United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS NANHOO-ROBINSON (of Counsel) Instructed by: Messrs Clifton Owen Solicitors 25 High Street Maidenhead Berks SL6 IJG
For the Respondents	MR PAUL O'ROURKE Advocate First Business Support Employment Law Office Unit 10, Newhallhey Business Centre Newhallhey Road Rossendale Lancashire BB4 6HL


 


HIS HONOUR JUDGE J BURKE QC

1. This is an appeal by Mrs Talbot against a decision of the Employment Tribunal sitting at Reading, chaired by Mr Cleugh and promulgated with Extended Reasons on 21 June 2002. Mrs Talbot was employed by the Respondents S Com Group PLC as an Accounts Manager from February 1999 until she was summarily dismissed for misconduct at the end of June 2001. She claimed that she had been unfairly dismissed and wrongfully dismissed and that the employers had failed to pay commission due to her. The last claim was, according to the Tribunal, put as a breach of contract claim and as a wrongful deduction of wages claim, it matters not which for present purposes.
2. The case of the employers, who recruit and provide specialist contractors to clients, as to the dismissal was, in brief, that Mrs Talbot, together with others, had acted contrary to the employers' interest by encouraging various contractors, who were part of a team of contractors provided by the employers to work for the international telecoms organisation Ericsson, to cease to perform that work through the agency of the employers and instead to work through a different agency. Investigations produced evidence which demonstrated to the employers that Mrs Talbot had been engaged in such activities. She was requested to attend a disciplinary hearing which, after some delay while she was ill, took place on 25 June 2001.
3. The employers concluded at that hearing that Mrs Talbot had been guilty of gross misconduct; and she was summarily dismissed. Her subsequent appeal was rejected. The Tribunal approached the issue of unfair dismissal along the classic lines set out in British Homes Stores -v- Burchell [1980] ICR 303. They found that the employers genuinely believed that Mrs Talbot had been guilty of gross misconduct, that there had been a proper investigation of the allegations against her and that, in the light of the serious misconduct in which the Tribunal found the employers genuinely believed, it was obviously reasonable to dismiss her and thus she had been fairly dismissed. There is and has been no challenge to that conclusion of the Tribunal.
4. Unhappily, the Tribunal then went straight on to consider the commission claim. They appear to have omitted altogether to deal with the wrongful dismissal claim. It is at least possible that they did so because neither party was legally represented and the issues which the Tribunal had to decide had become somewhat confused. It is possible that they did so because the wrongful dismissal claim was not a claim of great substance under her contract of employment; and, indeed, under statute, Mrs Talbot was entitled to two weeks notice and no more, having not been employed for more than two continuous years. Her salary was said, in her Originating Application to the Tribunal, to be £35,000 per year plus bonus and car allowance. Whether that figure included or excluded commission is not clear, but, in any event, it is unlikely that compensation for the loss of two weeks' notice would amount to much more than £2000 or thereabouts. Whatever the reason, it is clear that the Tribunal made no express findings in respect of Mrs Talbot's wrongful dismissal claim.
5. Miss Nanhoo-Robinson, who has appeared on behalf of Mrs Talbot before us, submits, entirely correctly, that any decision on that claim would depend not on whether the dismissal had been fair or unfair, or on the employers' reasonable belief that Mrs Talbot had committed the gross misconduct which they alleged she had committed but on whether the employers were contractually entitled to terminate Mrs Talbot's employment without notice; and for that purpose the employers had to prove not that they reasonably believed that she had committed gross misconduct but that she had in fact committed gross misconduct. Miss Nanhoo-Robinson submits that the Tribunal, having failed to consider whether or to find that the gross misconduct alleged was actually proved to have occurred, there is no alternative but to remit the wrongful dismissal claim, undecided as it is, to the Tribunal for decision.
6. Mr O'Rourke, on behalf of the employers, at the start of his submissions, realistically accepted that the Tribunal did not deal expressly with the wrongful dismissal claim. We encouraged him to seek to demonstrate to us from the Tribunal's decision that the Tribunal had made findings of fact as to what Mrs Talbot had actually done by way of misconduct, as opposed to what the employers believed that she had done, so that we could consider whether a remission to the Tribunal to reach a conclusion on the wrongful dismissal claim could be avoided on the basis that the findings of fact were such that on remission, no Tribunal could possibly reach any other conclusion than that the gross misconduct alleged was proved.
7. In response to our encouragement and, indeed, to what could possibly be described as urging on our part, Mr O'Rourke took us first of all to paragraph 8 of the decision in which the Tribunal say:

"Mr Beaver considered the evidence and concluded that the applicant was guilty of the charge …..

This constituted gross misconduct and she was summarily dismissed with immediate effect."

Mr O'Rourke, however, did not suggest that this was anything other than a description of the conclusion which Mr Beaver, in the course of the disciplinary process, reached; and he accepted that this was not a finding that there had been gross misconduct but was a finding that Mr Beaver had concluded that what Mrs Talbot had done was gross misconduct. He next took us to paragraph 10 where the Tribunal say:

"The Tribunal have reached a unanimous decision and find that the dismissal was a fair one. The reason for dismissal was conduct and we find that Mr Beaver had a genuine belief in the applicant's misconduct following upon a proper investigation."

That paragraph too goes only to the reason for dismissal and Mr Beaver's genuine belief in the misconduct which founded that reason. Mr O'Rourke took us to paragraph 12 which also goes no further than the route by which Mr Beaver reached his belief and to paragraph 13 in which the Tribunal dealt with the fairness of the procedures which were followed. Nothing in those paragraphs, unhappily for the employers, amounts to or indicates a conclusion on the part of the Tribunal that the gross misconduct alleged against Mrs Talbot was proved, as opposed to what Mr Beaver believed about that conduct.

8. Lastly, Mr O'Rourke referred us to paragraph 16, a paragraph to which we will have to return in due course, when we turn our attention to the commission claim, in which the Tribunal said:

"The Tribunal having found that the applicant was fairly dismissed, her claim for loss of future commission cannot be entertained."

But, again, that sentence refers only to the Tribunal's earlier conclusion as to the fairness of the dismissal and gives no hint as to the Tribunal's view as to whether the employers had proved the gross misconduct alleged.

9. While there are passages elsewhere in the decision, in particular in paragraphs 5 and 11, which could arguably be taken to include findings of fact as to whether the conduct was proved or not, as opposed to what the employers reasonably believed that she had done, Mr O'Rourke did not rely upon them. Indeed, he was plainly uneasy in seeking to maintain the position that the Tribunal had made sufficient findings of fact for a remission to be avoided and frankly accepted that there was not much by way of finding of fact within the decision which would enable him to maintain that position.
10. In the circumstances, it appears to us that there must be a remission so that the issue as to whether Mrs Talbot was guilty of the gross misconduct alleged, can be the subject of decision by the Tribunal. We are firmly of the view, however, that the remission should be to the same Tribunal. They have heard the evidence as to what Mrs Talbot did or did not do, both from the employers and Mrs Talbot; they have seen a large number of documents. Mr O'Rourke, on behalf of the employers, on whom the burden of proof lies to establish gross misconduct in the contract claim, has said that the employers do not need to put forward any further evidence.
11. Miss Nanhoo-Robinson has suggested that Mrs Talbot might want to put forward further evidence, although it was not suggested that she needed to give a full explanation anew; her answers to the allegations against her were put forward when the matter was before the Tribunal; but, she said, it was more important that Mrs Talbot should be professionally represented at any remitted hearing, which is, of course, an option open to her whether the remission is to the same Tribunal or to a different Tribunal.
12. We do not see at this stage any need for any further evidence on the issue of what Mrs Talbot did or did not do. Of course the parties must be permitted at a remitted hearing to present submissions as to the effect of the evidence given. If either party, hereafter, decides that it wishes to call further evidence and believes that there are good grounds for adducing further evidence, then application will have to be made to the Tribunal who will decide whether or not such evidence should be permitted..
13. We turn now to the commission claim. We need first to identify what Mrs Talbot was claiming. According to her Originating Application, she sought commission payable and due to her in respect of the months of March, April and May 2001, but not thereafter, save that it is not in dispute that as part of her wrongful dismissal claim, she was seeking, in addition to salary payable during the two weeks' notice period during which she says she should have had but did not get, commission that would have been paid, if any, during that period. While now Miss Nanhoo-Robinson says that Mrs Talbot's claim was also in respect of June 2000, it is significant not only that the Originating Application makes no reference to any month after May, but that the Tribunal, in paragraph 16 of their decision, the paragraph in which they deal with commission, say:

"The applicant also claims commission due to her in the months of March,
April and May 2001."

There is no suggestion that the Originating Application was ever amended. Mr O'Rourke has told us that from the employer's point of view, this is the first time that they had heard of any claim for commission due in respect of the month of June. It appears to us to be entirely clear that the claim was that set out in the first sentence of paragraph 16 and is limited to the months therein mentioned, save for the period of notice to which we have referred.

14. It is next necessary to go to the contract of employment. In the bundle of papers before us, at page 37, is Appendix A to Mrs Talbot's contract of employment which, under the heading "B.2 Bonus" makes at B.2.1 (b) provision for an annual bonus, and then at paragraphs (c) to (f) provision for a different type of payment. We should set out sub-paragraphs B.2.1 (c) to (f); they say:

"(c) Bonus will be paid on business which has been accepted by and executed by the Company.

(d) Subject to the terms and conditions of the company Commission Rules, bonus will be paid on a monthly basis one month in arrears.

(e) For a period until the end March 2000 you will be guaranteed a minimum income of £41,000.00 per annum.

(f) Entitlement to bonus shall cease forthwith on the termination of your employment (howsoever arising) save in respect of bonus earned but unpaid prior to the date of termination of your employment."

While the payments provided for by sub-paragraphs B.2(1)(c) to (f) are described as bonus, it seems clear that the bonus there referred to is different from the annual bonus referred to in B.2.1(b) and, in fact, is a reference to payments by way of commission, subject to the terms and conditions of the company commission rules. So much appears to be common ground between the parties. Another document, the provenance of which is not entirely clear, but there is no suggestion that it was not contractual as between Mrs Talbot and the employers, says of commission:

"All commission payments are paid a month in lieu of the contractors start date"

It seems to be common ground too that the words "in lieu" mean in arrears.

15. The Tribunal said, in paragraph 16, omitting the first sentence which we have already quoted, this:

"The respondents accept liability to the extent of £16,170 gross on a basis of money earned by the company in relation to the applicant's commission package until March 2001. The Tribunal having found that the applicant was fairly dismissed, her claim for loss of future commission cannot be entertained. The issue is whether commission should be paid on the amount refunded to Ericsson in the sum of £68,942. The applicant's Contract of Employment at Appendix A-B2(c) states that bonus will be paid on business which has been accepted by and executed by the company. However, the company were in dispute with Ericsson concerning mismanagement of their account which was administered by the applicant, with the result that the matter was settled by the respondents writing off $100,000 US and thereby reducing their profit on their business with Ericsson. The Tribunal is satisfied that commission is only accepted by and executed by the respondents and invoice submitted to Ericsson. This business is inextricably linked to the final costs and then clearly commission cannot be paid in respect of a sum of money that has been written off. If the parties are unable to agree the exact sum payable in respect of commission, taking into account the deduction of £68,942, the Tribunal will reconvene to calculate the sum."

16. Miss Nanhoo-Robinson makes four criticisms of that paragraph. First of all she says that, although it was indeed accepted that the employers owed £16,170 to Mrs Talbot in respect of commission, there was an issue at the Tribunal as to whether or not that sum, payable at the end of March, represented commission earned up to the end of March or only represented commission earned up to the beginning of March, because of the provision for payment one month in arrears; and, she submits, the Tribunal have not resolved that issue in saying that that money was due in relation to the commission package "until March 2001"; the Tribunal have not identified, whether they are so saying up to the beginning of March 2001, or up to the end of March 2001; and that is important because there is an outstanding claim for commission which was due in respect of the period which followed the period to which the £16,170 related, up to the end of May 2001. We agree; the Tribunal, in our judgment, have not resolved that issue and we see no alternative but to remit the resolution of that issue to the Tribunal for their decision.
17. The second criticism made by Miss Nanhoo-Robinson is as to the Tribunal's decision in relation to future commission, that is to say commission from after the date of the termination of Mrs Talbot's employment. It is submitted that the Tribunal erred in rejecting Mrs Talbot's claim for loss of commission during the notice period, or to be more accurate, for damages consisting of the loss of future commission during the notice period, because they appear in the sentence:

"The Tribunal having found that the applicant was fairly dismissed, her claim for loss of future commission cannot be entertained."

to have rejected that claim because they had found Mrs Talbot to have been fairly dismissed.

18. We agree with Miss Nanhoo-Robinson's submission. Whether or not the dismissal without notice was wrongful and in breach of contract, or whether it was justified by reason of gross misconduct, is not at all determined by whether the dismissal was fair. It would only be determined by a finding as to whether or not gross misconduct had in fact occurred. Thus, as to that part of the commission claim, the Tribunal has misdirected itself for the reasons which we have already given in dealing earlier with the wrongful dismissal claim. We cannot ourselves decide whether the gross misconduct was or was not proved; and therefore this part of the commission claim, again, must also be remitted to the Tribunal to be resolved according to law.
19. Thirdly, Miss Nanhoo-Robinson submits that the Tribunal have not made any decision as to whether Mrs Talbot was entitled to commission for whatever period up to the end of May 2001 is left when the £16,170 admitted to be due is taken into account. On any view, that sum was not referable to any period after the end of March, and thus there were, or may have been, sums payable in respect of April and May, but which the Tribunal has not awarded, or made any decision on. We are told that it is Mrs Talbot's case that the overwhelming majority of the contractors who work for Ericsson continued to work through the employer's agency on the Ericsson's account and therefore that substantial sums were earned by the employers on the Ericsson's account from which commission in substantial sums became payable to Mrs Talbot.
20. On the other hand, Mr O'Rourke says that, as a result of what Mrs Talbot did, Ericsson ceased to be a customer after the end of March and there was no continuing account, no continuing business, and nothing on which any further commission could be paid. These are rival issues of fact which we cannot begin to determine and which the Tribunal did not determine. What the Tribunal, in fact, appears to have done appears from the last sentence of paragraph 16, where they say:

"If the parties are unable to agree the exact sum payable in respect of commission, ……the Tribunal will reconvene to calculate the sum."

21. We are told that it was not agreed between the parties that the Tribunal should thus defer a decision on this issue, and we do not know why the Tribunal took the approach to this issue that they did; but it would appear, because it is clear that the parties have not agreed what sum further to £16,170, if any, is owing, that the matter is still open for resolution by the Tribunal; and since we are remitting the matters to the Tribunal to which we have already referred, it is clear to that at the same time, the Tribunal should now resolve this outstanding issue.
22. Lastly, we need to refer to the fourth criticism made by Miss Nanhoo-Robinson which relates to the figure of £68,942 mentioned twice in paragraph 16. There was plainly an issue between the parties, which the Tribunal did endeavour to resolve, which arose in this way. The Tribunal found (perhaps it was not in dispute) that the employers had written off $100,000 from the amount owing to them from Ericsson, as a result of a dispute between the employers and Ericsson concerning mismanagement by the employers of the Ericsson account. It may be that the employers were contending that if the $100,000 or £68,942 in sterling, was deducted from the amounts earned by the employers from Ericsson in the period after that to which the £16,170 related, there would be nothing left by way of commission to be paid to Mrs Talbot; that is not clear, but what is clear is that the employers were saying that that $100,000 or £68,942 had to be deducted from whatever earnings of the employers were derived from the Ericsson account before any commission payment was calculated.
23. The Tribunal resolved this issue by looking, correctly, at the contract which provided, as we have indicated, that commission was only payable on business which had been accepted by and executed by the company, and the Tribunal, correctly, in our judgment, concluded that if work had been invoiced by the employers to Ericsson, but it turned out that that work was of no value and the invoices in respect of that work were withdrawn or the subject of a credit note, or, in respect of those invoices, credit was given by the employers to Ericsson, no commission would be payable. We entirely agree with and endorse that contractual analysis by the Tribunal.
24. However, there remains this difficulty. The Tribunal did not, in our judgment, find as a fact that what had happened here was a withdrawal of and cancellation of invoices or a credit being made in respect of which those invoices were rendered as of no value or was not done, or was not done sufficiently well to justify any charging. All they have found is that a refund was made and the sum of money to which we have referred, $100,000, was written off. The findings of the Tribunal are expressed in such a way that that sum could well simply be some kind of compensation payment or some kind of payment made to encourage Ericsson back into the fold of the employers and not to continue their dispute with the company.
25. Thus while we accept and endorse the Tribunal's contractual analysis, we take the view that the findings of fact which would lead to the conclusion that the $100,000 should, correctly, pursuant to the contact of employment, be deducted for the purpose of commission calculation, are not there. Accordingly, we remit this issue, too, to the Tribunal for further consideration and determination because there is not, in our judgment, a sufficient determination as to whether the $100,000 should or should not be deducted from the employer's earnings on the Ericsson account for the purpose of commission calculation.
26. We have no hesitation in deciding that the remissions to which we have just referred, which arise out of the way in which the Tribunal approached the commission side of the claim, should also be to the same Tribunal. At the very least, this Tribunal has a substantial head start in dealing with the remission claims. On the other hand, it is also clear to us that both parties are likely to want to adduce further evidence on the commission claims, both as to their calculation and as to entitlement; and we take the view that it should be open to the parties to present further evidence on the commission claims and further submissions, of course, both on the previous evidence, and the further evidence as to the commission claims, as part of the remitted hearing.
27. For those reasons, this appeal is allowed to the extent and in the respects which we have set out in the course of this judgment.