Appeal Nos. UKEATPA/1853/10/RN
UKEAT/0198/11/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		    At the Tribunal
		    On 15 September 2011

Before
HIS HONOUR JUDGE McMULLEN QC
MR M CLANCY
MR J MALLENDER

KALTZ LTD	APPELLANT

MRS B HAMER	RESPONDENT

Transcript of Proceedings

JUDGMENT

RULE 3(10) APPLICATION - APPELLANT ONLY

PRELIMINARY HEARING - APPELLANT ONLY

	APPEARANCES

For the Appellant	MR SIMON GORTON QC
(of Counsel)
Instructed by:
Messrs DWF Solicitors
5 St Paul’s Square
Old Hall Street
Liverpool
L3 9AE

SUMMARY
VICTIMISATION DISCRIMINATION – Whistleblowing
UNFAIR DISMISSAL – Contributory fault
It was open to an Employment Tribunal to dismiss an ordinary unfair dismissal claim and uphold a whistleblowing claim. The findings as to that were discrete and free-standing. But it was reasonably arguable that the Employment Tribunal erred in holding as a principle that contribution to such an automatically unfair dismissal could not be found.

HIS HONOUR JUDGE McMULLEN QC

1.	This case is about unfair dismissal for whistleblowing.  I will refer to the parties as the Claimant and the Respondent.  This is an unusual procedure, for by directions of procedural Judges there is to be a rule 3(10) hearing on what I will call the liability Judgment and a preliminary hearing on the remedy Judgment. Since we have agreed in our preliminary discussions on the preliminary hearing that matters should go to a full hearing, I have invited my colleagues in to consider the submissions that Mr Simon Gorton QC has made in respect of liability, so the views that I express in the first person singular relate to the liability hearing, and the further views I express on behalf of my colleagues in relation to the remedy hearing.

Introduction
2.	It is an appeal by the Respondent in those proceedings against a Judgment of an Employment Tribunal chaired by Employment Judge Ross sitting at Manchester over three days, registered as a Reserved Judgment with Reasons on 9 November 2010.  The Claimant was represented by counsel, and the Respondent by a solicitor who today instructs Mr Gorton.  The Claimant made a number of claims, summarised as automatically unfair dismissal contrary to section 103A of the Employment Rights Act 1996, breach of contract, sex discrimination and ordinary unfair dismissal (as it was termed by the Employment Tribunal) under sections 95 and 98.  She failed on everything apart from the first: whistleblowing.  There is no appeal.  There is no indication that the Claimant wishes to cross‑appeal, so what appears now is an appeal by the Respondent against the one aspect of the Tribunal’s Judgment that was against it.  The central issue therefore on the liability appeal relates to the finding of an unfair dismissal for whistleblowing.

3.	In Haritaki v South East England Development Agency [2008] IRLR 945 at paragraphs 1‑13 I set out my approach to rule 3; it should be read with this Judgment.  That approach has been approved by the Court of Appeal in, for example, Hooper v Sherborne School [2010] EWCA Civ 1266 and Evans v University of Oxford [2010] EWCA Civ 1240.

The procedural background
4.	On this sift of this Notice of Appeal in accordance with the Practice Direction HHJ Serota QC formed the following opinion:

“1. The Employment Tribunal was clearly entitled to conclude on the facts that the principal reason for the dismissal was the disclosure of confidential information.  The first ground of appeal is an impermissible attempt to reargue the facts.
2. The statute makes clear that a whistleblower who makes a protected disclosure in good faith is protected from retaliatory action by section 47B and section 103A.  It is inevitable that on occasions a bona fide disclosure may be mistaken, and the disclosure would otherwise be regarded as a breach of confidence.  The whistleblower is nevertheless protected.  I am surprised that no reference has been made to section 43J:
‘Contractual duties of confidentiality.
(1) Any provision in an agreement to which this section applies is void insofar as it purports to preclude the worker from making a protected disclosure.
(2) This section applies to any agreement between a worker and his employer (whether a worker’s contract or not), including an agreement to refrain from instituting or continuing any proceedings under this Act or any proceedings for breach of contract.’
3. In the circumstances the argument that the Claimant is unable to rely on her unlawful act has no validity.
4. This Notice of Appeal discloses no reasonable grounds for bringing the appeal.”

5.	Where no point of law is found section 21 of the Employment Tribunals Act 1996 deprives the EAT of jurisdiction to hear the case.  The Respondent was given the opportunity to have the case heard before a Judge under rule 3(10), and it has done so.  I hear the case therefore on more material than was available to Judge Serota, and in particular in this case I have the benefit of reading the remedy Judgment given by the same Employment Tribunal on 24 January 2011 and the opinion on the sift of that given by HHJ David Richardson.  Judge Richardson’s approach was to include in case management directions a rule 3(10) on liability followed by a preliminary hearing on the remedy.  His note at that time was that the Claimant should be given an opportunity to make submissions on both contributory fault and Polkey v A E Dayton Services Ltd [1987] IRLR 503.  She has done, so all three of us have the benefit of those in relation to remedy, but I confine myself for the purposes of the rule 3 to this Appellant‑only zone, controlled at the moment by Mr Gorton.

The legislation
6.	The relevant provisions of the legislation are not in dispute.  The Tribunal set out the sections so far as are now relevant in the appeal, and these are contained in sections 103A, 43B and 43C of the Act.  Ordinary unfair dismissal is regulated by section 98, which requires the employer to show a potentially fair reason and, having done so, the question of fairness arises under section 98(4).

The facts
7.	The Tribunal introduced the parties to us in the following way:

“1. The claimant was employed by the respondent as an administration manager.  It was not disputed that the Claimant was good at her job and was a valued employee.  She was employed by the respondents from 23 November 2001 until her dismissal on 16 July 2009.
2. It was not disputed that on 2 July 2009 there were two telephone conversations between the claimant and one of the directors of the company Mr Charlie Richards.  It was not disputed by either party that those conversations became heated.  The claimant did not attend work on Friday 3 July due to a pre‑booked holiday.  On Monday 6 July the claimant was suspended on pay whilst investigations were carried out into the claimant’s (a) misconduct in relation to her attitude towards staff; (b) misconduct in relation to her attitude and disrespect towards director(s) and; (c) gross misconduct for alleged disclosure of confidential payroll information.”

8.	There is then a description of various disciplinary proceedings.  The Claimant was subjected to a disciplinary hearing and an appeal where the decision to dismiss her was confirmed.  The dismissal letter includes three matters put against her, which the relevant officer accepted, and they are misconduct in relation to the Claimant’s attitude to staff (I will call this the “staff matter”), misconduct in relation to her attitude and disrespect to the directors (I will call this the “directors matter”), and gross misconduct for alleged disclosure of confidential payroll information.  Within that there were two disclosures, neither of which was protected, but there was a disclosure in relation to Mr White.  It is not disputed that this was a protected disclosure within section 43B by reason of it being disclosed to the Claimant’s employer pursuant to section 43C; that is, it related to information tending to show wrongdoing by the Respondent.  The Tribunal upheld therefore the basis for the making of the whistleblowing claim.  

9.	The short point is that the Claimant, in her position as administration manager, noticed a clear undertaking given to Mr White as to the payment that he would receive while on paternity leave was being broken.  The Tribunal acknowledges that this is not actually a contractual term, but the upheld the Claimant’s view. It was her reasonable belief (that is, her subjective belief held on reasonable grounds) that for the Respondent to undertake to pay Mr White during the very stressful period that attended upon the death, stillborn, of his baby and his wife’s terrible condition thereafter, and then to reduce his pay, was a failure to carry out a legal obligation.

10.	The Tribunal divided its considerations into the four categories of claim made.  I need say no more about the sex discrimination and wrongful dismissal claims upon which the Respondent succeeded. But as to the two forms of dismissal it is necessary to consider the relationship between them bearing in mind throughout that the Respondent succeeded on the ordinary dismissal point. The outcome was that the Claimant presented a claim of unfair dismissal on which she succeeded.  Closer analysis indicates that she succeeded on her assertion that the reason for dismissal was whistleblowing, but failed to show any procedural unfairness or any other matter that would constitute what is conveniently known as ordinary unfair dismissal.  The Tribunal was at pains to go through the process directed to it by British Home Stores Ltd v Burchell [1978] IRLR 379; it did not make the error of imposing the pre‑1980 burden of proof upon the employer, but made findings in its favour consistent with it passing the tests (that is, a genuine belief on reasonable grounds after as much investigation as was reasonable, and a dismissal falling within the bands of a reasonable employer faced with these circumstances).  The Tribunal recognised that the reason for dismissal was the conduct, those three strands as summarised above, and within the disclosure strand three strands, too. It came to the conclusion that the principal reason was the reason advanced by the Respondent (that is, those three) but that the principal reason was the disclosure, for the Tribunal said this:

“50. We turn to the reason advanced by the Respondent.  In the dismissing letter the Respondent stated (a) misconduct in relation to her attitude towards staff; (b) misconduct in relation to her attitude and disrespect towards director(s) and; (c) gross misconduct for alleged disclosure of confidential payroll information.
In the letter dismissing the appeal at p207 the respondent stated the decision to dismiss was upheld.
51. We find the principal reason the claimant was dismissed was that the claimant had breached the respondent’s rules on disclosure of confidential information by disclosing the salary information of Joe White, Mr Southern and Mr Eckersley.  Although the claimant was also dismissed for two other reasons, namely insubordination to a director and conduct towards staff, we find that the disclosure of the payroll information was the principal reason.  Our reasons for this are that we find both the Dismissing Office and the Appeals Officer regarded the disclosure of confidential payroll information as the most serious charge against the claimant.  Our reasons for this are that the respondent relied upon its disciplinary rules at page 80 of the bundle.  The rules state ‘treat information acquired in the course of employment with appropriate care and not disclose confidential information to third parties’.  The rules go on to state that an example of gross misconduct includes ‘unauthorised disclosure of confidential information’.”

11.	The Tribunal then analysed the disclosure material and said this:

“52. The letters to the claimant specifically identified the disclosure of confidential payroll information as a matter of gross misconduct and thus placing the claimant at risk of dismissal, whereas the other two charges are identified as misconduct, rather than gross misconduct.  See the letter of invitation to disciplinary hearing p149, and the letter of dismissal p161.  Although insubordination is quoted in the respondents disciplinary rules as amounting to gross misconduct, the letters to the claimant did not identify her alleged insubordination as gross misconduct, suggesting to us that it was viewed at the time as less serious conduct than the disclosure of confidential information.  
[…]
55. We find it was.  Although the Respondent dismissed the claimant for disclosing confidential information to 3 people namely Alan Hall, Rick Eckersley and Stacey Farrell, we find it was the disclosure of payroll information about Joe White to Alan Hall which was the principal reason for dismissal.  Our reasons for this are the proximity in time to the dismissal of this disclosure.  We accept the claimant’s evidence that she and Alan Hall had discussed Rick Eckersley’s bonus had occurred some time previously.  Any discussion of Mr Southern’s pay with Stacey Farrell by the claimant (which the claimant denied had occurred) we find also is likely to have occurred some time previously as we accept the claimant’s evidence that Mr Southern had left some months before July 2009.  Neither of these matters had been raised with the claimant at the time, despite the very small size of the respondent’s business and the open plan area in which the claimant worked which causes us to find that they had not been regarded as serious by the respondent.  By contrast the disclosure to Mr Hall about Mr White’s pay had been made on or around 25 June 2009 a short time before the claimant was suspended on 6 July.”

12.	On the basis of that the Tribunal upheld the Claimant’s claim of unfair dismissal.

The Respondent’s submissions and rule 3 conclusions
13.	I will deal with the careful written submissions of Mr Gorton and his oral argument at the same time as I provide my conclusions for the purposes of this rule 3 hearing.  The principal argument is that the Tribunal ought not to have separated the section 98 ordinary dismissal from the reason found under section 103A.  Once the Tribunal had found the principal reason was for the dismissal for the purposes of ordinary unfair dismissal it had discharged its functions and needed to look no further as to reasonableness.  

14.	In my judgment that is a simplistic approach.  The Employment Tribunal looked most carefully and acquitted the Respondent of ordinary unfair dismissal, but it was the presence of the protected disclosure that operated on the mind of the relevant officers of dismissal and appeal that caused this dismissal to be unfair.  It went to the very heart of the matter even though the way in which the matter was addressed by the Respondent was not attended by any procedural unfairness.

15.	The Tribunal made clear findings that were open to it.  The finding by a Tribunal as to the reason for dismissal is a finding of fact.  It is one that pays regard to the reason given by the employer but is one of fact for the Tribunal alone to make.  It does so by looking at the evidence and getting into the mind of the relevant officers if necessary, and forming its own view.  The Tribunal did that and was able on an analytic approach to decide as between the three grounds given by the Respondent, and, in respect of the third disclosure matter of the three subjects within that.  The principal reason for dismissal was the protected disclosure in relation to Mr White.  That was a decision open to it and, in so far as it may be contended that this is a perverse decision, there was evidence before it.  In so far as it is contested today that it is wrong in principle, having decided first on ordinary unfair dismissal to move to protected disclosure, this cannot survive the very clear findings as to whistleblowing that the Tribunal has made.

16.	There is no inconsistency as between the two, but if I am wrong about that, then it is correct to look in isolation at the findings in relation to whistleblowing.  These, for example, would arise if the Claimant did not have one year’s service, and these are patently sufficient to justify the finding the Tribunal made. The approach adopted by Judge Serota is one with which I agree.  In his written submissions Mr Gorton did not run with the issue raised by Judge Serota on section 43J, and when I invited him to make a submission about it, he says that it was not engaged.  With respect I disagree with that; this was a matter that ought to have been drawn to the attention of the Tribunal.  It is arguable that the rules of the Respondent, which preclude unauthorised disclosure, may engage section 43J.  The word “unauthorised” might save the issue because “unauthorised” would mean “not authorised by section 43C”.  The Tribunal did not consider this matter; the Respondent has not had an opportunity to make any submission about this because we are still in rule 3 territory, but it does seem to me in line with Judge Serota’s opinion that this matter might have been of assistance, and if it was, then it would assist the Claimant and not the Respondent.  However, I say no more about it, as it was not live before the Tribunal.

Preliminary hearing conclusions
17.	I now turn to the Judgment of the three of us in respect of the preliminary hearing, and in the light of the written submissions of Mr Gorton we form the provisional view that the matter should go forward to a hearing.  We are most grateful to the Claimant for her written submissions.  It is reasonably arguable that the Tribunal decided on contribution as a result of or at least influenced by its approach to the question of principle; that is, that where there is a protected disclosure dismissal it would never be just and equitable to condemn the Claimant for having contributed to her dismissal.  We consider that the argument based on principle is one that is open to Mr Gorton, and whether or not the Tribunal was deciding that will require careful arguments relating to paragraphs 2 and 3, where in paragraph 3 of the remedy Judgment the Tribunal makes a firm finding there was no culpability.

18.	The second issue, which we have allowed to be bolted onto the first, relates to Polkey, and the written submissions of the Respondent indicating authorities such as Gover v Property Care [2006] ICR 1073 will be relevant.  The difficulty facing the Respondent is that it will have to show that the Respondent would have dismissed the Claimant at some stage, or there was a good chance of it, by reason of the staff matter, the director matter and the unprotected disclosures of the other two staff matters. As for that the reasons on liability and remedy will be relevant, but we see no practical advantage in ourselves deciding the Polkey issue; this will go to a full hearing (two hours; category B) .