United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS NAOMI CUNNINGHAM (of Counsel) Instructed by: Messrs Turbervilles Solicitors Hill House 118 High Street UXBRIDGE Middx UB8 1JT
For the Respondent	MR DARIUS A'ZAMI (Representative) under the aegis of the Free Representation Unit

SUMMARY

Unfair Dismissal: Procedural fairness/automatically unfair dismissal / S.98A(2) ERA

The claimant was found to have been unfairly dismissed. Unusually the Tribunal concluded that she had committed gross misconduct but there had been various procedural defects in her dismissal. They also held that they were not satisfied that even had fair procedures been adopted, the dismissal would have occurred in any event. Accordingly the dismissal was not rendered fair by virtue of s.98A(2) of the Employment Rights Act 1996.

The employers contended that the Tribunal had substituted its view for that of the employer, and that the finding on s.98A(2) was perverse. The claimant cross appealed on the grounds that on the evidence the finding of gross misconduct was perverse, and that on the material before the court, the only proper inference was that there was no gross misconduct.. Furthermore, there were no reasons given at all for this conclusion.

The EAT dismissed the appeal and upheld the cross appeal. The Tribunal had properly directed itself and its conclusions were not perverse. However, the Tribunal had not given any reasons at all for finding gross misconduct; indeed, it was not clear that it had appreciated that it had to determine that issue for itself. The question of whether there was gross misconduct to be remitted to the same Tribunal to be considered afresh when it deals with remedy.


 


THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)

1. Before the Employment Tribunal, the Claimant in this case was found to have been unfairly dismissed. (We continue to refer to her as the Claimant although she was the Respondent before us). The circumstances were somewhat unusual in that the Tribunal found that she was guilty of conduct which amounted to gross misconduct but held that the dismissal was unfair because of substantial procedural defects. The finding of gross misconduct meant that she failed in her separate claim for wrongful dismissal.
2. The Tribunal considered whether in the circumstances section 98A(2) of the Employment Rights Act 1996 would render the dismissal fair on the grounds that even if a fair procedure had been adopted, on the balance of probabilities she would have been dismissed in any event. They concluded, however, that they were not satisfied that there was a more than 50 per cent chance that she would have been dismissed. They postponed any assessment of precisely what the chance was until the hearing on remedies.
3. The employers now appeal on the basis that the Tribunal erred in concluding that there were procedural errors. It is said that they substituted their own view for that of the employer in making that determination. They further submit that the finding that there was a no more than 50 per cent chance that the Claimant would have been dismissed in any event had proper procedures been adopted was perverse. Finally, they submit that the decision is insufficiently reasoned; in particular, that part of the decision dealing with section 98A(2).
4. The Claimant cross-appeals on the grounds that the finding that she had committed gross misconduct was perverse, or alternatively was insufficiently reasoned.

The background

5. The Claimant commenced employment with the Respondent as an activities co-ordinator in their Day Centre on 29 April 2002. The employer is a charity and a company limited by guarantee. It is a small organisation with about 28 employees and it is served by a Board of Trustees. The employer offers a range of services, including therapeutic services in the Day Centre. The Chief Executive, since July 2004, was Elaine Fearnside.
6. In November 2005 the Claimant's job was altered. Instead of being a full time activities' co-ordinator she began doing that for two days a week, with three days as shop manager.
7. During 2005 and 2006 she had a number of health related problems, including two hip replacement operations and treatment for breast cancer. Her father sadly died suddenly in January 2006.
8. She was away from work because of the hip operations from May until July. While she was absent she had a meeting with Ms Fearnside to consider what duties she would be performing upon her return. This meeting was on 19 June 2006.
9. The Tribunal found that the parties agreed, albeit with some reluctance by the Claimant, that her days as activities' co-ordinator should be altered to Mondays and Tuesdays. They had been Wednesdays and Thursdays. The Claimant expressed some concerns in a letter about this the day following the meeting, 20 June. She was concerned about changing the days because she thought it would upset the clients. In the previous year when she had changed her role, management had been critical of her because they did not think that she had handled satisfactorily the way she had communicated the change with the clients. They specifically asked her to minimise distress in this instance.
10. More specifically, Ms Fearnside told the Claimant:

"I am happy for you to explain there has been need to change your days but I would ask that you do not share with them (i.e the clients) any negative views you may have of these moves and that you may maintain the professional boundaries".

11. The Claimant returned to work on 4 July and attended a meeting on 13 July. It was a training day on "Confidentialities and the Boundaries". Others present were Ms Kioussis, who worked at the Day Centre on Wednesdays and Thursdays, and her superior, Mrs Munday. There were also some of the clients from the Day Centre present. Ms Fearnside gave an explanation to the clients as to why the Claimant had been required to work on Mondays and Tuesdays. The Claimant did not believe that this was the true reason. After she left the Claimant said something to Ms Kioussis to this effect:

"That is what Elaine [i.e. Mrs Fearnside] told me. That is why. She has lied to me, she has lied to you, and she has lied to everyone in here."

12. The Claimant accepts that she did say that or something similar. The relevant dispute is whether it was said in front of the clients. The Claimant denies that it was. Ms Kioussis was apparently shocked by this remark and Mrs Munday, not having heard the remark, said that she saw the surprised expression on Ms Kioussis' face. Ms Kioussis subsequently complained to Mrs Munday and she mentioned it to Ms Fearnside, who asked Ms Kioussis to put what had been said in writing. This she did, maintaining that the comments had been made when the Claimant was standing in the circle of client-filled chairs. .
13. Ms Fearnside asked the administration manager, Ms Page, to investigate and decide whether a disciplinary hearing was necessary. Apparently Ms Page simply passed Ms Kioussis' statement to Ms Gadsby, another manager, and asked her to hold a disciplinary hearing. At that stage no-one had spoken to the Claimant. She was asked to attend a disciplinary hearing on 28 July. The allegation was that she had informed the staff and the clients that the Chief Executive had lied to them, and that this was an untrue and defamatory statement. She was told that it was considered that it could amount to gross misconduct and could lead to her dismissal.
14. The Claimant attended the meeting with Mr McCabe, a colleague, to assist her. He was told initially that he could not speak, but then it was confirmed that he could. Ms Gadsby went through the allegations. The letters from Ms Fearnside were considered, and in particular her emphasis on the need to deal in a careful and professional way with clients. The Claimant continued to deny that her comment was made in the presence of clients. She said that no-one else was present at the time. There was some dispute as to whether Ms Gadsby was asked if Ms Kioussis had been questioned and the Tribunal considered that she probably had been asked that question. In any event, Ms Gadsby did question both Ms Kioussis and Mrs Munday after the meeting had finished. They both asserted that the comment was in front of clients. Ms Kioussis added that the Claimant was not whispering and that the clients could hear what was being said.
15. The Tribunal noted that response from these witnesses was probably not recorded word for word. Ms Gadsby considered all this information, although she did not notify the Claimant that she had carried out these two further interviews. She also considered a further note from Mrs Fearnside detailing what she had said to the Claimant about communicating with clients. Ms Gadsby concluded that the Claimant ought to be dismissed. Her reasons were that it was an important matter and the misconduct was compounded by two facts, namely that the Claimant was attending a training course specifically on confidentiality and its boundaries, and also that she had been asked to show restraint and professionalism in her dealings with clients.
16. The Claimant wrote a short letter on 3 August, that is the day after she was notified of the dismissal, appealing against that decision. On 6 August she wrote a long letter to Mr Neighbour, the Chair of the Trustees, raising a number of issues and alleging that a number of the conclusions of Ms Gadsby were incorrect. She also observed that it was unfortunate that Ms Gadsby chaired the meeting since she was of lower rank than Ms Fearnside. She also pointed to what she considered to be some inconsistencies in the evidence of Ms Kioussis and Mrs Munday. She wrote a further note to Mrs Fearnside on 17 August in which she repeated her account, asked that the appeal be heard by an independent person or a senior manager, commented that the disciplinary procedures had not been properly conducted, and claimed that the sanction was disproportionate.
17. On 18 August Ms Fearnside wrote to the Claimant saying that although the appeal was out of time, it would be heard. That was arranged for 29 August. Again Mr McCabe attended with the Claimant. The appeal was heard by Ms Maskell. She was nurse co-ordinator for the Hospital and was junior to Ms Fearnside. She told the Tribunal that she had been informed by a third party about what the Claimant had allegedly said on the day itself and had subsequently discussed the case with that person. At the appeal stage the evidence of Ms Kioussis and Mrs Munday was put to the Claimant for her comments. Ms Maskell dismissed the appeal. In particular, she observed that she did not consider that a lesser penalty than dismissal was appropriate in the particular circumstances.
18. The Tribunal then set out the principles of law, directing themselves in accordance with the well known case of British Home Stores v Burchell [1980] ICR 303 and subsequent cases. They specifically recorded the fact that they must not substitute their view for that of the employers. It is not suggested that they misdirected themselves. They were satisfied that the Respondent had a genuine belief in the misconduct of the Claimant and that the dismissal related to that misconduct. They were not, however, satisfied that the genuine belief was based on a fair investigation.
19. They were critical of a number of features. First, the Claimant was not spoken to before the dismissal hearing itself. Nor indeed was anyone, with the exception of Ms Kioussis. The Tribunal expressed the view that there appeared to be a number of other people present who might have been interviewed, including Yvonne Munday who, in fact, later gave relevant evidence. As to the hearing itself, they considered that it was unsatisfactory that the Claimant should only have been given the one brief statement when the hearing started, and they also thought that Ms Gadsby ought to have reported back to the Claimant for any comments in the light of Ms Gadsby's subsequent conversations with Ms Kioussis and Mrs Munday. The key issue was whether the comments had been made in front of clients and further investigations could have been conducted on that matter.
20. The Tribunal were also very critical of the appeal process commenting that it was "wholly lacking in fairness". First, it was heard by a member of staff who was below the rank of Chief Executive, Ms Fearnside, about whom the comment had been made. It would have been appropriate to have asked members of the Board of Trustees to be involved and no real explanation was given to the Tribunal why they were not. This was particularly so "given Ms Maskell's inexperience, her previous involvement and knowledge of the case."
21. They then considered whether section 98A(2) applied and concluded that it did not.

They said this:

"We have not been satisfied by the respondent that had a fair procedure been followed the claimant had a more than 50% chance of still being dismissed. It is our view that a more thorough investigation, (sic), an independent person at the disciplinary hearing or appeal with people senior to (or at least not line managed by) the Chief Executive might well have made a difference to the outcome for the claimant."

22. However, they did conclude that dismissal fell within the range of reasonable responses, particularly if the investigation revealed that the comments were indeed made in front of clients. They reserved the position on remedies but noted that they would then determine whether and to what extent there was contributory fault and to what extent a reduction should be made because of the chance that dismissal would have occurred even had fair procedures been adopted.
23. As to the wrongful dismissal claim, although the Tribunal stated in its reserved judgment that the conduct amounted to gross misconduct, they did not in giving their reasons state why they had reached that conclusion.

The grounds of appeal

24. The first ground is that the Tribunal effectively substituted its own view for that of the employer in determining that no proper procedures had been adopted. It is common ground that the test for procedural fairness is as set down by Lord Justice Mummery in Sainsbury's Supermarkets v Hitt [2003] ICR 111, para.34, where he said this:

"I should emphasise clearly that as held by the Court of Appeal in Whitbread plc v Hall [2001] ICR 699, the range of reasonable responses approach applies to the conduct of investigations, in order to determine whether they are reasonable in all the circumstances, as much as it applies to other procedural and substantive aspects of the decision to dismiss a person from his employment for a conduct reason."

25. Ms Cunningham, Counsel for the employer, submits that this was a very simple case turning on the assessment of conflicting evidence. It really did not require a complex procedure at all. Ms Gadsby had heard from all three parties before making a decision and on any view the Tribunal ought to have concluded that that was sufficient. Nothing would have been served by showing the Claimant the observations of either Ms Kioussis or Mrs Munday since the gist of their statements had already been put clearly to her. Furthermore, the Claimant had had the opportunity to deal fully with these statements on appeal.
26. It is true that the employers might have contacted the clients, but there were perfectly cogent reasons not to do so and it was not suggested that they ought to have done so. There was little further investigation that could have taken place.
27. As to the appeal process, again the Tribunal has effectively substituted its view by saying that it considered that someone junior to the Chief Executive ought not to have heard the appeal. It was well within the range of responses for a reasonable employer to allow Ms Maskell to hear the appeal.
28. We reject this argument. We think that the Tribunal was entitled to conclude that a fair procedure would have entitled the Claimant to receive the statement at an earlier stage, and that it was unsatisfactory for Ms Gadsby to take account of material not specifically put to the Claimant. We recognise the force of the submission that given the scope of the issue in dispute and the nature of the additional information, this is unlikely to have altered matters. But there is no evidence that this is why Ms Gadsby did not revert to the Claimant, and it would plainly have been desirable if she had interviewed the witnesses before the hearing itself. An argument addressed to the potential implications of the error goes to the section 98A(2) question rather than the fairness issue. As to the fact that the Claimant had the opportunity to deal with these statements on appeal, that will often be sufficient to put right the earlier defects, but it all depends on the fairness of the process as a whole: see Taylor v OCS Group Ltd [2006] IRLR 613.
29. That involves a consideration of the appeal process. We have no doubt that the Tribunal was entitled to conclude that where the Chief Executive was under criticism, it was not satisfactory to have the appeal determined by somebody for whom she was responsible. The appeal did not have to be handled in that way since there were potentially trustees who could have heard the appeal. We see no legitimate criticism of that part of the Tribunal's decision. They considered that a reasonable employer would have required a more independently minded appeal body. They are not thereby substituting their view for that of the employer, as Ms Cunningham alleged.
30. We recognise, of course, that it is not a case where the Claimant and the Chief Executive were in direct opposition in the sense that there was not a dispute as between them as to what was said. The Chief Executive had no knowledge of what was said or in what circumstances, and the point was made by Ms Cunningham that there was no evidence that she was personally antagonistic to the Claimant. Nevertheless we entirely understand why the Tribunal would have considered that a more junior colleague might have difficulty in conducting the appeal wholly independently, given that on the Claimant's own case she had been seriously critical of the Chief Executive. In particular, as Mr A'Zami, Counsel for the Claimant, observed, it might be difficult for a subordinate to give appropriate weight to mitigating factors.
31. We see force in Ms Cunningham's point that it was not legitimate to criticise the appeal process on the grounds that Ms Maskell had already discussed the case with a third party. We recognise that this will be virtually inevitable in a small operation of this nature; no doubt the incident and its consequences would have been a general topic of conversation. But that was a very minor part of their criticism and nothing like central enough, in our view, to invalidate the thrust of the Tribunal's reasoning on this point.
32. We can only interfere with the Tribunal's decision on reasonableness if it was perverse and we do not think that this conclusion falls into that category.
33. The second ground is that even if the proper procedures had been adopted, it is quite unrealistic to conclude that there was only a 50 per cent chance or less that dismissal would have occurred. Ms Kioussis and Mrs Munday had no reason to state that the comments had been made in front of third parties unless it was untrue. It is fanciful to believe, submits Ms Cunningham, that even had the statements been made available to the Claimant prior to the hearing, it would have altered the substance of the evidence before management.
34. That may be true, but it does not engage with all the procedural failings identified by the Tribunal. The issue here is not what a reasonable employer could have done but what this employer would have done if the proper procedures had been complied with. The onus is on the employer to satisfy the Tribunal that on the balance of probabilities it would have dismissed the Claimant even if proper procedures had been complied with.
35. It may very well be that Ms Gadsby would have reached the same result even if the defects identified in the initial hearing had been remedied. We accept that it is unlikely that the Claimant could have said much more than she already had in the light of the further information gathered after the hearing. But that does not address the problems with the appeal. In particular, it seems to us that the Tribunal was fully entitled to take the view that a different appellate body - one who was not in any way beholden to the Chief Executive - may well have considered that given the conflict of evidence, it could not be satisfied that the words were said in the presence of third parties. Alternatively, they might have concluded that given the uncertainties, the conduct in question did not merit dismissal.
36. Ms Cunningham submitted that that would be highly unlikely, but we would disagree, particularly given the fact that the Claimant had four years' service and no prior disciplinary record. It is true that the Tribunal concluded that this was in fact gross misconduct but that is not the same as saying that an employer would necessarily have formed that view, or would have dismissed for it even if he had. Again we bear in mind that since there has been no misdirection on this point, we can only interfere if the decision is perverse, and that is a very high hurdle. We recognise that other tribunals might have taken a different view, but in our judgment this conclusion cannot be said to have been perverse.
37. Finally, it is submitted that the Tribunal has given inadequate reasons for their conclusions. In relation to their criticism of procedures, it is submitted that the Tribunal gave no explanation why it considered that the fact that Ms Maskell had prior knowledge of the incident ought to have amounted to a reason for her disqualification. We think that the reason is obvious: they felt it desirable that the person conducting the appeal should come to the task without any preconceived impressions of the case, and prior discussions would militate against this. As we have said, we agree with Ms Cunningham that this is not in fact a legitimate criticism, but in our judgment the reason why the Tribunal makes it is plain.
38. Then Ms Cunningham says that the Tribunal has not adequately explained why the employer had not satisfied it that if a fair hearing had been held, there was still a greater than 50 per cent chance that the dismissal would have occurred. They do not state what factors they consider might have altered the decision to that extent. But in our view, it is again obvious. There were really only two issues to consider.
39. In our judgment we can fairly infer that the Tribunal was not satisfied that a different appeal body would necessarily have concluded that the comments were made in front of clients, and moreover, they may have perceived the gravity of the offence differently, even had they reached that conclusion. A different appeal body may have thought that some sanction short of dismissal would be appropriate.
40. Accordingly, whilst we do recognise that other tribunals may have taken a different view of the matter, and in particular may have been less critical of the earlier stages in the appeal process, we do not accept that there is any flaw in the fundamental reasoning of the Tribunal. We can identify no error of law.
41. The Tribunal concluded that there were errors in the procedure. They were particularly critical of the unsatisfactory nature of the appeal and the fact that Ms Maskell was junior to the Chief Executive. They felt that because of her inexperience this might colour her approach to the issue in question. Finally they were not satisfied that dismissal would have occurred even had fair procedures been applied. We think they were entitled to reach each of these conclusions. It follows that the appeal fails.

The Cross Appeal.

42. Notwithstanding that we have dismissed the appeal, the cross-appeal remains relevant because it could affect the level of compensation, notwithstanding that there will be some overlap between unfair dismissal compensation and damages for wrongful dismissal. The submission is a short and in our view attractive one.
43. In determining whether or not the conduct was gross misconduct, as far as the claim for breach of contract is concerned the Tribunal does not, of course, simply concern itself with whether a reasonable employer could properly have reached the conclusion that the misconduct justified dismissal or even summary dismissal. The Tribunal has to decide for itself, in the light of the evidence before it, whether there was or was not a breach of contract of such gravity as to amount to gross misconduct.
44. In this case the Tribunal initially merely stated in its judgment that the conduct amounted to gross misconduct. There was no indication at all as to how that decision had been reached. Accordingly, an Order was made by this Tribunal in which the employment judge was requested to explain whether this was intended to be a finding of fact that the claimant's conduct amounted to gross misconduct, and if so, what were the reasons for that finding.
45. In a brief response the employment judge stated that the finding was indeed intended to be that the Tribunal had concluded that there had been gross misconduct, namely making the damaging statement about the Chief Executive when clients were present. The employment judge stated that the reasons were contained in particular in paragraph 7.2 of the decision. With due respect to the Tribunal, we have looked at paragraph 7.2 and although it states that the conduct of the Claimant had the potential to amount to gross misconduct it nowhere indicates that it did amount to gross misconduct. More importantly, that paragraph does not say why the Tribunal reached that view.
46. Initially Mr A'Zami submitted that the only proper conclusion that the Tribunal could reach was that there was no gross misconduct here. They heard evidence from the Claimant herself, who denied that the statement had been made in the presence of clients. They did not hear at all from either Ms Kioussis or Mrs Munday, and merely had their statements. It was not, therefore, appropriate for them to prefer the hearsay evidence to the direct evidence obtained from the Claimant. As Ms Cunningham properly pointed out, that cannot be correct. An employment tribunal can take account of all evidence, including hearsay evidence, and the decision was one which in principle they could properly reach.
47. Mr A'Zami has an alternative argument, namely that the Tribunal ought at least to have to given proper reasons for its conclusion that there was gross misconduct. Notwithstanding the employment judge's additional comments, the reasons are still opaque. Ms Cunningham submits that the reason is plain; the Tribunal preferred the evidence contained in the witness statements of Ms Kioussis and Mrs Munday to the evidence given by the Claimant herself.
48. That is plainly so, but we accept the submission of the Mr A'Zami that in circumstances like this, if the Tribunal is going to prefer hearsay to direct evidence, then it ought albeit briefly to indicate why it has reached that conclusion. A detailed explanation is not required, but we think that some explanation is.
49. The question is where that leaves the cross-appeal. The employment judge has already been asked on one occasion to give reasons for the Tribunal's decision and, as we have said, the response was, with respect, less than satisfactory.
50. It is not ideal to ask the Tribunal to look at this matter again. However, Mr A'Zami considers the most satisfactory course is to send it back to the same Tribunal, and in the circumstances of this case we think he is right. The cost of having this matter determined afresh by a different tribunal would probably be out of all proportion to the potential value of the claim, particularly since we have rejected the challenge to the finding of unfair dismissal and there is an overlap in the compensation. It will add little if anything to the cost of having this matter reconsidered if it is remitted to the same tribunal to be heard at the remedies hearing.
51. Accordingly, we remit the cross-appeal for further consideration by the Tribunal. We appreciate that they have reached a decision on the issue of gross misconduct, but in the normal way, given the inadequacy of the reasoning even after an opportunity to provide an explanation, we would at this stage have remitted this to another tribunal. Therefore, although we recognise that it is a difficult and invidious task for the Tribunal, we do ask them to seek to consider this issue again in the light of the material already before them. They may well, of course, come to the same view as they originally did but sometimes in the process of reasoning through a particular conclusion a tribunal will change its provisional view and come to a different conclusion. We only wish to make it clear that that is an option which this Tribunal has in this case.

Disposal

52. The case must now go back to the same tribunal to consider the issue of remedies and to deal with the cross appeal.