United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR M PILGERSTORFER (of Counsel) Instructed by: Messrs Edwards Duthie Solicitors 292-294 Plashet Grove East Ham London E6 1EE
For the Respondent	MR J TODD (of Counsel) Instructed by: Messrs Kennedys Solicitors Longbow House 14-20 Chiswell Street London EC1Y 4TW

SUMMARY

Unfair Dismissal: Procedural Fairness/Automatically Unfair Dismissal

The failure to disclose new witness statements obtained during the adjournment of an internal appeal against dismissal was a breach of the employer's written procedure, and fell outside the band of reasonable responses. Strouthos v London Underground Ltd [2004] IRLR 636 CA applied. The Employment Tribunal Judgment was set aside and the case remitted to it to decide in the light of this direction, and Employment Rights Act 1996 s98A(2), whether the dismissal was fair or unfair. Polkey v A E Dayton Services Ltd [1988] ICR 142 and Gover v Propertycare UKEAT/0458/05 upheld [2006] EWCA Civ 286 applied.


 


HIS HONOUR JUDGE McMULLEN QC

1. This case is about procedural fairness in handling unfair dismissal under the new regime known as reverse Polkey, a reference to Polkey v A E Dayton Services Ltd [1988] ICR 142 and the Employment Rights Act 1996, s98A(2).
2. The judgment represents the views of all three members. We will refer to the parties as Claimant and Respondent.

Introduction

3. It is an appeal by the Claimant in those proceedings against a judgment of an Employment Tribunal sitting at Shrewsbury, Chairman: Mr P Cadney, registered with reasons on 18 August 2005. The parties were respectively represented, as here, by Mr Marcus Pilgerstorfer and Mr James Todd of Counsel. The Claimant claimed unfair dismissal; the Respondent contended it dismissed him fairly for gross misconduct.

The issue

4. The essential issue, as defined by the Employment Tribunal, were to determine the fairness of the dismissal since it is not disputed that the Respondent proved its reason for dismissal as being gross misconduct, which is a potentially fair reason.
5. The Employment Tribunal dismissed the claim. The Claimant appeals. Initially, this case was rejected by Elias P on the sift. At a Rule 3 hearing at which Mr Pilgerstorfer attended before HHJ Peter Clark, directions were given by the judge sending this appeal to a full hearing.

The legislation

6. The relevant provisions of the legislation are in the Employment Rights Act 1996, s98 which includes conduct as a potentially fair reason for dismissal. Fairness and procedural fairness are dealt with in s98(4) and s98A.

98 General

(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.

98A Procedural fairness

(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".

7. The Tribunal directed itself by reference to those provisions and what we hold to be the leading authorities which are cited in its reasons at paragraphs 2 and 14 and to which we will return. The Tribunal directed itself on unfair dismissal in accordance with the following provision:

14. The next question is whether the dismissal was fair in accordance with the provisions of Section 98(4). The well-known cases of British Home Stores -v- Burchell and Sainsburys Supermarkets -v- Hitt establish that firstly there has to be a genuine belief in the misconduct. Secondly, that must be a reasonable belief based upon a reasonable investigation. Thirdly, dismissal must fall within the range of reasonable sanctions for that misconduct.

The facts

8. The Respondent is a railway undertaking, the successor to Railtrack after it was dissolved. It employs thousands of people in maintaining the railway network. There is a sophisticated disciplinary procedure which includes the following relevant provisions:

3.1 Preliminary Investigation

When misconduct by an employee is suspected, the relevant manager will promptly establish the facts and, where appropriate, obtain statements from available witnesses. The manager will keep a confidential written note of the investigation, together with any witness statements taken.

3.2 Notification that disciplinary procedure is to be implemented

lf disciplinary action is to be taken, the employee will be informed clearly, in writing, as early as possible, of the alleged offence, of all relevant evidence and asked to attend a disciplinary hearing which will be arranged within seven days by the appropriate manager. The manager who conducts the hearing will be someone not previously involved in any relevant investigation.

3.3 The disciplinary hearing

The employee involved should, other than in exceptional circumstances, be given a copy of all witness statements and any relevant reports at the time the disciplinary hearing is arranged. If for any reason it is not appropriate to do so the employee should be given a clear outline of the allegations made against them and the nature of the evidence relied on in support of those allegations. The type of exceptional circumstances, which might call for this approach, would be where witnesses are reluctant to have their names known because of a fear of retaliation".

If, following those procedures, the employee is dissatisfied with the disciplinary decision, there is a right of appeal. There is a provision about new evidence.

"Should new evidence come to light during the appeal, the manager may consider the need to adjourn the hearing to investigate or to consider such points as may be raised".

9. There are, of course, provisions for representation and it was provided by RMT, the Claimant's recognised trade union officers.
10. The actors in the unfolding drama, said by the Tribunal to be a simple case, and we agree, are: Mr Shaw, the complainant, Mr Rowlands who conducted an investigation into the complaint Mr Shaw made, Ms Bayliss, the main delegation unit manager who conducted disciplinary proceedings against the Claimant, Mr Whitehurst who conducted the appeal, Mr Leeson, the Claimant's line manager and two witnesses to the alleged assault by the Claimant of Mr Shaw, namely Mr Masterson and Mr Pettit.
11. The Tribunal found the following facts.

"3 The claimant has worked in the railway industry since 1985, initially for British Rail and thereafter for a number of companies leading to his employment by the respondent as from 2001. At the time of his dismissal he was employed as an infrastructure maintainer based at Stoke on Trent. His immediate line manager was Mr Gary Leeson. As an infrastructure maintainer he worked with teams of three or four maintenance staff and he was normally the most senior member of the staff and, therefore, acted as team leader.

4. The events which led to his dismissal occurred on 20 October 2004. It is not in dispute that on that day there was an incident involving the claimant and Ryan Shaw, a more junior member of his team. In brief Ryan Shaw alleged that after a dispute about the manner in which the claimant had decided maintenance should be carried out that he said that the claimant was just being daft. Following this the claimant picked up a chair and threw it randomly into the air narrowly missing Richard Masterson's head. The claimant then prodded Ryan Shaw in the stomach and then grabbed him by the throat and forced him up against a window. Ryan Shaw then pushed the claimant away but was then grabbed again by the throat and pushed against a window.

5. Subsequently Ryan Shaw left the mess room in which this had taken place, but returned a few minutes later and was again subject to similar treatment. The claimant was shouting and screaming at him, and grabbed Ryan Shaw by the throat and forced him to the floor marking his neck and face.

6. The claimant's account is diametrically opposed to this in that he suggests that whilst the incident began with a discussion of the way in which he had carried out the maintenance he was the subject of serious verbal abuse from Ryan Shaw accusing him of being thick and swearing at him. The abuse carried on for some time whilst the claimant tried to put his point of view over and ended with the two of them squaring up to one another with Ryan Shaw pushing his face into the claimant's and with the claimant then pushing Ryan Shaw away. At this point in the dispute the two other occupants in the room, Richard Masterson and Matthew Pettit, left the room having not intervened. A short time later, matters were sorted out between Ryan Shaw and the claimant and he believed that the incident was over".

12. Following a formal complaint and an investigation, statements were taken from Mr Shaw, Mr Pettit and Mr Masterson, but not from the Claimant, his not being sought. The view taken by Mr Rowlands was that the Claimant was guilty of assault and a disciplinary hearing was conducted by Ms Bayliss. She decided that the Claimant should be dismissed summarily. The Claimant appealed:

11 That appeal took place on 26 January 2005 which the claimant attended, on this occasion being represented by his union representative, Mr Raynor. During the course of that appeal hearing Mr Whitehurst obtained from the claimant his version of events. Having heard from the claimant he decided to make further enquiries before coming to a conclusion. He accordingly interviewed Mr Leeson, and again Mr Shaw and Mr Pettit although he did not interview Mr Masterson. Having interviewed those three men the appeal hearing was reconvened and Mr Whitehurst conveyed to the claimant his conclusion that he was guilty of gross misconduct in that he assaulted Mr Shaw and that he upheld the decision to dismiss. None of the three records of interview were given to the claimant prior to that decision being taken".

13. The Tribunal's first task was to determine whether there had been a genuine belief after as much investigation as was reasonable in the guilt of the Claimant in the mind of the relevant officer. It was determined that little further investigation could have been conducted, and that the relevant officers had a genuine belief. The Tribunal rejected one point which the Claimant made, which has not been appealed, and that related to the absence of his own interview.
14. The relevant issue on internal appeal was that he had not had the opportunity to put his case across, effectively, following full disclosure of material. The Tribunal decided this.

"21. The next matter of substance about which the claimant complains is that at the adjourned appeal hearing, Mr Whitehurst interviewed Mr Shaw and Mr Pettit and in addition Mr Leeson and self-evidently took into account in deciding whether or not to dismiss what he had been told in those interviews. In this regard the claimant points to a passage in the transcript of the appeal hearing which was recorded surreptitiously by the claimant in which Mr Whitehurst and Ms Bahl, the claimant's HR representative were discussing what had occurred and Mr Whitehurst expressed the view that in light [of] what he had heard until that point he would be obliged to reinstate the claimant. It self evidently follows from the alleges the claimant that what caused him to decide to dismiss the claimant was what was he heard from Mr Shaw, Mr Pettit and Mr Leeson and in the absence of that having been disclosed to the claimant that the decision to dismiss is unfair.

22. In our view there is some force in this criticism and it is accepted on behalf of the respondent that it would have been better had those statements been disclosed before Mr Whitehurst reached his final conclusion. The question for us at this stage is whether that failure so tainted the investigation that no reasonable conclusion could be drawn from it. We accept the evidence of Mr Whitehurst that having spoken to Mr Shaw and Mr Pettit he had reached the conclusion that Mr Shaw was telling the truth and that he had been the victim of an assault by the claimant rather than one the other way round. It follows that in our view even had the claimant been invited at that stage to comment on those statements that it would not have altered Mr Whitehurst's view that Mr Shaw was telling the truth about the incident". [There appears to be an error in paragraph 21 and we will correct the word "the Claimant's" to "the Respondent's"].

15. As a result of those findings, the Tribunal went on to decide the statutory question in the following terms:

"24. The final question is whether dismissal fell within the range of reasonable sanctions for that misconduct. In relation to that the respondent points to the fact that physical violence is included specifically in the matters which constitute gross misconduct and which may result in dismissal. The claimant makes the point that Mrs Bayliss failed to take into account his long service. Although Mr Whitehurst said that he took it into account that his word should be doubted on that point. In our view it was open to the respondent to find that the use of this degree of physical violence by a team leader in respect of a junior member of his team was conduct so serious that whatever the length of the claimant's previous good service that dismissal was a reasonable sanction. Again, in our view it certainly fell within the range of reasonable sanctions available to the respondent".

16. In the course of argument addressed to it, the Tribunal's attention was drawn to s98A and the Tribunal therefore gave its judgment in response:

"25. The provisions of Section 98(a) of the Employment Rights Act 1996 have been drawn to our attention by Counsel. For the reasons given above our view is that the procedural irregularities we have identified do not so fundamentally undermine the fairness of the dismissal so as to render it unfair. However, had we concluded that they did so fundamentally undermine that fairness we would have considered the provisions of Section 98(a)(ii) which provides that: "Failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purpose 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.

26. ….. In our view had those constituted breaches of procedure, for the reasons we have given above this is essentially a simple case and we have no doubt that given that Mr Whitehurst accepted the truth of what Mr Shaw and Mr Pettit had to tell him about this matter that he would have come to the same conclusion even had those documents been disclosed".

The Claimant's case

17. The Claimant submitted that the Employment Tribunal had erred in law in that it wrongly split the analysis of the statutory provisions and its approach to the question of fairness. It was accepted by Mr Pilgerstorfer that there was no criticism of the fairness of what Ms Bayliss did and no specific challenges were made as to what she did. However, in accordance with the judgment of the House of Lords in West Midlands Co-Operative Society Ltd v Tipton [1986] ICR 192, the fairness of a dismissal includes examination of the dismissal and of any appeal process or its absence including material which arises during such a process.
18. Mr Pilgerstorfer also submitted that defects in an appeal process can affect the fairness of a first instance decision. The criticism of the Tribunal is that it took a staged process towards the examination of the issues. The primary criticism advanced under this head is that the Tribunal's judgment recorded in paragraph 22 above is wrong. A wrong question was asked, that is whether the decision was so tainted, for the correct question was: was a failure to give statements which changed Mr Whitehurst's mind within the band of reasonable responses?
19. Secondly, it is contended that the Tribunal misapplied the judgment in Polkey. At the decision-making stage for the purposes of liability on unfair dismissal, it had taken a view about whether or not the procedural irregularity would have made any difference to Mr Whitehurst's position. The Tribunal should have looked at the whole process. The process includes, not only under this procedure but, as a matter of law, knowing the case which is being put against an employee to be disciplined and, in this example, knowing what the witnesses say. This is also consistent with the ACAS Code 2004 which provides:

"15. 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, present evidence, call witnesses and be given an opportunity to raise points about any information provided by witnesses".

20. It is further contended that the Tribunal committed the heresy of resorting to the law as it was before the Polkey judgment and as is reflected, for example, British Labour Pump Co Ltd v Byrne [1979] ICR 347. It was accepted by Counsel that the appeal in this case was a review and not a re-hearing, but that that did not constitute any departure from the procedure in this case. In other words, a right of appeal is given and whether it is by way of rehearing or review, does not make any difference.
21. The central submission was that it is a breach of the law relating to unfair dismissal for new information found on appeal not to have been taken into consideration when the dismissal was assessed against a statutory standard.
22. The second primary argument advanced in this appeal is in relation to the meaning and scope of s98A. It is contended that s98A(2) deals with procedures over and above the statutory procedures set out in the other two subsections. This procedure relates to what Mr Pilgerstorfer defined as "a contractual or other documented procedure". It is not apt to extend to a policy or to any document which is not a contractual document. It would exclude also custom and practice unless the same had been reduced into contractual or other documented form.
23. The principal difference is that the procedure mentioned in this statute excludes what might be described as unspecified procedural irregularities such as were discussed in the Polkey judgment.

The Respondent's case

24. On behalf of the Respondent, it is contended that there is no separate distinction in s98(4) between the two passages to which we will return: for at all times, uppermost in the mind of the Tribunal must be considerations of justice and equity. The central question is reasonableness. As to s98A(2), using the language of Mr Todd, there may be a "get out" for an employer if the breach of the procedure made no difference. This is a partial reversal of Polkey. He also submitted that there is no change in the law, save as to that very limited provision relating to Polkey. The central question which, he submits, the Tribunal asked itself was whether the Respondent stayed within the band of reasonable responses of an employer facing the circumstances which it did. The next question is how grave was the failing and the Tribunal had found that it was not fundamental. The principal concern of Mr Whitehurst in his adjournment was to see if the witnesses had made up or had collaborated upon the statements which they made.
25. There was no new evidence. On analysis, the interviews covered the earlier ground, although it was accepted that Mr Leeson was new. The Claimant had been represented by union officers throughout and although Mr Whitehurst did not disclose the written materials he had in his possession, he did disclose the gist and no complaint was made.
26. In response to the complaint about paragraph 22 of the Tribunal's reasons, the Tribunal did there decide that this was one of those cases where there would be no difference had the proper procedure been adopted and the documents been vouchsafed to the Claimant.
27. Mr Todd accepted that an appeal can undermine what had happened, apparently fairly, at an earlier stage but when an appeal is the form of a mere review, the identity of scrutiny on appeal is higher. In this case, the substantial merits of the case were fully examined by the Tribunal, especially in the light of the live evidence it heard from the Claimant himself. For all those reasons, the dismissal was within the band of responses of a reasonable employer. If, however, that was wrong, s98A(2) did apply in this case. There was a procedure, it was written, the central complaint was that the procedure applicable in this case was not followed.

The legal principles

28. The legal principles to be applied in this case appear to us to be as follow. A full discussion of the law relating to Polkey deductions was given in a judgment which I made on behalf of the EAT in Gover v Propertycare UKEAT/0458/05 (upheld since this oral judgment by the Court of Appeal [2006] EWCA Civ 286). It is common ground that the Tribunal set out the law correctly on unfair dismissal for misconduct, as we have recorded its judgment at paragraph 14.
29. We consider the issue of whether a failure to take a procedural step takes a decision outside the band of reasonable responses raises a question of law. Once the failure of procedure has been identified, it is a legal question as to whether the failure in the circumstances of the case takes the decision to dismiss outside the objective standards of a reasonable employer. Ultimately, the question of reasonableness under the Act requires the application of the statute to the facts.
30. Fairness of a dismissal includes consideration of material which became available or ought to have become available at an appeal. Similarly, if a contractual appeal is not made available, that too will affect fairness: West Midlands Co-Operative Society Ltd v Tipton [1986] ICR 192. It is also common ground that there is a difference between a review and an appeal: Whitbread & Co plc v Mills [1988] IRLR 501.
31. As to the doctrine in Polkey, the full exposition is given in the speech of Lord Bridge, approving observations of Browne-Wilkinson J in Sillifant v Powell Duffryn [1983] IRLR 91. If the likely effect of taking appropriate procedural steps is considered at the stage of assessing compensation,

"there is no need for an 'all or nothing' decision. If the industrial tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment"

Conclusions

32. We prefer the arguments of the Claimant and have decided that the appeal should be allowed with a remission to the Employment Tribunal.
33. First, we deal with the approach to s98. On this, we prefer the argument of Mr Todd. The formulation, as is now contained in the 1996 Act, owes its birth to s24(6) of the Industrial Relations Act 1971 which provides as follows:

"(6) … the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer shall depend on whether in the circumstances he acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case".

34. As can be seen, there is an unbroken line to the central question of reasonableness. Only in the 1996 Act is it divided in the way which we have presented it above. It will emerge as an issue when s98A(2) is discussed but, for the moment, we hold that the approach of an Employment Tribunal is to determine the one question - whether the dismissal was fair or unfair – and that involves an examination of the matter upon which it depends (set out in s984(A)) but always subject to it being determined in accordance with equity and the substantial merits. We asked Mr Pilgerstorfer if he had any authority which indicated that a Tribunal had found that the employer had acted reasonably and thus passed s98(4)(a) and yet was condemned as unfairly dismissing its employee under 98(4)(b). He produced no authority for that proposition. In our judgment, the principles of equity and substantial merits are over-arching in the approach of an Employment Tribunal to the question of unfair dismissal. There is, in reality, no separation of issues.
35. Next, we turn to the depiction of the issue. It is contended that the issue is one of fact. We have already indicated that we regard this as one of law. It is essential as a matter of law in the ingredients of fairness that the employee has a right to know the case made against him or her. In Strouthos v London Underground Ltd [2004] IRLR 636 CA, it was said that it is a basic proposition, whether in criminal or disciplinary proceedings, that the charge against the defendant or the employee facing dismissal should be precisely framed and that the evidence should be confined to the particulars given in the charge. It follows from that right to know that the employee has a chance to answer. It is a natural extension of that fundamental principle of law that there be an opportunity to respond to a charge, for why else would it be necessary for precise particulars to be described? Further, the ACAS Code of Practice (above) to which Tribunals must have regard in appropriate cases provides guidance to the same effect. In our judgment, it is only in exceptional circumstances that it could be said to be within the band of reasonable responses for an employer to avoid giving the employee notice of the charge and giving him an opportunity to know what evidence there was against him. It follows that it is outside the band of those responses for an employer to take a decision to dismiss based on material which has not been disclosed to the employee or at least upon which he has had the opportunity to make comment.
36. Here, the Claimant did not see the material and, at least, Mr Leeson's was entirely new. It is, we hold, in substance prejudicial, citing (as it does) a previous incident when it is conceded that the Claimant had an unblemished record and further, unspecified comments about the Claimant's attitude. There is also reference to what appears to be prejudicial material about Mr Masterson held on video by the Claimant. In the surreptitious transcript the Claimant contends that he has a video which "could sack the whole bloody lot" and a supervisor. We need not speculate: the content depicts bizarre activity at the workplace. We are certain that this material contributed to what these witnesses told Mr Whitehurst and to his change of view. The surreptitious evidence shows that he was at the stage before the adjournment of the appeal, inclined to reinstate the Claimant. That means something changed his mind and it has not been suggested that it was anything other than the conduct of the investigation. It is fair to say that he did have the advantage, which Ms Bayliss did not, of seeing and hearing the Claimant face to face on the first day of the appeal and being concerned that he was hiding something or the others' collaboration. The new material must have convinced Mr Whitehurst he was.
37. That being so, the Employment Tribunal judgment must be set aside. The Tribunal will be directed to reconsider this case now that we have held that it is a breach of the elementary principles of justice for there not to have been disclosure of the material to the Claimant. However, that does not invoke an easy answer to the question whether this case was one of fair on unfair dismissal, for we hold that in the circumstances, s98A(2) does apply. This means the consideration of the Employment Tribunal as to whether this was an unfair dismissal must take account first of s98A(2) and all of the elements.
38. We agree with the analysis of Mr Pilgerstorfer as to part of s98A(2) but we do not consider that his limited approach is right. The use of "a procedure" in subsection (2) between the description of the statutory procedures in subsections (1) and (3) indicates some formality, as does "the procedure" in the same subsection. Since it is subject to subsection (1), it refers to other than statutory procedures. It naturally includes those incorporated in contracts. It also includes those set out in policy documents, which may not be contractual. It will also include a procedure which is found in unwritten custom and practice, since that is an important source of employment relations. But it does not cover a lapse from standards of reasonableness, or the ACAS Code which is guidance as to the content of a procedure.
39. As a matter of fact, there was a procedure in this case and as can be seen from the passages we have cited, disclosure of evidence was an essential part of it, for the purposes of the disciplinary hearing. Since that is such an important part of the procedure prior to the dismissal of any employee, when new evidence is obtained from witnesses at an appeal, it follows that that too invokes the requirement that it be disclosed.
40. The upshot is that the Tribunal will have to consider whether this is, effectively, a defence available to the Respondent. It must be borne in mind how limited the effect of s98A(2) is. It is worth emphasising that it is involved only when a failure by itself to carry out a procedure makes the employer's action unreasonable. In a sense, Mr Todd is right that this is a limited Polkey reversal because there are situations as set out by the EAT in Gover v Propertycare where a dismissal would take place for some reason unconnected with a breach of procedure. In those circumstances, it is not appropriate for us to examine the effect of s98A(2) on these facts. We resist the invitation to substitute our judgment for that of the Employment Tribunal. It will be a matter for it to decide. We would suggest that it do by the written submissions, but it will be open to it to hear evidence.
41. We have heard no objection to this case going back to the same Employment Tribunal and, indeed, applying the principles in Sinclair Roche & Temperley, [2004] IRLR 763 we consider that to be entirely right, now it has our direction on the law.
42. We would very much like to thank both Counsel for their very helpful submissions to us today, both orally and in writing.