United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR PETER EDWARDS (of Counsel) Instructed by: Grancheser Construction (Eastern) Ltd 15A Saxon Business Park Littleport CB6 1XX
For the Respondent	No appearance or representation by or on behalf of Respondent


 


SUMMARY

UNFAIR DISMISSAL

Compensation

Polkey deduction

A Tribunal found that an employee who had left site an hour and a half or so early on two consecutive days and subsequently had submitted time sheets claiming to have worked full days was unfairly dismissed because there was no proper investigation. It thought the employee guilty of significant contributory fault, but because it assessed the "Polkey" chances of a fair dismissal at 50% it moderated the further deduction for contributory fault to 10% only. It applied this both to the basic and compensatory awards. Held it was wrong to apply the moderated figure to the basic award, since "Polkey" would have no effect on that. Secondly, the Tribunal had approached its assessment of the "Polkey" deduction by asking the chances of a reasonable employer dismissing an employee in such circumstances. That was the wrong approach. Though the postulated dismissal must be a fair one, it is the chances of the actual employer in the case, not some hypothetical reasonable employer, dismissing this employee which has to be assessed. The case was remitted to the same Tribunal for further consideration.

THE HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)

Introduction

1. In a decision, reasons for which were given in detail on 30 March 2012, an Employment Tribunal at Cambridge found that the Claimant had been unfairly dismissed by reason of his conduct. The employer's appeal relates entirely to the consequent findings at the same hearing in respect of remedy.

The facts

2. Mr Edwards, who appears to represent the Appellant employer, argues, and we accept, that it is necessary for an understanding of the decision to read carefully between the lines. The Claimant was a carpenter/electrician employed by a small construction company that had some 24 employees. The staff were warned by their employer in March or April 2011 that leaving site early would lead to dismissal. In the week beginning 23 May 2011 around the middle of the afternoon (3.00pm to 3.30pm), before the end of the working day, which finished at 4.30pm, a director of the Appellant, Mr David Fox, twice saw the Claimant driving past him in the opposite direction. He should have been working, thought Mr Fox. The employer did nothing but waited to see what the timesheet revealed. When that was submitted, on 3 June, the end of the following week, the Claimant was seen to have claimed that he had worked until 4.30pm on each of the two days that Mr Fox had seen him driving past him in the middle of the afternoon in the other direction. Given the time of the sighting, he must have left site somewhere between a quarter and half an hour or so earlier still.
3. Having received the timesheet, Mr Fox telephoned the Claimant and told him that he was dismissed. There was no investigation, no procedure was followed, and the Claimant was not told the details of the allegation against him. After his dismissal he wrote to complain that he had not been told some of the details. He maintained that in the past, on occasion with Mr Fox's knowledge, he had been permitted to leave work earlier when all the work had been completed. The Tribunal, not inappropriately but not clearly, attributed that explanation to these two occasions. The Tribunal thought that the reaction to what it regarded as genuine sightings had been with extraordinary and ill-judged haste; it was, it concluded, patently, blatantly procedurally unfair dismissal. It concluded that the case was (paragraph 47):

"[…] not a 'caught red-handed' case, when the incriminating facts are so flagrant and incontrovertible that any investigation would be futile. The Respondent in any event has not demonstrated that the Claimant was forewarned that a first offence (albeit 2 consecutive days) of leaving work 1 or 2 hours early, and failing to account for the shortened hours in his timesheet, would result in summary dismissal, and such a sanction for such an offence by an employee ostensibly with an otherwise unblemished disciplinary record does not in our judgement self-evidently fall within the band of reasonable responses even if established by proper process. In this case, the presumption of guilt was not tested to any degree, no information was given to the Claimant, no opportunity afforded to offer an explanation, no enquiry far less consideration of any mitigating circumstances, and no minimal safeguard of an appeal mechanism etc etc."

4. Then it said this, at paragraph 48:

"On the other hand, with the benefit of hindsight, there is plainly room to doubt the Claimant's protestations of ignorance and innocence. We trust his first letter responding to the dismissal as a reliable statement. He does not deny leaving early, albeit there may be some merit (this is not known, it was never investigated) in his substantive plea that the practice was not unique, to an extent possibly even approved, or at least benefiting from management turning a blind eye, and that he was being unfairly singled out for having done no worse than other employees. We are not impressed however by the various theoretical excuses which he had developed since then, and in the course of these proceedings. They lack credibility and only reinforce his qualified admission at the time. Notwithstanding the Respondent's culpable failure on its side to give information or conduct even the most rudimentary enquiry, the Claimant must have known at an early stage at least the approximate period under scrutiny, if not the exact days, and if he had any further good excuse and/or other or better explanation in denial or mitigation, then it seems to us that he would have raised them sooner in the course of events. He shares the blame for what happened."

5. The Tribunal went on to say (paragraph 51) that:

"[…] there was a not inconsiderable element of blameworthy action and conduct by the Claimant causative of and contributing to the dismissal."

6. It added:

"How to measure these separately and together is not capable of forensic calculation. Our assessment is that there was an even chance of a responsible employer after a reasonable and proper disciplinary procedure coming to a decision to dismiss, rather than imposing a lesser sanction – for example a final written warning."

7. That last sentence again shows that the Tribunal regarded the Claimant as having been substantively at fault. It thought that the choice was not between dismissal and acquittal but between dismissal and some lesser, though serious, warning.
8. Having decided that it was appropriate, on the basis we have outlined, to reduce any award of future loss by 50 per cent to accommodate the possibility of a fair dismissal by "a reasonable employer", the Tribunal turned to consider contributory conduct. It said this, at paragraph 52:

"[…] it is appropriate when considering contributory conduct […] in respect of both basic and compensatory awards, to moderate the reduction under sections 122(2) and 123(6) to reflect the substantial reduction already made under section 123(1), in order to achieve a result that is just and equitable overall. To avoid the injustice of an excessive and disproportionate reduction, we therefore deduct a further 10 % on this account."

9. It did not find specifically what conduct it thought the Claimant guilty of which in context had been blameworthy. As Mr Edwards submits, that has to be derived from a consideration of the Judgment as a whole or, as he put it, "reading between the lines". He argues, as grounds of appeal, first that the Tribunal reached a perverse decision in reducing the basic award by only 10 per cent in the circumstances in which, he argued, the Tribunal had made damning findings of fact against the Claimant. Secondly, he argued that the Tribunal had adopted the wrong approach to the assessment of the Polkey v A E Dayton Services Ltd [1987] IRLR 503 deduction and, had they adopted the right approach, would have been bound to find a 100 per cent reduction. He specifically abandoned the other arguments and grounds that had been contained in the Notice of Appeal.

The Employment Tribunal decision, submissions and discussion

10. In order to evaluate the arguments put before us on appeal, it is necessary to determine what the Tribunal decided in the light of the material before them. The Tribunal could have, but did not, clearly separate the consideration of Polkey, which calls for a predictive exercise (asking, on the correct test, what the chances were that the employer would have dismissed fairly in the circumstances, which requires a focus upon the employer's likely thought processes and may involve a consideration of what evidence would have been available to the employer upon which he was likely to have based his conclusion) from the question of contributory conduct (which requires the Tribunal itself to make a finding as to whether or not the employee was actually guilty of some misconduct).
11. As to the underlying facts, Mr Edwards has persuaded us that there were three matters of fact that were critical to the evaluations to be performed by the Tribunal. The first was whether the Claimant was actually seen during working hours driving when he should have been on-site, the second was whether he had claimed in his timesheet for the hours when he was not on-site as though he had been, and the third was that there was no proper explanation for his having done so.
12. As to the first of those, he argues that under the heading "Facts" the Tribunal stated in paragraph 15 that Mr Fox had seen the Claimant driving past on two occasions at the time alleged. If that was not clear enough, it is plain to us that the Tribunal took the view that that was an actual sighting of the Claimant and not a mistake, since at paragraph 46 it begins by observing that it does not question the genuineness of the Respondent's reaction to Mr Fox's sightings. As to the second, the timesheet was in evidence; the timesheet showed that hours were claimed as worked which, given the sightings, plainly had not been. As to the third, there is greater uncertainty. In paragraph 48 the Tribunal had observed that there might be some merit in what the Claimant had been saying in his initial letter after dismissal. We do not find it easy to see how that fits with what the Tribunal says at paragraph 51, in which it plainly thought the Claimant was guilty of blameworthy action. If in paragraph 48 the Tribunal was saying that the Claimant understood that it was permissible for him to leave site early because that was what Mr Fox had told him to do, there could be no question of his actions being blameworthy; they would be vindicated. He could not have been fairly dismissed, nor upon those facts emerging would he have been fairly dismissed. The Tribunal had in front of it evidence from the Claimant himself. The witness statement in our bundle is unsigned, but we are told by Mr Edwards that it was tendered in evidence by the Claimant. At paragraph 23 he said, in a passage itself of some difficulty:

"I feel I must deal with the accusation they [the employer] have subsequently made that my 'alleged skiving and time theft' was excusable on the basis that it was custom and practice, which was somehow endorsed and authorised by the Directors of Grantchester. I have not sought to have it both ways and will not do so because I have not done what they say they sacked me for. I did write a letter when I was upset on the 16^th June [we interpose to say that is a reference to the letter to which we have made reference] but when you read that it does not admit to my 'wrongdoings', it just makes the point that there might be an innocent explanation and that they appeared to be acting inconsistently if that were the case. If they had dealt with me properly, either in terms of a proper hearing or appeal, this misunderstanding would have been resolved."

13. Mr Edwards argues that that paragraph is only to be understood as the Claimant having retracted any suggestion that on the two days in question Mr David Fox had endorsed or authorised his absence. It seems to us the likeliest reading of the paragraph. Though it is no matter directly for us, it also accords with the realities of the situation revealed by the other findings of fact of the Tribunal. It regarded Mr Fox's reaction to having seen the Claimant driving past in the other direction as genuine. If he had specifically endorsed and authorised the absence of the Claimant on that occasion, it is difficult to see how the Tribunal could possibly have reached that conclusion. Mr Fox had given evidence before them, as did the Claimant.
14. We accept, therefore, Mr Edwards' interpretation of paragraph 23. We hesitated before doing so because the Claimant has chosen, for reasons he has expressed in writing to us, not to be present on the hearing of this appeal. We fully understand those reasons; they cast no reflection upon the strength or otherwise of his case. But they do mean that we have not had any argument putting the contrary point of view. Nonetheless, it seems to us that is what paragraph 23 means.
15. In his skeleton argument in writing that he has invited us to consider, Mr Attrill did say that he admitted leaving work early when he worked for the employer at the Leys College in Cambridge, "but only with the permission of Mr Fox, who said once he finished the work allocated to him he could leave". However, it is plain this is not intended as a repeat of the initial letter of 16 June from which the witness statement is a retraction, since he goes on in the next sentence to say that that was when he worked for the Respondent "as a self employed person". This case relates, of course, to his time as an employee, when he would have had at least a qualifying period of service in order to enable him to claim the rights he did. Accordingly, the skeleton argument is referring to some time in the past of no obvious materiality to the case and plainly long before the employer told the whole workforce, as it thought, that it would be a dismissible offence to leave work early.
16. Accordingly, we approach the submissions made to us by Mr Edwards in that light. First, he argues that the Tribunal's approach to contributory conduct at paragraph 52 was to deduct 10 per cent. Given the nature of the conduct, that decision, he submits, would be perverse. The reasoning that was said to justify it was indicative of the Tribunal having had in mind a much larger percentage reduction that would apply both to the basic award and to the compensatory award. It was reduced from some figure higher than 10 per cent to "avoid the injustice of an excessive and disproportionate reduction". That is in the light of the 50 per cent reduction already made under Polkey. Section 122(2) Employment Rights Act 1996, under the general heading "Basic Award: Reductions", provides as follows:

"Where the tribunal considers that any conduct of the complainant before the dismissal […] was such that it would be just and equitable to reduce or further reduce the amount of the basic award to any extent, the tribunal shall reduce or further reduce that amount accordingly."

17. Section 123(6), under the general heading "Compensatory Award", provides:

"Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding."

18. In the case of Rao v Civil Aviation Authority [1994] ICR 495, the Court of Appeal considered the interrelationship of a deduction for contributory conduct and an award that was reduced by Polkey. Though obiter, in the Judgment of the Master of the Rolls, Sir Thomas Bingham, at page 502 it was noted that the extent of a deduction to represent the chances of a fair dismissal subsequently being made might have a "very significant bearing" on what further deduction might fall to be made under the heading of contributory conduct. Staughton LJ specifically agreed, adding this:

"It may turn out that the deduction which is just and equitable under section 73(7B) of the Act of 1978 [a reference to previous legislation in respect of which, for present purposes, there is no material distinction] is not the same as that which is just and equitable under section 74(6). The reason for that could be that in the case of section 74 there would already have been a deduction under sub-section (1) [that is, the section that corresponds to section 123(1) in the Employment Rights Act 1996] by reason of the Tribunal's conclusion as to the likelihood that the employee would not have remained further employed in any event. That can affect what is just and equitable under sub-section (6)."

19. Sub-section (6) is equivalent to section 123(6) of the 1996 Act, which we have quoted. The process of calculation of a compensatory award is potentially subject to a reduction to take account of the chance that there would have been no loss at all because a dismissal might have been effected which was fair. That reasoning is irrelevant where what is in issue is the basic award, which is not affected by the Polkey deduction except in the exceptionally rare case where such a (fair) dismissal might have taken place virtually contemporaneously with the unfair dismissal which actually occurred. Accordingly, Mr Edwards argues, the Tribunal erred in paragraph 52 because the reason it had adopted 10 per cent in respect of the basic award was to reflect a consideration that applied only to the compensatory award.
20. There is no response to this particular ground by Mr Attrill in his skeleton argument. He submits that a 10 per cent reduction could not be said to be perverse to the high standard that such a plea has to meet. He argues the facts, submitting it is simply not true that the Tribunal found that he, the Claimant, had left site early, falsified his timesheet and knew the company's policy. We have already observed that the first is established by the Tribunal; the second is established if by "falsified" it means "submitted a timesheet that did not faithfully and accurately record the actual hours worked"; and as to knowing the company's policy, the Tribunal did not positively find that he had been at the meeting at which the workforce were told they must not leave early but appear to have concluded that it was likely that, if he had been absent, his absence would have been noticed, and it was not.
21. He did not deal specifically with the point that has been made in respect of section 122(2). This may be because the thrust of the Claimant's submissions was directed towards a ground raised in the Grounds of Appeal that the Appellant had permission to argue but that Mr Edwards on consideration has not advanced, relating to whether it was perverse or not to come to the conclusion the Tribunal did in respect of the section 123 award.
22. We conclude that Mr Edwards is right in his submissions, for the reasons we have set out above. Whereas it may be appropriate to moderate what would otherwise be the degree of contributory fault that would reduce an award because there have been matters of conduct taken into account in assessing the chances of a fair dismissal, so that it might be in effect double-counting to impose upon the Claimant a further reduction by way of contributory conduct, that reasoning cannot apply to that part of the award to which the Polkey principle itself does not apply. Accordingly, this appeal must be allowed upon the first ground argued before us. We should make it clear that given the findings that we consider the Tribunal made, it is appropriate to regard a 10 per cent discount in respect of the basic award for contributory fault as perverse. It is plainly too low for the conduct revealed by the papers. We make no comment about the appropriateness of the same percentage reduction where there has been a significant Polkey reduction.

Polkey

23. The Polkey reduction itself, it is argued, was also simply too low. But the reason that Mr Edwards centrally argues in his appeal is not perversity but the approach of the Tribunal, which was to look not at the chances of this employer carrying out a fair dismissal but rather of "a reasonable" employer doing so. He argues, and we accept, that the test for a Tribunal is not to ask in general what a reasonable employer would do but to focus upon the employer that is in fact before it. Accordingly, this was an error of law. Given that the Tribunal might not have attributed to a reasonable employer what as a matter of fact it had accepted that this employer actually did, which is told its workforce that it would be dismissible and would ordinarily result in dismissal for an employee to leave work early, it is obvious that concentrating upon the particular employer is likely to affect a Tribunal's calculation of the chances.
24. Though we hold that he succeeds on this argument, Mr Edwards goes further. He argues that the Tribunal's decision effectively split employers into two groups. One group would not have actually dismissed but would instead have given a final written warning or some other warning. The other group would have dismissed. Once one factors in to that calculation, first, the employer's warning to which we have already referred and, second, the evidence of Mr Fox's reaction having received the timesheets on the second, it would be, submits Mr Edwards, inconceivable that this employer would not have dismissed; he would be within the 50 per cent of dismissing employers. The deduction should thus have been 100%.
25. We, for our part, cannot accept this further submission as it stands. The assessment of Polkey is all about the assessment of chances. Mr Edwards' approach would be to introduce a consideration into the assessment of chances that does not belong there. He wishes to group employers into two groups before dealing with the chances. That converts a decision as to chance into a binary question: would the employer have, or would the employer not have, dismissed? We do not consider it right to move from an assessment of 50 per cent chance to a conclusion that because of the particular factors mentioned this employer inevitably would have dismissed.
26. Here we make reference to one matter of fact that was asserted before the Tribunal by the Claimant. In paragraphs 15 and 16 of his witness statement he said that in effect after having been absent from his employment with the Respondent for five months he was offered his old job back. If that were so, then it would have been capable of casting some light upon what this employer might have done in the circumstances. We are told that this assertion was fiercely denied by Mr Fox. However, the Tribunal do not state any conclusions on it. Their conclusions might be relevant. We cannot say for ourselves that the only appropriate percentage would have been 100 per cent, even though we accept that the Tribunal's approach in looking at a reasonable employer rather than at the actual employer was in error and was likely to understate the extent of the deduction that fell to be made. We also note in passing that the Tribunal may in paragraph 48 have been seeing merit in an argument that the absence had been approved when it would appear from paragraph 23 of his witness statement that the Claimant was not pursuing that as a matter of fact before the Tribunal, and when it appears to us from what the Tribunal said that the material before it showed that he did not make any such claim about the occasions when he left work early which were in question.

Conclusions

27. In conclusion, we accept, first, that the approach to deduction of contributory conduct in respect of the basic award was in error. Secondly, we accept that the Tribunal adopted a wrong approach to its assessment of the appropriate percentage chances of a fair dismissal. We would observe that whichever Tribunal hears the case upon remission, since we are unable to determine these matters for ourselves given the uncertainties of facts and the difficulties of reliably depending upon our reading between the lines of the Judgment, will need to set out clearly what it considers the Claimant did wrong if it is to come to a clear conclusion about contributory fault. It ought also, in a case such as this, to consider what facts and matters the employer would probably have accepted for itself, reasonably, having carried out the investigation that would have been carried out had a proper procedure been followed. Without clear findings in respect of each, it is, in our view, difficult for a Tribunal reliably to come to any proper conclusion as to the appropriate percentages and figures.
28. We shall remit this case, therefore, for decision, but we shall invite Mr Edwards to persuade us otherwise if he wishes and, if not, to address us as to whether it should be the same or some other Tribunal to whom the case goes back.

Disposal

29. Mr Edwards, having taken instructions, sensibly submits that the matter should be remitted to the same Tribunal unless that causes great administrative inconvenience. The scope of the remission will be this. The Employment Tribunal will accept, because it has already found, that the sightings by Mr Fox at the time that they were made were so made. Secondly, it will need to be clear what it is that the employee did or did not do that was blameworthy. If it needs further evidence in order to determine that, then it may consider that further evidence, which, in our view, is likely to be necessary to be given only with the leave of the Employment Tribunal, matters otherwise being left for argument. That evidence may need to be considered in order to decide on the balance of probabilities if the inaccurate timesheets were falsified in the sense of the employee cheating his employer.
30. It may also be necessary as to the third of the matters with which we began this Judgment to decide the chance that this employer at this time and in these circumstances would fairly have dismissed. Since that is highly likely to result in a different percentage reduction for Polkey from that which was adopted, the finding of contributory fault at 10 per cent will also need to be reconsidered in the light of the Tribunal's findings as to Polkey and in the light of any additional material or consideration that the Tribunal wishes to give to the question of contributory fault in the manner we have already indicated.