th August and 5th November 1997, of an Employment Tribunal sitting at Leeds which heard the applicant, Ms Formoso's, complaint of unlawful direct sex discrimination.

The Facts

The applicant was employed by National & Provincial Bank ['N&P'] as a team leader until her dismissal on 31st July 1996. On 5th August 1996 N&P merged with Abbey National. Employment commenced with N&P on 5th September 1994. It follows that her dismissal came very shortly before (a) what would have been a transfer of her employment to Abbey National and (b) her completion of two years qualifying service for the purposes of unfair dismissal protection. Further, at the time of her dismissal she was pregnant and had been on maternity leave since 22nd July 1996.

The background to her dismissal was as follows. In about October 1995 the applicant was considering following her former manager, Richard Bramble, to work for British Telecom. She went for interview and was offered a position with BT. She informed Ms Collins of Human Resources at N&P that she intended to leave, and was asked to hand in her notice to Mr Holt, her new manager. He was then on holiday. When he returned she told him of her intention to leave and he indicated that he wanted to discuss the matter with her. An arrangement was made for them to meet at a public house in Bradford. Over a drink, Mr Holt was able to persuade the applicant to stay with N&P. She did not pursue the job with BT.

In February 1996, at a team leaders' meeting at which the applicant was not present, a fellow employee, Kim Walker told others present that the applicant had told her that the earlier meeting with Mr Holt had gone beyond just a drink. She said that the applicant and Mr Holt had a meal together and he had then suggested to the applicant that he would book a hotel room and they would spend the night together. One of those present at the meeting, Dave Cullen informed Mr Holt that these allegations had been made.

The applicant was unaware of these events when, on 19th February 1996 she telephoned Mr Holt to ask if she could leave work early in order to attend a dental appointment. In fact she had an appointment with her doctor in order to obtain the results of a pregnancy test, something which she wished to keep private, having suffered a miscarriage the previous year.

Mr Holt gave the permission sought, but asked the applicant to call and see him before she left. She did so, and met both Mr Holt and Caroline Jones of Human Resources in his office. In that meeting Mr Holt told the applicant of the rumours which were circulating about them. The applicant expressed astonishment. She was asked if she knew anything about the rumour and if she had anything to do with starting it. She replied that she knew nothing about it and had said nothing to lead anybody to think that such things had occurred. She asked who had been spreading the rumours; Mr Holt declined to tell her.

The applicant was very disturbed about the revelation. Shortly thereafter she attended her doctor to have the pregnancy confirmed. The following morning she broke down in tears on the way to work. She contacted her staff association representative, Mr Needham, for assistance and went back to her doctor, who gave her a sick note, certifying her unfit for work until 18th March 1996 due to anxiety and pregnancy. Mr Needham contacted Ms Jones to inform her of what had happened and the fact of the applicant's pregnancy.

Whilst the applicant was off sick Mr Holt opened an investigation. He interviewed a number of people including Kim Walker and Dave Cullen. Notes of those interviews were typed up. Having concluded that round of interviews Mr Holt spoke to Kevin Hogarth of Human Resources, who took the view that the matter was potentially serious and that since Mr Holt was personally involved it would be preferable if it was dealt with by another manager. Consequently Mr Hogarth took over the investigation.

He proceeded to carry out further interviews with staff, including the applicant, who had returned to work on 18th March. On the same day he suspended the applicant by reason of an allegation of gross misconduct, namely that she had misled people about the occasion when she had met Mr Holt for a drink. Further interviews were then held.

The applicant was again certified sick. On 10th June her general practitioner provided the employer with a report as to her medical condition. He concluded then that she was suffering from work-related anxiety symptoms, confirmed that she was 22 weeks pregnant but expressed the view that her pregnancy had no bearing on her absence from work. On 17th June she wrote to the employer indicating that she wished to commence maternity leave on 22nd July and confirming her intention to return to work after the baby was born.

The employer wished to pursue disciplinary proceedings against the applicant and took advice from Dr Campbell, a consultant occupational physician in their employment. Without seeing the applicant, but having seen the general practitioner's report of 10th June, Dr Campbell expressed the view that it would be in the applicant's interests to resolve that problem before she commenced maternity leave. In the light of that report Mr Hogarth wrote to the applicant on 10th July asking her to attend for disciplinary interview on 15th July. On 11th July the applicant replied saying she was unfit to attend by reason of her anxiety state and asked that further investigations be delayed until after she had returned from maternity leave. She said that was based on her doctor's advice and invited Mr Hogarth to speak to her general practitioner. She pointed out that she was 28 weeks pregnant and the thought of having to attend a disciplinary interview upset her enormously.

Nevertheless, Mr Hogarth wrote to the applicant on 15th July asking her to attend a disciplinary interview on 19th July. In response, the applicant commissioned a further report from her doctor which read as follows:

"The above named patient has suffered a considerable exacerbation of her anxiety state as a result of the attempt to get her to attend a disciplinary meeting.

In my opinion she is emotionally unfit to attend such a meeting and is likely to remain so until after her pregnancy is over."

Mr Hogarth persisted. Notwithstanding that report he invited her to attend for interview on 30th July. The applicant consulted her trade union representative. They agreed that it would be inappropriate for her to attend personally or by a representative. The employer was so informed.

The disciplinary interview took place on 30th July in the absence of the applicant or her representative. Mr Hogarth dismissed her for gross misconduct. She was informed of that decision and in turn notified her intention to appeal. The appeal was heard by Mr Huck, director of operations at Bradford on 4th September. Again the applicant did not attend due to ill health, but her trade union representative, Margaret Osborne did so. She did the best she could to represent the applicant's interests but it was common ground that the format of the appeal hearing was less than ideal. Mr Huck then interviewed the principal witnesses and in due course dismissed the appeal.

The Employment Tribunal Decision (Liability)

The applicant's case on direct sex discrimination was put in two ways. First, it was said that by dismissing her subsequent to a disciplinary interview at which she was incapable of attending by reason of a condition that was inextricably linked with her pregnancy she was subject to a detriment. Secondly, it was contended that the whole basis for the investigation and disciplinary procedure was to protect the position of Mr Holt, a male employee, at the expense of the position of a female employee, the applicant.

The tribunal directed themselves that pregnancy was a condition unique to women and the first question they asked themselves was whether the illness from which the applicant was suffering on 30th July 1996 related to her pregnancy. On that question the employer relied on the general practitioner's first report dated 10th June and Dr Campbell's report for the proposition that her medical condition was unrelated to her pregnancy. The tribunal rejected that submission expressing themselves thus in paragraph 8 of their liability decision reasons:

"8 As to the first of those reports we accept that at that stage the applicant's state of anxiety and her pregnancy may have had little inter relation. As to Dr Campbell's report we give that very little weight as we would imagine would be given to any medical opinion based upon the interpretation of another brief medical report without the doctor involved even clapping eyes on the patient concerned. Whatever the applicant's state may have been in June it is clear to us that by the end of July the applicant's then advanced state of pregnancy was inevitably directly and inextricably linked to her emotional state. Why else would her General Practitioner conclude that she would be emotionally unit to attend a disciplinary meeting until after her pregnancy was over."

Next, the tribunal considered whether the applicant was subjected to a detriment by the carrying out of a disciplinary interview which she could not attend by reason of that condition. They found that she was, rejecting the employer's case that it was necessary to conduct the disciplinary hearing when they did. In these circumstances the tribunal found the first way in which the applicant put her case to be made out.

As to the second allegation, the tribunal divided it into two parts. They were not satisfied that the purpose of the investigation was to protect Mr Holt's position at the expense of the applicant's (reasons paragraph 15), but they were satisfied that the whole process was tainted by Mr Hogarth's "wholly unwarranted" attitude that the applicant was a flirt.

Accordingly, they found the complaint of sex discrimination well-founded.

The Liability Appeal

Mr Cavanagh takes essentially two points in support of the liability appeal.

First, whilst accepting the tribunal's findings of fact at paragraph 8 of their reasons and the principle, enunciated by the European Court of Justice in Webb v EMO Air Cargo [1994] ICR 770, that there will be sex discrimination where the complainant has suffered a detriment on the grounds of her pregnancy, he submits that the tribunal failed to consider the question of causation when dealing with the first way in which the applicant put her case. He relied upon the approach of this Appeal Tribunal expressed in the judgment of Mummery J. in O'Neill v St Thomas More School [1996] IRLR 372, paragraphs 38-40. The question, not addressed by the tribunal he submits, was whether the pregnancy was the cause of her dismissal. He argues that the applicant was called to the disciplinary hearing on 30th July because the employer could wait no longer for operational reasons. But for her pregnancy the employer would still have held the disciplinary when they did. They disregarded her pregnancy.

In response, Mr Gilroy submits that the tribunal took a pragmatic approach, applying the principles in O'Neill, and found that the pregnancy was an effective cause of the disciplinary hearing leading to her dismissal. It need not be the sole cause.

He relies upon the ruling of European Court of Justice in Brown v Rentokil Ltd [1998] IRLR 445, that dismissal of a woman at any time during her pregnancy for absence due to incapacity for work cause by an illness resulting from that pregnancy is direct sex discrimination. By extension, where the applicant is prevented from defending herself at a disciplinary hearing due to her absence for a pregnancy related reason, that is also sex discrimination.

We prefer the submission of Mr Gilroy and conclude that the tribunal was entitled to and did find that the applicant suffered a detriment for a pregnancy related reason, so that the first allegation of sex discrimination was made out.

Secondly, Mr Cavanagh attacks the tribunal's second finding that the investigatory process was tainted by Mr Hogarth's attitude that the applicant was flirtatious. He has referred us to passage in the interview notes of Kim Walker, the applicant herself and Dave Cullen which she submits supports such an attitude on the part of Mr Hogarth, although there was no evidence that he did hold that view.

We reject that submission. It seems to us that this was a view of the evidence which the tribunal was entitled to form. We shall not interfere with the tribunal's findings of fact in this respect.

Accordingly we dismiss the appeal against the liability decision.

Remedies Decision

The tribunal found that the applicant had suffered injury to her feelings as a result of the discrimination found in the liability decision and assessed compensation under that head at £5,000.

They then turned to the question of purely financial loss and assessed what may conveniently be referred to as special damage flowing from the acts of discrimination as found.

Their reasoning is set out at paragraphs 5-6 of the remedies reasons in this way:

"5. Turning to the issue of losses arising out of the act of discrimination it is common ground between the parties that the first issue we have to determine is what would have happened had the act of discrimination not taken place, what were the chances that she would have lost her job at any event. In our earlier decision we have already found that if a proper procedure had been followed a very different result could have been arrived at. We look at this question in the context of a reasonable employer who would have waited until the applicant had returned from maternity leave in November by which time of course she would have completed two years continuity of employment and would have had protected employment; a reasonable employer who, we assume, would have followed and proper procedures which would have included disclosing to the applicant all the statements that they had obtained and when, as would have become clear, there was a simple conflict between the evidence of the applicant and that of Kim Walker an employer who may well have allowed the applicant to confront Kim Walker. At the very least a reasonable respondent would have given themselves the opportunity to do the best they could to weigh up where the truth lies. In our view, doing the best we can based upon this hypothesis we assume that this employer would have found it hard to decide whose version of events should properly have been preferred and on that basis a reasonable employer would have given the applicant the benefit of the doubt.

6. Even if we are wrong about that we know that Mr Holt by that stage had left the respondent company and bearing in mind the applicant's previous good record with the respondent, it is unlikely that a reasonable employer would have dismissed the applicant at the conclusion of such a procedure."

Accordingly they assessed special damage on the basis that she would have returned to work in November 1996 and calculated her gross losses to the date of the remedies hearing in October 1997 (£10,722.57) and for a future period of 12 months, allowing for prospective earnings in alternative employment during that period (total: £2,738).

Finally, the tribunal considered two arguments put forward by the employer in relation to the applicant's duty to mitigate her loss. The first was that she had failed to take sufficient steps to seek alternative employment. That argument was rejected. A further contention, that she failed to mitigate her loss by not claiming the Jobseekers Allowance, succeeded and her loss to the date of hearing was duly reduced by £1,257.28, the amount of benefit not claimed by her during that period. Her earnings of £160 during that period were also deducted. In the event, the net figure for past and future loss of earnings totalled £12,043.29, which, when added to the £5,000 damages for injury to feelings, resulted in a final award of £17, 043.29.

The Remedies Appeal

Mr Cavanagh takes three points. First, he submits that the award for injury to feelings was too high. He argues that the tribunal impermissibly took into account the applicant's feelings in the early stages of the disciplinary investigation, whereas the findings of sex discrimination were limited to the period from July 1996; secondly, he submits that, in accordance with the dictum of Lawton LJ. in Coleman v Skyrail Oceanic [1987] ICR 864, 872B, the tribunal made a wholly erroneous estimate of the damage suffered by the applicant.

As to the first point, we are satisfied, as appears from paragraph 4 of the remedies reasons, that the tribunal were careful to limit their consideration of this head of damage to the acts of discrimination as found and not to the earlier period of the disciplinary investigation. As to the amount itself, we bear in mind that levels of compensation for injury to feelings have risen following the removal of the upper limit on awards and, applying the principles helpfully summarised by Smith J in Armitage v Johnson [1997] IRLR 162, we are unable to say that this award was a wholly erroneous estimate of the damage suffered by the applicant as a result of the discrimination as found. Accordingly we shall not interfere with that part of the award.

It is convenient next to deal with Mr Cavanagh's submission that the tribunal erred in rejecting the employer's submission that the applicant had failed to mitigate her loss because she had limited her search for alternative employment following dismissal to call centres at financial institutions in Bradford. That, it seems to us, was essentially a question of fact for the tribunal and we shall not interfere with their finding.

The final point, and the only point on which this appeal succeeds, relates to the tribunal's reasoning in paragraphs 5-6 of their remedies reasons, leading to what may be described as a 100% loss award by way of special damage.

The tribunal correctly directed themselves that the question for them, in assessing loss of earnings flowing from the dismissal, was what were the chances that she would have been dismissed anyway? That is the well-known "loss of a chance" principle, applied to discrimination claims by Morison J in MOD v Cannock [1994] ICR 918, 951A-953F, and the later pregnant servicewomen case and followed in Cleveland Ambulance NHS Trust v Blane [1997] IRLR 332.

Where this tribunal fell into error, submits Mr Cavanagh, is in applying the test of the reasonable employer, rather than asking themselves what were the chances that this employer would have dismissed the applicant for misconduct had she not been pregnant and had attended the disciplinary and appeal hearings.

Mr Gilroy accepts that neither party advanced the "reasonable employer" approach before the tribunal, although he seeks to support it before us. Alternatively, he invites this Appeal Tribunal to apply the correct approach and to hold that the result, that is 100% compensation, would be the same.

We reject the "reasonable employer" approach. That is appropriate when considering the fairness of a dismissal, not the loss flowing from a discriminatory dismissal. The question is more akin to the question posed in Polkey v A E Dayton Ltd [1988] ICR 142 following a finding of "procedurally" unfair dismissal. What were the chances that the complainant would have been dismissed had a fair procedure been followed? The loss of a chance of retaining employment is to be expressed in percentage terms.

On the fact as found we are unable to say that notwithstanding the tribunal's self-misdirection in law the result was plainly and unarguably right, as Mr Gilroy invites us to do. Accordingly, the case must be remitted for rehearing by an Employment Tribunal limited solely to this issue, that is, assessment of the loss of the chance of the applicant retaining her employment absent discrimination as found by the first Employment Tribunal.

Mr Gilroy asks us to remit that question to the same Employment Tribunal. We do not regard such a course as satisfactory. Accordingly, the case will be remitted to a fresh Employment Tribunal for determination of that single issue.