|For the Appellant
||MR BRIAN McCLUGGAGE
Messrs Cobbetts Solicitors
70 Gray's Inn Road
London WC1X 8BT
|For the Respondent
||MS ANYA PALMER
Messrs Morrish & Co LLP Solicitors
West Yorkshire LS1 3BE
Reasonableness of dismissal
It can only rarely be the case that it would be outside the range of reasonable responses for an employer to proceed with a disciplinary process before holding a grievance appeal, at least in the absence of some clear evidence of unfairness or uncompensatable prejudice to the employee.
The ET fell into error in holding that the Respondents had acted outside the band of reasonable responses in proceeding with a disciplinary hearing before the hearing of an appeal by the employees from the rejection of their grievance, where the grievance related to the subject matter of the disciplinary hearing. The employees had refused to comply with an instruction from the employers for over 3 months and could have raised any justification for the refusal to comply with the instruction at the disciplinary hearing. The ET had substituted its views for those of the Respondent as to what was reasonable.
The ET also conflated issues of contribution with a Polkey reduction, wrongly took account of matters not known to the Respondent at the time of the dismissal in assessing contribution, and conflated contribution to the dismissal with contribution to the fairness of the disciplinary process.
The ET's finding of 10 per cent contribution on the part of the Claimants was in any event unreasonable.
HIS HONOUR JUDGE SEROTA QC
- This is an appeal by the Respondent which was referred to a full hearing by Underhill J on 17 November 2009. The appeal is from a decision of the Employment Tribunal at Sheffield (Employment Judge Trayler and lay members) sent to the parties on 13 August 2009. The Employment Tribunal held that the Claimants had been unfairly dismissed but reduced compensation by 10 per cent by reason of contribution. A claim for breach of contract by the Claimants was dismissed.
The factual background
- The Respondent is a small independent brewer with some 200 public houses including the Holly Bush in Edenthorpe, Doncaster, which was managed by the Claimants. The Respondent also employed bar staff and cleaners who worked at the Holly Bush.
- The Employment Tribunal noted that at the relevant time the pub industry was in a state of some turbulence with a large number of outlets nationally closing on a daily basis. It found that the Respondent had sought to fill a certain requirement in relation to licensed premises. The Respondent's premises were only open until 11.00 pm, sold no alcopops or promotional cheap beer and did not have television or music on the premises. Instead, the Respondent was said to focus on presenting a warm and friendly convivial atmosphere and not to encourage binge drinking or other socially unacceptable results of the licensing trade. There was no doubt that the Respondent was suffering from a number of pressures leading to an increase in costs and a reduction in profits. The Respondent had embarked upon a review of operational needs
towards the end of 2007 at a time when in the words of the Employment Tribunal:
"It had been involved in challenging discussions with its bankers."
- Among the contractual provisions of relevance to these proceedings is paragraph 17 of the agreement whereby the Claimants were appointed as managers of the Holly Bush.
"The Managers shall not without previous authority of the company dismiss any staff" and "shall be entitled at their discretion to engage staff provided always that the weekly staff hours allocation provided in accordance with clause 17.2 … is not exceeded."
Paragraph 17:2 provided:
"The Manager(s) shall be informed from time to time by the designated Area Manager of the weekly staff hours allocation for the Business. That weekly staff hours allocation is subject to review at all times by the Area Manager and may vary upwards or downwards at the absolute discretion of the company."
- At the time at which the dispute between the Claimants and the Respondent arose the weekly staff hours allocation for the Holly Bush was 84 hours.
- The Claimants had opted out of the 44 hour time limit provided by the Working Time Regulations and both worked in excess of 48 hours per week.
- We note that the Respondent's written disciplinary and dismissal procedure provided that gross misconduct might result in summary dismissal and included what was described as "gross insubordination" and "deliberate refusal to carry out lawful instructions".
- Neither the Management Agreement nor the disciplinary and dismissal procedure contained a status quo or "standstill" provision, as one sometimes sees, which provides that where a grievance has been raised or an issue has arisen in relation to a change in the status quo, the status quo is to be preserved until the determination of the grievance.
- On 17 December 2007 Mr Sweetland, the Respondent's Area Manager, who was responsible for the Claimants and the Holly Bush, informed the Claimants that they would have to reduce staffing hours to 45 hours from the existing 84 hours and that any use of additional hours for exceptional circumstances had to be cleared by him in advance. (As a matter of interest we note that after new managers took over the Holly Bush in due course the staff hours were reduced and profitability increased.) The Employment Tribunal at paragraph 5.22 concluded that the decision to reduce staffing hours to 45 hours had been shown to be "a correct judgment".
- The Claimants were dissatisfied with the significant reduction in staffing hours and raised a grievance. Their complaint in essence was that the reduction in staff hours would necessarily lead to them having to work unacceptable hours. They also gave three months' notice to terminate their agreement to opt out of the requirement they should not work more than 48 hours per week. The Claimants declined to give effect to the direction to reduce staff hours in the meantime. So far as we are aware the managers of six other public houses owned by the Respondent were involved in a similar dispute and their trade union, Unite, was also involved.
- An informal meeting took place between the Claimants and Mr Sweetland on 25 January 2008. Mr Sweetland agreed to reduce staff hours to 58½ hours per week as opposed to 48 hours per week. He considered this was sufficient but the Claimants disagreed and still wished to pursue a formal grievance; a grievance hearing was fixed for 7 February 2008. On 7 February 2008 the Claimants had still not implemented the reduction in working hours. Mr Sweetland, having considered the matter, revised his target to 52 hours and made clear why he considered this was an appropriate reduction and would not lead to the Claimants working longer hours. He wrote to the Claimants following the meeting on 12 February 2008 and stressed that the new hours were to be implemented with immediate effect. He referred specifically to the provision of Clause 17(2) of the Management Agreement. Again, the Claimants did not comply with his instruction.
- On 15 February 2008 the Claimants appealed against the grievance decision. They maintained that setting staff hours at 52 hours per week was unrealistic. They proposed that the figure be set at 74 hours. In their letter to the Respondent the Claimants said that the status quo would apply and they would not implement the reduction of hours until the grievance procedure had been exhausted. An appeal against the grievance decision was fixed to take place before Mr Humphrey Smith, joint Managing Director, on 14 March 2008.
- On 6 March 2008 Mr Humphrey Smith visited the Holly Bush and met the Claimants. He told them his own review suggested that the appropriate staff hours would be 45 hours per week in order to bring the Holly Bush into line with other comparable houses. He wrote to the Claimants the following day and again reminded them of clause 17.2 and stated that he expected the new hours to be implemented by 9 March 2008. He also told them that he would have to adjourn the appeal in relation to the grievance that had been fixed for 14 March. He insisted that the necessary changes be implemented in the interim. He stated that the grievance appeal would be refixed; and we believe it was refixed to take place on 3 April. In his letter Mr Smith stated:
"You will have the opportunity at that appeal to challenge the decision. However in the meantime you are required to implement the change to staff hours. If your appeal is successful, a new staff hour allocation will be notified to you at that stage. Please note if you chose to ignore this decision and continue to operate with staff hours in excess of those allocated to you, you will be in breach of your Management Agreement. In such an event, the Company reserves the right to commence disciplinary action against you which could potentially result in the termination of your employment. …"
- The Claimants, however, insisted that the status quo would apply and that they would not make changes to staff hours until the grievance procedure had been exhausted. They continued to employ staff for 89 hours a week (at the Respondent's expense).
- Mr Smith replied on 11 March 2008 and pointed out that there was neither a contractual nor legislative basis for there to be any standstill and that the Respondent in accordance with Clause 17.2 of the Management Agreement had the right to vary weekly staff hours at its absolute discretion. He therefore made clear that the new hourly rate of 45 hours per week would have to be implemented by the Claimants with immediate effect; and he reiterated that if the Claimants chose to ignore that instruction and continued to operate with staff hours in excess of those allocated to them they would be in breach of the Management Agreement. In those circumstances the Respondent reserved the right to commence disciplinary proceedings against them. He informed them that he would contact the Claimants during the week to arrange a hearing for their appeal when they would have the opportunity to challenge the decision taken regarding staff hours. The Claimants, however, maintained their stance and apparently informed Mr Smith at a Managers liaison meeting on 13 March 2008 of this. On 18 March 2008 Mr Smith wrote to the Claimants. He repeated what had been said at the liaison meeting, that the Respondent was currently facing very challenging trading conditions and it had therefore been necessary to review the operational needs and productivity of each of its houses. He told Mr and Mrs Marshall that the decision to reduce the staff hours allocation at the Holly Bush was part of the Respondent's operational review and that:
"It is essential that operational savings are made in order t maintain the ongoing viability of the House. Without these operational savings, the House will simply not be sustainable …"
Mr Smith repeated that the level of staff hours had been set after a careful analysis and was both reasonable and achievable and would bring the Holly Bush into line with other comparable houses. Mr and Mrs Smith would be entitled to challenge the changes in staff hours at the appeal on 23 April. Mr Smith informed the Claimants that he had raised the question of whether they were entitled to insist on maintaining the status quo (as they had been advised by their trade union). He had been advised that there was no legal or contractual basis for the Claimants to refuse to implement the decision to reduce staff hours and in particular there was no legal basis to suggest that the status quo should apply pending the outcome of the grievance procedure.
"the fact that you have or intend to raise a grievance does not give you the right to refuse or delay the implementation of the decision to change the staff hour allocation. I would recommend that you take independent legal advice on this point in order to confirm the correct position. You will be eligible to make an application to the company's Legal Fees Fund to cover the cost of that advice."
- In light of the Claimants' ongoing refusal to implement the change in the staff hours they were required to attend a disciplinary hearing. Three possible dates were suggested - 20 March, 25 March or 27 March - in order to answer the allegation:
"You have failed to comply with a reasonable management instruction and in doing so acted in breach of the Management Agreement."
- Mr Smith noted that the Respondent considered the allegation to be a very serious disciplinary matter which if upheld could ultimately result in the termination of their employment. Mr Smith made clear that the Claimants were entitled to be accompanied at the hearing by another work colleague and a solicitor whose fees would be paid by the Legal Fees Fund or a trade union official. There was then a degree of 'to'ing and fro'ing' in relation to the dates of the disciplinary hearing by reason of a number of factors including holidays that had been booked by the Claimants and which the Claimants ultimately cancelled, the availability of their trade union representative and the perceived urgency of the matter on the part of the Respondent. Difficulties were compounded by advice from the Claimants' trade union that the disciplinary hearing should not be heard until after the grievance appeal. This, unfortunately, led the Claimants to taking the stance that they would not attend a disciplinary hearing until after the conclusion of their grievance appeal. The Respondent in its Notice of Appeal has suggested that the Claimants failed to agree to six proposed dates for the disciplinary hearing. The grievance appeal had been fixed for 3 April but was put back to 22 April as Mr Smith had been told the Claimants would be on holiday on 3 April. Again they were informed they could be represented by a solicitor, whose fees would be paid by the Legal Fees Fund, or by a trade union official. The Employment Tribunal found that on 3 April, during the course of a telephone conversation, the Claimants flatly refused to attend the disciplinary hearing until the grievance procedure had been exhausted. Confirmation of their stance is to be found in a letter of 4 April 2008 to Mr Smith in which they state:
"We have taken legal advice (from their trade union solicitors) and we have been advised that you should not take disciplinary action against us as the reason for the disciplinary is the subject of an outstanding grievance."
- On 8 April Mr Smith wrote to the Claimants referring to the conversation they had had with Mrs Stuart on 3 April and recorded they had said they would not attend any disciplinary hearing until the grievance procedure had been exhausted. Mr Smith reiterated his position that the fact that a grievance had been raised did not give the Claimants the right to refuse to attend the disciplinary hearing, which was now fixed for 10 April. The Claimants were informed that if they failed to attend the hearing without any reasonable cause or refused to attend the hearing he would be left with no alternative other than to take a decision on the matter on the basis of the information that he held without any representations being made by them, and he strongly recommended that they attended the hearing to put forward their representations.
- On 9 April Mr Bown on behalf of the union wrote to Mr Smith and pointed out that he had been advising most of the managers and manageresses of the Respondent's houses in the Yorkshire area. The letter contained the following:
"11…as a consequence of these grievances you have tried to instigate the disciplinary procedure. I would like to point out a couple of things at this point in time, first and foremost is that once somebody has registered a grievance with their company then the employer is not allowed to take part in a discipline procedure that connects and concerns the grievance procedure. In this particular case you are quite clearly disciplining people for taking part in their lawful statutory rights." (sic)
The letter asks that all disciplinary proceeding be stopped and a grievance meeting be arranged with a view to seeking mutual resolution. Failure to do this would leave only two options, to issue proceedings in the Employment Tribunal or to ballot for strike action.
- Mr Smith wrote again to Mr and Mrs Marshall on 11 April copied to Mr Bown. He was concerned that they were acting on what Mr Smith considered to be flawed advice in relation to their refusal to attend a disciplinary hearing. He reiterated his recommendation that they should seek independent legal advice in order to confirm the correct legal position and they would be entitled to make an application to the company's Legal Fees Fund in order to cover the costs of that advice. The Claimants had not attended the disciplinary hearing fixed for 10 April. Mr Smith said he understood the reason for their failure to attend was on the grounds they had received advice from their trade union representative that the disciplinary proceeding should not take place until the grievance procedure had been exhausted. He did not consider that this reason justified their failure to attend the hearing. He, therefore, was prepared to give them one final opportunity to attend a disciplinary hearing which he refixed for 14 April. The Claimants did not attend and the Employment Tribunal found (see paragraph 2.43) that the prime motivation for their not attending was the failure of the Respondent to conclude the appeal before the disciplinary action.
- The hearing proceeded in their absence and led to their immediate dismissal for gross misconduct. Mr Smith asserted that there was no truth in the suggestion that disciplinary proceedings had been commenced against the Claimants because they were exercising lawful statutory rights but that it was simply on the basis of their refusal to implement a reasonable instruction which had been identified as gross misconduct in the company's disciplinary procedure. The Claimants had repeatedly told Mr Smith they had no intention of implementing the staff hours reduction and Mr Smith concluded that a warning would be futile. Having taken into account their length of service and other mitigating circumstances he concluded the refusal was rendering the future employment relationship untenable and the house itself in jeopardy so their dismissal was confirmed with effect from 15 April 2008.
- We have little evidence in relation to the grievance appeal which took place on 22 April but was rejected. The Claimants' appeal against their dismissal was heard on 26 June 2008 and was attended by the Claimants. The dismissal was upheld; see paragraph 2.51 of the Decision of the Employment Tribunal.
The Decision of the Employment Tribunal
- The Employment Tribunal directed itself as to the law and its self direction is not challenged. The Employment Tribunal drew attention to the ACAS code then in force. Paragraphs 33 and 34 required an employer to consider suspending a disciplinary procedure for a short period while a grievance was dealt with when the grievance related to the subject matter of the disciplinary procedure. The Employment Tribunal's attention directed itself in relation to s 98(1) and s 98(2) of the Employment Rights Act 1996 and to the appropriate cases, making clear that when judging the fairness of the dismissal the Employment Tribunal should not substitute its view for those of the Respondent but should see whether the dismissal was within the range of responses open to a reasonable employer. It correctly directed itself that the same terms should be applied to the procedure adopted by the employer when assessing whether the employer has acted reasonably or unreasonably. It drew attention to the reduction of compensation under s 123 and reminded itself that the lawfulness of an instruction was not determinative of the fairness of a dismissal by reason of refusing to obey it, but that the lawfulness of the instruction was a relevant consideration to be taken into account when considering fairness.
- We have already set out the relevant facts as found by the Employment Tribunal and we now turn to its conclusions.
- The Employment Tribunal at paragraphs 5.1 and 5.2 found that the reason for the dismissal was the refusal of Mr and Mrs Marshall to implement the Respondent's decision to reduce the allocated staff hours. The Employment Tribunal considered that there was little reason to make a distinction between a "refusal or a delay in implementing the change of allocated hours". The Employment Tribunal noted that dismissal by reason of the Claimants' conduct in refusing to implement the instruction was a potentially fair reason for the dismissal.
- At paragraphs 5.3 and 5.4 the Employment Tribunal reminded itself of the need to determine the reasonableness of the dismissal in accordance with equity and the substantial merits of the case and the need to apply the "range of reasonable responses test". At paragraph 5.5 the Employment Tribunal reminded itself that the decision to cut costs of a business was one for the respondent and not for the Employment Tribunal.
- At paragraph 5.7 the Employment Tribunal rejected the submission made by the Claimants that the instruction to reduce staff hours was so unreasonable that the Claimants could justifiably ignore it.
"There was no alternative sanction the respondent was bound to apply in order to act reasonably. None was offered by the Claimants which meant the reduction in hours would be achieved."
- At paragraph 5.8 the Employment Tribunal held that the instruction was a "reasonable instruction" and that the Claimants were not prepared to give it a try at least until their grievance had been resolved.
- At paragraph 5.11 the Employment Tribunal having found that the Respondent had made calculations which the Employment Tribunal did not consider would have meant without doubt that the Claimants would have to work unreasonable or non-contractual hours (see 5.8) went on to consider the effects of the Claimants' refusal to delay implementation of the reduction of hours:
"There is provision within the disciplinary code to treat such matters as gross misconduct and therefore justifying dismissal. Sufficient warning was given in advance of the hearing for the Claimants to understand that this was potentially what would happen. We do not believe that there was any justification for the Claimants failing to implement the reduction in hours. It would have been open to them to have obtained a positive or more positive result from the appeal of a grievance or alternatively over the course of time impressed upon the area management the need to increase the staff hours in the light of experience in running the public house."
- The Employment Tribunal (paragraph 5.12) then noted that there was "no standstill" or "status quo" provision within the disciplinary procedure and that the advice given by the trade union to the Claimants and upon which they acted was based upon a false premise.
- Considerable stress has been laid by the Respondent on paragraph 5.14:
"Dismissal for this action therefore is in our view within a range of reasonable responses of a reasonable employer running a privately owned brewery faced with a refusal in effect to implement a reasonable management instruction. It cannot be said to be outside a range of reasonable responses to dismiss for that reason."
- The Tribunal then went on to find that the only legitimate criticisms of the procedure carried out by the Respondent were the conduct of the disciplinary hearing in the absence of Mr and Mrs Marshall and holding the disciplinary hearing before the grievance appeal had taken place. The Employment Tribunal, at paragraphs 5.16 and 5.17, asked itself whether the decision to hold the disciplinary hearing when the grievance appeal was to be heard one week later was outside the range of reasonable responses. The additional cost to the Respondent of paying for extra hours for a further week would be some £242.88. Having noted that the ACAS code did not provide for disciplinary proceedings to stop pending the appeal, the Employment Tribunal, at paragraphs 5.19 and 5.20, noted that there was no dispute between the Claimants and Mr Humphrey Smith that, had the Claimants' grievance appeal taken place and the Claimants had their say but their view was nonetheless rejected, they would have backed down and dismissal would have been avoided because had they backed down the Respondent would not have chosen to subsequently dismiss them.
"5.20 Therefore in that sense also we cannot make any reduction to any compensation due for unfair dismissal by reason of the inevitability of a dismissal had a different procedure been followed.
5.21 Our finding is that had the process been dealt with by finalising the grievance appeal hearing and then having the disciplinary hearing at the disciplinary hearing stage Mr and Mrs Marshall would have had to have backed down and would have backed down in order to preserve their employment. Mr Smith accepted in evidence that he would have allowed this."
- The Employment Tribunal then went on to refer to a "separate issue perhaps to be considered at a remedy hearing" as to how long the Claimants might have stayed at the Holly Bush had they accepted the decision of the grievance appeal and disciplinary hearing that the 45 hour limit should remain.
5.22 "We do not believe it is feasible that anything other than the 45 hour staffing limit was acceptable to the respondent and they have shown this to be a correct judgment."
- At paragraph 5.23 the Employment Tribunal reverted to the question of reasonableness
"…in this case, the event of having the disciplinary hearing before the grievance is effectively that by the time the grievance appeal is heard it has become something which has no positive import in that if as happened Mr Smith sticks to the 45 hour limit Mr and Mrs Marshall have no employment to go back to. The appeal proceeds some 3 months later and the Respondent again sticks to the 45 hour limit."
- The Employment Tribunal continued at 5.25:
"5.25 In our finding both the union and the Respondent and at the union' behest Mr and Mrs Marshall took intractable positions. Mr and Mrs Marshall wanted the appeal against the grievance held first and the Respondent wanting to get on with the disciplinary hearing. We bear in mind however that only 8 days is at stake and there will be little further delay necessary beyond 22 April if the Respondent addressed its mind to the matter soon afterwards.
5.26 Effectively Mr and Mrs Marshall have been deprived of a realistic opportunity to deal with their grievance by having the matter dealt with in this order and on that basis we believe that the dismissal is unfair. For example we had the Respondent willing to postpone the grievance to 22 April} a date after the return. of Mr and-Mrs. Marshall from their holidays and apart from the matter of the £242.88 per week lost by the continuing resistance to reduce hours by Mr and Mrs Marshall that is the only factor which weighs in favour of the necessity to avoid waiting a further week.
5.27 It is for the Respondent to apply a fair procedure. We believe it would have been fair to have held the grievance either immediately before or at the same time as the disciplinary process and it is not fair to deprive Mr and Mrs Marshall of their right to pursue a grievance appeal."
- The Employment Tribunal then at paragraphs 5.29 and 5.30 had this to say:
"5.29 Both sides obtained legal advice. The claimants had assistance from their union. We are critical of the respondent as above. We are critical of the claimants in that their refusal to follow a lawful instruction was the reason for the dismissal and contributed to it. But for the acknowledged position that a dismissal would have been avoided by a procedure which exhausted the grievance process before the disciplinary process and only an 8 day further delay being occasioned but such an approach we find is just and equitable to reduce the claimants' compensatory award by 10%.
5.30 That 10% reduction is to reflect both the contribution to the dismissal by an entrenched view being taken by the claimants on the procedure adopted and the refusal to follow a lawful instruction. Our award would have been reduced by a higher percentage but for the tangible and real prospect of avoiding dismissal for this conduct and the ultimate responsibility to conduct a fair procedure being on-the respondent."
- The Claimants' claims for breach of contract were rejected because they had been dismissed for gross misconduct for failing to apply a reasonable instruction. The Employment Tribunal was satisfied that the Respondent had satisfied the relevant statutory procedures.
Notice of Appeal and Respondent's submissions
- In grounds 1 and 2 it was said that the Employment Tribunal had misdirected itself by failing to correctly apply s 98(4) of the Employment Rights Act 1996. Having answered the statutory question in the Respondent's favour (whether dismissal for the Claimants' refusal to implement instructions was fair or not) as being the reason for dismissal it was wrong to focus on the delay in the grievance appeal. The Employment Tribunal should have considered the procedural and substantive matters together rather than separately because these are essentially part of the same question. Mr McCluggage drew our attention to Taylor v OCS  EWCA Civ 702.
- Mr McCluggage placed particular emphasis on the finding of the Employment Tribunal at paragraph 5.14 that dismissal in the circumstances of the case for refusal to implement a reasonable instruction was within the range of reasonable responses of a reasonable employer. Where the Employment Tribunal has found there was no justification for the Claimants to refuse to implement the instruction that the refusal amounted to gross misconduct the grievance appeal became irrelevant.
- Grounds 3 and 5 relate to what was submitted was the excessive weight placed by the Employment Tribunal, or its perverse conclusion, in treating the decision to hold the disciplinary hearing before the grievance appeal as a proper ground for finding that the dismissal was unfair. It was said that the reasoning of the Employment Tribunal was inconsistent. The Claimants should have followed the instruction and then tried to change the Respondent's mind on appeal, as the Employment Tribunal had found. It could not be unreasonable for the Respondent in those circumstances to take disciplinary action for non-compliance. The fact of the on-going grievance did not affect the gravity of misconduct that had already taken place. The Claimants could have raised issues at the disciplinary hearing in relation to the reasonableness of the instruction and at no time had they ever indicated that if the grievance went against them they would back down. Insufficient weight had been given to the misconduct and undue weight to the delay in holding the grievance appeal. Put another way, the Employment Tribunal had concentrated on the perceived unfairness of the disciplinary process as opposed to considering whether under s 98(4) of the Act the Respondent had reasonably treated the Claimants' misconduct as grounds for dismissal. Mr McCluggage also complained that the Employment Tribunal had not explained why the perceived unfairness in relation to the grievance appeal undermined the otherwise reasonableness or fairness of the decision to dismiss.
- Grounds 4, 6 and 7 assert that the Employment Tribunal has substituted its views for the reasonable employer. There was also a point taken that a burden of proof had wrongly been placed on the Respondent but Mr McCluggage (in our opinion correctly) abandoned this point. In relation to the question of substitution of views, Mr McCluggage drew our attention to paragraph 5.16 in which the Employment Tribunal said:
" … whether it was reasonable to proceed with the disciplinary hearing …"
and at paragraph 5.27 when the Employment Tribunal said
"We believe it would have been fair to have held the grievance either immediately before or at the same time as the disciplinary process …"
- Mr McCluggage relied upon this language as pointing to the fact that the Employment Tribunal had proceeded on its own subjective view of what was fair and had given no explanation as to why a reasonable employer would not have held the disciplinary hearing before the grievance appeal having regard to the fact that (a) the grievance did not suspend the instruction, (b) the Claimants' misconduct had been continuing for some time, (c) several disciplinary hearings had been postponed, (d) there was no such rule in the ACAS code (or indeed any authority to support the proposition); (e) the Employment Tribunal's reasoning was in any event inadequate because it had failed altogether to analyse the Respondent's reasons for holding the disciplinary hearing first. Mr McCluggage suggested that the Employment Tribunal had fallen into what he described as the 'London Ambulance v Small trap'.
- Ground 8 related to the submission that it was wrong for the Employment Tribunal to take into account in relation to the fairness of the dismissal a matter that was not known to the Respondent at the time, namely that the Claimants would have backed down if the grievance appeal had gone against them. In this regard he drew our attention to the decision of the House of Lords in Polkey v Dayton Services Ltd  AC 344.
- Grounds 9, 10 and 11 related to the failure to adjourn the disciplinary hearing. It was submitted on behalf of the Respondent that the Claimants had not been deprived of their grievance appeal as a grievance appeal was in due course heard. The Claimants already had had a grievance hearing it was only the appeal that was outstanding. It was in the circumstances perverse to find that a reasonable employer would have been bound to have adjourned the disciplinary hearing for the reasons already submitted; there was no contractual right to a standstill, no reference in the ACAS code, the adjournment of the disciplinary hearing and failure on the part of the Claimants to agree to some six dates between 20 March and 14 April, and the refusal to implement the instruction going back to 17 December 2007.
- Ground 12 related to contributory fault. It was asserted the Employment Tribunal wrongly took account of the fact that the dismissal could have been avoided. This was irrelevant to the Claimants' misconduct and was not known to the Respondent at the time. Mr McCluggage noted the finding by the Employment Tribunal that but for the prospect of avoiding the dismissal the contribution would have been very much higher. Mr McCluggage submitted the Employment Tribunal was wrong to look outside the Claimants' causative or contributory conduct in assessing the relevant percentage of contributory fault; and in this regard drew our attention to the decision in Parker Foundry v Slack  IRLR 11. The Employment Tribunal thus went outside the language of s 122 and s 123 of the Act and had conflated contributory fault with the approach to a "Polkey" deduction. Mr McCluggage pointed to paragraph 5.30 of the Decision where the Employment Tribunal had focussed on what it described as "the tangible and real prospect of avoiding dismissal" for the Claimants' misconduct rather than on the misconduct. It had concentrated on and had regard to hypothetical knowledge derived from hindsight and the Claimants during their submissions to the Employment Tribunal had accepted the Employment Tribunal was not entitled to rely upon such knowledge.
- Ground 13 related to the approach of the Employment Tribunal in approaching the question of contributory fault by reference to the relative contribution to the alleged procedural unfairness whereas this matter should have been assessed by reference to contribution to the dismissal.
- In ground 14 the Respondent seeks to argue that the reduction in compensation of 10 per cent for contributory fault was plainly wrong and that the Employment Appeal Tribunal should substitute its own views of the Claimants' contributory fault. Mr McCluggage submitted that the Claimants could have been dismissed fairly for one week's failure to implement the instruction to reduce staff hours let alone three months. Where, on the findings of the Employment Tribunal, the Claimants did not even given those instructions a try and had no justification for refusal to follow them the contribution should have been assessed at 100 per cent.
- In conclusion Mr McCluggage submitted it was not appropriate for this matter to be remitted to the Employment Tribunal but we should substitute a finding that the dismissal was fair or alternatively substitute a finding of 100 per cent contribution.
The Claimants' Submission
- Ms Palmer grasped the nettle at the outset in relation to paragraph 5.14 of the Decision of the Employment Tribunal, in which the Employment Tribunal had said that dismissal for the Claimants' misconduct was within the range of reasonable responses for a reasonable employer and that it could not be said to be outside a range of reasonable responses to dismiss for that reason. She submitted that reading the judgment as a whole that only related to the sanction of dismissal and not whether the procedure was outside the band of reasonable responses. She drew our attention to paragraphs 5.17 and 5.32. The finding at 5.14, she submitted, was not an answer to the question as to whether the overall circumstances of the dismissal were fair. This was a preliminary conclusion later overridden by the Employment Tribunal's decision on procedural unfairness.
- The Employment Tribunal in the circumstances was entitled to conclude that the dismissal was outside the range of reasonable responses. A reasonable investigation included fair procedures and it was necessary to apply the reasonable band of responses' test to those procedures; in this case the Employment Tribunal found that they had been breached.
- The main thrust of Ms Palmer's arguments was that the grievance appeal was of great importance because it went to the question of whether the instruction to reduce staff hours was reasonable or not. It was submitted that the Claimants did not refuse to carry out the instruction for all time but only until the conclusion of their grievance appeal which was due to be heard on the 14 March but which was cancelled for no apparent reason on 6 March. The Respondent was insisting that the instruction to reduce staffing hours be complied with before the grievance appeal. As the grievance raised the issue of whether the instruction was reasonable it was difficult to see how the Respondent could fairly defer consideration of the reasonableness of the instruction until after the disciplinary hearing. At this point in her submissions Mr Yeboah asked Ms Palmer why the Claimants could not argue the same points they wished to raise on the grievance appeal as a defence to the disciplinary charges. Ms Palmer said she could not say why they could not but it was necessary to have regard to what she described as 'the power imbalance between the Claimants and the Respondent'. The Claimants had been told that the grievance appeal would be dealt with on another day and Mr Humphrey Smith was simply throwing his weight about.
- Ms Palmer went on to submit that by postponing the grievance appeal and demanding immediate compliance the Respondent was insisting on the Claimants' unquestioning obedience to an instruction that might be regarded as unreasonable. No good reasons had been advanced by the Respondent in any event for holding the disciplinary proceedings first or for the cancellation of the original grievance appeal. Appeals should be heard quickly and she noted that there was a delay as the appeal was not heard until four months after the grievance, although as Mr Yeboah had pointed out the grievance itself had been dealt with in the letter of 12 February and we were concerned with an appeal rather than the actual hearing of the grievance itself.
- Ms Palmer submitted that the crux of understanding the Employment Tribunal's Decision was appreciating that it had looked at the proceedings as a whole, and on the facts of the case as a whole the refusal to hold the grievance appeal was unreasonable. It was not the Claimants' case that an employer always had to have a grievance appeal heard before a disciplinary hearing where the subject matter of both hearings overlapped but, on the facts of this particular case, the Employment Tribunal was entitled to conclude that no reasonable employer could have refused to adjourn the disciplinary hearing until after the grievance appeal. She again stressed that the grievance appeal related to the reasonableness of the instruction to reduce staff hours and that this was also central to the disciplinary charges.
- Ms Palmer rejected the submission that the Employment Tribunal had substituted its views for those of the Respondent. It had clearly and correctly directed itself as to the importance of respecting the reasonable band of responses on the part of the Respondent and the inadmissibility of substituting its own views for those of the Respondent. She also submitted that the Employment Tribunal had not attempted to split procedural and substantive unfairness.
- Ms Palmer submitted that the Employment Tribunal had been correct to find that the Claimants had been deprived of the benefit of the grievance appeal because the delay meant that they would be deprived of a realistic opportunity of dealing with their grievance as their jobs would have gone and the grievance in those circumstances would have become pointless.
- Ms Palmer submitted the Employment Tribunal did not take account of matters not known to the Respondent at the time of dismissal save in relation to the question of a Polkey deduction, which it was bound to do. She later put the matter a little differently and said that if the Employment Tribunal did take account of the fact that the dismissal could have been avoided, although this was not known at the time of dismissal, that would be a question of a Polkey deduction rather than contribution. Apart from that there was no error in the approach of the Employment Tribunal.
- Finally she submitted to us that the Employment Tribunal was entitled to conclude that the appropriate contribution was no more than 10 per cent and the Employment Tribunal was entitled to conclude (implicitly) that the Respondent bore 90 per cent of the blame for the dismissal by reason of the refusal to adjourn the disciplinary hearing. The Employment Tribunal were entitled to have regard to this because it was necessary to take a wide view of what was relevant to issues of contributory fault; she drew our attention to G R Maris v Rotherham Borough Council  IRLR 147 and Al Jumard v Clwyd Leisure Ltd  UKEAT/0034/07.
- The decision of the Employment Tribunal was "unarguably right" and even if there were minor errors the decision should be upheld; in this regard she referred us to the well-known decision of Dobie v Burns International Security Services  IRLR 329.
- At the outset we reminded ourselves of the helpful dicta of Mummery LJ in London Ambulance v Small  EWCA Civ 220:
"It is all too easy, even for an experienced ET, to slip into the substitution mindset. In conduct cases the claimant often comes to the ET with more evidence and with an understandable determination to clear his name and to prove to the ET that he is innocent of the charges made against him by his employer. He has lost his job in circumstances that may make it difficult for him to get another job. He may well gain the sympathy of the ET so that it is carried along the acquittal route and away from the real question- whether the employer acted fairly and reasonably in all the circumstances at the time of the dismissal."
- We then needed to remind ourselves as to the provisions of s 123 (6) of the Employment Rights Act 1996 as to contribution:
"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."
- Cases relating to the construction of s 116 (3) of the Industrial Relations Act 1971, which was in somewhat different terms, have suggested that contributory conduct requires consideration of "all the circumstances surrounding the dismissal". For example see Maris v Rotherham Borough Council  IRLR 147 (NIRC); Sir Hugh Griffiths saying this at paragraph 26:
"'The matters to which the complaint relates' in the subsection are words of wide import and bring into consideration all the circumstances surrounding the dismissal, requiring the Tribunal to take a broad common sense view of the situation and to decide what, if any, part the applicant's own conduct played in contributing to his dismissal, and then in the light of that finding decide what, if any, reduction should be made in the assessment of his loss."
- This dictum was recently recited with approval by Elias P in Al Jumard v Clywd Leisure Ltd  UKEAT/0334/07 in relation to s 123 (6) of the Employment Rights Act 1996.
- The Court of Appeal in Parker Foundry Ltd v Slack  IRLR 11 considered the effect of s 74 (6) of the Employment Protection (Consolidation) Act 1978 which corresponds to s 123 (6) of the Employment Rights Act. Balcombe LJ had this to say at paragraph 41:
"The absence of the words 'in all the circumstances' in subsection (6) of s.74 of the 1978 Act, in contradistinction to their presence in subsection (1), is significant. In my judgment subsection (6) is looking only to the causative or contributory conduct of the complainant as a ground for the reduction of the compensatory award to which the complainant would otherwise be entitled under subsection (1). The words 'just and equitable' in subsection (6) give the Tribunal a discretion to decide by what proportion the compensatory award should be reduced. They do not, in my judgment, entitle the Tribunal to take into account matters other than the causative or contributory conduct as a ground for deciding the proportion by which the compensatory award is to be reduced."
- It is important for employment tribunals to remember that separate consideration needs to be given to the issues of contribution and Polkey deduction. In this regard we refer to the judgment of Elias J in Software 2000 Ltd v Andrews  IRLR 568 at paragraph 54.
- We start by reminding ourselves of certain important findings of fact made by the Employment Tribunal.
(a) The Respondent's decision to reduce staff hours at the Holly Bush was reasonable (5.8).
(b) The instructions were a clear management decision communicated to the Claimants in a clear way that underlined the gravity of the matter and the Claimants were warned repeatedly that refusal to comply pending determination of their grievance appeal could lead to dismissal. They were urged to obtain legal advice (5.7, 5.11). There was no provision in the disciplinary code for any status quo or standstill; see 5.12.
(c) There was no justification for the Claimants failing to implement the reduction in hours whether the Claimants' conduct amounted to an out and out refusal or a delay; see 5.1 and 5.11. It was open to the Claimants to have obtained a positive or more positive result from the appeal of a grievance or alternatively over the course of time impressed upon their area manager the need to increase staff hours in the light of experience.
(d) The dismissal was within the range of reasonable responses; see 5.14.
- We also note the following in relation to the question of whether the grievance appeal should be heard after the disciplinary hearing.
(a) There was nothing in the ACAS code that required the grievance appeal to be heard first. The ACAS code was neutral.
(b) It is difficult to see what detriment the Claimants might suffer had they implemented the procedures. They were promised that if their grievance succeeded the hours would be recalculated.
(c) There was no reason, as was conceded by Ms Palmer, why the Claimants could not raise issues as to the reasonableness of the instruction to reduce staff hours at the disciplinary hearing. It was unfortunate that as a result of poor advice the Claimants chose to boycott that hearing.
(d) The Claimants could at any time have said they would accept the reduction in hours if their grievance appeal failed. They could have complied under protest. Ms Palmer's submission that the Claimants would not have been able to challenge the reasonableness of the decision at a disciplinary hearing because Mr Humphrey Smith had made up his mind and because of the power imbalance between the Claimants and the Respondent does not appear in the reasoning of the Employment Tribunal or in any evidence we have seen.
(e) We can see difficulties in the suggestion that was made that the disciplinary hearing and the grievance appeal could have been heard at the same time. There would be difficulties in arranging an appeal from the disciplinary hearing and it might be said that once both joint Managing Directors had been involved there was no one able to undertake a further appeal. This, however, is a matter of minor significance and does not form part of our reasoning.
(f) There is no authority for the proposition that it is necessary to complete the entire grievance procedure (including an appeal) before a disciplinary hearing can take place. We would suggest it can only be in the rarest of cases that it would be outside the range of reasonable responses for an employer to proceed with a disciplinary process before hearing a grievance appeal, at least in the absence of some clear evidence of unfairness or uncompensatable prejudice. It is important to bear in mind that this is not a case where there had been no grievance hearing at all, such a hearing had taken place, which rather makes the Respondent's case stronger. No principle was relied upon by the Employment Tribunal or by the Claimant as to the appropriate timing and in this regard it looks very much as if the Employment Tribunal has substituted its decision for that which was reasonable for that of the Respondent.
- In the circumstances and having regard to the facts which we have outlined the suggestion that the Employment Tribunal fell into the London Ambulance v Small "trap" appears to have substance. This is particularly so because the Employment Tribunal knew with the benefit of hindsight what the Respondent did not know at the time of dismissal that the Claimants would have stepped back if their grievance appeal was unsuccessful and that the Respondent would have accepted the position and would not have dismissed them.
- It is difficult to see in the circumstances how the decision to dismiss for failure to comply with a reasonable instruction after three months (leading to additional expenditure by the Respondent) could be outside the reasonable band of responses simply because the grievance appeal was delayed.
- We have considered the point made by Ms Palmer that the Claimants' case had always been they would not comply with the instruction to reduce staffing hours until their grievance appeal had been heard so it should be inferred that if their grievance appeal had been unsatisfactory they would have complied with the instruction. Mr Yeboah pointed out during the course of the hearing that the Employment Tribunal rejected the distinction between deferring implementation and refusal to do so, the failure to comply was found by the Employment Tribunal to constitute gross misconduct and there was no evidence at all that the Claimants had ever made clear that if the grievance appeal went against them they would have accepted the instruction.
- We accept that the Employment Tribunal has concentrated on the perceived unfairness of the disciplinary process rather than concentrating on the question it was required to consider under s 98 (4) whether the Respondent reasonably treated the misconduct as grounds for dismissal. The decision that no reasonable employer would have arranged for the grievance appeal to be heard until after the disciplinary hearing where there had been a repeated and ill-advised refusal to comply with what the Employment Tribunal found to be a reasonable instruction is simply wrong as a matter of law and amounts to a substitution of the views of the Employment Tribunal for those of the Respondent. Alternatively, the decision in that regard by the Employment Tribunal is unreasonable and cannot be upheld.
- In terms of contribution it seems to us that the Employment Tribunal has failed to follow the guidance of Parker Foundry, to which we have referred earlier, and has had regard to issues outside contribution to the dismissal, i.e. the failure to hold the grievance appeal before the disciplinary hearing. The Employment Tribunal were wrong in looking to contribution to the fairness as opposed to the fact of the dismissal. The Employment Tribunal has, it may fairly be said, run together issues of contributory fault and Polkey reduction which are required to be kept separate. Although we recognise that the dicta we have cited in Maris recently cited by Elias J in Al Jumard, to which we have referred earlier, suggest that a broad approach is appropriate when considering issues as to contribution, we are bound by the decision in Parker Foundry to hold that even if one allows a broad meaning to the term "contribution", the contribution has to be a contribution to the dismissal as opposed the fairness of the dismissal.
- We are not able to accept Ms Palmer's submission that the Employment Tribunal only took account of what the Claimants would have done at a grievance appeal in considering a Polkey question. It is clear that it ran this point together with issues as to contribution especially at paragraph 5.30 where the point is expressly and explicitly made in relation to contribution.
- The after acquired knowledge of what would have happened at a grievance appeal is irrelevant, in our opinion, to the question as to the extent to which the Claimants contributed to their dismissal. It was clearly not known at the time of dismissal and no indication had been given by the Claimants, although they had every opportunity to do so, that if the grievance went against them they would back down.
- Even were we to be wrong in our finding that the dismissal was not unfair the finding by the Employment Tribunal of a 10 per cent contribution flies in the face of the findings made by the Employment Tribunal and is far too low as to be outside the band of reasonable findings by the Employment Tribunal. We do not feel ourselves able to accept the contribution and were it not for the fact that we have allowed the appeal on other grounds this point would have had to be remitted to the Employment Tribunal.
- In the circumstances and for the reasons we have given therefore we have concluded that the Employment Tribunal's decision cannot stand and that we should substitute a decision holding that the dismissal was not unfair. Were we to be wrong, we would have found that the Employment Tribunal (for the reasons we have set out) misdirected itself as to the level of contribution or we would have permitted the issue of contribution to be considered by another Employment Tribunal.
- In the light of our conclusions it is not necessary for us to address every submission that has been made to us but we would wish to express our gratitude both to Mr McCluggage and to Ms Palmer for their most helpful written and oral submissions.