Appeal No. UKEAT/0483/04/LA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 15 October 2004

Before
HIS HONOUR JUDGE McMULLEN QC
MR M CLANCY
MRS M MCARTHUR

MR M SEWARDS	APPELLANT

AUTOGLASS LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR SIMON GORTON
(of Counsel)
Instructed by:
Messrs Edwards Abrams & Doherty Solicitors
Third Floor
Minster House
Paradise Street
Liverpool
L1 3EU	
For the Respondent	MISS SALLY COWEN
(of Counsel)
Instructed by:
Autoglass Ltd
1 Priory Business Park
Cardington
Bedford
MK44 3US

SUMMARY

Unfair Dismissal

Employment Tribunal majority (Chairman dissenting) erred in holding the dismissal of A was neither procedurally nor substantively unfair.  Minority upheld.  Remitted for remedy.

HIS HONOUR JUDGE McMULLEN QC

1.	This case is about procedural and substantive unfairness in the handling of a dismissal.  The judgment represents the views of all three members who pre-read the relevant papers.  We will refer to the parties as Applicant and Respondent.

Introduction

2.	It is an appeal by the Applicant in those proceedings against a majority decision of an Employment Tribunal sitting at Liverpool, the Regional Chairman Mr B Doyle dissenting, with Mr D Bettles and Mr F Lindsay.  It was registered on 24 April 2004 with Extended Reasons following a previous decision.

3.	The Applicant and the Respondent were represented there and here by Mr Simon Gorton and Miss Sally Cowen respectively of Counsel.  This case had a complicated and unfortunate administrative history at the Employment Tribunal which was the subject of an interim judgment we gave this morning and which is relevant in only one respect which we will explain.

The issues

4.	The essential issues as defined by the Employment Tribunal were as follows:

“2.	By his originating application the applicant complains of unfair dismissal. The details of his complaint assert that he attended a disciplinary hearing on 16 April 2003, following which he was dismissed for alleged gross misconduct. 
3.	By its notice of appearance the respondent agrees that the applicant was dismissed for gross misconduct at a disciplinary hearing on 16 April 2003. The reason for the dismissal is said to be the fraudulent recording of glass repair claims by the applicant marking repair jobs on documentation as having been performed when no such repairs had taken place. This resulted in the respondent unwittingly charging for work that had not been performed, posing in its view a grave threat to its reputation and business. An appeal hearing on 28 May 2003 is said to have been adjourned and not resumed because the applicant had not been in further contact. The respondent denies that the applicant was unfairly dismissed. 
4.	As determined at the commencement of the hearing the issues for the Tribunal to decide are as follows: (1) was the disciplinary investigation a reasonable one? (2) did the respondent withhold information from the applicant during the disciplinary process? (3) were there such flaws in the disciplinary procedure that the dismissal of the applicant was both substantively and procedurally unfair? (4) did the appeal cure such flaws or did it compound the unfairness of the dismissal?”

The Decision

5.	The majority decided that the Applicant was not unfairly dismissed. The Applicant appeals.  Directions sending this appeal to a full hearing were given in Chambers by Beatson J and later by me.

The legislation

6.	The relevant provisions of the legislation and of the applicable case law are set out and summarised without dissent from Counsel and gratefully adopted by us:

“32	The Tribunal directed itself in accordance with section 98(1)-(2) and (4) of the Employment Rights Act 1996, the ACAS Code of Practice and the well-established principles to be found in cases such as British Home Stores Ltd v Burchell [1978] IRLR 379 EAT; Iceland Frozen Foods Ltd v Jones [1982] IRLR 439 EAT; HSBC Bank plc (formerly Midland Bank plc) v Madden; Foley v Post Office [2000] IRLR827 CA; and Sainsbury's Supermarkets Ltd v Hitt [2003] IRLR 23 CA. The Tribunal is not re-running the disciplinary investigation or the disciplinary procedure. It is not for the Tribunal to step into management's shoes or to substitute its judgement for that of the respondent. The question for the Tribunal is whether at the relevant time the respondent entertained a reasonable suspicion amounting to a belief that the applicant had committed gross misconduct? Did the respondent in fact believe it; were there reasonable grounds to support that belief; and was that based upon a reasonable investigation? The test is an objective one of whether the actions of the respondent (including the investigation, the disciplinary hearing and the appeal) in deciding to dismiss the applicant by reason of gross misconduct fell within the band of reasonable responses? Defects in the original disciplinary hearing may be remedied by a properly conducted appeal in the nature of a full re-hearing of the case (rather than a mere review of the decision).”

The facts

7.	The Employment Tribunal began its findings by holding that there was little by way of conflict in the evidence to be resolved.  It went on:

“7.	The respondent is an automotive glazing and repair company with approximately 130 branches throughout the UK. It has a written disciplinary procedure.
8.	The applicant was employed by the respondent, initially as a fitter, then as a branch manager and latterly as a fitter, from April 1986 until 16 April 2003.  In 1998 he was given a written warning concerning his performance as a branch manager and that warning expired after 12 months in accordance with the relevant paragraph of the disciplinary procedure. Shortly afterwards he stepped down as a manager and resumed the role of fitter. At the time which is relevant to the present proceedings he was employed at the respondent's Liverpool branch.”

8.	Following an investigation, it appeared to the relevant manager Mr Aitchison that work was being charged for which was not being carried out.  On 16 April 2003 a disciplinary hearing was conducted.  It is important note what the Tribunal found:

“16.	On 16 April 2003 Mr Aitchison held a disciplinary hearing in respect of the applicant. It is not clear how this disciplinary hearing was arranged. There is no letter of invitation to the disciplinary hearing nor any written indication of the specific charges the applicant was to face. No investigatory notes, witness statements or other documentary evidence were supplied. The hearing commenced at 11.02a.m. The applicant was present with Mr Terry Mellor of the GMB trade union who took notes. Mr John Okninski (HR Adviser) was present on behalf of the respondent. A disciplinary interview record was made by Mr Okninski. Mr Aitchinson confirmed that the applicant understood the purpose of the hearing. He then set out the background to the disciplinary hearing and the results of the disciplinary investigation. Mr Aitchison asked the applicant questions about particular jobs and showed him the relevant paperwork. The applicant's position was that if he had recorded that he had carried out repairs then he had done so. There was a dispute as to whether it was always possible to detect that a repair had been done, but otherwise the applicant was not able to explain Mr Aitchison's findings. The applicant and Mr Mellor asked to see the information which Mr Aitchison had. He refused on the basis that it contained confidential Information about customers (names, addresses, telephone numbers, insurance details, credit card numbers, etc). There was an adjournment at 11.20 a.m. of one hour at the applicant's request. The applicant and Mr Mellor looked at the documents, but were not permitted to take copies. The hearing resumed at 12.20 p.m. The applicant stated that it was a matter of opinion as to whether the repairs had been carried out or not. Mr Aitchison disagreed. Mr Mellor said that it was not possible to comment further without seeing the screens on the vehicles. Mr Aitchison then announced his decision. He had looked at the applicant's personnel file He considered the applicant's length of service and previous disciplinary record. He informed the applicant that he had no choice but to dismiss him on grounds of gross misconduct in accordance with the definition of gross misconduct in the disciplinary procedure. He informed the applicant of his right of appeal. The meeting concluded at 12.30 p.m.”

9.	The outcome was that the Applicant was dissatisfied and after a number of unfortunate but blameless delays an appeal hearing was conducted on 3 July 2003 by Mr Hardie.  The Tribunal found that his approach was as follows:

“22.	He did not take evidence from Mr Aitchinson, but had spoken with him previously and had inspected the documents. He considered that he was reviewing the information provided by Mr Aitchinson and then considering anything that the applicant wished to say.”

10.	The Applicant had made his case himself and through Mr Mellor to Mr Hardie.  Mr Hardie considered that the issue on appeal was whether the Applicant had knowingly charged customers when all the work had not been carried out.  At the end of the hearing the following transpired:

“23.	… the applicant indicated that he was happy that he had been able to get his points across but he would have liked more time to review the documents. Mr Hardie offered to adjourn the hearing and leave the appeal open to be reconvened at a time of the applicant’s choosing. Mr Mellor invited Mr Hardie to give the applicant the benefit of the doubt in view of his length of service, record and positive customer feedback. He stated that they would revert to Mr Hardie in a couple of days if they wished the hearing to be reconvened.”

11.	Following that a number of things happened.  There were visits by Mr Hardie to discuss further the matters with Mr Aitchinson.  There were visits to customers and there were investigations in respect of the technical department.  On the 9 July 2003 shortly before the deadline, the Applicant submitted his originating application and the Respondent entered a Notice of Appearance.  No reply had been received from the Applicant’s side to a letter of 16 July 2003 asking him whether he would wish any further meeting to be arranged and so Mr Hardie following the further investigations described above wrote as follows:

“28.	He concluded that there was no substance in the applicant’s claim that he had been singled out or that the original investigation was unfair. Mr Hardie had seen first-hand evidence of a repair being charged for which had not been carried out. On 21 August 2003 Mr Hardie wrote to the applicant and upheld the decision to dismiss.”

12.	The Tribunal was unanimous in its conclusion that the reason for dismissal was that the Respondent genuinely believed that the Applicant had fraudulently recorded glass repair claims. That passed the test of section 98 (1) and (2).  The Tribunal divided thereafter. In eight lines the majority reasoning was expressed and in a different eight lines that of the minority.  It is important that we set out both.  The majority is as follows:

“33.	The majority adopted the reasoning of the respondent’s counsel in her closing submission. In the essence, in the majority view any procedural defects that arose during the investigation and the disciplinary hearing were cured by the appeal hearing and by the applicant’s failure to prosecute the appeal. The majority found the evidence given by the respondent’s witnesses compelling and credible. Whilst acknowledge procedural laxities, the majority considered these were not sufficiently important to make the decision to dismiss unfair. The decision to dismiss fell within the band of reasonable responses.”

As for the minority:

“34.	The minority adopted the reasoning of the applicant’s counsel in his closing submission. In essence, in the minority view the investigation and disciplinary hearing were procedurally and substantively flawed, such that any defects in the procedure were incapable of being cured by the appeal hearing which, in any event, was a review and not a re-hearing. The conduct of the investigation and the disciplinary and appeal hearings denied the applicant any effective opportunity to defend himself against the charge of gross misconduct. The decision to dismiss did not fall within the brand of reasonable responses.”

13.	It will be clear that each side in that division cleaved to submissions made by the two Counsel.  There is nothing wrong with that approach when cases are argued as fully as this and a cross reference can be made to the submissions which were recorded by the Tribunal in extensive form at paragraphs 30 and 31.

The Applicant’s case

14.	The Applicant submitted that the Tribunal majority in the passage that we have cited from paragraph 33 made three errors.  First, it was unfair and unlawful for it to find that the Applicant should be criticised for failing to prosecute an appeal, since that was wrong both in principle and as a matter of substance when looking at the facts.  In any event the Respondent itself had not argued that point.  Secondly, it was contended that the appeal before Mr Hardie was not capable of curing such defects as there were at the dismissal meeting stage.  Thirdly, the finding by the majority that there were procedural laxities was circular and was wrong in any event.

15.	In reply, it was contended that the whole of the process from the dismissal to the ending of the appeal should be considered when considering the fairness of the dismissal and there was no automatic cut off at the end of the appeal hearing on 3 July 2003 or indeed on the presentation of the originating application.

The Respondent’s case

16.	On behalf of the Respondent it is contended that the language of the Tribunal as to prosecuting appeals may not have been that which Counsel herself had used but nevertheless indicated that the Tribunal was concerned that the Applicant was not doing all he could to resolve the dispute between the parties.  It was not accepted that there were defects in the procedure but, if there were, this was a proper re-hearing not a review and so the re-hearing could itself cure those defects identified hitherto.  Labels are not important, and what in substance occurred on 3 July was a re-hearing. The Applicant was fully aware of the charge which was being made against him if not put precisely in those terms.

17.	It is accepted that the majority in the passage which we have cited expressed itself in a muddled way but that that was because the Decision was drafted initially by the Chairman. Although this case is short of reasons it passes the test to be, in the deathless phrase of Sedley LJ, Meek-compliant.  Both parties addressed us on remedy accepting that there would be no point, if we were in favour of the Applicant, in sending this matter back on remission.

The legal principles

18.	The legal principles to be applied in such a case apart from those which we have cited from the Tribunal reasons are derived from the following authorities:

1.	It is a basic proposition in internal proceedings that a charge against an employee facing dismissal should be precisely framed and the evidence should be confined to the particulars given in the charge, see Strouthos v London Underground Ltd [2004] IRLR 636 CA.

2.	A procedural defect occurring prior to dismissal may be cured if there is a proper rehearing, see Whitbread & Co v Mills [1988] ICR 776 and Byrne v BOC Limited [1992] IRLR 505.

3.	There can be no criticism of an Applicant for not pursuing an appeal or appealing it to its logical conclusion, see Chrystie v Rolls Royce (1971) Ltd [1976] IRLR 336 and William Muir v Lamb[1985] IRLR 95.

4.	A Tribunal must give sufficient reasons for each of its findings see Tran v Greenwich Vietnam Community [2002] ICR 1101

Conclusions

19.	We have decided that we will not accept the arguments of the Respondent and have decided that the appeal should be allowed.  We uphold the submissions of the Applicant which in turn uphold the judgment of the minority, the Chairman Mr Doyle.  The approach we take is as follows, adopting the sequence in which submissions were helpfully made to us by Counsel.  The Tribunal was wrong in law to criticise the Applicant both in substance and in form for failing as it put it to prosecute the appeal.  The Applicant did not acquiesce in his own unfair dismissal.  The matter was left at the end of the hearing on 3 July that if there were anything else that the Applicant wanted to say he could do so within two days.  In fact his response six days later was to issue the originating application.

20.	Although described as an adjournment, the Respondent regarded the appeal as ongoing.  We might take a different view if the Applicant had been invited back on a specific day to continue with the proceedings and had eschewed doing so.  Similarly, had the Respondent written to him at any time following 3 July reporting what had been found by Mr Hardie during his subsequent investigations and the Applicant had refused to attend.  However, we accept the proposition that everything which occurs until the final decision closing the appeal is relevant in determining fairness.  There is no artificial cut-off, for example on the presentation of an originating application. It may well be that an originating application prompts a Respondent to take action to provide rights or a continuation of rights to an employee.

21.	In this case, the investigation seemed to continue. Matters which confirm Mr Hardie’s view against the Applicant took place and the Applicant had no opportunity to combat them.  We have no doubt that if Mr Hardie had called the Applicant in to present him with more material and further opportunity to deal with it, that would be relevant to a decision on fairness. Those steps were not taken.  We hold that the majority in criticising the Applicant for failing to prosecute his appeal erred in law for the reasons given in Chrystie and Muir above.  In any event, there is force in Mr Gorton’s point that the Applicant did not in fact refuse to prosecute his case.  He is not at fault in our judgment for the way in which matters were left on 3 July and so both as a matter of substance and form we consider that the majority fell into error making that criticism of him. We are fortified in that view by the acceptance by Miss Cowen that it was not her case that the Applicant had failed to prosecute his appeal.  

22.	We turn then to the curative effect of such an appeal.  The law on this is undisputed by Counsel.  The first issue is to determine the nature of the appeal.  In our judgment, the Tribunal meant what it said when it recorded the approach of Mr Hardie which we have cited above.  If, as Miss Cowen submits, the Tribunal wished to make clear that it had found as a matter of fact that Mr Hardie approached the matter first as a review but in fact conducted a re-hearing it would have said so immediately following the passage which we have cited from paragraph 22.

23.	This was as he said a review; this is shorthand for something less than a full re-hearing.  At that hearing, submissions, as it were, came from him and Mr Mellor but there was plainly more investigation to be had.  This was we hold to be a review.  Defects occurring at the first hearing could not be cured, see Whitbread (above).  In any event, the majority failed to deal with what deficiencies there were which would be capable of being cured.  The passage which we have cited from the unanimous reasons at paragraph 16 constitutes not only a comprehensive criticism of the way in which this employer went about a disciplinary process but also a denial of the rights which it had set out in its own written disciplinary procedure.  Therefore both on its own terms and against the standard of a reasonable employer there were very significant procedural shortcomings in the way in which the Applicant was treated prior to his dismissal.
24.	The Tribunal majority does not describe those defects.  It is possible to cross refer to them by reference to the submissions of Mr Gorton which failed to impress the majority and these include not only the matters cited at paragraph 16 but also other procedural and substantive criticisms made by him, as recorded by the Tribunal.  In short, the decision to dismiss on 16 April fell below the standard of a reasonable employer.  The third criticism made by Mr Gorton we also accept although this was described by him as very much a tail-ender.  It is this: the Tribunal appears to accept what it describes as procedural laxities but these were not sufficiently important to make the Decision to dismiss unfair.

25.	In our judgment, once those procedural laxities have been traced as we have done it required more than a single line to dispose of them.  The Tribunal majority failed to explain how it was fair, notwithstanding these procedural laxities which we consider are both procedural and substantive see Constantine v McGregor Cory Ltd [2000] ICR 938 EAT  It behoved to show in cogent reasoning why the decision was nevertheless fair.  It failed to do so; we accept that its approach was circular.  For those three reasons therefore, the Decision of the majority cannot stand.  The minority reasoning is correct.  In our judgment the Chairman was correct to identify not only a procedural but also a substantive flaw going to the heart of the Decision, no doubt a reference to Constantine v McGregor.  The Chairman was in our judgment correct to have diagnosed the event of the 3 July as a review, having the inevitable consequence that it could not cure those defects the unanimous Tribunal had diagnosed.

26.	We would very much like to thank both Counsel for their arguments today.  We canvassed disposal.  We have been asked to substitute our judgment for that of the Employment Tribunal.  We have acceded to that submission since it is the position of both of the parties that they see no advantage in going back for a re-hearing of this material and the Tribunal itself told us that the facts were substantially not in dispute.  We have sufficient material from the unanimous findings of fact for us to apply the standard of a reasonable employer in circumstances such as this and we hold that the Applicant was unfairly dismissed.  

27.	We have given directions for the onward progress of this rather old case in order to focus parties’ minds on the essential issue of a remedy before the same Tribunal. The appeal is allowed.