Appeal No. EAT/1248/95 & 		          EAT/1249/95

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 29 October 1996

Before
HIS HONOUR JUDGE PETER CLARK
MISS C HOLROYD
MR D J JENKINS MBE

(1) MR D O'CONNOR
(2) MR D INGRAM	APPELLANTS

CREATIVE UPHOLSTERY LTD	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the 1st Appellant	MR J McGLYNNE
(of Counsel)
Messrs David Harris & Co
Solicitors
13 Penybont Road
Pencoed
Mid Glamorgan
CF35 5PY

For the 2nd Appellant

For the Respondents	MR J McGLYNNE
(of Counsel)
Messrs Gwyn & Gwyn
Solicitors
2 Caroline Street
Bridgend
Mid Glamorgan CF31 1HS

MR A SENDALL
(of Counsel)
Messrs Morgan Bruce
Solicitors
Bradley Court
Park Place
Cardiff CF1 3DP

	

	JUDGE PETER CLARK:	    This is an appeal by two former long-standing employees of the Respondent, Creative Upholstery Ltd, against the decision of the Cardiff Industrial Tribunal sitting over three days in June 1995 that they were not unfairly dismissed from their employment.  Extended reasons for that decision are dated 26 September 1995.

	The facts may be shortly stated.  The Respondent operated a transport section in which Mr Ingram was employed as a driver and Mr O’Connor as a loader.  The transport manager was Mr Richards.  During May 1994 Mr Richards became suspicious that Mr Ingram was taking extra furniture on his vehicle, not destined for a specific customer, and not returning it to the depot.  The suspicion was that items were being stolen.

	On 13 June Mr Richards and Mr Williams, the works director, followed Mr Ingram’s lorry on its rounds, having first identified a particular three piece suite which had been loaded onto that lorry, but did not appear on the paperwork.  During the journey they noticed nothing untoward, but when the vehicle returned to base the suite was not aboard, nor had it been reported as being surplus to requirements by Mr Ingram.

	On a previous occasion of suspected overload Mr Richards had invited two shop stewards, Messrs Thomas and Reynolds, who represented the drivers, to check whether items had been overloaded and not accounted for.  They confirmed that this was so but kept that fact to themselves.

	On 15 June Mr Richards invited those same shop stewards to attend interviews to be conducted by Mr Richards with Mr Ingram and two of the loaders, Mr O’Connor and another man, Flahive.  We infer from the Industrial Tribunal’s reasons that none of the three men were given prior notification of the purpose of the meeting, nor of the charges laid against them.  Each man was invited to give an explanation for the overloaded suite on 13 June.  Mr Williams joined the first meeting with Mr Ingram.  No explanation was forthcoming; certainly not one which satisfied management.

	In consequence each man was summarily dismissed.  There was an evidential issue as to whether the men were informed of their right of appeal under the Company’s disciplinary procedure.  That factual issue was resolved in favour of the Respondent.

	All three men presented complaints of unfair dismissal to an Industrial Tribunal.  Mr Flahive’s complaint was out of time, and thus this Tribunal was concerned only with the cases of these two Appellants.

	Both Appellants faced criminal prosecution arising out of the material incident.  Both were acquitted; O’Connor on the Judge’s direction, Ingram by the jury.  Rightly, the Industrial Tribunal disregarded the fact of the criminal proceedings in approaching its task of determining whether or not the dismissals were fair.

	In deciding that question the Industrial Tribunal adopted the following approach:

(1)  Has the employer shown a prescribed reason for dismissal?  It had.  The reason related to the Appellant’s conduct.

(2)  Had the employer acted reasonably or unreasonably in treating that reason as a sufficient reason for dismissal.  Correctly the Tribunal observed that no burden of proof rested on either party so far as that issue was concerned.  In answering that question they applied the three-fold test contained in British Home Stores Ltd v Burchell [1980] ICR 303.

(3)  Was dismissal within the range of reasonable responses?  Plainly, if all other factors favoured the employer, dismissal was an appropriate penalty for theft.

(4)  Were the dismissals procedurally fair?

	We pause to observe that whilst each of these questions is relevant to the overall issue of fairness there is a danger in hiving off the question of procedural fairness from those questions identified in the so-called ‘Burchell test’.  Burchell was decided in a climate where questions of procedural fairness were perhaps not accorded quite the degree of importance to be found in the more recent cases, and in particular the House of Lords decision in Polkey v A E Dayton Services Ltd [1988] ICR 142.

	On a literal reading of Burchell neither the question of procedural fairness, nor the severity of the punishment are relevant factors where the three-fold test laid down by Arnold J is satisfied in accordance with the then burden of proof resting on the employer.

	Ultimately it is for the Tribunal to judge the overall fairness of the dismissal under section 57(3) of the Employment Protection (Consolidation) Act 1978, taking into account any procedural shortcomings in conjunction with the question as to whether the employer, in a conduct case such as this, held an honest belief based on reasonable grounds following a reasonable investigation that the employee was guilty of the misconduct alleged.

	In addition to emphasising the importance of procedural safeguards in the dismissal process, Polkey also laid to rest what had come to be known as the British Labour Pump principle.

	British Labour Pump Co Ltd v Byrne [1979] ICR 347, a decision of the Employment Appeal Tribunal, laid down the principle that a dismissal could be held to be fair, even where procedural irregularity was present, in a case where such procedural failings made no difference to the result.  Accordingly, following that decision, tribunals were directed to ask themselves the hypothetical question, “would the employee have nevertheless been dismissed had a fair procedure been adopted?”.

	The British Labour Pump Co Ltd principle was powerfully criticised by Browne-Wilkinson J in Sillifant v Powell Duffryn Timber Ltd [1983] IRLR 91.  However, by the time that Sillifant came to be decided in this appeal tribunal the Court of Appeal had approved the British Labour Pump principle in W & J Wass Ltd v Binns [1982] ICR 486.  Browne-Wilkinson J, with some reluctance, felt bound to following that Court of Appeal decision.

	Thus the British Labour Pump principle remained in play until Polkey reached the House of Lords.  Then, their Lordships expressly approved Browne-Wilkinson J’s preferred reasoning in Sillifant.  In short, the question as to whether or not a fair procedure would have made any difference was held to be an impermissible and irrelevant question.  Such an enquiry went not to fairness, but to remedy.

	Against that background we turn to the real point in this appeal.  It focuses on the Industrial Tribunal’s approach contained in paragraph 15 of their reasons which we shall set out in full:

“15  Finally, did they carry out a sufficient enquiry and follow a proper procedure, giving the applicants the opportunity to explain or to mitigate?  In our view the enquiries were rigorous.  They checked the several loads.  On 2 occasions they even trailed Mr Ingram on his circuitous route to the North of England.  The evidence which they accumulated was over-whelming.  Should they have told each that they were being called to a disciplinary hearing?  In this case we are not sure that it makes any difference at all.  If there had been an innocent explanation it would have been forthcoming.  Should they have been questioned about he previous loads?  The fact was that they had no explanation for the load which had just been delivered.  What purpose would be served by enquiring about the previous consignments, when they had nothing to offer on the last?  Indeed, it is worth recording that after a 3-day hearing they still have no acceptable explanation for any of these overloads.  Should they have been told that they had the right to be represented?  In our view this is not the sort of case where representation would make much difference.  What the employers were requiring, and were entitled to require, was an explanation for the extraordinary events of the recent past.  Only they could supply that explanation.  They did not.  We are satisfied that they were told that they had the right of appeal.  At such an appeal they could have had all the representation they desired.  In any event their shop stewards had been present throughout the proceedings.  They apparently remained mute.  They had no doubt that there had been overloading.  They had, indeed, been given the opportunity to verify that fact themselves on the occasion mentioned above.  We conclude that the enquiry was thorough.  The applicants were given a fair opportunity to explain.  Nothing further was required.  If it was then they should have appealed; but they did not.  Our view is that these employers have more than adequately satisfied what is known as the Burchell test.  Accordingly, these complaints must be dismissed.”

	In a nutshell, what Mr McGlynne submits on behalf of the Appellants is that this passage demonstrates a patent self-misdirection on the part of the Tribunal.  The question is not whether a failure to notify the Appellants that they are to attend a disciplinary hearing at which certain specific allegations will be investigated, or whether a failure to inform them of their right to representation made any difference to the outcome, but whether these were procedural failings which, taken in the overall context, rendered the dismissals unfair.  In response Mr Sendall invites us to construe paragraph 15 of the reasons in this way; although perhaps infelicitously worded what the tribunal was there conveying was that overall the procedure used by the employer was not such as to render the dismissals unfair, given the particular circumstances of this case.

	He submits that the basic requirements of natural justice were complied with and the Tribunal so found.  In particular:

(1)  The employee knew the nature of the accusations made against him 
(2)  He was given an opportunity to state his case and
(3)  The decision maker acted in good faith

	He takes these principles from Khanum v Mid-Glamorgan Area Health Authority [1978] IRLR 215.  

	We prefer Mr McGlynne’s submission.  It seems to us that there was here a classic misdirection.  See Spink v Express Foods Group Ltd [1990] IRLR 320, paragraph 20 (per Wood J).  There is no finding by the Industrial Tribunal in this case that the facts of the case constitute one of those rare exceptions to the general principle to be found in the speech of Lord Bridge of Harwich in Polkey at page 163 A - C.  In our judgment this Industrial Tribunal has fallen into error in its approach to the question of reasonableness under section 57(3) of the 1978 Act.

	We have canvassed with counsel what course we should take in these circumstances.  There is no difference between them.  It is submitted that if this decision is to be set aside we should remit the whole matter to a fresh Industrial Tribunal for re-hearing.  That is the course which we shall adopt.  It will be for the new Tribunal to rehear the evidence in order to reach a conclusion as to whether or not the dismissals and each of them were unfair and if so, to then consider the question of remedy at which stage, if it arises, the Tribunal will wish to consider what difference, if any, a fair procedure would have had on the outcome.

	Accordingly we shall allow these appeals and remit the applications to a fresh Industrial Tribunal for a full re-hearing.