United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR J BENNETT (Advisor) Employment Law Firm Ltd 3 Eastwood Court of Appeal Wiltshire Road Marlow Buckinghamshire SL7 1JG
For the Respondents	MRS L. STEELE (Representative)


 


SUMMARY

UNFAIR DISMISSAL: Reasonableness of dismissal

Betting shop assistants dismissed for fraud - Dismissal held to be unfair on the basis that there were defects in the investigation and, more particularly, that the employers' belief in the employees' guilt was unreasonable on the basis of the available evidence - Employer appealed on the basis that the Tribunal had failed to apply British Home Stores v. Burchell - Held that the Tribunal had directed itself properly and that it was entitled to reach the conclusion which it did


 


THE HONOURABLE MR JUSTICE UNDERHILL

1. The Appellant company ("the company") operates over 2,000 betting shops in this country. The Claimants, the Respondents to this appeal, worked at its branch at 33, Old Market Street, Bristol. On 21 February 2007, both were dismissed for allegedly participating in a fraud against the company. By a Judgment sent to the parties on 19 October 2007 an Employment Tribunal at Bristol held that both had been unfairly dismissed: written Reasons were sent to the parties on 2 November 2007. The company appeals against that decision. It has been represented before us by Mr. John Bennett, an employment law consultant. The Claimants have been represented by Mrs. Loretta Steele, who is Ms. Steele's mother. Both of them also represented the parties before the Employment Tribunal.
2. The preliminary stages of this appeal have not been straightforward. The appeal was initially rejected under the rule 3(7) procedure; but at a subsequent rule 3(10) hearing the President allowed it to proceed. As will appear, the grounds of appeal included a contention that the Tribunal had made significant errors about matters of undisputed fact and that its conclusion was not open to it on the evidence before it. That meant that it was necessary that the parties should agree what the evidence was on the points in question or, if that were not possible, that the relevant parts of the Employment Judge's notes should be obtained; and the directions made at the rule 3(10) hearing contained the standard paragraph providing for that to be done. Mr. Bennett on behalf of the company did his best to comply with the President's direction, but Mrs. Steele was not willing to co-operate. If she had been a professional representative her behaviour would be highly reprehensible, and it is most regrettable that she did not think it necessary to obtain advice (or, if she did, that the advice that she received was so wrong-headed); but it is perhaps understandable that a lay representative should be suspicious of correspondence from the opposing party asking for agreement on matters of fact which she understood to be prejudicial to the Claimants' case. In any event, the process of attempting to obtain Mrs. Steele's agreement – which involved two further directions by the Registrar - took so long that by the time that an approach was made to the Employment Judge it was too late for his notes to be available before the listed date of the appeal. Mr. Bennett has supplied a copy of the witness statements of the Claimants (which are very short) and of the company's only witness, Mr. Russell, together with such very incomplete notes as he has, but he accepts that they do not give a complete picture of the witness evidence. That difficulty is compounded by the fact that we have not been given a copy of the bundle of contemporary documents which was before the Employment Tribunal, or indeed any contemporary documents at all. Some at least of these documents were plainly potentially material to the issues on this appeal. Both parties are to some extent to blame for this unfortunate state of affairs.
3. Recognising the difficulty which the absence of the Employment Judge's notes potentially created, Mr. Bennett applied on the day before the hearing of this appeal for an adjournment. Mrs. Steele opposed that application; and I directed that the hearing should proceed at least for the purpose of establishing whether an adjournment was indeed necessary. Having canvassed matters with the parties at the start of the hearing, we decided to allow Mr. Bennett to develop his submissions, on the basis that if in the event we felt able to resolve the appeal fairly without reference to the missing materials we would do so, but that if we could not do so then we would adjourn the appeal part-heard so that the notes, together with a bundle of the contemporary documents, could be obtained. We have in fact been told that the Employment Judge's notes have, since the hearing, been typed up and would be available if called for. But if we were to consider them now it would be necessary to call for further submissions, and possibly hold a further hearing; and in the event we have not found it necessary to take that course.

THE FACTS

4. Ms. O'Neill was a "customer service assistant". Ms. Steele was a Deputy Manager: that meant that in addition to dealing directly with customers she acted as the manager of the Old Market branch when the Shop Manager, Mr. Briggs, was not working. Both had worked for the company for several years and had good records.
5. In order to understand the fraud which the Claimants were accused of, it is necessary that we should set out, albeit in outline, the procedure for handling bets placed in the company's shops, and in particular that we should explain the phenomenon of "late bets". For convenience, although at the risk of stereotyping, we will refer to customers as "he" and to members of the company's staff as "she".
6. In order to place a bet on a horse or greyhound race at one of the company's branches, a customer will fill out a slip identifying the stake and the runner on whom he is betting: he ought also to identify the race, but that is not always done and the omission is not fatal because the race in question can always if necessary be established from the name of the runner. He will then hand that slip with his stake to an assistant, who will pass it through a scanner, which produces a print-out endorsed with the precise time of the bet. This document, which in effect becomes "the" slip in place of the slip originally presented, is the customer's official receipt and the authoritative record of the placing of the bet and the time that it was placed. As soon as possible thereafter – typically only a minute or two, but much depends on how busy the shop is – the details from the scanned slip will be put into the computer system (not necessarily by the same assistant who initially accepted the bet): this process is known as "translation".
7. In principle, the company does not accept late bets, i.e. bets placed after the start of the race in question. The reason for this is obvious: a customer who places a bet after a race has started may gain an illegitimate advantage from knowing what has happened in its early stages. An assistant who knows that a bet is late will thus normally refuse to accept it when the customer proffers the slips for scanning. However, late bets may nevertheless, and not uncommonly, be accepted in one or other of two circumstances:

(a) It may not be apparent to the assistant at the moment that the slip is proffered that the race has in fact started. There are various methods by which she can normally ascertain the position; but these do not always give an immediate or definitive answer, particularly when there is a lot going on; and even where they do it is not difficult for a pressured assistant to make a mistake. (One method which featured in the evidence is a red light which shows against a race on the screen once it is started. It was accepted before us that this aid is not available or apparent to the assistant in every case. The Tribunal referred to this as "the only thing which prevents operatives scanning bets late". Mr. Bennett said that that was wrong, and contrary to the evidence; but even if that were so we cannot see that it affects the essential element in its reasoning.)

(b) Even where an assistant knows or believes that a race has just started, she may as a matter of discretion accept a late bet if it seems fair to the customer to do so, essentially because he was ready to place his bet before the race started but there was a delay in processing it for reasons beyond his control. A typical case would be where the customer was in a queue at the counter and could not be reached in time.

8. Where a late bet has been accepted in that way it will be picked up at the translation stage since the computer will compare the time of the bet, as recorded at the moment that the slip was scanned, with the actual start-time of the race, of which it has an authoritative record generated centrally. The computer system is programmed to treat all late bets as void.
9. It might seem to follow that whenever a bet is identified by the computer, at the translation stage, as having been placed after the start of the race and thus as void, the transaction should invariably be treated as a nullity and the customer should be entitled to the return of his stake. But in practice the position is not quite so straightforward. We take separately the cases of a winning and a losing bet.
10. In the case of a winning bet, the customer, who of course is not involved in the translation process and will be relying on the fact that his bet was accepted by the assistant, will present his slip expecting to be paid out. The manager should obviously not pay him if she believes that the late bet was a try-on; but in other circumstances she may be prepared to pay out in the interests of good customer relations, and particularly where she or a colleague had consciously accepted the bet knowing that it was or might be late (i.e. in "situation (b)" above). It was accepted that in principle a manager had a discretion to pay out in such circumstances. In such a case it is possible to over-ride the computer's categorisation of the bet as void: this is done by using a special "alien" file on the system. It was the company's evidence before the Tribunal, though not accepted by the Claimants, that if that were done a manual entry had to be made in the branch day-book.
11. In the much more common situation of a losing late bet, the customer – not knowing that the bet had been treated by the system as void – will not seek the return of his stake. It would nevertheless usually be very easy to return it to him, since the customer will probably still be in the shop; and even if he is not, if he is a regular customer and known to staff a note could be made to return his stake when he next attended. It is however procedurally necessary that the customer should still have his slip, since that has to be presented for formal cancellation and is retained by the branch. It was the Claimants' evidence that they thought that it was only fair to customers to try to return their stakes in the case of a void bet whenever possible and that they regularly did so. But the Tribunal appears to have thought that that was not in accordance with normal practice, the company preferring to retain the stake and say nothing to the customer (who arguably had not really lost out in that case, at least if he would in practice have been paid out if the bet had won).
12. Against that background, it is possible to explain the fraud in which the company believed the Claimants had been engaged. It involved two stages. First, the Claimants would try so far as possible to increase the incidents of late bets. Given that many customers place their bets at the last minute, this could often be achieved simply by engineering a short delay between the moment that the slip was proffered and the putting of it through the scanner. Secondly, it was said that at the end of the day, or at some other convenient opportunity, the Claimants would scour the shop for slips relating to late bets which customers had discarded – it is of course normal behaviour for a disappointed customer simply to throw away the slip relating to a losing bet; the Claimants would then process these as if the stake were being returned to the customer but would in fact simply keep the money for themselves. Strictly speaking, this would be a fraud on the customer rather than the company, but it is equally reprehensible.
13. The company carried out regular audits which, inter alia, involved sophisticated tests aimed at detecting any unusual pattern of the handling of bets. The audit for the eight-week period between 23^rd November 2006 and 12^th January 2007 appeared to show an unusual number of late bets being accepted by the Claimants, specifically at times when they were working together and when Mr. Briggs was not on duty. The number of repaid void bets over the whole period came to 35, in a total sum of £1,009. These had been processed roughly 50/50 as between the two Claimants. Thus, on a simple average, they amount to about two repayments per Claimant per week. There had also been a few payments out on winning late bets. For the purpose of these payments Ms. Steele had used the "alien" route to over-ride the computer system; but no note had been made in the day-book.
14. The matter was initially investigated by the company's Regional Security Manager, who conducted an "investigatory interview" with each Claimant. The explanation which they gave – and, to anticipate, maintained at all times thereafter – was that each of the repayments was a genuine repayment of his stake to a customer whose bet had been treated as void because it was late. They said that the reason for the difference between the incidence of such payments when they were on duty and when Mr. Briggs was present was simply that Mr. Briggs took a much firmer line on late bets than they did. They said that he very rarely accepted late bets and hardly ever authorised repayment; whereas they were more relaxed about doing so and made a point of repaying stakes where losing late bets had been voided by the system. As the Tribunal observed at para. 11 of the Reasons, if those explanations were correct they might represent a departure from what the company regarded as good practice but they would be a complete answer to an allegation of the fraud alleged.
15. The Regional Security Manager was not satisfied by the Claimants' explanations. The company's disciplinary procedure was accordingly initiated. On 16 February 2007 Mr. Russell conducted disciplinary meetings with each of the Claimants separately. At the conclusion of those meetings he decided that both were guilty of the fraud which we have explained above, and they were summarily dismissed. The reasons for the dismissals were given in letters dated 21 February 2007 as follows:

"After thorough investigation and careful consideration, I decided to summarily dismiss you from the service of William Hill Organisation without notice or payment in lieu of notice. This decision was taken because whilst working as a Deputy Manager or Counter Sales Assistant at the Old Market LBO on various dates between 23^rd November 2006 and 12^th January 2007 you have fraudulently processed a number of bets and stolen £405 and £605 respectively from the company."

16. The Claimants appealed, but the appeal was unsuccessful. It appears that there was before the Tribunal virtually no evidence about the appeal process, although we are told by Mr. Bennett that it took the form of a review rather than a rehearing. The argument before the Tribunal appears to have centred entirely on the fairness of Mr. Russell's original decision.

THE TRIBUNAL'S REASONS

17. The Reasons start by summarising the facts about the system for taking and processing bets in the company's branches, essentially as we have sought to summarise it above although in somewhat more detail. They then proceed, at para. 12, to set out the law relating to dismissal for misconduct in terms which are entirely unexceptionable. In particular, the Tribunal accurately paraphrases the principles enunciated in British Home Stores Ltd v Burchell [1980] ICR 303 (though without referring expressly to it). The Tribunal then goes on to accept in terms that Mr. Russell genuinely believed that the Claimants were guilty of the fraud alleged. It also – which is of course uncontroversial – says that if they were indeed guilty of such a fraud dismissal was an appropriate sanction.
18. Accordingly the crucial question is whether Mr. Russell's belief in the Claimants' guilt was reasonable. As to that, the Tribunal's reasoning is in two parts. First, at para. 13 of the Reasons it outlines a number of criticisms of the investigation carried out by the company, describing these as "extremely serious" (para. 14, opening sentence). It then, secondly, proceeds to examine the strength of the case against the Claimants, in other words to assess how reasonable were the grounds for believing them to be guilty. It does so by examining in turn, at paras. 14 – 28, what the company had apparently advanced before it as the principal alleged weaknesses in the Claimants' explanation (closely based on weaknesses expounded by Mr. Russell in his very full and clear witness statement). In each case, the Tribunal finds the supposed weaknesses unconvincing, with the result that in its view there was no substantial basis on which the company should have disbelieved the Claimants' explanation for the payments in question. It concludes as follows:

"19. We have done our best to analyse all this carefully and we have had to bear in mind the demeanour of the Claimants, which would have been the same essentially as their demeanour before Mr. Russell. The Claimants' demeanour impressed us as that of honest people who had no intention to steal or defraud and were explaining as best they could a system which was not as robust as that of Mr. Briggs. It was nevertheless broadly in line with the kind of process which Mr. Russell accepted.

20. We have come to the conclusion that there is no sufficient investigation of the key question of whether the Claimants' had taken the money. Given the seriousness of these allegations against people with long unblemished records with the Respondent and no record of criminal activity before that, the Respondents had no reasonable grounds for their finding of theft or fraud. The conclusion we have come to, in essence, is that Mr. Russell, having looked at the audit, created a plausible hypothesis in his mind and then stuck to it without finding any supporting evidence."

In Burchell terms, that reasoning is based on findings both that the company's investigation was inadequate and that there were no reasonable grounds to believe in the Claimants' guilt. However, in practice the two points interpenetrate.

GROUNDS OF APPEAL

19. The company's grounds of appeal are developed at paras. 6–14 of the Notice of Appeal. We will consider them paragraph-by-paragraph.

Para. 6

20. This reads as follows:

"The grounds upon which this Appeal is brought are that in determining the fairness of the dismissal the Tribunal misapplied or misconstrued the statutory tests under s.98 (4) of the ERA 1996 in that it decided the issue on the basis of how the Tribunal would itself have acted had it been the employer, rather than by considering (as it should have done) whether the Appellant's decision to dismiss the Respondent was one which was open to a reasonable employer to take in the circumstances of the case."

21. That of course, is a ground commonly asserted in appeals of this kind. But Mr. Bennett was unable to identify either in the Notice of Appeal or in his oral or written submissions any specific indication in the Reasons that the Tribunal had fallen into this error. (He might perhaps have sought to rely on the Tribunal's reference, in para. 19, to the Claimants' demeanour. But the Tribunal was careful to make clear that it relied on that factor only as an indication of how the Claimants were likely to have appeared when interviewed.) In such a case an appellant's argument depends on asserting that the Tribunal could not reasonably have reached the conclusion in question if it had not substituted its own view rather than simply assessing the reasonableness of the employer's. In practice, therefore, this adds little or nothing to an allegation of perversity.

Para. 7

22. This reads as follows:

"The Tribunal misapplied or misconstrued the statutory test because it was looking at the circumstances of the case it wrongly directed itself toward, rather than the actual circumstances which were before the Appellant at the time the decision to dismiss the Respondents was taken."

We have some difficulty even after hearing Mr. Bennett's helpful submissions, in understanding this point. We do not believe that it adds anything of substance to the more particular points which we consider below.

Para. 8

23. In this paragraph the company identifies three specific alleged factual errors in the Reasons. If the errors in question were capable of constituting or giving rise to an error of law, it would be necessary for us – as discussed above – to obtain the notes of the Employment Judge and/or the bundle of contemporary documents. However, we do not believe that that is the case. The first of the three alleged errors is a matter of the detailed description of the paperwork. The second concerns whether the system in place at the company's branches is peculiar to it or merely the application of standard EPOS technology. The third relates to a comment made by the Tribunal that the company had created a problem of late payments for itself "because of their desire to ensure that they can process as many bets as possible in the short space of time immediately before the races start". None of those statements or comments was in any way material to the Tribunal's reasoning and accordingly even if they were "wrong" the basis of that reasoning would not be impugned.

Para. 9

24. To some extent this paragraph appears to be intended simply to summarise the effect of the preceding paragraphs. However, it also introduces an allegation that the Tribunal made a further factual error about whether a bet can be regarded as "validated" when initially passed through the scanner or only when subsequently translated. This too is an issue of no significance to the Tribunal's reasoning.

Para. 10

25. In this paragraph the company challenges the Tribunal's conclusion in para. 20 of the Reasons (set out above) that Mr. Russell, having "created a plausible hypothesis ... stuck to it without finding any supporting evidence". This, it is said:

"… contradicts Mr. Russell's unchallenged evidence that he did not form any conclusions until the end of the disciplinary process, and ignores the central issue in his mind that the questions were raised as to the Respondents' conduct by the fact that so many bets were placed late in the first place."

Even if – which cannot be authoritatively established in the absence of the Employment Judge's notes – Mr. Russell was not specifically challenged on the account which he gave in his witness statement of his own thought-processes, that would not render the Tribunal's conclusion illegitimate. A conclusion of this kind is as much as a matter of interpretation as a finding of primary fact, and there is no conceivable injustice in it not having been formally put to Mr. Russell that he may, no doubt subconsciously, have approached matters with rather less than an open mind than he believed.

Para. 11

26. The grounds of appeal which we have thus far been considering are, with respect to Mr. Bennett, somewhat in the nature of shadow-boxing. In this paragraph we come to the heart of the company's appeal, and specifically to the question of whether it was open to the Tribunal to find that there were no reasonable grounds for the conclusion to which Mr. Russell came. It reads as follows:

" Based on the Appellants' evidence, it was submitted on their behalf (in written submissions) that there were 7 identifiable reasonable grounds on which he [sc. Mr. Russell] could sustain his genuine belief in the misconduct, but only two of those have been referred to at all in the Tribunal's Reasons. The reasonable grounds were relevant to the dismissing authority's conclusion that the Respondents had deliberately held the customers' bets back (as referred to in paragraph 7 of the Reasons) and in apparently ignoring the other reasonable grounds it is submitted that the Tribunal were concentrating on the circumstances they wrongly believed to be relevant."

The "seven reasonable grounds" there referred to are identified at para. 11 of Mr. Bennett's closing submissions to the Tribunal. They are all taken from Mr. Russell's witness statement. We will consider them in turn.

27. (a) "The pattern of the bets in question". We asked Mr. Bennett what, more precisely, this heading referred to. He helpfully identified a number of points as being subsumed under the general heading of "the pattern of the bets". Most of them in fact proved to be the subject of other heads in his "seven reasonable grounds" and we will deal with them in their own right. The essential remaining point was that which had prompted the investigation in the first place, namely that over the eight-week period the Claimants appeared to have made repayment of a substantial number of stakes placed on late bets but only at times when Mr. Briggs was not working. It is not correct to say that the Tribunal did not deal with that point. It recorded the Claimants' explanation for this phenomenon and proceeded to examine the criticisms of it advanced by Mr. Russell and the company. It came to the conclusion, as we have said, that those criticisms could not reasonably justify rejecting the explanation. We consider below whether that conclusion was one which was reasonably open to it.
28. (b) "The fact that all of these bets were either void or winners (and, therefore, there were no losers)". The point being made here by Mr. Bennett was that it was inconsistent of the Claimants to return the stakes on losing late bets if they paid out on winning late bets: the rationale for returning stakes on losing late bets is that the customer never had any chance of winning, but if in practice payment would have been made if the bet had turned out to be a winner that rationale disappears. The Tribunal recorded, at para. 10 of the Reasons, that the Claimants accepted that their practice in this regard might be logically flawed; but they maintained that, logical or not, it was in the interests of good customer relations. The Tribunal expressly addressed this point in para. 14 of the Reasons, finding that the Claimants' answer was "plausible". In our view that was a legitimate conclusion. The question is not of course whether the practice of paying out on winning late bets while also returning the customer's stake on losing late bets is in some absolute sense "right", or in accordance with company policy, but simply whether it was plausible that the Claimants might have followed such a practice. The Tribunal thought that it was, and we can see nothing irrational in that conclusion.
29. (c) "The fact that there had been no notes made in the shop diary to the effect that any discretionary payments had been made". The company's point here was that on the occasions on which the Claimants, in the absence of Mr Briggs, paid out on winning late bets, over-riding the computer by using an "alien", they should have made a written record of their reason for doing so in the day-book. Presumably, though this is not entirely clear, the argument is that their failure to do so evinced a wish to cover their tracks in some way. It is true that that point is not specifically addressed anywhere in the Reasons. It should have been. But the failure to deal with one particular point in a party's submissions does not automatically constitute or give rise to an error of law. We do not believe that it does so in the present case. This particular point simply formed part of an overall submission that the company had reasonable grounds for its belief in the Claimants' guilt. That submission was directly addressed by the Tribunal, and this particular element in it was not so evidently cogent or crucial as to require specific consideration. On the contrary, the Claimants' failure to make the entries in question in the day-book seems to us of marginal significance. There was apparently, as noted above, a dispute on the evidence as to whether they had ever been told that an entry needed to be made in these circumstances. Although the Tribunal does not make a finding on this point, it regarded the Claimants as honest witnesses and we can see nothing prima facie surprising in their genuinely being unaware of this particular detail of procedure. Further and in any event, the suggestion of deliberate concealment is not very plausible. It was common ground that there was a discretion to pay out on winning late bets, so that the fact that the Claimants had done so – on a very few occasions in eight weeks - would not be an indication of any impropriety: specifically, it would not be an indication of the fraud being alleged in the present case, namely retaining for their own benefit the stakes placed on losing late bets.
30. (d) "The unusual percentage of late bets paid out". Mr. Bennett acknowledged to us that the phrase "paid out" was confusing: the real point here was simply that the Claimants were permitting an unusually large number of late bets compared with the incidence when Mr. Briggs was on duty and, apparently, in other branches. The Tribunal addressed this point at para. 15 of the Reasons, where it said:

"The second problem is the percentage of late bets which were paid out. We got the distinct impression that the respondents had an unwritten policy that punters should not be encouraged to recover their stake on losing void bets. By contrast Miss McNeil believed strongly that they were entitled to their stakes back. "

That reasoning is succinct to the point of opacity; but it is in fact clear from the Reasons taken as a whole that what the Tribunal meant was that the Claimants' practice differed from that (at least tacitly) encouraged by the company and followed by most of their colleagues. It is thus, in practice, the same point as has already been considered above. Mr. Bennett complained that the Tribunal's answer did not specifically address a point which Mr. Russell had made in his witness statement to the effect that on one particular day during the eight-week period there had been no fewer than nine late bets out of 200 taken. Mrs. Steele said that the significance of that could not be judged without more information: some days were much busier, and more likely to generate errors, than others. At this point all that we need say is that this appears to be another example of a point of detail with which it was not necessary that the Tribunal should deal specifically.

31. (e) "All of these bets were translated after the results were known, but none of the other bets were". This point derived from three passages in Mr. Russell's witness statement (at paras. 67, 77 and 85) in which he pointed out that the audit returns showed that it had taken significantly longer for the late bets in question to be "translated" than the normal interval between scanning and translation (which was said to be between one and one-and-a-half minutes). This was, as we understand it, said to be an indication that the Claimants had been deliberately waiting until the result of the race was known. The Tribunal, again, specifically addressed this contention. It said, at para. 16 of the Reasons:

"The third proposition is that there were substantial delays in the translation of these bets. Obviously a late bet is likely to be translated after a timely bet because they would they would be translated in sequence and we have had no evidence of translation out of sequence. There is no pattern of delays in translation."

Again, the reasoning is very short, but it shows unequivocally that the Tribunal had expressly considered the points being made by Mr. Russell and had rejected his contention that there was any pattern which supported his case. Mr. Bennett accepted that that was what the Tribunal appeared to have found but he said that it did not deal adequately with the particular points made in the paragraphs in Mr. Russell's witness statement which we have identified. We have been carefully over those paragraphs ourselves; but we do not see that they contain any argument which is so compelling or specific as to have required more detailed refutation.

32. (f) "The fact that these bets were all placed as a race was about to go off, and yet they were not collected until significantly later". Mr. Bennett's point here was that it had been Mr. Russell's evidence that some of the alleged repayments had not been made until an hour or two later, notwithstanding that it was demonstrable that the customer had been in the shop in the intervening period (because he had placed other bets): on one occasion the repayment had been as much as two days later. It was the company's case that this was hard to reconcile with the Claimants' explanation: if they were genuinely making the repayments to the customers, it would be expected that they would do so at once, whereas if they were perpetrating the alleged fraud some time-lag might be expected because they would need to obtain the discarded slips. The Tribunal addressed that contention at paragraph 17 of the Reasons, where it said:

"Another problem, and perhaps the most significant one, is the delay between the voiding of the bet and the repayment of the stake. The longest period was two days. The explanation given by Miss McNeill was simply that she would mention it to people when she saw them again. The respondents did not seem to like that much but it seems a perfectly credible explanation."

Again, the Tribunal's reasoning is distinctly summary. But the essential point is that it regarded the Claimants' explanation as credible.

33. (g) "The condition of the customers' receipts, i.e. that they were badly crumpled". The slips which had been cancelled as part of the repayment process were retained by the company and were available to the investigators. They were all, as Mr. Bennett said, crumpled. The company's point was that that indicated that they had been discarded by the customer and subsequently retrieved by the Claimants: Mr Russell's evidence was, indeed, that one had been torn in two and had to be sellotaped. The Tribunal addressed this point at para. 18 of the Reasons as follows:

"The final problem was the crumpled condition of some of the receipts. We see no basis for suggesting that, because a betting slip is in imperfect condition, it follows that it spent two days on the floor of the betting shop. It seems to us unsurprising that punters in a city betting shop should only preserve their betting slips in a crumpled or imperfect condition especially when they had thought that those slips were losers. We also find it unsurprising that losing betting slips should be kept for a time by punters simply by omission to throw them away."

What we understand the Tribunal there to be saying is that it is to be expected that a customer who has lost would scrumple up his slip but also that, if notified shortly afterwards that he could have his stake repaid if he could produce the slip, would still be able to retrieve it (either from a pocket or from wherever he had thrown it) in order to obtain repayment. That is a factual conclusion on the part of the Tribunal which seems to us entirely reasonable.

34. Overview. With one exception (which does not seem to us to be fatal to its conclusion), the Tribunal systematically addressed each of Mr. Bennett's seven points and reached a considered conclusion that neither individually nor cumulatively were they capable of justifying the conclusion to which Mr. Russell came. It is true that its reasons were sometimes rather telegraphically expressed, but that is a question essentially of style rather than of substance. It is clear that the Tribunal conscientiously addressed the company's case and it gave adequate reasons for rejecting it.

Para. 12

35. This reads as follows:

"… [N]o reasonable Tribunal properly addressing the evidence before them could have concluded that there were "extremely serious defects in the investigation" (paragraph 14)."

The Tribunal had identified four "difficulties" with the investigation - (1) that there was no direct evidence – from observation or from till records - of the Claimants ever having taken anything; (2) that none of the customers had been interviewed or had complained; (3) that the company had not approached Mr. Briggs; and (4) that there had been no covert surveillance (e.g. by a "mystery shopper" or by CCTV). Point (1) is of a rather different character from points (2)-(4): it merely identifies a feature of the facts, whereas the others identify investigatory steps which the company did not take.

36. Mr. Bennett put forward arguments why each of these was a bad point. Taking them in turn:

(1) He said that the nature of the fraud was such that the Claimants could not have been observed committing it; and till records would in fact reconcile. That is true, but in our view all that the Tribunal was saying was that there was not in this case, as there is in some, direct evidence of misconduct, and that it accordingly behoved the company to be more cautious in reaching a conclusion of guilt.

(2) Mr. Bennett said that interviewing regular punters could have produced no useful information. We do not agree. Although it is unlikely that anyone could have remembered particular repayments several weeks previously, it is entirely possible that they could have confirmed, or rebutted, the Claimants' evidence that they sometimes made repayments of stakes on void bets. (The Claimants themselves in fact approached several punters for statements to this effect and produced them to the appeal. They were in a standard format and not clearly addressed to the crucial question; but the fact that they could be obtained confirms that the suggestion is not unrealistic.)

(3) Mr. Bennett said that the only issue which Mr. Briggs could have addressed, namely his own practice with regard to late bets, was not controversial and that there was therefore no point in approaching him. The Tribunal was entitled to take a different view. It could not safely be assumed that Mr. Briggs would be able to say nothing relevant to the investigation. As the manager of the branch, and knowing the Claimants well, he might well have been able to shed useful light on the credibility of their explanations.

(4) Mr. Russell was apparently questioned in some detail by the Tribunal about what CCTV coverage there was in the shop and whether and how it might have been used to produce relevant evidence. It seems to us that it was open to it to reach a conclusion that it might have been a source of relevant evidence. Mr. Bennett's principal contention before us was that the most that CCTV evidence – or, equally, the employment of a mystery shopper - could have done was to produce evidence of misconduct by the Claimants after the event; and that such evidence would have been irrelevant to the question whether the Claimants had carried out the actual fraud alleged. We do not agree. If they had been caught red-handed carrying out a similar fraud, that would of course have justified dismissal in any event, though it would no doubt also have confirmed the company's submissions about the earlier period.

37. We are not therefore satisfied that the Tribunal's points were bad. In so far as they are to be understood as criticisms of the company's investigation, we believe that the criticisms were ones which were legitimately open to it on the evidence. We are inclined to agree that the characterisation of the omission of the steps in question as "extremely serious defects" was an over-statement; but that does not invalidate the Tribunal's reliance on them as an element in its overall finding of unfairness. In any event, as we read it, the Tribunal was not so much saying that each of these steps was necessary to a fair conclusion as that, in their absence, the company had only a very limited evidential basis on which to reach a conclusion. It had only the findings of the original audit, which the Tribunal believed did not by themselves establish guilt, together with the Claimants' answers in interview. The Tribunal does not say – and nor do we – that a fair finding of guilt was impossible in those circumstances; but the absence of any other objective evidence meant that the question whether the available evidence justified a conclusion of guilt required particularly careful scrutiny.
38. Mr. Bennett did not explicitly submit before us that steps of the kind in question would have been disproportionate. But we would in fact observe that a finding of fraud – against long-serving employees with an impeccable record - is a serious matter even when made by an employer rather than by a Court. Steps that might seem disproportionate or unnecessary in relation to another kind of offence might be necessary when allegations of this kind are being made.

Para. 13

39. We will not reproduce this ground in full. The essential point is that in paras. 14-18 of the Reasons the Tribunal had engaged in an over-minute analysis of the Claimants' explanations and so substituted its own judgment for that of Mr. Russell. We do not agree. In a case of this kind, where – as we have already observed – two long-serving employees with good records were being accused of fraud on essentially circumstantial evidence the Tribunal was entitled to look carefully at the details and ask whether it was capable of justifying the conclusion to which Mr. Russell came.

CONCLUSION AND OVERVIEW

40. It is only fair to the company and to Mr. Russell to record that this was not a case in which they acted patently irresponsibly or without any basis for suspicion. The audit raised a matter which deserved investigation and initially the Regional Security Manager and subsequently Mr. Russell carried out a genuine investigation. But it is not the effect of "the Burchell test" that an Employment Tribunal is precluded from carrying out a critical scrutiny of an employer's reasoning process: forbearing from stepping into the employer's shoes is not the same as endorsing every step that he takes. In this case an experienced Tribunal went carefully over the various steps involved in Mr. Russell's reasoning and decided that they were not reasonably capable of supporting the conclusion of guilt which he reached. That was an exercise which it was the Tribunal's job to perform, and this Tribunal should only intervene if we are satisfied that there has been some error of law in its approach or its decision. Despite Mr. Bennett's thorough and well-presented submissions, we are not so persuaded. This appeal must accordingly be dismissed.