United Kingdom Employment Appeal Tribunal

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URL: http://www.bailii.org/uk/cases/UKEAT/2011/0066_10_2306.html
Cite as: [2011] UKEAT 0066_10_2306, [2011] UKEAT 66_10_2306

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Appeal No. UKEATS/0066/10/BI

EMPLOYMENT APPEAL TRIBUNAL

52 MELVILLE STREET, EDINBURGH, EH3 7HF

At the Tribunal

On 23 June 2011

Before

THE HONOURABLE LADY SMITH

MR P PAGLIARI

MR M SMITH OBE JP

CHIVAS BROTHERS LTD APPELLANT

MRS MARY FRANCES ROBERTSON RESPONDENT

JUDGMENT

APPEARANCES

For the Appellant

MR M LAMONT

(Solicitor)

Lamonts Solicitors

Miller Chambers

16 Miller Road

Ayr

KA7 2AY

For the Respondent

MR A THOMSON

(Solicitor)

McClure Naismith Solicitors

292 St Vincent Street

Glasgow

G2 5TQ

SUMMARY

UNFAIR DISMISSAL – Reasonableness of dismissal

Misconduct dismissal. Claimant found to have been unfairly dismissed. She was responsible for circumstances in which Respondent incurred substantial expenditure in respect of excessive amounts of consumables but had not kept any records of what she ordered, could not explain her authority for the excess expenditure, the expenditure was not supported by business usage, and the items to which it was said to relate had never been received into stock. Employment Tribunal found her dismissal to have been automatically unfair – step 2 of the statutory dismissal procedures had not been complied with (it was unclear but they may also have found that there was a failure to comply with step 1) , that there were procedural failings (although they did not find whether or not they were such as would, in any event, have rendered the dismissal unfair), that the Respondent had reasonable grounds for their belief in the Claimant’s misconduct but also that they had not carried out a reasonable investigation.

Tribunal found that Claimant did not cause significant financial damage because the respondent had a turnover in the region of two billion pounds but the level of negligence involved in the Claimant’s conduct was such that dismissal was a reasonable sanction.

On appeal -

Employment Tribunal’s Judgment: there were contradictions and patent errors in the Tribunal’s judgment.

Procedure: Employment Judge had, apparently without reference to the lay members, invited written responses to an issue relating to a part of a document that had not been put in evidence, almost seven months after the last day of the hearing. Judgment not issued until some eight months after the end of a nineteen day hearing (which had begun over a year before the date of issue). Flawed procedure.

Employer’s appeal upheld: there was no basis in the evidence for the Tribunal finding that there had been a failure to comply with either step 1 or step 2 of the statutory dismissal procedure. The findings did not support the conclusion that the Respondent had failed to carry out a reasonable investigation; if that was what the Tribunal had found, they had substituted their own view but the picture was confused. The judgment contained too many contradictions and patent errors for the EAT to have sufficient confidence in its findings to enable them to determine whether or not the Claimant’s dismissal was unfair. Case remitted to a freshly constituted Tribunal for a rehearing.

THE HONOURABLE LADY SMITH

Introduction

1. Mary Frances Robertson was employed as an engineering administrator at the Chivas bottling plant at Kilmalid, Dunbartonshire. She was found to have been unfairly dismissed on 23 December 2008, in the judgment of an Employment Tribunal sitting at Glasgow, Employment Judge R Mackenzie, registered on 15 September 2010. She was awarded compensation of £64,815.93. The hearing of her case had taken place over nineteen days in September and December 2009, and January 2010. Although the last date specified in the heading to the judgment is 25 March 2010, we infer that that must have been the date of the decision meeting between the Employment Judge and lay members; we were advised by parties that the last day of the hearing, when final submissions were completed, was 22 January 2010.

2. We propose to carry on referring to parties as Claimant and Respondent.

3. The Claimant was represented by Mr A Thomson, solicitor, before the Tribunal and before us. The Respondent was represented by Mr M Lamont, solicitor, before the Tribunal and before us.

Background

4. The Tribunal’s judgment is confusing and, as we explain below, contains some contradictions and patent errors. We are, accordingly, hesitant about setting out an account of the background facts in this case. However, there was a measure of agreement evident from parties’ submissions and we can be reasonably confident that the following account is correct.

5. The Claimant entered the employment of the Respondent’s predecessors, Allied Distillers, on 24 February 1992. At the time of the events leading to her dismissal, her role was that of engineering administrator. Her duties included responsibility for purchasing some supplies of various consumable items used in the bottling plant. The source of her authority for carrying out purchases was not clear. In particular, when it came to expenditure on what the Claimant appeared to accept were excessive purchases, she could not specify the source of her authority for doing so. She was able to use a credit card, referred to as a P Card, to buy consumables. She had had a P Card since May 2007 and had experience before that of using a colleague’s card to make purchases.

6. Three of the suppliers to whom payments had been made via the Claimant’s use of her P Card were Supplies for Industry, Envitec(h) and Tribology. She made many repeat purchases from these suppliers, using her P Card; they, accordingly, had a record of her P Card details.

7. By the end of September 2008, which was three months into the 2008/9 financial year, expenditure on consumables was in excess of budget. The Claimant’s expenditure on her P Card over the period of four months to the end of October was £98,176 which was considerably in excess of budget; the relevant budget for the three months to the end of September was, for instance, £28,000.

8. The Claimant never kept a record of orders that she placed with suppliers. She did not tell anyone that she had ordered goods. She did not check that goods ordered were all delivered. She received statements for her P Card. If she did not have invoices for entries on it, she would request a copy invoice from the supplier; she did not make any check to see that the goods referred to had actually been received.

9. An analysis of the Claimant’s P Card spend showed that not only was the amount spent far in excess of what had been budgeted for but the number of certain items purportedly purchased was out of all proportion to previous experience. For example, it was estimated that over an 11 week period the Respondent’s normal use of ear plugs could be expected to be of the order of 30,000 pairs but an 11 week period was identified where the Claimant was recorded as having purchased 60,000. Also, comparison of the amount of goods apparently ordered with the Respondent’s available storage space indicated that they could not all have been delivered – they could not all have been accommodated in the space available.

10. The circumstances were summarised by the Tribunal in paragraphs 138 and 139 (a summary with which Mr Thomson did not take issue):

“138. The claimant had completed almost seventeen years service with the respondents. She was the authorised holder of a P Card since May 2007 and before that date she had experience of using a colleague’s card to make purchases she was required to make. She had therefore significant experience in using and managing a P Card. No record was kept by the respondents to record the delivery of products ordered by card holders to Kilmalid. The claimant did not keep a record of orders she had placed with suppliers. On receipt of her card statement she checked to ensure she had invoices to match entries on the statements and if not she would ask the supplier to send duplicate invoices.

139. If a card statement is received then the first question the claimant should have asked herself is whether she had placed the order and not where is the invoice. Quite simply she failed to address that question. However, the claimant gave evidence that she had returned some vests on the basis that she had not placed an order for them and so the claimant did maintain some means of checking on at least some of the goods ordered and delivered and the question that is not answered is why all the goods paid for were not checked. We accepted the evidence from the respondents that the quantity of goods paid for could not be accommodated in the areas used for storage of the goods and that the quantities of goods paid for was not consistent with usage.”

11. An investigation was carried out by Mr McIntosh, who was the Respondent’s Operations Manager. He investigated overspend by not only the Claimant but by other employees as well. It led to the Claimant being called to a disciplinary hearing following which she was dismissed. In the course of his investigation he examined P Card statements for a number of employees including the Claimant, he met with various employees including the Claimant and he met with the finance team. He prepared a schedule analysing employees’ P Card spend. He identified matters which gave rise to a number of concerns, as detailed by the Tribunal at paragraph 37 and which can be summarised as amounting to showing that he could not have any confidence that all goods paid for had ever been delivered (or even ordered) and that the amount of goods represented by the payments made was greatly in excess of the Respondent’s requirements or ability to store supplies.

12. During the investigatory stage, there were three meetings attended by the Claimant, two of which were on a one to one basis with Mr McIntosh.

13. The Claimant was called to a disciplinary hearing by letter dated 10 December 2008 which was in the following terms:

“Dear Mary Frances

Re: Disciplinary Hearing

As you are aware the company has been investigating the possible misuse of Purchasing Cards (P Cards) within the Kilmalid Bottling and Engineering departments due to higher than normal levels of spending on consumables. This investigation – that has encompassed a number of P Card Holders and authorisers – is now complete and it is the recommendation of the investigating managers that you attend a disciplinary hearing. The purpose being to decide whether or not your involvement in consumable purchasing using your P Card merits disciplinary action.

This is a serious matter and your actions could constitute gross misconduct. This means that if disciplinary it could possibly result in action being taken against you up to and including your dismissal. The hearing will be held under the Company’s Dismissal and Disciplinary Policy and Procedure (this is available on the Source and a copy of which is enclosed).

The disciplinary hearing will take place at 1.30pm on Monday 15 December in the Tia Maria meeting room, Kilmalid. The disciplinary panel will be Bill Cosgrove, Maturation Manager and myself. You have the right to be represented at the hearing by a trade union representative or work colleague.

Please find enclosed a copy of statements and documentation gathered during the investigation that may be used during the hearing. Please treat this information in the strictest of confidence. If you cannot attend please call me on the above number at your earliest opportunity.

Yours sincerely,

For and on behalf of

CHIVAS BROTHERS LIMITED

Robert Muir

HR Manager.”

14. The Claimant attended the disciplinary hearing, accompanied by Mr G Boyd, a fellow employee. Neither he nor the Claimant asked that she be allowed more time to prepare for the hearing nor did they indicate that she had had any difficulty in preparing her response to the matters of which she had notice via the letter of 10 December and the documents enclosed with it. The Claimant at no time appears to have disputed that there was excessive spend on consumables. Indeed, her position, which was not accepted by either the Respondent or the Tribunal, was that she herself had had concerns and had drawn attention to it. She could not, however, point to any specific authority for her overspend having been given to her. She was vague about that and could not remember “who decided what”.

15. The outcome was that the Claimant was dismissed by letter dated 23 December 2008:

“Dear Mary Frances

Re: Disciplinary Hearing

We have concluded our disciplinary process regarding your involvement in P Card purchasing of production consumables at Kilmalid.

After reviewing the facts and statements gathered during the investigation and disciplinary process it was the decision of the Disciplinary Panel, Bill Cosgrove and myself that you have fraudulently purported to order goods that were never received into stock or used by the Company; You ordered and paid grossly excessive amounts of production consumables thus negligently causing significant financial damage to the Company.

These actions constitute gross misconduct and it is our decision that you are dismissed from your post with immediate effect.

This is a summary dismissal and your last date of employment with the company will be the day you were notified of our decision, Tuesday 23^rd December 2008. You will not be entitled to payment in lieu of notice.

I would like to provide some of the reasoning for our decision by summarising some of the key facts gathered:

· Consumables bought are significantly in excess of usage. For example;

o 20,000 bin bags purchased in 9 months – no business need to support purchases. No evidence of said bin bags in stock.

o 1,316 Hi Vis Vests purchased in 8 months – despite Arco being main supplier of such and the fact that these are generally not used in Clyde Hall, 4 were found in your office of a type not commonly used and a small quantity were held in the Engineering Store (approx.20). Levels of use and evidence of stock do not support purchases.

o 1,214 boxes of ear plugs purchased in 10 months – average of 120 boxes per month. In the busiest months, we estimate maximum usage at 60-80 boxes per month and this year has seen much lower levels of personnel than previous ones. Usage levels over the last few months are estimated half this (i.e. 30-40 boxes per month). Level of use and evidence of stock do not support such purchases.

o 5,392 pairs of cut resistant gloves purchased in 7 months. Nearly the same as the 2 Bottling Administrators combined in a similar period. Only 30 Pairs found in your office with a similar amount in Engineering Store. Levels of use and evidence of stock do not support purchases.

o 236 mop heads and 77 poles purchases. Levels of use and evidence of stock do not support purchases.

o Average of 24 packs of blue roll purchased every month. None in Store. The stocks used in halls comes from Bottling Administrator orders. Levels of use and evidence of stock do not support purchases.

o Spending levels increase significantly after Jim Mackay’s retirement despite no business reason for this and the fact that Bottling Administrators were purchasing similar consumables for their area. Your spending levels, when compared to Jim Mackay’s are several times what his orders were when compared on a month by month basis. No explanation was given for this.

· You claim to be the main buyer of production consumables for the Clyde Hall, Dry Goods, Bulk Glass and Decant. We found there to be no evidence to support this.

· You claim to order all purchases and receive all goods in to either your office, engineering stores or the Clyde Hall Store. There is no evidence to support the receipt or control of any goods purchased as you described.

· You allowed the same invoice to be processed in 2 consecutive months on several occasions and you have allowed your card to be accessed by suppliers without authority. You did not control your card in accordance with Company Policy.

I enclose a copy of the minutes taken at the hearing on 15^th December 2008.

You have the right to appeal against this decision. Should you choose to do so you should complete and submit the enclosed “Appeal Against Disciplinary Action” form to Douglas Cruickshank, Operations Director at our Kilmalid site within 5 working days (8^th January 2009).

Yours sincerely

For and on behalf of

CHIVAS BROTHERS LIMITED

Robert Muir

HR Manager.”

16. She appealed. Her appeal was heard by Mr Livingstone, one of the Respondent’s managers and Mr Cruikshank, the Operations and Spirit Supply Director. They had joined an ongoing finance meeting on 27 November 2009 and been provided with a summary of the investigation. There are no findings as to what was contained in that summary and the meeting was concerned with a number of matters which did not relate to the Claimant including possible involvement of suppliers in the overspend and potential VAT fraud implications if payments had been made to a supplier company which was found to have been dissolved.

17. Mr Livingstone may have known that the Claimant was going to be dismissed prior to that decision being intimated to her. The Claimant’s appeal was not successful.

The Tribunal’s Judgment

18. We have already alluded to there being contradictions and errors in the judgment. An example of a contradiction in their findings in fact is that at paragraph 89, they find that it was possible that the excess goods had been received but not checked whereas, at paragraph 139, as we note above, they record their acceptance of the Respondent’s evidence that there was not sufficient storage space in their premises to accommodate all the goods purportedly supplied i.e. they cannot have received all that they paid for. Then, at paragraph 37(l), by way, it seems, of criticism of the Respondent, they find:

“Mr McIntosh had a concern that on the P-Card statements goods ordered were often identified as ‘Misc. Durable goods.’ However, the product supplied could be identified from the invoices issued by the supplier and invoices could be matched against the P- Card statements. What was not identified during the investigation or at the hearing that may have been of more significance to the respondents was that the P- Card statements identified ‘Cryobiology’ as the supplier and not Teratology and invoices issued by Investech (identified on the invoices as ‘Investech Chemical & Lubrications Ltd.) narrate that cheques should be made out to a different company, namely ‘Evotech Ltd’.”

19. Parties agreed that that passage was erroneous. It was a matter of agreement between them that no company named “Teratology” was ever referred to in the documents or at the hearing nor was any company with the name “Investech”. Further, there was no reference to companies called Cryobiology, Investech Chemical & Lubrications Ltd or Evotec Ltd. There were references to companies called Tribology, Tribiology, Envitec, Envitech and Envitech Chemical & Lubricant Solutions Ltd but they are not referred to by the Tribunal.

20. A further apparently contradictory finding is that, at paragraph 119(c), the Tribunal found that the Claimant had not been given copies of certain invoices yet it appears from their findings at paragraphs 47(a) and 63(s) that she had the originals – they had been requested by her from the supplier and marked for her attention. The Claimant had these documents and was not, accordingly, in ignorance of them.

21. We also observe that parties agreed a schedule of loss which brought out a total of £88,955.95 excluding a basic award (which was agreed to total £6015). The Tribunal found that the Claimant had contributed to her dismissal to the extent of 40% which would mean that she was entitled to compensation amounting to 60% of £88,955.95 i.e. £53,373.57, plus the basic award, but the Tribunal have awarded compensation of £58,710.93 plus the basic award. They thus appear to have awarded the Claimant 66% of full compensation rather than the 60% which they intended. That is an error which the Tribunal did not pick up despite them having required to consider the calculation of their award at a review hearing on 30 November 2010 on an application by the Claimant’s solicitor to have the award for notice pay excluded from the deduction for contribution. They could reasonably have been expected to do so, at that stage if not before.

22. Before considering the Tribunal’s reasoning we turn to a procedural matter which was raised in the Notice of Appeal. We begin by noting that the analysis of P Card spend that was prepared by Mr McIntosh was significant in the investigatory and disciplinary process. It sets out each item of expenditure in detail, taking matters back to 2007 which was prior to the date when he first became responsible for setting budgets. At paragraph 35, the Tribunal state that they did not consider that the analysis was reliable. Their rejection of its reliability would appear to have influenced their view (see: paragraph 111) that Mr McIntosh was not greatly concerned about what had happened prior to 1 July 2008, the date when he first became responsible for the relevant budgets. More significantly, their rejection of its reliability forms part of their rationale for finding that the Respondent did not carry out a reasonable investigation (see paragraph 117). The circumstances in which the rejection of the analysis came to be made are as follows. The accuracy of the analysis was not questioned in the course of the hearing before the Tribunal either in evidence or in submissions. The hearing finished on 22 January 2010. As above noted, we infer that a meeting with members took place on 25 March 2010 but there is no indication of there being any further meeting. Parties’ agents received letters dated 16 August 2010, from the Secretary of the Employment Tribunals, in the following terms:

“Mr A S Thomson

McClure Naismith LLP

292 St Vincent Street

Glasgow, G2 5TQ

Case Number 10334/2009

Claimant Mrs MF Robertson v Chivas Brothers Limited Respondent

I refer to the above named proceedings.

Employment Judge Roderick Mackenzie has instructed me to write and say that Production 45 was an analysis of P.Card spend, pages 159 to 163 (including page 160A) comprising ‘Total Spend on ….Feb 07 to Sep 08’. From the analysis the first purchases of product by Ms Doherty in March and April 2007 (production 33) are not included. It is noted the last purchase of product by Mr Mackay was on 13 July 2007.

The accuracy of the analysis was not challenged but the EJ invites any comments you care to make on the analysis within the next seven days.

Your response should be copied to the other party’s representative.

Yours faithfully

J McGinley

For the Secretary of Employment Tribunals.”

23. There is no indication of the lay members ever having been consulted about this matter or of their having agreed with the course of action adopted by the Employment Judge. The Claimant’s solicitor replied by letter dated 18 August 2010 in which fresh submissions were made. They included:

“3.1 It is correct to say that the purchases from Supplies for Industry and Tribology which are shown on Laura Doherty’s P.Card statement on pages 114 and 115 are not included in the list on page 162 (nor on the equivalent list on page 168) which appears to show that the first purchases made by Laura Doherty from any of the three companies was in July 2007.

3.2 Taking the information on page 113 at face value, strictly speaking the items showing on Laura Doherty’s statement at pages 114 and 115 were not purchased by her because she was off ill at the time.

3.3 Nevertheless the items appearing on pages 114 and 115 as purchases from Supplies for Industry and Tribology were not included in the list in Production 45 (page 162) which means that the Respondent would seem to have deliberately excluded them from its considerations when making the comparison between the Claimant, Laura Doherty and Elizabeth McDonald. This also meant that this information was excluded from the Respondent’s consideration of the Claimant’s position notwithstanding the fact that it demonstrated a misuse of a P.Card in a context and at a time when the Claimant had no involvement.

3.4 It might be argued that it was not unreasonable to exclude the information from pages 114 and 115 when the document at page 162 was being compiled on the basis that Laura Doherty did not make these purchases but, on the other hand, the Respondent ignored the evidence provided by Laura Doherty as to misuse of her P.Card when conducting the disciplinary action against the Claimant. Notwithstanding the fact that the Respondent had clear evidence provided by Laura Doherty of misuse of a P.Card, when Mr McIntosh was cross-examined about that issue his answer was to say that his investigation was focusing only on the three months of July, August and September 2008.”

24. The Respondent’s solicitor responded by letter dated 20 August 2010 in which he drew the Tribunal’s attention to the fact that the hearing had concluded, the pages referred to in the Tribunal’s letter had not been put to witnesses and submitted that those pages were of no probative value. He submitted:

“…no comment by me – or the Claimant’s solicitor – at this time can constitute evidence or legal submission in the case. I have seen the Claimant’s solicitor’s comments contained in his letter to you dated 18^th August. It is my submission that his comments do not constitute evidence or legal submission in the case. I respectfully submit that no regard should be given to such comments in deciding this case.”

25. It is, however, evident from the terms of paragraph 117, that the Claimant’s fresh submission was favourably received.

26. We turn to the Tribunal’s rationale for its decision.

27. First, the Tribunal found that the Respondent had a genuine belief in the guilt of the Claimant (paragraph 108). What they say is, however, puzzling:

“We conclude the respondents had a genuine belief in the guilt of the claimant no matter how mistaken that belief may have been.”

28. The puzzle is that nowhere does the Tribunal conclude that the Claimant was not guilty of misconduct; on the contrary they later conclude that the level of her misconduct – characterised as negligence – was such as to justify her dismissal. That being so, we are at a loss to understand the reference to the belief being a mistaken one.

29. Secondly, they concluded that:

“ …the respondent had reasonable grounds for their belief.” (paragraph 109)

because they had inspected the areas where the products apparently purchased could be stored, formed a view of the quantity of goods that could be stored there, considered the entries on the claimant’s P Card statements and concluded that what she had apparently ordered had not been received.

30. Thirdly, however, the Tribunal concluded that the Respondent:

“..failed to carry out an investigation that was reasonable having regard to the circumstances.” (paragraph 110)

31. The findings of failure in investigation are prefaced by observations (in paragraph 111) to the effect that Mr McIntosh was not greatly concerned about what had been happening prior to 1 July 2008 because it was only then that he became responsible for fixing the budgets. The fact that his documentary analysis extended back to 2007 was discounted because of the Tribunal’s rejection of that document in the circumstances to which we have already referred. The Tribunal appear to infer that Mr McIntosh was not bothered about carrying out a proper investigation in respect of that earlier period.

32. Otherwise the failings in investigation were, according to the Tribunal, that the Respondent did not approach one of the suppliers – Supplies for Industry – “for information that may have assisted the respondents in their investigation” (paragraph 112). Mr McIntosh’s concerns regarding that supplier related to their duplicate invoices (and, on the evidence, that certain invoices had been paid twice); at paragraph 112, the Tribunal simply state: “We did not share his conclusion.” The remainder of that paragraph contains an explanation, it seems, of why they did not share Mr McIntosh’s concerns and, inferentially, why they therefore considered that he ought to have approached the company. The explanation is not, however, based on any evidence that was given at the hearing. Rather, it is based on supposition on the part of the Tribunal that:

“The principal invoice would be sent by a supplier to the respondents. If the principal invoice does not arrive for any reason or is lost by the respondents then a duplicate of the invoice is requested. The supplier may choose to prepare a new invoice bearing the information on the lost invoice or may choose to copy his file or book copy of the missing invoice and the process followed may differ depending on who responds to the request from the claimant. The respondents did in our view have no basis for reaching the conclusion during the investigation that Supplies for Industry was part of the problem until they had spoken to Supplies for Industry.”

33. The Tribunal had no evidential basis for those suppositions and their finding is, accordingly, undermined.

34. The next failing is referred to at paragraph 113 and is that Mr McIntosh failed to take a statement from the Claimant’s line manager, Mr Nicol, which “could possibly assist him in the investigation which he was carrying out.” The Tribunal does not, however, suggest what that assistance might have been.

35. They state that it would have been “reasonable” for the Respondent to investigate why and how the Claimant’s credit exceeded the Respondent’s recommended monthly spend of £5,000 (paragraph 114) but there is no indication of how any such investigation could have made any difference to the fundamental difficulty for the Claimant in that she kept no records of orders, did not check supplies when they arrived and simply assumed that if there was an entry on her P Card statement, goods relating to it must have been ordered and must have been supplied.

36. They refer, at paragraph 115, to a sensible practice described to Mr McIntosh by a fellow employee of the Claimant’s, Ms Doherty, as having been carried out by her so as to exercise effective control of the use of her card details by a representative of Supplies for Industry and comment that Mr McIntosh did not separately investigate when she instituted the practice referred to and how it was implemented. They do not, however, explain how that matter had any relevance to the Claimant’s case.

37. At paragraph 117, the Tribunal further criticise Mr McIntosh’s investigation, rejecting the reliability of his P Card analysis under reference to the argument advanced by the Claimant’s solicitor in his letter of 18 August 2010 (to which we refer above). They state:

“Production 45 was an analysis of the card spend of the claimant, Ms Doherty, Ms McDonald and Mr Moffat with Supplies for Industry, Teratology and Investech for the period February 2007 to September 2008. The analysis was not supported by invoices from the three companies. The accuracy of the analysis was not challenged during the claimant’s disciplinary hearing or at the Tribunal. However, from the productions that were lodged the analysis was not accurate in respect that in the case of Ms Doherty the earliest purchases she made from any of the three companies were in July 2008. However, from production 33 there were purchases on her card from Supplies for Industry and Teratology in the period 22 March to 10 April 2007 that are not shown in production 47 and further from the investigation meetings with Ms Doherty and Ms McDonald they ceased to deal with Supplies for Industry only when they had difficulty obtaining invoices from that company. From the investigation meeting with Ms McDonald on 3 December (production 37) the difficulties obtaining the invoices from Supplies for Industry arose in March 2008. A reasonable investigation was not carried out by Mr McIntosh.”

38. Fourthly, the Tribunal concluded that “there were a significant number of procedural failures.” They are listed at paragraph 119 and can be summarised as being that the Claimant was not told she had the right to be accompanied at the investigation meetings or that they were to be such meetings, that they did not consider it appropriate for Mr McIntosh, the senior manager at the site, to carry out the investigation, that the Claimant was not given copies of the invoices to which we refer above, that the Claimant was not given copies of notes of certain meetings, that a note of the meeting with Mr Moffat (a fellow employee) was inaccurate, that Mr Livingstone and Mr Cruikshank had seen a summary of the investigation prior to hearing the Claimant’s appeal and Mr Livingstone may have known of the decision to dismiss the Claimant before she was advised of it, and that one of the reasons for rejecting the Claimant’s appeal was that they had re-heard an aspect of the disciplinary proceedings relating to her purchase of safety glasses.

39. For convenience, we would make certain observations regarding these criticisms at this point. Whilst the Claimant was not told that she could be accompanied at the investigatory meetings or that that was what they were, from the Tribunal’s findings about those meetings, the Claimant cannot have been in any doubt as to the concerns which were being investigated and she was accompanied when it came to her disciplinary and appeal hearings. As regards the appropriateness of Mr McIntosh undertaking the investigation, the Tribunal do not explain why they considered he should not have done so; there is no obvious reason why, particularly given the nature of the concerns, it was not appropriate. As regards the notes of meetings, at no point does it appear to have been suggested that that was liable to cause any difficulty for the Claimant – she was provided with a bundle of documents prior to the disciplinary hearing which included statements from all those to whom Mr McIntosh had spoken and the documentation gathered together for use at the hearing. The Tribunal does not explain the relevance of the inaccuracy of the note of the investigatory meeting with Mr Moffat. Then, as regards those who heard her appeal, the Tribunal make no finding about what it was in whatever summary was provided to them that they ought not to have seen – they joined that meeting after it had begun and it is not evident from the note of the “P Card Review” that anything passed to them would have prejudiced the Claimant at her appeal. As for the suggestion that if a person who presides over an appeal had learnt of the decision to dismiss an employee prior to the employee being told, then they should not hear the appeal, there is no such rule nor does it show that they cannot deal with matters properly and fairly. As regards the suggestion that the fact that an appeal hearing involves some re-hearing, that of itself does not render an appeal procedure unfair.

40. Perhaps, however, of more significance is that nowhere does the Tribunal conclude that the procedural failures identified by it would have, of themselves, rendered the dismissal unfair. If the Tribunal had gone on to consider whether or not there should be a Polkey deduction, that would have shown that that was their conclusion but they do not do so – even although this was a case where, given their subsequent finding that the Claimant contributed quite substantially to her own dismissal, they could have been expected to address that issue whether raised by parties or not (see: Red Bank Manufacturing Ltd v Meadows [1992] ICR 204; Salford Royal NHS Foundation Trust v Roldan [2010] EWCA Civ 522 at paragraph 62). Whilst the Tribunal go on and state, at paragraph 120, that equity requires employers to deal with employees in an equitable manner, it is not at all clear to what that comment relates and given what follows, the context may have been intended to be considerations of comparative justice as between employees. That said, the Tribunal does not go on find that the Claimant was unfairly dismissed because employees in directly comparable circumstances were not dismissed. Indeed, there were no findings that other employees were in directly comparable circumstances.

41. Fifthly, at paragraph 124, the Tribunal find that the Claimant was “unfairly dismissed in terms of section 98(4) of the 1996 Act.”

42. Sixthly, at paragraph 125, the Tribunal add:

“….if we had concluded the dismissal of the claimant was fair we would have considered the dismissal was a reasonable sanction but not for the reasons given for the claimant’s dismissal. Our conclusion is there is an absence of any evidence of gain by the claimant and that it cannot be said that in a company with a turnover the region of two billion pounds the claimant’s actions could be considered to have caused significant financial damage to the respondents. Nevertheless the level of negligence was such that we would (sic) concluded dismissal was a reasonable sanction.”

43. Seventhly, the Tribunal turns to section 98A(1) of the 1996 Act (which was in force at the relevant time). At paragraph 129, they state:

“The claimant was invited to attend a disciplinary hearing, the purpose being ‘to decide whether or not your involvement in consumable purchasing using your P Card merits disciplinary action’. The letter inviting the claimant to attend the meeting on 23 December could, in our view, be more accurately described as being an invitation in writing to attend an investigation meeting and not a disciplinary hearing. The letter does not set out in sufficient detail the matters to be considered at the disciplinary hearing.”

44. The reference to 23 December is erroneous. The letter inviting the Claimant to a disciplinary hearing was dated 10 December. It was headed “Re: Disciplinary Hearing”. It is set out in full earlier in this judgment. It is in terms which state the alleged conduct – possible misuse of P Cards giving rise to higher than normal levels of spend on consumables. Detail is provided by way of enclosing statements and other documentation that may be relied on at the hearing. It tells the Claimant in terms that she is being called to a disciplinary hearing and that she could be dismissed. We are at a loss to understand how the Tribunal have concluded that this letter does not satisfy step 1 of the statutory dismissal procedure (if that is what they have concluded – they do not actually say that) and, in particular, how they have concluded that it could “be more accurately described as being an invitation in writing to attend an investigatory meeting and not a disciplinary hearing.” That is not a fair or reasonable description of the letter.

45. The Tribunal do expressly find that step 2 of the statutory procedure was not complied with. At paragraph 131, they state:

“131. The hearing was held on 15 December. The claimant did not seek postponement of the hearing. Because of the manner in which this investigation was carried out we are doubtful if a request for a postponement of the hearing would have been favourably received. We do not consider the claimant was given a reasonable opportunity of responding to the information in the letter of 10 December in terms of paragraph 2(2)(b) of the procedures.”

46. We observe that there are no findings in fact that the Claimant had any difficulty in considering her response in the time available to her. She had attended three meetings during the investigatory stage, a number of the relevant documents enclosed with the letter of 10 December were documents she had seen before – for example, her own P Card statements. She was accompanied at the disciplinary hearing by Mr Boyd and he did not request a postponement for her either – nor suggest that she had not had enough time to prepare her response. Further, the Tribunal does not explain what it was about the manner in which the investigation was carried out that led them to doubt whether or not a request for a postponement would have been acceded to.

47. Eighthly, the Tribunal awarded the minimum uplift of 10% for their finding of failure to follow the statutory procedure.

48. Ninthly, the Tribunal found that the Claimant had contributed to her own dismissal to the extent of 40% because she had:

“140. ……failed to exercise the care expected of an employee with her level of experience holding a position of responsibility with the respondents.”

49. Tenthly, they awarded £58,710.93 (which, as we explain above, is not 60% of the agreed figure for compensation) plus a basic award of £6105.

Law

50. The statutory dismissal procedures which were in force at the relevant time required that an employee be regarded as unfairly dismissed if one of the procedures set out in Part 1 to Schedule 2 to the Employment Act 2002 applied and was not followed: Employment Rights Act section 98A(1). Step 1 and 2 of the “standard” dismissal procedure applied in this case and, accordingly, the procedure with which the Respondent had to comply was:

“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 other circumstances, which lead him to contemplate dismissing or taking disciplinary action against the employee.

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

Step 2: meeting

2(1) ………..

(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 the information.”

51. Turning to section 98 of the 1996 Act, if an employer fails to show that the dismissal was for a potentially fair reason – one of the reasons set out in section 98(2) – then the dismissal cannot be found to have been fair. In the case of misconduct, where an employer states that the reason for dismissal was misconduct, as discussed in British Home Stores Ltd v Burchell [1978] IRLR 379:

“…the Tribunal have to decide ….whether the employer who discharged the employee on the grounds of the misconduct in question…..entertained a reasonable suspicion amounting to belief in the guilt of the employee of that misconduct at that time. That is really stating shortly and compendiously what is in fact more than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly that the employer had in his mind reasonable grounds upon which to sustain that belief. And, thirdly, we think that the employer, at the stage at which he formed that belief on those grounds, at any rate the final stage at which he formed that belief on those grounds, had carried out as much investigation as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters who must not be examined further.”

52. In Sainsbury’s Supermarkets Ltd v Hitt [2003] IRLR 23, the Court of Appeal held that:

“ 30…..The range of reasonable responses test (or, to put it another way, the need to apply the objective standards of the reasonable employer) applies as much to the question whether the investigation into the suspected misconduct was reasonable in all the circumstances as it does to the reasonableness of the decision to dismiss for the conduct reason.”

and warned against the dangers of a tribunal substituting its own view as to what would have amounted to a reasonable investigation, which was not the correct approach. It was, it was stressed, necessary to apply the objective standards of the reasonable employer to all aspects of the question of whether the employee was fairly dismissed (paragraph 29). That includes the question of whether or not there has, for Burchell purposes, been a reasonable investigation.

53. If the employer does show that the dismissal was for a potentially fair reason then, under section 98(4) of the 1996 Act, the task for the tribunal is to consider whether, in all the circumstances (the onus is not on either employer or employee) it was reasonable or unreasonable to treat the misconduct in question as a sufficient reason for dismissal.

Appeal

54. For the Respondent, Mr Lamont submitted that the Tribunal had erred in law in several respects. They had substituted their own view as to what amounted to a reasonable investigation whilst at the same time apparently finding that the Respondent had acted reasonably – that was the implication of their finding that they had reasonable grounds for their belief in the Claimant’s misconduct and of their finding that dismissal would have been a reasonable sanction. They had failed to explain why the investigations that they listed mattered. He referred, in support of his submissions, to Sainsbury’s Supermarkets v Hitt.

55. He submitted that the Tribunal had made a number of findings for which there was no basis in the evidence such as those in paragraph 112, those in paragraph 113 that a statement from Mr Nicol “could possibly assist”, and those in paragraph 37(l) regarding the names of supplier companies (a matter which did not feature at the hearing either in the evidence or in submissions), and the matters referred to at paragraphs 111 to 117 as failures in investigation were not demonstrated as having any potential to affect the outcome. The Tribunal failed to have regard to the importance of the issue of why and by whose authority the Claimant had apparently made the excessive purchases. They failed to have regard to the Respondent’s and their own conclusion that the Claimant could not be believed when she said that she had had concerns about the extent of overspend and had raised them – it was not as if this was a case where the Tribunal did or should have concluded that the Claimant was to believed on that matter: Salford Royal NHS Foundation Trust v Roldan at paragraph 73. The Tribunal’s finding that her actions did not cause significant financial damage to the Respondent was perverse. Regarding the Tribunal’s finding of automatically unfair dismissal, there was no basis in the evidence for their finding of failure to comply with step 2 and it was not clear whether they had made a finding of failure to comply with step 1. The Tribunal’s list of procedural failings did not appear to lead to a finding of a procedurally unfair dismissal and, in any event, when examined, they were largely unfounded.

56. Separately, the Tribunal had erred in the manner in which it dealt with the matter raised in the letter from the Tribunal dated 16 August. There was no proper basis for comments to be sought – the analysis was one of the Claimant’s productions and the part referred to had never been referred to in evidence before the Tribunal whether in evidence or submission. Mr McIntosh had, in particular, not been cross examined on the point raised in the submissions in the Claimant’s solicitor’s letter dated 18 August. Further, it appeared that the Employment Judge was not only acting of his own motion but without any involvement on the part of the lay members. That was not competent: South Lanarkshire Council v Ms P Russell and Ors UKEATS/ 0067/09/BI. Justice was not seen to be done – why was the Tribunal criticising the Respondent regarding this matter when their witnesses had had no chance to comment on it? The same could be said regarding the supplier names matter referred to at paragraph 37(l).

57. Further, Mr Lamont submitted that the factors relied on by him demonstrated that the Tribunal’s judgment was perverse.

58. Finally, he submitted that, in all the circumstances, particularly given the nature of the Tribunal’s criticisms of the Claimant, their finding that she had only contributed to her own dismissal to the extent of 40% was perverse. It was obviously a case of 100% contribution.

59. For the Claimant, Mr Thomson sought to rely on that part of LJ Elias’ judgment at paragraph 51 in the Salford Royal NHS Foundation Trust case where he sounds a reminder that if a tribunal has properly directed itself as to the relevant law, this tribunal should not interfere with their decision: “…unless there is no proper evidential basis for it or unless the conclusion is perverse.”, the latter being “..a very high hurdle”.

60. Mr Thomson submitted that the Tribunal’s finding at paragraph 109 that the Respondent had reasonable grounds for their belief, was an error. That was evident from their subsequent finding that the Respondent had failed to carry out a reasonable investigation because it was not possible to conclude that an employer had reasonable grounds for his belief in an employee’s misconduct and, at the same time, find that he had failed to carry out a reasonable investigation.

61. It was, he submitted, not necessary for the Tribunal to find what difference the further investigations would have made. The task was to decide whether a sufficient or reasonable investigation was carried out. In any event, there was a finding (at paragraph 103) that after her appeal, the Claimant had contacted Supplies for Industry and they said that some of the duplicate invoices sent to her had been sent in error; they sent the correct invoices. We observe that the finding does not explain how that matter could have had any bearing on the Respondent’s conclusions regarding the Claimant’s misconduct. Mr Thomson sought to support the Tribunal’s list of failures in investigation by rehearsing them. He asserted that if Mr Nicol had been spoken to, it would have “coloured” the outcome and under reference to a finding at paragraph 80 regarding another employee, Ms Murray, that Mr Nicol would have been aware of the arrangements for buying consumables but we note that there is no finding in the judgment to that effect.

62. Regarding the Tribunal’s rejection of the P Card analysis as being unreliable (paragraph 117 of the tribunal’s judgment), Mr Thomson acknowledged that the procedure adopted was unusual and said he feared that, in good faith, he may have compounded the difficulty by taking the opportunity to make submissions on the issue raised. He accepted that the points raised by him had never been put in evidence and that Mr McIntosh had not been cross examined on them. He submitted that we should simply ignore what had happened.

63. As to the source, nature and extent of the Claimant’s purchasing authority, Mr Thomson accepted that the position was confusing and contradictory but the Respondent did accept she had some responsibility for doing so.