Appeal No. 96/91

	EMPLOYMENT APPEAL TRIBUNAL
	4 ST. JAMES'S SQUARE, LONDON, SW1 4JU

		At the Tribunal
		On 12 November 1991

	Before

	THE HONOURABLE MR JUSTICE KNOX

	MISS C HOLROYD

	MS P SMITH

MISS L GILLAN	APPELLANT

PARAMAS LTD	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	MS F DIX-DYER
	(OF COUNSEL)
Gillings Walker & Keen
Rechabite Building
21 Clifford Street
York YO1 1RQ

For the Respondents	NO APPEARANCE BY OR 	ON BEHALF OF THE 	RESPONDENTS

	MR JUSTICE KNOX:  This is an appeal from a decision of the Industrial Tribunal at Leeds which in fact sat on two days, although the decision only identifies one, on 31 October and 22 November 1990.  The decision was sent to the parties on 16 January of this year and it was that Miss Gillan, the applicant and the appellant before us, was unfairly dismissed but that there was an element of 65% contributory fault.  The appeal before us is on the latter part, namely, the 65% contributory fault.  It has been conducted by Miss Dix-Dyer who appeared below but there has been no appearance on behalf of the respondents, the employers, who have written in to the court to warn that they do not intend to attend the hearing and say that they are content to rely on the original findings of the Tribunal as being correct in the circumstances.

	The applicant, Miss Gillan, was employed as a manageress of Benetton concessions in successive stores in York, one Fenwicks, the other Brown's.  Originally she was employed by the predecessors in title of the respondent company Paramas Ltd but Paramas acquired the concessions and Miss Gillan along with it.  There are some findings of the early history which include a finding that there appears to be no strong criticism of the applicant during that period of her employment so we can pass over that period without further investigation.  She moved from Fenwicks to Brown's, as I say, and there is an element of criticism found in the findings of fact in a sentence in paragraph 3:-

"In general it would seem that the applicant's work as manager in the concession was regarded as satisfactory, although problems began to arise in 1989, both in relation to time-keeping (a matter of 10 or 20 minutes on various days) and, as alleged by Mrs Dunn but denied by the applicant, in regard to the tidiness of one stock room."

	The Tribunal then said:-

"We therefore find with regard to time-keeping it was not fully acceptable for someone holding the post of manager but that it should not be regarded as serious in this instance" 

	So far as the time-keeping was concerned, it was found to be a fault but not serious.  With regard to tidiness the Industrial Tribunal said:-

"We accept that Mrs Dunn accurately assessed" - the next word is spelt
 "t-h-e-r-e" which must be a misprint for either "her" or "these" "shortcomings".

	There is therefore, an element of untidiness in a stockroom found as a fact.  They then go on to attribute that decline in efficiency as Miss Gillan suffering from a peptic ulcer.  However, those rather limited findings of something less than perfection on Miss Gillan's side are put in context in relation to the change that occurred in her occupation when she was moved to a new concession at Wetherby, which of course is not very far from York.  That was offered to Miss Gillan by Mr and Mrs Dunn who were the alter ego of Paramas Ltd and in relation to that offer of a position in effectively, sole charge of the Wetherby branch, except for some help on Saturday mornings, the Industrial Tribunal says:-

"We therefore formed the view that at the time that the Wetherby opportunity was offered to the applicant as sole manageress - indeed as sole sales person save for Saturday mornings - she was regarded as being able to take sufficient responsibility to run it in such a way as to assist her future."

	That seems to us to be a finding that she was then currently being regarded as perfectly competent.  The Wetherby operation then started on Thursday 12 April.  There was an occasion on 17 April when Miss Gillan missed the bus and that meant, because the service from Wetherby to York is not very frequent, that she could not get there until 11.45 a.m. and the branch was due to open at 10.30 a.m. and so that there obviously was a hiatus there.  However, in relation to that, anticipating what the Industrial Tribunal found, there is a specific finding later on that this was a misfortune which could apply to a conscientious manager or manageress.
	The next significant event which figures very largely in the Industrial Tribunal's reasonings was that Miss Gillan found that she was pregnant and decided to undergo an abortion.  She was told late on Wednesday 18 April of the date for the necessary operation to terminate the pregnancy and that it would be on Friday 20 April.  There is an irrelevant dispute which was left unresolved by the Industrial Tribunal as to whether she rang on evening of Wednesday 18 April.  There is an implicit clear finding that she did inform Mr and Mrs Dunn on Thursday morning and there cannot be any blame attached at that amount of delay.

	What Miss Gillan - or her sister did - was to give an inaccurate reason for her prospective absence.  The reason given was a bad cold whereas the actual reason was the abortion operation.  There is a specific finding by the Industrial Tribunal, with which we wholeheartedly concur, that:-

"....... except in cases where the medical state of an employee may endanger the respondents' responsibility in the employment (as for example cases of epilepsy in relation to working machinery, or stomach problems in relation to the preparation of food) then it ought reasonably be left to an employee who has a medical problem which is felt to be of a very personal and private nature to refrain from informing the employer of the true cause of her absence."

	It seems to us almost a matter of common sense that given a necessary absence due to illness, more especially with regard to something as private and personal as the termination of a pregnancy, the giving of an inaccurate reason for a perfectly genuine absence due to ill health cannot possibly be regarded as a significant fault on the part of the employee and that appears clearly to have been, correctly in our view, the view of the Industrial Tribunal.

	The operation in fact did take place on Friday 20 April and it is self evident that she could not go to work on that day.  It is clear that she did not go to work the following day.  There was a project for her sister, with whom she then lived, and the sister's boyfriend to go to London for the weekend but that did not materialise and there was a visit by Mr and Mrs Dunn on Sunday evening to the house where Miss Gillan was living.  At that stage they discovered that the true reason was not a cold but the operation and Mrs Dunn was sympathetic, so much so that Miss Gillan was encouraged not to come to work on the following Monday, and indeed she did not.  She did go to work on Tuesday and then the Industrial Tribunal says:

"There was then no particular complaint until Saturday 19 May 1990 ........."

	The remainder of the complaints are all concerned with the two occasions on which it was found by Mr Dunn that there had been a reduction by Miss Gillan in a price on a ticket attached to goods that were for sale.  In relation to one of them there is, we think, a finding that Miss Gillan at first said that she did not know anything about it but that she subsequently admitted - she did to the Tribunal - that in fact the reduction was done by her and it may be that there is an element of fault in that first inaccurate statement by her but the Industrial Tribunal specifically said:

"[we] are not in a position to say that her initial denial of the reduction was a deliberate evasion."

	So the Industrial Tribunal abstained from making a finding of deliberate untruthfulness.  

	In relation to the reduction on the prices there is a specific finding that Mrs Dunn had said to Miss Gillan words to the effect that she had discretion to reduce prices.  Then there is, we fear, one of numerous examples in this Industrial Tribunal decision where it is very difficult to find what is being found as a fact by the Tribunal because the remainder of that sentence reads as follows:-

"......... although Mrs Dunn alleges that she had indicated that that discretion should be carefully exercised, and that it should be linked specifically to an endeavour to encourage customers by offering a reduction if they were hesitant in making a further purchase; or indeed to encourage future purchases.  We have not received evidence as to Mrs Dunn's view as to the extent of reasonable reduction in the cases in question."

	It seems to us, doing the best we can with that, that there was undoubtedly a discretion conferred by Mrs Dunn on Miss Gillan to reduce prices and that Mrs Dunn had failed to give evidence to the Tribunal that convinced the Tribunal that there were limits placed by Mrs Dunn on that discretion. 

	As a result of those two events of price reduction which in fact occurred between 19 May and 23 May, a letter was written by Mr Dunn to Miss Gillan saying that they were offering her, Miss Gillan, redundancy in accordance with statutory regulations.  The reason for that was stated in the letter to be that on 23 May, Miss Gillan had advised Mr & Mrs Dunn that she no longer wished to work in the Wetherby shop and wished to return to Brown's.  Mr & Mrs Brown had said that that was not possible in view of the staffing arrangements that had been made and that no other position was available.  The conclusion from that had been drawn that there was a redundancy situation and a cheque for £687.50p was enclosed with that letter.
	Mr Dunn's decision was said to have been influenced by the following:-

"1.Your bad timekeeping about which you were warned on several occasions, and your general inability to cope with your post of Branch Manager in our Browns of York shop.

2.Having accepted the position in our Sale shop in Wetherby the business continued to suffer as a result of your bad timekeeping.

We accept that your unexplained absence from work during April was caused by your emotional state following your pregnancy termination.  When we visited you on that occasion it was made clear to you that you were being given a final chance.

3.We have discovered that you have been reducing the prices of goods in our Wetherby shop without authority.  When asked to explain you action you were unable to do so.  We have consulted the Police in this matter, and are currently considering further action.

4.Comments received from customers in the Wetherby Sale Shop lead us to conclude that you have not been acting in the best interests of the Company."

	In relation to those 4 heads of complaint in support of the offer of redundancy the Industrial Tribunal first of all recorded that the respondents had, in fact shifted their ground and no longer claimed that it was a redundancy case but relied in part on conduct and in part upon capability.  They then turned to look at those issues.  They dealt with capability first and they rejected the criticisms on that basis saying this:-

"With regard to capability, we take the view that the respondents, over a period, having firstly provided the applicant with additional responsibility at Brown's .................... and subsequently having given her the responsibility of Wetherby - which they admit was fairly considerable having in mind that it could result in a continuing trading arrangement with Benetton - that they could not have been, at the time they sent her to Wetherby, of the view that she was incompetent."

	So capability or competence is out of the picture it would appear.  They then turn to conduct and they say:-

"Clearly, the question of her medical condition in regard to her pregnancy cannot be equated with incompetence, certainly against the general background of legislation to protect pregnant employees.  The question then arises as to whether her conduct in running the Wetherby branch should be regarded as incompetence against the evidence that she was late significantly on one occasion as the result of missing a bus on an infrequent bus service, which is a misfortune which could apply to a conscientious manager or manageress; and whether the extent of marking down of prices was a matter of incompetence or conduct.  Discretion having been given by Mrs Dunn, even if limited, it would be a matter of whether Mrs Dunn gave a clear indication, if reductions were too great, that they should not continue."

	As regards conduct we are unable to find that any effective misconduct, if the missing of the bus is, properly as we see it, classified as a misfortune which could happen to a conscientious manager.  The question of marking down of prices was a matter that was found to have been the subject of a discretion and, for the reasons given earlier, we find that there was no limit established in evidence by Mrs Dunn on the discretion that she admittedly gave.  It is very difficult in those circumstances to find out of that sentence which I have quoted from the Industrial Tribunal's decision anything other than the statement of a question rather than a finding and we unable to detect a finding of misconduct in that paragraph.

We now come to the final paragraph in the decision which records that there was no evidence of any formal warning whether oral or written but there is an implication that there was an informal oral warning because the Tribunal says:-

"We accept that comment was made as to time-keeping and the stock room but it was not a formal oral warning."

	They then point out this was a very small organisation and therefore the code of Industrial Practice of ACAS had not necessarily for that reason been followed but they say that warnings at appropriate times could reasonably have totally altered the situation in which the applicant found herself.  That looks to us like a statement that there were not warnings at appropriate times but it may be somewhat less positive than that.

	We then come to the critical passage for the purpose of this appeal because the Industrial Tribunal finished its decision with this:-

"We therefore take the view that, against the general background as recited, a reasonable employer would not have dismissed an employee - certainly not without more careful investigation than has been applied in this case.  However, we also take the view that there was an element of 65% contributory fault, having taken into account the applicant's natural desire (which we do not say was wrong) to regard her pregnancy as a personal and private matter."

	Here again we have great difficulty in following what was intended.  It was submitted to us that the Industrial Tribunal was there attributing the whole of the 65% contributory fault to the pregnancy episode.  We are not convinced that that is necessarily quite right but it is plain in our view that the - what I have called the "pregnancy episode" was put in the scales in arriving at the figure of 65%.  No other interpretation seems to us possible of the words "having taken into account" that factor.  At the same time, of course, the Industrial Tribunal say - and we agree - that that was not wrong.  There is an element of internal contradiction there which is very striking.

	The question for us, of course, is not whether we would have reached the same conclusion, that is not our function.  Our function is to correct errors of law if they exist and the issue for us, therefore, is whether that decision which seems to us to contain more questions than answers to questions reveals an error of law on the part of the Industrial Tribunal.

	The function of an Industrial Tribunal in giving effect notably to Section 74(1) and (6) of the Employment Protection (Consolidation) Act 1978 was considered in Nelson v B.B.C.(No.2) (C.A.) [1980] ICR 110.  The relevant sub-sections are:-

"(1) Subject to sections 75 and 76, - which are not material for the present purposes - the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

	and

"(6) Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding."

	Brandon LJ in Nelson v B.B.C. (No.2) (CA) [1980] ICR 110 analysed the legislative provision that was the direct predecessor of Section 74(6) of the 1978 Act.  What was actually in issue there was paragraph 19 (3) of Schedule 1 to the Industrial Relations Act  1971 but there is no significant difference between the two statutory provisions.

	He preferred, of three possible ways of interpreting the sub-section in question, the following at p.121:-

"... in any case, it could never be just or equitable to reduce a successful complainant's compensation unless the conduct on his part relied on as contributory was a culpable or blameworthy.  ............

It is necessary, however, to consider what is included in the concept of culpability or blameworthiness in this connection.  The concept does not, in by view, necessarily involve any conduct of the complainant amounting to a breach of contract or a tort.  It includes, no doubt, conduct of that kind.  But it also includes conduct which, while not amounting to a breach of contract or a tort, is nevertheless perverse or foolish, or, if I may use the colloquialism, bloody-minded.  It may also include action which, though not meriting any of those more pejorative epithets, is nevertheless unreasonable in all the circumstances.  I should not, however, go as far as to say that all unreasonable conduct is necessarily culpable or blameworthy; it must depend on the degree of unreasonableness involved.

It follows from what I have said that it was necessary for the industrial tribunal in this case, in order to justify the reduction of Mr Nelson's compensation which they made, to make three findings as follows.  First, a finding that there was conduct of Mr Nelson in connection with his unfair dismissal which was culpable or blameworthy in the sense which I have explained.  Secondly, that the unfair dismissal was caused or contributed to to some extent by that conduct.  Thirdly, that it was just and equitable, having regard to the first and second findings, to reduce the assessment of Mr Nelson's loss by 60 per cent."

	It seems to us quite impossible to say of this decision by an Industrial Tribunal that there was a compliance with what Brandon LJ had described as being necessary for an Industrial Tribunal to do.  We have already said that we find more questions than answers in this decision and we certainly do not find a specific finding that there was conduct of Miss Gillan in connection with her unfair dismissal which was culpable or blameworthy.

	In so far as the pregnancy situation was identified as supporting the decision to reduce the award by 65% it was, in our judgment, not only plainly wrong but wrong on the basis of what the Industrial Tribunal itself had found and in those circumstances it cannot be a justification for any reduction, let alone a reduction of 65%.  In so far as there were some criticisms to be detected in the findings of the Industrial Tribunal in earlier passages to which we have referred in this judgment, they fall very far short, in our view, of satisfying the requirements that were identified by Brandon LJ.
	We were also referred to the decision of this Tribunal in Slaughter v C Brewer & Sons [1990] ICR 730 where Wood J said, at p.738, of an award which contained an 80% reduction because of the physical disability in the applicant in that case:-

"There may, however, be cases of ill-health where although section 74(6) is not appropriate yet an award may be drastically reduced under the overriding provisions of section 74(1).  A dismissal may be unfair on procedural grounds yet it may be quite apparent from the medical evidence that an applicant was, at the date of dismissal, quite incapable of carrying out her or his proper function.  In another case there may have been insufficient medical evidence hence unfairness, but the subsequent investigation would have shown that the dismissal was inevitable.  In such a case a possible view might be that such an investigation would have taken some days or weeks and that compensation should cover that period.

These are only examples, but in our judgment, bearing in mind the guidance in Nelson, an industrial tribunal, by utilising the provisions of section 74(1) or section 74(6) or both should be able to reach a decision on compensation which is fair, just and reasonable between the parties, who must, nevertheless, be able to understand the reasons for that decision.

In the light of what we have said above we are satisfied that in the present case the submission for the employee is well-founded and that this matter must be remitted for rehearing."

	We would respectfully adopt what was said by Wood J that it necessary for the parties to be able to understand the reasons for an Industrial Tribunal on a reduction of an award under section 74(6) and certainly we have to say that that is a task which is impossible to carry out in the context of this Industrial Tribunal decision.

	We are very conscious of the fact that it is no part of our function to make findings of fact and because we have had the greatest difficulty in identifying relevant findings in the decision below, it necessary follows in our view, that there is not the material for us for us to say that one answer is the certainly correct answer to the question whether or not any deduction should be made in respect of contributory fault.  In those circumstances just as happened in Slaughter v C Brewer & Sons, we are compelled to remit this matter to another Tribunal for reconsideration.  We say another Tribunal because we understand that the learned Chairman has retired and there is therefore no possibility of this Industrial Tribunal being reconstituted.

	We should finally, before parting, in this case say that we respectfully agree also what Wood J said with regard to the difficulties which may arise from dealing with both the question of liability and the question of reduction or contribution in 74(6) where the parties are not warned that is likely to occur.  That is not a ground that we identify as being an error of law committed by this Tribunal because as Wood J points out they are the masters of their own procedure.  However, this case does highlight the difficulties that the parties may find themselves in if no sufficient warning is given to the parties of the possibility of a reduction on compensation being awarded under 74(6) because we are told by Counsel, and we accept, that there was no argument on that issue before the Industrial Tribunal and the finding came as something of a shock.  We therefore allow this appeal and remit the matter for reconsideration in the light of this judgment by another Industrial Tribunal.