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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Soll (Vale) v Jaggers (Unfair Dismissal: Reasonableness of dismissal) [2017] UKEAT 0218_16_0802 (08 February 2017)
URL: http://www.bailii.org/uk/cases/UKEAT/2017/0218_16_0802.html
Cite as: [2017] UKEAT 218_16_802, [2017] UKEAT 0218_16_0802
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EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE
At the Tribunal
Before
(SITTING ALONE)
Transcript of Proceedings
JUDGMENT
APPEARANCES
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(One of Her Majesty’s Counsel) Instructed by: Wright Hassall LLP Solicitors Olympus Avenue Leamington Spa Warwickshire CV34 6BF
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(of Counsel) Instructed by: Blake Morgan LLP New Kings Court Tollgate Chandler’s Ford Hampshire SO53 3LG
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SUMMARY
UNFAIR DISMISSAL - Reasonableness of dismissal
UNFAIR DISMISSAL - Polkey deduction
UNFAIR DISMISSAL - Contributory fault
Unfair dismissal - fairness of dismissal (Employment Rights Act 1996 (“ERA”) section 98(4)) and band of reasonable responses test
Unfair dismissal - Polkey v A E Dayton Services Ltd [1988] ICR 142 HL
Contributory fault - sections 122(2) and 123(6) ERA
The Claimant, the Managing Director of a charity, reporting to the Board of volunteer Trustees, had been in without prejudice negotiations with the Respondent with a view to agreeing terms for the termination of his employment. The ET had found that, during these discussions, the Claimant had created a false version of his contract of employment, materially altering various terms, with a view to relying on that document for personal gain in the negotiations. The ET had also found, however, that the Respondent’s Board had agreed a “direction of travel” which would see the Claimant’s employment brought to an end. Having found various matters of concern relating to the Claimant’s conduct whilst he was suspended, seven disciplinary charges were put to the Claimant. Thereafter, the Claimant had presented the false contract to the Respondent and, having had it investigated by an external IT consultant, this led to an eighth charge being added to the disciplinary process. The decision making in relation to that process was then carried out by one of the Respondent’s Trustees who had himself uncovered the matters that had led to the initial seven charges. He determined that the Claimant should be summarily dismissed. The Claimant’s appeal against that decision was unsuccessful.
The ET found that, whilst he dismissed the Claimant due to his genuine belief in the Claimant’s misconduct and had reasonable grounds for that belief in respect of three of the original charges and the eighth (false contract) charge, the decision taker had pre-judged the disciplinary process such as to mean the dismissal was rendered unfair. This was not remedied by the appeal.
Although the ET found the Claimant guilty of gross misconduct in falsifying the contract such as to justify his summary dismissal, and accepted that this had contributed to his dismissal, it neither considered that it was appropriate to make any Polkey deduction nor that there should be any reduction of his award greater than 10 per cent. The Respondent appealed.
Held: allowing the appeal
The ET’s conclusions on liability were confused and failed to make clear whether the ET was finding that the entire investigation was tainted by pre-judgement (a finding that could only go to the initial seven charges, as the eighth charge had been investigated by an independent consultant) or whether it was simply the fact that the decision taker had previously been involved in the investigation and had thereby pre-judged the decision (although he had not been involved in investigating the eighth charge). The appeal in this respect would be allowed, but it would not be possible to substitute a finding of unfair dismissal - had there not been further points raised by the appeal, this issue would have needed to be remitted to the ET.
On the question of a Polkey reduction, the ET’s approach was flawed and its conclusion perverse. As a neutral body (so, fulfilling the role it had stated was required for a fair dismissal in these circumstances), it had itself concluded that, by falsifying his contract of employment with a view to personal gain, the Claimant had been guilty of gross misconduct such as would warrant his summary dismissal. This was not a case where the ET had found the evidence to be unreliable or “riddled with uncertainty” (applying Software 2000 Ltd v Andrews and Ors [2007] ICR 825 EAT); it had itself answered the question what would have been the conclusion had the eighth charge been considered by a body that had not pre-judged the position. On the ET’s findings, the only conclusion that could properly be reached was that the Claimant would have been summarily dismissed in any event.
The ET’s approach to the question of contributory fault also demonstrated an error of approach, having focused on the conduct of the Respondent rather than that of the Claimant and having thereby failed to properly assess what reduction would have been just and equitable in the light of his conduct. Moreover, applying the correct test, it was apparent that the ET’s assessment of a reduction under this head (only 10 per cent) was perverse.
HER HONOUR JUDGE EADY QC
Introduction
1. In this Judgment I refer to the parties as the Claimant and Respondent, as below. This is the Full Hearing of the Respondent’s appeal against a Judgment of the Employment Tribunal sitting at Reading (Employment Judge Gumbiti-Zimuto, sitting with members Mr Morley and Mr Gregory over nine days during February and March 2016; “the ET”), sent to the parties on 15 April 2016. Representation before the ET was as it has been before me.
2. By that Judgment the ET, relevantly, upheld the Claimant’s claim of unfair dismissal for the purposes of section 98 of the Employment Rights Act 1996 (“ERA”), albeit finding that he had contributed to his dismissal by 10 per cent, and rejecting his complaint of wrongful dismissal. I should also mention that the ET further rejected the Claimant’s claim of having been unfairly dismissed or subjected to detriment on grounds of protected disclosure. Those claims no longer concern me, but they were obviously a major focus of the case before the ET.
The Relevant Background
3. The Respondent (an acronym for South Oxfordshire Leisure Ltd) is a registered charity operating leisure facilities in the public and private sectors. The Claimant originally commenced his employment as a Deputy Managing Director, Head of Business, and Company Secretary on 1 April 2004. In April 2010 he became the Managing Director. As such, the Claimant reported to the Respondent’s Board of volunteer Trustees, the Chair of which was, at the relevant time, Mr Booker. None of the Trustees at the time of the events leading to the Claimant’s dismissal had been in place when he commenced his employment.
4. Up to September 2014 the Claimant had been highly regarded by the Respondent’s Trustees. During a Board meeting that month, however, the Claimant was asked about a matter that was the subject of an ongoing dispute between the Respondent and the Vale of White Horse District Council, to which he objected, considering he was treated unfairly given the of the questions asked of him. The Claimant’s reaction to the September Board meeting - treated as a grievance - triggered a series of without prejudice discussions, held with a view to agreeing the terms for the termination of his employment. In the event, no agreement was reached, but the discussions form a relevant part of the background to his eventual dismissal. Indeed, it was during the course of discussions between the Claimant and Mr Booker that, on 10 November 2014, the Claimant was suspended whilst “various matters were considered and procedures put in place”. The intention, the ET found, was to suspend the Claimant from work while disciplinary and grievance procedures took place; the disciplinary issues then arising relating to the Claimant’s response in the discussions post-dating the September 2014 Board meeting.
5. Prior to the Claimant’s suspension, one of the Respondent’s Trustees, Mr Robinson, had sent an email to Mr Booker stating that he fully supported “the direction of travel being undertaken”. In his evidence to the ET, Mr Robinson said that referred to information that had been provided to the Board to the effect that there was a breakdown in the relationship with the Claimant; he did not accept there was an automatic assumption that the Board should get rid of the Claimant. In any event, an independent consultant was used to investigate the Claimant’s grievance, which was rejected; that decision was communicated to the Claimant on 23 December 2014 and he then appealed. At the same time, it appears the Board considered that the initial disciplinary charges it had sought to pursue against the Claimant were withdrawn. Notwithstanding that, however, the Claimant’s suspension was continued.
6. During the Claimant’s suspension another employee, Mrs Wright, was charged with taking up certain of his responsibilities. Subsequently, on 17 December 2014 she was asked by Mr Booker - in Mr Robinson’s presence - to draft a letter of dismissal to the Claimant on the basis that there had been a breakdown in trust and confidence, albeit that Mr Booker said it was in fact a request made in the context of discussion about restructuring. Also during the suspension, members of the Board became more involved in the management of the Respondent. That was particularly true of Mr Robinson, who reported to other Trustees his concerns arising from three projects in which he was involved: that the Claimant had potentially misrepresented financial information, had caused a difficult relationship with the Vale of White Horse District Council, and had presented a defamatory report to the Charity Commissioners.
7. In January 2015, it was determined that the Claimant should face disciplinary proceedings in respect of seven charges arising from the matters identified by Mr Robinson.
8. Returning to the without prejudice discussions between the Claimant and the Respondent, earlier in January 2015 the Claimant had provided a copy of a document that he said was his contract of employment, intending to rely on this in the negotiations. This was in fact an altered and false contract and the ET concluded it was more likely than not that the Claimant was responsible for this falsification. Significantly, the document included material changes from the original contract of employment, for example in respect of the Claimant’s notice period, which had been increased from three to fourteen months.
9. Having been presented with this document purporting to be the Claimant’s contract of employment and after an investigation carried out by an external IT consultant, the Respondent’s Trustees determined that the Claimant should face an additional, eighth disciplinary charge, as communicated to him by an amended version of the disciplinary letter. Mr Robinson carried out the subsequent disciplinary hearing and found the case against the Claimant had been made out. Specifically, he found that charges 1, 3, 4 and 8 were established and amounted to gross misconduct for which the Claimant would be summarily dismissed, a decision communicated by letter of 2 March 2015.
10. The Claimant appealed against that decision, and his appeal was heard on 27 March 2015 by another Trustee, Mr Hampson. The ET observed:
“55. … Mr Hampson was the member of the board who had the least involvement in events leading up to the claimant’s dismissal. Mr Hampson had however been involved in discussions as a trustee about various matters which had led to the claimant’s disciplinary proceedings.
56. Mr Hampson’s approach to the appeal was to treat it as an opportunity for the claimant to explain why he thought the decision to dismiss him was wrong and to refute the allegations. Mr Hampson was not going to open a new investigation.”
Mr Hampson concluded the appeal should be rejected and confirmed the decision to dismiss.
11. After the dismissal process, the Respondent further discovered unauthorised pension payments the Claimant had made to himself, contrary to an earlier agreement he had made with Mr Booker. The ET did not accept the Claimant’s explanation for those payments and found he had received some £15,860.50 to which he was not entitled. It also uncovered further information relating to payments made for services provided by a company owned by the Claimant and his wife, which gave rise to issues of conflict of interest, in respect of which there was no evidence of the approval of the Claimant’s activities by anyone within the Respondent.
The ET’s Decision and Reasoning
12. Having reminded itself that the reason for dismissal was the “set of facts known to the employer or beliefs held by him which cause him to dismiss the employee”, the ET observed that Mr Robinson had reached his decision aware of the background and having already been involved with the earlier investigations into the Claimant’s role:
“99. Offstage, there were discussions taking place on a ‘without prejudice’ basis, the purpose of which was to try and agree a termination of the claimant’s employment. Mr Robinson went into the disciplinary proceedings in January 2015 fully aware of these matters.
100. The Tribunal is satisfied that before the dismissal, the members of the board were considering the removal of the claimant from his role as managing director, albeit at this stage by agreement. Following the claimant’s suspension, Mr Robinson took an active role in the management of the respondent’s organisation, attending the office once a week. Mr Robinson began looking into the respondent’s finances in more detail and carried out what he described as three projects. As a result of carrying out these projects, Mr Robinson became sufficiently concerned about the respondent’s finances to report his findings to the board. All three projects were matters which informed Mr Robinson’s decision to dismiss the claimant.
101. Mr Robinson found all the disciplinary allegations against the claimant proved and, in respect of some of the matters, considered that they were sufficiently serious to warrant the claimant’s dismissal. These matters were what Mr Robinson genuinely believed amounted to misconduct by the claimant and the reason he dismissed the claimant. The Tribunal is satisfied that the reason for the claimant’s dismissal related to his conduct.”
13. In relation to the first, third, fourth and eighth charges that Mr Robinson had found to be proved against the Claimant, the ET concluded that there were reasonable grounds for those findings. The eighth charge, of course, related to the falsification of the Claimant’s contract.
14. The ET turned to the reasonableness of the investigation. It was concerned about Mr Robinson’s prior involvement, specifically:
“103. The Tribunal are troubled by the fact that when Mr Robinson took greater interest in the day to day running of the respondent he carried out the three projects at a time when there was a “direction of travel” heading for possible dismissal of the claimant.
104. The three projects inform the disciplinary charges which the claimant faced. The investigation into the matters under consideration at the disciplinary hearing was in large part carried out by Mr Robinson. At the time that Mr Robinson carried out these investigations, he had already been involved in a meeting where he, together with Mr Booker, requested a letter of dismissal of the claimant. Mr Robinson had expressed agreement with a “direction of travel” that was leading potentially to the claimant’s dismissal if agreement for a severance package was not reached with the claimant.”
15. Noting the guidance provided by the ACAS Code on Disciplinary and Grievance Procedures 2015 (“the ACAS Code”) that “In misconduct cases where practicable different people should carry out the investigation and disciplinary hearing”, the ET observed that it would have been practicable for the Respondent to have asked another Trustee to carry out the disciplinary hearing or to utilise the services of an independent consultant as it had for the Claimant’s grievance. It was satisfied the Respondent had acted in breach of the ACAS Code.
16. The ET returned to the question of the fairness of the investigation and concluded:
“106. The conclusion of the Tribunal is that this was not a reasonable investigation. It gives the impression of being orchestrated to seek and find a basis on which the claimant could be dismissed once it had emerged that no severance package was being agreed by the claimant with the respondent. In the circumstances, we consider that such an approach to a disciplinary investigation is outside the range of what we would expect of a reasonable employer. In the circumstances, we find the claimant’s dismissal was unfair.”
17. It did not consider this unfairness was rectified by the appeal process:
“107. We have considered whether the appeal that was conducted by Mr Hampson was capable of curing the defects which we find in relation to the dismissal and our conclusion is that it would not have been possible to cure the substantive defects which occurred in the process up to dismissal without the matter being restarted by somebody entirely independent. In the circumstances, we are of the view that the processes followed by the respondent were not capable of curing the procedural defects that we have found.”
18. On the Claimant’s claim of wrongful dismissal, the ET concluded that the Claimant had indeed been guilty of gross misconduct in relation to allegation 8, the falsification of his contract. Specifically, the ET rejected the Claimant’s account as untruthful and concluded that the evidence showed he had altered the content of the contract in order to use it to his advantage in the negotiations with the Respondent:
“109. … This conduct the respondent found to have been proven and amounting to gross misconduct. The view of the Tribunal is that the claimant’s conduct was blameworthy and that it contributed to the reasons for his dismissal.”
19. In addition, although the Respondent did not know of it at the time of the dismissal, the payments that the Claimant had made to himself to which he was not entitled - which I take to be a reference to the pension payments - also amounted to a repudiatory breach of contract. The ET concluded that the Claimant’s complaint of wrongful dismissal was not well founded and should be dismissed. It further went on to uphold the Respondent’s counterclaim against the Claimant in respect of the pension payments.
20. Turning to the question of any deduction in respect of any award on the unfair dismissal claim, the ET considered this question under the headings of contribution and Polkey v A E Dayton Services Ltd [1988] ICR 142 HL as follows:
“109. The Tribunal finds that in manipulating the contract, he provided to the respondent, the claimant had contributed to his dismissal. The claimant has never provided the Tribunal with an explanation for why he presented to the respondent a contract which even on his own account (which we do not accept) he cannot be confident was his own contract of employment. The claimant’s evidence on the contract was such that it leads the Tribunal to conclude that the claimant knew that he was presenting a false document to the respondent. We reject as untruthful the claimant’s evidence that he presented the contract simply because it was the document he was provided with in November 2014 soon after his suspension. On balance, the Tribunal consider that the evidence shows that the claimant altered the content of the contract in order to use it to his advantage in the negotiations with the respondent. This conduct the respondent found to have been proven and amounting to gross misconduct. The view of the Tribunal is that the claimant’s conduct was blameworthy and that it contributed to the reasons for his dismissal.
110. We are satisfied on balance that the claimant did do the matters which are alleged by the respondent. We have concluded that the level of contribution in respect of this is not significant because the respondent was set upon a course to find a reason for the claimant’s dismissal by the time the contract was produced by the claimant. Even if the eighth charge was not present we consider that the claimant would have been dismissed. We therefore assess the level of contribution at the low level of 10% because the respondent had set upon a course to dismiss the claimant.
111. We have considered whether this is a case where we can arrive at a Polkey reduction. We have concluded that it is not. The respondent was looking for a way to end the claimant’s employment by a compromise agreement or otherwise. Mr Robinson and all the board were of the view that the direction of travel included termination of the claimant’s employment.
112. We are not satisfied that a fair process would necessarily have led to the claimant’s dismissal or, if so, what chance it would be. For us to make this assessment, it would involve implanting on the part of the board a neutral state of mind which it did not hold. In the circumstances, we do not consider that it is appropriate to conclude that the claimant’s case is one which requires a Polkey reduction to be made.”
The Appeal
21. The Respondent appeals against the ET’s conclusions in the Claimant’s favour. It first contends that the ET erred in law in conflating separate findings of gross misconduct, specifically the Respondent’s findings on allegation 8 (false contract), when Mr Robinson had not been involved in the investigation, with the other findings of gross misconduct, in which to some extent he had. Secondly, it argues that error fed into the conclusion that there had been a breach of the ACAS Code in respect of allegation 8. Third, and more generally, the Respondent says the ET erred in failing to properly direct itself to consider the discrete aspects of the disciplinary findings that had been made. Had it done so, it would have held that the investigation that it criticised (and found rendered the dismissal unfair) had not led to the finding of gross misconduct in respect of allegation 8. Fourth, on the question of contribution, the Respondent submitted that, having itself found that the Claimant had committed a separate act of gross misconduct in respect of the false contract such as to justify his summary dismissal, the ET ought properly to have found that he had contributed to his dismissal by 100 per cent. Alternatively, the decision to make only a 10 per cent reduction under this head was perverse. Fifthly, in respect of the ET’s determination that there should be no reduction under Polkey, the Respondent contended that it had similarly erred in law and/or reached a perverse conclusion. The Claimant resists the appeal, essentially relying on the reasoning provided by the ET.
The Relevant Legal Principles
22. The starting point is section 98 ERA, which provides, relevantly, as follows:
“(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 -
…
(b) relates to the conduct of the employee,
…
(4) 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.”
23. It was for the Respondent to discharge the burden of proving the reason for the Claimant’s dismissal and that it was a reason that was capable of being fair for the purposes of section 98(1) and (2). As the ET observed, the reason for the dismissal is to be determined as the set of facts known to the employer or beliefs held by it that caused it to dismiss the employee (per Cairns LJ in Abernethy v Mott, Hay & Anderson [1974] ICR 323 CA).
24. In a conduct dismissal case the ET is assisted by determining the statutory question of fairness having regard to the well-known standards laid down by Arnold J in giving judgment for the EAT in British Home Stores Ltd v Burchell [1980] ICR 303. When applying the Burchell guidance, the ET’s role is to review the employer’s decision, not to put itself in the position of the employer (Davies v Sandwell MBC [2013] IRLR 374 CA), and this is so when considering the investigation and process carried out by the employer as much as the sanction applied (see per Mummery LJ in Sainsbury’s Supermarkets Ltd v Hitt [2003] ICR 111 CA).
25. Specifically, on the reasonableness of an investigation, the ACAS Code provides:
“6. In misconduct cases, where practicable, different people should carry out the investigation and disciplinary hearing.”
26. As the ACAS Code acknowledges, the involvement of separate people for the investigation and disciplinary stages might not always be possible, and it is not necessarily unfair for the same individual to carry out both (Slater v Leicestershire Health Authority [1989] IRLR 16 CA; Sartor v P&O European Ferries (Felixstowe) Ltd [1992] IRLR 271 CA).
27. Where an ET properly carries out its role in assessing the fairness or otherwise of a dismissal, it is not for the EAT to substitute its view in that regard; specifically, I remind myself of the guidance provided by Elias J, as he then was, in ASLEF v Brady [2006] IRLR 576 EAT:
“55. … The EAT must respect the factual findings of the employment tribunal and should not strain to identify an error merely because it is unhappy with any factual conclusions; it should not ‘use a fine tooth comb’ to subject the reasons of the employment tribunal to unrealistically detailed scrutiny so as to find artificial defects; it is not necessary for the tribunal to make findings on all matters of dispute before them nor to recount all the evidence, so that it cannot be assumed that the EAT sees all the evidence; and infelicities or even legal inaccuracies in particular sentences in the decision will not render the decision itself defective if the tribunal has essentially properly directed itself on the relevant law.”
28. As for the question of any reductions in compensation for unfair dismissal, section 122(2) ERA provides, in respect of the basic award, 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.”
29. As for the compensatory award, section 123, relevantly, provides:
“(1) Subject to the provisions of this section … the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.
…
(6) 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.”
30. In making any Polkey reduction (relevant to the assessment to be made under section 123(1), guidance has been laid down by the EAT, Elias J (as he then was) presiding, in the case of Software 2000 Ltd v Andrews and Ors [2007] ICR 825:
“53. The question is not whether the tribunal can predict with confidence all that would have occurred; rather it is whether it can make any assessment with sufficient confidence about what is likely to have happened, using its common sense, experience and sense of justice. It may not be able to complete the jigsaw but may have sufficient pieces for some conclusions to be drawn as to how the picture would have developed. For example, there may be insufficient evidence, or it may be too unreliable, to enable a tribunal to say with any precision whether an employee would, on the balance of probabilities, have been dismissed, and yet sufficient evidence for the tribunal to conclude that on any view there must have been some realistic chance that he would have been. Some assessment must be made of that risk when calculating the compensation even though it will be a difficult and to some extent speculative exercise.
Summary
54. The following principles emerge from these cases. (1) In assessing compensation the task of the tribunal is to assess the loss flowing from the dismissal, using its common sense, experience and sense of justice. In the normal case that requires it to assess for how long the employee would have been employed but for the dismissal. (2) If the employer seeks to contend that the employee would or might have ceased to be employed in any event had fair procedures been followed, or alternatively would not have continued in employment indefinitely, it is for him to adduce any relevant evidence on which he wishes to rely. However, the tribunal must have regard to all the evidence when making that assessment, including any evidence from the employee himself. (He might, for example, have given evidence that he had intended to retire in the near future.) (3) However, there will be circumstances where the nature of the evidence which the employer wishes to adduce, or on which he seeks to rely, is so unreliable that the tribunal may take the view that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction based on that evidence can properly be made. (4) Whether that is the position is a matter of impression and judgment for the tribunal. But in reaching that decision the tribunal must direct itself properly. It must recognise that it should have regard to any material and reliable evidence which might assist it in fixing just compensation, even if there are limits to the extent to which it can confidently predict what might have been; and it must appreciate that a degree of uncertainty is an inevitable feature of the exercise. The mere fact that an element of speculation is involved is not a reason for refusing to have regard to the evidence. (5) An appellate court must be wary about interfering with the tribunal’s assessment that the exercise is too speculative. However, it must interfere if the tribunal has not directed itself properly and has taken too narrow a view of its role. … (7) Having considered the evidence, the tribunal may determine: (a) that if fair procedures had been complied with, the employer has satisfied it - the onus being firmly on the employer - that on the balance of probabilities the dismissal would have occurred when it did in any event: the dismissal is then fair by virtue of section 98A(2); (b) that there was a chance of dismissal but less than 50%, in which case compensation should be reduced accordingly; (c) that employment would have continued but only for a limited fixed period. The evidence demonstrating that may be wholly unrelated to the circumstances relating to the dismissal itself, as in O’Donoghue v Redcar and Cleveland Borough Council [2001] IRLR 615; (d) that employment would have continued indefinitely. However, this last finding should be reached only where the evidence that it might have been terminated earlier is so scant that it can effectively be ignored.”
31. On the question of contributory fault, section 123(6) requires an ET to consider the conduct of the employee. The guidance offered by HHJ Peter Clark in the case of Optikinetics Ltd v Whooley [1999] ICR 984 EAT is helpful in this regard, specifically:
“(1) Before making any finding of contribution the employee must be found guilty of culpable or blameworthy conduct. The inquiry is directed solely to his conduct and not that of the employer or others.
(2) For the purposes of section 123(6) the employee’s conduct must be known to the employer at the time of the dismissal … and have been a cause of the dismissal.
(3) Once blameworthy conduct causing, in whole or in part, the dismissal has been found, the tribunal must reduce the compensatory award by such proportion as it considers just and equitable. …
(4) A finding of contribution under section 122(2) does not require a finding that the conduct is causatively linked to the dismissal. … The wording … grants to the employment tribunal a wide discretion as to whether to make any, and if so what, reduction in the basic award on the grounds of the employer’s conduct.
(5) … it is now clear that different proportionate reductions are permissible in relation to the basic and compensatory awards …
(6) The appellate courts will rarely interfere with the employment tribunal’s assessment of the percentage reduction for contribution …” (Page 989A-E)
32. More generally, in Steen v ASP Packaging Ltd [2014] ICR 56 EAT Langstaff J provided the following guidance when applying sections 122 and 123 ERA:
“11. The application of those sections to any question of compensation arising from a finding of unfair dismissal requires a tribunal to address the following: (1) it must identify the conduct which is said to give rise to possible contributory fault; (2) having identified that it must ask whether that conduct is blameworthy.
12. It should be noted in answering this second question that in unfair dismissal cases the focus of a tribunal on questions of liability is on the employer’s behaviour, centrally its reasons for dismissal. It does not matter if the employer dismissed an employee for something which the employee did not actually do, so long as the employer genuinely thought that he had done so. But the inquiry in respect of contributory fault is a different one. The question is not what the employer did. The focus is on what the employee did. It is not on the employer’s assessment of how wrongful that act was; the answer depends on what the employee actually did or failed to do, which is a matter of fact for the employment tribunal to establish and which, once established, it is for the employment tribunal to evaluate. The tribunal is not constrained in the least when doing so by the employer’s view of wrongfulness of the conduct. It is the tribunal’s view alone which matters.
13. (3) The tribunal must ask for the purposes of section 123(6) if the conduct which it has identified and which it considers blameworthy caused or contributed to the dismissal to any extent. If it did not do so to any extent, there can be no reduction on the footing of section 123(6), no matter how blameworthy in other respects the tribunal might think the conduct to have been. If it did cause or contribute to the dismissal to any extent, then the tribunal moves to the next question, (4).
14. This, question (4), is to what extent the award should be reduced and to what extent it is just and equitable to reduce it. A separate question arises in respect of section 122 where the tribunal has to ask whether it is just and equitable to reduce the amount of the basic award to any extent. It is very likely, but not inevitable, that what a tribunal concludes is a just and equitable basis for the reduction of the compensatory award will also have the same or a similar effect in respect of the basic award, but it does not have to do so.”
33. I again remind myself that the ET will be best placed to make these assessments and the EAT should be slow to interfere (see for example the guidance given in Hollier v Plysu Ltd [1983] IRLR 260 CA at page 263 and Yate Foundry Ltd v Walters [1984] ICR 445 EAT). More generally, I further bear in mind that where a perversity appeal is pursued there is a high threshold; parties seeking to make good that contention on appeal must be able to show that the ET’s decision was almost certainly wrong (see Yeboah v Crofton [2002] IRLR 634 CA).
Submissions
The Respondent’s Case
34. The Respondent noted that, aside from the eighth charge (concerning the fraudulent contract), the ET had itself also found charge 4 proven (this alleged that the Claimant had altered part of the Trustees’ report) and had allowed that the Respondent had reasonable grounds for finding this and two other charges (charges 1 and 3) amounted to gross misconduct; there was no basis for thinking the ET had concluded that the initial charges levied against the Claimant had not themselves been made out. As for charge 8 and the Claimant’s suggestion that the underlying facts would not have arisen but for the Respondent’s unwarranted pursuit of the other charges, that (1) ignored the fact that the ET had found at least three of the other charges justified (see above) and (2) confused the chronology: the ET had found that the without prejudice discussions had started before the formulation of any of the disciplinary charges that fed into the dismissal process, and the Claimant’s misconduct had arisen as part of those discussions and before the formulation of the January charges against him.
35. Turning to the first three grounds of appeal, the ET had conflated its consideration of the charges, which fed into (and undermined) its approach to Mr Robinson’s role as investigator and decision maker. There was no specific finding by the ET as to what had been in Mr Robinson’s mind as the principal reason for dismissal and no assessment of the weight given to the different charges, still less was there a clear finding as to the extent of any pre-determination. Given that neither Mr Robinson nor any of the other Trustees had any involvement in investigating charge 8, it had been incumbent on the ET to make clear findings as to what weight was given to that charge. If the ET had concluded there was sufficient to justify it determining that this was a case where Mr Robinson’s closed mind had rendered the decision unfair, there was still a problem in respect of its approach to the appeal.
36. Turning to the approach to Polkey and contributory fault (and bearing in mind the guidance given in Software 2000 and Hill v Governing Body of Great Tey Primary School [2013] ICR 691 EAT at paragraph 24), it was clear that for Polkey purposes the ET must look at matters from the perspective of the actual employer, not some hypothetical fair employer. If the error found by the ET had been rectified in this case, it was inevitable the charges would still have been found proven, certainly in respect of charge 8 (and, on the ET’s findings, apparently also of charges 1, 3 and 4); if the unfairness had been rectified, it was plain that an open minded investigation would also have concluded that the Claimant was guilty of gross misconduct. The ET was wrong to conclude it could not apply Polkey because the Board did not have a neutral mind; that resulted in the bizarre conclusion that the Respondent could not dismiss because of its justified belief in the Claimant’s proven gross misconduct.
37. Turning, specifically, to contributory fault and noting the guidance given in Steen, the ET appeared to have concluded that the level of contribution was not sufficient to give rise to a greater than 10 per cent reduction as the Board was:
“110. … set upon a course to find a reason for the claimant’s dismissal by the time the contract was produced by the claimant. …”
38. That seemed to be referring to the charges other than charge 8, whereas on charge 8 the ET had itself found that in the criteria set out in Steen points 1, 2 and 3 had been made out. Paragraph 110 saw the ET confusing contribution with what was just and equitable. It had (see the last sentence of paragraph 109) already found that the Claimant had, by his culpable conduct, contributed to his dismissal; the ET was therefore wrong to revisit contribution when making what should have been a just and equitable assessment. If asking what the justice and equity would be in respect of any award for the most senior employee having falsified a contractual document for personal financial gain, it must be wrong for the ET to have made anything other than a 100 per cent reduction; the EAT should so find and substitute its view for that of the ET. This was a case where such a course was permissible as the only proper outcome (see Jafri v Lincoln College [2014] IRLR 544 CA).
The Claimant’s Case
39. On behalf of the Claimant, it was observed in general terms that the nature of the ET’s decisions under challenge were exercises of discretion and judgment (see per Smith J in Governing Body of St Albans Girls’ School v Neary [2010] IRLR 124 CA, paragraph 49): the EAT must respect the factual findings of the ET and should not strain to find artificial defects in the reasoning (see per Elias J in ASLEF). That was true of the ET’s assessment of fairness but also of its conclusion on contributory fault (see Hollier and Software 2000).
40. Turning to paragraph 104 of the ET’s Judgment, it was necessary to stand back and bear in mind the ET’s role as first-instance Tribunal of fact. Allegation 8 was a key issue; the ET was obviously was aware of its importance and should not be assumed to have lost sight of this when assessing fairness. Specifically, it was apparent that the ET was aware of the difference between allegations 1 to 7 and allegation 8; thus it had set out (paragraph 44) that the investigation into charge 8 was carried out by others external to the Board.
41. On the Respondent’s objection that the ET had conflated the seven allegations investigated by Mr Robinson with the eighth, which were not, there was no basis for thinking it had. It was accepted that Mr Robinson had not investigated the eighth allegation (false contract), although he was involved in early Board discussions about it. The ET had acknowledged that fact and should not be taken to have lost sight of the point when determining fairness. Moreover, at paragraph 104 the ET had expressly noted that Mr Robinson had carried out the investigation in large part; it did not lose sight of the fact he did not carry out the entire investigation and further kept in mind the distinction between allegations 1 to 7 and allegation 8 in considering contributory fault and Polkey. The real point of the ET’s finding was that the direction of travel had been determined prior to the investigation of the eighth allegation. That was the answer to the first grounds of appeal. The contract was only provided to the Board during the discussions taking place after the first charge letter: although the Claimant had provided it to Mrs Wright prior to that, it was not actually passed onto the Board and relied on by the Claimant until after that first letter. The ET’s concern was plainly that Mr Robinson and the other members of the Board had by then formed a concluded view that the Claimant’s employment was to be terminated. It had therefore found it fell outside the range of reasonable responses for the decision to be made by someone who had so pre-judged the case.
42. As for the decision not to make any Polkey reduction, the Claimant relied on Elias J’s observations in Software 2000 at sub-paragraphs (3) and (4) and noted that the EAT should be loath to interfere with such an assessment made on the part of the first-instance Tribunal. The Claimant’s case below had been put on the basis that if there had been no pre-judgement he would have returned to work in or about late December/early January and thus would never have provided the Respondent with any false contract; the factual premise for allegation 8 would never have arisen: had the Respondent acted fairly, the reason that might have justified the Claimant’s dismissal in any event would have disappeared. The ET’s reasoning at paragraph 111 made apparent that it saw this as one of those cases envisaged at sub-paragraphs (3) and (4) of Software 2000. It considered the Respondent’s evidence as to its ability to treat the Claimant fairly so unreliable that it could not make any deduction under Polkey.
43. The most that could be said was any other possible permutations must be for the ET and the matter would need to be remitted, although it was the Claimant’s primary submission that the ET had reached a permissible view; in so doing, it had not sought to implant some notional hypothetical employer but had taken the perspective of this particular employer.
44. On contribution, the first sentence of paragraph 110 should be taken to refer to the finding on charge 8. That made sense if seen in the context of the preceding and subsequent paragraphs. It was accepted that the ET had found that the Claimant’s conduct in relation to charge 8 met the first three Steen questions. On the fourth question - the just and equitable reduction - that is what the ET was doing at paragraph 110, albeit it had not expressly used that terminology. It could be taken to have found that allegation 8 only contributed to the decision to dismiss at a fairly minimal level and therefore it would only be just and equitable to make a reduction of 10 per cent.
Discussion and Conclusions
45. On the Claimant’s complaint of unfair dismissal under section 98 ERA, the ET had first to determine the reason for the dismissal; as it correctly observed, that was the set of facts known to the Respondent or beliefs held by it that caused it to dismiss the Claimant. Here, the relevant decision maker was Mr Robinson. The ET found that the set of facts or beliefs operative on Mr Robinson’s mind were properly to be characterised as a reason relating to the Claimant’s conduct, a reason that would be capable of being fair for section 98 purposes. Not only was the ET satisfied that the Claimant’s conduct was the operative reason for Mr Robinson’s decision to dismiss, it further allowed that he had reasonable grounds for his view of the Claimant’s conduct in respect of charges 1, 3, 4 and 8.
46. The first difficulty with that finding, however, is that it does not go any further. There is no more detailed assessment of the weight given by Mr Robinson to each of those charges at that stage, as to which (if any) was the principal reason playing on his mind. Did he conclude, for example, that allegation 8 was an act of gross misconduct that by itself would warrant the Claimant’s summary dismissal, or did he see it as one of a number of acts that, taken together, led him to that decision? If the latter, this could present difficulties for the Respondent’s challenge: on that basis, the issues would have been interwoven in Mr Robinson’s mind, and allegation 8 could not be disentangled to avoid the difficulties the ET apparently found arising from his having been both investigator and judge in the disciplinary process.
47. Some clue as to what the ET considered had most weighed with Mr Robinson might be found subsequently when it purported to address the question of contribution. The ET then opined (see paragraph 110) that:
“110. … Even if the eighth charge was not present we consider that the claimant would have been dismissed. We therefore assess the level of contribution at the low level of 10% because the respondent had set upon a course to dismiss the claimant.”
I shall return to that reasoning in more detail below.
48. As for the Respondent’s challenge to the ET’s finding on liability, however, more specifically, it contends the ET failed to identify that any taint in Mr Robinson’s decision making process could not have arisen because he had already investigated the false contract allegation when (as a matter of fact) he had not done so. I can see why a cursory reading of paragraph 104 might lead to that conclusion, but I am not persuaded it is the correct understanding of what the ET was saying. The ET did not say that Mr Robinson had carried out all investigations, but that, in large part, he had investigated the matters under consideration; that was correct: on the ET’s findings, he had investigated the matters that formed allegations 1 to 7. In that regard, I agree with Mr Line, I should not assume the ET lost sight of that which it had found: that allegation 8 had been investigated by others and not by Mr Robinson or by other members of the Respondent’s Board.
49. Where, however, I consider the Respondent raises a point of greater concern is as to the ET’s approach to the question of fairness more generally. It is just unclear to me whether the ET’s finding of unfairness through pre-judgement related to the appointment of Mr Robinson as the decision maker (suggested by paragraph 105, where the ET seems to allow that another Trustee or an external consultant might instead have been utilised), or to the entirety of the investigation (suggested at paragraphs 106 and 107). And this lack of clarity is not immaterial to the question of liability: it would impact upon the conclusion as to why any unfairness could not have been cured at the appeal stage - an appeal heard by Mr Hampson, the member of the Board with the least involvement in the background matters.
50. If this were simply an appeal against the Liability Judgment, I would be minded to remit the matter back to the ET for reconsideration, which might have better allowed it to clarify its reasoning on these points. The appeal also raises, however, issues with the ET’s approach to the possible deductions that might be made to any award. I therefore turn now to those further points, considering first the question of any Polkey reduction.
51. In considering this question, it is useful to remind myself of the basis of any reduction under this head. This arises from the broad discretion given to ETs to make awards that reflect the justice and equity of the case, specifically, in respect of a compensatory award, having regard to the loss sustained by the Claimant in consequence of the dismissal insofar as that loss is attributable to action taken by the employer. In this regard, I am asked by Mr Line to assume that the ET effectively accepted the Claimant’s case below: it was really finding that, if the Respondent’s unfairness was removed, the factual circumstances leading to allegation 8 would never have arisen and thus there could be no basis for any Polkey reduction. Specifically, he points to the timing of the Claimant’s reliance on the false contract, which post-dated the first of the seven charges, even if the contract itself had been falsified prior to that event.
52. With respect to Mr Line, I do not feel able to read the ET’s Polkey conclusion in the way he submits; that is not how it explains its reasoning. The ET was plainly concerned that the Respondent’s Board had pre-judged the situation with the Claimant, but it did not find he was thereby forced to commit an act of gross misconduct by falsifying his contract of employment; something that he did prior to being sent the first charge letter. Further, the ET, itself, concluded that the Claimant gave an untruthful account of his manipulation of the contract and found that his actions contributed to his dismissal; specifically, it concluded that he altered the content of the contract to use it to his advantage in the negotiations with the Respondent, negotiations that were taking place prior to the first charge letter.
53. Otherwise, Mr Line urges that the ET must be taken to have adopted the view allowed for in Software 2000 and to have concluded that the Respondent’s evidence was so uncertain as to mean no attempt could properly be made to reconstruct what might have happened.
54. Again, however, I do not consider that is a reading allowed by the ET’s Judgment. The unfairness that the ET had found related to the closed mind of the decision-maker. At paragraph 105 it observed that the Respondent could have utilised another Trustee, who had not been so involved in investigating matters, or an external consultant. Even if I read the subsequent paragraphs as evidencing a finding that the unfairness fed back further into the earlier investigation into charges 1 to 7, that could not be so in relation to the eighth allegation if the Respondent separated that out and simply considered it in isolation. So, if all other allegations were ignored (although I have some sympathy for Mr Reade QC’s point that, given the ET’s finding in respect of allegation 4, there is no particular reason why it should) and if an entirely impartial decision maker were presented with the fact that the Claimant had sought to rely on a falsified document, it would simply be perverse to say that the employer could not then have fairly dismissed. Indeed, it seems to me unnecessary to speculate: the ET itself - a fully independent body - found the Claimant could be summarily dismissed in those circumstances. This was not a case where the ET had concluded that the position was riddled with uncertainty, it was quite clear: the Claimant had in fact been guilty of gross misconduct in relation to allegation 8. That justified his summary dismissal as a matter of contract, a view reached with no hesitation by a decision making body (the ET) that had the entirely neutral state of mind that fairness would have required.
55. On the ET’s findings, I am therefore satisfied that it erred in law on its approach to Polkey and reached a conclusion that can properly be described as perverse; the only possible conclusion was that the Claimant’s employment would have been terminated in any event.
56. In case I am wrong about that, I turn to the question of contributory fault. Given the ET’s findings on wrongful dismissal, it certainly seems wrong to conclude that there should have only been a 10 per cent contribution, all the more so given that the ET did not make a clear statement of its finding as to how important allegation 8 was for Mr Robinson (see above): he might have had a closed mind, but the ET still needed to ask whether allegation 8 played any part in his thinking and, if so, what part. Mr Line says I can be satisfied that the ET properly considered this issue and assessed the contribution of allegation 8 to the Respondent’s decision making as low, 10 per cent. The real difficulty is, however, as identified by Mr Reade QC. In making that assessment, the ET was confusing the different aspects of the test it had to apply. The ET had found that the Claimant had committed the act of misconduct in issue and had found that to be blameworthy. It had further found that the conduct in question had contributed to his dismissal. It was then required to ask what the just and equitable reduction would be to the compensatory and basic awards. In holding that if the eighth charge was not present the Claimant would still have been dismissed, the ET was going about its task in the wrong way. Having found that the Claimant’s conduct in falsifying the contract had contributed to his dismissal, it still needed to ask what the just and equitable reduction would be; a reduction focused not on the conduct of the Respondent - the ET had already done that in finding the dismissal to have been unfair - but on the conduct of the Claimant. What would be the just and equitable sum to be deducted in that respect?
57. Approaching the task in this way, it would simply be perverse to conclude that the reduction should only be 10 per cent. This was the most senior employee working for a charity, reporting directly to a Board of volunteer Trustees, who had presented to them a contract that he had falsified in material respects with a view to personal gain. I very much respect the right of ETs to make the assessment of contribution in unfair dismissal cases, but it is simply perverse to conclude that anything other than a substantial reduction would be just and equitable in these circumstances. For all those reasons, I therefore allow this appeal.
Disposal
58. Having given my judgment, I permitted the parties to address me further on the question of disposal. For the Respondent, Mr Reade QC says that the appropriate course would be to substitute a finding that there should be no compensatory or basic award given my judgment under Polkey and on the question of just and equitable contribution. For the Claimant, Mr Line says there remains some doubt as to the level of any reduction either under Polkey or in respect of contribution, such that this matter should be remitted to the ET.
59. It is right to observe that, whilst I have allowed the appeal on liability, given the particular view that I have formed I would not be in a position to substitute my view in that regard. On the question of any reduction to the Claimant’s awards, however, I have given a clear judgment that Polkey would have applied and that - given the ET’s findings of fact - it would be perverse to conclude other than that the Claimant would have been dismissed. A finding of perversity in that respect means that there can be only one outcome, which is that there would have been a dismissal. It has not been suggested to me that this is a case where making good the unfairness would have required a matter of a few more weeks added to the Claimant’s employment - that has been no part of the Claimant’s case before me - and, that being so, I am unable to see that there is anything other than one outcome possible, which is that there will be no award under the heading of Polkey.
60. The position is not quite the same in relation to a reduction for contributory fault. Whilst I have found the reduction at 10 per cent to have been perverse, I have made no specific finding as to the higher level, but, given the view I have formed on Polkey, I cannot see that makes any difference. I therefore allow the appeal and substitute my conclusion for that of the ET: there should be a nil award given the application of Polkey.