Appeal No.	 EAT/81/96

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 17 June 1997

Before
HIS HONOUR JUDGE PETER CLARK
MR A D TUFFIN CBE
MRS R A VICKERS

MR T A WATTS	APPELLANT

GRAHAM GROUP PLC	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR KIBLING
(of Counsel)
Messrs Robert Howard
Solicitors
1-3 Lifton Road
Plymouth
	
For the Respondents	MR DUGGAN
(of Counsel)
Messrs Dibb Lupton Alsop
Solicitors
117 The Headrow
Leeds
LS1 5JX	

	JUDGE PETER CLARK:     This is an appeal by the Applicant before the Birmingham Industrial Tribunal sitting on 16 August and 18 October 1995, Mr Watts, against that Tribunal’s unanimous decision to dismiss his complaint of unfair dismissal against his former employers, the Respondent, Graham Group Plc.  Extended Reasons for that decision were promulgated on 28 November 1995.

	The Background

	The Appellant commenced the relevant period of continuous employment with Ash & Lacey Distributors in December 1966 as a sales clerk.  He was then aged 23.  He moved through the ranks and at the age of 34 was appointed managing director of Ash and Lacey.  In 1982 that company became part of a newly formed business, Goodman Croggan Ltd (GCL).  He was appointed a director of the new company and in 1985 or 1986 became the Operations Director of that company.

	Prior to that appointment he had, in 1982, been disqualified from driving for 12 months for an offence of drink driving.  He did not then lose his employment.

	On 8 March 1994 BTR Plc floated a group of companies of which GCL was one and they became the Respondent.

	On 20 March 1994 the Appellant was stopped by police and took a breath test which proved positive.  He promptly informed his Managing Director, Mr Barbour.  On 25 April 1994 he was convicted, banned from driving for 12 months and fined by magistrates.

	On 4 May 1994 he was invited to attend Mr Barbour’s office “for a chat”.  When he arrived he was met by Mr Barbour and the Personnel Manager.  He was informed that it was to be a formal disciplinary hearing.  The Appellant complained that he had not been told that it was to be a disciplinary hearing, and he had had no opportunity to gather witnesses or seek assistance.

	The Tribunal found that from the start Mr Barbour was considering a choice between dismissal and resignation.  The Appellant expressed regret concerning his conviction.  However, he suggested that his managers would support him; that his wife and son would act as chauffeur; that he could use public transport, both by train and by air and that, if necessary, he would employ a chauffeur at his own expense.  He also pointed to another case, that of the Liverpool Branch manager who had been convicted of conspiracy to pervert the course of justice, as well as a serious traffic offence and had been disqualified from driving, but had retained his employment.  All these proposals were rejected by Mr Barbour, but he did not dismiss the Appellant at that stage.

	On 16 May a further meeting took place.  On the Tribunal’s finding the issue was whether the Appellant would resign; if not, he would be dismissed.  He did not resign and was dismissed at that meeting.  The dismissal took effect on that day.

	On 17 July 1994 he presented his complaint of unfair dismissal to the Industrial Tribunal.

The Industrial Tribunal Decision

	The Tribunal accepted the Respondent’s case that the overwhelming cause of dismissal was the Appellant’s incapability in carrying out his duties as a result of the one year driving ban.  He was required to travel some 30,000 miles a year on company business.  The question of the Appellant’s conduct played a minor part in the decision, so the Tribunal found.

	The Tribunal expressly rejected the suggestion that the Appellant’s disqualification was used as an excuse to get rid of him.  They rejected the argument that there was disparity of treatment when compared with other employees who had lost their licences; the Tribunal found as a fact that others in that position were dismissed.  They appear to have accepted Mr Barbour’s evidence that the proposals put forward by the Appellant to keep himself mobile were unworkable, and that alternative employment within the Group would involve a demotion and this was unacceptable.

	Overall, the Tribunal concluded that the Respondent’s decision to dismiss the Appellant for incapability was reasonable in all the circumstances.

The Appeal

	At a Preliminary Hearing held on 7 October 1996 the Appellant, through Mr Kibling, persuaded that Employment Appeal Tribunal presided over by Judge Byrt QC to permit this appeal to proceed to a full hearing on the basis of four potential points of law.

	At this full hearing Mr Kibling has put in the forefront of his argument what we shall call “the disparity point”.  We have taken that as a preliminary point and heard full argument from Mr Duggan in reply.  Having done so we have concluded that the appeal succeeds on that point, and the result is that this Industrial Tribunal decision must be set aside and the whole case be remitted to a fresh Industrial Tribunal for re-hearing.  Our reasons for so finding now follow, but we should record that in the light of our conclusions on the disparity point it is both unnecessary, and indeed undesirable, in view of the fact that the case is to be re-heard by a new Tribunal of fact, to hear and determine the further points arising in this appeal.

Disparity of Treatment

	The starting point must be the words of what is now Section 98(4) of the Employment Rights Act 1996.  However, within the overall question of reasonableness under that provision the Courts have recognised that employees who have behaved in much the same way should have meted out to them much the same punishment where the reason for dismissal related to conduct.  The Post Office v Fennell [1981] IRLR 221.

	That principle has been developed and refined.  Waterhouse J identified three sets of circumstances where the issue of disparity of treatment may arise in Hadjioannou v Coral Casinos Ltd[1981] IRLR 352.  At paragraphs 24 to 25 he said this:

“24.  ...  Firstly, it may be relevant if there is evidence that employees have been led by an employer to believe that certain categories of conduct will be either overlooked, or at least will be not dealt with by the sanction of dismissal.  Secondly, there may be cases in which evidence about decisions made in relation to other cases supports an inference that the purported reasons stated by the employers is not the real or genuine reason for a dismissal.  ...  Thirdly, Mr Tabachnik concedes that evidence as to decisions made by an employer in truly parallel circumstances may be sufficient to support an argument, in a particular case, that it was not reasonable on the part of the employer to visit the particular employee’s conduct with the penalty of dismissal and that some lesser penalty would have been appropriate in the circumstances.
25.  We accept that analysis by counsel for the respondents of the potential relevance of arguments based on disparity.  We should add, however, as counsel has urged upon us, that Industrial Tribunals would be wise to scrutinise arguments based upon disparity with particular care.  It is only in the limited circumstances that we have indicated that the argument is likely to be relevant and there will not be many cases in which the evidence supports the proposition that there are other cases which are truly similar, or sufficiently similar, to afford an adequate basis for the argument.  The danger of the argument is that a Tribunal may be led away from a proper consideration of the issues raised by s.57(3) of the Act of 1978.  The emphasis in that section is upon the particular circumstances of the individual employee’s case.  It would be most regrettable if Tribunals or employers were to be encouraged to adopt rules of thumb, or codes, for dealing with industrial relations problems and, in particular, issues arising when dismissal is being considered.  It is of the highest importance that flexibility should be retained, and we hope that nothing that we say in the course of our judgment will encourage employers or Tribunals to think that a tariff approach to industrial misconduct is appropriate.”

	That warning was reinforced in the judgment of Beldam LJ in Paul v East Surrey District Health Authority [1995] IRLR 305, paragraph 34.

	In Cain v Leeds Western Health Authority[1990] IRLR 168 this Appeal Tribunal pointed out that there should be consistency within the employers’ business; it is no answer that different cases were treated differently by different managers.

The Present Case

	It is clear that from the outset of the disciplinary process in this case the Appellant sought to compare his circumstances with that of other employees in the past.

	At the first disciplinary hearing, called without warning of its true nature to the Appellant on 4 May 1994, the Appellant raised the case of Kevin Gurney.  He was the Liverpool Branch Manager of GCL, disqualified for 12 months following conviction for offences including perverting the course of justice.  He was given a final written warning.

	Subsequently, before the Industrial Tribunal, the Appellant also relied in evidence on the cases of  Mr Brockett, Chief Executive of Newey & Eye, an associated company of GCL, who had lost his licence following a driving ban and had used a chauffeur during his period of disqualification, and Mr Childs, the Product Manager in Bristol, who was permitted to have his lodger drive for him following his heart surgery.  These cases are recorded in paragraph 7 of the Tribunal’s reasons.  Indeed, there was no evidence before the Tribunal of any case within the Group or Groups of Companies in which the Appellant was employed prior to March 1994 of dismissal following a driving disqualification.

	It appears from Mr Barbour’s evidence to the Tribunal that following the Appellant’s arrest on 20 March 1994 he took advice from Mr Rhodes, the Personnel Director of the new holding Company, Graham Group Plc.  It was that Company’s attitude that disqualification for drink/driving was considered an offence which in appropriate circumstances could lead to dismissal, and that employees of the Graham Group had been dismissed following drink/driving convictions.  Mr Barbour also said that he had no knowledge of Mr Brockett’s conviction.

	In light of that evidence the Tribunal dealt with the question of disparity at paragraphs 9 to 10 of the reasons in this way:

“9  In the applicant’s evidence it was made clear that a number of people who had lost their ability to drive were accommodated in the company and indeed supported and we have mentioned these instances earlier on in the judgment.  The applicant asked us to conclude from that it was unfair of the company to pick on him when they had dealt with other cases more sympathetically.  The respondents however said and the applicant accepted that there were cases when people had been dismissed.  After considering the evidence we have concluded that the applicant had no inherent right to be considered in these sympathetic terms and we bore in mind particularly the observation of Beldam LJ in the case of Cornwall (Paul) v East Surrey District Health Authority [1995] IRLR 305, and in particular took note of the comments that:
‘That Tribunals would be wise to scrutinise arguments based on disparity with particular care.  There will not be many cases in which the evidence supports the proposition that there are other cases which are truly similar or sufficiently similar to accord an adequate basis for that argument’.
In particular the tribunal had in mind that the post of Operations Director was a unique post and had to be considered separately and had in mind that these other cases to which reference had been made had all occurred when the company had been under different parental management.  The tribunal also bore in mind that there had been a number of cases where dismissal had in fact occurred because of the issue of capacity as a result of an employee losing his licence.  The employer had no established policies to deal with such cases and we conclude that in all the circumstances the respondents were not obliged to follow the precedent which was more favourable to the applicant.
10  We therefore look at the respondents conduct and ask whether under all the circumstances it was reasonable for them to take the action that they took.  We find that the applicant did need to be able to have the use of his car and that it was essential to the effective carrying out of his business.  We also find that the respondents did not act unreasonably in rejecting the applicant’s proposals for his continued transport without giving them a trial.  It is doubtful if public transport could provide an answer at times convenient for the parties concerned and we do not consider that the respondents acted wrongly in rejecting the suggestions made by the applicant.”

The Submissions

	Mr Kibling submits that the Tribunal fell into error in its approach to disparity of treatment in that it failed to recognise that the principles of fairness require that if an employer is to change its policy in regard to penalty for a particular matter, so that in future dismissal will follow whereas previously it did not, employees should be informed of the change before it is put into effect.  We think that submission is right, following Fennell and the first of the three matters identified by Waterhouse J in Hadjioannou.  Here, the Tribunal has turned that principle on its head.  It has had regard to the past policy of the new holding Company, Graham Group Plc, instead of the past policy of the Appellant’s employing Group prior to 8 March 1994.

	He further submits and we accept the submission, that in paragraph 9 of their reasons the tribunal found that the Applicant accepted that there were cases when people had been dismissed, although there was no evidence to support that finding in relation to the Group or Groups by whom the Appellant was employed prior to March 1984.

	Secondly, he submits that although previous disparity cases have been concerned with conduct as the reason for dismissal, there is no reason in principle why the same approach should not be applied to this type of capability case, where the circumstances, that is disqualification from driving, makes a true comparison possible with earlier cases.

	Mr Duggan, in response, contends that the question of disparity does not truly arise here.  there is a finding that the principal reason for dismissal was incapability, not conduct.  As to that, the Tribunal found that as Operations Director the Appellant was in a unique post, and his case had to be considered separately.  Further, the Tribunal found that the Appellant’s ability to use his car was essential in order for him to effectively carry out his business.  He was required to travel some 30,000 miles per annum by car, sometimes to destinations not easily reached by public transport.

	He acknowledges that the other cases where dismissal had resulted involved employees in the Graham Group, and not its predecessors prior to 8 March 1994 in which the Appellant was employed.  However, he submits that this factor was not a necessary part of the Industrial Tribunal’s reasoning in reaching the conclusion that the Respondent acted reasonably in dispensing with the Appellant’s services on the ground of incapacity.

Conclusion

	We prefer the submissions of Mr Kibling.  In a case such as this, although characterised as a capability dismissal, we can see no distinction when compared with the conduct cases in which the disparity point has been considered.

	Applying that approach, it is clear on the evidence that there was here a change of policy to fall into line with the Graham Group Plc philosophy expressed by Mr Rhodes.  That change was not conveyed to the workforce, and in particular the Appellant, before his own disqualification and dismissal.

	Although the Tribunal describe his position as Operations Director as “unique”, that does not of itself answer the comparison made with, for example, Mr Brockett, who also held a senior position.  Further, the Appellant’s incapacity lay solely in his ability to drive.  It did not prevent him from being chauffeured, a course which he offered to take at his own expense.  Mr Barbour rejected that offer because “it would set a precedent”.  However, on the evidence, that precedent had already been set by Mr Brockett.  

	Further, we are not able to treat the Tribunal’s findings as to the other cases in the Graham Group as being irrelevant to their conclusion on the disparity point.  For the reasons advanced by Mr Kibling we hold that those findings reveal an error of law which means that this decision cannot stand.

	Accordingly, this appeal is allowed and the matter remitted to a fresh Industrial Tribunal for re-hearing.  At that further hearing it will be for the new Industrial Tribunal to carry out the comparative exercise, paying due regard to the warning given by Waterhouse J to which we have referred.