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Cite as: [2000] UKEAT 135_00_0707, [2000] UKEAT 135__707, [2000] IRLR 650, [2000] ICR 1263

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		BAILII case number: [2000] UKEAT 135_00_0707
		Appeal No. EAT/135/00

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 7 July 2000

Before

HIS HONOUR JUDGE PETER CLARK
MR D NORMAN
MRS R A VICKERS

MR JAMES BEEDELL APPELLANT

WEST FERRY PRINTERS LTD RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellant	MR R M WHITE (of Counsel) Instructed By: Messrs Russel Jones & Walker Swinton House 324 Gray's Inn Road London WC1X 8DH
For the Respondent	MR J SWIFT (of Counsel) Instructed By: Messrs Simmons & Simmons Solicitors 21 Wilson Street London EC2M 2TX

JUDGE PETER CLARK:

We have before us an appeal by the applicant before the London (South) Employment Tribunal, Mr Beedell, against that tribunal's decision, reached following an eight-day hearing and promulgated with extended reasons on 14 December 1999 (the liability decision) dismissing his complaint of unfair dismissal against his former employer, the respondent West Ferry Printers Ltd. In that same decision the tribunal upheld his complaint of wrongful dismissal. At a further remedies hearing held on 10 January 2000 that same Tribunal, chaired by Mr J. Sprack, considered the question of damages for wrongful dismissal and, by a decision with extended reasons dated 17 February 2000 they awarded him damages totalling £7,233.89. Within that award was a sum of £954.72 in respect of holiday not taken during 1998. Against that award of holiday pay the respondent cross-appeals.

The Facts

The facts are set out in admirable detail in the liability decision reasons. In summary, the appellant was a long-standing employee, having commenced his employment with the respondent or its predecessors first as a casual worker in 1970 and then as a permanent employee with effect from 1 October 1978. Further, the respondent, which printed newspapers, recognised the GPMU. Mr Beedell was the Father of Chapel for the Machine Managers from 1992.

He had an impeccable employment record until an incident occurred on 29 September 1998 involving a fellow employee, Mr Radcliffe. In short, both men were reported for fighting in the workplace by Mr Fisher, the Press Hall Manager, to the Production Director, Mr Lawrence and the Personnel Manager, Mr Marsden. Both men were suspended on full pay pending a disciplinary hearing.

Potential witnesses were interviewed. Both men gave differing accounts of the incident.

On 2 October disciplinary hearings took place before Mr Fairlie, the Senior Press Hall Manager. Neither protagonist attended the other's disciplinary hearing.

Based on the evidence of the two men, witnesses to the incident and a report from the company nurse and a report from the appellant's general practitioner, Mr Fairlie concluded that both men had been violent participants in the incident. He summarily dismissed them both without notice.

Against Mr Fairlie's decision both men appealed. Their appeals were heard separately by Mr Marsden on 16 October 1998. He dismissed their appeals.

The appellant commenced these proceedings by an Originating Application presented to the Employment Tribunal on 29 December 1998. Before the Tribunal, represented by experienced counsel, Mr Richard Greening, it was the appellant's case

(1) that the reason or principal reason for dismissal was not, as the respondent contended, related to his conduct, it was for a reason relating to his trade union activities and consequently automatically unfair under section 152 (1) (b) of the Trade Union and Labour Relations (Consolidation) Act 1992 (the 1992 Act)

(2) alternatively, if the reason for dismissal was shown by the respondent to relate to his conduct under section 98 (2) (b) of the Employment Rights Act 1996 (ERA), then the respondent acted unreasonably in dismissing him in that:

(a) there was inconsistency of treatment. See the test propounded by Waterhouse J in Hadjiannou v Coral Casinos Ltd [1981] IRLR 352, paragraph 25; approved by the Court of Appeal in Paul v East Surrey District Health Authority [1995] IRLR 305, paragraphs 34 – 35, per Beldam LJ. In 1991 a similar incident had occurred between two employees, Mr Scutt and Mr Smith. Mr Smith had been found to be the aggressor and was dismissed; Scutt received a written warning. It was Mr Beedell's case on appeal that here Mr Radcliffe had been the aggressor. By parity of treatment the appellant ought to have retained his employment with a warning.

(b) no proper assessment had been made of the appellant's part in the incident with Mr Radcliffe

(c) dismissal was too harsh a penalty in the appellant's case, given his long and impeccable record of employment with the respondent.

It was the respondent's case, presented by Mr Swift,

(a) that the reason for dismissal related to the incident with Mr Ratcliffe, that is a reason related to conduct and not trade union activities

(b) that the respondent had formed an honest belief in the appellant's misconduct on reasonable grounds following a reasonable investigation. The well known Burchell test.

(c) there was no disparity of treatment compared with the 1991 incident involving Scutt and Smith

(d) the company had carried out a fair procedure

(e) the penalty of dismissal was a reasonable one in all the circumstances.

The separate issue of whether the appellant was wrongfully dismissed was also addressed by counsel.

The Employment Tribunal Decisions

Unfair Dismissal

At a preliminary hearing held in this case on which I sat on 18 April 2000 the matter was permitted to proceed to this full hearing. At that time a controversy had arisen as to the proper approach to be taken by Employment Tribunals in considering cases of unfair dismissal, particularly where the reason for dismissal relied on by the respondent related to an applicant's conduct, following certain observations made by the former President, Morison J in Haddon v Van den Bergh Foods Ltd [1999] IRLR 672. Lord Johnston, sitting in the Scottish Employment Appeal Tribunal "completely endorsed" those observations in Wilson v Ethicon [2000] IRLR 4, paragraph 6. Lindsay P has taken the opportunity to consider Haddon in the case of Madden v Midland Bank Plc [2000] IRLR 288. I shall refer to those three cases as "the recent trilogy".

In these circumstances I reserved this case to myself in the certain knowledge that we should at this full hearing obtain valuable assistance from counsel appearing before us, Mr White and Mr Swift, in considering whether this Tribunal had correctly directed themselves as to the law, particularly in circumstances where, at paragraph 52 of their reasons, the Tribunal specifically refer to Haddon.

That confidence was not misplaced. We have received, well in advance of this hearing detailed skeleton arguments from counsel dealing with the effect of the recent trilogy and the earlier cases on what is now section 98 ERA.

It is common ground between counsel that insofar as the recent trilogy followed earlier binding precedent in the Court of Appeal they add nothing; where they differ they cannot be sustained. In short, they do not alter the earlier orthodoxy.

Having had an opportunity to consider those submissions in the light of the statutory provision and the authorities we are quite satisfied that those submissions are correct. We should explain why.

The Law

The material statutory provisions, to be found in section 98 ERA are these:

"(1) In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show –

(a) the reason (or, if more than one, the principal reason) for the dismissal ,and

(b) that it is either a reason falling within subsection (2) or some other substantial reason.

(2) A reason falls within this subsection if it –

(b) relates to the conduct of the employee,

(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) –

(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case."

Until the recent trilogy the everyday task set for an Employment Tribunal trying a "straightforward" case of "conduct" unfair dismissal did not appear to present any great legal difficulty. Assuming a dismissal the employer had to show a potentially fair reason for dismissal, here conduct:

"A reason for the dismissal of an employee is a set of facts known to the employer, or it may be of beliefs held by him, which cause him to dismiss the employee." Abernethy v Mott, Hay and Anderson [1974] ICR 323, 330 C, per Cairns LJ.

Of course, if the reason put forward by the employer is found by the Tribunal, as a matter of fact, to be a false reason, then the employer has failed to show a potentially fair reason. Thus, in the present case, the respondent put forward as their reason for dismissal, the appellant's conduct. Mr Beedell contended that that was not the true reason, it was in fact his trade union activities, an inadmissible reason which, if accepted by the Tribunal, would have rendered the dismissal automatically unfair. On the facts, the Tribunal accepted the reason put forward by the respondent, conduct and rejected that advanced by Mr Beedell. The respondent had shown a potentially fair reason for dismissal.

Although the burden of showing a potentially fair reason in a conduct case lies on the respondent under section 94 (1) and (2) (b) ERA that burden is not a heavy one. A genuine but mistaken belief in the employee's misconduct will suffice. See, for example, Trusthouse Forte Leisure Ltd v Aquilar [1976] IRLR 251 and Kent County Council v Gilham [1985] IRLR 18, at paragraph 18, per Griffiths LJ. It should be observed that the position is otherwise where the reason relied on is redundancy. There, the respondent must show that the employee was in fact redundant within the meaning of Part XI ERA. See Elliott v University Computing Co (GB) Ltd [1977] ICR 147. Similarly where the employer relies upon a statutory requirement to dismiss under section 94 (2) (d) ERA. See Bouchaala v Trusthouse Forte Hotels Ltd [1980] ICR 721.

The employer having established a potentially fair reason for dismissal, here conduct, it is then for the Employment Tribunal to form a judgment as to whether in the circumstances (including the size and administrative resources) the employer acted reasonably or unreasonably in treating that reason as a sufficient reason for dismissal and that question will be determined in accordance with equity and the substantial merits of the case. The section 98 (4) question. At that stage no burden of proof lies on either party. Boys and Girls Welfare Society v McDonald [1996] IRLR 129.

As to how the Employment Tribunal should interpret section 98 (4), a convenient starting point, although not chronologically first in time, is the guidance given by the then President of the Employment Appeal Tribunal, Browne-Wilkinson J, in Iceland Frozen Foods v Jones [1982] IRLR 439. At paragraph 24 of the judgment His Lordship said this:

"Since the present state of the law can only be found by going through a number of different authorities, it may be convenient if we should seek to summarise the present law. We consider that the authorities establish that in law the correct approach for the Industrial Tribunal to adopt in answering the question posed by s. 57 (3) of the 1978 Act (now section 98 (4) ERA) is as follows:

(1) the starting point should always be the words of section 57 (3) themselves;

(2) in applying the section an Industrial Tribunal must consider the reasonableness of the employer's conduct, not simply whether they, (the members of the Industrial Tribunal) consider the dismissal to be fair;

(3) in judging the reasonableness of the employer's conduct an Industrial Tribunal must not substitute its decision as to what was the right course to adopt for that of the employer;

(4) in many (though not all) cases there is a band of reasonable responses to the employee's conduct within which one employer might reasonably take one view, another quite reasonably take another;

(5) the function of the Industrial Tribunal, as an industrial jury, is to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted. If the dismissal falls within the band the dismissal is fair: if the dismissal falls outside the band it is unfair."

At this stage I shall focus on the fourth and fifth propositions, the band of reasonable responses test, and the third proposition, the duty not to substitute the tribunal's decision for that of the employer.

That band of reasonable responses test was first formulated by Lord Denning, MR in British Leyland (UK) Ltd v Swift [1981] IRLR 91, a conduct case. At paragraph 11 he said:

"The first question that arises is whether the Industrial Tribunal applied the wrong test. We have had considerable argument about it. They said: '... a reasonable employer would, in our opinion, have considered that a lesser penalty was appropriate'. I do not think that this is the right test. The correct test is: Was it reasonable for the employers to dismiss him? If no reasonable employer would have dismissed him, then the dismissal was unfair. But if a reasonable employer might reasonably have dismissed him, then the dismissal was fair. It must be remembered that in all these cases there is a band of reasonableness, within which one employer might reasonably take one view: another quite reasonably take a different view. One would quite reasonably dismiss the man. The other would quite reasonably keep him on. Both views may be quite reasonable. If it was quite reasonable to dismiss him, then the dismissal must be upheld as fair: even though some other employers may not have dismissed him."

I pause to observe that in setting out his fourth and fifth propositions Browne-Wilkinson J was doing no more than recording that which was binding on the Employment Appeal Tribunal and the Industrial Tribunals, following the judgment of the Court of Appeal in Swift.

Subsequently, the correctness of that test has never been doubted in the Court of Appeal. On the contrary it has been repeatedly affirmed.

In Neale v Hereford and Worcester County Council [1986] IRLR 168, 172 May LJ repeated the Iceland analysis with approval (paragraphs 31 – 33) and at paragraph 60 Stocker LJ noted that no issue arose before the court on the question of the Industrial Tribunal's general approach to section 57 (3) of the 1978 Act, indeed the Industrial Tribunal directed themselves in terms virtually identical to those used by Browne-Wilkinson J in Iceland.

The band of reasonable responses test was by then so well entrenched that nobody thought to question it.

The next relevant case in the Court of Appeal is Securicor Ltd v Smith [1989] IRLR 356. Smith is a case not often cited. It is not referred to in the judgments in either Haddon or Madden and did not rate inclusion in the bundle of 26 authorities prepared by Mr White for the purposes of this appeal. It therefore requires some prominence in this judgment.

The first point to make is that counsel for the applicant, Mr Smith was instructed by Mr Joe O'Hara, then Legal Officer of the trade union formerly known as GMBATU, now the GMB union. The significance of that small detail will emerge later.

Mr Smith was employed by Securicor as one of a team of three involved in the delivery and collection of cash from customers' premises. The employer had strict rules governing the handling and transit of cash. On one occasion both Mr Smith and one of his colleagues, Mr Curry, breached one of those rules, putting two containers of cash at risk.

Disciplinary proceedings followed. At the first stage both Smith & Curry were dismissed. They appealed internally. At the final appeal stage it was decided by management that Curry was less culpable than Smith. The outcome was that Smith's dismissal was confirmed; in Curry's case the penalty was reduced to a final warning. He was reinstated on that basis.

On Smith's complaint of unfair dismissal an Industrial Tribunal held that the original decision to dismiss both men fell within the range of options open to a reasonable employer. They went on to hold that, although the final appeal stage was reasonably conducted, no reasonable employer could have decided to dismiss the appeal of Smith and allow that of Curry. Equity demanded that where two employees are guilty of culpable conduct and there is practically no distinction to be drawn between their culpability they should be treated in the same manner. Smith's dismissal was unfair. On appeal by the employer the Employment Appeal Tribunal upheld the Industrial Tribunal decision.

On further appeal to the Court of Appeal the decisions below were reversed. The judgments in that case are notable in two ways. First, at paragraph 31, Stocker LJ affirmed the band of reasonable responses test in the context of whether, in acting upon the findings and conclusions of the appeal panel, the respondent employer acted reasonably and within the band of reasonable responses. The passage to which I have referred in Lord Denning's judgment in Swift is set out by Stocker LJ at paragraph 33 without dissent. Secondly, at paragraph 43, Balcombe LJ observed that what the Industrial Tribunal clearly did, in holding that there was no real distinction between the cases of Smith and Curry, was to substitute their own views for that of the employers in this case. That, said his Lordship, is enough to show that their decision was wrong as a matter of law.

It follows, in my view, that Securicor v Smith is binding Court of Appeal authority approving the third, fourth and fifth propositions advanced in Iceland.

Next, Morgan v Electrolux Ltd [1991] IRLR 89. The applicant, Mrs Morgan, was suspected by her employer, Electrolux of overbooking the number of units on which she had worked for the purpose of boosting her piece-work earnings. Following investigation she attended a disciplinary interview at which she was asked to explain apparent discrepancies between work booked and produced. She attempted to do so but the employer refused to accept her explanation. She was dismissed.

An Industrial Tribunal upheld her complaint of unfair dismissal. They held that the employer's refusal to accept her explanation was unreasonable. According to the tribunal the evidence of another employee, which suggested that the appellant had been absent from her work for considerable periods of time, ought not to have been preferred to that of the applicant.

On appeal by the employer the Employment Appeal Tribunal allowed the appeal on the ground that the Industrial Tribunal had impermissibly substituted their own evaluation of the other employee's evidence for that of the employer. They substituted a finding that the applicant had been fairly dismissed.

On further appeal to the Court of Appeal by the applicant, the court upheld the Employment Appeal Tribunal's approach. In giving the judgment of the court Balcombe LJ, at paragraph 11, summarised the relevant principles of law, as to which there was no dispute between counsel. It is worth mentioning that leading counsel appearing in that case, between whom there was no dispute as to the relevant principles, were Mr Stephen Sedley QC and Mr Patrick Elias QC, as they then were. Mr Sedley was instructed by Mr O'Hara of the GMB union on behalf of Mrs Morgan. The second of five principles of law, set out by Balcombe LJ at paragraph 11, consists of a recitation of paragraph 24 of the judgment in Iceland, which his Lordship describes as having been approved by the Court of Appeal in Neale v Hereford and Worcester County Council.

Applying the Iceland approach (proposition (3)) at paragraph 19, Balcombe LJ held that the Industrial Tribunal had substituted their own evaluation of the other employee's evidence for that of the employer. That was an error of law. The Employment Appeal Tribunal were correct in so finding. Not material to our present considerations is the further finding by the Court of Appeal, allowing Mrs Morgan's appeal, that having identified an error of law the Employment Appeal Tribunal ought to have remitted the case to the Industrial Tribunal for reconsideration, not substituted their own finding of unfair dismissal.

For completeness I should next refer to the Court of Session decision in Conlin v United Distillers [1994] IRLR 169. That case concerned an allegation of inconsistency of treatment between the applicant and other employees who had committed similar offences. See Hadjiannou.

In the course of his judgment in Conlin, at paragraph 6, Lord Ross quoted with approval the approach of the Employment Appeal Tribunal in that case [1992] IRLR 503, paragraph 4, where Lord Coulsfield records a submission made on behalf of the employer relying on Iceland that the Industrial Tribunal had fallen into error by substituting their own judgment of what was reasonable for that of the employer and that they had failed to consider whether, in the circumstances of the case, dismissal fell within the range of responses open to a reasonable employer. That submission was accepted by the Employment Appeal Tribunal in allowing the employer's appeal and affirmed by the Court of Session on further appeal.

The foregoing review of what I regard as the relevant cases seems to us to put beyond doubt the proposition that this Employment Appeal Tribunal is bound to follow and apply paragraphs 3 – 5 of the Iceland approach. However, that is not quite all.

I have mentioned that the cases of both Smith and Morgan were supported by their trade union, the GMB. It is clear that in recent years that union has conducted something of a campaign to challenge the band, or range of reasonable responses test in these courts. See, for example, the article by Mr Andrew Freer, the GMB Legal Officer in the December 1998 issue of the Industrial Law Journal volume 27, page 335, to which Mr White referred us. We do not say that in any way pejoratively. On the contrary, it is the function of the representatives of workers to improve their protection under law. The band of reasonable responses test is seen as being unduly weighted against applicants. Whether or not that is so is not a matter for us. The question it raises is whether that test is correct in law; if not, at what level in the judicial system can it be corrected; and if it properly reflects the statutory provision, then it can only be altered by Parliament.

As part of what I have described as the union's campaign, the application of the band of reasonable responses test in individual cases has been challenged on appeal to the Employment Appeal Tribunal. I recall having one such case, in which we declined to entertain the submission beyond the ex parte preliminary hearing stage and refused permission to the applicant to appeal to the Court of Appeal in order to challenge the test.

His Honour Judge Colin Smith QC and members took a similar course in another GMB supported case, Smith v Siddall & Hilton (Springs) Ltd, heard at the Employment Appeal Tribunal on 21 January 1997. On that occasion the applicant renewed his application for permission to the Court of Appeal. The application came before Waite LJ, a former President of the Employment Appeal Tribunal and Potter LJ on 25 April 1997. The applicant was represented by experienced leading counsel in the field, Mr Brian Langstaff QC.

We have been supplied with a transcript of the judgment of Waite LJ, with which Potter LJ agreed, on that occasion. It is, so far as we are aware, unreported.

From that judgment we see that the Industrial Tribunal directed themselves in accordance with the Iceland approach in finding that dismissal fell within the band of reasonable responses open to the employer.

In his submissions, Mr Langstaff, in seeking permission to appeal, argued that the range of reasonable responses formula was unsatisfactory; that it was only one of a number of judicial paraphrases of what is now section 98 (4) which, on analysis, conflict with each other. He invited the court, if permission were granted, to give guidance as to which formula was to be preferred or, perhaps some new formula to replace it.

That submission was rejected. The court was not persuaded that any real conflict of judicial approach could be found between Iceland and Neale on the one hand and the cases of

Bessenden Properties v Corness [1977] ICR 821, Gilham and British Leyland v Swift [1981] IRLR 91. Permission to appeal was refused.

Thus, without more, it would seem to us that as at the 26 April 1997 not only was the Iceland approach plainly and unarguably binding on this Employment Appeal Tribunal and Employment Tribunals; its correctness was not open for debate in the Court of Appeal; which brings me to the recent Employment Appeal Tribunal decisions.

The Recent Trilogy

Having considered the judgments in Haddon, Wilson and Madden, with the assistance of counsel appearing before us, it seems to us that three principal questions must be addressed:

(1) Does the Burchell test apply to the reason for dismissal (section 98 (1) to (3)) or to the reasonableness of the dismissal (section 98 (4)) or a combination of the two? (Burchell).

(2) Is the band of reasonable responses test to be followed and if so, what precisely does it mean? (the Denning test).

(3) In what circumstances, if any, is the Employment Tribunal permitted or required to ask themselves what they would have done, in the circumstances of the case before them (substitution).

Burchell

No review of this branch of the law would be complete without reference to the judgment of Arnold J in British Home Stores Ltd v Burchell (EAT). That case, decided on 20 July 1978, was initially reported at [1978] IRLR 379. It did not come to prominence until the approach taken by Arnold J was approved by the Court of Appeal in Weddel v Tepper [1980] ICR 286. The judgment in Burchell appeared in a note which followed that report at [1980] ICR 303.

In introducing the case Arnold J said, at page 304B:

"The case is one of an increasingly familiar sort in this tribunal, in which there has been a suspicion or belief of the employee's misconduct entertained by the employers; it is on that ground that dismissal has taken place; and the tribunal then goes over that to review the situation as it was at the date of the dismissal."

The relevant law was then contained in paragraph 6 of the First Schedule to the 1974 Trade Union and Labour Relations Act. In other words, prior to the amendment effected by the 1980 Employment Act, removing the burden of proof on the employer to show that he had acted reasonably. In Burchell, the respondent had to show both that he had a potentially fair reason for dismissal and then that he had acted reasonably under what is now section 98 (4) ERA.

At page 304 D Arnold J laid down what has become the three-fold Burchell test:

"First of all there must be established by the employer the fact of that belief (that is, belief in the employee's misconduct) that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain the belief. And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further. It is not relevant, as we think, that the tribunal would themselves have shared that view in those circumstances."

This first point arises directly as a result of the approach taken by Lindsay J in Madden. Certain passages in that judgment appear to suggest that in Burchell, Arnold J was directing the three-fold test exclusively to the reason for dismissal and not in any way to the question of reasonableness under what is now section 98 (4).

At paragraph 17 in Madden Lindsay J said:

"Broadly, section 98 is concerned with two things: the reason (or principal reason) 'shown' for the dismissal and the fairness or unfairness of such dismissal as a response to that shown reason. There are cases where, so long as the alleged reason is adequately shown, it is inescapable but that the dismissal was a reasonable response to it."

And at paragraph 20:

"Thus the word 'shown' in reference to the reason or principal reason for the dismissal, thus leads, at any rate in a disputed misconduct case, to a complex question (as to which the burden is on the employer) which embraces that the reason must have been disclosed or made apparent to the employee, that it must later have been disclosed or made apparent to the Employment Tribunal, that it should have been honestly believed by the employer to be the reason or the principal reason for the dismissal (at any rate by the time the employer acted upon the reason) and, at latest by the time the employer finally formed the belief and acted upon it, that by then the employer should also have been available to him what, objectively regarded, can be seen by the tribunal to have been reasonable grounds for that belief." We make no further comments on section 98 (1) to (3).

He then moves to section 98 (4).

We confess to having some difficulty with that analysis of section 98. It has the refreshing originality of a construction of the section untrammelled by authority. However, we fear that we must take a more conservative approach.

Arnold J was expressing, compendiously, the test to be applied to an employer who, when Burchell was heard, had to show both that he had a potentially fair reason for dismissal (under paragraph 6 (1) and (2) (b) of the First Schedule to the 1974 Act) and that he acted reasonably in treating that as a sufficient reason for dismissal (paragraph 6 (8).

In Weddel v Tepper Stephenson LJ was of the opinion (297 E – H) that employers suspecting an employee of misconduct cannot justify their dismissal simply by stating an honest belief in his guilt. There must be reasonable grounds and they must act reasonably in all the circumstances having regard to equity and the substantial merits of the case. They do not have regard to equity and the substantial merits of the case if they jump to conclusions without carrying out a proper investigation. If they form their belief hastily and act hastily upon it without making the appropriate enquiries or giving the employee a fair opportunity to explain himself, their belief is not based on reasonable grounds and they are certainly not acting reasonably. The two things run together and paragraph 6 (8) of the Schedule is there to reinforce paragraph 6 (1) (b). It did not seem to his Lordship to matter whether, by failing to do that (carry out a reasonable investigation) the employer failed to fulfil the requirements of paragraph 6 (1) (b) or paragraph 6 (8).

In a sense the distinction between paragraph 6 (1) (b), read with paragraph 6 (2) (b) (the conduct reason) and paragraph 6 (8) did not then matter, because the employer had to establish his case on both limbs.

The difference today, as we pointed out in McDonald, is that whilst under section 98 (1) and (2) the employer must show a potentially fair reason, no such onus lies on him, having passed that hurdle, to show reasonableness under section 98 (4). Because the question under section 98 (4) is one for the Employment Tribunal, in circumstances where the burden of proof is neutral, it is now important to make the distinction.

We are quite satisfied that the question of reasonable investigation and reasonable grounds for the employer's honest belief in the misconduct alleged goes solely to the reasonableness of the dismissal and not the reason for it.

We say that on the basis of the Court of Appeal decision in Gilham, a case to which Lindsay J refers in Madden, but only in the context of Morison J's reliance on that authority for a proposition for which, as we shall later see, it is not support, in relation to the range of reasonable responses test question.

Gilham deals with the distinction between the reason and reasonableness in the judgment of Griffiths LJ at paragraphs 16 – 19. The case involved the Council's need to reduce its budget. In order to do so they unilaterally reduced the pay of the applicants, who were employed in the capacity then known as "dinner ladies". The applicants refused to accept the pay cut and brought complaints of unfair dismissal.

An Industrial Tribunal held that the Council had failed to make out a substantial reason for dismissal under section 57 (1) (b) of the 1978 Act, but that even if they had, the dismissals were unfair under section 57 (3).

Lord Justice Griffiths said that it was impossible to argue that the substantial reason put forward by the Council, namely a need to achieve economies forced upon an employer by a national policy to reduce spending in the public sector by offering new contracts to applicants on reduced terms, could not be a substantial reason for dismissing the applicants. He continued at paragraphs 18 – 19:

"The hurdle over which the employer has to jump at this stage of an enquiry into an unfair dismissal complaint is designed to deter employers from dismissing employees for some trivial or unworthy reason. If he does so, the dismissal is deemed unfair without the need to look further into its merits. But if on the face of it the reason could justify the dismissal, then it passes as a substantial reason, and the enquiry moves on to s. 57 (3), and the question of reasonableness.

The error into which the Tribunal fell was to confuse the s. 57 (1) (b) and s. 57 (3) tests. In order to decide if the reason was a substantial one, they ask themselves if the employer was, in the circumstances of this case, reasonable in regarding it as a sufficient justification for the dismissal. This is the test that has to be applied when considering s. 57 (3), and not section 57 (1)."

It follows that in Madden, it seems to us, Lindsay J's analysis may be one which falls into the same error as did the Industrial Tribunal in Gilham, that is, by conflating the question of reasonableness with that of the reason for dismissal.

In our view, looking at the Burchell test, stage 1 relates to the reason for dismissal, has the employer established the fact of his belief in the misconduct alleged? If so, section 98 (1) and (2) is satisfied. Stages 2 and 3, reasonable grounds based on a reasonable investigation go to the question of reasonableness under section 98 (4).

(2) The Denning Test

For the reasons given by Lindsay J at paragraphs 32 – 38 in Madden, we agree that this Employment Appeal Tribunal is bound to apply the Denning test. The authorities set out earlier in this judgment inexorably lead to that conclusion.

We are not persuaded otherwise by the reasoning of Morison J in Haddon. In particular, we are unable to find any support in the judgments of the Court of Appeal in Gilham for the proposition that the court was there laying down some different test in substitution for that propounded by Lord Denning in Swift.

We note that this approach, which found favour with the Employment Appeal Tribunal in Haddon, was advanced in the "conspicuously able" argument of Mr Freer on behalf of Mr Haddon. Surprisingly, the earlier GMB cases of Securicor v Smith, Morgan v Electrolux and Smith v Siddall are not referred to in Haddon.

What had failed before the Court of Appeal in the leave application in Smith v Siddall & Hilton, appears to have succeeded in Haddon to this extent (paragraph 26) where Morison J said:

"The mantra 'the band or range of reasonable responses' is not helpful because it has led tribunals into applying what amounts to a perversity test, which as is clear from Iceland itself, was not its purpose."

That observation requires further analysis.

The perversity test stems from the Court of Appeal decision in the administrative law case of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] 2 AER 680. The test there formulated was whether the decision reached by the licensing authority was one to which no reasonable authority could have come. Only in those circumstances could the court interfere with that administrative decision.

Perversity is a common ground of appeal to the Employment Appeal Tribunal against decisions of the Employment Tribunal. It is a high hurdle for an appellant to overcome. See per Mummery J in Stewart v Cleveland Guest (Engineering) Ltd [1996] ICR 535, 542 C – H.

However, it seems to us that that is not the same as the band or range of reasonable responses test.

If an analogy can be drawn with another branch of the law it lies not in perversity, we think, but in the Bolam test.

In the ordinary case of medical negligence the first question is whether the defendant fell below the standard of a reasonably competent medical practitioner in the field.

In his classic direction to the jury in Bolam v Friern Hospital Management Committee [1957] 2 AER 118, 122, McNair J said:

"A doctor is not guilty of negligence if he has acted in accordance with a practice accepted as proper by a responsible body of medical men skilled in that particular art. Putting it the other way round, a doctor is not negligent, if he has acted in accordance with such a practice, merely because there is a body of opinion which takes a contrary view."

Later he referred to "a standard of practice recognised as proper by a competent reasonable body of opinion".