United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR J SYKES (Consultant) Employment Lawyers 26 Farringdon Street London EC4A 4AB
For the Respondent	MR N DE MARCO (of Counsel) Messrs Lewis Silkin Solicitors LLP King Charles House Park End Street Oxford OX1 1JD


 


SUMMARY

Practice and Procedure – 2002 Act and Pre-action Requirements

Unfair Dismissal - Contributory fault

Contract of Employment – Wrongful dismissal

Section 98A(1) – whether breach of steps 1 and 2 Dismissal and Disciplinary Procedure (DDP). Inter-relation between contribution under s123(6) and s98A(1) automatically unfair dismissal (s124A Employment Rights Act) and with common law claim for Wrongful Dismissal.


 


HIS HONOUR JUDGE PETER CLARK

1. This is an appeal by Mr Sahatciu, the Claimant before the London Central Employment Tribunal against a judgment of that Tribunal promulgated with reasons on the 13 January 2006 dismissing his complaints of unfair dismissal and breach of contract (wrongful dismissal) brought against his former employer, the Respondent DPP Restaurants Ltd.


The Issues

2. The appeal challenges 3 findings by the Tribunal:

(1) that his dismissal was not automatically unfair under s98A(1) of the Employment Rights Act 1996 (ERA). It is contended that the Tribunal was wrong to find that the Respondent had complied with both steps 1 and 2 of the standard Dismissal and Disciplinary procedure under the Employment Act 2002 Schedule 2, Part 1. Mr Sykes has confirmed to us that there is no appeal against the Tribunal's further finding that dismissal by reason of the Claimant's conduct was fair under s98(4) ERA;

(2) that even if his dismissal had been automatically unfair under s98A(1) the claimant would receive no compensation because he had contributed to his dismissal by his own conduct to the extent of 100%;

(3) that his claim of wrongful dismissal failed. The Respondent was entitled to dismiss the Complainant by reason of his gross misconduct.

The Facts

3. The Claimant commenced employment with the Respondent's predecessor in about 1990. Following a relevant transfer he continued that employment with the Respondent, which operates a chain of restaurants. At the relevant time he was manager of their Notting Hill restaurant.
4. On 14 October 2004 the Claimant's line manager, Elaine Burt visited the Notting Hill restaurant. She discovered that the Claimant had permitted a member of staff, Abdullah Murat, to work more than 20 hours a week. That was illegal; as a non-EU student in this country Mr Murat was not permitted to work more than 20 hours a week. She told him to stop that practice.
5. He ignored that instruction. Indeed he went further. When Miss Burt visited the restaurant again on 19 November the relief manager had informed her, in the absence of the Claimant on holiday, that another employee, Erkan Aiden, had not been attending for work and his hours were being covered by Mr Murat, putting the latter over his permitted 20 hours. Worse still, she learned that Mr Aidan had earlier left the employment but had been retained on the payroll by the claimant so that Mr Murat could be paid for his additional hours via Mr Aiden.
6. In these circumstances she summoned the Claimant to an investigatory meeting on 23 November. She raised with him his apparent deception and failure to follow her instruction given on 14 October and suspended him on full pay pending a disciplinary hearing to be held on 30 November.
7. On 25 November she wrote to him at the address on the Respondent's records (he had in fact moved without informing the Respondent of his new address). She said this:

"Dear Besnik,

Further to my preliminary conversation with you on Tuesday 23rd November 2004 over your failure to follow instructions given and your continued breach of immigration legislation, tax, national insurance and payroll fraud, I write to confirm my decision to suspend on full pay for those alleged gross misconduct offences."

She then informed him that the disciplinary hearing would be held on 30 November at Oxford Street and concluded "these allegations are classified as gross misconduct and if proven are capable of amounting to summary dismissal". Later that day she interviewed a Manager at the restaurant called Morad, and the following day spoke to Mr Murat and noted what he had to say.

8. Miss Burt conducted the disciplinary hearing on 30 November. She began by asking the Claimant if he knew why he was there. He agreed that he did. She put the breach of 14 October instruction to him. He explained that Mr Murat wished to do Mr Aiden's hours whilst the latter was on holiday; it overcame staff shortages in the restaurant. He agreed that she had told him it was illegal for Murat to work more than 20 hours. He did not think it a problem. Both men appeared on the payroll as working 20 hours each. He thought it was okay to pay Aiden and he would sort it out with Murat.
9. Miss Burt read out to him statements taken from Murat and Morad. Asked why he falsified the payroll, he replied it was normal practice in the West End. He did not think there was anything wrong.
10. Miss Burt then carried out further investigations. She could find no evidence to support the claim that it was common practice elsewhere to cover up payments for more than 20 hours worked illegally. Subsequently, she contacted Murat. He said he knew nothing of the arrangement in advance.
11. She then havered, reluctant to get rid of an otherwise good employee. But, pressed by Head Office on 7 December for a decision, she concluded that the Claimant was guilty of gross misconduct in (a) failing to comply with her clear instruction of 14 October (b) deliberately breaching immigration rules and (c) falsely manipulating payroll records. She decided that the appropriate penalty was summary dismissal and wrote a letter of dismissal dated 8 December and sent it to the Claimant at his new address. She informed him of his right of appeal.
12. The Claimant did appeal. The appeal came before Mr McTaggert, the Respondent's chief Executive. He held a hearing on 17 December and then carried out further investigations into new information provided by the Claimant at that hearing. That came to nothing and the appeal was dismissed by letter dated 14 January 2005.

Section 98A(1)(ERA)

S98A(1) 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 I 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."

Schedule 2, Part 1, Chapter 1 of the Employment Act 2002 provides as far as is material:

"Step 1: statement of grounds for action and invitation to meeting

1(1) The employer must set out in writing the employee's alleged conduct or characteristics, or other circumstances, which lead him to contemplate dismissing or taking disciplinary action against the employee.

(2) The employer must send a statement or a copy or it to the employee and invite the employee to attend a meeting to discuss the matter.

Step 2: meeting

2(1)The meeting must take place before action is taken except in the case where the disciplinary action consists of suspension;

(2)The meeting must not take place unless-

(a) the employer has informed the employee what the basis was for including in the statement under paragraph 1(1) the ground or grounds given in it, and

(b) the employee has had a reasonable opportunity to consider his response to that information."

13. It was argued on behalf of the Claimant below that the Respondent failed to comply with both step 1 and step 2 DDP, thus rendering the dismissal automatically unfair. The Tribunal rejected that contention. They said at paragraph 15 of their reasons:

"As to the contention that the dismissal was automatically unfair on the basis that it is suggested that the letter of 25 November is inadequate to comply with the step 1 procedure set-out in Schedule 2 Employment Act 2002, the Tribunal disagrees with that submission. It is unnecessary, we consider, for the step 1 letter to set out the details of the allegations made, providing it draws attention in a broad fashion to the alleged conduct which is the subject of the disciplinary proceedings." This letter does so. The letter does have to be looked at against the background of the fact that the Claimant had been spoken to by Ms Burt on 23 November when the conduct in question had been discussed at some length and it must have been absolutely obvious to the Claimant what conduct on his part was the subject of the disciplinary proceedings. Furthermore, the step 2 meeting provided for in Schedule 2 provides that that meeting must not take place unless the employer has informed the employee what the basis was for including in the step 1 statement the ground given in the step 1 statement for the disciplinary proceedings. That indicates to the Tribunal that the standard procedure does not require the detailed grounds for the alleged conduct to be set-out in the step 1 letter but simply for the conduct to be broadly defined and brought to the Claimant's attention through the step 1 letter and that thereafter further details are to be provided at the step 2 meeting. We are entirely satisfied that that was in fact done in this case and accordingly we conclude that there was no breach of the statutory dismissal and disciplinary procedure on the part of the Respondent."

14. Mr Sykes renews his submissions below in this appeal. He submits that the step 1 letter of the 25 November was too vague. The Claimant did not know what was the allegation against him. The instruction is not identified. Continued breach suggests historic defaults. The headings, such as 'tax', were unclear and unfocused. Tax, national insurance and payroll fraud were to be read disjunctively. The letter did not tell the Claimant what would be dealt with at the step 2 hearing.
15. The statutory step 2 requirement has been the subject of EAT consideration in 3 cases decided since the Tribunal judgment in this case to which we have been referred. They are Alexander v Bridgen [2006] IRLR 422 (Elias P); Draper v Mears Ltd (EAT 0174/06/ZT 5 September 2006, HHJ Burke QC) and YMCA Training v Stewart [2007] IRLR 185 (Underhill J), in each case sitting with members.
16. From these cases we draw the following principles: (1) The step 1 letter need do no more than state the issue in broad terms (Alexander, para 38; Draper para 39; Stewart para 9). (2) It must provide sufficient information to the employee to give a considered and informed response to the proposed decision to dismiss (Alexander, para 34).
17. In the present case we are satisfied that, read in the context of what was said by Miss Burt at the investigatory meeting held on 23 November, as found by the Tribunal at paragraphs 8 and 9 of their Reasons, her letter of 25 November complied with the step 1 requirement. She referred to the earlier meeting on 23 November, and as he agreed at the 30 November disciplinary the Claimant knew the case he had to meet.
18. Similarly, step 2 was considered in those cases. The EAT recognized that the step 2 requirement may be met before the step 1 letter (see Draper para 40; Stewart para 14).
19. Mr Sykes submits that further matters arose as a result of the 23 November meeting but the Respondent failed to provide the Claimant with the results of Miss Burt's further investigations. However, we agree with the majority in Stewart (Ms Tatlow dissenting); the statutory procedures are no more than a minimum. In the present case, the nature of the charges was made quite clear to the complainant at the 23 November meeting and confirmed in the step 1 letter of 25 November. He knew the grounds for the proposed disciplinary action and the basis of those charges. There is no express requirement to provide further information from Morad and Murat taken after the meeting of 23 prior to the disciplinary meeting held on 30 November.
20. We think that an unduly pedantic reading of the DDP is as unattractive as an overly technical construction of a step 1 grievance letter under the statutory grievance procedure; see Canary Wharf Management Ltd v Edebi (2006) UKEAT 0708/05 (Elias P) and cases there cited, particularly Shergold v Fieldway Medical (2006) IRLR76 (Burton P).
21. Looking at the facts of this case in the round we are wholly satisfied that the Tribunal were entitled to find that the Respondent complied with steps 1 and 2 of the DDP. Accordingly the Tribunal was entitled to find that dismissal was not automatically unfair under s98A(1)ERA.

Contribution

22. Having upheld the Tribunal's finding of fair dismissal the question of contribution does not strictly arise. However, for completeness, we shall deal with Mr Sykes' submission that, in a case of automatically unfair dismissal under s98A(1), it is not open to an employment tribunal to find 100 per cent contribution, since the Claimant could not be said to have contributed to the procedural unfairness of the Respondent. That is correct, but wholly immaterial, as Mr De Marco submits.
23. Contribution is deal with in two ways in the Employment Rights Act, although strictly in this appeal Mr Sykes challenges the Tribunal's finding as to the compensatory award only. By Section 122(2), as to the Basic Award:

"Where the Employment Tribunal considers that any conduct of the Complainant before the dismissal … was such that it would be just and equitable to reduce … the amount of the basic award to any extent, the Tribunal shall reduce … that amount accordingly"

and by s123(6), as to the Compensatory Award:

"Where the Tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding."

24. The Tribunal, in finding that this was a case, even on a finding of Section 98(A)1 unfair dismissal, for nil compensation, said at paragraph 16:

"Accordingly it cannot be said that there is an automatically unfair dismissal pursuant to the provisions of Section 98(a) Employment Rights Act 1996. Even if we were wrong about that we conclude that even if there were an automatically unfair dismissal in this case, we would have concluded the Claimant was guilty of blameworthy conduct to such an extent that he could be said to have contributed to his dismissal to the extent of a 100 per cent. And that in those circumstances we would have taken the view that there should be no basic or compensatory award in this case, in not being just and equitable to making any award."

25. It has been well settled law prior to the introduction of s98(A) ERA that in assessing contribution under s123(6) it is only the employee's conduct which can be taken into account. The conduct of the employer is irrelevant (see for example Parker Foundry Ltd v Slack (1992) IRLR 11. Does the advent of s98(A), automatically unfair dismissal, alter the position? We can find no statutory warrant for such a proposition. s123(6) itself remains unaltered.
26. Mr Sykes submits that it is incumbent on an employment tribunal in a s98A(1) case to first assess compensation under s123(1) then apply the statutory uplift provided for in s31(3) Employment Act 2002, subject to immaterial exceptional circumstances referred to in s31(4), before considering contribution; (see s124(A) ERA).
27. He suggests that even if the s123(1) element can be extinguished by a finding of a 100 per cent under s123 (6) the uplift under s 31(3) is untouched. We disagree. It is clear to us from s124(A) that the option of a 100 per cent finding of contribution applies to the whole potential compensatory award. s31(3) EA speaks of increasing any award which the Tribunal makes to the employee. A finding of 100 per cent contribution under s123(6) precludes any award being made. There is nothing to which the percentage uplift can apply. We reject Mr Sykes submission that even if a Tribunal has determined that there is 100 per cent contribution they should nevertheless go through the exercise of assessing compensation under s123(1) and applying an appropriate uplift under s31(3) EA. That seems to us a useless exercise.
28. As to the basic award, not strictly an issue in this appeal, we note that s120(1A) added by the Employment Act 2002 s34(6) at the same time as s98(A) ERA, provides for a minimum award of 4 weeks pa, while a dismissal is automatically unfair under s98A(1) unless, see s120(1B), the increase would result in injustice to the employer. It necessarily follows, in our view, that the general discretion afforded to Tribunals to reduce or extinguish the basic award under s122 remains and is applicable to a case which would otherwise attract a minimum of 4 weeks pay. In these circumstances we reject Mr Sykes submissions under this head of the appeal.

Breach of Contract

29. Finally, Mr Sykes contends that if the dismissal was automatically unfair under s98(A) the Tribunal was not entitled to reject the claim for notice pay by way of a breach of contract claim for wrongful dismissal.

29. Again we agree with Mr De Marco that this submission is misconceived. The statutory claim for unfair dismissal in all its forms differs from the common law action for wrongful dismissal. In the latter, the question is whether the employer has shown on the balance of probabilities that the employee is guilty of gross misconduct entitling the employer to discharge him summarily. Here, the Tribunal accepted the primary evidence of Miss Burt. The Claimant was guilty of gross misconduct. Summary dismissal was justified.
30. We do not think that Mr Sykes ingenious submission as to the implied term of mutual trust and confidence, assists him in this part of the appeal. Although by Section 30 (1) of the Employment Act 2002 Parliament provided that every contract of employment shall have effect to require the employer and employee to comply in relation to any matter to which a statutory procedure applies with the requirements of the procedure, that provision has not yet b een brought into effect. Absent an express term, albeit imported by statute, into the contract of employment that the employer shall comply with the DDP, we do not think it permissible to imply a term to that effect by virtue of the trust and confidence obligation. In any event this was a case of summary dismissal. Breach of the implied term may give rise to a claim by an employee for constructive dismissal under s95(1)(c) ERA but it cannot assist at the point of summary dismissal by the employer under s95(1)(a). In these circumstance, for the reasons which we have endeavoured to give, this appeal is dismissed.