United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR JASON GALBRAITH-MARTEN (of Counsel) Instructed by: Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW
For the Respondent	MR PAUL McGRATH (of Counsel - liability) And MR DOMINIC ADAMSON (of Counsel - remedies) Instructed by: Messrs Rollingsons Solicitors Lonsdale Chambers 27 Chancery Lane London WC2A 1NG

SUMMARY

Unfair Dismissal

Failure of Employment Tribunal to apply Sainsbury's Supermarkets Ltd v Hitt [2003] IRLR 23.


 


HIS HONOUR JUDGE BIRTLES

Introduction

1. These are conjoined appeals from decisions of an Employment Tribunal sitting at London (South). The first decision ("the liability decision") was heard on 12 February and 8 April 2003. The Extended Reasons were entered in the Register and sent to the parties on 3 June 2003. The second decision ("the remedies decision") was heard on 13 June 2003. The summary reasons were entered in the Register and sent to the parties on 27 June 2003.

THE LIABILITY DECISION

The Material Facts

2. The Employment Tribunal made the following findings of fact: decision paragraph 7:

"The Applicant was appointed by the Respondent in February 1991 as a handyman responsible for the maintenance and cleaning of the Respondent's head office.

The Applicant showed an interest in, and skill with, computers and in September 1995 was appointed IT Development Officer. Although he had no job description for this post, his responsibilities included operating, maintaining, programming and purchasing computer equipment. He was not given a budget for this work.

The Respondent did not have a proper IT strategy or funds to develop such a strategy.

The Applicant, who had no qualifications, was given no training.

The Applicant reported initially to Mr Mike Fordham, and from 2000 to Geoff Ellis the national officer responsible for IT.

Mr Ellis commissioned an external IT audit which revealed unlicensed software was in use. The consultant warned him of the potential criminal penalties arising from such use.

Mr Ellis therefore complained to Mike Lawson (National Officer responsible for staff) that the Applicant had installed unlicensed software and copied software in breach of licence.

The Applicant was informed of the charges by letter dated 12 November 2001. The Respondent did not have a current disciplinary procedure but the letter told him that his alleged conduct was regarded as potential gross misconduct.

The Applicant attended the investigatory meeting with Mr Lawson on the 3 December 2001. He admitted installing unlicensed software and copying software using a Long John Silver Logo.

The disciplinary hearing, also conducted by Mr Lawson, commenced on 24 January 2002 but was not concluded until 27 June 2002. The Applicant did not have the opportunity to question Mr Ellis whose report formed the basis of the charges against him.

There had been no prior complaints about the Applicant's work and his previous manager, Mr Fordham, gave evidence to the disciplinary hearing on his behalf. Mr Fordham acknowledged that he had been responsible for creating an environment which encouraged cutting corners and may have led the Applicant to believe he was expected to use pirated software.

The Applicant was under pressure to provide and maintain an IT system to meet the requirements of the union. This frequently involved being expected to install software within hours and without funds to purchase appropriate licences. Mr Fordham accepted that union officials knew that they were being provided with pirated software. Indeed he could hardly say otherwise, since the Applicant used the Long John Silver Logo.

Mr Lewis regarded the copying and use of unlicensed software as gross misconduct equivalent to theft, and did not consider any sanctions short of dismissal.

The Applicant lodged his appeal on 13 July 2002. This had not been heard by the date of the Tribunal hearing on 12 February 2003.

The Applicant derived no financial benefit from the software. No consideration was given at any stage to whether he was the appropriate individual in the union hierarchy to be held responsible for the misuse of software by the union for the union's benefit."

The Employment Tribunal Conclusions

3. The Employment Tribunal reached the following conclusions:

"8. Actual and Reasonable Belief. The allegations against the Respondent which were upheld by the disciplinary hearing were that he had used and installed unlicensed software on FBU IT equipment and that he had made copies of software in breach of licence agreement under the name Long John Silver. The Applicant admitted the conduct complained of in both charges but denied they amounted to disciplinary offences.

The Applicant had been appointed as a handyman in February 1991. In September 1995, the Respondent recognising that he had an interest in Information Technology, appointed him as the Union's Information Technology Development Officer. The evidence was that the union did not have any proper IT strategy or the funds to develop and implement such a strategy. It is consistent with this lack of funds that a handyman was appointed to this crucial role without any proper qualifications or training or any job description to make clear his responsibilities and the limits on his authority. Evidence supplied by Mr Fordham, the Applicant's Line Manager until June 2002 was that the union operated in an environment in which pressure was put upon the Applicant to install and maintain a computer system which would meet the union's needs by cutting corners wherever necessary.

9. The Tribunal is satisfied that the Respondent had an actual and reasonable belief that the Applicant had installed and copied unlicensed software since the Applicant had admitted as much but did not have a reasonable belief based upon proper investigation that he did this without authorisation. Had they carried out a proper investigation, and had they placed proper emphasis on the evidence supplied to them by Mr Fordham, it would have been apparent that the Applicant was encouraged to believe that his conduct was acceptable to his employer. Although no express authorisation was given, it was well known by union officials that unlicensed software was in use. They chose to turn a blind eye to this practice over a long period of time.

Procedure

10. The Tribunal accepts that the Applicant was given notice of the charges against him and that he was given proper notice of the investigatory meeting and disciplinary hearing. However, it took the Respondent some seven months from November 2001 to June 2001 to arrange a disciplinary hearing and at that hearing the Applicant did not have the opportunity to question Mr Ellis whose investigatory report formed the basis of the allegations against him. The Applicant lodged his notice of appeal on 13 July 2002 yet the appeal had not been heard at the date of the Tribunal hearing. On these grounds the Tribunal find that the procedure adopted by the Respondent was unfair. The Respondent admitted that its disciplinary procedure was out of date and maintained that it was guided by the ACAS code of practice. However the Tribunal is required to look at the procedure actually adopted and consider whether it is fair in all the circumstances it is not necessary for the Respondent to follow any particular procedure.

Reasonableness of Decision to Dismiss

11. The Tribunal has to determine whether the decision to dismiss fell within the band of reasonable responses of a reasonable employer. It finds that no alternative sanction to dismissal was considered by the Respondent. The Respondent behaved unreasonably, when it appointed the Applicant as Information Technology Development Officer and did not provide any of the appropriate training, guidance, etc that the Applicant required to fill such a role. The union was aware that the Applicant was copying and installing unlicensed software and benefited from the Applicant's actions which were carried out without any gain to the Applicant. The union turned a blind eye to the Applicant's activities and, when this matter was brought to its attention by its consultants they panicked and refused to accept responsibility instead they attempted to pass this down to the lowest possible level, namely the Applicant. It would have been clear to all in receipt of Long John Silver Software that it was pirated. Accordingly the Tribunal find that no reasonable employer would have dismissed the Applicant, but would instead have given him a warning and ensured that its IT policies and procedures were properly drawn up and implemented in the future."

The Amended Notice of Appeal

4. The Amended Notice of Appeal has been supplemented by the Skeleton Argument and oral submissions of Mr Jason Galbraith-Marten. We are grateful to him and to Mr Paul McGrath who appeared for the Respondent in respect of the liability appeal. At the outset of these two conjoined appeals we agreed with all three Counsel that it would be sensible for us to hear argument on the liability appeal first, because if we allowed that appeal then we would make no order on the remedies appeal which would effectively become redundant because there would have to be a rehearing on liability. This judgment is therefore only concerned with the merits of the liability appeal.
5. We remind ourselves that an appeal to the Employment Appeal Tribunal lies only on a point of law. That has been most succinctly stated in British Telecommunications plc v Sheridan [1990] IRLR 29 as meaning that the Employment Appeal Tribunal can interfere with a decision of an Employment Tribunal if they are satisfied that the Tribunal have misdirected themselves as to applicable law, or if there is no evidence to support a particular finding of fact, since the absence of evidence to support a finding of fact has always been regarded as a pure question of law. The Employment Appeal Tribunal can also interfere if the decision is perverse. Perversity has of course been subsequently explained in such cases as Piggott Brothers & Co Ltd v Jackson & Others [1991] IRLR 309 and Yeboah v Crofton [2002] IRLR 634. At paragraph 93 of the latter decision Mummery LJ said this:

93. Such an appeal ought only to succeed where an overwhelming case is made out that the employment tribunal reached a decision which no reasonable tribunal, on a proper appreciation of the evidence and the law, would have reached. Even in cases where the Appeal Tribunal has 'grave doubts' about the decision of the Employment Tribunal, it must proceed with 'great care': British Telecommunications plc v Sheridan [1990] IRLR 27 at paragraph 34.

Ground 1: Reasonable Investigation

6. Mr Galbraith-Marten submits that the Employment Tribunal misdirected itself in paragraphs 9 and 10 of its Extended Reasons in failing to ask whether the investigation in fact carried out was reasonable in all the circumstances. In so doing the Tribunal impermissibly substituted its view of the standard of investigation required for that of the putative reasonable employer. Taking account of the investigation in fact carried out by the Appellant, Mr Galbraith-Marten submits that any tribunal properly directing itself would be bound to hold there had been a reasonable investigation. Mr Galbraith-Marten relies upon the well-known cases of British Home Stores v Burchell [1978] IRLR 379 and Sainsbury's Supermarkets Ltd v Hitt [2003] IRLR 23. In the latter case Mummery LJ at paragraph 30 said this:

"30 …The range of reasonable responses test (or, to put it another way, the need to apply the objective standards of the reasonable employer) applies as much to the question whether the investigation into the suspected misconduct was reasonable in all the circumstances as it does to the reasonableness of the decision to dismiss for the conduct reason."

At paragraph 31 he said this:

"31 … The investigation carried out by Sainsbury's was not for the purposes of determining, as one would in a court of law, whether Mr Hitt was guilty or not guilty of the theft of the razor blades. The purpose of the investigation was to establish whether there were reasonable grounds for the belief that they had formed, from the circumstances in which the razor blades were found in his locker, that there had been misconduct on his part, to which a reasonable response was a decision to dismiss him. The uncontested facts were that the missing razor blades were found in Mr Hitt's locker and that he had had the opportunity to steal them in the periods of his absence from the bakery during the time they went missing. Investigations were then made, both prior to and during the period of an adjournment of the disciplinary proceedings, into the question whether, as Mr Hitt alleged, someone else planted the missing razor blades in his locker. In my judgment, Sainsbury's were reasonably entitled to conclude, on the basis of such an investigation, that Mr Hitt's explanation was improbable. The objective standard of the reasonable employer did not require them to carry out yet further investigations of the kind which the majority in the Employment Tribunal in their view considered ought to have been carried out.

32 In suggesting further investigations of the kind set out in paragraph 6 of the Extended Reasons, the majority of the Employment Tribunal were, in my judgment, substituting their own standards of what was an adequate investigation for the standard that could be objectively expected of a reasonable employer. On the decision of this Court in Madden, that is not the correct approach to the question of the reasonableness of an investigation."

Employment Appeal Tribunal Decision

7. We agree with Mr Galbraith-Marten's submissions. In this case the following factual matrix is clear from the findings of fact of the Tribunal:

a. The issue that subsequently became the subject of the disciplinary proceedings was first identified in an independent IT audit in late 2001;

b. As a result of that audit a report was prepared by Mr. Ellis, a National officer of the union;

c. Mr. Croucher had been given express instructions not to copy software in March 2001 and had not raised any issue at the time;

d. Mr. Croucher was represented throughout by the GMB trade union and meetings were arranged for his and their convenience;

e. Mr. Croucher was suspended and called to an investigative meeting, having first had sight of the report, to obtain his comments on it;

f. Mr. Croucher was asked to identify witnesses that might be able to give evidence supportive of his case;

g. A decision was taken to proceed to a disciplinary hearing;

h. Mr. Croucher was specifically invited to call any witnesses that were supportive of his case at his disciplinary hearing;

i. Mr. Croucher did in fact obtain written evidence from witnesses supportive of his case;

j. At the disciplinary hearing Mr. Croucher was allowed to put questions, through his representative, to each of the witnesses called by the presenting officer;

k. The disciplinary hearing was adjourned to allow Mr. Croucher's own witnesses to give live evidence and to answer questions;

l. At the conclusion of the hearing one of the allegations against Mr. Croucher was dismissed and only two upheld.

8. In our judgment no Tribunal properly directing itself could possibly have come to any conclusion other than the fact that this investigation was a reasonable one within the meaning of Burchell and Hitt. The Employment Tribunal did substitute its judgment for that of the employer in this case: decision paragraph 9.

Ground 2: Weight of Evidence

9. Mr Galbraith-Marten also complains about another aspect of paragraph 9 of the Tribunal's decision. They said this:

"Had they carried out a proper investigation, and had they placed proper emphasis on the evidence supplied to them by Mr Fordham, it would have been apparent that the Applicant was encouraged to believe that his conduct was acceptable to his employer. Although no express authorisation was given, it was well known by union officials that unlicensed software was in use. They chose to turn a blind eye to this practice over a long period of time."

10. Mr Galbraith-Marten submits that it is not for the Employment Tribunal to substitute its view of the evidence for that of the employer. Questions of the weight of the evidence are a matter for the employer: Morgan v Electrolux [1991] IRLR 89 at paragraphs 11 and 19 citing Linfood Cash & Carry Ltd v Thomson [1989] IRLR 235; the comments by Mummery LJ in Post Office v Foley [2000] IRLR 827 at paragraph 76.

Employment Appeal Tribunal Decision

11. We agree with Mr Galbraith-Marten. The Employment Tribunal clearly was impressed by the evidence of Mr Fordham and entered into the arena in evaluating his evidence. It was not for the Employment Tribunal to do so. It should have asked itself whether, by the standards of the reasonable employer, the Appellant had established reasonable grounds for its belief that the Respondent was guilty of misconduct and whether the Appellant's investigation into the matter was reasonable in the circumstances: Post Office v Foley at paragraph 76.

Ground 3: Perversity

12. Mr Galbraith-Marten further submits that the finding by the Employment Tribunal in paragraph 9 of its decision that the Appellant had turned a blind eye to the practice of the use of unlicensed software over a long period of time was perverse. He made extensive submissions on the evidence.

Employment Appeal Tribunal Decision

13. In the light of our decisions on the first two grounds of appeal, it is unnecessary for us to express a view on this ground of appeal. Suffice it to say that a decision on perversity is normally one which requires the Chairman's notes of evidence. It is quite impossible for us to say on the short findings of fact by this Tribunal that its decision on this issue was perverse.

Grounds 4 & 5: Procedure

14. Mr Galbraith-Marten submits that at paragraph 10 of its decision the Employment Tribunal decided that the procedure adopted by the Appellant conducting the disciplinary proceedings was unfair. Again, he submits that this is a misapplication of the band of reasonable responses test. The Employment Tribunal relied on three separate matters. First, the delay in arranging the disciplinary hearing; second, the failure to allow the Respondent an opportunity to cross-examine Mr Ellis; third, the further delay in arranging an appeal hearing. Mr Galbraith-Marten submits that the Tribunal rely on all these three matters. It is not possible to say whether one or more of them would have made the dismissal unfair. There was a failure to apply the test laid down by Mummery LJ in Hitt, cited at paragraph 7 above.

The Employment Appeal Tribunal Decision

15. We agree. We will take each of the three matters relied on by the Employment Tribunal in turn. First, the delay in arranging the disciplinary hearing. We note that the Tribunal made no findings of fact as to the reason for the delay. The primary reason for the delay was the conduct of the Respondent and his trade union representative, Ms Dawn Butler. The Respondent was suspended in mid-November 2001. An investigatory interview was held on 3 December 2001. The disciplinary hearing was originally due to take place on 18 December but was later re-scheduled to take place on 24 January 2002 because of the unavailability of witnesses. The hearing was not completed on 24 January only because the Respondent's own witnesses were unavailable to give evidence. There was then a period of delay between 24 January 2002 and 27 June 2002. The main cause of the delay was difficulty in obtaining available dates from the Respondent's own witnesses, a matter that his trade union representative asked that she be allowed to coordinate. These matters were put before the Employment Tribunal in the Appellant's closing submissions
16. Furthermore, the Employment Tribunal has failed to give any reason to explain its findings that this or any period of delay rendered the dismissal unfair: A v B [2003] IRLR 405 at paragraphs 66-67 Elias J. See also Emms v UCAT (unreported EAT/0811/03, judgment 31/3/04) and RSPCA v Cruden [1986] ICR 205.
17. Second, the failure to permit cross-examination of Mr Ellis. Mr Galbraith-Marten submits that there is no absolute rule of law entitling an employee to cross-examine witnesses at an internal disciplinary hearing: Ulsterbus v Henderson [1989] IRLR 251 and Santamera v Express Cargo Forwarding [2003] IRLR 273 at paragraphs 34-42 per Wall J. Mr Galbraith-Marten invites us to embark on an examination of the evidence before the Employment Tribunal which he says suggests strongly that the Respondent's trade union representative, Ms Butler, did not actually want to cross-examine Mr Ellis in the sense in which a lawyer would understand it, but really wanted some background information from him.

Employment Appeal Tribunal Decision

18. We note that Wall J in the Santamera case said this at paragraph 42:

"42 We do not read Ulsterbus Ltd -v Henderson, and in particular paragraph 21 of the judgment in that case, as laying down the proposition that cross-examination can never be required in any investigation carried out by a reasonable employer. O'Donnell LJ rejects the proposition that "an employer who failed to do it in a case such as this" was "acting unreasonably". The issue, in section 98 (4) of the Employment Rights Act 1996 is always reasonableness and fairness. We do not exclude the possibility that there will be cases in which it would be impossible for an employer to act fairly or reasonably unless cross-examination of a particular witness is permitted. The question, however, in each case is whether or not the employer fulfils the test laid down in British Homes Stores -v- Burchell, and it will be for the Tribunal to decide whether or not the employer has acted reasonably, and whether or not the process has been fair."

19. In this case Mr Ellis was the Respondent's line manager and it was his report and complaint about the Respondent which led to his suspension and the disciplinary proceedings against him. Mr Ellis was the prosecutor at the disciplinary hearing and there was no difficulty in the Appellant permitting cross-examination of other witnesses. We cannot see why it was not possible for Mr Lawson, who chaired the disciplinary hearing, to make Mr Ellis a witness so that he could be cross-examined. We see no practical or legal difficulty in this happening. It follows that on the particular facts of this case we agree with the Employment Tribunal that Mr Ellis should have been available to be cross-examined. We are not prepared to speculate about what questions would have been asked of him.
20. Third, the period of delay after the Respondent lodged his Notice of Appeal on 13 July 2002. That appeal had not been heard by the date of the Tribunal hearing on 12 February 2003. Mr Galbraith-Marten submits that no evidence was led in respect of the second period of delay by the Appellant and no questions were asked of any of the Appellant's witnesses at the Tribunal about this period of delay. Neither Counsel addressed the issue of the delay in hearing the appeal in their closing submission. Indeed, the parties agreed not to call evidence relating to the appeal process.
21. This is a piece of fact-finding by the Employment Tribunal, apparently in the absence of evidence. The evidence before us clearly shows a stream of correspondence from Ms Butler, representing the Respondent and Mr Gilchrist, the Appellant's General Secretary, about trying to arrange a suitable date for the hearing of the appeal. They were unable to do so. We do not see how this delay can be laid at the door of the Appellant. We bear in mind that throughout this period of time the Appellant was involved in national industrial action.

Grounds 6-8: the Sanction of Dismissal

22. The Employment Tribunal deal with this in paragraph 11 of their decision (set out above). Mr Galbraith-Marten complains that the Employment Tribunal have in fact failed to make a finding that the Respondent was dismissed for gross misconduct, but in any event it has substituted its decision for that of the employer.
23. It is quite clear that when Mr Lawson suspended the Respondent by letter dated 12 November 2002 he regarded the matter as potentially gross misconduct: EAT bundle pages 52-53. The dismissal letter from Mr Lawson dated 12 July 2002 also specifically stated that the two charges proved against the Respondent constituted gross misconduct: EAT bundle pages 95-97. Indeed, the Originating Application made it clear that the Respondent understood that he had been dismissed for gross misconduct: EAT bundle pages 24-27. The Appellant's Notice of Appearance made it clear that the Respondent had been dismissed for gross misconduct: EAT bundle page 33 paragraph 7.14.
24. Furthermore, the Employment Tribunal recognised that both the suspension letter and Mr Lawson's decision to dismiss were based on gross misconduct: decision paragraph 7: EAT bundle page 3, bullet points 8 and 11. However, it is implicit in the Employment Tribunal's conclusions that it did not itself regard the conduct as gross misconduct. That is to substitute its view of the gravity of the offence for that of the employer.
25. That is an impermissible option for the Employment Tribunal. The usual sanction for gross misconduct would, of course, be dismissal and there could not normally be any argument that dismissal for gross misconduct was within the band of reasonable responses of a reasonable employer: British Leyland v Swift [1981] IRLR 91 applied in Securicor Ltd v Smith [1989] IRLR 356.
26. In reaching its decision the Employment Tribunal considered three separate matters. First, it found that no alternative sanction to dismissal was considered by the Respondent. This is simply not correct as a matter of fact: witness statement of Mr Lawson: EAT bundle page 139, paragraphs 26-30. Mr Lawson was not cross-examined on this point.
27. Second, the Employment Tribunal held that the Appellant behaved unreasonably when it appointed the Applicant as Information Technology Development Officer and did not provide any of the appropriate training, guidance etc. that he required to fill such a role. The contested evidence before the Employment Tribunal was that Mr Ellis had given the Respondent an express instruction not to copy software without a license: EAT bundle pages 57, 67. Mr Fordham (Respondent' witness) gave evidence to the disciplinary hearing to the effect that the Respondent had received on the job training: EAT bundle page 81, that he had not asked for formal training and that formal training would not have been appropriate in any event: EAT bundle page 91. However, there is a more fundamental objection to this reason relied on by the Employment Tribunal. It is quite clear that the Respondent knew that he was pirating commercial software. He even used the name "Long John Silver Software" on the pirated software he downloaded and gave to members of the Appellant's staff. It is very difficult to see how training or guidance would have made any difference. Certainly the Employment Tribunal do not explain at all how that would have happened.
28. Finally, the Employment Tribunal found that the union turned a blind eye to the Respondent's activities. As Mr Galbraith-Marten points out, that is inextricably bound up with the view the Tribunal seemed to have formed about the Respondent's culpability. In our judgment there are simply no facts found by the Tribunal save for the evidence of Mr Fordham which would have permitted the Employment Tribunal to make this finding. The Employment Tribunal were clearly impressed by Mr Fordham's evidence but it is important to note that he did not give evidence before the Employment Tribunal. He did give evidence at the disciplinary hearing before Mr Lawson: EAT bundle pages 78-79. In those circumstances it is not open to the Employment Tribunal to give a different weight to Mr Fordham's evidence than was given to it by Mr Lawson who conducted the disciplinary hearing.

Conclusion

29. For these reasons we allow this appeal and remit the liability hearing to a fresh Employment Tribunal. It is not therefore necessary for us to hear or make any order on the remedies appeal. The remedies decision was dependant upon the liability decision. If the Respondent is successful on a new liability hearing then the issue of remedies will have to be reconsidered again.