United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR C MANNAN (of Counsel) Instructed by: Tameside Welfare Rights Unit 200 Market Street Hyde Cheshire SK14 1HB
For the Respondents	NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE RESPONDENTS


 


HIS HONOUR JUDGE PETER CLARK:

1. This is an appeal by Thameside Welfare Rights Unit Ltd. a company limited by guarantee and the respondent before the Manchester Employment Tribunal against the Decision of a full Tribunal chaired by Mrs D M Kloss upholding complaints of unfair dismissal brought by their former employees the applicants Miss Martin and Mr Ogden. That Decision (the liability Decision) was promulgated with extended reasons on 29 October 2002 following hearings held on 26 – 28 June 2002 and 19 July. The Decision was promulgated after a further day of deliberation by the Tribunal in private on 7 October.
2. Thereafter a Remedies Hearing took place on 24 February 2003 and by their Remedies Decision promulgated with extended reasons on 28 February that same Tribunal awarded Miss Martin compensation for unfair dismissal totalling £25,789 and to Mr Martin £6,645. There is no separate appeal against the Remedies Decision although that Decision stands or falls on the appeal against the liability Decision. We shall use the same description of the parties in the Judgment as below.

Representation

3. Before the Tribunal the respondent was represented by Mr Charles Mannan, a barrister in independent practice and Company Secretary of the respondent. The applicants were represented by Mr Hynes, their Trade Union representative and a former employee of the respondent.
4. Today Mr Mannan appears to prosecute the respondent's appeal. The applicants do not appear and are not represented. In a letter to the EAT dated 10 July 2003 Miss Martin said:

"I am given to understand that Thameside Welfare Rights Unit has not been giving advice since November 2000. Indeed all the paid staff and volunteers were finished and they have not used the premises since that date"

She believes that the keys of the premises used by the respondent at 200 Market Street, Hyde has been returned to Thameside Council and in a letter dated 11 July Mr Ogden states that to his knowledge the respondent has ceased trading.

5. In these circumstances we enquired of Mr Mannan what is the current status of the respondent and the capacity in which he now represents them. He tells us that despite withdrawal of funding by the Local Authority and then the Legal Services Commission the respondent has managed to find work under a contract with the Employment Service. It is still trading, although part of its premises have been sub-let. He remains Company Secretary and in that capacity appears on behalf of the respondent today. In these circumstances we proceeded to consider the merits of the appeal.

The Facts

6. The respondent operated an advisory centre which had a special Employment Advice Unit and a Debt Counselling Unit. It was mainly funded by Thameside Metropolitan Borough Council. It was controlled by a Management Committee.
7. Mr. Ogden was the Manger of the Unit; Miss Martin was the Administrator of the office. On 20 March 2000 Malcolm Wyatt, a Debt Advice Worker, was dismissed on grounds of capability. As Mr Wyatt's line manager, responsible for supervising him, Mr Ogden was suspended on 21 March 2000 and following a disciplinary hearing before members of the Management Committee chaired by Mr Keith Travis, Mr Ogden was summarily dismissed by a letter from Mr Travis dated 17 May.
8. The reasons then given for that dismissal were his failure to supervise Mr Wyatt and Miss Martin against whom it was alleged that she had failed to put in place the appropriate Professional Indemnity Insurance Cover in respect of Mr Mannon at a time when he worked for the respondent as an employed barrister from November 1998. Miss Martin was in turn suspended and a disciplinary hearing was held on 13 June 2000. She was dismissed, again by letter from Mr Travis dated 14 June.
9. As appears from that letter she was found guilty of two charges, characterized by Mr Travis as serious gross misconduct. The first related to her failure to obtain the correct category of insurance in respect of Mr Mannan; the second is described as poor financial management.
10. Mr. Ogden presented a complaint of unfair dismissal, breach of contract wrongful dismissal and unlawful deductions from wages to the Tribunal on 28 July 2000. That claim was resisted. The reason for dismissal being given in the Respondent's Notice of Appearance as gross misconduct/capability.
11. Miss Martin presented her similar complaint on 26 June 2000. Her complaint was resisted on the grounds of her gross misconduct.

Employment Tribunal Decisions

12. It seems from the Tribunal's remedies Decision that no award was made in respect of the applicants' claims for unlawful deductions from wages. Nor was there any separate award for damages for wrongful dismissal. However, the calculation of each applicant's compensatory award for unfair dismissal included loss of earnings from the dates of their respective summary dismissals.
13. The liability Decision found simply that each applicant had been unfairly dismissed.

The Appeal

14. The respondent's grounds of appeal may be conveniently divided under two heads, the substantive grounds including perversity and the bias grounds.

Substantive Grounds

15. Under a heading, The Decision (the Employment Tribunals reasons, unhelpfully are not set out in sequentially numbered paragraphs), Paragraph 1; the Tribunal refer to the Court of Appeal Decision in Post Office v Foley [2000] IRLR 827. We are satisfied that the judgment in that case represents the current state of the Authorities on misconduct Unfair Dismissal cases.

Foley corrects the wrong turn taken by the EAT in Haddon v Van Den Burgh Foods Ltd. [1999] IRLR 672 and HSBC v Madden [2000] IRLR 288. The appeal in Madden was conjoined with that in Foley before the Court of Appeal.

16. The following principles emerge from Foley:

(1) The first question for the Tribunal is whether the employer has established a potentially fair reason for dismissal. Here a reason relating to conduct . If so

(2) When considering the reasonableness of the dismissal under s.98(4) Employment Rights Act 1996 Tribunals should direct themselves in accordance with Mr Justice Arnold's 3-fold test in British Home Stores v Burchell [1978] IRLR 379 Did the employer have a reasonable belief that the employee was guilty of the misconduct alleged, if so, did he have reasonable grounds for that belief following a reasonable investigation?

(3) Approving the EAT Decision in Iceland Frozen Foods Ltd. v Jones [1982] IRLR 439 the Tribunal is not permitted to substitute its view of the reasonableness of the dismissal for that of the employer. The question is whether dismissal falls within the band of reasonable responses open to the employer.

(4) It has been further explained by the Court of Appeal in the later case of Sainsburys Supermarkets Ltd. v Hitt [2003] IRLR 23 that the range of reasonable responses test applies to both the procedural and substantive aspects of the employer's decision to dismiss (see Lord Justice Mummery, paragraph 34).

17. We have set out our understanding of the law in order to place in context the substantive grounds of this appeal. We should add parenthetically that the Tribunal found no material fault with the procedure employed by the respondents in dismissing both applicants.
18. The first question for the Tribunal in each of these applications heard together was whether the respondent had established a potentially fair reason for dismissal. Under the heading Mr Ogden's case the Tribunal state at paragraph 1:

"The reason for his dismissal was gross misconduct in respect of the applicant's failure properly to supervise Mr Wyatt which had resulted in a number of complaints against the Unit, one of which had come to the notice of the Local Government Ombudsman. The applicant was also dismissed for failing to supervise Miss Martin".

Under the heading Miss Martin's case the Tribunal hold:

Paragraph 1: "The reason for Miss Martin's dismissal was again an allegation of gross misconduct."

The focus in the unfair dismissal claim then moves to the Burchell questions under section 98(4):

(1) Did the respondent have an honest belief that, in each case, the applicant was guilty of the misconduct alleged? That question does not appear to be addressed in the Tribunal's reasons.

(2) If so, did the respondent have reasonable grounds for that belief. Again that question is not expressly addressed.

(3) Did the respondent carry out a reasonable investigation. We can find no answer from the Tribunal's reasons.

Instead by their Decision section the Tribunal direct themselves in accordance with Foley that it is not for them to substitute their views for that of the employer but to determine whether the dismissals fell within a band of reasonable management responses. They answer that question in this way:

"The Tribunal determines that the evidence against both Mr Ogden and Miss Martin did not disclose misconduct which a reasonable employer could have regarded as sufficiently grave to justify a dismissal".

Can that finding stand?

19. Mr Mannan points out, first that in their Extended Reasons the Tribunal made the following findings:

(1) In Mr Ogden's case, paragraph 5:

"The Tribunal finds that his failure to supervise Mr Wyatt more closely did not amount to gross misconduct and that there was no failure of appropriate supervision of Miss Martin … dismissal was completely out of proportion to the complaints about Mr Ogden's work and

(2) In Miss Martin's case, paragraph 2:

"Her failure to check the details of the insurance scheme was unfortunate but does not in the Tribunal's view amount to gross misconduct…"

20. Secondly, in her comments on Mr Mannon's affidavit sworn on 19 March 2003 in support of the bias complaint the Chairman concludes at paragraph 11 of her response to the EAT dated 29 April 2003

"In this case, we found it difficult to accept the respondent's submissions that Miss Martin was guilty of gross misconduct and we made this clear to them throughout the three days of the hearing. They had every opportunity to convince us to the contrary."

21. Those passages, submits Mr Mannan, give a clear insight into the Tribunal's reasoning. Instead of applying the Burchell test and then answering the objective question, did dismissal fall within or outside the range of reasonable responses, the Tribunal required the respondent to prove gross misconduct, a quite different question requiring the respondent to prove first the fact of misconduct and secondly that it amounted to gross misconduct such as to defeat a common law claim for wrongful dismissal. We see the force of that submission.
22. Even if we were to accept that the Tribunal found in favour of the respondent on the Burchell test and the reasons are silent on all three aspects we cannot be satisfied that they approach the case in accordance with their self-direction based on Foley. If their answer to that question was informed by their view that the respondent had not convinced them that the applicants were guilty of gross misconduct, that was a wrong approach in law. I endeavoured to distinguish between the Unfair Dismissal and Wrongful Dismissal questions in Farrant v Woodroffe School [1998] ICR 184. A dismissal which is wrongful at common law may not be statutorily unfair.
23. In these circumstances we have concluded that this Tribunal fell into error in first, not asking and answering the Burchell questions and secondly in substituting their view for that of the employer by asking, in reality, not whether dismissal fell within the range of reasonable responses, but whether the respondent had made out a case in answer to a claim of wrongful dismissal. The appeal will be allowed on this basis and the Tribunal's Decision will be set aside.
24. That raises the question at this stage as to whether we are in a position to affirm the Tribunal's Decision on the basis that it is plainly and unarguably right; reverse it, as Mr. Mannan urges us to do and substitute a finding that the Decision was plainly and unarguably wrong or to remit the case for a re-hearing before a fresh Employment Tribunal (it would not be appropriate to send it back to the same Tribunal, which has reached a firm view on the outcome of these cases).

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25. Despite Mr. Mannon's best endeavours to persuade us that the middle course is the correct one, we cannot accept his submission. He has referred us to two examples of cases in which the EAT has reversed the Tribunal below where an error of law has been found. They are John Lewis & Co. Ltd v Smith (EAT 289/81 4 December 1981 Mr Justice Bristow presiding) and Mecca Leisure v Haggerty et al. (EAT 324-6/83 23 August 1983 Lord McDonald MC presiding). However, both those cases involved dishonesty, where the result on remission was clear. The facts of the present case are not such that, in our judgment, it can be said that on remission a finding that, even if the respondent satisfies the Burchell test, dismissal fell within the range of reasonable responses is so certain that the Dobie v Burns test, that this Decision is plainly and unarguably wrong, is satisfied. We are not persuaded, put another way, that the Decision was legally perverse as Mr. Mannon submits.

Bias Grounds

Mr Mannon accepts that if we allow the appeal on substantive ground and remit the case to a fresh Tribunal for re-hearing then the question of bias or its appearance on the part of two of the members of the Tribunal, the Chairman and Mr Jacques, becomes moot. Even if we were to uphold that contention the result would be the same. Accordingly, we do not find it necessary to rule on those grounds of appeal.

Disposal

It follows that we shall allow this appeal and remit both cases to a fresh Tribunal for complete re-hearing.