United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR N PORTER (of Counsel) Instructed by: Messrs DLA Piper UK LLP Victoria Square House Victoria Square Birmingham B2 4DL
For the Respondent	MR A MIDGLEY (of Counsel) Instructed by: Messrs John Collins & Partners LLP Venture Court Waterside Business Park Swansea SA6 8QP


 


SUMMARY

UNFAIR DISMISSAL: Reasonableness of dismissal

Conduct dismissal. Burchell test. Reasonableness of grounds for belief in misconduct. Misapplication of (neutral) burden of proof under s98(4) ERA.

Appeal allowed and case remitted for rehearing by fresh Employment Tribunal.


 


HIS HONOUR JUDGE PETER CLARK

1. This is an appeal by Makro Self Service Wholesalers Ltd, the Respondent before the Cardiff Employment Tribunal, against the Judgment of an Employment Tribunal chaired by Employment Judge D. Harris, promulgated with Reasons on 18 September 2007, upholding the Claimant, Mr Rees' complaint of unfair dismissal.

The facts

2. The Claimant was employed by the Respondent as Duty Manager at their Swansea store. His employment commenced on 5 July 1996. His record was clear until the matters leading to his dismissal on 21 August 2006.
3. On 27 July 2006 an employee, Sarah Jane Allen, was seen informally by her manager, Ms Dee Aubrey, about her work performance. During that meeting Ms Allen broke down in tears, saying that she could no longer work with the Claimant because he kept picking on her. She did not then mention what she told Ms Aubrey at a further meeting held on 1 August, that the Claimant had touched her inappropriately. The next day she raised a written grievance, alleging that the Claimant had bullied and sexually harassed her. That harassment, she said, had taken the form of improper touching and making sexual comments to her.
4. As a result of that complaint the Respondent suspended the Claimant on 3 August and appointed Jason Dunford, Assistant General Manager, to carry out a fact finding investigation. Mr Dunford then interviewed 13 potential witnesses including Ms Allen (three times), the Claimant (twice), and two employees whom Ms Allen claimed had witnessed the Claimant's sexual harassment of her, namely Stacey Jones (seen three times) and Richard Powell.
5. Having completed his round of interviews Mr Dunford had generated 115 pages of handwritten notes. Mr Powell did not support Ms Allen's account, nor did any of the other witnesses save for Stacey James who, whilst contradicting Ms Allen's account in important respects in her second interview, did say in her first interview that she had seen the Claimant touching and brushing past Ms Allen in a way that was not professional and that the Claimant and Ms Allen used to flirt with one another. In his interviews with Mr Dunford the Claimant vehemently denied Ms Allen's allegations against him.
6. At the end of his investigation Mr Dunford, on 15 August, invited the Claimant to return to the store so that he, Dunford, could read to him the written response which was to be issued to Ms Allen. The Tribunal drew the inference, not having heard evidence from Mr Dunford, that the clear implication was that the Claimant would not face disciplinary action.
7. On 16 August Mr Darren Peoples, the Manager of the store, returned from holiday. He received Mr Dunford's handwritten notes, but no written or oral investigation report. He did not speak to Mr Dunford about his investigation. He read the notes over two hours, without himself taking his own notes (the Employment Tribunal finding that, given the handwriting, two hours would not be long enough to complete the task). On that basis Mr Peoples decided to call the Claimant to a disciplinary hearing. When the Claimant arrived at the store he was given a letter requiring him to attend a disciplinary hearing on 18 August.
8. At that disciplinary hearing, the Employment Tribunal found, the Claimant and his representative were given some notes of the interviews, namely the first interviews with Ms Allen and Ms Jones. That hearing went over to 21 August when he was provided with a witness statement from a Ms Pirie.
9. At the end of the disciplinary process, Mr Peoples decided to dismiss the Claimant. His reasons for doing so were set out in a letter dated 28 August, the text of which is set out at paragraph 16 of the Reasons.
10. Against that decision the Claimant appealed to Ms Sibson, Head of HR. Having said that the appeal would be in the nature of a review of Mr Peoples' decision Ms Sibson then re-interviewed some of the witnesses seen by Mr Dunford, namely Stacey Jones, Karen Butcher and Lisa Pirie. She also interviewed Messrs Dunford and Peoples. Ultimately she dismissed the appeal without giving the Claimant an opportunity to comment on the results of her own interviews.
11. Following dismissal of his appeal the Claimant was served with nine further witness statements from witnesses interviewed by Mr Dunford and Ms Sibson.

The Employment Tribunal's Decision

12. At paragraph 19 of the Reasons the Tribunal set out the legal principles which they considered should be applied to the facts found in order to reach a conclusion on the claim. In particular, they referred to the well-known case of BHS v Burchell [1980] ICR 303 (Note), setting out, without adaptation, the 3-fold Burchell test formulated by Arnold J at P304 D of that report. The applicability of the Burchell test in a conduct dismissal case was affirmed by the Court of Appeal in the conjoined appeals of Foley v Post Office and HSBC Bank PLC v Madden [2000] ICR 1283. In those cases Mummery LJ corrected the wrong turns there taken by the Employment Appeal Tribunal and re-affirmed the Burchell test. One case cited to the Court of Appeal but not mentioned in the judgment (see 1285 B) was Boys and Girls Welfare Society v McDonald [1997] ICR 693. In that case I reminded employment tribunals that s6 of the Employment Act 1980 had altered the burden of proof in unfair dismissal cases. Whereas previously, and at the time Burchell was decided, it was for the employer to show not only a potentially fair reason for dismissal, here conduct, but also that he acted reasonably in treating that reason as a sufficient reason for dismissal (see the Trade Union and Labour Relations Act 1974, Sched 1, para 6(8)). The effect of s6 of the 1980 Act was to remove the burden of proof resting on the employer at the reasonableness stage of the enquiry (but not the potentially fair reason for dismissal). That remains the position under s98 of the Employment Rights Act 1996 (ERA). What Foley established, among other things, is that the first limb of Arnold J's test, that is a genuine belief in the misconduct alleged, goes to the reason for dismissal. The remaining limbs, reasonable grounds following a reasonable investigation go to the reasonableness question under s98(4) (see Foley, 1288 A-B). Further, Foley reiterates the caution to be found in Iceland Frozen Foods v James [1983] ICR 17, that the employment tribunal must not substitute its view for that of the employer. The question is whether dismissal falls within the range of reasonable responses open to the employer. That test applies not only to the sanction of dismissal, but also to the reasonableness of the investigation carried out by the employer; the grounds for his belief in the misconduct alleged and the procedure followed. See Sainsbury v Hitt [2003] ICR 111.
13. In the present case the Employment Tribunal were satisfied that the Respondent genuinely believed that the Claimant was guilty of the misconduct alleged, that is sexual harassment of Ms Allen; however, they went on to find that "the Respondent had failed to establish that there were reasonable grounds for that belief on the part of Mr Peoples (para 23), a formulation which they repeat at paras 24 and 27 of their Reasons. On that basis they held that the dismissal was unfair.

The Appeal

14. Mr Porter's principal submission is that in finding that the Respondent had failed to establish that there were reasonable grounds for Mr Peoples' belief that the Claimant was guilty of the misconduct alleged by Ms Allen the Tribunal had fallen into the error identified in Boys & Girls Welfare. They had placed the burden of proof on the employer to establish s98(4) reasonableness when the burden is neutral.
15. Mr Midgeley has struggled valiantly to persuade us that the Employment Tribunal's references to the burden of proof in relation to s98(4) ERA at paragraphs 19, 23, 24 and 27 of their Reasons represent an unfortunate use of language when in reality they were plainly aware of and applied the law correctly as he endeavoured to show by reference to the language, e.g. 'reasonable management' used in paragraph 22. If we may paraphrase Oscar Wilde, to mistake the burden of proof once is unfortunate, to do so four times amounts to an error of law.
16. We have no hesitation in accepting Mr Porter's primary submission. Additionally, we accept that in other parts of the Reasons the Employment Tribunal, having correctly directed themselves not to substitute their view for that of the employer, appear to have done just that. Their view of the non-production of the Claimant's mobile phone records and the effect that had on Mr Peoples' judgment is but one example raised by Mr Porter. Conversely, their treatment of the reasonableness of the Respondent's investigation leaves much to be desired. They appear to have focussed on Mr Dunford's "full and fair investigation at the preliminary stage, but express no concluded view on the reasonableness of the disciplinary investigation conducted by the dismissing manager, Mr Peoples, nor the appeal conducted by Ms Sibson; for example, nine witness statements gathered during the disciplinary process were first disclosed to the Claimant by Ms Sibson, at his request, after his appeal had been dismissed.
17. The upshot is that this appeal must be allowed. The Tribunal's approach is, as Mr Porter submits, fatally flawed in law. Both advocates have addressed us on disposal. Mr Porter invites us to reverse the Tribunal decision and substitute a finding of fair dismissal; Mr Midgeley asks us to uphold the finding of unfair dismissal notwithstanding any error by the Tribunal in the application of the law as we find it. We reject both positions. In our judgment the proper course is to allow the appeal and remit the whole matter for rehearing. Since the original hearing took only two days we prefer Mr Porter's submission that the matter be reheard by a fresh Employment Tribunal, rather than the same Employment Tribunal as Mr Midgeley suggests. The case is therefore remitted to a fresh Employment Tribunal for complete rehearing.