United Kingdom Employment Appeal Tribunal

Appeal No. UKEATS/0025/11/BI

EMPLOYMENT APPEAL TRIBUNAL

52 MELVILLE STREET, EDINBURGH, EH3 7HF

At the Tribunal

On 11 January 2012

Before

THE HONOURABLE LADY SMITH

MISS S AYRE FIPM FBIM

MR P HUNTER

VETCO GRAY UK LTD APPELLANT

MR REGINALD GARDEN RESPONDENT

Transcript of Proceedings

JUDGMENT

APPEARANCES

SUMMARY

UNFAIR DISMISSAL – Reasonableness of dismissal

Unfair dismissal.  Employee admitted (i) having continued to undertake driving instructor’s training course whilst off sick, without employer’s permission, (ii) having lied about having done so in the past and (iii) having been warned that it would be viewed as gross misconduct if he did so. Employee handbook provided that employees must not, without permission, engage in any activity (paid or unpaid) during working hours.  On appeal, held that Employment Tribunal had erred in interpreting handbook as not prohibiting Claimant’s conduct and in finding that, in Burchell terms, they did not have reasonable grounds on which to sustain a belief in the Claimant’s misconduct.  Finding of fair dismissal substituted.

THE HONOURABLE LADY SMITH

Introduction

1.            This is an employer’s appeal from a judgment of the Employment Tribunal sitting at Aberdeen, Employment Judge, Alan Strain, registered on 29 March 2011 (and corrected as per certificate dated 13 April 2011) finding that the Claimant was unfairly dismissed and awarding compensation.

2.            We will continue, for the sake of clarity, to refer to parties as Claimant and Respondent.

3.            The Respondent was represented by Ms J Turner, solicitor before the Tribunal and by Mr P Sharp before us.  The Claimant was represented by Mr F Lefevre before the Tribunal and by Ms Stobart, advocate, before us.

4.            The Claimant was employed by the Respondent as a staging stores person from May 2005 to 3 February 2010 when he was dismissed.  He was absent from work from 6 July 2009 until his dismissal on 3 February 2010, suffering from headaches, neck pain and back pain.  He was in receipt of sick pay throughout that time.  He was employed under a contract which specified his working hours as being 8.30 to 5pm, Monday to Friday.

5.            In September 2009, during that period of sickness absence, the Claimant began taking lessons to train him to become a driving instructor.  He also took “a couple of lessons” in October 2009[1].  He took about six lessons in total in those two months.  He did not ask the Respondent for permission to do so.

6.            On 2 October 2009, the Claimant attended at the Respondent’s premises to deliver a sick note and spoke to Mrs Kerry Ings, HR manager. The Tribunal found that she told him:

7.            The Tribunal refer to the Claimant’s explanation for his lie as being “a knee jerk reaction”[2], the relevance of which we do not understand.  A lie is a lie, amounts to dishonesty and is a serious matter in the context of the employer/employee relationship.  We also note that the Tribunal find that the Claimant took “a couple” of driving lessons in October[3] which  sounds as though they seek to downplay the seriousness of the Claimant’s conduct and fails to put that finding in the context of their later finding that he taken “possibly” six lessons in mid September or October.  Again, that appears, unfortunately, to be an indication of the Tribunal seeking to downplay the Claimant’s conduct rather than facing up to the reality of the Claimant having on at least some six separate occasions been undertaking a distinct non work activity during working hours whilst off sick, without telling his employers about it and then, when challenged, denying what had evidently been a significant and substantial course of activity on his part.

8.            The Claimant nonetheless undertook further driving instructor lessons in January 2010 – he took about seven lessons in that month - and passed the driving instructor’s test on 25 January 2010. Again, he did not seek permission from the Respondent to do so.

9.            The Respondent’s employee handbook includes the following terms:

10.         The Claimant was called to an investigatory meeting which took place on 27 January 2010.  He admitted that he had been training as a driving instructor.  A disciplinary meeting then took place on 3 February 2010.  During that hearing, the Claimant acknowledged and confirmed that he was aware that undertaking activities other than those of the Respondent during working hours whilst off sick and receipt of sick pay, without the Respondent’s permission, could be considered to be gross misconduct[4]. The Tribunal found:

“16. The disciplinary hearing concluded that the claimant had been dishonest with Ms Ings; that Ms Ings had made it clear that if he was driving whilst off sick and receiving sick pay, this would be deemed to be misconduct. The disciplinary meeting considered that the claimant had undertaken driving instruction whilst off work sick and receiving sick pay. Accordingly it concluded that he was guilty of gross misconduct.”

The Claimant’s employment was terminated with immediate effect.

11.         The Claimant appealed.  He confirmed having taken driving instructor lessons in September, October and January.  He said that he did not consider it necessary to advise the Respondent as he was signed off and he was not being paid for taking the lessons.  His appeal was unsuccessful other than that he was allowed one month’s pay in lieu of notice.  By letter dated 4 May 2010, the Respondent advised the Claimant that they considered he had:

12.         It was not disputed that the Claimant was dismissed for a reason which “related to the conduct of the employee.”[5]  Nor was it disputed that the conduct complained of had occurred. This was not a case where the employee had denied responsibility for the conduct alleged.  Nor had he denied being aware that to undertake activities other than those of the company, without permission, whilst off sick and in receipt of sick pay, could be considered to be gross misconduct.  The employer was not faced with a competing account of events.  There was very little to investigate.  The issue was whether or not, “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.”[6]

13.         In the conjoined cases of Foley v Post Office & HSBC Bank Plc v Madden[7], Mummery LJ stressed that Employment Tribunals required, in an unfair dismissal case, to apply the law as enacted in section 98(1), (2) and (4) of the 1996 Act.  He added that that meant

“for all practical purposes”[8]

two particular approaches were relevant, namely (1) the “band or range of reasonable responses” approach to the issue of the reasonableness or unreasonableness of a dismissal[9]; and (2) the

“tripartite approach to (a) the reason for, and (b) the reasonableness or unreasonableness of, a dismissal relating to the conduct of the employee, as expounded by Arnold J in British Home Stores Ltd v Burchell (Note) [1980] ICR 303, 304 and 308 G-H[10] and as approved and applied by this court in W. Weddel & Co. Ltd v Tepper [1980] ICR 286, remains binding on this court, as well as on employment tribunals and the Employment Appeal Tribunal. Any departure from that approach indicated in Madden (for example, by suggesting that reasonable grounds for belief in the employee’s misconduct and the carrying out of a reasonable investigation into the matter relate to the establishing of the reason for dismissal rather than to the reasonableness of the dismissal) is inconsistent with binding authority.” [11]

14.         Both Foley and HSBC were cases which involved disputed allegations of misconduct.  In both of them the employers had had to determine, in the face of denials by the employee, whether or not the alleged conduct had taken place or not.  The Burchell approach is plainly appropriate and helpful in such circumstances where the reasonableness of an employer’s efforts to confirm suspicions or clear up doubts about what actually happened, may be in issue. Whilst it does not provide a complete answer – even if the answer to all three questions identified by Arnold J is in the affirmative, the tribunal still requires to consider whether or not dismissal was within the range of reasonable responses – it sets out a straightforward approach to some of the issues that arise when applying section 98(2) and (4) in such a case.  However, as a matter of practicality, it is of little real assistance in a case, such as the present one, where the employee does not dispute the conduct alleged, it is not disputed that it was the reason for the dismissal and where the circumstances called for little, if any investigation.  Hence the observation by HHJ Peter Clark, with which I would agree, in Boys and Girls Welfare Society v McDonald[12] that:

“……it is apparent that the threefold Burchell [1978] IRLR 379 test is appropriate where the employer has to decide a factual contest. The position may be otherwise where there is no real conflict on the facts.”[13]

15.         I do not read anything said by Mummery LJ in the passage quoted above as suggesting that Burchell  is other than guidance to which regard must be had or that its authority is greater than or even equal to the words of the statute themselves.  Indeed, he had a concern about the misuse of Burchell in any manner involving departure from the statute, as explained in the example which he cites in parenthesis. This reflects the directions of Wood P many years earlier, in Post Office Counters Limited v Heavey[14], drawing on his understanding of the approach of the Court of Appeal:

“14. As the Court of Appeal has indicated on many occasions, the correct direction for a tribunal to give itself is to use the actual wording of the statute…..”

It would not, accordingly, be wrong for a tribunal, in a case such as the present to refrain from referring to Burchell at all.  If, however, it does do so, it is important to appreciate that the tripartite approach covers the issue that arises under section 98(2) (was the reason for the dismissal related to the employee’s conduct? i.e. did the employer genuinely believe that the claimant had conducted himself in the manner alleged and did it cause the dismissal?) and that which arises under section 98(4) regarding the reasonableness of the dismissal.  That is, it straddles the area where the onus lies on the employer (section 98(2)) and the area where there is no onus on the employer (section 98(4)).

The Tribunal’s Judgment

16.         For reasons which are not entirely apparent, the Tribunal referred to the authorities relating to the establishment by the employer of the reason for the dismissal and the irrelevance of after discovered conduct; parties were not at issue on these matters.  There is also reference to authority for the proposition that where an employer fails to allow an employee to exercise a right of appeal, the dismissal will be unfair but, again, that was not an issue in this case. [15]

17.         The Tribunal turns then to Burchell[16], noting that the onus is on the employer regarding its first limb but there is a neutral burden regarding the second and third limb.  However, subsequently, when referring to the issue of reasonable grounds for a belief in the employee’s misconduct - the second limb of Burchell - the Tribunal appear to regard the onus as having been on the Respondent.  They refer to what would have been the position “had the respondents established” that there were reasonable grounds on which to form that belief[17].  The Tribunal then compounds that evident error by a reference in the next paragraph[18] to what would have been their conclusion “even if the respondents had satisfied the first 3 tests” thereby indicating again that they considered that the onus was on the Respondent in respect of all three limbs.  At best, it appears that they were confused regarding the relevant law.  At worst, they appear to have proceeded, wrongly, on the basis that the onus was on the Respondent not only in respect of section 98(2) but in respect of the ‘Burchell’ parts of section 98(4) as well.

18.         The Employment Tribunal decided that the dismissal of the Claimant was unfair because the Respondent did not have in mind “reasonable grounds upon which to sustain the belief of misconduct.”[19] That was because of the wording of the relevant part of the Employee Handbook:

“Any plain literal interpretation of these policies did not prevent the claimant undertaking unpaid training to become a driving instructor whilst off on paid sick leave…….The Tribunal were of the view that the policies and procedures did not prevent the claimant undertaking such training whilst off sick and certified as unfit to work.”

19.         They took no account of what they had, at paragraph 16, found to be two other elements in the Respondent’s decision namely that the Claimant had been dishonest and that he had continued to undertake driving instructor lessons despite having been expressly warned that to do so whilst off sick and in receipt of sick pay would be deemed to be misconduct.

20.         At the end of their judgment, the Tribunal hypothesise as to what would have been their position “if the respondent had satisfied the first 3 tests” i.e. the Burchell tests.  That can only mean that they were seeking to indicate what would have been their view if the Respondent had - contrary to their actual conclusion- reasonable grounds for concluding that the Claimant was guilty of misconduct.  They found that the dismissal would, nonetheless, have been found to be unfair but they do so because the Respondent’s policies did not, in their view, prevent the Claimant from taking the training that he undertook.  That is, they do not proceed on the basis that the Respondent had reasonable grounds for their belief in the Claimant’s guilt at all.  Nor do they address the question of whether or not a reasonable employer could have interpreted the policy in such a way as to show that the Claimant was in breach of it.

21.         For the Respondent, Mr Sharp submitted that the Tribunal had fallen into error in three respects:

22.         Mr Sharp submitted that the relevant provision, clause 19.6 of the Employee Handbook, would be breached if:

23.         It was not a matter of absolute prohibition but the clause imposed an obligation on the employee to seek permission from the Respondent before embarking on such a course of activity.  The application of paragraph 19.6 was not conditional on the employee being fit for work.  The Respondent had a continuing interest in an employee’s activities during a period of sickness absence and was entitled to be able to consider their position if the employee was proposing to embark on an activity.  It would, for instance, be reasonable to expect the Respondent to refuse to give permission for the undertaking of any activity which might compromise the employee’s ability to return to active service.  The Respondent has an interest in employees who are off sick getting better.  The activity undertaken by the Claimant – taking a course of driving instructor lessons – was plainly covered by paragraph 19.6.  The Tribunal had erred in finding that it was not.  The Claimant required to seek permission and he had not done so.  He was, accordingly, plainly in breach of that term of the policy and where an employer dismisses for breach of such a policy it cannot be said to do so must fall outside the band of reasonable responses.

24.         Regarding his second ground of appeal, Mr Sharp relied on there having been more to the reasons for dismissal than the fact of breach of the policy.  There were also the ‘trust and confidence’ matters of his lying to Ms Ings and then having continued with the driving lessons without asking permission despite having been warned that it would be viewed as misconduct if he did so.  These were important factors.

25.         Regarding his third ground of appeal, the Tribunal had misdirected themselves as to onus and had, erroneously, imposed an onus of proof on the Respondent in respect of section 98(4) matters.  They had also automatically applied Burchell in circumstances where the central issue, for them, was the construction of the Respondent’s policy and that was not informed at all by a slavish application of Burchell.  He referred to Burchell causing as much confusion as anything else where the facts of what happened were not disputed: Boys and Girls Welfare Society v McDonald and to the importance of focussing on the words of the statute: Post Office Counters v Heavey.  Further, the Tribunal had failed to recognise that so far as construction of the policy was concerned, the Respondent did not have to be right; it was enough that they reached a conclusion as to its meaning which was a reasonable one.

26.         For the Claimant, Ms Stobart submitted that the Tribunal had not erred.  In an argument which was not advanced before the Tribunal, she submitted that the Respondent’s construction of the policy would render the contract of employment absurd.  She referred in that regard to McBryde: The Law of Contract in Scotland – 3^rd Edition, para. 8-08.  It was wrong to read it as prohibiting an employee from trying to better themselves such as embarking on a course of study whilst off sick.  It is often sensible for an employee who is off on long term sickness absence to engage in a new course or interest, such as where the absence is due to stress.

27.         Regarding Mr Sharp’s submission relating to trust and confidence, Ms Stobart submitted that that was not a matter which was raised by the Respondent.  The Respondent had relied on breach of their policy and the Claimant was not in breach.  Whether or not the Tribunal were correct to have considered Burchell, they had looked at the issue of reasonableness and concluded that no reasonable employer would have considered the Claimant to be in breach of their policies and dismissed him.

28.         It was not disputed that these provisions formed part of the contract between the Claimant and Respondent.  The Tribunal found that the Claimant was not in breach of them but we are satisfied that they erred in so doing.  First, the clause does not, contrary to what was suggested by Ms Stobart, absolutely prohibit all activities whilst an employee is off sick.  No question of absurdity arises. As Mr Sharp rightly pointed out, it simply imposes a pre-condition, namely that the employee ask permission from his employers before embarking on an activity during hours which he would otherwise be at work.  The provision plainly applies to all employees whether off sick or not.  Indeed, sickness absence is an obvious period during which the opportunity to undertake another activity during what would otherwise be working hours, could present itself.  However, the employer plainly has an interest in knowing if the Claimant is intending to embark on such a course of activity and consider his position, particularly since he has an interest in the Claimant achieving as expeditious a recovery as possible so as to be able to return to productive work, particularly where sick pay is ongoing.  Far from being absurd, the provision makes sense.

29.         The Tribunal give no reasons for concluding that the provisions do not cover circumstances where an employee undertakes an activity directed towards training for another occupation and we cannot see that there was any basis on which it was open to them so to conclude.  We agree with Mr Sharp that where the four conditions to which he referred are satisfied, clause 19.6 applies.  The effect of that, in this case, was not that the Claimant was automatically prohibited from undertaking the training that he desired to follow.  It was, simply, that since he was still employed by the Respondent and proposing to undertake a distinct activity that was nothing to do with their business, he required to be open about his intentions and ask for permission before doing so.  That he failed to do and, accordingly, was plainly in breach of the Respondent’s policy.

30.         We are also satisfied that the Tribunal applied the wrong test in law.  The relevant question was not whether or not the Respondent interpreted the policy correctly but, bearing in mind the terms of section 98(4) of the 1996 Act, whether or not their interpretation of it was one which was open to a reasonable employer.  The Tribunal were wrong to consider only what was their interpretation of the policy.

31.         Turning to the second ground of appeal, we are also satisfied that it is well founded.  The Claimant’s dishonesty in lying to Ms Ings and his having carried on with the activity which he had been warned would be deemed to be misconduct, without seeking permission, having acknowledged at his disciplinary hearing that he knew undertaking activities in those circumstances could be considered gross misconduct, were founded on by the Respondent. The Tribunal had made findings to that effect at paragraph 16.  These were matters of substance which could, as Mr Sharp submitted, be labelled as trust and confidence matters.  They were plainly important to the Respondent as, for instance, was demonstrated by the express reference to them in letter of 17 February 2010 which confirmed the outcome of the disciplinary hearing. The Tribunal required to have regard to the whole of the Respondent’s reasons for dismissing. They did not, however, do so.

32.         We are also satisfied that the third ground of appeal is well founded.  As we point out above, the Tribunal does appear to have become confused regarding the relevant law and the distinct impression is that they have approached matters on the basis that the onus was on the Respondent throughout, not just for the section 98(2) purposes of considering whether or not the Claimant was dismissed for a potentially fair reason.  Further, their conclusion as to what would have been the position had the Respondent in fact had reasonable grounds for their belief in the Claimant’s misconduct i.e. that the Respondent was correct in their interpretation of the policy, is a perverse one since it proceeds on the self contradictory basis that the Respondent was wrong about the policy.

33.         For these reasons we are satisfied that the Tribunal’s decision cannot stand.  We do not consider that there is any need to remit the case.  The facts are not in dispute, it is clear that the Claimant was in breach of the Respondent’s policy and once the whole circumstances surrounding and reasons for his dismissal are taken into account, the only conclusion that could be reached by a reasonable Employment Tribunal is that the dismissal was a fair one.

34.         We will pronounce an order upholding the appeal, revoking the judgment of the Employment Tribunal and substituting a finding that the Claimant was fairly dismissed.