United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ROHAN PIRANI (of Counsel) Instructed By: Messrs Bailey Wright & Co Solicitors 3rd Floor Guildhall Buildings Navigation Street Birmingham B2 4BT
For the Respondent	MR ANDREW J McGRATH (of Counsel) Instructed By: Messrs Manby & Steward Solicitors George House St John's Square Wolverhampton WV2 4BZ


 


MR JUSTICE LINDSAY (PRESIDENT):

1. Mrs Bopari worked as an examiner and packer for Grasshopper Babywear (Wolverhampton) Ltd. She was on a piece-work contract. There is no finding that Grasshopper found her output unsatisfactory in the first year or so of her employment but then the National Minimum Wage came into effect as from the 1st April 1999. Grasshopper calculated a target for the output of its employees that was related to its obligation to pay the statutory minimum wage, then £3.60 an hour, and found Mrs Bopari's output to be inadequate. Despite warnings given to her over a period of months, Mrs Bopari failed to reach the target outputs set for her and she was dismissed. She presented an IT1. Grasshopper, in its IT3, gave as the reason for her dismissal "low performance". Mrs Bopari, though, attributed it to the setting of higher targets by reason of the introduction of the National Minimum Wage and on her failure to meet those higher targets.
2. She was relying, in that part of her case, on the provisions of section 104 A of the Employment Rights Act 1996 which make a dismissal "automatically" unfair where the only or principal reason for it is that the employee is entitled to the statutory minimum wage.
3. The Tribunal at Birmingham under the Chairmanship of Mr Derek Mellor held in Grasshopper's favour; the dismissal was on the ground, it held, of capability; nor, under section 23 of the National Minimum Wage Act 1998, had Mrs Bopari been subjected to any material detriment in consequence of her entitlement to the minimum wage. Mrs Bopari appeals. She appears before us by Mr Pirani and Grasshopper appears by Mr McGrath, who, unlike Mr Pirani, had also appeared in the matter before the Employment Tribunal.
4. Section 104 A of the Employment Rights Act 1996, added to that Act by the National Minimum Wage Act 1998 section 25 (1), provides as follows:-

"(1) An employee who is dismissed shall be regarded for the purposes of this Part [Part X; Unfair Dismissal] as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that -

a) ............

b) ............

c) the employee qualifies, or will or might qualify, for the National Minimum Wage ...."

5. As Lord Cairns said in Abernethy -v- Mott Hay & Anderson [1974] ICR 323, in a widely quoted passage:-

"A reason for the dismissal of an employee is a set of facts known to the employer or it may be beliefs held by him, which cause him to dismiss the employee."

Thus, as a main question before it on this part of the case, the Tribunal below had to examine into whether the facts known to Grasshopper or the beliefs held by it and which caused it to dismiss Mrs Bopari were or included, as the principal amongst the facts or beliefs which were causative of the dismissal, that she qualified for the National Minimum Wage.

6. As for the facts, Mrs Surjit Bopari, who had earlier had spells working for Grasshopper, rejoined that company on the 23rd March 1998.
7. In April 1998 Grasshopper appointed a new Group Chief Executive who was given the task of making the company more competitive.
8. On the 15th May 1998 Mrs Bopari was given a written contract of employment which provided that she was to be paid on a piece-work basis, working a minimum of 40 hours a week. The piece-work formula was related, it would seem, to output in terms of the numbers of garments which she examined and packed. The contract is not amongst our papers but there is no mention in the findings of the Tribunal as to the contract having specified any minimum output or rate of productivity by the hour or week which was to be required of Mrs Bopari, nor (if some such minimum was required) as to whether there was some maximum number of hours in which that minimum had to be produced nor, again, if a rate of production was specified, over what period it was to be observed and measured and whether it was, for example, an average or some other rate. In the absence of such features being mentioned by the Tribunal below, we shall assume, so far as the contract related to pay, that it was simply for piece-work by reference to output in numbers of garments examined and packed over a period of not less than 40 hours a week and that it had no other relevant stipulations as to pay or output. What was thus contractually required of Mrs Bopari was her attendance and work for at least 40 hours a week. The appointment of the new Chief Executive, it would seem, had not, by the 15th May 1998, led to the contract of a recent employee such as Mrs Bopari incorporating any special features as to productivity.
9. On the 31st July 1998 the National Minimum Wage Act 1998 was passed, to come into force on the 1st April 1999.
10. At first the single hourly rate specified in the 1999 Act was £3.60 an hour. As from the 1st April 1999 Mrs Bopari's pay was said by the Tribunal to have been "related to the National Minimum Wage". There is no finding that her piece-work contract was consensually departed from nor, if it was, as to what agreement replaced it. We assume that what was meant by the reference to her pay being "related" to the National Minimum Wage was that she was paid such minimum as the 1999 Act required but that, if her output at the piece-work rate had been sufficient, she was or would have been paid at whatever greater amount the piece-work basis led to.
11. In May 1999, after time and motion studies organised by Grasshopper over the previous 7 weeks, Grasshopper found that a number of employees, including Mrs Bopari, were performing at what Grasshopper regarded as an unacceptably low level. The Tribunal held, as to such employees:-

"On the 13th May all these employees attended a collective first stage interview and were warned (orally) that their performance must be improved within the next four weeks in order to meet the necessary performance targets (including one at 94% which was set as the appropriate return for the National Minimum Wage rate) and that if these were not met, further disciplinary process would follow; this warning was confirmed by letter of the 18th May 1999 ...."

That 94% was presumably not 94% of what Mrs Bopari herself had once produced or even of what it was thought that she personally would be able to produce but was some notional or average figure related to a wider number of operatives. Precisely what it is, though, is not explained in the Extended Reasons, nor is it explained how it was computed, although it is plain that, "as the appropriate return for the National Minimum Wage rate", it had within it the then £3.60 an hour as a factor.

12. There is no finding of any dissatisfaction by Grasshopper with Mrs Bopari's output or rate of output in the interval between her commencement on the 23rd March 1998 and the collective gathering on the 13th May 1999. There is no finding either that Mrs Bopari's output had once been higher but had now declined or was still declining. However, the Tribunal held that Grasshopper's industrial and work study engineer observed her at work to ascertain her performance capabilities and formed the view that she was capable of performing at a much higher rate but that she was not highly motivated and was easily distracted. There is no finding that earlier she had been more highly motivated or less easily distracted.
13. There then began a series of meetings and warnings to Mrs Bopari about her output. On the 9th July she was warned that she had failed to achieve the 94% target set for her on the 13th May and that she was required to achieve a 75% performance target. She appealed against that warning but the appeal was dismissed. On the 13th October, although not as part of a disciplinary process, she was set a 75% productivity target to be achieved during the following week and was warned that, if the target was not met, the next stage of the disciplinary procedure would be invoked. In the event she achieved only 67% and was called to a disciplinary hearing on the 3rd November. She was given a final written warning that her performance did not meet Grasshopper's standards and she was, as the Tribunal described it, "re-targeted for a further week at 75%" and told that if that figure was not achieved it would lead to her dismissal. On the 19th November there was another disciplinary hearing. She was told that in the previous week she had achieved only 69%. The Tribunal continued:-

"She had been urged to increase her performance since May, that her standard was clearly not going to improve adequately (the company required a 94% performance rate to justify the National Minimum Wage rate in operation) and she was given one week's notice of termination of her employment and advised of her right to appeal ...."

She did appeal but the appeal was dismissed and the Group Chief Executive of Grasshopper decided to confirm Mrs Bopari's dismissal as from the 3rd December 1999.

14. On the 7th February 2000 Mrs Bopari presented an IT1 for "National Minimum Wage/Unfair Dismissal". Amongst the details given of her complaint was that she asserted:-

"Prior to the advent of the National Minimum Wage my employers were satisfied with my work ........

It is my belief that I have been treated this way because management has set me higher targets because of the introduction of the minimum wage and hence my dismissal on the strength of the failure to meet those targets is unfair."

15. On the 10th February 2000 Grasshopper put in its IT3. It said that the reason for dismissal was "low performance". It said, inter alia:-

"The introduction of increased performance targets were necessary for the company to maintain its competitive edge within the textile industry and to assist in the survival of the business."

Grasshopper managed to complete its IT3 without making any reference at all to the National Minimum Wage Act or the rates payable thereunder.

16. The hearing at the Tribunal below occupied some 4 days between 1st September 2000 and 21st December 2000. The decision was sent to the parties, with Extended Reasons, on 18th January 2001. The Tribunal held:-

"It is the unanimous decision of the tribunal:

a) that the Applicant's dismissal was not automatically unfair by virtue of section 104 A of the Employment Rights Act 1996, being neither solely or principally for the reason that the Applicant qualified for the national minimum wage;

b) that the Applicant's dismissal was on grounds of capability and, measured against the criteria of section 98 (4) of the Employment Rights Act 1996, was not unfair; and

c) the Applicant was not subjected to any detriment (for the purposes of Section 23 of the National Minimum Wage Act 1998) by being involved in a disciplinary process that was neither unwarranted, unreasonable, nor the direct consequence of her being entitled to the national minimum wage."

17. We shall first look at some select passages from the Tribunal's reasons which, in the light of the arguments we have received, give rise to real doubts.

1. Section 104 A

18. The Tribunal held:-

"What was clear to the Tribunal was that the applicant understood that she had to work harder to meet her employers' productivity standards (which were not at any point challenged as being unreasonable) and that she was in danger of losing her job if she did not."

We have some difficulty with that. The 1999 Act did not have the effect of changing the terms of Mrs Bopari's contract; it remained a piece-work contract but, on and after the 1st April 1999, it had a statutory "floor" or minimum level of remuneration which (in the absence of any finding as to a "fair estimate agreement" within regulation 25 of the National Minimum Wage Regulations 1999) was to be computed by reference to the statutory minimum hourly rate and the number of hours which she had spent on her work, which was (presumably) "time" or "output" work within regulation 3 or 5 of the 1999 Regulations - see regulations 20 and 24. If that was the only effective alteration to Mrs Bopari's contract then questions arise as to whether Grasshopper was, at law, able unilaterally to require a higher rate of output than had been observed, without objection, from Mrs Bopari in the past, a higher rate which had not been contractually agreed, and then to threaten her with the loss of employment if that higher unagreed rate was not attained. This is an area which the Employment Tribunal leaves totally unexplained. We do not say that the Tribunal's decision is necessarily wrong in law here but, in the absence of explanation, its decision is in our judgment, vulnerable to the Meek -v- City of Birmingham doctrine to which we shall need to return below.

19. Next the Tribunal, after recognising, as had the parties, "that there was a connection between the effect of the implementation of the National Minimum Wage rate by the respondent company and its wish to improve its productivity" then immediately continued:-

"We are satisfied, however, that in the case before us, the imposition of that wage rate was neither the sole nor the principal reason for the Applicant's dismissal."

That also, in our view, requires some further explanation. As we have mentioned, there is no finding that Mrs Bopari's work under her piece-work contract had been complained of before the 1999 Act came into effect. The new level of output rightly or wrongly demanded of her was by reference to a rate required by the employer "to justify the National Minimum Wage rate in operation". The initial time and motion checks had found unacceptably low levels of output in May 1999. There is no finding that it was mere coincidence that that was immediately after the first full month of the operation of the 1999 Act. These surrounding circumstances do suggest a prima facie case that there was a close causal connection between the higher output rate required "to justify the National Minimum Wage Rate" and Mrs Bopari's dismissal and hence there was a need for the Tribunal to explain more fully than does that single sentence cited above that, in the Tribunal's view, the dismissal was not because Mrs Bopari was qualified for the National Minimum Wage.

20. The Tribunal then noted that Grasshopper had in 1995 and 1997 applied performance measures to the tasks of their employees and had dismissed several on the grounds of low and unacceptable output. It is, however, not explained whether those employees were, as we have taken Mrs Bopari to have been, on piece-work contracts without any specified minimum output required of her, or whether those employees were on other types of contract. The Tribunal continued:-

"We considered that the company was entitled to employ work study measures to determine required standards of productivity, and that they did so properly, openly and without oppression. We believed it was significant that no challenge was made either to the level of production required to be met by the applicant or to that aligned to the National Minimum Wage cost, and would observe that some employees were achieving productivity rates well above that."

Of course, the fact that other employees were achieving better productivity rates than Mrs Bopari would not, of itself, provide a reason to dismiss Mrs Bopari. Moreover, that no challenge was made by her to the level of production required of her is immaterial unless it could be said that the absence of challenge over a period represented acquiescence in and acceptance of new minimum piece-work rates contractually to be required of her, as to which there is no finding. Equally, although the company's entitlement to employ work study measures to determine standards of productivity could not be challenged, it does not follow from that that a person, such as Mrs Bopari, on a piece-work contract with no specified rate of output required of her, could be dismissed by reason of falling short of such standards. Further explanation is needed.

21. Next the Tribunal, having found Mrs Bopari's dismissal not to have fallen within section 104 A, went on to say that the dismissal:-

"..... was in fact on grounds of capability and, measured against the criteria of section 98 (4) of the Employment Rights Act 1996, was not unfair."

It is to be remembered that for the purposes of section 98 "capability" means, in relation to an employee, his capability assessed by reference to skill, aptitude, health or any other physical or mental quality. The Tribunal does not explain what assessment by reference to skill, aptitude, health or any other physical or mental quality was carried out by Grasshopper or was in Grasshopper's contemplation at the point of dismissal. It does not seem to us to follow that a failure to meet a given target output is necessarily a shortcoming in, for example, skill or aptitude as quite different factors (such as the adequacy of training or of the equipment given to the particular worker to do the job) may require to be taken into account. Simply to say that Mrs Bopari achieved, say 67% whereas others did 94% is not, of itself, an indication of a want of skill or aptitude in Mrs Bopari. However, the appeal, we were told, was limited to sections 104 A and 23 so that we attach no weight to our doubts in that area of section 98.

2. Section 23

22. An alternative or additional form of claim which was developed below on Mrs Bopari's behalf was under section 23 of the 1998 Act, which we touched upon above. It provides:-

"(1) A worker has the right not to be subjected to any detriment by any act ... by his employer, done on the ground that -

a) ..........

b) ..........

c) the worker qualifies .... for the National Minimum Wage ..."

Sub-section (4) disapplies the section where the detriment is a dismissal within Part X of the Act. The word "detriment" is left undefined but it is reasonable to suppose that Parliament had in mind the meaning attributed to the word (in the context of sex discrimination) by the Court of Appeal in Jeremiah -v- Ministry of Defence [1979] IRLR 437 as consisting of "Putting under a disadvantage" (paragraph 22, per Brandon L.J.) or more fully (per Brightman L.J. at paragraph 47):-

"I think a detriment exists if a reasonable worker would or might take the view that [the matter complained of] was in all the circumstances to his detriment."

23. As we have mentioned, Mrs Bopari was warned on the 13th May 1999, along with others; she was required to attend a disciplinary meeting on the 9th July 1999 and given a first written warning. On the 13th October 1999 she was summoned to a second meeting and then, on the 3rd November, to a disciplinary hearing which led to a final written warning. On the 19th November she attended another disciplinary hearing and was given notice of dismissal. Given that the only material finding as to her contract was that it was on a piece-work basis and for the working of a minimum of 40 hours per week, it is not, as we have said, explained by the Employment Tribunal what contractual right Grasshopper had to require of Mrs Bopari the attainment of new output targets, targets which her IT1 describes, as seems probable, as higher than had been required of her previously (if any particular output had previously been required of her). It seems to us that a reasonable worker would or might take the view that it was to his detriment to be required over several months to attend at repeated stages of disciplinary process directed to his first being set, and then as to his failure to attain, targets for output which his employer had no contractual right to require of him.
24. Thus whether Grasshopper had any (and if so, what) contractual right to require the targets it required of Mrs Bopari was a question which the Tribunal would have had to have examined into and to have answered. The question had relevance, viewing Mrs Bopari's claim merely as an ordinary case of "unautomatic" unfair dismissal on the ground, upheld by the Employment Tribunal, of "capability"; it might well have been unfair to require an output which Grasshopper was not contractually entitled to require. Alternatively or additionally, the question would have had relevance under section 23 if there was a real causal link between the higher targets and the consequential disciplinary process on the one hand and the obligation to pay the minimum wage on the other. The Tribunal said:-

"We have also considered section 23 of the National Minimum Wage Act 1998 but cannot accept that the applicant was subjected to any detriment by being involved in a disciplinary process that was neither unwarranted nor unreasonable, and was not, in our view, the direct consequence of her being entitled to the National Minimum Wage."

But whether it was "unwarranted" depends, in our view, upon whether Grasshopper had any contractual right to specify increased targets, a matter which, as we have said, the Tribunal does not explain. Moreover, and even assuming that the statutory words "on the ground that" in section 23 are as restricted as the Tribunal's phrase "the direct consequence", a practical test for the Employment Tribunal to have applied to find the existence or not of a causal link between the new targets and the consequential disciplinary process on the one hand and the payment of the minimum wage on the other would have been for the Tribunal to examine whether Grasshopper would have required the higher targets and hence been able to have used disciplinary process as they did or would otherwise have been minded to dismiss Mrs Bopari if it had not had to pay her the minimum wage.

25. It does not, of course, necessarily follow from the fact that when there was no minimum wage there had been no higher targets that the minimum wage caused those higher targets and the consequent disciplinary process. "Post hoc" is not necessarily "propter hoc", but given that there had been no targets or lower ones throughout the first year or so of Mrs Bopari's employment it was, in our judgment, incumbent upon the Employment Tribunal to explain more fully than it did why the disciplinary process was not so related to the obligation to pay the National Minimum Wage as to be fairly describable as "done" on that ground.

3. Conclusion

26. In a familiar passage in Meek -v- City of Birmingham D.C. [1987] IRLR 251 at paragraph 8 Bingham L.J., as he then was, said, of the requirements of a Tribunal's extended reasons, they should be a sufficient account of the facts and of the reasoning to enable the Employment Appeal Tribunal or, on further appeal, the Court of Appeal, to see whether any question of law arises. Mr Pirani's argument on behalf of Mrs Bopari includes that the Tribunal's conclusions are, on a number of issues, insufficiently explained. We agree. We have identified a number of areas where the facts and the reasoning is not explained sufficiently for us to tell whether there has been error of law or not. It may that there has been no such error (and we are not to be taken to be holding that the Tribunal's conclusion was necessarily wrong) but in the absence of more explicit reasoning it cannot be ascertained whether there has been error of law or not. On that ground we allow the appeal and set aside the Tribunal's decision.
27. We certainly would not wish to be thought to be expressing serious discontent with the Tribunal's approach to what was plainly a novel and difficult task but especially is it required of Tribunals to be full and explicit in both their fact-finding and their reasoning where, as here, the Tribunal finds itself in wholly uncharted territory. However, this is not a case where there is the slightest ground for any loss of confidence by either side in the Tribunal that originally heard the case. Accordingly, (unless the Regional Chairman directs that to remit to the same Tribunal as before might substantially delay the rehearing) we remit the matter for consideration afresh of the whole case as to sections 104 A and 23 by the same Tribunal as before. It will be for that Tribunal (or such other as the Regional Chairman prescribes) to consider whether, in the light of this judgment, it requires further evidence and whether, if it does or might require further evidence, whether it should first convene a Directions hearing on the subject. That is entirely a matter for the Tribunal that is to hear the remission.
28. For the reasons we have given above, we set aside the decision and (subject as we have said) remit the matter to the same Tribunal as before.