United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	IAN WILSON (Solicitor) Instructed by Messrs Dean Wilson Laing Solicitors 96 Church Street Brighton East Sussex BN1 1UJ


 


MR JUSTICE LINDSAY (PRESIDENT)

1. We have before us by way of a full hearing the Appeal of Mrs S Thomas trading as Teddy Bears Nursery, in the matter Miss Overton and Mrs Marsh v Mrs Thomas trading under that name. This morning Mr Ian Wilson has appeared for the Appellant, Mrs Thomas, and he had also appeared for her below. Neither of the Respondents to the Appeal, that is to say the Applicants below, appears before us to resist the Appeal. Each has merely put in an answer indicating that they rely on the grounds relied upon by the Employment Tribunal and neither of them has put in a skeleton argument to resist the Appeal notwithstanding a direction that that should be done.
2. The history of the matter is this; that on 14 October 1999 an IT1 was received from Mrs Marsh for unfair dismissal. She said that she had been employed from January 1992 to 19 July 1999 as a Deputy Nursery Supervisor. She said this:

"On the 19 July 1999 the Respondent had a meeting with Brighton & Hove Social Services Registration and Inspection Unit. Upon her return to the Nursery the Respondent called the Applicant and her co-employee, Sharon Overton, to see her. The Respondent said that she intended dealing with both employees at the same time.

The Respondent's attitude was aggressive and said that a number of complaints had been made to the Social Services about the Applicant and Sharon Overton. Mrs Thomas did not specify any of the complaints and said that she had only been told of five allegations. The Respondent said that Social Services had told her to dismiss the Applicant and Sharon Overton. The respondent said that she was dismissing the applicant and Sharon Overton with immediate effect. However the Respondent said that the applicant (and Sharon Overton) could work until 6 pm if she wished to do so. The Applicant did not and left the premises immediately after the meeting.

The written reasons for the dismissal given by the Respondent were contained in a letter from the Respondent dated 22 July 1999. The letter states: " … because of serious allegations made by a number of complainants to the Registration and Inspection Unit, Brighton & Hove Social Services, as the owner of the Nursery I was required to take immediate action to ensure the welfare of the children attending the Nursery."

3. On the next day, 15 October, there was an IT1 presented from Miss Overton also for unfair dismissal. She had been employed from April 1994 to 19 July 1999. She, too, refers to that meeting of 19 July 1999. She says:

"Mrs Thomas said a list of complaints had been handed to the Social Services about Debbie Marsh and the Applicant. Mrs Thomas did not specify any of the allegations. The Applicant asked what this meant and was Mrs Thomas sacking her. Mrs Thomas replied "yes" and on being asked by the Applicant "why" Mrs Thomas replied "don't you think 5 allegations hanging over your head from Social Services is enough to sack you?". Mrs Thomas said Social Services had mentioned the Applicant's and Debbie Marsh's name throughout and that Social Services had told her to make changes and sack both the Applicant and Debbie Marsh. Mrs Thomas said the Applicant (together with Debbie Marsh) were to be sacked immediately but could work until 6 pm that day. The Applicant left the premises after the meeting."

4. And Miss Overton had received a similar or virtually identical letter to that of 22 July 1999 that had been received by Mrs Marsh. On 1 November 1999 Mrs Thomas, the employer, put in an IT3 in both cases and she made a number of points. She said:

"On Monday, 19^th July 1999 the Respondent was called in to the Inspection Unit and there was confronted by a panel consisting of a Senior Registration and Inspection Officer, the Registration and Inspection Officer, Senior Practitioner Children and Family's Department and a Team Administrator taking notes. The Respondent was confronted with eight pages of complaints regarding the staff at the nursery which specifically named the Applicant and Debbie Marsh which were summarised as follows:-"

Then she sets out a number of complaints, staff being bullied, Sharon shouting at children and that sort of thing.

5. In her paragraph 4 she said:

"It was made clear to the Respondent by the Registration and Inspection Unit that unless she took immediate steps in relation to the Applicant and Debbie Marsh the nursery would be closed down. The Applicant was asked what she proposed to do about it by the Registration and Inspection Unit and said that she would have to dismiss both members of staff.

In view of the urgency of the situation the Respondent immediately on her return to the nursery convened a disciplinary meeting inviting both the Applicant and Debbie Marsh to bring in a work colleague if they wished and neither did so wish.

Both employees were told that the allegations had been made about their conduct at the nursery and some of the allegations were read out to them. The Respondent told the Applicant that the nursery would be closed by the Inspection Unit but that she had offered to work full-time herself until alternative staff arrangements could be made. Both employees were told by the Respondent that she was not prepared to allow the nursery to close and lose the reputation that she had built up over the years.

The Respondent considered the possibility of suspending the Applicant and her colleague but reasonably concluded that this would serve no purpose since she was not in the position to challenge the findings of the Registration and Inspection Unit and because parents would inevitably remove their children if they thought there was any prospect of the Applicant and her colleague returning to work."

A little later in paragraph 9 she says:

"A full disciplinary hearing would in the circumstances have served no purpose whatsoever. It is therefore submitted that dismissal in all the circumstances was within the range of reasonable responses of any employer.

Without prejudice to the foregoing if it be found that the dismissal was procedurally unfair it is submitted that the result would have been the same if a proper procedure had been followed and/or that it would be inequitable in all the circumstances to award the Applicant any compensation."

6. So, there were the claim and the defence. On 12 June there was a hearing at the Employment Tribunal. On 5 July the decision was sent to the parties. It was the decision of the Tribunal at Brighton under the Chairmanship of Mr J Simpson, sitting with Mrs Penfold and Mr Allen and the decision was unanimous. It was that both Applicants were unfairly dismissed by the Respondent. The Respondent was ordered to pay compensation to Miss Overton of £2,089.25 and to Mrs Marsh of £3,619.35.
7. The Employment Tribunal made some important findings in the course of their Extended Reasons. They said, firstly, that on 19 July 1999 the employer was called to a meeting by the Local Authority which administers and inspects nurseries and confronted the employer with a number of allegations of serious child abuse against the Applicant as well as more general complaints. Secondly, the Tribunal held this:

"Although the local authority did not demand the dismissal of the Applicants it made it clear to the Respondent that unless she took personal charge of the nursery and resolved the current difficulties it might require the nursery to close until it was satisfied with the way that if operated."

8. Thirdly, the Tribunal find that Mrs Thomas called the Applicants into her office and dismissed them without notice and without payment in lieu of notice. Fourthly, that she did not embark upon conducting any investigation into the allegations and, fifthly, that she gave no thought to suspending them during an investigation.
9. All that was not as intractable and unreasonable as it would be in many cases because special circumstances were applying; thus the Tribunal said in their paragraph 6:

"The Tribunal is satisfied that the reason for the dismissal of the Applicants was because of the serious allegations of child abuse made against them. The Respondent did not investigate the allegations partially because she felt there was little she could do to ascertain whether they were true as she expected them to be denied by the Applicants (as later substantially proved to be the case). The Tribunal accepts that it was impracticable in the circumstances of this case for the Respondent to contact the 80 or so parents of the children who attended her nursery and inform them that an investigation was being undertaken into allegations of child abuse against one of her nursery staff (Miss Overton) and her nursery supervisor (Mrs Marsh). The Tribunal concludes on the balance of probabilities that such action would most likely have resulted in many if not most parents withdrawing their children from the nursery, which would have destroyed the Respondent's business.

Going on, they said in paragraph 7:

"The Tribunal is also satisfied on the balance of probabilities that even if the Respondent informed the parents she had carried out a thorough investigation into the allegations of abuse against the Applicants and had found them not to be proved with the result that they were continuing in her employment, this too would have had a devastating effect on her business with the likelihood of many children being withdrawn."

10. The Tribunal said that there should have been an internal enquiry. The said:

"The Applicants should have been given an opportunity of responding to the allegations made against them before any decision to dismiss them was made. Whatever the result of that enquiry the Applicants should have been given the opportunity of undergoing normal disciplinary proceedings before a decision to dismiss them was made. None of this was undertaken. Had it been undertaken the Tribunal finds it would have taken 4 weeks to conduct and the Applicants should have been suspended on full pay pending the outcome of those enquiries and procedures."

11. And then they made a further series of important findings. In paragraph 9 they said:

"The Tribunal accepts that had these procedures been conducted then on the balance of probabilities the result would have been the same and the Applicants would have been dismissed. However, the Tribunal is unable to conclude that such an investigation would have resulted in the dismissals being for gross misconduct entitling the Respondent to dismiss the Applicants summarily."

A little later they say:

"The Tribunal accepts the commercial reality that if parents became aware that two members of the Respondent's staff were being investigated about a number of serious allegations of child abuse it would have sounded the death knell of the Respondent's business. The Respondent was therefore entitled to adopt an exceptionally cautious approach when assessing the seriousness of the situation with which she was confronted."

And later in paragraph 10:

"However, the Tribunal concludes that had a proper procedure been adopted it would not have made any difference to the end result save that both Applicants would have remained employed by the Respondent for a further 4 weeks. In arriving at this conclusion the Tribunal is not finding that all or any of the allegations were substantiated against either or both Applicants but the fact that they were made placed the Respondent on the horns of a dilemma for which she had no real alternative but to dismiss both Applicants, or run the serious risk of crippling if not losing her business. Although the local authority did not demand their dismissal it was implicit from their conduct that had the Respondent not dismissed them she ran a serious risk that the local authority might require the closure of her nursery."

And then finally the quotations are of important passages. In paragraph 12 the Tribunal says:

"However, had the Respondent proceeded properly her reason for dismissing the Applicants would have amounted to Some Other Substantial Reason and in all the circumstances of the case, when determined in accordance with equity and the substantial merits of the case, they would have been fair dismissals.

The Applicants were therefore entitled to be compensated on the basis their employment would have continued for a further 4 weeks which the Tribunal finds would have been a reasonable period within which to conduct proper investigatory and disciplinary procedures."

12. The Tribunal held there was no ground for reduction on the basis that the Applicant had contributed to their own dismissals. And the Tribunal then went on to make awards consisting of basic and compensatory awards of payment in lieu of notice and a sum for loss of statutory rights.
13. Mr Wilson's skeleton argument which he has, of course, also adopted orally before us this morning makes the point that it cannot have been unreasonable for the employer not to have investigated the allegations given that it was impracticable to contact the parents of the children. And thus the position was that the employer felt there was little she could do to either establish or indeed refute the allegations.
14. It was also implicit in the Local Authority's conduct that if the Applicants were not dismissed then there was a serious risk that the Local Authority might require the closure of the whole nursery. Thirdly, the knowledge that a full enquiry was being pursued could, even if it led to an exoneration of the Applicants, nonetheless have been devastating for the business and against that background the employer was thus entitled, as the Tribunal found, to adopt an exceptionally cautious approach.
15. This sort of subject requires us to look at the well known authority of Polkey v Dayton Ltd (H.L.(E)) [1988] ICR 142 and in particular the passage from the speech of Lord Bridge of Harwich at page 163 where he says this:

"If an employer has failed to take the appropriate procedural steps in any particular case, the one question the industrial tribunal is not permitted to ask in applying the test of reasonableness posed by (and it was then section 57(3)) is the hypothetical question whether it would have any difference to the outcome if the appropriate procedural steps had been taken. On the true construction of section 57(3) this (and the modern equivalent being section 98) this question is simply irrelevant. It is quite a different matter if the Tribunal is able to conclude that the employer himself, at the time of dismissal acted reasonably in taking the view that in the exceptional circumstances of the particular case, the procedural steps normally appropriate would have been futile, could not have altered the decision to dismiss and therefore could be dispensed with. In such a case the test of reasonableness under section 57(3) may be satisfied."

16. Even supposing a full investigation involving children and therefore parents would have been impracticable, which seems to be the case, there is no finding by the Tribunal that an enquiry limited to a confidential enquiry of other members of staff would have jeopardised the business in any way nor is there any finding that that sort of limited enquiry would have been futile.
17. It would at least have established what the allegations were; which, if any, could be set aside as being trivial and not requiring further investigation and, more importantly, what the Applicants said as to such allegations as remained after the trivial ones had been discounted. It was, after all, a very serious matter that 2 persons who had been engaged for some time in this type of business and involved with children should not have an opportunity to put their side of things to meet what were described as serious allegations.
18. Investigation of that limited and confidential kind could, perhaps, have thrown up what the attitude of other members of staff was and could have pointed to whether Mrs Marsh and Miss Overton were guilty or not guilty of such things as the charges were known to relate to. There is no finding that the employer herself, Mrs Thomas, had come to a view that an enquiry of that limited nature would be futile and hence could be dispensed with.
19. Indeed, the Tribunal held that:

"The Respondent made the decision to dismiss the Applicants before being aware of the nature or seriousness of the allegations made against them."

We find it impossible against that background to say that the Tribunal erred in law. Of course, we are only concerned with errors of law in the Tribunal's view that a limited type of enquiry should have taken place. The facts that, on balance, in looking back from the findings of the Employment Tribunal, it can be seen that it would not have availed the Applicants in proving their innocence nor availed the employer in proving their gross misconduct to have had that kind of limited enquiry do not of themselves indicate error of law in the Tribunal's conclusion that such enquiry should have been embarked upon and that for want of it the dismissals were unfair.

20. Next, Mr Wilson challenges the conclusion that such a limited enquiry would have taken 4 weeks. In oral argument, without the point being abandoned, Mr Wilson recognised there were weaknesses in it and the weaknesses perhaps come from passages from the oral evidence where Mrs Thomas, during cross examination said:

"I did not suspend to investigate because I would have had to keep on full pay which could have taken weeks or months."

And there was a later passage where the evidence says:

"It would probably have been only a month to investigate these matters and I would still have dismissed."

21. Neither of those passages clearly describes or necessarily relates to the limited form of enquiry of other staff which it seems that the Tribunal thought should have been embarked on, including, of course, enquiries as to what the 2 Applicants themselves said about the allegations, and so not too much weight can be put on those answers without knowing precisely what the questions were that were being answered and what kind of investigation was there in mind. But one of the points of having what is called "the Industrial Jury" below is to enable decisions to be reached in such matters from experience gained by the lay members of the Tribunals themselves. We do not feel able, given the limited evidence on the subject, to say that the Tribunal's conclusion that dealing with the matter would have taken 4 weeks represents an error of law and again we emphasise we can only deal with errors of law.
22. Lastly, Mr Wilson urges that the Tribunal had no right in point of jurisdiction to make an award of pay in lieu of notice, a purely contractual claim, in the context that the Applicants' claim was only for unfair dismissal and hence did not include claims in contract. We have been able to see no answer to that point and, of course, no Applicant is here to resist it. It seems to us that was an error of law on the part of the Employment Tribunal and accordingly we allow the Appeal but only into the extent of reducing Miss Overton's award by £650, (the element of pay in lieu of notice) and Mrs Marsh's by £1199.10, (again the element attributed to an award for pay in lieu of notice). There may need to be consequential adjustments to the prescribed element and possibly to interest but if those do arise and cannot be agreed between the parties then we remit those questions to the same Tribunal as before.