United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR JOHN DOWSE (of Counsel) Messrs Eversheds Solicitors London Scottish House 24 Mount Street Manchester M2 3DB
For the Respondent	MR GARETH JONES (of Counsel) Messrs David Yablon Solicitors Forward House 8 Duke Street Bradford BD1 3QX


 


THE HONOURABLE MR JUSTICE LINDSAY (PRESIDENT):

1. We have before us the full hearing of the appeal of ASDA Stores Limited in the matter Mrs Sandra Malyn v ASDA Stores Limited. Today the Appellant (ASDA) has appeared by Mr Dowse and Mrs Malyn, the Respondent, by Mr Gareth Jones. The case concerns the use or abuse of a discount card which ASDA gives to its employees. It might be convenient first to explain ASDA's "Colleagues Discount Card", as it is called. ASDA has a system under which its employees of more than 6 months' continuous service, called Colleagues, are given an ASDA discount card which entitles them to purchase goods from ASDA stores without any annual or other spending limit at a 10% discount. Plainly a useful perk to have. A booklet of August 1998 explains its use. The booklet is headed "Colleague Discount Card". It says: -

"The discount card must only be used by the colleague and one other person nominated by them. The nominated user must live within their household and be their immediate relative or partner."

And, under a heading "What Happens if A Card is Misused", :

"A colleague discount is part of the remuneration and benefits package. Any misuse of a card or breach of the rules by the colleague or their nominated user will be regarded as gross misconduct by the colleague, the penalty for which is dismissal."

That is dated August 1998. The card, though, when it is sent or given to the colleague, seems to have a note with it saying:

"Your colleague shopping card, here is your new discount card."

It says:

"Please read the instructions opposite carefully and then ensure that your card is signed immediately by yourself and your nominated user."

2. It is not entirely clear from the Tribunal's decision but it would seem that that is attached to the card when it is sent. There are discount scheme rules which are also in the evidence and, without reading all of them, there is a passage that says the following:

"Your colleague discount card may be used only by yourself and one other person nominated by you. The additional nominated user must live in the same household as yourself and must be either an immediate relative or your partner. Any card holder whose nominated user does not satisfy these criteria, will be in breach of company policy and, such an incident will be regarded as gross misconduct."

There are general conditions and they look as if they are on the back of the sheet that said "Your colleague shopping card" which seems to have accompanied the card and they say:-

"Any misuse of the card by an ASDA stores' or Dales colleague in contravention of the scheme rules, will be regarded as gross misconduct. Colleagues are reminded that they are responsible for use of their card by their additional nominated user. The colleague is responsible for notifying the rules of the scheme to the nominated additional user. Any misuse of the card by a nominated user and contravention of the rules of the scheme will be regarded as gross misconduct by the colleague."

In addition there is an ASDA colleague disciplinary procedure brochure or booklet dated November 1997 and that includes the following passages:-

"Acts of serious misconduct will result in a final written warning or dismissal without stages one and two being used".

Stages one and two were verbal warning and written warning.

Then there is a heading that says; Gross Misconduct.

"This normally relates to an act of misconduct so serious that we no longer have enough trust or confidence in the colleague for a working relationship to be maintained. Examples of gross misconduct are as follows. It must be noted that this is by no means an exhaustive list as it is not possible to include every case of gross misconduct which may arise in the store".

Amongst the examples given are:

"A wilful breach of colleague discount card rules or condition."

Then, on the same page, under the heading "Summary Dismissal", one finds this:-

"If a colleague commits an act of gross misconduct the normal penalty will be summary dismissal, that is without notice or pay in lieu of notice."

3. It is not entirely clear, by any means, which of these particular passages were appropriate at the time that Mrs Malyn gained her card, but we will revert to that when we come to the findings of the Tribunal. Mrs Malyn was summarily dismissed. On 4 June 1999, she who is deaf, presented her IT1 for unfair dismissal. She had solicitors acting for her. She had been a long established employee of ASDA. Her employment had ended 5 March 1999. She had been, at any rate in the latter stages of her employment, a grade three assistant. She said that she had been dismissed for gross misconduct, namely the abuse of a discount card. Her IT1 said: -

"It was a term and condition of the card scheme that the employee could use the card along with one other nominated user. The nominated user was to be a person in the employee's immediate family and who normally resides with them."

4. She said that the allegation against her had been that on 20 February 1999 she had allowed a person who was not a signatory to use her card. There had been an investigatory hearing on 4 March 1999. She had had a colleague representative with her. The allegations against her were described. She said:

"I admitted that I had allowed my son to use the card so that he could obtain a discount on his weekly shopping. His employment situation was not very secure and, that particular week, he was not expecting to be paid much. I explained my son's predicament to those present and offered to repay the discount which amounted to approximately £3. I apologised for what I had done."

That was a passage from her IT1. She indicated that she was then requested to attend a disciplinary hearing the next day. At that hearing, she says that the seriousness of what she had done was impressed upon her. She apologised for what she describes as her omission. She was then dismissed for gross misconduct and she appealed but her appeal failed and accordingly the dismissal took effect.

5. She says this:-

"I contend that I have been unfairly dismissed on the grounds that the Respondent was not reasonable in coming to the decision to dismiss me. The Respondent also failed to follow fair disciplinary procedures. In relation to the reasonableness of my dismissal, I contend that the Respondent did not act in accordance with equity and the substantial merits of my case. I was employed by the Respondent for 22 years and my record of service was unblemished. I have not previously had any form of warning during my employment. It is also the case that I immediately admitted the offence and apologised to the Respondent. I explained why I had allowed my son to use the card. I also offered to repay the discount which was approximately £3. She added, I also believe that other employees of the Respondent Company have not been dismissed for the offence of misusing the colleague discount card. Given my length of service, my admission and apology and the Respondent's inconsistency, I maintained that the Respondent's decision to dismiss me was unreasonable."

There was also an allegation of procedural irregularity on ASDA's part but as that lead to no conclusion against ASDA, we do not need to deal with it. It will be noted that in that IT1 there is no allegation that Mrs Malyn had not breached the rules as to discount cards. There is no allegation that she had not realised that she had breached the rules. There is no allegation that she had not recognised that such a breach was a serious or gross breach and there is no allegation that a serious or gross breach could not be visited with summary dismissal even for a single offence. That was the position on the IT1.

6. On the 22 June 1999 ASDA lodged its IT3. It set out some of the rules to which we have already referred. It said:-

"These rules are communicated in writing to the employees each time a new card is issued. Breach of the rules is regarded as gross misconduct. The additional nominated user of the card must live in the same household as the employee and must either be an immediate relative or the employee's partner."

The Applicant's nominated user was her daughter who was a member of the same household. Another rule is that the card may only be used to purchase goods for use or consumption within the Applicant's household. As to the events of the 20 February, the IT3 said this:-

"On that date the Applicant's daughter used the card to obtain £5.52 discount on £55.15 worth of shopping. The Applicant admitted that shortly following that transaction, another transaction took place involving the use of the discount card, this time to obtain £3.65 on £36.47 worth of shopping for the benefit of her son and daughter-in-law, neither of whom was a nominated user or member of the Applicant's household."

7. There had been no dispute, said the IT3, about the facts at the disciplinary hearing. And the IT3 continued:-

"After careful consideration, the Applicant was dismissed for gross misconduct. The Applicant was advised of her right to appeal. The Applicant's dismissal was upheld at a subsequent appeal. The Applicant complains about the reasonableness of the decision to dismiss her. The Respondent will contend that in all of the circumstances, the decision to dismiss the Applicant fell within the bound of reasonable response open to a reasonable employer."

As for an allegation that ASDA had been inconsistent in its response to card abuse, that was denied and it was said that further and better particulars were being sought from Mrs Malyn and the procedural shortcoming was also denied. The IT3 was later amended to say that on 20 February the offending card use and purchases were by Mrs Malyn's daughter-in-law in the amount of £55.15 to yield a discount of £5.52.

8. Well, there was the claim and the defence, so to speak, and they went forward to a hearing on 8 October 1999 at the Employment Tribunal at Cardiff under the Chairmanship of Mr G Pritchard. On 15 November 1999 the decision was sent to the parties. It was unanimous and it was: (1) the Applicant was unfairly dismissed, (2) the Applicant contributed to the extent of 70% of her dismissal, (3) the remedies would be considered at a hearing on 7 January 2000. The Tribunal's extended reasons say this:

"It is of some relevance to the case that the Applicant is profoundly deaf. During the hearing she had the assistance of two experienced lip-speakers to help her follow proceedings. However, it is clear that her deafness did not prevent the Applicant from working effectively for the Respondent and being a well-valued and well-liked member of the team. There are no general complaints on either side and there is no suggestion of discrimination or unfair disadvantage."

9. There is, in fact, a question that we cannot resolve as to whether the lip-speakers were, whilst available at the hearing, actually used at the hearing, but there is no way of going into that. We have no Chairman's notes.
10. The Tribunal says this at its paragraph 4: -

"The Respondent's disciplinary procedures, for which the Applicant and her colleagues signed for a copy, mentioned "wilful breach of colleague discount card rules" as one example among eleven of gross misconduct offences, inferentially leading to dismissal for a first offence."

That would seem to be a reference to the terms that we have already read from the ASDA Colleagues Disciplinary Procedures of November 1997 which say, as we have already cited, "wilful breach of colleague discount card rules". So it would seem that the Colleague Disciplinary Procedures of November 1997, including that reference, were what the Tribunal held to have been signed for by Mrs Malyn. The Tribunal went on; they explained how cards were issued and they said this in their paragraph 5:

"Like credit cards, the discount card expires and has to be renewed periodically. Each time it is renewed and re-issued new current rules of use are issued with it. Employees will sign for receipt of the card and the rules. At the same time they elect a "nominated user" of their choice who must live in the same household and be a partner or immediate relative. In the rules for which the Applicant signed it is provided that misuse of the card "will be regarded as gross misconduct". Even nominating a user who is not a relative/partner/or in the same household, will be regarded as gross misconduct. These rules, unlike the August 1998 update, do not further spell out that the penalty for gross misconduct "is dismissal".

11. That quote "will be regarded as a gross misconduct" can be found in the discount scheme rules, which we have already read. So it looks as if the case is either that the Tribunal found the discount scheme rules which we have read as being relevant to Mrs Malyn's case or that such rules as they did regard as relevant to Mrs Malyn's case included exactly the same expression. The Tribunal does not in terms mention the general conditions, which we have cited. Mrs Malyn had signed for her card in September of 1997 so she did not then have the November 1997 Disciplinary Procedures before her but, as we have seen, the most relevant passage of the November 1997 Disciplinary Procedures was the same, it would seem, as that in the Disciplinary Procedures which she did sign.
12. The Tribunal continued as follows: -

"The facts giving rise to the dismissal are substantially undisputed by the Applicant namely that on 20 February 1999 at a time when the Applicant was shortly due to finish work at 1.30pm in the afternoon, before she finished work her son used her card to purchase some goods for himself through a till. The goods amounted to some £55.15 in value therefore the discount given was £5.52. Shortly after that she finished work. She and her husband then purchased some goods for themselves quite legitimately through another till some 20 minutes later to the value of £36.47 thereby getting a discount of £3.65. The Applicant admits now and knows that she was not entitled to give her card to her son and he was not entitled to get the discount for the £5.52 that he did on the goods. It is also accepted that the son was not a "nominator user" of the card. We have at this stage to say the Applicant has from the outset admitted she knew what she did was wrong. The issue she raises in this case was, whether she knew that it was so wrong that she would be summarily dismissed for this single offence of misusing the colleagues discount card."

The Tribunal then turned to look at what had happened at the disciplinary hearing on 5 March. They said that it was conducted by the general store manager, Mr Mark Reece. And then they continued in their paragraph 9 as follows:

"After considering the facts Mr Reece decided to dismiss her. Having considered other options he told us he considered they were not suitable. His main reason for thinking so, as he told us in evidence, was, as he put it, "a question of consistency". The rules had to be consistent for all employees. He also said that he had taken her length of service into consideration."

The Tribunal found it hard to see in precisely what way he had taken the length of service into consideration. He had merely said that he had taken it into consideration. The disciplinary hearing ruled as we have seen and Mrs Malyn appealed. The appeal was held by a general store manager brought in from another branch, a Mr Mayer. And of him and the appeal the Tribunal said this:

"Mr Mayer heard what Mrs Malyn had to say and he summarised her appeal well when he said that the two points she was making were (i) the dismissal sanction was too harsh given her 23 years of service and (ii) she was not aware of the implications of misuse of the discount card. Not that she was unaware that it was wrong, just that she was unaware of the grave consequences. After investigating the allegation that she was unaware, he came to the conclusion "that she had an opportunity to find out that it was wrong". We would question this conclusion as being a reasonable one. It is our view that a reasonable employer if managing properly would have made sure that the employees, all employees including this employee actually knew in fact what the consequences of misuse of the card were. Mrs Malyn was summarily dismissed at that point."

13. The Tribunal was satisfied that ASDA had a genuine belief in the misconduct alleged having occurred and that misconduct, accordingly, was the reason for the dismissal. Accordingly, the Tribunal turned to the question of whether within Section 98 Subsection 4 of the 1996 Act, the dismissal was fair or unfair having regard to the matter set out in 98.4 (a) and (b). The Tribunal said this:

"We consider that a reasonable employer in this case should have made a more thorough investigation of the Applicant's allegation that she had made in the investigatory hearing and subsequently in the appeal hearing that she was unaware. We think that allegation should have been looked into more carefully. Had it been looked into the Respondents would have found that the Applicant was issued the card, which came together with the rules at the same time in circumstances where she signed for the card and was only verbally asked to read the rules. It seems to us hit and miss whether it actually registered properly with the Applicant that misuse of the card would result in her dismissal. The rules might have been little more than instructions for use."

They then turned to some evidence Mrs Malyn had given. They said in their paragraph 14:

"The Applicant says that she was given the card and rules in a hurry and was told to get back to work. Because there was no regularised or documented procedure, the Respondents were not in position to refute that evidence. In general terms we accepted Mr Jones's submission …….."

Mr Gareth Jones had appeared below as he appears here;

"……… that there was a certain inflexibility and too much of a desire to achieve consistency in the approach of both Mr Reece and Mr Mayer in their handling of the situation."

14. It had not been alleged in the IT1 that she had been given the card in a hurry or otherwise that her signature had been little considered or could not be relied upon. As for the steps taken by ASDA to inform its staff in the context of making them aware of rules as to use and abuse of the card, the Tribunal said this: -

"Having studied the Respondent's documentation we find it of high quality. It was generally well designed to bring the matter to employees' attention. Why we say they could not rely on it is this particular case was because of the way that that documentation was brought to the employee's attention at that time and the fact this particular employee had needs as an unskilled person with a disability."

The Tribunal referred to the fact that Mrs Malyn was not supervisory or managerial. They said that the consequences of misuse of a card were not mentioned on the card itself. They continued: -

"It is significant, we consider, that currently an employee applying for a discount card, not only is told about the rules and given the rules, but actually has to sign a declaration that they have understood the rules. This almost makes the Respondent's position unassailable for future cases. We should emphasise that our finding in this case is an exceptional one based upon Mrs Malyn's experience and position and, to an extent, her deafness."

A little later they say: -

"What we have found is that there was a memo issued in March 1998 which clearly set out to achieve that advertising standards of the workforce. We cannot be convinced that the message percolated down to Mrs Malyn and again the Respondents are not in a position to prove that her ignorance of that memo is not quite genuine. The very fact there was a memorandum implies a perceived need to issue a reminder. We have found that the dismissal therefore is unfair by reason of inflexibility and over-strict adherence to the written rules in this case. This approach did not do justice to special individual needs that are personal to Mrs Malyn."

15. The Tribunal recognised, not for the first time in their decision, in their paragraph 19 that:-

"In Mrs Malyn's case we have to say she made a definite error of judgment. She knew, even as she did it, she was doing something wrong."

The Tribunal held that ASDA's procedure had been impeccable. They said:-

"As far as the bare procedural steps are concerned, the Respondent's handling of the matter was we find impeccable. They adhered to their own rules. It is the inflexibility on the substantial question of blame and the failure to investigate fully Mrs Malyn's personal awareness of the gravity of her misconduct that make her dismissal unfair."

And albeit dealing with a slightly different point they said:-

"We consider a reasonable employer would not have dismissed in this case. He might have taken the opportunity to overhaul and re-advertise the rules of misuse to make absolutely certain that no one else slipped through the net as we find that Mrs Malyn had. We also consider Mrs Malyn should have been warned. Mitigating circumstances such as the length of service, the fact that it was an isolated incident not initiated by herself should have indicated that dismissal was too harsh."

And they held that Mrs Malyn, as the decision we have cited indicated, had contributed to her own dismissal to the extent of 70%. That, I hope, is most of what we need from the decision of the Tribunal.

16. On 4 January 2000, ASDA lodged a notice of appeal. Mr Dowse of ASDA, argues that what the Tribunal should have considered is whether in the circumstances as they had appeared to ASDA at the relevant time (which would be at the end of the domestic appeal hearing), dismissal was within the band of reasonable responses open to a reasonable employer. Oddly, the Tribunal do not actually use the familiar phrase 'the band of reasonable responses' at all. And it has to be said that there are some weaknesses in the Tribunal's position. Why should a deaf person be in a special position in relation to printed documentation? The Tribunal relied on the fact that Mrs Malyn was deaf but do not explain what relevance that deafness could have had to the case. It was mentioned that she was only, as it was put "verbally told" (which presumably means orally told), that the rules were to be signed, but there is no indication that there was any evidence that she had misunderstood the position or had not understood it at all. The Tribunal relied on the fact that she was unskilled, but was she so unskilled as to be illiterate or uncomprehending? That is no finding to that extent. It does not appear. She surely could not have been totally illiterate or uncomprehending because, if she understood nothing whatever of the rules and conditions of the card use, how could should have known, as she did, that it was wrong to have done as she did even as she did it? In what form could she have learnt that what she was doing was wrong even as she did it which would not also have drawn to her attention that what she was doing would be regarded as gross misconduct?
17. ASDA's documentation was held to be of high quality, generally well designed to bring the matter of card use and abuse to employee's attention. What more, it might be asked, could a reasonable employer be expected to do beyond providing such literature and getting employees' agreement and signature to it? It is not as if there is any mention of Mrs Malyn saying that, over the years during which she had the card, she had not understood the rules and had asked for them to be explained to her or anything of that order. How could the Tribunal's finding that the current arrangements were now better, in their view, reflect on whether the previous arrangements had been inadequate? The Tribunal said the very fact that there was an amendment implies a perceived need on ASDA's part to issue a reminder. How could that possibly be of relevance to the question before the Employment Tribunal, even if it was a logical point, which it is not. What more thorough investigation could ASDA have made of the allegation that she was unaware (meaning, presumably, unaware of the consequences of the card abuse being such that they did not include gross misconduct)? Apart from pointing to the company's documentation and to what she had signed and making the point that she knew and admitted what she was doing was wrong even as she did it, and hence that she must have already learnt something on the point, what investigation would have made any difference? It was accepted that ASDA could not refute her assertion that she was given a card and the rules in a hurry so what more could ASDA have done by way of investigation? These are all factors that no doubt might have led us to conclude other than as did the Employment Tribunal. But even if we were confident that we would have decided differently to the way the Tribunal decided, that would be entirely irrelevant. It is no error of law to come to a conclusion which the EAT would not have shared as that, in itself, represents no error of law. But there is a passage in the Tribunal's reasoning that does concern us and may indicate an error of law. In their decision in paragraph 17, the Tribunal has a sentence which reads as follows: -

"We cannot be convinced that the message percolated down to Mrs Malyn and again the Respondents are not in a position to prove that her ignorance of that memo is not quite genuine. The very fact that there was a memorandum implies a perceived need to issue a reminder."

18. In that passage, instead of considering what was the company's state of knowledge and whether the dismissal was within the band of reasonable responses in the light of that state of knowledge as at the end of the domestic disciplinary appeal, the Tribunal seem to be addressing whether or not they were convinced that the message had percolated down to Mrs Malyn. Quite apart from the point that reference to conviction rather than to the band of possibilities might be inappropriate, in any event there is the difficulty that that appears to be a substitution by the Tribunal of an examination of its views for the views that should have been looked into, namely the views of the employer at the time. It might be said that a similar vice appears in paragraph 20 where they say: -

"He," …….

That is to say a reasonable employer;

"……….. Might have taken the opportunity to overhaul and re-advertise the rules of misuse to make absolutely certain that nobody else slipped through the net as we find that Mrs Malyn had We also consider Mrs Malyn should have been warned."

It does not follow that because the Tribunal, on the evidence they heard, thought that Mrs Malyn had slipped through the net that it was in any way unreasonable for ASDA at the earlier stage and on the earlier evidence available to them to take the view that dismissal was a reasonable response to the misconduct which it was not disputed had taken place, in other words, the abuse of card procedures and card rules, the very thing that Mrs Malyn, by signing either the ASDA Colleague Disciplinary Procedures of 1997 or their earlier equivalent, had had indicated to her to be a matter described as within the category of gross misconduct. For the Tribunal to ask the wrong question, as it seems that they were doing, does in our view represent an error of law. We must therefore set aside the Tribunal's decision. In doing so, we have paid some attention to Mr Dowse's argument based on L'Estrange v Graucob [1934] 2 KB 394. In that case at page 403, the Queen's Bench Divisional Court consisting of Lord Justice Scrutton, and Lord Justice Maugham said in this passage cited from the judgement Lord Justice Scrutton:-

"When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not".

The force of that observation in relation to contract is undeniable but the whole point of unfair dismissal is that it goes beyond contract. The L'Estrange principal does not, as it seems to us, necessarily help ASDA.

19. It is, of course, not uncommon for employers to specify what would be regarded as gross misconduct. It is appropriate that they should be able to do so. One can readily imagine that, for example, the standard of cleanliness appropriate to the food or health industries could be quite inappropriate in a garage. There might need to be rules as to, for example, alcohol in relation to, say, a train or coach driver that would be quite unnecessary for a meat porter. Stipulations that fit the particular industry or trade can be expected to be encountered. L'Estrange, as we have mentioned, was a case concerning only contract. We do recognise that, developing an argument from L'Estrange, there might well be a principle as follows; firstly, if the provision in the disciplinary code stipulates that a particular act or omission is to be regarded as an offence of gross misconduct attracting the possible sanction of summary dismissal and is such that an employer in that particular trade or industry could not unreasonably characterise that act or omission as such and, secondly, if that employer then takes reasonable steps, including gaining the employees signature to it, to publicise to his employees that the disciplinary code includes that stipulation; and, thirdly, if the employee concerned knows that he is doing wrong under the code and, fourthly, if, had the employee wished to ascertain the particular provisions of the code, he could readily have done so, then, if all those four are present, the employee will not be able to escape the usual consequences of his act having been characterised as gross misconduct by a plea that, whilst he knew that it was wrong and wrong under the code, he had not realised it might or would carry the sanction of summary dismissal. Such a person takes a calculated risk. There might be room for such a principle as we have just mentioned. If there was such a principle it could perhaps have been decisive of this case but we do not so decide or need so to decide. L'Estrange was not cited below and an argument in support of such a principle was not, we think, advanced below. We do not need to deal with it because, as we have indicated, we have already found another error of law in the sense of there being a substitution by the Tribunal for the proper issue which was, as we have mentioned, whether, on the information they had at the time of the end of the disciplinary appeal, a dismissal could properly have appeared to have been within the band of reasonable responses opened to a reasonable employer.
20. We therefore leave the development of such a principle, if it needs to be developed, to other cases. But, reverting simply to this case, having set aside the decision below, the next question is do we remit or come to our own conclusion here and now? We have not found that an easy decision. Indeed, the whole case, as it seems to us, is close to borderline. But, although we have pointed to several weaknesses, as we would say, it in the Tribunal's decision, we are far from confident that the only possible conclusion that a Tribunal properly instructing itself could have come to was that the decision was fair. As we lack confidence in that respect, it seems to us that the only course open to us is to remit the matter to be reheard below. Then the question arises; should the remission be to a new Tribunal or to the same Tribunal as before? We think, given that, of the passages we have drawn attention to, some are such that ASDA is entitled to feel doubt as to its confidence in the previous Tribunal, that the proper course is to send the matter for remission to a totally new Tribunal.
21. Accordingly we allow the appeal. We set aside the liability decision below and we remit to a new Tribunal for hearing afresh. It may be appropriate for the parties to seek directions as to the hearing and as to the evidence to be heard and so on, but that we leave entirely to the Tribunal. In consequence we also set aside the remedies decision.