United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS DEBBIE GRENNAN (of Counsel) Instructed by: Messrs Wolferstans Solicitors Depford Chambers 60-66 North Hill Plymouth Devon PL4 8EP
For the Respondent	Written Submissions

SUMMARY

Unfair Dismissal: Polkey Deduction

The employment tribunal had failed to consider the Polkey argument addressed to them by the employer. Held, that the claim for unfair dismissal should be remitted to a differently constituted tribunal for re-hearing


 


THE HONOURABLE MR JUSTICE RIMER

1. This is an appeal from a judgment of the Exeter employment tribunal that was sent to the parties on 24 August 2005. The tribunal was chaired by Mr P R Anderson. The claimant before the tribunal (the respondent to this appeal) was Joanne Thomas. The respondent before the tribunal (and the appellant before us) was her former employer, Mrs Robyn Scorah who trades as Premier Plus. Miss Thomas's claim was for unfair dismissal. The tribunal found that she was unfairly dismissed and adjourned the proceedings for agreement as to compensation or, in default, a remedy hearing.
2. The essence of the employer's appeal is that it is said that the tribunal misunderstood the nature of the case that the employer was making. The employer claims, and it is admitted by Miss Thomas, that it had expressly conceded that the dismissal was unfair because it accepted that the dismissal was a summary one without being preceded by anything in the way of a disciplinary process. The employer's stance was, however, that had a proper disciplinary process being gone through, it was inevitable, or at least likely, that Miss Thomas would have been dismissed anyway so that a consideration of the principles in Polkey v A E Dayton Services Ltd [1988] ICR 142 pointed to a conclusion that no, or at least reduced, compensation should be recoverable. Alternatively, the employer argued that Miss Thomas had contributed to her dismissal and, in the further alternative, the employer's case was that it would not be just and equitable to award Miss Thomas any compensation at all.
3. In so far as the tribunal dealt at all with these three points, they dispatched them summarily, and in an essentially unreasoned way, in the last paragraph of their reasons. The essence of the appeal to us is, as we shall explain, that it is said that the tribunal really missed the real point in the case and therefore did not decide it. It is said, somewhat ambitiously, that we should do so here and now; alternatively, and rather more realistically, that we should remit the matter to a different tribunal for a re-hearing.
4. On the appeal, we have had the benefit of brief oral submissions from Ms Grennan, who also appeared before the tribunal. We say brief because, having read the papers in advance, we were satisfied that this was an appeal that should be allowed and we did not need to trouble Ms Grennan to unfold her helpful skeleton argument further. Miss Thomas, who appeared in person before the tribunal, has chosen not to do likewise before us and has confined herself to submitting short written reasons as to why we should dismiss the appeal. We have, of course, also considered those reasons but, for reasons to which we shall come, we are not satisfied that they provide any answer to the appeal.

The decision of the employment tribunal

5. The facts fall within a relatively small compass. Miss Thomas was a sales assistant in a general store which Mrs Scorah took over in September 2004. Miss Thomas had worked there since 1999. She did evening shifts from 5pm to 11pm. On 18 November 2004, she left work early suffering from stomach pains, for which she attended hospital. She was, however, fit enough to return to work the following evening, which she did. During that evening, two incidents occurred. The evidence relating to these incidents included oral evidence from Miss Thomas, who was cross-examined, and a statement made by Sylvia Allen, another sales assistant in the shop, that Ms Allen made to the police. The tribunal made it plain, however, that they were more impressed by the live evidence.

The first incident

6. The tribunal's findings were that at about 7.30pm, Mrs Scorah's tenant gave a sum of money to Ms Allen. It represented rent due to Mrs Scorah. As Ms Allen was occupied with the sales till, she gave the money to Miss Thomas and asked her to put it in the safe. Miss Thomas put the money in her pocket with a view to putting it in the safe later, but forgot to do so until Ms Allen reminded her. Miss Thomas did then put the, or at least some, money in the safe and then commented to Ms Allen that it amounted to £60. Ms Allen disagreed, saying that it had amounted to £70. Ms Allen then telephoned Mrs Scorah, who came to the shop. She opened the safe to find that only £60 had been put into it and that the extra £10 to which Ms Allen had referred was not to be found. Mrs Scorah asked Miss Thomas for an explanation, which was that she had been given just £60 but that, if £10 was missing, she would repay it. The tribunal said, in effect, that in the absence of oral evidence from Ms Allen, they were not able to find that Ms Allen had been given £70 by the tenant or that she had given £70 to Miss Thomas. Miss Thomas's evidence was that she had only been given £60.

The second incident

7. At about 10.55pm, Ms Allen was still on the till. She explained in her statements to the police that as she could not leave the till, she asked Miss Thomas to fetch her handbag from the stock room. She needed it because her purse was in it and she wanted to pay for some items she was purchasing. Miss Thomas's evidence was to the different effect that Ms Allen had asked her to fetch her purse from the handbag in the stock room, not the handbag itself. CCTV footage showed Miss Thomas rummaging through the handbag, which the tribunal found she would not have done unless Ms Allen had asked her to fetch the purse. They made this finding because they also found that Miss Thomas would have known that her movements would have been caught on the CCTV. Miss Thomas then took the handbag to Ms Allen saying she could not find the purse. The footage showed Miss Thomas passing the bag to Ms Allen who put her own purchases through the shop's scanning machine. It then showed Ms Allen checking through the bag for her purse which could not be found. Ms Allen, checked the stockroom for it but she could not find it there either and she assumed that she had left it at home. She left the shop. The tribunal say nothing about whether Ms Allen found her purse at home, but the inference from later events was that she did not. On 21 December 2004, Miss Thomas was arrested and interviewed. On 13 January 2005, she was charged with two counts of theft. The charges were discontinued in February 2005.

The dismissal

8. On the morning after the incidents (20 November), Mrs Scorah telephoned Ms Allen and asked her to come in to view the CCTV tape of the handbag episode. She also called the police who turned up and also viewed the tape. On 21 November, the police returned to take statements, one of which was from Ms Allen who also made a further one on 21 December. The tribunal said that "in the light of those events and on the evening of 20 November" Mrs Scorah, who had not in the meantime had any discussion with Miss Thomas, decided to dismiss her. We are not clear whether the tribunal meant to say 20 November rather 21 November since by that point in their narrative they had reached 21 November. We infer that they were in fact referring to a decision made on 21 November.
9. Miss Thomas arrived for work at 5pm on 21 November and went into Mrs Scorah's office. Mrs Scorah relayed to her what she had seen on the tape "and that she was dismissing her for the theft of the purse". Miss Thomas denied taking it but she was dismissed with immediate effect and her request to see the CCTV footage was refused. On 24 November, Miss Thomas wrote to Mrs Scorah and appealed against her dismissal, but received no response.

The tribunal's decision

10. Having found those facts, the tribunal referred to section 94 of Employment Rights Act 1996, which confers on employees the right not to be unfairly dismissed. They then referred to section 98A, which was inserted by the Employment Act 2002 and came into force on 1 October 2004. It is headed "Procedural Fairness" and provides:

"(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if-

(a) One of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 (dismissal and disciplinary procedures) applies in relation to the dismissal,

(b) the procedure has not been completed, and

(c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.

(2) Subject to subsection (1), failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of section 98(4)(a) as by itself making the employer's action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure.

(3) For the purposes of this section, any question as to the application of a procedure set out in Part 1 of Schedule 2 to the Employment Act 2002, completion of such a procedure or failure to comply with the requirements of such a procedure shall be determined by reference to regulations under section 31 of that Act".

11. The tribunal then referred to the two procedures, the standard dismissal & disciplinary procedure and the modified procedure, provided in the 2002 Act and found, contrary to Ms Grennan's submission, that it was the standard dismissal and disciplinary procedure that applied to the present case. They then said

"11. The respondent nevertheless concedes that the dismissal was automatically unfair by reason of section 98A(1) of the 1996 Act because it did not follow either of the statutory procedures but, relying on section 98A(2), asserts that the dismissal was not unreasonable as a result of its failure to follow any procedure at all because dismissal would have been inevitable. In our view, the section 98A(2) defence is not available to the respondent because that subsection is introduced by the words 'Subject to subsection (1)' and subsection (1) clearly states that a dismissal is unfair if the statutory procedures are not followed. On our reading, those statutory procedures are the minimum legal requirements which must be complied with and only in circumstances where they have been complied with is it then open to the employer to argue that he would have decided to dismiss the employee even if he had not followed a procedure over and above the minimum statutory procedures required. Further, the respondent has not satisfied us that dismissal would have been inevitable if a proper procedure had been followed in this case".

The tribunal proceeded to point out that a dismissal for misconduct will only be fair if the tripartite test outlined in British Home Stores Limited v Burchell [1978] IRLR 379 was satisfied, namely genuine belief in the misconduct based on reasonable grounds arrived at after a reasonable investigation. In the present case, the tribunal found that Mrs Scorah did have a genuine belief that Miss Thomas had taken the purse and her evidence was that this was the principal reason for dismissal since she had not attached much weight to the missing £10.

12. As for the grounds for that belief, they were based on the sight of Miss Thomas rummaging in Ms Allen's handbag as recorded on the CCTV tape and the fact that Ms Allen had told her that the purse was missing. The tribunal found that at the dismissal meeting on 21 November, Mrs Scorah never asked Ms Thomas for an explanation as to why she was going through Miss Allen's handbag; and the tribunal had already found that Miss Thomas would have known that her actions would be caught by the CCTV. The tribunal also found that Mrs Scorah had no proof that the purse was in the bag at the time and that Ms Thomas was not given the opportunity to tell Mrs Scorah that Ms Allen had told her that she had taken her purse out of her bag earlier in the day in order to give some money to her partner and that, when it went missing, she assumed that she had left it at home. The tribunal therefore found that Mrs Scorah did not have reasonable grounds for her belief in Miss Thomas's alleged misconduct.
13. They then went on to find that it was clear that no investigation at all had been carried out by Mrs Scorah to support her belief. She did not ask the tenant about the amount of rent she had handed over to Ms Allen and she did not ask Miss Thomas for an explanation about the missing purse. The tribunal found that she had no reasonable grounds for her belief at the point of the dismissal. They concluded their reasons as follows:

"16. Accordingly, it is our judgment that the claimant was automatically unfairly dismissed and that procedurally and for other reasons her dismissal was unfair. In assessing the amount of any compensation, we reject the submissions made on behalf of the respondent that it would be appropriate to make a reduction to reflect contributory conduct on the part of the claimant and also on Polkey grounds; and, in our view, it would be just and equitable to award to the claimant an amount which provides full compensation for her loss. The parties having indicated that it might be possible to negotiate a settlement we decided to adjourn the hearing to give them an opportunity to do so"

The appeal to this tribunal

14. Mrs Scorah's case is that at the tribunal hearing she conceded that Miss Thomas's dismissal was unfair since neither of the statutory dismissal and disciplinary procedures had been followed. Her case was that the only issues before the tribunal were as to compensation. Miss Thomas accepts in her written submission that this was Mrs Scorah's stance at the hearing.
15. Mrs Scorah's case as to compensation was as follows: (1) had a proper disciplinary procedure been followed, dismissal was inevitable, or at least highly likely, and any compensation should reflect this; alternatively (2) Miss Thomas had contributed by her own conduct to her dismissal, so that any compensation should again reflect this; alternatively, (3) it would anyway not be just and equitable to award any compensation in the circumstances. In this context, Mrs Scorah relies, at least in part, on the following concessions that Miss Thomas made at the hearing, being points repeated in the notice of appeal and which, as we infer from Miss Thomas's written submissions (which are addressed to the grounds of appeal) Miss Thomas does not question. The concessions are as follows:

(a) that Miss Thomas was in a position of trust, her duties including the handling of cash;

(b) it was essential that Mrs Scorah should have absolute faith in her honesty;

(c) it was a "real problem" for her that there had been two incidents, both of which involved her, during one single shift and this was bound to raise the level of suspicion against her;

(d) in the event that a disciplinary/appeal hearing had been held, and Ms Allen had told Mrs Scorah what she had told the police, she would not have been at all surprised if she was dismissed;

(e) if she had been dismissed for theft after disciplinary/appeal hearings, she would have had no cause for complaint;

(f) the CCTV footage was consistent with what Ms Allen had said in her statements to the police.

16. Mrs Scorah's case is that the tribunal's discussion about the application or otherwise of section 98A(2) of the Employment Rights Act 1996 reflected muddled thinking on their part since she had in terms conceded that, because of the failure to comply with the dismissal and disciplinary procedures, the dismissal was automatically unfair by reason of section 98A(1). Mrs Scorah's concern about the tribunal's decision is that it would have been wholly contradictory for her to concede that the dismissal was unfair for reason of non-compliance with the statutory procedures and then to argue that it was not unfair for reason of section 98A(2). We are inclined to agree. Mrs Scorah submits that this confused thinking by the tribunal amounted to an error of law which tainted the whole approach to the case.
17. Starting from this premise, Ms Grennan submits that the tribunal then committed material errors in their approach to the issues about compensation. She asserts that the tribunal accepted that Mrs Scorah had a "reasonable" belief in Miss Thomas's misconduct. We think this may in fact be incorrect. As Miss Thomas has pointed out, all that the tribunal appear to have found was that Mrs Scorah had a "genuine" belief in such misconduct and the states of mind respectively conveyed by those epithets are of course different.
18. More to the point, however, Ms Grennan points out (correctly in our view) that the tribunal applied the Burchell test to Mrs Scorah's state of mind only as at the point of dismissal, and of course they found that it was not satisfied. Ms Grennan's point about this is, however, that this was simply not in issue at the hearing. As we have said, Mrs Scorah put her hands up to the charge that the dismissal was unfair (and it obviously was) and so the tribunal's consideration of the Burchell test as at the point of dismissal added nothing of materiality to the concession already made.
19. Proceeding from this, Ms Grennan submits that, as regards Mrs Scorah's Polkey argument, the task for the tribunal was to consider what the likely outcome would have been if Mrs Scorah had followed a proper disciplinary procedure – an exercise which would necessarily have occupied some period of time following the actual date of dismissal. The tribunal simply did not do this. They focused their attention exclusively on the position as at the point of dismissal. Ms Grennan's submission is that this was another error of law on their part. They simply did not deal with the case that had been put to them. Ms Grennan also submits that the course of events following the dismissal - in particular Miss Thomas's arrest followed by her being charged with two counts of theft - show that there was sufficient evidence for dismissal following a proper disciplinary process to fall within the range of reasonable responses open to a reasonable employer. She points out that the tribunal also made the error of assessing the evidence which was before them as to Miss Thomas's conduct whereas this aspect of Mrs Scorah's case required them to consider what evidence would have been available to them during any disciplinary process. Finally, Ms Grennan complains that the tribunal failed to give any reasoned consideration to the further arguments that Miss Thomas had contributed by her own fault to her dismissal or that, in the circumstances, it would not be just and equitable to award her any compensation at all.
20. We are less impressed by the last two points than we are by the criticism of the tribunal's failure to address any consideration to the Polkey argument. In her written submissions, Miss Thomas said that there was no evidence to suggest that the tribunal did not apply their mind to the exercise that Ms Grennan submitted they should have gone through. We are unable to accept that as an answer to the point. If the tribunal had in fact considered the matter, it is inconceivable that they would not have said so and explained it in their reasoning. We regard it as obvious that they did not consider the Polkey argument at all. We accept that this was an error of law on their part; they had a duty to consider Mrs Scorah's case but it appears that they wholly failed to do so. In our view, the tribunal's decision cannot stand and must be set aside.
21. Ms Grennan asks us, albeit it very faintly, to substitute a finding that, had a proper disciplinary process been followed, Miss Thomas would have been dismissed. We have no hesitation in rejecting that suggestion. We are not a fact-finding tribunal and anyway have wholly insufficient material to enable us to make such a finding. Moreover, we regard the outcome of the inquiry that Ms Grennan complains that this tribunal did not make, but should have made, as by no means certain. It seems to us that another tribunal considering this matter is going to have to exercise a difficult element of judgment as to what would have happened in a world which never was and we express no view as to the extent to which they will in fact be able to make any finding as to that. In our view, it would be quite wrong for us to assume the task of trying to decide the question which Mrs Scorah's case raises. We take the view that the only order that we can properly make is to allow the appeal, set aside the tribunal's judgment and remit Miss Thomas's unfair dismissal claim for a rehearing by a freshly constituted tribunal. That is what we will do.