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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Khan v Stripestar Ltd (Unfair Dismissal: Reasonableness of dismissal) [2016] UKEAT 0022_15_1005 (10 May 2016) URL: http://www.bailii.org/uk/cases/UKEAT/2016/0022_15_1005.html Cite as: [2016] UKEAT 22_15_1005, [2016] UKEAT 0022_15_1005 |
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Appeal No. UKEATS/0022/15/SM
EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF
At the Tribunal
On
10 May 2016
Before
THE HONOURABLE LADY WISE
(SITTING ALONE)
MR DARREN KHAN
APPELLANT
STRIPESTAR
LTD RESPONDENT
JUDGMENT
APPEARANCES
For the Appellant |
Mr C Edward (Advocate) Instructed by: Ramsay Employment Law Suite 128 St James Business Centre Linwood Road Paisley PA3 3AT |
For the Respondent |
Mr J Newman (of Counsel) Instructed by: Eversheds LLP 1 Royal Standard Place Nottingham NG1 6FZ |
SUMMARY
UNFAIR DISMISSAL : Reasonableness of Dismissal
The Employment
Judge was correct in concluding that a lack of credibility on the part of a
witness who had conducted a disciplinary hearing that was disregarded as
procedurally and substantively unfair did not inevitably render the whole
dismissal unfair. Following the guidance in Taylor v
OCS Group Limited
[2006] ICR 1602 the process was still capable of being fair overall where
the subsequent appeal process was thorough and reasonably conducted against a
background of sufficient evidence of gross misconduct. There are no limitations
on the nature and extent of the deficiencies in a first stage disciplinary
procedure that can be cured by a thorough and effective appeal.
A distinction
can be drawn between an employer’s bad faith in issuing a warning that leads to
dismissal, as in Way v
Spectrum Property Care Limited [2015] EWCA Civ 381, and bad faith within a deficient disciplinary process not
ultimately relied on in assessing whether the dismissal was fair.
THE HONOURABLE LADY WISE
1.
The case came before me for a full hearing at which Mr Darren Khan
appealed against a decision of the Employment Tribunal (“ET”) sitting in Glasgow
on 4 February 2015 in which the judgment was sent to parties on 4 March 2015.
The ET comprised Employment Judge Lucy Wiseman, (“EJ”) sitting alone. Mr C
Edward, advocate appeared on behalf of the claimant at the Employment Tribunal
and also before me at the Employment Appeal Tribunal. The respondent
Stripestar
Limited was represented by Ms Conn, solicitor before the Employment
Tribunal and before me by Mr Newman, barrister.
2.
I shall refer to the parties as claimant and respondent as they were in
the Tribunal below. The decision of the ET was that the respondent’s dismissal
of the claimant was fair. The issue that arises in this appeal is whether, in
light of adverse credibility findings by the ET in respect of the respondent’s
employee, who carried out the initial disciplinary hearing, Mr James Abercrombie,
the Tribunal then fell into error in separating the subsequent internal appeal
process and deciding that it was fair or whether the whole process was vitiated
by the bad faith of the said Mr Abercrombie.
3.
The ET heard evidence from the claimant, from James Abercrombie and from
a Mr Graeme McCallum, a regional after sales development leader within the
respondent’s business who heard the internal appeal. The judge made a number
of significant findings of fact, all of which were accepted as being properly
made in the hearing before me. I will summarise those briefly for the purposes
of this appeal. The claimant commenced employment with the respondents on
1 February 1999. He was responsible for running the workshop where repairs
to vehicles
are carried out, the respondent being in the business of selling
and repairing new and used cars. He was responsible for allocating work to the
five technicians in the workshop. The claimant reported to Mr James
Abercrombie, after sales leader, who in turn reported to Mr Gordon
Naismith, dealer principal, who was responsible for the whole site. A few
weeks prior to the claimant’s dismissal in August 2014, a customer of the
respondent, having decided not to proceed with the repairs to his
vehicle,
which would have been expensive, received a request from the claimant to
purchase it. The claimant then paid £300 to the customer for the car, a
Ford Mondeo. He made up a job card for the
vehicle,
a document used to
authorise and record work done to repair a
vehicle
and time spent thereon. The
claimant inserted the name of the original owner on the job card and instructed
technicians within the workshop to start dismantling the engine. The Ford
Mondeo remained in the workshop for several weeks after which Mr Abercrombie
instructed the technicians to remove it from the ramps. The claimant then had
the
vehicle
removed from the respondent’s premises.
4.
On noticing the removal of the vehicle
Mr Naismith took it upon himself
to make inquiries, and learned that the claimant had purchased the
vehicle.
A
disciplinary hearing was subsequently held and conducted by Mr Abercrombie.
The disciplinary hearing was both procedurally and substantively unfair. It
lasted no longer than six minutes and the claimant was given no opportunity to
make any representations or give information. Had he been allowed to do so,
the claimant would have raised with Mr Abercrombie that he, Mr Abercrombie, had
been informed of the purchase of the
vehicle.
The reasons for dismissal
included unauthorised purchase of a customer’s car, subsequent repairs carried
out on the
vehicle
under the customer’s name on the job card and the removal of
the
vehicle
from the premises without the repairs being paid for. On being
dismissed, the written decision for which was given to the claimant by letter
of 20 August 2014, the claimant appealed.
5.
An appeal hearing took place on 5 September 2014 chaired by Graeme
McCallum. Mr McCallum asked the claimant various
questions and on
receiving certain responses indicated he would require to make further
inquiries. Mr McCallum then conducted a thorough investigation of the
circumstances. He interviewed Gordon Naismith, Mr Abercrombie and three
technicians from the workshop. Two of the technicians (Gary Carstairs and
James Thomson) told Graeme McCallum that the claimant had told them not to
“clock on to the job” when carrying out repairs on the Ford Mondeo. Having
made further investigations Mr McCallum concluded that the claimant had exhibited
gross misconduct having regard to the company’s disciplinary procedures. In
particular there had been falsification of the job card by failing to insert
details of the car owner and the technicians had been told not to clock on to
record the time for the job. He also considered that the claimant had brought
the company into disrepute given the potential consequences had the customer
discovered what had happened to the
vehicle.
The significant findings in fact
in relation to Mr McCallum’s conclusions are findings 35, 36 and 37 of the
ET judgment. When Mr Abercrombie was interviewed by Graeme McCallum, he
denied knowledge of the claimant’s purchase of the
vehicle.
6.
The ET considered the case of British Homes Stores Ltd v
Burchell
[1980] ICR 303 which sets out the correct approach in a misconduct
case. The issue was the nature of the investigations carried out by the
respondent and the issue of reasonable belief. The EJ concluded that both the
very
limited investigation carried out by Mr Naismith and the disciplinary
hearing conducted by Mr Abercrombie were inadequate and could not be relied
on. In particular at finding in fact 78 she states:
“I concluded the disciplinary hearing before Mr Abercrombie was wholly inadequate and, subject to the comments below regarding the appeal process, would have rendered the dismissal procedurally and substantively unfair”
In light of that conclusion, the EJ turned to give careful consideration
to the appeal process to see whether it could cure the otherwise unfair dismissal.
She had regard to the case of Taylor v
OCS Group Limited
[2006] ICR 1602. She considered the specific alleged misconduct
identified by Mr McCallum having made detailed investigations. Ultimately the EJ
was satisfied that Mr McCallum had carried out a thorough investigation and
that he had reasonable grounds on which to sustain his belief that the claimant
had purchased the
vehicle
contrary to the customer practice in place in the
garage, that he had falsified the job card and instructed the technicians not
to clock on/off the job. As far as Mr Abercrombie was concerned, the judge
formed the distinct impression based on the evidence that he had been aware of
the purchase and repair of the
vehicle
at the time. She went on to conclude,
however, that Mr McCallum had no reason not to believe what he was told by
Mr Abercrombie at the time. Mr McCallum was independent of
Mr Naismith and Mr Abercrombie and held a responsible position within the
respondent’s organisation. The decision to believe Mr Abercrombie rather than
the claimant on the issue of the former’s knowledge fell within the band of
reasonable responses required of someone in his position. Overall the appeal
process was fair and cured the area of defects in the investigation and
disciplinary hearing.
7.
Two separate grounds of appeal were advanced at the hearing before me.
I will deal with each in turn. First, it was argued that the Tribunal erred in
finding that the respondent’s knowledge or state of mind was limited solely to
that of its appeal manager; it failed to also attribute the knowledge of the
dismissing manager to that of the respondent. On this ground, Mr Edward
for the claimant argued that in the light of the findings of the Employment
Tribunal in relation to Mr Abercrombie’s credibility, it had to be accepted
that Mr Abercrombie had no genuine belief in the misconduct of the claimant.
In conducting the disciplinary hearing James Abercrombie was acting as
agent of the employer and the respondent could therefore be regarded as knowing
that there was no misconduct having regard to the Employment Tribunal’s finding
that Mr Abercrombie himself had knowledge of the purchase and repair of the
car. The error was said to be in the ET considering only the knowledge of
McCallum who conducted the internal appeal process. Reference was made to Orr
v
Milton Keynes Council [2011] EWCA Civ 62. There the Court of Appeal
had decided that where an employee had dissembled in evidence given to the
senior manager conducting the disciplinary hearing and the claimant was
dismissed as a result, it would be unreasonable to input to that senior manager
knowledge of the dishonest witness’s behaviour which he could not reasonably
have acquired through the appropriate disciplinary procedure. Mr Edwards
sought to distinguish a situation where the witness was dishonest in his
evidence to a disciplinary hearing from one such as the present case where the
disciplinary hearing itself was in bad faith. The entire disciplinary process
required to be considered, not just the internal appellate stage in considering
reasonableness. As the statutory test required consideration of whether the
employer acted reasonably then Mr Abercrombie in this case as agent for the
employer was as important a part of the process as Mr McCallum.
8.
In response to the first ground of appeal Mr Newman for the respondent
relied heavily on the Court of Appeal decision in Taylor v
OCS Group Limited. The ratio in Taylor was submitted to
be directly in point. There is no restriction to the nature of the
defectiveness of the first instance stage. Anything can be cured by a proper
appeal process. The Employment Judge in this case had been entirely correct to
put the first stage decision to one side and look only at the appeal. The yardstick
was reasonableness, nothing more. McCallum did everything he reasonably could
have done. He made inquiries of all relevant parties and came to a decision.
It was inappropriate to try to attribute Mr Abercrombie’s knowledge to Mr
McCallum. That would be impractical and not in keeping with the test in BHS
v
Burchell. In addressing whose state of mind is relevant for the
purposes of section 98(4) the answer had to be Mr McCallum. The relevant
person started as Mr Abercrombie but because his process was hopeless and had
to be set aside, it was Mr McCallum’s investigation, in line with the dicta in Taylor
v
OCS Group Ltd that required to be scrutinised. No
proper distinction could be drawn between the situation that arose in Orr
v
Milton Keynes, and that which had arisen here. Given that it was a
process conducted by Mr McCallum that the Employment Tribunal ultimately
scrutinised in considering reasonableness, the situation was analogous with Orr.
A witness had been untruthful to the decision maker in Orr and
here it seemed that Mr Abercrombie had been untruthful to Mr McCallum. The
test was not whether Mr Abercrombie had in fact lied to Mr McCallum but
whether Mr McCallum’s ultimate decision that the dismissal was justified was a
reasonable one. It had to be remembered that the reasonableness in question
was that at the time of the decision. There was no dispute on the authorities
that the whole process must be considered when considering whether a dismissal
was fair or unfair. The Employment Judge had quite properly looked at stage 1
and stage 2 separately. Having put stage 1 to one side as procedurally
and substantively unfair, the question was then whether the situation was
remedied by the internal appeal process which was capable of rendering the
whole dismissal fair.
9.
The second ground of appeal contends that the Tribunal reached a
decision that no reasonable Tribunal could have reached on the basis of the
findings in fact. Mr Edward argued that a reasonable Tribunal, having found as
a matter of fact that the dismissing manager (Abercrombie) had knowledge that
some of the alleged misconduct had not taken place in that he knew of the
purchase of and repairs to the vehicle
on the premises, could not have found
that the respondent acted reasonably in treating the alleged misconduct as a
reason to dismiss. Mr Abercrombie had acted qua employer when he
sanctioned the repairs having been informed of the purchase. He then acted
also as employer in dismissing the claimant for those same acts. While it was
accepted that the Tribunal cannot substitute its own evaluation for that of the
employer at the time, the employer’s decision in this case could not be said to
be within the band of reasonable responses available. In the circumstances as
now proved, the respondent employer was itself in bad faith in this case and
could not pray in aid that bad faith in dismissing the claimant. Reliance
was placed on the case of Way
v
Spectrum Property Care Limited [2015]
EWCA Civ.381. In that recent decision of the Court of Appeal the
issue had arisen as to whether in a disciplinary process the employer was
entitled to have regard to a previous final warning issued to the employee even
if it turned out that warning had resulted from the bad faith of the employee’s
line manager. The Court of Appeal decided that a warning given in bad faith
was not, in the circumstances of the case before it, to be taken into account
in deciding whether there is or was sufficient reason for dismissing an
employee. An employer would not be acting reasonably in taking into account
such a warning when deciding whether the employee’s conduct was sufficient
reason for dismissing him. Mr Edward contended that by analogy in this case,
the reasonable approach would have been the Employment Tribunal to realise that
in light of Mr Abercrombie’s bad faith, the disciplinary process could not be
relied upon at all because the employer himself was in bad faith from the
outset. That bad faith at stage 1 of the disciplinary process negated the
otherwise properly conducted internal appeal process at round 2.
10.
In responding to the second ground of appeal Mr Newman referred to Morgan
v
Electrolux Limited 1991 ICR 369 as authority for the proposition that
the Employment Tribunal cannot substitute its own evaluation of a witness for
that of the employer unless on logical and substantial grounds. The grounds
given as examples in Morgan included where the witness was a bare
faced liar, where there was clear bias or where documents available at the time
should have resulted in the employer acting reasonably and fairly at the time
of the decision by reaching a different
view.
Mr Newman submitted that the ET
findings that Abercrombie was an unreliable witness did not in any sense
automatically render the dismissal unfair. Both Mr McCallum and the Employment
Judge were faced with two competing accounts on a particular aspect of the
investigation. While the Employment Judge doubted the credibility of
Abercrombie’s position there was no evidence before McCallum at the time that
Abercrombie was a bare faced liar, biased or that documents available at the
time clearly showed him to be giving a false account. The accusation by the
claimant was before McCallum and it was dealt with. Absent anything that
should have alerted Mr McCallum to Abercrombie’s lack of credibility it was
perfectly reasonable for Mr McCallum to have accepted his account. In any
event, the evidence of the three technicians interviewed by Mr McCallum
was unequivocal. A retrospective
view
of bad faith on the part of one witness
is not determinative and the Tribunal was correct not to “wade in” and decide
what evidence McCallum should have accepted. For the appellant to succeed
under ground 2 the perversity test in Yeboah
v
Crofton [2002] 1
RLR 634 would have to be satisfied. That case set down an
extremely high threshold for perversity. It could not be said in this case
that no reasonable Employment Judge would have reached the same decision. The
Tribunal’s decision was within the reasonable range of opinions that could have
been reached. The relevant authorities were followed and a careful analysis of
the stage 1 and stage 2 approach of the disciplinary process was
scrutinised. In those circumstances, absent logical and substantial grounds indicating
that McCallum was wrong at the time, the Employment Judge’s impression of
Abercrombie was in essence irrelevant.
Discussion
11.
In my view
the sharp issue focussed by the first ground of appeal is
whether there are limits to the extent to which a second or subsequent process
internal to the employer can remedy a defective first stage. The leading
authority on the matter, Taylor
v
OCS Group Limited [2006] ICR 1602 is clearly in point. While not, strictly speaking, binding on
me, (contrary to the submission to the contrary made by Mr Newman at the
hearing), this Court of Appeal decision is highly persuasive, setting out as it
does the correct approach that Employment Tribunals should take where a
defective first stage is followed by a second internal review or investigation
howsoever that second stage is regarded. In Taylor,
Smith LJ (at paragraph 47) expresses the
view
that employment
tribunals should:
“…consider the fairness of the whole of the disciplinary process. If they find that an early stage of the process was defective and unfair in some way, they will want to examine any subsequent proceeding with particular care. But their purpose in doing so will not be to determine whether it amounted to a rehearing or a review but to determine whether, due to the fairness or unfairness of the procedures adopted, the thoroughness or lack of it of the process and the open-mindedness (or not) of the decision maker, the overall process was fair, notwithstanding any deficiencies at the early stage”.
The Employment Tribunal in this case found that the first stage
disciplinary process conducted by Mr Abercrombie was both procedurally and
substantively unfair. Accordingly focus shifted to the process conducted by Mr
McCallum. The issue is whether the whole process was capable of being cured by
that properly conducted appeal or whether what Mr Abercrombie did was more than
defective or unfair, rather it was vitiated
by his disingenuity. I have
reached the conclusion that the submissions of the respondent on this point are
to be preferred. The test in Burchell
v
British Homes Stores
requires a genuine belief that there was misconduct, based on reasonable
grounds following a reasonable investigation. Had the Employment Judge placed
any weight on the process conducted by Mr Abercrombie, her decision might be
open to criticism. However, having quite properly set aside that whole first
stage given its fundamental deficiencies, it was open to the Employment Judge
to hold that Mr McCallum had acted reasonably and fairly on the findings
in fact made. He interviewed all relevant witnesses, considered material in
relation to the company’s disciplinary policy together with the behaviour that
might amount to gross misconduct and made his decision in an independent and impartial
manner. As a corporate body, the respondent necessarily delegated
responsibility for the investigation first to Mr Abercrombie and then to
Mr McCallum. While the relevant person at stage one was
Mr Abercrombie, the ultimate decision maker so far as the Employment
Tribunal was concerned was Mr McCallum given the unfair procedure at that
first stage. Mr Abercrombie was not a party to the ultimate decision that
was upheld by the Employment Tribunal. Mr McCallum had no basis to
question the information given to him by Mr Abercrombie which,
importantly, was consistent with the information given to him by the three
technicians. As Moore-Bick LJ put it in Orr
v
Milton Keynes Council
(at paragraph 60):
“The obligation to carry out a reasonable investigation as the basis of providing satisfactory grounds for thinking that there has been conduct justifying dismissal necessarily directs attention to the quality of the investigation and the resulting state of mind of the person who represents the employer for that purpose. If the investigation was as thorough as could reasonably be expected, it will support a reasonable belief in the findings, whether or not some piece of information has fallen through the net. There is no justification for imputing to that person knowledge that he did not have and which (ex hypothesi) he could not reasonably have obtained”.
Mr McCallum was clearly representing the employer in making the decision
ultimately upheld as reasonable and fair. There are, in my view,
no limitations
on the nature and extent of the deficiencies in the first stage of the process
that can be cured by a thorough and effective appeal. Where as here, an
employee is summarily dismissed without proper investigation or inquiry, that
dismissal will be unfair unless it can be shown that the subsequent procedure
was sufficiently robust as to provide the overall fairness that the law
requires. I note that in Taylor, at paragraph 48,
Moore-Bick LJ suggests that a distinction may be drawn by employment
tribunals between particularly serious misconduct, which may render a dismissal
fair notwithstanding deficiencies in the process and that where the misconduct
is of a less serious nature where procedural deficiencies may have a greater
impact. The claimant in this case was on any
view
involved in dishonest
conduct. The wholly defective first stage of the relevant disciplinary process
did not prevent a fair dismissal at the second stage. In all the
circumstances, I consider that the ET decision exhibits no error of approach in
its examination of the whole disciplinary process.
12.
So far as the second ground of appeal is concerned the test for
perversity, that no reasonable Employment Tribunal could have reached the
decision made, is consistently described as a high hurdle to overcome. In Yeboah
v
Crofton [2002] IRLR 634, the Court of Appeal emphasised that
an appellate tribunal does not have the advantage of listening to the whole of
the evidence, of seeing the witnesses and understanding the nuances of the
evidence given. In my
view,
the conclusion of the Employment Judge that,
notwithstanding his evidence, he had been aware of the purchase and repair of
the
vehicle
by the claimant at the time should not be overstated in terms of
its significance. Taken at its highest, her conclusion on this witness is that
he lied on a single issue in the context of a fair stage two internal
disciplinary process. As I have already indicated, he was not the employer or
decision maker at stage two, he was a witness. Accordingly, the situation
was rather different from that which arose for consideration in Way
v
Spectrum Property Care Limited [2015] EWCA Civ. 381. There a
warning, used as part of an incremental process leading to ultimate dismissal,
had been given in bad faith by the employer. In the present case, the claimant
was found to have carried out a single course of dishonest conduct that
constituted gross misconduct. The procedure in which Mr Abercrombie was a
principal actor was at stage 1 of the disciplinary process which I have
already found was cured by the thorough and reasonably conducted appeal process
of Mr McCallum. Accordingly, unlike the situation in Way,
any bad faith on the part of Mr Abercrombie was not something that had,
wrongly, been relied on in deciding whether the claimant’s conduct was
sufficient reason for dismissing him. Further, the accusation by the claimant
that Mr McCallum had known of his purchase of the
vehicle
was not something
that came to light after the disciplinary process had been concluded.
Mr McCallum knew of that allegation and took it into account.
13.
In my opinion, the Employment Judge was correct in her analysis
following her determination that Mr Abercrombie had not given credible evidence
to her on a particular point. His lack of credibility did not render the whole
process unfair. The decision to uphold the dismissal notwithstanding the lack
of credibility of Mr Abercrombie is in no sense counter-intuitive when viewed
against the background of the other now undisputed facts of the claimant’s
conduct. In this context the evidence of the three technicians who spoke to
his dishonest behaviour is relevant.
14. I am satisfied that the Employment Judge was entitled to make the decision that she did on the basis of the findings in fact made. Her conclusion was well within the reasonable range of decisions that could have been reached. For the reasons given the appeal fails and is dismissed.