United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ALEXANDER MODGILL (of Counsel) Instructed by: Messrs Stachiw Bashir Green Solicitors 499 Great Horton Road Bradford BD7 4EG
For the Respondent	MR STEFAN BROCHWICZ-LEWINSKI (of Counsel) Instructed by: Northern Foods plc Legal Services 2180 Century Way Thorpe Park Leeds LS15 8ZB


 


SUMMARY

UNFAIR DISMISSAL – REASONABLENESS OF DISMISSAL

The Respondent made an error in the application of the third stage of its absence policy and procedure: but for the mistake it would not have moved the Claimant on to the fourth stage of the procedure, where he was dismissed. The Tribunal held that the dismissal was for some other substantial reason; that the mistake by the Respondent's manager was a reasonable one; and that the dismissal was fair. The appeal was allowed. The Tribunal was correct to hold that the dismissal was for some other substantial reason: Wilson v Post Office [2000] IRLR 834 applied. However, the Tribunal ought to have had regard to the responsibility of the Respondent's personnel department for providing support to the manager to ensure the fair and consistent application of the policy, this being a relevant resource for the purposes of section 98(4). Moreover the Tribunal was entitled to take into account that the issuing by the Respondent of a warning at the third stage was manifestly inappropriate having regard to its own procedures: Stein v Associated Dairies Ltd [1982] IRLR 447 and Tower Hamlets HA v Anthony [1989] IRLR 394 and Co-operative Retail Services v Lucas [1993] UKEAT/145/93 discussed. Appeal allowed. Decision substituted that the dismissal was unfair.


 


HIS HONOUR JUDGE RICHARDSON

1. This is an appeal by Mr Saleem Sakharkar ("the Claimant") against a judgment of the Employment Tribunal sitting in Leeds (Employment Judge Lee presiding) dated 5 January 2010. By its judgment the Tribunal dismissed his claim of unfair dismissal. He had been employed by Northern Foods Grocery Group ("the Respondent") for 17 years from July 1991 until his dismissal on 18 November 2008.
2. Put shortly, the Respondent dismissed the Claimant because he failed to meet the requirements of the Respondent's absence policy. The Respondent's manager, Mr Smith believed at the time of dismissal that the absence procedure had been properly operated. But he was mistaken. A warning at the previous stage had been given in error, the Claimant's absence not qualifying for the warning. Nevertheless the Tribunal found the dismissal to be fair, although recognising that their finding seemed harsh. The question is whether the Tribunal erred in law.

The absence policy

3. The absence policy runs to some 8 pages and contains within it an absence review procedure. The Tribunal described it as "not easy to understand". Certainly it is quite complicated and prescriptive.
4. It is sufficient for the purposes of this judgment to say that the procedure had four stages, the first three of which were described as "reviews", each of which was triggered by a certain level of absence. A hearing would take place at each stage at which the employee was entitled to be represented by his union. If the review hearing confirmed that the level of absence had been reached an official letter would be sent to the employee. There were detailed provisions as to which kinds of absence would, and which would not, be taken into account for the purposes of the procedure.
5. The first review was triggered by a certain level of absence, which depended on conditions which are indeed not easy to understand but with which we are not concerned in this appeal. Thereafter each stage was triggered if after the preceding review the employee had "a further 2 occasions of absence in the following 12 months, or one spell of 10 days or 8 nights absence or more".
6. The third review was called a Final Review. At this stage even if the triggering level of absence was reached the manager had a discretion whether to move the employee on. The final stage was dismissal. The policy does not specifically say that the manager had discretion over the question of dismissal, but it was common ground before us that he did.
7. The Tribunal summarised the Respondent's absence policy accurately. But we wish to draw attention to two features which the Tribunal did not mention.
8. Firstly, the policy specifically provided that the Respondent's personnel department was:

"Responsible for auditing of absence levels and providing advice, support and training to Line Managers to ensure the fair and consistent application of this policy" (paragraph 4.3)

Secondly, the procedure specifically provided that at final review and dismissal stages a personnel officer or personnel manager must be present in all cases (paragraph 10.2).

The background facts

9. The Claimant was employed by the Respondent from July 1991 until his dismissal on 14 November 2008.
10. Between 2006 and 2008 the Claimant was subject to successive stages of the Respondent's absence procedure. The first review took place on 6 March 2006. The second review took place on 12 April 2007. After that review he was given a second stage warning. This was to the effect that two absences (or one sustained period of absence) during the next 12 months would trigger a final review.
11. Following that review the Claimant had 56 days of absence from 14 September 2007 until 23 November 2007 with stress and depression. He then had one day of absence with migraine on 4 January 2008 and another with migraine on 9 May 2008.
12. A third stage warning was given on 26 May 2008. It is now common ground that this warning should not have been given. The Tribunal explained the mistake as follows:

"3.4.10 The Third Stage hearing took place on 26 May 2008, when the Claimant was given the Third Stage warning. That has been the difficulty. We now know that it had been agreed that the 56 days with stress and depression would not be counted. That meant that the Claimant could only properly be given a Third Stage warning on 26 May 2008 if he had triggered two periods of absence within twelve months of the Second Review period. In fact, the second of those individual days, 9 May 2008, was slightly outside that period. No-one realised when the Third Stage warning was given that it should not be counted – not the person giving the warning, or the Claimant, or his Union Representative. This is because the position was somewhat obscured, partly by discussions about the 56 days off, and partly by the fact that the Second Stage warning itself had been outside of the usual ten days as a result of the Claimant having insisted on being represented by one particular union Representative who had been unavailable for a number of weeks. It is clear that everyone 'took their eye off the ball' when the Third Stage warning was given. However it was given and there was no appeal against it."

13. The Tribunal returned to this mistake in paragraph 4.7 of its reasons.

"We have considered the Claimant's submissions on this, but we prefer Mr Smith's evidence that he made a genuine mistake at this meeting, as he believed that both of the absences counted towards the Stage Three Review. Clearly he should not have made such a mistake. One of the things we had to consider is whether it was a reasonable mistake to make. We note that the same mistake was made by the Claimant and his Trade Union Representative, and that although the file and the dates had been reviewed later by a Trade Union Official, by the Claimant's legal advisors, and by the Respondent, no-one at all spotted this error until the case was listed for Pre-Hearing Review, for a potential strike out, before Employment Judge Burton earlier this year. Given that list of people who made the same mistake, it would be difficult in our view for us to say that the mistake was not a reasonable one to make. They cannot all have been acting unreasonably."

14. In due course the Claimant had further absences. A fourth stage hearing took place on 14 November. The Claimant was dismissed. He appealed. His appeal was dismissed after a hearing on 24 November. The Respondent did not appreciate that there had been an error at the third stage of the procedure. Neither the Claimant nor his union representative suggested that there had been any such error.
15. It was not until the Claimant brought proceedings for unfair dismissal that the error came to light. It was highlighted at a pre-hearing review. By the time of the final hearing it was common ground that a mistake had been made.

The Tribunal's reasons

16. The Tribunal's statement of the applicable law included the following:

"5.1 Under Section 98 of the Employment Rights Act 1996 it is for the employer to show the principal reason for dismissal. The potentially fair reason in this case could be capability or some other substantial reason.

5.2 If the employer can show a potentially fair reason we have to decide whether dismissal is in fact fair in accordance with the substantial merits of the case under Section 98(4). In accordance with the guidance in BHS v Burchell this means that we may consider such matters as whether, at the time of dismissal the Respondent believed that the claimant was guilty of the misconduct alleged or that there was some other reason which justified dismissal, and if so whether it had reasonable grounds for that belief, and if so at the time it formed that belief, had it carried out as much investigation into the matter as was reasonable in the circumstances. That in turn can involve determining whether the process carried out by the Respondent fell within the range of reasonable investigative procedures open to an employer in such circumstances.

5.3 After considering the Burchell test the final question is whether the decision to (summarily) dismiss the Claimant was within the range of reasonable responses open to an employer in the circumstances.

5.4 We have been referred to Devis v Atkins, heard in the Court of Appeal in 1977 which quoted Lord Denning's Judgment in Abernethy which clarified that the reason for the dismissal must be a reason is [sic] existence at the time when the employee was given notice, and be the principal reason which operates on the employer's mind at the time the decision to dismiss is made. Devis v Atkins also disapproves an earlier case Da Costa v Optolis, and held that evidence of irregularities unknown to the employer at the time of the dismissal have no bearing on the fairness of the dismissal. This is because things the employer does not know cannot affect the question of whether the employer acted reasonably in concluding that the reason it had was sufficient to justify dismissal.

5.5 There is other authority to the effect that a genuine but mistaken belief can be grounds for a fair dismissal. Bouchaala v Trust House Forte Hotels Ltd, heard in 1980, found that a genuine but mistaken belief that the employment of the Claimant, a Tunisian national, was in breach of immigration rules, was sufficient to justify dismissal, even though to continue the employment would not in fact have been such a breach."

17. The Tribunal's conclusions were stated in the following way:

"6. The question of whether this particular dismissal was fair or not, has not been easy to answer, and has taken us some time.

6.1 We are satisfied that the principal reason for the dismissal was the number of the Claimant's absences, and not the assertion of any statutory right to be paid overtime. We think the correct categorisation of a dismissal for such absences is 'some other substantial reason'. It was not the Claimant's ill health in itself which caused the dismissal, but the fact that he could not meet the employer's attendance procedure. In similar cases concerning the Post Office, which has a similar strict procedure, the Court of Appeal has concluded that some other 'substantial reason' was the appropriate categorisation.

6.2 We are satisfied that this Respondent, at the time it decided to dismiss, believed that the Claimant had, during the currency of a Stage Three warning, incurred two further periods of absence. Therefore under the procedure, dismissal was an appropriate sanction. Whilst it is clear that the Claimant ought not to have been given the Stage Three warning, we nevertheless find that the principal reason which operated on Mr Smith's mind was that the Claimant had received that warning and then had two subsequence absences. That was the set of facts known to employer, or belief held by him, which caused Mr Smith to dismiss the employee. Given that on the day that Mr Smith decided to dismiss he did not know or appreciate that there was an irregularity, and no-one brought it to his attention, we conclude that it should be ignored when determining the fairness of his decision.

6.3 Mr Smith clearly held a reasonable belief at the time the decision was taken that the Claimant had hit the point of the procedure where he should be dismissed. It was a genuinely held belief and, albeit that it was a mistaken belief, we still conclude that it was fair for him to dismiss for 'some other substantial reason'.

6.4 This finding seems harsh. We have considerable sympathy with an employee who is dismissed in these circumstances; which he clearly thinks is unfair. However Devis v Atkins itself states that the test directs our attention to the conduct of the employer, and not to whether the employee in fact suffered any injustice. Given that the Claimant did not appeal the Stage Three warning, he is in a similar position to a person dismissed for misconduct, who argues at a dismissal hearing that he should not have been given an earlier written warning for misconduct a year ago. We do not routinely expect the employer to reopen the earlier disciplinary procedures. The Claimant had been given the warning, mistakenly, but in good faith, which was not appealed. Moreover the Respondent was not aware of its error at the time the decision to dismiss was taken. We are satisfied from what the employer has told us, and from what it has done since, that had the Claimant raised the error in the dismissal hearing, he probably would not have been dismissed. In the absence of it being raised, we do not conclude that it would have been reasonable to expect the employer to trawl back through its records just in case there had been an earlier mistake. There was no breach of the procedure leading to the dismissal. Therefore we conclude, applying the tests in Sections 98 and 98A(2) of the Act, that the dismissal was fair."

18. The Tribunal, recognising that its judgment was to some extent controversial and one which the Claimant would think unfair, wisely set out findings which would assist in assessing compensation if it should prove to be wrong.

Submissions

19. We heard submissions from Mr Modgill on behalf of the Claimant and Mr Brochwicz -Lewinski on behalf of the Respondent.
20. On behalf of the Claimant Mr Modgill submitted that the Respondent could not show a potentially fair reason for dismissal which would qualify under section 98(1) of the 1996 Act. He accepted that the reason put forward was breach of the absence procedure, but submits that this reason could not be established because the Respondent failed to operate the absence policy properly. But he concentrated his attack on the way in which the Tribunal approached section 98(4) of the 1996 Act. He challenged the reliance of the Tribunal on Bouchaala v Trust House Forte Hotels [1980] IRLR 382. He submitted that the Tribunal was wrong to take British Home Stores v Burchell [1978] IRLR 379 as its starting point, since that case was concerned with dismissal on the grounds of misconduct. He submitted that the Tribunal, applying section 98(4), ought to have found the dismissal unfair since the Claimant was not liable for dismissal under the absence procedure. Any other conclusion would be unfair. It was unreasonable to treat a misapplication of the sickness absence procedure as sufficient reason to dismiss. The Tribunal was wrong to focus on the fact that the Claimant and his union representative did not see the mistake. It was the Respondent's responsibility to deal with the matter.
21. On behalf of the Respondent Mr Brochwicz-Lewinski submitted that the Tribunal had applied the law correctly. It was open to them to find that the dismissal was for some other substantial reason. The Tribunal was correct to hold that a dismissal could be fair even though the employer was acting on a mistaken belief: this was the proposition the Tribunal drew from Bouchaala. The Tribunal's reliance on Burchell was not misplaced; it relied on Burchell essentially for the proposition that the focus was always on whether the person taking the decision to dismiss was reasonable, rather than whether they were right. He took us to cases on the correct approach to an error at an earlier stage in a procedure, such as a warning: Stein v Associated Dairies Ltd [1982] IRLR 447, Tower Hamlets HA v Anthony [1989] IRLR 394 and the unreported decision of the Appeal Tribunal in Co-operative Retail Services v Lucas [1993] UKEAT/145/93. He submitted that these cases demonstrated that the Employment Tribunal's approach was correct; and in any event that its conclusion was a matter of fact with which the Appeal Tribunal could not interfere.
22. We turn first to the key statutory provisions, and then to our conclusions.

The statutory provisions

23. The key statutory provisions applicable to this appeal are well-known.

"98 General

(1) In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show-

(a) the reason (or, if more than one, the principal reason) for the dismissal, and

(b) that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2) A reason falls within this subsection if it-

(a) relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

(b) relates to the conduct of the employee,

(c) is that the employee was redundant, or

(d) is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.

(2A) Subsections (1) and (2) are subject to sections 98ZA to 98ZF.

(3) In subsection (2)(a)-

(a) 'capability', in relation to an employee, means his capability assessed by reference to skill, aptitude, health or any other physical or mental quality…

(4) In any other case where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)-

(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case."

Reason for dismissal

24. In our judgment the Employment Tribunal was plainly correct to find that the dismissal was for "some other substantial reason". It is well established that an employer who dismisses an employee for breach of the absence procedure may dismiss for some other substantial reason: see Wilson v Post Office [2000] IRLR 834 at paragraphs 26-27. Subject to some exceptions (such as dismissal for redundancy or contravention of statutory restriction) a genuine, even if mistaken, belief in the reason for dismissal will be sufficient to discharge the burden of proof for establishing a potentially fair reason for dismissal: see the judgment of His Honour Judge Clark in Farrant v The Woodroffe School [1998] IRLR 176 at paragraphs 55-57 and the cases there cited. These principles in our judgment apply to a dismissal for some other substantial reason.

Mistake and reasonableness

25. The essential question posed by section 98(4) is not whether the employer was right but whether the employer was reasonable. When this question is addressed, the fact that the employer is or may be mistaken is relevant but not conclusive.
26. Where the reason for dismissal relates to conduct, we think the principle has been well established for many years: see, for example, Trust House Forte v Aquilar [1976] IRLR 251 at paragraphs 24-25. Once granted that the question is whether the employer had a reasonable belief in an employee's misconduct, formed after a reasonable investigation, it is inherently possible that there will be some cases where the employer, though wrong, was reasonable.
27. The authorities were reviewed in Farrant v The Woodroffe School [supra]. In that case the respondent school honestly and reasonably believed that it was entitled under the terms of his contract to require an employee to work to a new job description. When he refused to do so the school dismissed him. The Tribunal held that the dismissal was fair notwithstanding the school's mistake. The Appeal Tribunal upheld the Tribunal's decision. In a judgment which fully reviewed the cases (paragraphs 58-71) His Honour Judge Peter Clark said (paragraph 59):

"In our judgment, where the conduct relied on by the employer is the employee's refusal to obey an instruction, the question as to whether that instruction is lawful ... is a relevant but not decisive question when considering the reasonableness of the dismissal under section 98(4)..."

We consider that the same principle applies when a dismissal is the sanction for breach of an absence policy. The essential question is whether the employer acted reasonably in dismissing the employee. That an employer was in some way in error in the operation of the procedure is relevant to the question whether the employer acted reasonably in dismissing, but it is not conclusive. The Tribunal correctly proceeded upon this view of the law.

Reasonableness of dismissal

28. As we have seen, by virtue of section 98(4) the key question for the Tribunal was whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating the reason for dismissal as a sufficient reason for dismissing the employee.
29. In this case in our judgment the administrative resources of the Respondent's undertaking were of real importance.
30. It is in the nature of sickness absence policies and procedures that they are prescriptive. This brings with it advantages both for employer and employee. Such policies and procedures give management a structure within which to manage problems of absenteeism; and they afford employees a clear indication of the requirements of the employer in this regard. But where a policy is prescriptive there is an increased danger of mistaken or unfair application. Fairness requires that if an employee is to be assessed against a prescriptive policy care is taken to apply the policy correctly in accordance with its terms and consistently as between different employees.
31. It is therefore our experience that an employer of large or medium size will usually place such a policy under the superintendence of a human resources or personnel department. It is, we think, good employment practice (and common practice) that a manager will have the assistance of such a department in order to ensure that the policy is applied correctly and fairly.
32. The Respondent adopted this practice. As we have seen, the personnel department was accorded responsibility for auditing of absence levels and providing advice, support and training to line managers to ensure the fair and consistent application of this policy. It was specifically provided that a personnel manager or officer should be present at all final review and dismissal hearings.
33. We think it plain that the Tribunal has left out of account the responsibility of the personnel department. There is no reference to this aspect of the Policy in their reasons. There is no reference to the presence of a personnel officer or manager at the final review hearing. When the Tribunal listed, in paragraph 4.7 of its reasons, the persons who did not see the error, there is no reference to the personnel department or to any personnel officer or manager. (We were told that there was such an officer present; whether there was or not, it was the responsibility of such an officer to assist the manager with the application of the procedure, and we think the Tribunal should have noted this). Nor is there reference to any personnel representation at the dismissal hearing where again it was the responsibility of personnel to assist the manager with the application of the policy.
34. We think the Tribunal fell into error by concentrating on the Burchell test rather than the words of section 98(4). In Royal Society for the Protection of Birds v Croucher [1984] IRLR 425 at 429 Waite LJ said:

The Burchell [1978] IRLR 379 case remains, in circumstances akin to those that were under consideration, a most useful and helpful guideline; but it can never replace the soundness of an appraisal of all the circumstances of each particular case viewed in the round way that [s.98(4)] requires them to be viewed"

35. The Burchell test tends to focus attention on the decision maker: this is entirely appropriate for many cases, including the vast majority of conduct cases. But section 98(4) is a statutory direction to take into account the employer's administrative resources. A decision maker ought not always to stand alone. As we have said, in the case of an absence policy and procedure it is good employment practice for the human resources department to take a significant measure of responsibility. In any event, in this case the employer had a procedure which specifically deployed its specialist personnel resource to support fair and consistent application of the policy. Section 98(4) requires this to be taken into account.
36. We wish also to say a word about the Tribunal's reference, by way of analogy, to the person dismissed for misconduct who argues at a dismissal hearing that he ought not to have been given an earlier written warning for misconduct a year ago. The Tribunal said that it did not "routinely" expect the employer to re-open the earlier disciplinary procedure.
37. Guidance on this question was given in Stein v Associated Dairies Ltd [1982] IRLR 447 and Tower Hamlets HA v Anthony [1989] IRLR 394. We find of assistance the summary of the position by Mummery J in Co-operative Retail Services v Lucas [1993] UKEAT/145/93 (and we acknowledge the endeavours of Mr Brochwicz-Lewinski in finding this authority). He said, after discussing Stein:

"There is, however, an important qualification to that general rule. The Tribunal is entitled to satisfy itself that that final warning was issued in good faith and that there were prima facie grounds for following the procedure of a final warning. That appears from paragraph 6 of the Stein case. There is an important passage in paragraph 8 where Lord McDonald said:

'Certainly if there was anything to suggest that the warning had been issued for an oblique motive or if it was manifestly inappropriate that is a matter which a Tribunal could take into account.'

If a Tribunal is entitled to take into account the matter whether a final warning has been given in 'manifestly inappropriate' circumstances or without prima facie grounds, the Tribunal must consider the factual background to and the circumstances in which the final warning was given, including the employers' own procedures for the issuing of oral warnings, written warnings and final warnings."

38. In this case, therefore, the Tribunal was not circumscribed by law to the extent that it was bound to take the result of the final review as read. It was entitled to consider whether the giving of the warning was, having regard to the employer's own procedures, manifestly inappropriate. Having concluded, at paragraph 6.2 of its reasons, that it was "clear that the Claimant ought not to have been given the Stage Three warning", the Tribunal was therefore wrong to decide that this "should be ignored" (same paragraph) when determining the fairness of the dismissal decision.

Conclusions

39. For the reasons we have given, we are satisfied that the Tribunal erred in law.
40. Further, we are sure that if the Tribunal had applied the law correctly it would have held that the dismissal was unfair. If the Tribunal had taken account of the resources of the Respondent – and in particular that a member of the personnel department ought to have ensured the proper application of the policy both at the final review and at the dismissal hearing – the Tribunal would have concluded that it was not reasonable for the Respondent to treat non-compliance with the absence procedure as a sufficient reason for dismissal. Further the result of the final review was, having regard to the employer's own procedures, manifestly inappropriate.
41. Accordingly the appeal will be allowed and a finding will be substituted that the dismissal was unfair. The Tribunal wisely made significant findings on the question of remedy to assist the parties in the event that an appeal was allowed. It may be possible to reach agreement. If it is not, the matter will be remitted to the same Tribunal to deal with all questions relating to remedy.