United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR D BRUNNEN (of Counsel) instructed by MESSRS WALKER SMITH & WAY Solicitors 26 Nicholas Street Chester CH1 2PQ
For the Respondent	MR T LINDEN (of Counsel) instructed by MESSRS EVERSHEDS Solicitors London Scottish House 24 Mount Street Manchester M2 3DB


 


HIS HONOUR JUDGE CLARK: This is an appeal by Mr Hewitt, one of 3 Applicants to the Liverpool Employment Tribunal sitting on 8 April 1998, against that Tribunal's decision, promulgated with extended reasons on 26 May 1998, dismissing his complaint of unfair dismissal against his former employer, the Respondent W.E. Anfield & Co Limited. Of the other 2 Applicants, Mr Brown withdrew his claim and that of Mr Hewitt was also dismissed.

The Facts

The Respondent is a firm of builders merchants trading in Chester. In June 1994 Mr Alan Fittan and his co-shareholders acquired the shares of the company from its former owners. He then became a director of the company.

The Appellant was employed by the Respondent as a glass cutter/supervisor from July 1980 until his dismissal on 3 August 1994. Prior to the take-over in 1994 the Respondent had operated a system of personal sales to members of staff. We have been referred to an affidavit, before the Employment Tribunal, of David Graham Lloyd, the former General Manager of the company. He there deposed to the fact that a staff purchase scheme had been in operation from the time he joined the company in 1963. The terms of the scheme were that goods for the personal use of members of staff were available at cost plus 10%. Goods for relatives were available at trade prices. A letter from Mr Streatham, a former director of the company, to the Appellant dated 28 April 1995, added that under the scheme all purchases were to be paid for in full at the time of purchase and all purchases were to be authorised by the General Manager.

At the time of the take-over the company was trading at a significant loss. There was a perception by the incoming management that there was a lack of proper controls. Auditors had raised various matters in a report submitted to management on 31 March 1993.

Following the take-over an investigation was carried out into possible abuses of the staff purchase scheme. In the case of the Applicants, so the Tribunal found, certain invoices and associated documentation showed losses to the company, many of them of a substantial amount.

We have been referred to the documentation considered by the Employment Tribunal, relating to this Appellant, Mr Hewitt. For example, on one occasion he had paid £200 for goods with a cost price of £1,033.97; on another he paid £600 for goods with a cost price of £1,975.00, an on a third, involving his wife, £1000 was paid for goods costing the Respondent £1,749.62.

As a result, discussions were held with all 3 Applicants. Thereafter, taking the case of this Appellant, he was called to a disciplinary hearing held on 2 August 1994 before Mr Fittan and Mr Greenwood. Details of the allegations were discussed, but no decision was then taken. On the following day the Appellant was told that he was dismissed. The Tribunal found that at the hearing the allegations against the Appellant were made clear and he had a proper opportunity to state his case.

Against that decision the Appellant appealed to Mr Hazeldine, who had not been involved in the initial decision to dismiss. The Tribunal found that the Appellant had a proper opportunity to again state his case. His appeal was dismissed.

The Tribunal Decision

The Tribunal was satisfied that the Appellant was dismissed on grounds relating to misconduct. As to the question of reasonableness under Section 98(4) of the Employment Rights Act 1996, they directed themselves correctly in accordance with the well-known Burchell principles, as further explained by this Tribunal in Boys and Girls Welfare Society v McDonald (1996) IRLR 129 and by the Court of Session in Scottish Daily Record and Sunday Mail v Laird (1996) IRLR 655.

They found that the Respondent genuinely believed that the Appellant was guilty of misconduct, that there were reasonable grounds for that belief after a reasonable investigation, taking into account the documentary evidence produced, in that the staff purchase scheme was being systematically abused. Specifically, in the Appellant's case, his purchases of materials went far beyond what was permissible and it was obvious that the materials so obtained were being used in connection with outside business activities. Further, whatever laxity had occurred in the past in controlling the staff purchase scheme, new management were entitled to scrutinise the situation very carefully and, if abuse was revealed, to take action upon it.

The Tribunal expressly rejected the Appellant's claim that although he was aware of the scheme he did not know the details of it, bearing in mind his length of service with the company. Dismissal fell within the band of reasonable responses and was fair.

The Appeal

Mr Brunnen puts his essential point in this appeal in 3 different ways. The starting point is the Appellant's Originating Application in which he contends that his activity complained of by the Respondent was known of and sanctioned by senior management. From that base Mr Brunnen's submissions are these:

(1) that the Tribunal failed to give adequate reasons for its decision in that it made no finding as to whether the purchases made by the Appellant were authorised by the then General Manager, Mr Lloyd, and the Contracts Manager, Mr Rowlands. Mr Lloyd gave evidence before the Tribunal; we do not have the Chairman's notes of evidence but we have been taken to Mr Lloyd's affidavit, prepared in connection with the proceedings. In these circumstances the Tribunal's reasons failed to comply with the minimum requirements set out in the judgment of Bingham L J in Meek v City of Birmingham District Council (1987) IRLR 250, paragraph 8.

(2) The Tribunal fell into error in failing to consider, when dealing with the issue of reasonable investigation, whether the Respondent ought, in the light of answers given by the Appellant at the disciplinary interview held on 2 August 1994, to have spoken to Messrs Lloyd & Rowlands, then mentioned by the Appellant, to enquire into his claim that what he did was authorised by them.

(3) The Tribunal reached a perverse conclusion in finding that the dismissal was fair in circumstances where the Appellant claimed that his purchases were expressly authorised by management.

We accept the answers to those submissions advanced by Mr Linden. The critical question for the Respondent was whether the Appellant knew that what he was doing breached the Respondent's scheme rules. Crucially, the Tribunal found that, contrary to his case which they rejected, the Appellant did know the terms of the scheme as we have earlier set them out. He obtained goods at a price well below the cost to the Respondent for use in his own business and on occasions did not pay for the goods until after he received payment from his customer.

What is the relevance of the authorisation given by Mr Lloyd to his having the goods and the prices agreed with Mr Rowlands? In our judgment such authorisation does not of itself excuse the breaches of the rules which resulted in the Appellant obtaining goods for his commercial purposes at a gross undervalue and without always making timeous payment for them. Certainly that was a conclusion which the Tribunal could permissibly reach. A reasonable investigation did not necessarily involve questioning Mr Lloyd and Mr Rowlands on the question of authorisation. In our view the Tribunal's findings sufficiently reveal why the Appellant lost his case. He was found to have knowingly abused the staff purchase scheme to his advantage and to the detriment of the company. Mr Brunnen's specifically disavows any argument that dishonest conduct can be authorised and thus ceases to be properly regarded as misconduct. In our judgment what is what the Tribunal found the Respondent was entitled to conclude happened here. There is no error of law in the Tribunal's reasoning or approach. Accordingly, this appeal must be dismissed.