United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR W J DIAMOND (Consultant) Heald House Cottage Heald House Road Leyland Lancashire PR25 2JA
For the Respondent	MR P MEAD (of Counsel) Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW


 


MR RECORDER LANGSTAFF QC:

1. This is an appeal from a decision of the Tribunal sitting at London (Central); reasons for that decision were delivered on 6 February last year. By that decision the Employment Tribunal upheld the employee Respondent's complaint of unfair dismissal, but reduced the compensation to which he was entitled to 25% because it concluded there was only a 25% chance that he would not have been dismissed in the circumstances which transpired. In consequence, the Tribunal ordered that the Respondent pay the Applicant £2,158.25. Against that decision the employer appeals.

The Facts

2. Essentially the facts are these; that in March of 2000 pornographic material was found stored on the hard disk of a computer used by Mr Hunt. He was told of this, suspended and a week later a disciplinary hearing was held.
3. The issue was whether or not Mr Hunt had deliberately or accidentally stored the material, which he agreed he had been sent. He claimed he intended to delete it and not to store it, though in fact the converse occurred. He claimed that he had not solicited the material. The head of personnel of the Appellant then concluded that Mr Hunt had deliberately saved the material and summarily dismissed him. He appealed. That appeal was dismissed.
4. The Tribunal found at paragraph 16 of their decision that the reason for his dismissal was his conduct. They concluded, however, that that reason was not a sufficient reason for his dismissal because there had been no sufficient investigation of his claim that he had stored the material by accident. Instead the employer had simply relied upon the view of its IT Department that it was impossible for the material to be saved by mistake.
5. On this basis, the Employment Tribunal concluded that the decision was procedurally unfair. They then added at paragraph 18:

"If that further investigation had been carried out, the Tribunal's view was that there was a 25% chance that it would have shown that Mr Hunt's explanation was correct."

If the explanation that Mr Hunt gave was correct, no question of dismissal would have arisen. If it was shown to be false then the Tribunal concluded that the decision to dismiss would have been reasonable and we have heard no argument that dissents from that view.

The Grounds of Appeal

6. These short facts give rise to four grounds of appeal. The first of those is that before concluding that there was a 25% chance that Mr Hunt would have not been dismissed, the Tribunal should have afforded the employer the opportunity to make submissions upon the matter or, it may be, to call further evidence relating to that question.
7. Secondly, it is said that Mr Diamond, who appeared before the Tribunal as he has appeared before us, asked the Tribunal to hear argument whether or not they would reduce the compensatory award which they had given or indicated by reason of the contributory conduct of Mr Hunt. He tells us that he was not permitted to make that argument at that time before the Tribunal.
8. Thirdly, he complains that the Tribunal reduced the basic award to reflect its view of the percentage chance of the Applicant being fairly dismissed, when it was permitted only to reduce the basic award if it had first found contributory fault which of course it had failed to consider.
9. Fourthly, he argued that the Tribunal decision was perverse. The employer must have been entitled to rely upon the evidence of its own information technology experts and could not be said to have been conducting an unreasonable investigation. If those experts were telling them what was a matter of expertise, namely that it was impossible for the material to have been saved accidentally, it was not for the Tribunal to conclude otherwise.
10. When this appeal began, we were faced with an application by the Respondent employee to permit him to advance a cross appeal. This was to accept the force of the third ground which the Appellant advanced, namely that the basic award should not have been reduced by 75%, but should on well established authority have been left at 100%. Any reduction by reason of the improper procedure which had been adopted, should be visited upon the compensatory award only. This would follow from any decision by us, Mr Mead argued, if it was decided that the principal points relied upon by the Appellant were well founded. We gave permission for that cross-appeal to be advanced. We did so on this basis: first it was not opposed, indeed it was freely consented to by Mr Diamond, who indicated that the main thrust of his appeal was the first, second and fourth ground we have identified. He told us that he had mentioned the third ground out of completeness and to indicate that this was a Tribunal which had made an elementary error of law and might therefore be considered prone to make such errors, and that something had gone seriously wrong with the procedures before it.
11. We considered whether the appeal might have been a freestanding appeal in any event and thus out of time. We concluded however, on the basis of the submissions that Mr Mead made to us, which it is unnecessary given the consent to recite further, that we need not treat it as such and accordingly we did not feel precluded by the lateness of the cross-appeal from denying the employee the opportunity of arguing a point which was, after all, not in dispute.

The First Ground

12. On the first ground it is, as we see it, an elementary principle of law and procedure, sometimes referred to as a principle of natural justice, that each party has a right to be heard. Part of that principle necessarily involves a party having the opportunity within reason to address the Tribunal upon the issues before it. Where there may be some uncertainty as to what issues are before a Tribunal, it is obviously wise and it may be essential for those issues to be clarified. Where a Tribunal reaches a decision upon a discrete issue without giving the opportunity procedurally to either party to address that issue, there would be a failure of natural justice or a failure to hear the parties as it is appropriate that they should be heard. We do not think that those principles are seriously in dispute here. Mr Mead, for the Respondent employee, does not dissent from the view of the facts that we have established from the Chairman's notes and from the submissions of Mr Diamond, that what occurred was that the Tribunal reached the decision it did at paragraph 18, as to the percentage chance, without specifically inviting any submission as to that chance.
13. If the judgment that has to be made to establish the percentage is to be regarded as a separate legal issue, then it was plainly not one which the parties were invited to address. If it is to be regarded however, as not being a discrete legal issue but as being part and parcel of the determination of the unfairness of the procedure or unfairness of the dismissal then it would not necessarily be required of a Tribunal, however desirable it might be, that they should ask the parties for their submissions. Essentially, therefore, as we see it, the appeal here turns upon whether or not the determination of what is called "the Polkey percentage", after the case from which the Employment Tribunal's practice derives, was or was not a determination of a separate legal issue.
14. To answer that one needs to be reminded of its origin in the case before the House of Lords in Polkey v. Dayton Services. By that decision it was established that where an employee complained that he had been dismissed by means of a procedure which was unfair, that was an unfair dismissal, notwithstanding that he might, if a fair procedure had been used have been dismissed in any event. The question of the chance of his remaining in employment if a fair procedure had been adopted was regarded by the House of Lords as being a separate issue. Indeed one might well see many cases in which the separateness of that issue would be plain as a matter of fact, quite apart from one of principle. For instance in argument before this Tribunal we considered the question of an employee apparently caught red handed, who was not invited to give an explanation for the appearance of the theft that it was alleged had occurred, or who when being asked, had suggested that there was some relevant witness who had not been consulted, who might support his or her case. In such a situation, it is not difficult to envisage that a decision reached on the hoof by the employer might, depending upon the facts, be regarded as procedurally unfair in not having sufficiently investigated the employee's case. One might well consider that in such a case it would require further evidence to show what would or would not have been the probable consequence had a fair procedure in fact been adopted.
15. Mr Mead, however, argues that in the present case all the facts were before the Tribunal. He argued that it was incumbent upon an Employment Tribunal to reach a decision as to the percentage chance of retaining employment, even if the evidence was thin. He pointed in support of that to the decision before this Tribunal of King v. Eaton (1998) IRLR 686. There in the head note, it is noted that an employer is not always entitled to call evidence that compensation should be reduced on the basis that it was likely that the employee would have been dismissed in any event. The head note goes on to observe that it is for the Tribunal to decide, as a matter of impression and judgment, whether the unfair departure from what should have happened was of a kind which made it possible to say with more or less confidence that the failure made no difference, or whether the failure was such that the world as it might have been could not sensibly be reconstructed. That case, he pointed out, was implicitly approved by the Court of Appeal in O'Donohue v. Redcar and Cleveland Borough Council (2001) IRLR 615.
16. Given that there was an obligation upon an Employment Tribunal to reach a determination as to the Polkey percentage and given that the Tribunal was entitled as King v. Eaton demonstrates in some circumstances at least to refuse to hear further evidence upon that issue, he argued that an Employment Tribunal was equally entitled not to hear submissions upon the evidence which it had heard before reaching a determination. In practice, as Mr Diamond later characterised it, Mr Mead was here arguing that the submissions of the parties' representatives were in effect redundant, that what mattered was the evidence before the Tribunal, which it was for the Tribunal to assess, and that the submissions of the parties were in effect irrelevant on this issue. Mr Mead suggested that the issue of culpability of Mr Hunt was argued at length before this Tribunal, that the Tribunal therefore had in mind all the arguments and all the evidence that might be capable of persuading it as to the appropriate percentage chance that might be adopted. In any event, he argued that the determination of the appropriate percentage was so bound up with the question of procedural default that Mr Diamond, as a representative familiar with Employment Tribunal procedures, should have been aware that the Tribunal would be bound to consider what percentage chance there might be and therefore should have and could have addressed the Tribunal as to it. He dealt with cases which might be said to argue the opposite by pointing to the limited nature of the questions which they addressed. Thus when in Mercia Rubber Mouldings Ltd. V. Lingwood (1974) ICR 256, Sir John Donaldson, on behalf of the Industrial Relations Court said at page 257 g – h, in reference to the facts of that case:

"The Tribunal having decided that the employee had been 'unfairly' dismissed within the meaning of the statue proceeded to deduct 50% from the compensation which they would have otherwise have awarded, they did so upon the ground that the employee had contributed to his own dismissal, but the Tribunal reached this conclusion without giving him any opportunity of giving evidence on that aspect. That was plainly a denial of justice and, as the employers fairly concede, the conclusion that the employee contributed to his own dismissal cannot possibly stand."

17. Mr Mead observed that that related to a case in which further evidence might have been given. That was not the case in the present appeal. As to the case of Slaughter v. Brewer and Sons (1990) ICR 730, a decision of this Tribunal presided over by Mr Justice Wood, in which the following was said, Mr Mead has similar observations:

"A Tribunal is of course master of its own procedures. A practice has grown up - no doubt with sound administrative reasons - of deciding liability and then adjourning and asking the parties to reach agreement on compensation. In order to help in this process it is desirable for the parties to know of any intended reduction in such compensation. This is usually expressed in percentage terms as "a contribution." When beginning a case, especially a long one, it may not always be easy to see whether arguments on compensation issues are going to be possible before deciding liability and therefore a Tribunal may not know how it will proceed at the close of the evidence.

Those representing parties should know that a Tribunal may well be taking the course of deciding contribution as the same time as liability and be ready to argue the issues, but there may be some room for misunderstanding. Where parties appear in person then they may not know the usual procedures. Thus, a representative may well address a Tribunal only on liability. It is difficult to know how best this problem can be handled, but it is important for Chairmery of Tribunals to know that it exists.

There may however be cases where an argument on compensation cannot be properly prepared until the decision on liability and perhaps more importantly the reasons for that decision are digested…"

18. Mr Mead points out that that passage falls short of establishing that a Tribunal has an obligation to raise the issue with the parties, at least where it is considering contributory fault, even though it is plainly very desirable that it should do so before reaching a conclusion. Again, he distinguished the case of Laurie v. Holloway (1994) ICR 32, in which the Appeal Tribunal reviewed a decision of an Employment Tribunal which had taken a view that the contractual arrangements between the employer and employee in the case they were considering were illegal. It was held that that possible conclusion should have been raised as a matter of law with the parties before determining it. Mr Justice Knox, having drawn attention to the Privy Council opinion in the case of Mahon v. Air New Zealand Ltd (1984) AC 808, had gone on to say that Lord Diplock had held that a relevant rule was that any person making a relevant decision;

"…must listen fairly to any relevant evidence conflicting with the finding and any rational argument against the finding that a person represented at the inquiry, whose interests, (including in that term, career or reputation) may be adversely affected by it, may wish to place before him or would have so wished, if he had been aware of the risk of the finding being made."

This rule requires:

"…that any person represented at the inquiry who would be adversely affected by the decision to make the finding, should not be left in the dark as to the risk of the finding being made, and thus deprived of any opportunity to adduce additional material of probative value which, had it been placed before the decision maker, might have deterred him from making the finding, even though it cannot be predicted that it would inevitably have had that result."

19. Those words were adopted by this Tribunal in the judgment of Mr Justice Knox in determining that the decision of the Employment Tribunal there was unsafe and could not stand. But Mr Mead points out that the decision refers to further evidence: accordingly, we are left with the question whether or not the determination of the Polkey percentage is a separate issue, such that it would require a Tribunal to notify the parties that it had it in mind dealing with that issue at a particular stage in the proceedings or whether it is so bound up with the determination of the unfairness of the dismissal itself, that (at least for experienced advocates) it requires as a matter of justice no such notification.
20. We reject the submissions made by Mr Mead. We do so for these reasons: first, the case of Polkey itself draws a distinction between procedural fault and the economic consequence in terms of compensation of that fault. Secondly, it is common ground that in the present case, the Tribunal were, albeit without announcing the fact, engaged upon a hearing as to liability (i.e. unfairness) first, and were not engaged so far as the parties or (it appears) the Tribunal understood what they were doing, upon any issue that related directly to compensation. Mr Mead properly conceded that if this Tribunal had come to a conclusion following deliberation as to the amount of compensation to be paid without inviting any further evidence or submission upon it that there would have been a clear sense of injustice in the parties and it would not have seemed to either party to be appropriate that should happen. Because of its origins in the Polkey case, we see the present position as being analogous to that. Thirdly, we are persuaded by the logic of the three cases, Mercia Rubber, Slaughter v. Brewer, and Laurie v. Holloway to which we have referred. Although Mercia Rubber deals with a case in which further evidence might have been called, we are far from clear that the present case is not such a case. It might well have been, but we think that although it was within the powers of the Tribunal following the guidance given in King v. Eaton to refuse to hear further evidence upon the basis that it would be wholly artificial to recreate a situation which never existed in fact, that was a decision which they could only make upon being told of the nature of the evidence that might be called and upon listening to submissions. We consider that it was perhaps open to Mr Diamond, if he had wished to do so, to have called further evidence from his information technology experts to indicate that there was no realistic possibility of Mr Hunt retaining his employment and that the case which he sought to advance could not logically succeed. We do not rest our decision just upon the possibility (for such it is and no more than that) that there might have been further evidence, but also upon the recognition in Slaughter v. Brewer and in Laurie v. Holloway that the submissions of the parties may be material. We consider that there is little point in permitting advocates to make submissions as to that which the facts should demonstrate by way of inference or that which they should lead to by way of judgment, unless the Tribunal is prepared in principle at least to be influenced by those submissions. It is necessary for those submissions to be focussed upon the issues which the Tribunal is addressing.
21. Next we take into account the experience, which is that of each of the members of this Tribunal and that of Mr Diamond, that it is customary for Tribunals to invite the advocates to make submissions as to the percentage chance that they should determine in respect of the Polkey deduction. This we think recognises the fact that it is not naturally evident, or may not be naturally evident to an advocate, that the point arises as being one bound up inextricably with a decision as to the unfairness of the dismissal.
22. Next, we consider that it is essential for the parties to understand why it is that they have lost. If authority were needed for that trite proposition it is to be found in the case of Meek v. City of Birmingham. Where a judgment or assessment of a proportion or figure has to be made by a Tribunal, this general principle requires that the parties have at least some understanding of the basis upon which a Tribunal has reached the conclusion it has. Where it is that a percentage is adopted, it may be sufficient, depending on the circumstances, for a Tribunal simply to say that it has assessed those chances at 25 or 30 or 40 or whatever percent. However, such circumstances are likely only to arise after the parties have urged upon the Tribunal the figure which is in their submission correct from their respective view points.
23. Where in the absence of such submissions a Tribunal simply hits upon a figure without expressing any of the factors which lead to that figure rather than another in its decision, then that decision cannot sufficiently explain the basis upon which it has been reached. In this way too the absence of submissions mean that the parties cannot properly understand the basis upon which one figure rather than another has been reached. Indeed Mr Mead in the course of his argument was unable to say what factors might have motivated this Tribunal to come to this particular conclusion other than to rely upon a broad assessment of the evidence.
24. Accordingly we consider that where a Tribunal has before it a case in which it is considering reaching a decision that a dismissal is unfair upon procedural grounds, then unless it has given an opportunity to the parties, which is clear in its terms, to address them as to that aspect of the case before retiring, it should raise with the parties the possibility that submissions may make a difference to the determination before proceeding to place a figure upon it. It may be that they will have to consider whether or not to admit further evidence and will at that stage take account of the guidance given by King v. Eaton Ltd. However we do not think that the Tribunal is entitled to resolve an issue in the absence of submissions by the parties, where that issue is of fundamental importance to the amount of compensation which is, after all, what the case is principally about.
25. Turning to the second ground of appeal, we should say nothing about this save that had this been the sole ground of appeal, we should have thought it premature. It may well be that the answer to it is that given by Mr Mead, where he points out that in the particular circumstances of the present case, either Mr Hunt was on any reasonable view of the evidence guilty and therefore there would be no question of anything less than 100% contribution, or he had accidentally stored the e-mail attachments to which the case related in which case he could not sensibly be guilty of any contributory negligence at all. We can see from the submissions that Mr Diamond has made that it may be open to him to argue before the Tribunal to whom we shall eventually remit this case that there was an element of contributory fault in the failure of Mr Hunt to alert any of his management to the fact that he had received a number of very offensive e-mail attachments and that thereby, although inadvertently by storing those attachments he may have suggested to his employers that he was guilty when in fact he was not. That is an argument about which it is best we say no more because it is likely to be one raised by Mr Diamond before any remitted hearing and therefore one which we leave him to develop and about which we should express no view, save that he is entitled to raise it.
26. As to the fourth ground of appeal, we simply say this: Mr Diamond argues that it was perverse of the Employment Tribunal to take the view that the employer was acting unreasonably in failing to investigate further the employee's claims. He argues in effect that the employer's information from its own information technology experts should be determinative of the appeal. We do not see any force in this ground of appeal. This is because it seems to us to be a finding principally of fact whether or not a procedure involved sufficient investigation to satisfy the requirements of reasonableness. That judgment is one for the Employment Tribunal to make. He has to go so far as to show that they were perverse in reaching an impermissible finding upon it. Whatever the view might be of this Tribunal, we cannot say that it was not open to the Employment Tribunal to conclude that there should have been some further investigation and consideration of that which the employee was saying. There would indeed be little point in interviewing the employee in the course of a disciplinary hearing, before which the employer had obtained the views of the information technology experts, if any expression by the employee that he had accidentally saved the documents was simply going to be rejected without more.
27. Accordingly, we propose to allow this appeal upon the first ground which is raised. This means that the case will have to be remitted to the Employment Tribunal for determination as to the appropriate percentage reduction to be adopted. The Employment Tribunal will have to approach its task upon the basis that the procedure adopted by the employer was not one which was fair. Accordingly, the employee will be entitled to a basic award without reduction, subject only to such force as Mr Diamond may summon from any argument he may seek to address as to contributory fault.
28. So far as the compensatory award is concerned, that, we think, should be considered by the Tribunal who will first have to determine whether or not it wishes to hear any evidence more than that which has already been given. We have considered whether or not the matter should be remitted to the same Tribunal as Mr Mead urged, or to a different Tribunal. We have concluded that if it is administratively convenient, then considerations of economy and proportionality argue that the matter should be remitted to the same Tribunal for determination. In effect, what is required is that Tribunal, if it is still able to be reconstituted, should consider the submissions that Mr Diamond and Mr Mead will make with an open mind and consider in the light of those submissions (and as we have indicated, any further evidence which they may think appropriate, although there may be none) and determine with a fresh and open mind what, if any percentage deduction there should be from the compensatory award in respect of the chance that Mr Hunt may have retained his employment.
29. For those reasons and to that extent, this appeal must be allowed.