United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR M LAING (Representative) Employment Law Associates Ltd 13 Corrigan Avenue Coulsdon Surrey CR5 2QP
For the Respondent	MR J BENNETT (Adviser) Employment Law Firm Ltd 3 Eastwood Court Wiltshire Road Marlow Buckinghamshire SL7 1JG


 


SUMMARY

Unfair Dismissal – Procedural fairness/automatically unfair dismissal

Unfair Dismissal – Contributory fault

The Appeal and the Cross-Appeal were allowed and the Judgment on liability and contribution were set aside and that the matter remitted to the same Employment Tribunal for rehearing.

Having found that the Respondent met the test for fairness in British Home Stores Ltd v Burchell [1978] IRLR 379 and was not in breach of the statutory procedures, the Employment Tribunal's findings of unfair dismissal were set aside. The Employment Tribunal erred in relying on ACAS Code paragraph 15 relating to the Claimant's entitlement to call witnesses when none had been identified to the Employment Tribunal or even to the EAT on appeal.

The Employment Tribunal erred, when reducing compensation by 90% on account of the Claimant's conduct, since it relied on his failure to help himself at the disciplinary process by probing the Respondent's case, when such argument had not been put by the Respondent and it was anyway contrary to British Steel Corporation v Williams, unreported EAT 776/82.

Further the Employment Tribunal did not rule on the Respondent's submission that compensation be reduced for other reasons related to his conduct.

Both points remitted to the Employment Tribunal.


 


HIS HONOUR JUDGE McMULLEN QC

1. This case is about unfair dismissal on the ground of gross misconduct and the assessment of contributory fault. It also examines Employment Tribunal procedure when dealing with issues not raised at the hearing. Since we have decided to allow the Appeal and Cross-Appeal and to remit the case we will say no more than is necessary to identify the errors of law in the Judgment and to direct how the matter should be handled now. The Judgment represents the views of all three members. We will refer to the parties as the Claimant and the Respondent.

Introduction

2. It is an Appeal by the Claimant and a Cross-Appeal by the Respondent in those proceedings against a Reserved Judgment of an Employment Tribunal sitting over two days with a further day in Chambers at London (South), Chairman Miss R A Lester, registered with reasons on 28 April 2006. As today the parties were represented respectively by Mr Laing and Mr Bennett, both experienced employment advocates. The Claimant claimed unfair dismissal. The Respondent contended he was dismissed fairly and in accordance with statutory dismissal procedures. It argued that if unfair he contributed to his dismissal. The Tribunal decided this:

"1. The Claimant was dismissed by the Respondent for reasons relating to his conduct.

2. The dismissal was unfair by reasons of serious procedural defects.

3. By reason of the conduct of the Claimant before the dismissal, the amount of any award to be made to the Claimant will be reduced by 90%.

4. The standard dismissal and disciplinary procedure set out in Schedule 2 to the Employment Act 2002 applies in this case; there was no breach of that procedure."

3. The Claimant appeals against the reduction in compensation. The Respondent cross-appeals on liability. Directions sending this Appeal to a preliminary hearing were given in Chambers by me. At that preliminary hearing HHJ Burke QC, Mr Evans and Mr Hougham, who sits today, sent it and the Cross-Appeal to this full hearing.

The legislation

4. The relevant provisions of the legislation are not in dispute. Conduct is a potentially fair reason for dismissal under the Employment Rights Act 1996 Section 98. Fairness is dealt with in Section 98(4):

"98(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)-

(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."

5. No issue arises in relation to Section 98A, which deals with certain aspects of procedural fairness and was disposed of unexceptionably in paragraph 4 of the Judgment and paragraph 20 of the reasons. The Tribunal directed itself by reference to the relevant provisions and what we hold to be the leading authorities which were cited in the reasons at paragraph 16, 17.1 and 21, save for British Steel Corporation v Williams, unreported EAT 776/82, Neill J and members, 27 July 1982, to which we will return.

The facts

6. The Employment Tribunal found the following:

"3. Mr Vijay Sidhu, the Claimant, was employed by Superdrug Stores Plc, the Respondent, from August 1997 until his dismissal in May 2005. He was latterly employed as transport manager at the Respondent's South Regional Distribution Centre at Croydon. This is a senior position with management responsibilities. The transport operation at that regional base involved the use of drivers who were not employees of the Respondent. They included Mr Loizou, who was a driver for "Driving Edge", a business which was contracted with the Respondent to carry out driving work involved in the Respondent's business at the Croydon base.

4.The Respondent is a large and well known business with many shops and with regional centres, including that at Croydon. Mr Brian Keyworth is Southern Region General Manager there and he was the Claimant's line manager from December 2004. Mr Richard Jones, who held the Claimant's appeal hearing, is Head of Supply Chain for the Respondent.

5. In May 2005, Mr Jones was told by a security officer that an employee wanted to raise concerns about time sheets, Mr Loizou and the Claimant but was reluctant to do so: Mr Jones then spoke to that employee, who appeared fearful while telling Mr Jones that Mr Loizou had been paid by the Respondent while doing work for the Claimant personally. Mr Jones decided to preserve the anonymity of the informant. He reported the matter to the head of security, who decided that Mr Malcolm Sharp would investigate the matter. Mr Sharp was employed by the Respondent from December 1999 to November 2005. As Regional Security Manager, he was responsible for security in the region which included the Croydon base. Mr Jones briefed Mr Sharp orally about the concerns expressed to him."

7. The interview described above was an ambush and took the Claimant off his guard. He was suspended. Mr Sharp then interviewed four others, including Mr Loizou. That broke up in chaos and a scuffle. There were two other lengthy interviews with the Claimant. On 31 July 2005 a disciplinary hearing took place before Mr Keyworth who dismissed him. The Employment Tribunal went on to find this:

"19.3 The Tribunal therefore decides that this was a conduct dismissal and that the Respondent had a reasonable belief in the misconduct, formed on reasonable grounds after sufficient investigation. There was no suggestion in the Tribunal hearing that such conduct would not constitute gross misconduct."

8. That is a straightforward acquittal of the Respondent in terms familiar now under the British Home Stores Ltd v Burchell [1978] IRLR 379 test. That was also complemented by its finding in favour of the Respondent in relation to the statutory procedures set out in paragraph 20. It then said:

"19.4 The Tribunal then went on to consider whether, bearing in mind all the considerations set out in section 98(4) Employment Rights Act 1996, dismissal was within the range of responses open to a reasonable employer in all the circumstances of the case. The Tribunal decides that the dismissal was rendered unfair by reason of procedural unfairness in the Respondent's process. While it was not appropriate for the Tribunal to pick through every single part of the Respondent's procedure, there were serious matters which led the Tribunal to its conclusion, arising mostly from the Respondent's failure to follow the ACAS Code of Practice (despite referring to that in its employee booklet "A Guide to Disciplinary & Appeal Hearings", page 3).

19.5 Mr Sharp hurried the Claimant into a meeting with him the moment he entered the office on return from leave. The status of this meeting was not made clear. It commenced formally with the Claimant being asked if he wanted a witness, but was informal in that the Claimant had been given no notice of it. It ended with the suspension of the Claimant (on full pay). There was then another investigation meeting. The Claimant had nothing in writing: even allowing for an employer's difficulties when acting on what was effectively an anonymous tip-off, it would have been sensible for Mr Jones to have given Mr Sharp a written briefing. The Claimant was caught very much on the hop.

19.6 The employee handbook says nothing about allowing employees to call witnesses or other evidence at disciplinary hearings. While there is no such statutory right, paragraph 15 of the ACAS Code states (among other things) that that should be allowed. Nothing was said to the Claimant, for example in Mr Keyworth's letter of 25 May, about the possibility of the Claimant's calling witnesses or producing evidence, and these matters are not dealt with in the booklet enclosed with the letter. In the event, no witnesses at all appeared at the disciplinary hearing: Mr Keyworth relied on written statements. That appears insufficient.

19.7 The appeal (conducted by Mr Jones) was not, and was not intended to be (as Mr Jones very properly told the Tribunal) a re-hearing; therefore it could not remedy any previous defects in the Respondent's procedure. However, had the Respondent paid attention to the ACAS Code, flaws would have been seen and Mr Jones could perhaps have addressed them. Further, the Tribunal mentions, as a matter of best practice only, that as Mr Jones had been the recipient of the tip-off in the first place and had then had to brief Mr Sharp, it would have been advisable for an uninvolved person from another part of the Respondent's large organisation to be appointed to conduct the appeal."

9. Having done so it reduced the compensation for reasons which it gave in paragraph 21:

"21. The Tribunal was referred to both Polkey v A E Dayton Services Ltd [1988] ICR 142 and to contributory conduct in the submissions it received. The Tribunal considers that a very significant reduction should be made in any awards in this case (sections 122(2) and 123(6) of the Act). The Claimant really did nothing to help himself before his dismissal (that is, from the time of the first investigation meeting until his dismissal at the end of the disciplinary meeting on 31 May). He was a senior and long-serving employee with management responsibilities, arid could have helped himself substantially, for example by probing the written evidence copied by the Respondent to him and at least attempting to call witnesses at the disciplinary hearing. He did not put himself forward so as to suggest that he had credible and consistent explanations. Despite the initial "ambush" by Mr Sharp, he could after that meeting have taken sensible steps to deal with the disciplinary proceedings. There appeared to be no reason why he could not have done so. The Tribunal notes the levels of percentage reductions suggested in Hollier v Plysu Ltd [1983] IRLR 260: it decides however that the proper reduction in this case is 90%."

10. At a subsequent hearing, loss was agreed at something over £16,000 and, after reduction, the Claimant got 10%. This is not the subject of an appeal. Subject to liability the full award is the correct starting point for the Claimant's Appeal.

The submissions

11. It is convenient to deal first with the Cross-Appeal by the Respondent. On its behalf Mr Bennett says that his client having been acquitted of any breach of the Burchell test and of the statutory procedures, the Tribunal went on to consider in a vague way whether there were breaches of the ACAS Code of Practice. The only references in the Judgment to a breach of the code is paragraph 15 and only part of that matters - the entitlement of a person charged with a disciplinary offence to be able to call witnesses. The other parts of the ACAS Code were fully discharged. There was no issue on the notes which were made available to the Claimant indicating what the case against him was and that he was able to say whatever he wished and to ask questions. There was no appeal by the Claimant to call witnesses and no witnesses were named. Indeed Mr Bennett might have been said to have been provoking Mr Laing when he again said that the Tribunal had not heard of any relevant witness, either at its hearing or today.
12. The relevance is that a witness may clear up a dispute but there was no witness here relevant to the dispute in this case. It could not be said that the Respondent was under a duty to go out and seek witnesses. The only relevant witness at all was Mr Loizou but since he had left the premises he was not to be called. As to the criticism made of Mr Sharp in paragraph 19.5 of the reasons, Mr Bennett submitted that was not properly to be depicted as part of the disciplinary process and that within three days a second and third meeting were called when the Claimant had a lengthy opportunity to say whatever he wanted, given that he was in a management position.
13. On behalf of the Claimant opening the Appeal proper, Mr Laing contended that the Tribunal was wrong to criticise the Claimant in the way it had for the failure to help himself substantially. As Mr Bennett had very fairly accepted today the first time that anyone knew that the Tribunal was going along this road was when it published its reasons. It had not been part of Mr Bennett's case that the Claimant's award should be slashed on the grounds that he did not really help himself, but the findings about the Claimant's inconsistencies might possibly be attributable to that approach. That being so, Mr Bennett accepted that there was an error in cutting the Tribunal's award on the ground that it did. Mr Bennett had argued for the award to be cut because of the Claimant's own conduct but there is not a trace of that in the passage in which the Tribunal reduces the award. Thus Mr Laing contends the Tribunal erred in making such an award and so failing to give the parties an opportunity to address it, when had it done so the law is clear from British Steel Corporation v Williams. As to liability, although Mr Laing again very fairly said he could not point to anything in the Tribunal's findings which showed the serious matters which the Tribunal had in mind, they were implicit and they included the first Sharp interview.

The legal principles

14. The legal principles relevant in this case appear to us to be as follow.
15. An Employment Tribunal must deal only with the issues put before it. It is unfair to decide a point adverse to a party without giving the parties an opportunity to address it on the point.
16. An Employment Tribunal must give adequate reasons for its judgment, Meek v City of Birmingham District Council [1987] IRLR 250 (CA).
17. In the assessment of a reduction of compensation for conduct the way in which the Claimant has responded at an interview or at a disciplinary hearing is generally not to be held against him or her, see British Steel Corporation v Williams above where the EAT said this:

"We have come to the conclusion, however, that that is not the right way of looking at the facts of this particular case. The employers were making a serious accusation against Mr. Williams. It was for them to prove it. It was for them, once the matter had been challenged by him (as it was), to investigate it. We consider that it would be imposing too high a duty or obligation on Mr. Williams to have required him to make known exactly who else could speak on his behalf. It might well have been a very sensible thing for him to do and it is a matter of regret perhaps that he did not take that course. But looking at the definition of culpability and blameworthiness as described in the judgment of Brandon LJ, it does not seem to us that in the context of the present case Mr. Williams could be described as being culpable or worthy of blame. He did not produce Mr. Bone as a witness until 2nd April. It may be that was unfortunate, but we do not think it would be right to describe that as something worthy of blame or as culpable. Accordingly, we have come to the conclusion that the finding that the compensation should be reduced by 50% is one which ought not to stand."

18. Remission to an Employment Tribunal is regulated by the considerations set out in Sinclair Roche & Temperley v Heard [2004] IRLR 763 and include the confidence of the EAT and of the parties in the professionalism of the Employment Tribunal to hear the matter again, proportionality, cost, delay and the issues involved in any such remission.

Conclusions

19. As we have indicated we agree with both arguments. As to liability, we cannot say what it was that the Tribunal regarded as serious. Wedged in between its mention of "serious matters" and "defects" are references to the Sharp meeting and to the ACAS Code. In our judgment the absence of the witness is not a relevant factor. As Mr Bennett has said, if there were a relevant witness out there ready and willing to come to a disciplinary hearing who was prevented by the employer that would be a serious matter and would be a breach of the Code. It would not itself make the dismissal unfair but it would be a factor which a Tribunal would be fully entitled to take into account. The ACAS Code is very important in giving guidance as to what is required in internal disciplinary procedures and we do not in any way undermine the importance which the Tribunal gave to it. Paragraph 15 days this:

"At the meeting, the employer should explain the complaint against the employee and go through the evidence that has been gathered. The employee should be allowed to set out their case and answer any allegations that have been made. The employee should also be allowed to ask questions, prevent evidence, call witnesses and be given an opportunity to raise points about any information provided by witnesses."

20. It is meaningless to say that there is a breach of the Code in respect of the employee calling a witness when there is no relevant witness. We have taken account of the fact that even today no witness has been named as being relevant and therefore this finding has no bearing on the fairness of the proceedings. So the Tribunal cannot correctly have regarded that as a serious matter.
21. We turn then to the other matter which is the first Sharp meeting. The Tribunal notes, very briefly, that other meetings followed but it plainly considered that the ambush at the first meeting caused there to be a procedural defect. However, if those are the only two matters in the Tribunal's mind they will require careful consideration. The Tribunal indicates that they are among the serious matters. If indeed the Tribunal did have in mind other matters of procedural unfairness it has not said so and Mr Laing has not been able to point to findings to that effect.
22. This case will therefore be remitted to the Tribunal for it to identify what serious matters it had in mind. It will wish to consider whether or not the defects it found in relation to the first Sharp meeting endured notwithstanding the two subsequent meetings with Mr Sharp and his disengagement from the decision making in relation to dismissal. It will also wish to consider how that matter lies with the acquittal of the Respondent in terms of Burchell and the statutory procedures. What will not be relevant we hold are the absence of witnesses in the light of there not being any sign of them at the Employment Tribunal or before us.
23. We then turn to contributory conduct as it is generally known. The guideline of course is given in Nelson v BBC (No.2) [1979] IRLR 346 (CA). If the point is to be taken (and it will be open to take the point) that the Claimant did not help himself, then that must be judged carefully. If the Tribunal is going to hold it against the Claimant that he has caused his dismissal by some aspect of his conduct it must carefully consider whether that conduct falls within or without the kind of conduct envisaged in British Steel Corporation v Williams. The Tribunal could have avoided this difficulty if it had canvassed the parties' submissions on this matter for, as we have indicated, it is an error of law for a Tribunal to decide a matter upon which it has not heard submissions from the parties. That as Mr Bennett accepts creates the error of law in this case.
24. By the same token a live issue was before the Tribunal about whether the Claimant's overall conduct would cause there to be a reduction by reason for example of his misuse of Mr Loizou's working time. A proper submission having been made by the Respondent on this, the Tribunal was bound to answer it. We agree that once the reduction is in the order of 90% there is little scope for anything else but now that this matter is live, and bearing in mind that the Tribunal may deicide having addressed the law correctly that there can be no reduction for the Claimant's failure in the disciplinary process, it is bound to consider the submissions of the Respondent relating to his overall conduct. The argument of Mr Laing is that if that were the case a reduction of something like 25% would have been appropriate but certainly not 90%. This matter will now be remitted for a Tribunal to consider those issues.
25. Having heard our reasons both advocates regard it as highly sensible, and we agree, that this matter go back to the same Employment Tribunal. We would like to thank both advocates for the very succinct way in which they have presented their respective arguments today. The Appeal and Cross-Appeal are allowed.