United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A HARDMAN (Advocate) Instructed by: Morton Fraser LLP Quartermile Two 2 Lister Square Edinburgh EH3 9GL
For the Respondent	MR G DUNCAN (Solicitor) Beveridge & Kellas SSC 52 Leith Walk Edinburgh EH6 5HW


 


SUMMARY

UNFAIR DISMISSAL

Reasonableness of dismissal

Contributory fault

Unfair dismissal. The Employment Tribunal found that the Appellant unfairly dismissed the Respondent. It found that there had been no reasonable investigation following an incident, and that it failed to show the reason for dismissal. Appeal allowed and case remitted to a freshly constituted Tribunal.


 


THE HONOURABLE LADY STACEY

Introduction

1. Schuh is a retail shoe outlet. Mr Kacperski, who was called 'Casper' or 'Kasper' by his work colleagues, was employed in the internet dispatch department. We shall refer to the parties as the Claimant and the Respondent. The Claimant was employed between September 2007 and 24 May 2011. He was dismissed without notice, according to the Respondent, because of gross misconduct. He brought a claim for unfair dismissal, which was heard by the Employment Tribunal (ET) in Edinburgh over a number of days. The judgment issued on 31 July 2012 was to the effect that he had been unfairly dismissed and that he should be awarded compensation uplifted by 25% in respect of unreasonable failure by the Respondent to follow the ACAS code of practice on disciplinary procedures.

Facts found by ET

2. The facts of the case were that the Claimant was working in the dispatch area. On Friday 13 May 2011 one of the supervisors saw another man, Mr Klusek, acting suspiciously by taking a photograph with his mobile phone of the address label of a carton of international shoe orders, which he had just packed for an address in Poland. The supervisor, Mr Bryans, alerted the dispatch manager Mr McAuley, who checked one of the packages that Mr Klusek had photographed. Extra pairs of shoes not relating to a valid order were found in the packages. Mr McAuley took the open box with the additional stock directly into the office to show Mr Myint the warehouse manager. Mr Myint reported this to Mr Bridle, Head of Logistics and Mr Bridle decided to come to the office in order to assist Mr Myint in interviewing Mr Klusek. Mr Klusek was called into the office in order to discuss the extra pairs of shoes found. He was interviewed by Mr Myint and Mr Bridle. While the interview was going on in the office Mr Bryans saw the Claimant opening up several cartons that he had already packed and taking out two pairs of trainers from one of the cartons and putting them back into stock. Mr Bryans reported this to Mr Myint and Mr Bridle. The carton was destined for the same address as the one that Mr Klusek had been photographing. Mr Myint and Mr Bridle told the Claimant, in the office, that Mr Bryans had seen him removing trainers from a carton he had packed and asked him to explain his actions. The Claimant denied that he had taken shoes out of cartons he had packed and said that he had opened a carton because he had forgotten to put an invoice into it previously. He was suspended on full pay pending an investigation into his conduct.
3. The Respondents decided to have a disciplinary hearing to take place on 17 May 2011. They wrote to the Claimant, telling him that the allegation to be discussed with him was that "extra stock was found in a parcel that you had packed for international post." Mr Bridle was to take the meeting and Mr Myint was to be there to take the minutes. The Claimant had the right to be accompanied. There was a warning in the letter that if the allegation was upheld that was possible that the Claimant's employment would be terminated.
4. Mr Myint interviewed two employees, Mr McInnes and Mr Bryans and obtained from them handwritten and signed statements of their recollection of events. He also interviewed Mr Pryde, despatch manager for Parcelforce who was on the Respondent's premises at the time of the incident, who confirmed that he had seen the Claimant walking across the warehouse with two pairs of trainers and returning with nothing in his hands. On 16 May Mr Pryde gave only a verbal, and not a written, statement. Mr Myint summarised these statements and gave them to Mr Bridle. He also gave Mr Bridle the Claimant's statement, which was to the effect that he did open a carton, but that it was to put an invoice into the carton that he had forgotten to do previously. Mr Myint provided a conclusion to his report as follows:-

"We have three witnesses saying that Kasper took 2 pairs of shoes from the carton to put back to stock but Kasper denies doing this. The address and name that the shoes were going to was a Polish name/address which leads to a high risk of Kasper knowing this person and sending more shoes out to the customers than ordered deliberately. Therefore it looks like an act of theft could have taken place."

5. At the disciplinary hearing the Claimant accepted that he had reopened the cartons, but denied that he had taken any shoes out of the cartons and he denied that he had placed any shoes in stock. He claimed that he must have been framed by Mr McAuley the dispatch manager. He said that Mr McAuley would have a motive to do that because the Claimant and Mr Klusek had information about Mr McAuley that was damaging to him relating to alleged improper conduct by him at work. The Claimant said that the Respondent's witnesses must have been threatened by Mr McAuley and it was for this reason that they were lying about the events of 13 May 2011.
6. The ET found at paragraph 61 and 62 on pages 9 and 10 and 11 of the judgment that there were some differences between the statements given by Mr Bryans and Mr McInnes. The main difference is that Mr Bryans said that he saw 'Casper' removing cartons from the international cages and taking the cartons over to his desk; he opened one carton and removed two brown shoeboxes from it and then sealed it back up, then proceeded to open another where he removed two pairs of Lacoste shoes then sealed up the second carton and put it back in the cage. He then picked up the two pairs of Lacoste shoes which he had removed from the carton and walked down to zone C where he discarded them on the shelf. Mr McInnes' handwritten statement said that he saw 'Casper' packing an international order and placing it in the cage for UPS to collect. Later he saw the Claimant bring the same carton back to where he was working and he saw him opening it up and removing two pairs of Lacoste shoes which he then left to the side, and took the carton back up. He then saw the Claimant pick up the two pairs of Lacoste shoes and walk down towards zone C.
7. The tribunal found in paragraph 63 and 64 that the Respondents carried out further investigation by asking Mr Bryans if Mr McAuley had asked him to help him to set up the Claimant. Mr Bryan said that had not happened.
8. The Respondent invited the Claimant to a further disciplinary hearing and at that the personnel officer, Ms Fleming, confirmed that the allegation to be discussed with the Claimant was that extra shoes were found in a parcel that he had packed for international post. The Claimant was not provided with a copy of the witness statements obtained by the Respondents. The hearing took place on 24 May 2011, and Ms Fleming wrote to the Claimant in the following terms after the hearing:-

"I refer to the disciplinary meeting held on Tuesday 24 May 2011. The decision was reached that you be dismissed without notice or pay in lieu of notice. The reason for your dismissal was gross misconduct due to a breakdown of trust. Your explanation of how extra stock was found in a parcel that you have packed for international post doesn't appear to be an honest account or offer an acceptable explanation. Your last day of service was 24 May 2011, and you will be paid up to and including that date. You P45 will be sent to your home address. In terms of the company's procedures you have a right of appeal against dismissal. If you wish to exercise that right, the appeal must be presented in writing without unreasonable delay. You will then be advised of how and when the appeal will be dealt with."

9. The Claimant received the letter and did not understand the explanation for his dismissal and so he sought further clarification. Miss Fleming wrote to him a further letter dated 26 May 2011 in the following terms: –

"During your telephone conversation with Rob Bridle yesterday you told him that you believe the reason given for your dismissal was not an accurate description of what you discussed on Tuesday 24 May. You requested further written clarification which I will now provide:

'On Friday 13 May three eye witnesses, saw you take two pairs of shoes from a carton that you have previously packed for international post and put them back on the shelf in the warehouse. There were no legitimate customer orders for those items. When questioned you denied that this event ever took place. You were dismissed from breakdown of trust as it appeared not to be an honest account and you didn't offer an acceptable explanation. We regard this as gross misconduct on your part. If you require any further clarification, please do not hesitate to contact me.'"

10. Mr Pryde produced a handwritten statement on 26 May, which was, of course, after the Claimant had been dismissed. In that statement, he said that he saw Casper opening a box and taking two green shoeboxes from it.
11. The Claimant wrote to appeal against the decision because he felt that his dismissal was unfair. In his letter he stated as follows: –

"You are saying that the eyewitnesses saw me taking two pairs of shoes from a carton that I previously packed for international post and put them back on a shelf in the warehouse. I would like to know what are their names and I would like to receive copies of their statements. I need to see all your evidence because without them, I cannot give you my grounds of appeal. I will provide you with the detailed grounds of appeal in another letter."

12. Thus it can be seen that before the appeal the Claimant did not have the names or the statements from the witnesses. He was given them along with Mr Myint's report to Mr Bridle. The Claimant provided grounds of appeal which took issue with the entitlement of the Respondent to dismiss him. He asserted that they had insufficient evidence upon which to form a reasonable belief that he was guilty of "the alleged misconduct". He noted that he had not been provided with a statement from Mr McAuley. He repeated his position regarding the incident in that he said at his ground of appeal three the following: –

"I did not put any additional shoes in parcels and did not remove anything from parcels. No additional shoes were found in my parcel (after all, it was my job and involved packing the shoes)."

13. His ground of appeal number five was in the following terms: –

"The reason for my dismissal was breakdown of trust, without any adequate explanation from the company as to misconduct. It is also a reason which is different from the reason given by the company for inviting me to the disciplinary meeting."

14. An appeal hearing was arranged on 13 July taken by Mr Reid. The Tribunal found at paragraph 97 that Mr Reid advised that he would investigate further the points raised by the Claimant and go through everything before making his decision, and that he would write to the Claimant early the following week. No evidence was produced to the Tribunal at the hearing of any further investigation undertaken by Mr Reid. By letter dated 20 July 2011 to the Claimant Mr Reid said that his appeal had been dismissed. He gave no reasons for the dismissal.

The ET Judgment

15. The ET found that there were faults in the way in which the Respondents had dealt with things. In their heading "Relevant Law," they correctly set out the legislation with which they were concerned being section 98(2) of the Employment Rights Act 1996. They list appropriate cases on which they had been addressed. It is clear that the ET appreciated that they were not to substitute their own view, but were to take an objective view of all of the circumstances. They then list verbatim the submissions made by the Respondents and Claimant. At page 44, paragraph 53, they come to the view that the Respondents have not established the reason for dismissal. They note that Ms Paton, who appeared for the Respondent, said that it was either conduct or some other substantial reason. At the subparagraph (f) they say that this shows that the Respondents still do not have a clear view as to why they dismissed the Claimant nor what the principal reason for his dismissal was.
16. They go on to ask themselves if the Respondent had a genuine belief that the Claimant had been dishonest and therefore committed a breach of trust. At page 46 the Tribunal say the following: –

"Having carefully considered the evidence laid before us, we have come to the view that while there may have been a genuine belief on the respondent's part, it was not a reasonable belief based on reasonable grounds and reasonable investigation. We do not accept Ms  Paton's submission for the respondents that each aspect of Burchell is satisfied."

17. They then ask if the Respondent's belief that the Claimant had acted dishonestly and therefore committed a breach of trust and confidence was based on reasonable grounds and state that the answer is no. They then go on to ask if the Respondent conducted a reasonable investigation and their answer is no. Thus, the ET has found that the Respondent has not led evidence to show the principal reason for dismissal and has failed all of the tests set out in Burchell thereby rendering the dismissal unfair.
18. The ET then goes on to ask, at page 46, if the dismissal was procedurally fair. They come to the view that it was not. Their reasons for so deciding are that the Respondents did not give the Claimant full particulars of the initial allegation against him; they did not give him witness statements; they decided to dismiss him before they saw Mr Pryde's written statement; they decided to dismiss him before the disciplinary hearing and certainly before the appeal; they decided to dismiss on grounds other than that of which he had notice, namely the allegation that extra stock was found in a parcel. They find that the Claimant had no opportunity or notice of the allegation for which he was subsequently dismissed. They stated, at page 48 that they agree with the submission made on behalf of the Claimant that these procedural failures are such as to go to the heart of the matter and are substantive. They decided that they had to look at the case in the round, and maintaining that they did so, they felt that the matter was still unfair. They noted in particular that Mr Reid had said that he would carry out further investigation, but he did not do so. They agreed with the submission made on behalf of the Claimant that he had been "ambushed" by the Respondents. On page 50 they ask themselves the vital question if the decision to dismiss was within the range of reasonable responses. At the top of page 51, having said that it was not within that range, they say as follows:-

"In our view a reasonable employer would only have considered dismissal as a possible disciplinary penalty or sanction if they were satisfied that there had been proven misconduct by the employee in question."

Submissions for the Respondent

19. Mr Hardman, who appeared for the Respondent, challenged the judgment on several counts. He produced a helpful written argument. He argued that the Tribunal's conclusions on the merits were perverse and that they had failed to explain their decisions. He argued that the Tribunal had applied the wrong test on the issue of the Respondent's reasonable belief in the misconduct of the Claimant. He also challenged the Tribunal's findings on remedy, arguing that the Tribunal were wrong to conclude that any procedural errors they found would have made any difference to a finding of dismissal. He also argued that the conclusion that the Claimant did not contribute to his dismissal was perverse. He argued that if he is correct concerning the above then it was also inappropriate to make the statutory uplift to the compensatory award. He was prepared to accept that the Respondent had been 'mealy mouthed' in the letter dismissing the Claimant as he did not make it plain in that letter what had caused the lack of trust referred to. But it was, he said, plain to the Claimant what he had been brought to a hearing for; he knew it was because others had said he took shoes out of a package ready for international despatch and returned the shoes to stock.
20. Mr Hardman addressed us fully on the law as it applied in light of the facts found in the case. He submitted that the reason for dismissal was that the Respondent believed it could no longer trust the Claimant because the Claimant had, in the Respondent's view, deliberately lied about removing pairs of trainers from a carton and putting them back into stock. The decision to dismiss having been made, an appeal was heard and rejected. Mr Hardman submitted that in light of those facts it was perverse of the Tribunal to conclude that the Respondent had failed to establish that the principal reason for dismissal related to the Claimant's conduct. He made reference to the well-known case of Melon v Hector Powe Ltd [1981] ICR 43 to remind us that the ET is entitled to interfere with the decision of the ET only if the appellant could succeed in showing that the ET has either misdirected itself in law or reached a decision which no reasonable tribunal, directing itself properly on the log could have reached. He argued that this was such a case. He made reference to the case of Hereford and Worcester County Council v Neale [1986] IRLR 168 and to the case of Stewart v Cleveland Guest (Engineering) Ltd [1994] IRLR 4442 as reminders that the decision of the employment tribunal should not be subjected to meticulous analysis. He appreciated that the test of perversity is a high one. He argued that the example given above was the first example of the ET making a decision which "simply flies in the face of the findings of fact and is therefore perverse."
21. Mr Hardman argued that the ET had concluded that although the Respondent had a genuine belief that the Claimant had acted dishonestly that was not a reasonable belief. He submitted that the conclusion was simply stated and that there was no explanation as to why the ET reached that conclusion. The same argument applies to the ET's conclusion that there was not a reasonable investigation. He argued that the parties in litigation were entitled to know why they had won or lost and that a lack of reasons in this case meant that the Tribunal had erred in law. He made reference to the case of Meek v City of Birmingham District Council [1987] 250 as authority for that proposition. He referred also to the more recent case of Tran v Greenwich Vietnam Community [2002] IRLR 735 and to paragraphs 11 and 17 which he said set out the test. He said that the Tribunal had not given sufficient reasons in the current case. Mr Hardman summed up this part of his argument by saying that the reasons were insufficient but that in any event the conclusions that the ET had come to were inconsistent with the findings of fact and must therefore be perverse.
22. According to Mr Hardman's argument the ET appeared to find, without expressly saying so, that the Claimant's contention that it was a procedural failure that he did not receive a copy witness statements before the disciplinary hearing was correct. The findings in fact however made it clear that the Claimant must have known from very early in the process what it was that he was accused of. He denied the allegation, which makes it clear that he knew what the allegation was, and it was because he lied that he was dismissed.
23. Mr Hardman then addressed the conclusion found by the ET at pages 50 to 51, paragraph 6. The Tribunal concluded that the Claimant's dismissal was not within the range of reasonable responses open to an employer in the circumstances of the case and gave the following as their reason: –

"In our view, a reasonable employer would only have considered dismissal as a possible disciplinary penalty or sanction if they were satisfied that there had been proven misconduct by the employee in question."

He submitted that the ET had fallen into substantial error. They had applied the wrong test. It is not necessary, he argued, that an employer be satisfied as to proven misconduct by an employee in order to dismiss. The test is whether an employer had a reasonable belief that misconduct took place. He argued that the ET had applied a test more appropriate in a criminal case. He made reference to the well-known cases of British Home Stores Ltd v Burchell [1978] IRLR 379 and Sainsbury's Supermarkets Ltd v Hitt [2003] IRLR 23.

24. The disposal which Mr Hardman sought was that we should allow the appeal and reach our own conclusion on the fairness or otherwise of the dismissal. He submitted that there were sufficient findings in fact to enable us to decide that the dismissal was fair. His fall-back position was that if we allowed the appeal but did not decide to substitute their own decision we should remit to another tribunal to consider whether dismissal was fair or not. Mr Hardman also made submissions on the question of disposal if we were not with him on the appeal on the merits. We will not quote the submissions in full in light of the decision we have reached.

Submissions for the Respondent

25. Mr Duncan appeared for the Claimant. He also produced a helpful written submission. He submitted that the judgment should be considered as a whole. The judgment was not, he said, perverse, and he submitted that was a high test rarely met. He submitted that a finding of whether dismissal is fair or unfair is essentially a question of fact for the ET and therefore not something with which we should interfere. While the judgment has a section headed 'Findings in Fact' he submitted that there were facts found elsewhere in the judgment. The Tribunal had correctly set out the relevant legal test for unfair dismissal at paragraphs 38 to 49 of the judgment. Mr Duncan made reference to the well-known case of Yeboah v Crofton [2002] IRLR 634 which he argued expands upon the basic principle outlined in the decision of the House of Lords in Melon v Hector Powe Ltd above. He reminded us that an appeal on perversity should succeed only where an overwhelming case is made out that the ET reached a decision that no reasonable tribunal would have reached. Any appeal on a question of law should not turn into a rehearing of the evidence by the appeal tribunal and any appeal tribunal must be careful not to substitute its own assessment of the evidence or overturn findings of fact made by the Tribunal.
26. Mr Duncan argued that the ET judgment did comply with the requirements set out in the case of Meek. The ET had set out in some detail the reasons for its conclusions that the investigation was not reasonable in the sense used in the case of Sainsbury's Supermarkets Ltd v Hitt. He emphasised that dismissal was for something different from the allegation that was made, and so the Claimant did not know what case he had to meet at the disciplinary hearing or at the appeal. He referred to errors made by the Respondent in investigation where they did not give to the Claimant a copy of the witness statement taken on 16 May 2011 and where they had received one of the witness statements only after the dismissal had taken place. He noted that Mr Reid had said that he would make further investigation but did not do so. He argued that the question of whether discrepancies were of relevance was a matter for the ET. He noted that in paragraph 53 of the judgment the ET had found that the Respondents did not give the Claimant particulars of the allegation for which he was dismissed; they did not give him witness statements in time to prepare; and they proceeded to dismiss before one of the statements was provided to them. They failed to give the Claimant all of the paperwork before either the disciplinary hearing or the appeal. They dismissed on a ground other than that of which he had notice.
27. Turning to the use by the ET of the term "proven misconduct" Mr Duncan made reference to paragraph 53 sub paragraph 6 in which the Tribunal found:

"Given our views on the procedural and substantive unfairness of the claimant's dismissal by the respondents, we did not consider that the claimant's dismissal was within the range of reasonable responses."

He argued that that was actually application of section 98 ERA 1996. He asserted that the use of the words "proven misconduct" did not of itself show that the ET had failed to apply the correct test.

28. Mr Duncan argued that the tenor of the judgment is that, given the reasons in which the decision of unfair dismissal is based, the ET concluded that the Respondent had not made out the principal reason for dismissal. He argued that the ET had found that the Respondent had been influenced by the case of Mr Klusek and that reliance on the statutory words "some other substantial reason" was merely a convenient label. He made reference to the case of Leach v Office of Communications [2012] ICR 1269.
29. Mr Duncan also made submissions on disposal. In light of our decision we will not rehearse those submissions. His primary submission was of course that we should refuse the appeal.

Discussion and Decision

30. It is for the ET to decide if they are satisfied on the evidence before them and they have the advantage of seeing and hearing the witnesses, which we do not have. Nevertheless we have decided that the ET has erred in law. The ET has found at finding in fact 22 that Mr Bryans saw the Claimant opening up several cartons he had already packed, taking out two pairs of trainers and putting them back in stock. This happened just after Mr Klusek had been taken into the office having been seen to be using his phone, which is not permitted in the despatch area. Two others said they saw the Claimant opening packages and putting shoes back into stock. At finding in fact 32 the Claimant was told that the allegation against him was that 'extra stock was found in a parcel you had packed for international post'. The Claimant denied that he had moved any shoes and so the Respondent was faced with two different versions of events. The ET decided that the statements from the witnesses were significantly different. We regard the differences as immaterial. We find that the ET drew conclusions not supported by its findings in fact.
31. The ET found that there was a lack of investigation, though they did find that Mr Klusek was investigated and dismissed, as was Mr McAuley. They were aware that CCTV was examined but it showed nothing. Given that the Claimant flatly denied moving shoes it is hard to see what further investigation could be done except a stock check which may have shown whether extra shoes had been sent to the despatch area. The ET find at page 13, para 80 that Miss Fleming the personnel officer stated in the letter to Claimant that 'there were no legitimate customer orders for these items' by which items she meant the shoes which the witnesses claimed were returned by the Claimant to stock. There is no finding as to whether that was factually correct or not. Thus if the Respondent was faced with three witnesses claiming to see shoes being taken out of a package and returned to stock, and the Claimant denying that he had done so, it was for them to decide whom they believed. They did so, and decided not to believe the Claimant. Interference with stock even without being part of large scale fraud would be conduct which could reasonably lead to dismissal. The ET failed to give any clear reason why they did not regard dismissal as within the range of reasonable responses from the employer. There is an error in law in failing to explain the reasoning in deciding that the Respondent had no reasonable grounds for thinking that the Claimant acted dishonestly, and that they had not carried out a reasonable investigation.
32. The ET have erred in law by deciding that the decision to dismiss was outwith the reasonable range of responses because a

"reasonable employer would only have considered dismissal as a possible disciplinary penalty or sanction if they were satisfied that there had been proven misconduct by the employee in question."

That is too high a test. A reasonable belief in the employee's wrong doing will suffice.

33. The ET decided whether a fair procedure would have ended in the same result, that is dismissal. They accepted a submission by Mr Duncan that it was not possible to reconstruct the events, and that to do so would be to indulge in speculation. They therefore made no deduction under the case of Polkey v A E Dayton Services Ltd [1988] 1 AC 344.
34. The ET was addressed on the question of whether the Claimant contributed to his dismissal. They found no reason to reduce the award under this heading.
35. We have decided that the ET has erred in law in the principal decision, that is that the dismissal was unfair. We have decided that the appropriate disposal is to remit the case to another tribunal to be heard again. In those circumstances we do not require to consider the questions of reductions in respect of Polkey or in respect of the Claimant's fault. It would be unwise of us to say anything about these matters as they are for determination by ET. We were addressed on this matter, and we can say that we take note of the case of Ministry of Justice v Parry [2013] ICR 311 to the effect that any such reduction is to be considered as a percentage representing the chance that the employee would still have lost his employment had a correct procedure been followed; it is not an 'all or nothing' situation.
36. Our decision is that the appeal succeeds, and the case is remitted to a freshly constituted ET to be heard again.