United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR D POWELL (of Counsel) Instructed by: Messrs DLA Solicitors Victoria Square House Victoria Square Birmingham B2 4DL
For the Respondent	THE RESPONDENT IN PERSON


 


HIS HONOUR JUDGE RICHARDSON

1. This is an appeal by Abbey National PLC against a Decision of the Employment Tribunal sitting in Birmingham, promulgated on 10 March 2003. The Employment Tribunal held that Mr Morgan, who is the Respondent to this appeal had been unfairly dismissed by Abbey National PLC, hereafter "the Company". The Company appeals against this Decision.
2. As we shall see, the Employment Tribunal decided that the dismissal was unfair because the Company did not preserve or look at relevant CCTV footage. Therefore the Employment Tribunal held the Company did not undertake a reasonable investigation, and, in consequence, its decision to dismiss was vitiated. The question for us will be whether the Employment Tribunal erred in law in reaching this conclusion.

The facts

3. Mr Morgan was employed as a customer administrator; his tasks included transferring very large sums of money from and to large cages during cash processing. The company has, for obvious reasons, very strict procedures governing such work. The work itself is relatively undemanding but involves a high level of responsibility.
4. On 12 June 2002, a daily vault check showed a £25,000 shortage. Investigation by the Company showed that the retailer cash cage was short of a "brick" of £25,000. The cage, which was sealed, was designed so that investigators could count the bricks inside without breaking the seal. The only person who had been working on transferring retailer cash to the vault on that day was, according to the Employment Tribunal, Mr Morgan. Because it was late and the search had already taken three hours, the vault was closed for the night. The following morning a member of staff discovered a brick of £25,000 at the bottom of a cage beneath a jumble of trays or boxes.
5. Mr Morgan has always accepted that he was responsible for transferring retailer cash on that day. He has always accepted that he knows the procedures, but as the Employment Tribunal found, he maintained, as he still does, that he does not know how the brick came not to be placed in the sealed cage, but rather ended up in an unsealed cage outside the vault. The Company has CCTV. The film for the CCTV is inspected as a matter of policy if money disappears and is not found or if theft is suspected. The CCTV in this case was not inspected because the money was found and Mr Morgan was not suspected of dishonesty. The tapes were disposed of in accordance with the Company's policy after 28 days, so they were seen neither by the investigator nor by the decision makes within the company.
6. Mr Morgan was called to a disciplinary hearing on 5 August 2002, by which time the tapes had been destroyed. As a result of that disciplinary hearing, he was dismissed. No finding is made by the Employment Tribunal as to whether the question of the CCTV evidence was raised at that hearing. Mr Morgan tells us that he was suspended up to the date of that hearing and raised the matter at the hearing. The Employment Tribunal finds that the hearing was thorough, that Mr Morgan did not admit the allegations, but could offer no explanation of what happened.
7. On 5 November 2002 there was an appeal hearing. It was held by Mr Cooke. He asked if the video footage was available; he was told that it was not. The appeal panel, which he chaired, took the view that it would have been preferable and helpful to see the video footage, but decided that its absence did not prevent them from taking a view on the evidence. Accordingly, Mr Morgan's appeal was dismissed. The Employment Tribunal found that the reason for dismissal related to conduct and directed itself that it had to apply section 98(4) of the Employment Rights Act 1996.

The Tribunal's reasoning

8. The Employment Tribunal directed itself that it had to apply the guidelines in British Homes Stores -v- Burchell [1978] IRLR 379. Therefore, one issue was whether the employer had, when he formed a belief in the employee's misconduct, carried out as much investigation into the matter as was reasonable in the circumstances of the case. The Employment Tribunal directed itself that the standard was that of a reasonable employer and that what is often called "the range of reasonable responses" test applied. It directed itself that this test applied to the question of investigation as much as to other substantive and procedural aspects of dismissal, and expressly referred to Sainsbury's Supermarkets Ltd -v- Hitt [2003] IRLR 23.
9. The Employment Tribunal took into account the ACAS Code of Practice. Under that Code of Practice it is provided that good disciplinary procedures should:

"ensure that disciplinary action is not taken until the case has been carefully investigated".

See paragraph 9(xii) of the ACAS Code of Procedure 1 on Disciplinary and Grievance Procedures 2000. The Employment Tribunal observed that an investigation will not go only into such matters as proved guilt, but may also go into such matters as might disprove guilt. It quoted Sewell & Francis -v- Ford Motor Company [1975] IRLR 25. It continued:

"In this case the Respondent has amply investigated those matters that might prove guilt, but has failed to secure, preserve or examine the one piece of evidence which might disprove guilt or provide an explanation. We have not heard evidence from [the investigator] and there is no evidence that the employer at the time of the investigation decided that it was reasonable not to look at the video. The evidence before us was that a policy existed to look at the video-tapes only in case of theft or total disappearance of the money. The video was therefore simply not looked at. We do not think that anyone applied his or her mind at the time of the investigation to whether the video might contain useful evidence."

After observing that the video had been destroyed by the time of the disciplinary hearing, the Employment Tribunal went on:

"We consider that it is an aspect of an employer's reasonableness that the employer is concerned to be fair to the employee and not merely to prove his guilt. We think that no reasonable employer, conducting a careful or fair investigation, would disregard a piece of objective evidence that might explain matters or exonerate the employee. We think that is as much so where an employee cannot provide an explanation as when he provides a positive explanation to be investigated. We see that the evidence against the Applicant appears strong, so why, it might be said, is there a need to check the video as well? "

10. The Employment Tribunal, by way of justification, quotes the well known dictum of McGarry J in John -v- Rees [1970] Ch 345 that:

"As everybody who has anything to do with the law knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were fully explained; of fixed and unalterable determinations that, by discussion, suffered a change."

The Employment Tribunal concluded that no reasonable employer would have failed to check the video. It said:

"It follows that although the belief in guilt was genuine, it was not reasonably based on a reasonable investigation"

The Law

11. The law applicable to the question of whether a dismissal is fair or unfair is well established. Once an Employment Tribunal has established the reason for a dismissal, section 98(4) applies. The determination of the question whether the dismissal is fair or unfair, having regard to that reason:

"(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

 (b) shall be determined in accordance with equity and the substantial merits of the case"

12. In determining whether a dismissal is reasonable or unreasonable, the Employment Tribunal must not substitute its own judgment for that of the employer. It must rather ask itself whether the employer acted reasonably, recognising that, in some but not all circumstances, there will be room for reasonable employers to take a different view or adopt a different procedure. The question is whether the employer's action is within the band of reasonable responses which a reasonable employer may have adopted. This was laid down authoritively in Post Office -v- Foley [2000] ICR 1283. When an employer asserts that he has dismissed an employee, for a reason related to his conduct, it is well established that an Employment Tribunal will consider the questions set out in British Homes Stores -v- Burchell [1980] ICR 303 approved by the Court of Appeal in Weddel -v- Tepper [1980] ICR 286. These include consideration of whether an employer at the time he finally concludes that the employer is guilty of misconduct, has carried out as much investigation into the matter as was reasonable in all the circumstances of the case. If there had been any doubt, it was laid down authoritively in Sainsbury PLC -v- Hitt [2003] ICR 111 that the "range of reasonable responses" test applies to this question.
13. So far, the law which we have cited is well known. One case which the Employment Tribunal did not have before it because it is recently decided, is the case of Santamera -v- Express Cargo Forwarding [2003] IRLR 273. This case was concerned with the issue whether the employer should have permitted the employee to cross-examine witnesses, who, she said, were falsely accusing her of bullying and intimidation. The Employment Tribunal held that such cross-examination was not required; the Employment Appeal Tribunal dismissed the appeal. At paragraph 35 the Employment Appeal Tribunal said:

"The employer has to act fairly, but fairness does not require a forensic or quasi-judicial investigation, for which the employer is unlikely in any event to be qualified"

14. Then in paragraph 36 the Employment Appeal Tribunal said:

"….. Whilst, in order to be fair, it is incumbent on an employer conducting an investigation followed by a disciplinary hearing both to seek out and take into account information which is exculpatory as well as information which points towards guilt, it does not follow that an investigation is unfair overall because individual components of an investigation might have been dealt with differently, or were arguably unfair. Whilst of course an individual component, on the facts of a particular case, may vitiate the whole process, the question which a Tribunal hearing a claim for unfair dismissal has to ask itself is: in all the circumstances, was the investigation as a whole fair?"

The parties' submissions

15. On behalf of the Company four principal submissions were made, reflecting four grounds of appeal. It was submitted that the Employment Tribunal in effect substituted its own view, in spite of its express reference to the "reasonable responses" test and Sainsbury PLC -v- Hitt. In support of this submission it was said that the Employment Tribunal made impermissible use of the old case Sewell -v- Ford Motor Company. That was a case where the employee had an explanation which was not investigated. Contrariwise, in this case, no explanation was given and it was neither right nor proper to use Sewell -v- Ford Motor Company as an illustration.
16. It was submitted that where no explanation was given, different considerations applied; the employer could not be expected to investigate in the same way, and, consequently, the Employment Tribunal erred in law in its approach. Rather the Employment Tribunal should have had regard to such cases as Dick and another -v- Glasgow University [1993] IRLR 581 and the specific appeal of Madden which was part of the overall appeal known as Post Office -v- Foley [2000] ICR 1283.
17. It was then submitted that the Employment Tribunal, having identified an inadequacy in the investigation, ought to have looked at the overall picture. Doing so would have involved identifying in what way the inadequacy in the investigation may have led to any substantive unfairness. Reliance was placed on Santamera; it was submitted that the Employment Tribunal should have stood back from its Decision and asked itself whether, despite the lack of retention of video evidence, it was proper to dismiss. It is submitted that in this manner also the Employment Tribunal erred in law.
18. The third and fourth submissions can be taken briefly. The third submission is that the Employment Tribunal failed to have any regard for the companies' duties under data protection and other legislation. The fourth submission was that by using the word "disregard" in paragraph 4 of the Decision, the Employment Tribunal misdirected itself as to what the Company had actually done. It had not, it is said, disregarded the evidence, at most it had not appreciated its possible significance.

Our conclusions

19. The test which we have identified in section 98(4) is indeed a composite test. Santamera is authority for the proposition that an individual failure of investigation will not necessarily result in an unfair dismissal. An Employment Tribunal has to ask itself whether, in all the circumstances, the investigation as a whole was fair; in other words, as a whole, the employer acted reasonably or unreasonably in dismissing.
20. The Employment Tribunal in this case, having identified and criticised the failure to keep the video evidence, has not, in our judgment, undertaken the task which is identified in Santamera and which follows from section 98(4). It has not asked itself whether, in spite of the lack of video evidence, it was reasonable for the employer, on the basis of the investigation as a whole, to dismiss and whether the investigation as a whole was a reasonable one. This involves some careful analysis and consideration of the issues which actually arose in the case.
21. The Employment Tribunal had found in its Decision at paragraph 5, that the retailer cash cage was short of a brick of £25,000. It had also found that the cage was sealed; it had found that investigators could count the bricks inside without breaking the seal. These being their findings, it is difficult to see what impact viewing the video evidence would have had. The employee in this case, Mr Morgan, says to us that after he left the site on that day, with the cage sealed, others indeed had the opportunity, and would have been expected to, open the cage. He questions indeed whether the cage which was found to have £25,000 missing, was necessarily his cage.
22. The Employment Tribunal, however, in paragraph 5 made findings on the basis of which it is extremely difficult to see why it was a requirement for the employer to view the video evidence. It seems to us that although the Employment Tribunal has correctly identified the "reasonable responses" test, it has not properly stood back from its finding that the video evidence should have been retained and looked at, to ask itself the question whether a reasonable employer, not having viewed that evidence, has as a whole carried out a reasonable investigation which entitled it to dismiss the employee. It follows from that conclusion that we consider the Employment Tribunal to have erred in law. It also follows, however, that we cannot simply substitute our own decision for that of the Employment Tribunal.
23. What was required of the Employment Tribunal. and what will be required of the Employment Tribunal on a re-hearing, is to consider in practical terms what the video evidence might have shown, so as to reach a conclusion whether as a whole the investigation was reasonable and sufficient to allow the employer to dismiss. This is not a task which an Employment Appeal Tribunal can undertake.
24. It follows from that the appeal must be allowed and the case remitted to a differently constituted Employment Tribunal. It also follows, since this appeal is allowed, that the remedies Decision, which the Employment Tribunal subsequently made on 2 May 2003, will itself be rendered nugatory. We mention this because there was a cross-appeal by Mr Morgan by which he sought to question the remedies decision, and he says that the amount of compensation awarded in the remedies Decision was inadequate. He points to the fact that on no less than three occasions, he has been employed by other employers and then lost the job, following the taking up of references from the company, even though he was not dismissed for dishonesty in this case. He says that bearing that in mind, the amount of the compensatory award was inadequate. Because we allow the appeal against the liability Decision, this Decision inevitably also falls and all matters are open for reconsideration before the Employment Tribunal.
25. It follows from the decision that we have made that the case will go back to the Employment Tribunal for reconsideration. It also follows that if Mr Morgan succeeds before the Employment Tribunal of course the Employment Tribunal which hears and reaches a conclusion on the unfair dismissal will have to reconsider the question of remedies.