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||BAILII case number:  UKEAT 0615_04_1111
||Appeal No. UKEAT/0615/04
EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
||At the Tribunal
||On 11 November 2004
HIS HONOUR JUDGE MCMULLEN QC
MR D J JENKINS OBE
MR B M WARMAN
|MRS H EASTER
|THE GOVERNING BODY OF NOTRE DAME HIGH SCHOOL
Transcript of Proceedings
© Copyright 2004
|For the Appellant
||MR DANIEL TATTON-BROWN
Messrs Hawkins Solicitors
24A Nelson Road
|For the Respondent
||MS HARINI IYENGAR
Norfolk County Council
Practice and Procedure / Unfair Dismissal
The procedure of the Employment Tribunal created a risk that the Applicant had not had a full opportunity to deploy her case on the reason for dismissal. At all times up to the Chairman's letter, following written closing submissions by solicitors, it was common ground that the reason was gross misconduct and so it was a material irregularity for the Employment Tribunal to uphold some other substantial reason without hearing evidence and without it being the Respondent's case. Remit to a fresh Employment Tribunal. Recommend ADR and ACAS (old case now).
HIS HONOUR JUDGE McMULLEN QC
- This case is about the nature of a potentially fair reason for dismissal within section 98(1) and (2) of the Employment Rights Act 1996 and employment tribunal procedure in dealing with a new point which occurs to the tribunal having heard the evidence and written closing submissions. The judgment represents the views of all three members. We will refer to the parties as Applicant and Respondent.
- It is an appeal by the Applicant in those proceedings against a Reserved Decision of an Employment Tribunal sitting at Norwich, Chairman Mr J N Leonard, registered with Extended Reasons on 4 May 2004. The parties were represented there by solicitors and today by Mr Daniel Tatton-Brown and Ms Harini Iyengar respectively, of Counsel. Both the solicitors are in court and have given some assistance to their Counsel in answering questions from us about the proceedings, and we are grateful to them.
- The Applicant claimed that she was unfairly and wrongfully dismissed. The Respondent denied the allegations, contending that she was dismissed fairly for gross misconduct and thus lawfully. The essential issue for the Employment Tribunal to decide was whether the claim which she made should be upheld and whether, if it were, remedies should follow. The Tribunal dismissed both her claims. She appeals. Directions sending this appeal to a full hearing were given in chambers by His Honour Judge Prophet.
- The relevant provisions of the legislation are section 98(1) and (4) of the 1996 Act:
“98(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
(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.”
- Section 123(6) deals with contribution:
“123(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.”
- The Tribunal directed itself by reference to the relevant provisions and to a number of authorities including W A Goold (Pearmark) Ltd v McConnell  IRLR 516 and Abernethy v Mott, Hay & Anderson  ICR 323, which we hold to be relevant.
- The Applicant was employed as a teacher of business studies at the Notre Dame High School in Norwich from 7 June 2001 until the relationship came to an end by dismissal on 30 June 2003. The Applicant was originally engaged on terms and conditions about which there appears to have been a number of misunderstandings. The Principal of the School was Mr Pinnington and in due course a number of criticisms were made by the Applicant of the way in which her engagement was working out. The Tribunal found that she applied herself to her responsibilities with energy and commitment and achieved some success. But almost immediately problems began to surface.
- So far as is relevant to our appeal, it is necessary to note only that the Tribunal adjudged that the Applicant had good cause to believe that her internal mentor at the School, a necessary part of the training program, lacked both understanding and commitment. Secondly, she did not find the support which she was entitled to look for, and thirdly, she expected more of Mr Pinnington than he as a busy head of a school could reasonably deliver and formed the genuine belief that his attitude towards her was aggressive and bullying. Following an OFSTED report when there was criticism of the Department, the Applicant felt she had been publicly pilloried, an exaggerated belief but which reflected a growing level of stress.
- So it was that on 18 April 2002 the Applicant began a period of absence on account of stress, stayed away from school and never did return. She was placed on “garden leave” in July 2002 and attended a meeting on 17 July 2002 at which Mr Pinnington and others attended. The Applicant's approach was as follows:
“Ms Easter perceived that she was not welcome back and, given the profound differences that emerged during the course of the discussion, the school saw no prospect of reaching an accommodation with her. What did emerge was recognition that Ms Easter's employment should be terminated and it was left that the terms would be discussed with a view to a compromise agreement. From then until November 2002, the only item on the agenda for discussions between the parties was the terms of a termination.”
- The approach, therefore, was to consider further talks on a draft agreement to go back to work or to leave as a result of reaching, as the Tribunal have found, finality. The Tribunal noted that the Applicant, according to her case, had ample grounds upon which to claim constructive unfair dismissal, but did not do so despite being in receipt of estimable legal advice. The Respondent imposed ultimata: sign the compromise agreement, return to school or face dismissal. The deadlines to these matters passed and in due course the Respondent initiated disciplinary proceedings.
- At a disciplinary panel, conducted on 28 March 2003, it was decided that the Respondent had proved its case that the Applicant should be dismissed for gross misconduct. Essentially this was failing to observe the order to return to work. There then followed an appeal, which was found to be a comprehensive rehearing and on 25 June 2003 the decision was upheld that gross misconduct charges were justified and the dismissal was confirmed. The Applicant then launched employment tribunal proceedings.
- The Tribunal decided, when it addressed the requirement for the Respondent to put forward a reason, that the reason it had put forward was not the reason upon which the Tribunal would make its decision, and it is necessary to set out in full its thinking on this:
“35 Although the whole of the disciplinary process was devoted to a response to Ms Easter's refusal to return to work when instructed to do so, a reason given the label of 'misconduct', we believe that we should consider the underlying reality. .A refusal by an employee to carry out a reasonable and lawful direction by an employer may wcl1 constitute a reason sufficient to justify dismissal, one related to the conduct of the employee. Whilst that is how the employer saw the issue in this case, our difficulty with it, as a reason sufficient to justify the dismissal, is that the last thing the employer wanted to achieve was Ms Easter back at work. It did not want her back but it did want a solution to a problem that had proved so intractable. We consider that it was not, therefore, the reason best suited to the situation in which the employer found itself. The artificiality lies in dismissing because the employee has disobeyed an instruction when that instruction was adopted as expedient, for want of something better suited. We believe that this$ Tribunal should strip away the artifice and look at the reality.
36 The reality was that there was a fundamental and irretrievable breakdown in the relationship between the parties. Ms Easter believed that she had been treated most unfairly and unreasonably but she would neither accept what she plainly perceived to be a fundamental breach by the employer by resigning nor would she adopt the contract of employment by a return to work. Whilst there remained the option of a mutual separation on terms she could accept, the situation was allowed to drift on. The employer, in the person of Mr Pinnington, saw that the situation was irretrievable at the meeting in July 2002 and, thereafter, he proceeded on the assumption that Ms Easter would not be returning to the school: in the circumstances, that assumption was a reasonable one.
37 The reality is that the dismissal was a belated recognition of the fact that the employment was already over, in the sense that trust and confidence had broken down and, with it, the consensus that must exist in a viable employment relationship. Both parties were conscious that there could be no way back to a position in which such consensus could exist. When the formal declaration that the employment was over came, the adopted means were less than perfectly suited to the needs of the situation. That was, probably, due to deficiency in understanding or, perhaps, because the perceived breakdown in the relationship between the parties was not thought to constitute a sufficient reason for dismissal. Whatever the reason for proceeding as it did, we are satisfied that the respondent's true reason for dismissing Ms Easter was because of the well-founded perception that there had been an irretrievable breakdown between itself and the applicant. We believe that, of the two parties, the applicant must bear the greater share of the blame for the breakdown but its roots lay in the misunderstandings fanned at the very outset of the cmp1oyment, referred to in paragraph 13 above. Her charge that the respondent failed in its duty to provide her with suitable guidance and support, is not made out.
38 The most appropriate label is that the dismissal was for some other substantial reason of a kind sufficient to justify the dismissal of an employee holding the position held by the applicant. It lies in the irretrievable breakdown and is a reason sufficient to justify the dismissal of an employee holding the position held by the applicant. The work of a schoolteacher, involving the exercise of a statutory duty to provide children with an education is of such a special character that there must be an appropriate level of trust and confidence between the parties. Where that has wholly broken down and all reasonable efforts to retrieve the situation have failed, the reasonable employer is likely to conclude that the employment must be terminated.”
- The Tribunal then came to the conclusion that it was no longer relevant to form a view about whether the Applicant perceived the conditions proposed by the Respondent for a return to work as a unilateral change to her terms and conditions of employment.
- Before reaching that decision, the Tribunal had engaged in a highly unusual exchange of correspondence, which it set out in full. The hearing had taken place over three days – 24 to 26 November 2003 – and a chambers meeting was held on 22 December 2003 so that written submissions of the parties could be considered, there being insufficient time at the oral hearing. However, an application was sent on behalf of the Applicant for the Tribunal to re-open the hearing into evidence. This was because, as a result of the publicity given to the case in the Norwich area, material had come to light, according to the Applicant, which would be of relevance to what is described as the “bullying issue”; that is the Applicant's allegation that Mr Pinnington bullied her and that this was relevant to Mr Pinnington's credibility. The Tribunal decided to reject that application, but noted that the Applicant did form such a belief that he did bully her but it did not need to go further than that.
- However, during the course of its deliberations, the Tribunal came to the view, as recorded in the paragraphs we have cited above, relating to the reason put forward by the Respondent. It gave the parties' representative an opportunity to submit written representations. These were produced by the Respondent and the Applicant and then on 27 February 2004, the Tribunal Chairman invited the parties to give observations in writing on two issues; so far as we are concerned the more important is whether the true reason for dismissal was an irretrievable breakdown in relations. Written submissions were acquired from both of the parties. The Tribunal deliberated on 19 March 2004 and promulgated its Decision in May.
The Applicant's case
- The Applicant contends that the Tribunal made a procedural error in the approach, which we have outlined above, first in dealing with what was not the case advanced by the Respondent for irretrievable breakdown, and secondly in requiring written submissions and not giving a proper opportunity to the parties to canvass these matters by way of evidence. The error, which was implicit in the Tribunal's reasoning, was that the Tribunal had regarded the issue as one of mere labelling. Thus applying the judgment of the EAT in Hannan v
TNT-IPEC (UK) Ltd  IRLR 165, Hutchison J and members at paragraphs 14-15, the approach advocated by the Tribunal would be satisfactory. The EAT in that case said as follows:
“In effect, Mr Field submitted that there were three stages which one had to go through. The first was that the appellant must show some prima facie ground for thinking that there had been prejudice and he conceded that the appellant in the present case might begin to do that. He then submitted that if the respondent could demonstrate prima facie that it would in fact have made no difference had the matters which the Tribunal relied upon been canvassed before them, it was then for the appellant to cross a further threshold by showing what he would in fact have wished to do which would have materially affected the outcome of the case.
We consider that that is a proper interpretation of the authorities which hae been cited and properly reflects the attitude displayed in the judgment given by Waite, J in the last if the cases that we have cited, Hotson.”
The Tribunal went on to say that the material facts were fully laid before the Tribunal, and the Applicant had every opportunity to deal with them.
- It is contended on behalf of the Applicant, as it was below, that it was not accepted that the Respondent could now adopt a different label so plainly different from the one given at the time and pursued throughout the hearing. It was contended that the Employment Tribunal had made decisions relating, for example, to where the blame lay in the breakdown of the relations upon which the Applicant should have had the opportunity to present arguments herself and to have presented evidence. Four examples were given. The issue of irretrievable breakdown requires a different mental process to be examined from that involved in the case of gross misconduct. The cross-examination of the witnesses and the presentation of the material would all be different if this were to be the ground upon which the dispute was to be fought. There would also be allegations as to the sincerity of the offer made by the Respondent to return to work.
- Secondly, it was contended that there was a procedural irregularity in the way in which the Employment Tribunal had approached this difficult issue. All the Applicant needs to show before the EAT is that she might have been able to change a view on who bore the greater share of the blame: see the extract from paragraph 37 above. Again she had no opportunity to make her case on this matter.
- The Applicant's own view of this matter was that there was no irrevocable breakdown of the relationship, for that is the way in which her case was presented to the appeal panel, and there appears to have been no dissent registered by that appeal panel to the way in which the Applicant put and perceived her case.
- In submissions, both orally and in writing, by Mr Tatton-Brown, the Respondent's answer in this case, which was taken as the Skeleton Argument by Ms Iyengar since she had drafted it, was the subject of close examination. Mr Tatton-Brown accepted the law as set out, substantially, in that Respondent's answer but made submissions distinguishing a number of the cases. It has been helpful to us to know that in her oral submissions to us Ms Iyengar did not contest the distinctions drawn by Mr Tatton-Brown, and thus we have common ground in our approach to the legal questions.
- It was further contended that the Applicant did not know the case which she had to make and had to answer, and it was unfair and a breach of the rules of natural justice for these matters not to have been made available to her. Although the Tribunal says it has looked at the reality of the position, as a matter of law the requirement is that a burden of proof is placed upon the Respondent to put forward a reason, not a difficult task, which is potentially fair within section 98(1) and (2), and if it fails to do that or if the Tribunal does not accept the reason put forward, automatically the dismissal is unfair. This case should be the subject of a finding by the EAT that there was an unfair dismissal and the case should be returned for a remedy.
- It was further contended, in reply, that it was no excuse for the Respondent to contend, as it now does, that an error of law had been committed by it. This was more than simply a labelling process: it required an examination of the thought processes of those engaged in the decision to dismiss. The Applicant did not know the case she would have to meet if, as has now been found by the Tribunal, she was dismissed for an irretrievable breakdown in the relations.
The Respondent's case
- On behalf of the Respondent, it is contended that by a mistake of law “some other substantial reason” was not placed in the Notice of Appearance. The wrong reason was put down. The Tribunal was correct to look at all of the material which was before it upon which it could form a view as to what was the reason for dismissal. The procedure adopted by the Tribunal did not disclose such irregularity as would cause the Decision to be overturned; but it has to be said that Ms Iyengar accepted that there was an irregularity. She contends however that the Tribunal, having seen the correct legal reason, gave an opportunity to the parties to ventilate the matter: the requirements we have set out from the judgment in Hannan had been met in this case and the appeal should be dismissed.
The legal principles
- The legal principles to be applied in this case can be found in the following authorities. In Abernethy v Mott, Hay & Anderson, above, Lord Denning MR said as follows:
“I turn to the first point of law which Mr Pain raises. The employer has under the Industrial Relations Act1971 to 'show' the reasons for the dismissal. That is clear from s.24(6). It must be a reason in existence at the time when he is given notice. It must be the principal reason which operated on the employers' mind: see s.24(1)(a). It should, I think, be known to the man already before he is given notice, or he must be told it at the time. But I do not think that the reason has got to be correctly labelled at the time of dismissal. It may be that the employer is wrong in law as labelling it as dismissal for redundancy. In that case the wrong label can be set aside. The employer can only rely on the reason in fact for which he dismissed the made, if the facts are sufficiently known or made known to the man. The reason in this case was – on the facts – already known or sufficiently made known to Mr Abernathy. The wrong label of 'redundancy' does not affect the point.”
It will be noted that in that case (see paragraph 6) both redundancy and incapability had been put forward in alternative forms.
- The approach to a change of view by the employment tribunal about the way in which the case is to be argued was the subject of the judgment of the EAT in Murphy v Epsom College  IRLR 395, Mr Justice Browne-Wilkinson, President, and members:
“9. …In Gorman v London Computer Training Centre Ltd  IRLR 22, this Appeal Tribunal held that it was not necessary to 'plead' some other substantial reason in the full technical sense of the word. However, in our judgment in the light of the Nelson case it is probably necessary that the matter should be expressly ventilated in the Industrial Tribunal before it reaches a decision on the matter so that the parties can have a full and proper opportunity to deploy their case on the matter. Natural justice requires that the party should not have a case decided against him on a ground on which he has not had an opportunity to be heard.
10. It is therefore not safe for us to approach this case on the basis that the reason for dismissal was either redundancy or some other substantial reason. It is accordingly necessary for us to consider whether, on the facts of this case, Mr Murphy could properly be held to be redundant.”
The case was approved on appeal to the Court of Appeal, and Ms Iyengar accepts that express approval is given to that approach (see  IRLR 271, paragraph 35).
- Where, again, a problem emerges in the depiction for the reason for dismissal during the course of a hearing, the EAT, Mr Justice Wood, President, and members in Burkett v Pendletons (Sweets) Ltd  ICR 407 at 413 paragraph B said as follows:
“The way in which the matter has been argued to us makes it quite clear however that the approach of mere labelling can cause problems for those who are not legally trained and it seems to us that first of all, if there is any doubt about the reason, then it is better that the reasons should be stated in the alternative, and I have no doubt that those advising parties will soon realise that that is desirable. Secondly, that where, or indeed as soon as, it becomes apparent to the tribunal that the reason is likely to be different from the one stated in the documents, that matter should be raised; the issue should be re-analysed; it should be made clear to each side; each side should comment, object seek adjournments in any way where justice so requires it, but thereafter all parties should be clear about that is being decided and then they can argue, readjust their evidence, if need be call further evidence. So in the end no one need come forward and say “Oh we thought it was rather difference and we feel that we have not had a chance of putting our case as we might have wished to have done.”
It will be noted that in that case the EAT accepted that the consequence of a failure for an employer to prove a potentially fair reason was effectively an automatically unfair dismissal, and the case should be so decided, leaving only an issue of remedy upon remission: see page 409H-410A.
- With those principles in mind, we have decided that the submissions of
Mr Tatton-Brown are to be preferred to those set out comprehensively by Ms Iyengar, and so we will allow the appeal. But we will not go to the extent of a finding ourselves, as advanced by Mr Tatton-Brown.
- We say at once that we would be extremely wary of overturning a Decision of an Employment Tribunal which expressed in such forceful terms its approach to what it regards as the reality of the situation affecting the parties. We also accept that a mere labelling problem can be quickly resolved as being one of form not substance and the Tribunal is there to determine matters of substance in this particular area.
- We can also understand how at the end of a hearing, when the tribunal meet in chambers to discuss their judgment and to review written submissions made to it, points may occur to it which require further submission. It is quite proper and indeed it must be done in a case where a decision may be made which has not been the subject of formal submissions at the hearing. For that reason the three and half months time allowed for a judgment of any employment tribunal begins at the end of the final submission in the sequence.
- In this case it must be remembered that the Tribunal, upon reflection, has decided to reject the reason of gross misconduct advanced by the Respondent. It is the experience of the lay members of this Appeal Tribunal that it is comparatively clear cut and easier for an employer to advance an argument based upon gross misconduct than on the rather more difficult ground of some other substantial reason involving, on this hypothesis, an irretrievable breakdown in the relationship. This Respondent chose, throughout, to rely upon the ground of gross misconduct. We accept Mr Tatton-Brown's submission, having examined the places where that is done, that it was, until the moment the Chairman wrote to the parties, the approach of the Respondent that it had dismissed the Applicant for gross misconduct in failing to comply with its instruction. The failure to provide an oral hearing on this new matter is what is fatal in our judgment to the Decision.
- We have great sympathy with the Tribunal, which requires the parties to address difficulties which seem to be in the way of making a decision and making a decision fairly. One approach is to invite written submissions; often that can be done where, for example, a new legal authority has arisen, or perhaps one which had not been drawn to its attention. Where, however, the central issue in the case of unfair dismissal is the reason for dismissal and its fairness, it seems to us that it is only fair, particularly when an objection is taken by an applicant, for a hearing to be reconvened so that evidence may be addressed.
- In our judgment the Tribunal erred in categorising the distinction between gross misconduct and irretrievable breakdown as a labelling problem. It also erred in its decision that the essential facts were fully laid before the Tribunal and that the Applicant had an opportunity to deal with them. We have considered the judgment of the Court of Appeal in Strouthos v London Underground Ltd  IRLR 636, summarised in the headnote:
“An employee should only be found guilty of the offence with which he has been charged. It is a basic proposition, whether in criminal or disciplinary proceedings, that the charge against the defendant or the employee facing dismissal should be precisely framed, and that evidence should be confined to particulars given in the charge. Care must be taken with the framing of a disciplinary charge and the circumstances in which it is permissible to go beyond that charge in a decision to take disciplinary action are very limited. Where care has clearly been taken to frame a charge formally and put it formally to an employee, the normal result must be that it is only matters charged which can form the basis for a dismissal.”
- That proposition was the subject of no dispute by Counsel in this case. It does indicate that an employee at the workplace, and it follows inevitably at the hearing, must know the specific charge put against him or her when a claim is made of misconduct. In this case we consider that the Tribunal erred when it thought things would not have changed in any way if a case had been advanced by the Respondent that the reason for dismissal in reality was an irretrievable breakdown. Certain lines of cross-examination immediately appear to be relevant, and it would be necessary for the Tribunal to have formed a judgment about those four issues identified by Mr Tatton-Brown, upon which, it must be said, the Applicant made some headway and further it must also be noted that the Applicant's application for new evidence to be brought had been refused. That evidence relates to, it is said, and we put it no higher than this, Mr Pinnington's bullying attitude. That too would be relevant to a consideration of whether there had been an irretrievable breakdown and it would have been the subject of a finding by the Tribunal. The approach of the Tribunal would also have required it to make decisions upon whether the Applicant was indeed reasonable in exhibiting her end of the irretrievable breakdown, that is her refusal to obey an instruction. Why she refused and whether or not it was a lawful instruction would be relevant to that consideration, and those matters required evidence.
- In our judgment this approach has caused a possibility that there is a material irregularity. That is as far as Mr Tatton-Brown needs to go. He does, however, go further and invites us to make the decision ourselves on the basis of Burkett: that is that the Respondent has failed to make good its reason for dismissal. That is a step too far. It follows from the fact that the Applicant has succeeded in her claim that she might have put different evidence forward and run the case differently that we are not in position to make the decision ourselves. Nor do we regard it as open to us, mechanistically, to hold an unfair dismissal automatically in this case and send the matter on for a remedy. It would involve, of course, the material presently in the Tribunal reasons to be put before it or a different Tribunal for it to base its Decision upon, for example, contribution, and that would be unsatisfactory. We consider that Burkett is applicable where a tribunal is live. When the case has been terminated in this way, the only approach is to reopen it on the basis of new evidence and it is fair to put that forward. We do not accept that it will in every case apply that an automatically unfair dismissal finding is made. We decline to make that finding. We will accede to the submission that this case be sent back to a differently constituted tribunal.
- Having heard Counsel on directions we note that this is now quite an old case. It will involve a lot of work to go into another hearing, and there are public funds involved, and the Applicant has suffered from considerable stress, and so the Tribunal below has been most anxious to see if there were any possibilities of resolving this and has recorded the approaches of the parties during the course of the relationship. We would very much hope that attention can be focussed on that. ACAS is available as this case is now back in the employment tribunal and the parties are entitled to call upon ACAS to assist in resolving these matters. We do not want to take the pressure off, so we think that 14 days is the correct period for exchange of evidence. The parties will jointly apply to the Norwich Tribunal for a four day hearing as quickly as possible and the parties are to report to the Norwich Tribunal within 21 days on such steps as they have taken to attempt alternative dispute resolution, and for that, the parties both being legally represented in this case, there is every chance that ACAS will offer its services and be useful.
- We would very much like to thank both Counsel for the succinct way in which they have put their case, both in writing and orally to us today. The appeal is allowed.
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