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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Punch Pub Company Ltd v O’'Neill [2010] UKEAT 0287_09_2307 (23 July 2010) URL: https://www.bailii.org/uk/cases/UKEAT/2010/0287_09_2307.html Cite as: [2010] UKEAT 287_9_2307, [2010] UKEAT 0287_09_2307 |
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At the Tribunal | |
On 9 February 2010 | |
Before
HIS HONOUR JUDGE SEROTA QC
MR T HAYWOOD
MR P SMITH
(FORMERLY SPIRIT GROUP LTD) |
APPELLANT |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
For the Appellant | MS JOANNE WOODWARD (of Counsel) Instructed by: Messrs Halliwells LLP Solicitors 3 Hardman Square Spinningfields Manchester M3 3EB |
For the Respondent | MR JAMIE ANDERSON (of Counsel) Instructed by: Messrs Grey Street Lawyers 4th Floor Central Exchange Building 93A Grey Street Newcastle-upon-Tyne NE1 6EG |
SUMMARY
UNFAIR DISMISSAL
Reasonableness of dismissal
Procedural fairness/automatically unfair dismissal
The Employment Tribunal failed to consider the effect of S98A(2) of the Employment Rights Act 1996. Had it done so it would have been bound to find that had the Respondent followed a fair dismissal procedure the Claimant would have been dismissed in any event.
HIS HONOUR JUDGE SEROTA QC
Introduction
Factual Background
"The question of disciplinary action against you, in accordance with the company disciplinary procedure, with regards to the following allegations: unreconciled transactions totalling £7,916.68 on 12/11/05."
"Failure to follow company policy and procedures, specifically in the relation to the serious breach of company paperwork and financial transactions procedures resulting in a current deficit of £7,916.68. Failure to ensure sufficient processes were in place to check that banking was completed on time and accurately."
The Decision of the Employment Tribunal
"We do, however, consider that the Claimant contributed to his dismissal. We consider that the cause of the Claimant's dismissal related to his failing to follow company paperwork and procedures with regard to banking. That is clearly indicated from the bank reconciliation document and indeed some of the paying in slips. We accept that the Claimant is largely a very honest person, however, we do not accept he could have been properly checking the banking process on the basis of the documentation provided before us, for example at pages 160-163, as if he had been undertaking a proper check he would have identified the problem at a much earlier stage. Furthermore, we note that he signed an audit report indicating that he was not even doing the cash checks properly. We accept that the Claimant was entitled to delegate his duties with regard to bankings. Ms Sinclair in various emails and in a meeting seemed to acknowledge that the Claimant had arranged for Ms Findlay to do the banking. We do not however consider that the Claimant, having been allowed to delegate this duty undertook any proper checks to ensure that the banking was being properly undertaken. In that regard we note from the procedures and indeed the Claimant's own admission that he was at the end of the day responsible for the banking as he was the manager of this pub and therefore the ultimate responsibility lay with him. For those reasons we have assessed his contribution to his dismissal at 50%. We have considered just and equitable issues in that regard and these are noted below."
"We have noted that Ms Sinclair did not undertake any disciplinary action against the Claimant in relation to failings in relation to the bankings previously. However, in this case substantial monies are missing which have never been recovered and we consider that it is therefore possible that the Respondents would have fairly dismissed the Claimant if they had properly followed procedures and on that basis we have further reduced the award by 25% on just and equitable grounds."
The Employment Tribunal then went on to deal with issues of reinstatement mitigation with which we are not concerned.
The Notice of Appeal and Submissions in Support
The Claimant's Cross Appeal Submissions on the Respondent's Appeal
The Relevant Law and Discussion
"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."
"(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if –
(a) one of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 (dismissal and disciplinary procedures) applies in relation to the dismissal,
(b) the procedure has not been completed, and
(c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.
(2) Subject to subsection (1), failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of section 98(4)(a) as by itself making the employer's action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure.
(3) For the purposes of this section, any question as to the application of a procedure set out in Part 1 of Schedule 2 to the Employment Act 2002, completion of such a procedure or failure to comply with the requirements of such a procedure shall be determined by reference to regulations under section 31 of that Act."
"Step 1: statement of grounds for action and invitation to meeting
1. (1) The employer must set out in writing the employee's alleged conduct or characteristics, or other circumstances, which lead him to contemplate dismissing or taking disciplinary action against the employee.
(2) The employer must send the statement or a copy of it to the employee and invite the employee to attend a meeting to discuss the matter.
Step 2: meeting
2. (1) The meeting must take place before action is taken, except in the case where the disciplinary action consists of suspension.
(2) The meeting must not take place unless—
(a) the employer has informed the employee what the basis was for including in the statement under paragraph 1(1) the ground or grounds given in it, and
(b) the employee has had a reasonable opportunity to consider his response to that information.
(3) The employee must take all reasonable steps to attend the meeting.
(4) After the meeting, the employer must inform the employee of his decision and notify him of the right to appeal against the decision if he is not satisfied with it.
Step 3: appeal
3.(1) If the employee does wish to appeal, he must inform the employer.
(2) If the employee informs the employer of his wish to appeal, the employer must invite him to attend a further meeting.
(3) The employee must take all reasonable steps to attend the meeting.
(4) The appeal meeting need not take place before the dismissal or disciplinary action takes effect.
After the appeal meeting, the employer must inform the employee of his final decision.
GENERAL REQUIREMENTS
Introductory
11. The following requirements apply to each of the procedures set out above (so far as is applicable).
Timetable
12. Each step and action under the procedure must be taken without unreasonable delay.
Meetings
13. (1) Timing and location of meeting must be reasonable.
(2) Meetings must be conducted in a manner that enables both employer and employee to explain their cases.
(3) In the case of appeal meetings which are not the first meeting, the employer should, as far as is reasonably practicable, be represented by a more senior manager than attended the first meeting (unless the most senior manager attended that meeting)."
We should also note that paragraph 13(2) of Schedule 2 provides that meetings "must be conducted in a manner that enables both employer and employee to explain their cases".
"33. First, the purpose of these statutory procedures is to seek to prevent the matter going to an Employment Tribunal if possible by providing the opportunity for differences to be resolved internally at an earlier stage: see the observations in the Canary Wharf case, para. Hence the reason why these procedures apply at the stage when dismissals are still only proposed and before they have taken effect. However, to achieve that purpose the information to be provided must be at least sufficient to enable the employee to give a considered and informed response to the proposed decision to dismiss.
34. Second, these procedures are concerned only with establishing the basic statutory minimum standard. It is plainly not the intention of Parliament that all procedural defects should render the dismissal automatically unfair with the increased compensation that such a finding attracts. They are intended to apply to all employers, large and small, sophisticated and unsophisticated. They are not intended to impose all the requirements breach of which might, depending on the circumstances, render a dismissal unfair. This suggests that the bar for compliance with these procedures should not be set too high.
35. Third, we think that it is relevant to bear in mind that once the statutory procedures have been complied with, employers are thereafter provided with a defence for failing to comply with fuller procedural safeguards if they can show that the dismissal would have occurred anyway even had such procedures been properly followed. This factor, in our view, militates against allowing the bar for the statutory procedures being set too low.
36. It must be emphasised that the statutory dismissal procedures are not concerned with the reasonableness of the employer's grounds, nor the basis of those grounds, in themselves. It may be that the basis for a dismissal is quite misconceived or unjustified, or that the employer has adopted inappropriate or vague criteria, or acted unreasonably in insisting on dismissing in the light of the employee's response. These are of course highly relevant to whether the dismissal is unfair, but it is irrelevant to the issue whether the statutory procedures have been complied with. The duty on the employer is to provide the ground for dismissal and the reasons why he is relying on that ground. At this stage, the focus is on what he is proposing to do and why he proposing to do it, rather than how reasonable it is for him to be doing it at all.
38. Taking these considerations into account, in our view, the proper analysis of the employer's obligation is as follows. At the first step the employer merely has to set out in writing the grounds which lead him to contemplate dismissing the employee, together with an invitation to attend a meeting. At that stage, in our view, the statement need do no more than state the issue in broad terms. We agree with Mr Barnett that at step one the employee simply needs to be told that he is at risk of dismissal and why. In a conduct case this will be identifying the nature of the misconduct in issue, such as fighting, insubordination or dishonesty. In other cases it may require no more than specifying, for example, that it is lack of capability or redundancy. That is consistent, we think, with the approach which this Tribunal has adopted in relation to grievance procedures in the Canary Wharf and other cases. Of course, most employers will say more than this brief statement of grounds, but compliance with the statutory minimum procedure is in our view met by a limited written statement of that nature.
39. It is at the second step that the employer must inform the employee of the basis for the ground or grounds given in the statement. This information need not be reduced into writing; it can be given orally. The basis for the grounds are simply the matters which have led the employer to contemplate dismissing for the stated ground or grounds. In the classic case of alleged misconduct this will mean putting the case against the employee; the detailed evidence need not be provided for compliance with this procedure, but the employee must be given sufficient detail of the case against him to enable him properly to put his side of the story. The fundamental elements of fairness must be met."
"16. The effect of section 98A(2) was to reverse Polkey and to reinstate the position as it had been under British Labour Pump v Byrne (save in a situation, not material here, where the statutory procedures have been breached).
17. The consequence is that if the employer satisfies the tribunal on the balance of probabilities that the employee would have been dismissed even had fair procedures been adopted, the dismissal must be held to be fair. If the tribunal finds that there would have been a chance of such a dismissal but falling short of 50%, then the tribunal must find that the dismissal was unfair but reduce the compensation, in line with the Polkey decision itself, to take account of the risk that a fair dismissal would have occurred anyway."
"54. The following principles emerge from these cases:
(1) In assessing compensation the task of the Tribunal is to assess the loss flowing from the dismissal, using its common sense, experience and sense of justice. In the normal case that requires it to assess for how long the employee would have been employed but for the dismissal.
(2) If the employer seeks to contend that the employee would or might have ceased to be employed in any event had fair procedures been followed, or alternatively would not have continued in employment indefinitely, it is for him to adduce any relevant evidence on which he wishes to rely. However, the Tribunal must have regard to all the evidence when making that assessment, including any evidence from the employee himself. (He might, for example, have given evidence that he had intended to retire in the near future).
(3) However, there will be circumstances where the nature of the evidence which the employer wishes to adduce, or on which he seeks to rely, is so unreliable that the tribunal may take the view that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction based on that evidence can properly be made.
(4) Whether that is the position is a matter of impression and judgment for the Tribunal. But in reaching that decision the Tribunal must direct itself properly. It must recognise that it should have regard to any material and reliable evidence which might assist it in fixing just compensation, even if there are limits to the extent to which it can confidently predict what might have been; and it must appreciate that a degree of uncertainty is an inevitable feature of the exercise. The mere fact that an element of speculation is involved is not a reason for refusing to have regard to the evidence.
(5) An appellate court must be wary about interfering with the Tribunal's assessment that the exercise is too speculative. However, it must interfere if the Tribunal has not directed itself properly and has taken too narrow a view of its role.
(6) The s.98A(2) and Polkey exercises run in parallel and will often involve consideration of the same evidence, but they must not be conflated. It follows that even if a Tribunal considers that some of the evidence or potential evidence to be too speculative to form any sensible view as to whether dismissal would have occurred on the balance of probabilities, it must nevertheless take into account any evidence on which it considers it can properly rely and from which it could in principle conclude that the employment may have come to an end when it did, or alternatively would not have continued indefinitely.
(7) Having considered the evidence, the Tribunal may determine
(a) That if fair procedures had been complied with, the employer has satisfied it - the onus being firmly on the employer - that on the balance of probabilities the dismissal would have occurred when it did in any event. The dismissal is then fair by virtue of s.98A(2).
(b) That there was a chance of dismissal but less than 50%, in which case compensation should be reduced accordingly.
(c) That employment would have continued but only for a limited fixed period. The evidence demonstrating that may be wholly unrelated to the circumstances relating to the dismissal itself, as in the O'Donoghue case.
(d) Employment would have continued indefinitely.
However, this last finding should be reached only where the evidence that it might have been terminated earlier is so scant that it can effectively be ignored."
"In seeking to resolve this matter, it is necessary to make two observations of a general nature. In the first place, when an industrial tribunal is addressing the question in the context of remedy, against a background of procedural unfairness, whether a fair procedure if it had been adopted would have achieved the same result, ie dismissal, the tribunal is always addressing itself to a hypothetical question since dismissal has in fact occurred. The role of the tribunal in this narrow context does not bear upon its general role to determine the reasonableness of dismissal, where it has been frequently said that the tribunal should not conduct what amounts to an independent investigation and reach its own conclusions. In this context, it must conduct an investigation by acceptable evidence to achieve an answer to the hypothetical question, and the only decision can be that of its own. Secondly, it is necessary in addressing this issue, assuming the tribunal determines that the evidence at least supports the position that dismissal would have occurred in any event, that the tribunal thereafter address that question as a matter of probability, to be assessed in percentage terms. In many cases, failure to address the secondary question of assessment of probable risk will render a tribunal's approach flawed. However, if it does make an assessment upon the evidence, that is a question of fact which would rarely be interfered with by this tribunal."
"There are two lessons to be drawn from these appeals. The first is that, while it is perfectly acceptable for reasons to be set out briefly in a judgment, it is the duty of the judge to produce a judgment that gives a clear explanation for his or her order. The second is that an unsuccessful party should not seek to upset a judgment on the ground of inadequacy of reasons unless, despite the advantage of considering the judgment with knowledge of the evidence given and submissions made at the trial, that party is unable to understand why it is that the judge has reached an adverse decision."
"It is important, however, that, when a conclusion is reached as to what is likely to have happened had the employment been allowed to continue, the reasons for that conclusion and the factors relied on are sufficiently stated."
"The Industrial Tribunal's function in considering s.73(7) and s.74(6) [contrib. reductions] is what it was in considering the statutory forerunners of those subsections: it is to take a broad commonsense view of the situation and to decide what, if any, part the employee's own conduct played in causing or contributing to his or her dismissal and then, in the light of that finding, decide what, if any, reduction should be made in assessment of his or her loss: Maris v Rotherham Corporation [1974] IRLR 147 per Sir Hugh Griffiths."
Conclusions
Step 2
"25. With the benefit of fuller argument than has been available to any tribunal in reaching its decision, I have reached the conclusion that there was no error of law in the ET's decision on the construction of section 98A. In my judgment, the section distinguishes between three things: the applicable procedure, the completion of the procedure and compliance with the requirements of the procedure. The question whether the procedure applies obviously has to be addressed before the question whether the procedure has been completed. If the procedure does not apply in relation to the dismissal, the question whether it has been completed never arises. Similarly, the question whether the procedure has been completed must be addressed before the question of non-compliance with the general requirements of the procedure. If the procedure has been completed, the question whether there has been non-compliance with the general requirements of the procedure never arises.
26. Completion of the procedure is not made expressly or impliedly conditional on, or subject to, compliance with the general requirements. All the prescribed steps in the applicable procedure may be completed, even if there has been non-compliance with other procedural requirements, such as the timetabling standards.
27. In other words, non-compliance with the stipulated requirements is relevant to deciding, in a case where there has not been completion, who is responsible for the non-completion. Where there has been completion of the procedure, as here, it is futile to inquire to whom the "non-completion" is to be attributed."
Here the appeal has been completed and it is irrelevant that (if it be the case) earlier procedures may not have been inadequate.
"It is important, however, that, when a conclusion is reached as to what is likely to have happened had the employment been allowed to continue, the reasons for that conclusion and the factors relied on are sufficiently stated."
Mr Smith's Reasons
"17. If the tribunal finds that there would have been a chance of such a dismissal but falling short of 50%, then the tribunal must find that the dismissal was unfair."
In a case such as this where the absence of a reasonable investigation and/or a fair procedure leads to what may be termed a "short of 50%" Salford chance of a fair dismissal, the Employment Tribunal "must find that the dismissal was unfair" and this appeal should be dismissed. Applying that principle to this case, the minority accepts Mr Anderson's submission (para 4) that the Tribunal's 25% Polkey/just and equitable reduction was the clearest indication that they assessed as falling short of 50% the chance of the Claimant being fairly dismissed via a fair procedure. If in practice (as in para 68 above) the question should be whether the Claimant would (i.e. as opposed to "could") have been fairly dismissed, then what may be termed the Tribunal's Salford threshold figure would have been even lower than 25%. By contrast, although Ms Woodward's skeleton (para 33) did not clearly state that the appeal on dismissal was a perversity appeal, her reference to "properly directed .. reasonable tribunal" and EAT substitution makes it clear that this was all a perversity appeal. So the question to be asked is whether this unanimous Tribunal judgment on dismissal was one which no reasonable tribunal, properly directing itself on the law cold have reached? And in simple terms, the minority concludes that a perversity appeal must fail because the Tribunal had reasonably assessed the chances of a fair dismissal as falling below the Salford standard. Ms Woodward's challenge also failed to meet the standard of either Lord Justice May's "my goodness that was certainly wrong" test or Lord Mummery's "judgment which no reasonable tribunal, properly directing itself on the law, could have reached" test. A perversity appeal must, in the view of the minority, fail precisely because this Tribunal had reasonably assessed the chance of a fair dismissal as falling short of the 50% Salford test; and unless perversity is proved, substitution of an erroneous finding by the EAT is an option only if an employment tribunal must – but for any error – have reached the same conclusion as the EAT. In such a highly fact-sensitive case as this, the EAT should reject Ms Woodward's submission that it should substitute its own judgment for that of the Employment Tribunal, not least because such substitution would be entirely dependent on the questionable increase in the likelihood of dismissal from (arguably) significantly below 25% to above the critical 50%.