Appeal No. UKEAT/0087/07/LA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 26 June 2007
	Judgment delivered on 2 July 2007

Before
THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)
MR T HAYWOOD
MR P R A JACQUES CBE

SOUTH KENT COLLEGE	APPELLANT

MR J HALL	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	Mr E Nuttman
Solicitor
Messrs Ford & Warren
Solicitors
Westgate Point
Westgate
LEEDS
West Yorkshire
LS1 2AX	
For the Respondent	In person.	

SUMMARY

PRACTICE AND PROCEDRUE

2002 Act and Pre-Action Requirements

The employers contended that the Tribunal should not hear a case of unfair dismissal because the employee had failed to comply with the statutory grievance procedure.  The Tribunal rejected the argument, heard the case and made a finding of unfair dismissal. The Tribunal held that the employer had not raised the issue within the meaning of s32(6) of the Employment Act 2002 simply by stating in their response that no written grievance had been raised. Further, and in any event, the procedure was inapplicable because the grievance fell within reg6(5) of the Employment Act 2002 (Dispute Resolution) Regulations 2004.  The EAT reluctantly held that the Tribunal had erred in reaching both conclusions and that they ought not to have heard the case.

THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)

1.	This case raises yet another issue concerning the operation of the statutory grievance procedures.  The appellant contends that had the Employment Tribunal properly analysed and applied the law with respect to these procedures, they would have had to decline to hear Mr Hall’s case. We will refer to him as the claimant, as he was below.  He appeared in person before us, and the College was represented by Mr Nuttman, who also appeared below.

The law.
2.	The Employment Act 2002 establishes certain statutory dispute resolution procedures. The provisions in the Act are supplemented by regulations, the Employment Act (Dispute Resolution) Regulations 2004. 

3.	 In schedule 2 to the Act there is a dismissal and disciplinary procedure for dealing with cases where the employer is contemplating dismissing or taking relevant disciplinary action against the employer.  Relevant disciplinary action is defined as “action short of dismissal which the employer asserts to be based wholly or mainly on the employee’s conduct or capability, other than suspension on full pay or the issue of warnings (whether oral or written.)”(reg.2)

4.	Dismissal for the purpose of these provisions is defined by reference to s95(1)(a) and (b) of the Employment Rights Act 1996:  see reg2. This embraces termination by the employer and the automatic termination of limited term contracts.  Importantly, it does not include constructive dismissal i.e. the situation where the employee resigns in response to a repudiatory breach by the employer.

5.	Failure by the employer to comply with a statutory dismissal procedure will render the dismissal automatically unfair. 

6.	The Act also prescribes a grievance procedure which must be used in certain circumstances.  Where the employee has a grievance he must raise that with his employer in accordance with procedures set down in schedule 2 to the Act. There are two distinct procedures which are applicable in different situations, the standard and the modified procedure, although in practice the former is almost always the relevant procedure.

7.	For certain tribunal claims identified in schedule 4 to the Act (which included unfair dismissal), if the employee fails to raise a grievance through the relevant procedure with respect to the claim, s32(2) provides that he should not present a complaint to a tribunal raising that claim.  Moreover, even where he has raised a grievance, s32(3) provides that he must leave 28 days from the date of lodging the grievance before presenting a claim. The purpose of this provision is to enable the procedures to have time to operate in the hope that the grievance may be resolved without the need for a tribunal hearing.  He should also not present a claim if he lodges a grievance more than one month after the original time limit for lodging claims: s32(4).

8.	  The obligation to lodge a grievance will in general apply even in the case of a constructive dismissal. Indeed, this is one of the most important areas for the grievance procedure to be utilised. The grievance will be with respect to the conduct of the employer which the employee alleges caused him to resign. Since there has been no termination by the employer (albeit that there is a dismissal for unfair dismissal purposes), the dismissal procedure is generally inapposite.

9.	  There is, however, an exception to the obligation to raise a grievance found in reg6(5) which provides:
“Neither of the grievance procedures applies where the grievance is that the employer has dismissed or is contemplating dismissing the employee.”

The logic of this has been held to be that since the employer has either dismissed or is contemplating dismissing the employee, the statutory dismissal or disciplinary procedures will be applicable and duplication is both unnecessary and undesirable: Lawrence v HM Prison Service UKEAT/0630/06.  Curiously it applies only to cases where there is a contemplated dismissal, not contemplated action short of dismissal.

10.	Curiously, although s32 provides that the employee “shall not present a complaint”, if he does so it is not necessarily outwith the jurisdiction of the tribunal to hear it.  Section 32(6) provides: 
“An employment tribunal shall be prevented from considering a complaint presented in breach of subsections (2) to (4), but only if-
the breach is apparent to the tribunal from the information supplied to it by the employee in connection with the bringing of proceedings, or
the tribunal is satisfied of the breach as a result of the employer raising the issue of  compliance with those provisions in accordance with [the employment tribunal procedure regulations.]”

So information from either employer or employee might trigger consideration of the position by the tribunal.  The claim and response forms have been amended specifically to ensure that the parties address questions relevant to the use of these procedures.

The Background.
11.	The claimant was a full time lecturer in earth studies at the College. He was employed in January 2001. Subsequently, for reasons it is not necessary to develop, he was employed in the Teacher Training Centre as from February 2004 and later, from the end of August 2005 in the Motor Vehicle Centre. 

12.	The College began to have concerns about his performance.  He did not attend a course which he was obliged to attend and for which the college had paid. He did not produce documentation that was required and failed to take a register. He sent an email on 12 October 2005 asking whether he was being pushed out of the Centre; the reply was that management want him to adhere to the programme of work.

13.	Then concerns were expressed by different groups of students about the claimant’s lessons. The students thought that the work they were being required to do was too complicated and his lessons difficult to follow. 

14.	The College conducts quality assessments as part of the requirements imposed by Offsted. These include observations of the teacher. Mr Hadfield, the manager responsible for running the Centre, decided not to pass on the students’ concerns until the outcome of the observations had taken place. 

15.	There were a number of observations which, in different ways, revealed unsatisfactory performance.  Then on the last day of term, 16 December 2005, a tutor group indicated that they did not rate the claimant’s work and they threatened to walk out if nothing was done. One of the students provided a work folder containing his work.  This was considered at a management meeting on the 22 December.  They agreed that the tasks set for the students were above their level.  Mr Hadfield decided to initiate the college’s capability procedure.  He sent a letter to the claimant inviting him “to attend a Formal Interview held under Stage 1 of the Staff Capability Policy and Procedure” on 12 January.  The letter continued: 

“During this interview an action plan will be developed dealing with specific performance issues, the required improvements will be identified along with the timescales for achievement, and the interim review and support arrangements detailed.
I should point out that failure to achieve the required performance level will result in either a further review period or a Formal Review Interview where action up to and including dismissal from the employment of the College is an option.”

16.	The Capability Procedure has two stages.  As the letter indicates, the first involves specifying the required standards and setting a timescale within which they should be attained, and may involve providing support for the employee.  If that is complied with, then providing the standard is maintained, no further steps are taken.  If it is not, the procedure moves to stage 2 and involves a more senior manager reviewing the case. That might in turn lead to a further opportunity to reach the required standard, a transfer to another post, or dismissal.

17.	At the beginning of the following term there was some restructuring of courses and the claimant was removed from the group which had complained about him, although the matter was not discussed with him. The students were told by a letter on the 6 January that he would no longer teach them. When he returned to work he was still not informed of the fact that the class had been removed from him or why. It was only when he was due to take the relevant group that he was informed what had occurred. 

18.	The Stage 1 formal interview then took place on 12 January 2006 between Mr Hadfield and the claimant. Management sought to emphasise the supportive and corrective nature of the procedure.  The Tribunal found that it was agreed that further observations would be carried out but that there would be a three-week moratorium before that was done. It was envisaged that during that period there would be a peer observation by a colleague, who had also acted as his representative during the procedure. According to the Tribunal, Mr Hadfield subsequently regretted giving that three-week period and the quality control team were unhappy that he had done so.

19.	On 19 January the claimant sent an email to the College’s Vice Principal, asking him to investigate the sanctioning of the letter to the students of 6 January  (i.e. the letter informing the students of his removal as their teacher), and the removal itself. He received no reply to this email. Subsequently there were further emails concerning the continuing performance, which management found unsatisfactory. 

20.	There was also an attempt to observe the claimant on 27 January 2006 but he refused to be observed because it was a breach of the three-week agreement.  This led to a grading which he felt, and the Tribunal agreed, was detrimental to him. It was a default grade, which meant that the observation had not gone ahead, and in addition he was told that there would now be one more observation to be completed.  When informed of this, the claimant left, alleging that it was the last straw. The Tribunal found that he had resigned with effect from 6 February. They went on to find that the dismissal was unfair. We understand that that finding is under appeal, but we are not concerned with that in this case.

The issue of jurisdiction.
21.	The employers raised at a preliminary hearing the question of whether the Tribunal had jurisdiction to hear the claim. The basis of this was that in the Claim Form, submitted to the Tribunal on the 14  February, the claimant had ticked the relevant box indicating that he had not put his complaint in writing.  Indeed, he explained why he had not done so, observing that the employment relationship had irrevocably broken down and could not be resurrected.  Moreover, in the Response the College confirmed this; they ticked the relevant box indicating that the substance of the complaint had not been raised in writing. They left blank a section which requires certain information in the event that the parties are in dispute as to whether a grievance has been raised or not.   The College did not, however, in terms state that it was their case that the Tribunal did not have jurisdiction to hear the case because of this.  That was not done until a letter was sent to the Tribunal on 19 June.

22.	The Tribunal concluded at that preliminary stage that it should hear the case.  It gave two reasons for this conclusion.  The first was the late stage at which the point had been taken. The Tribunal said this: 
“The Tribunal considered that section 32(6) did not prevent them from hearing the Claimant’s Claim as
the alleged breach of section 32 was not apparent to the Tribunal from the information in the Claim form as the form was accepted by the Tribunal; 
the issue of compliance with section 32 was not raised in the Response but by letter on the 19 June, by which time the Claimant was prejudiced as the time limit for taking action to remedy the alleged breach had expired.”

23.	 Alternatively, they concluded that in any event the email sent by the claimant in October constituted a satisfactory compliance with the grievance procedure.

24.	The employers sought a review and that was granted by the Tribunal. However, the Tribunal indicated they would hear further representation on the issue at the same time as they heard the substantive case.  That is what they did.

25.	At that substantive hearing the Tribunal in fact concluded that the dismissal was unfair.  They then considered the jurisdiction point and confirmed that they had jurisdiction.  They made it clear that having heard the evidence they could not treat the October email as compliance.  Nor was the email of 19 January, and in any event he did not wait the statutory 28 days thereafter to submit his claim.  They did, however, confirm the alternative ground they had originally given, namely that the point was raised by the College too late.

26.	The Tribunal said this:
“The tribunal considers s32(6)(b) must be interpreted as meaning the tribunal must be satisfied of the breach as a result of the respondent raising the issue in the response form in order to avoid prejudice to an unrepresented claimant.”
They concluded that it was not enough to raise the response merely to tick the box; something more was required.

27.	Furthermore, the Tribunal concluded that there was no obligation on the claimant to raise a grievance in any event.  This was because reg 6(5), set out above, provides that the grievance procedures do not apply where the grievance is that the employer is dismissing or contemplating dismissing the employer.  The Tribunal’s explanation for concluding that this relieved the claimant of the duty to raise his complaint was as follows:
“The Tribunal considered the key to this to be the letter of 22 December 2005 to the Claimant from the Respondent. The letter initiated the capability procedure and stated that if the claimant failed to achieve the required performance level then action up to and including dismissal from the employment of the college was an option.  It is clear that the Respondent’s capability procedure can lead to dismissal or other disciplinary action within the meaning of regulation 2…The repudiatory breach of contract was tied up with the Respondent’s capability procedure and the agreements and understandings reached in the Claimant’s first capability procedure meeting on the 12 January 2006.”

The grounds of appeal

28.	The College challenges both conclusions of the Tribunal.  They submit that by identifying in the response that no grievance had been raised, that was sufficient to “raise the issue of compliance” within the meaning of s32(6).  It was not necessary to do more. The purpose of the question was to alert the Tribunal to the fact that the question of compliance was at least in doubt.  It was not necessary to spell out the inevitable implication of that information.  It was unjust and inaccurate to suggest that the issue had only been raised for the first time in June.

29.	The College also submitted that reg 6(5) did not relieve the Claimant of the duty to raise a grievance.  They challenge each of the tribunal’s rulings on this point. First, they contend that where there is a constructive dismissal, there is always an obligation to raise a grievance.  Regulation 6(5) has no application.  They rely on a decision of the EAT in Pinkus v Crime Reduction Initiative UKEAT/0087/07 in support of that proposition. 

30.	Second, they dispute that the employer could properly be said to be contemplating a dismissal merely as a result of initiating the capability procedure.  This was still only the first stage, the purpose of which is to identify performance levels, set timescales for improvement, and give practical support.  It is only if the requisite performance levels are not achieved that there will be a more formal interview with a more senior manager which might lead to dismissal.

31.	Third, the College contend that even if reg 6(5) is in principle applicable, it was not relevant here because the grievance was not about the contemplated dismissal;  rather it was about the procedures adopted by the College, and in particular the departure from the three week moratorium.  

Discussion.and conclusions.

32.	We agree with the College that neither ground relied on by the Tribunal is sustainable.  We will deal first with the argument that reg 6(5) relieved the claimant from the duty of raising the grievance at all.  If that is correct, the Tribunal plainly had jurisdiction whether the College had raised the matter in their response or not.  

Regulation 6(5)
Can it apply to constructive dismissal?
33.	We reject the College’s first submission that reg 6(5) can never apply where the claimant is relying on a constructive dismissal.  The argument advanced was that the grievance in a constructive dismissal case is that the employee has been constructively dismissed.  Since that is not a relevant dismissal for the purposes of the statutory provisions, it cannot be about an actual or contemplated dismissal.  We think that the premise is wrong. 

34.	The grievance in a constructive unfair dismissal case is about the conduct which is said to be repudiatory and caused the employee to resign.  It is not about the dismissal itself - the acceptance of the repudiation - since that is the result of the employee’s own action.  In principle, therefore, an employee could allege that the repudiatory breach was the fact that the employer was contemplating dismissal. (It could not of course be an actual dismissal since the contract is then already at an end.) Insofar as Pinkus suggests otherwise, we respectfully disagree.  

Was the employee contemplating dismissal?
35.	So the first issue is whether the employer was contemplating dismissal. The Tribunal appears to have taken the view that since the procedure could ultimately lead to dismissal, that was enough to justify the conclusion that dismissal was “contemplated”.  

36.	Taken in isolation, there is some force in that approach.  The word “contemplated” could naturally mean “foreseen as a realistic possibility”, and there was evidence before the Tribunal justifying that conclusion.  However, the word must be construed in its statutory context.  In the context of this legislation, it is clearly envisaged that an employer might contemplate dismissal or disciplinary action short of dismissal. Although the same statutory procedure is employed for both, these are distinct actions. In our view the latter must arise where disciplinary action is taken but dismissal is not a possible outcome.  It may be envisaged that dismissal could occur further down the line if the action short of dismissal does not bring about the desired change in conduct, but that possibility is not enough to conclude that dismissal is “contemplated.”  

37.	Moreover, disciplinary action short of dismissal is specifically defined to ensure that the statutory procedures do not apply at all where the outcome of the process may only lead to a warning, even although a failure by the employee to respond to that warning might thereafter lead to a dismissal.  Since disciplinary procedures include capability as well as conduct dismissals, the same approach must be adopted to those procedures. 

38.	In this case the first stage of the capability process could not itself lead to dismissal. That was not a possible outcome of the stage 1 interview.  If the statutory procedures applied at that stage at all, it was on the basis that action short of dismissal was contemplated. In fact, we doubt whether the statutory procedures were engaged.  The process at stage 1 was the equivalent of a warning but set in a capability context.  The employer was defining the level of performance with a warning that failure to meet the standard would set in train further proceedings.   Once those proceedings were set in motion, dismissal clearly was contemplated, but not until then.
 
39.	It is true that the letter did alert the claimant to the possibility of dismissal if he did not respond in the timescale set for him. That was in fact required by the procedures.  It is no different to an employee being told that if he does not heed a disciplinary warning, that may lead to his dismissal.  However, a recognition of the possibility that there may be a dismissal further down the line does not mean that dismissal is contemplated within the meaning of the regulation 6(5).

40.	Accordingly, we consider that the Tribunal erred in law in finding that the College was contemplating dismissal at the stage when the claimant resigned.  The first stage of the procedure could not result in the sanction of dismissal.  Regulation 6(5) did not, therefore, come into play.
 
Was the grievance that the employer was contemplating dismissal?
41.	The third issue is whether the grievance was that the employer was contemplating the dismissal.  It is not enough that the employer is contemplating dismissal.  That must be what the grievance is about.  To take a simple example, if an employee is subject to a dismissal procedure which may lead to his misconduct, the employer will clearly be contemplating dismissal.  If the employee then complains that he is not being paid his wages, his grievance is wholly independent of the dismissal procedures. It is unrelated to the fact that the employer is contemplating dismissal. Consequently, the employee will have to lodge a grievance before presenting a complaint to a tribunal.

42.	The Tribunal concluded that the grievance was that the employer was contemplating dismissal because it was “tied up” with the capability procedure: (see para 27 above.)  The finding appears to be that it was sufficiently closely linked with the procedures contemplating dismissal as to amount to a grievance about the contemplated dismissal itself.  There are two decisions of this Tribunal, namely Department of Constitutional Affairs v Jones UKEAT/0333/06 and Lawrence v HM Prison Service UKEAT/0630/06 which would tend to support the Tribunal’s analysis.  However, we were not referred to them by the parties, and they have not had a chance to deal with them.  In the circumstances, given that it is not necessary for us to reach a decision on this point, since we have found that reg 6(5) does not apply in any event, we do not think it appropriate that we should do so.

Did the employer raise the issue of compliance?
43.	We therefore have to determine whether the alternative ground relied upon by the Tribunal is sustainable.  Did the College raise the issue of compliance in accordance with the procedural regulations when they identified, as part of the standard Response, that the employee had not lodged a grievance?  We are unanimously of the view that he did.  

44.	The factual material provided which employers are requested to provide in the response alerts the Tribunal to the issue.  Indeed, we would have thought that the purpose of incorporating a section headed “Action before a claim” in the response form is precisely to ensure that the employer has the opportunity to provide this information.  If, for example, the employer ticks the box which asks whether he has dismissed the employee and indicates that he has not, he surely does not have to add in terms that one of his defences to an unfair dismissal claim is that there is no dismissal.   Similarly here; the College was asserting that no written grievance raising the substance of the claim has been lodged with him, and they provided that  information in accordance with the regulations.  

Disposal.
45.	It follows that we find that the appeal succeeds.  The Tribunal erred in finding that there was no obligation for the claimant to raise a grievance, and in concluding that the employers had failed to raise the issue of compliance.  They ought not to have heard the case and therefore the finding of unfair dismissal cannot stand.  We reach this result with considerable reluctance given that the employee has succeeded in his unfair dismissal claim.  He is being denied his remedy because of the operation of highly technical and abstruse rules which are far from easy to construe.  However, that fact cannot deflect us from adopting what we consider is the proper construction of the relevant provisions.