Appeal No.	EAT/1373/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 18 April 2000

Before
MR COMMISSIONER HOWELL QC 
MR D A C LAMBERT
DR D GRIEVES CBE

MR D ROBERTSON	APPELLANT

NEWCASTLE BREWERIES LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

	PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	MR R.P CAPE
(of Counsel)
Wallers
Pearl Assurance House
7 New Bridge Street
Newcastle upon Tyne
NE1 8BJ

MR COMMISSIONER HOWELL QC:

1.	In this appeal which is before us today for a preliminary hearing Mr David Roland Robertson seeks to pursue an appeal against the decision of the Newcastle upon Tyne Employment Tribunal contained in extended reasons issued to the parties on 13 September 1999 after a hearing on 23 July 1999.  Mr Robertson had brought the proceedings before the Tribunal following his summary dismissal by his employers, Newcastle Breweries Ltd with whom he had been a Sales Manager, since April 1996.  The Originating Application dated 13 April 1999 was before us and it and the annexed documents make clear that the complaints Mr Robertson sought to bring before the Tribunal were under two heads, first that his dismissal had been unfair contrary to the Employment Rights Act 1996, and secondly that the dismissal had been wrongful and in breach of contract since the respondents had purported to dismiss him the ground of gross misconduct.  He contended that an act of Gross Misconduct had not been committed and accordingly that his dismissal without due notice was in breach of his rights under his employment contract at common law.  The decision of the Tribunal, as set out in the extended reasons before us at pages 7-17 of the appeal file, was expressed to be given under one head only, and was in terms that:
 “The unanimous decision of the Tribunal is that the applicant was fairly dismissed.”

2.	The extended reasons which follow give the factual background to the case.  This can be summarised fairly shortly for the purposes of this appeal by saying that the applicant had been dismissed for alleged gross misconduct in having organised a Christmas party at a hotel for members of his own sales team, which had involved getting what is referred to as commercial “sponsorship” from a firm of cider suppliers in Taunton who were not the normal “preferred”suppliers used by Newcastle Breweries.  The evidence before the Tribunal from the Respondent was that the Brewery had a very clear and express policy that any acceptance of hospitality or financial support from non-preferred suppliers had to have express approval from the Senior Managers of the Sales staff, because of the obvious prejudice that such involvement with non-preferred suppliers might cause to the employer’s business relations with the preferred suppliers.  These in the case of the provision of cider were Bulmers, who provided according to the evidence some 95% of the respondents’ requirements for that product.

3.	The letter of dismissal is before us in a supplemental bundle which has been helpfully provided by Mr Cape, who appears before us for the Appellant today, and by his instructing Solicitor, who appeared for the Applicant at the actual Tribunal hearing.  That letter at pages 41-42 of the supplemental bundle dated 18 January 1999, makes clear that following a disciplinary hearing that had taken place over two days in January 1999, at which the Appellant had been accompanied, concerning his “conduct and involvement in the arrangement of a social event held on Friday 18 December 1998 for the South Tyne Sales Team” the conclusion had been reached that the Appellant’s actions had constituted “gross misconduct within the company procedure”, had been “in breach of the code of business conduct of the Scottish Courage Group” (of which Newcastle Breweries form part), and “represented a serious breach of the trust” placed in the Appellant by his Line Manager and the Company.  Accordingly the letter summarily dismissed the Appellant without notice and without pay in lieu of notice.  The stated reasons for the decision of the writer of the letter (Mr David Embleton, the Director of Sales for Newcastle Breweries) to impose the penalty of summary dismissal on Mr Robertson were that:
“You entered into an arrangement with a non-preferred third party supplier to provide support for a private party for yourself, members of your team and your wives.
You did not seek permission from your Line Manager and did not disclose the hospitality to him, in fact keeping the event secret over a period of time. 
The level of expenditure and scope of the event were inappropriate and beyond normal courtesies and business practices.” 

4.	It is not in dispute that the Appellant’s Line Manager was a Mr Clarke and that as conceded by him at the Tribunal hearing, (recorded in paragraph 4 of the Tribunal’s reasons on page 13 of the appeal file before us), the Applicant had not informed Mr Clarke of the financial involvement with the rival firm of cider suppliers in the Christmas party that he had organised and was holding.  The relevant facts are summarised in a number of sub paragraphs in paragraph 3 of the Tribunal’s extended reasons and for this purpose it is necessary only to refer to a few of them.  In paragraphs 3(d) and( e) the Tribunal recorded that:
3(d) “It had been the practice during 1996 and 1997 for the applicant to be responsible for organising a Christmas function for his own team.  On these occasions the spouses of the team members were allowed to attend.  Funding of the event was partly by the direct financial contribution from each team member for each person attending and partly by the respondent.  These events were fairly basic affairs with house wines and set menus and would not include overnight stays.  Permission for the “official” Christmas party was obtained by Mr Clarke, payment towards the cost would then be approved in the normal course of events of management. 
(e) “Following restructuring in 1997 Mr Clarke, had been appointed director of sales for both South Tyne Team and North Tyne Sales team.  In 1998 he decided there would be a joint Christmas party for both of his teams.  Both the applicant and Mr Milburn, the other Sales Manager had stated that they wished to organise their own team events in addition to the joint event.  The applicant, had on the strength of an appraisal that year decided that he needed to concentrate on his team building and considered such a party would be one way of doing this.  Mr Milburn did not subsequently arrange a separate party for his own team.” 

And then in paragraph 3(f) the Tribunal referred to the arrangements made by the applicant after consulting his own team to hold his own Christmas party, apparently in addition to the official joint Christmas party which was a relatively modest affair held shortly before Christmas 1998.  In the result, the separate party for the applicant’s team was booked at a hotel for 18 December 1998 and the booking included accommodation overnight for members of the team and their wives.  The arrangements about the support from the non-preferred supplier appear from paragraphs 3(h) to (k) of the Tribunal’s reasons where they explained the nature of the “preferred supplier” arrangements in force and the commercial implications of this.  In paragraph 3(i) to which we have been specifically referred the Tribunal recorded that: 
3(i) “It was established practice for events to be held at which preferred and other suppliers would supply drinks and hospitality for the respondent’s employees and vice versa.  Some events would be sales or tap drives.  Sometimes, the opportunity would be taken to promote particular drinks, at specially organised events as a promotion drive.  Similar arrangements applied to events for the respondent’s own customers.  On each occasion however, whatever the type of event and irrespective of who would be involved, it was necessary to obtain official authorisation in order to meet the costs of or to receive hospitality.  Sometimes, the respondent had directly met or received the costs of the functions, at other times it had been done indirectly through stock of an equivalent value.”
5.	And it is recorded in paragraph 3 (j) to which we were also referred that on 1 October 1998 the applicant and his wife had attended a gala dinner as guests of the rival Taunton cider firm and this had not been an unusual happening.  In the course of that evening, the Christmas event that the applicant was proposing for his team had been discussed and the representative of the rival firm indicated that they would interested in “supporting” the Christmas party and in some of his colleagues attending it.  The Tribunal recorded that during the week commencing 5 October, the applicant had spoken to Mr Roy Knox, who was the respondents Marketing Manager but not the applicant’s own Line Manager from whom authorisation needed to be obtained, and that Mr Knox had encouraged him to proceed with the idea of the Christmas dinner and with the “support” from the rival firm, MCT.  As the Tribunal recorded:
3(k) “It was arranged that MCT would sponsor the meal and accommodation.  Details of the sponsorship being set out in an undated fax sent from the applicant to the Taunton Representative, Mr McMenamin shortly after 10 November 1998.  The applicant had proposed that the balance of the funds should be provided not only by a contribution from staff but by each team member’s keg allowance [which is an allowance given in lieu of free drinks in kind by the respondents in common with many other brewing and spirits firms].  In the fax it was stated “I will pick up the wine and drinks bill also that MCT would send in stock as a contribution towards the costs of food and accommodation.”  
And there is then reference to MCT having proposed that its products would be provided through a substantial number of outlets described as “cider fonts” in the bar at the Christmas party, which would have of course involved their products being made available in preference to those of Bulmers, although the applicant gave evidence that he had not any intention of taking away business from the preferred supplier. It is recorded in paragraph 3(m) of the Tribunal’s findings that: 
“3(m). On 3 December 1998 a memo had been issued to heads of staff by the respondent’s Personnel Director.  The applicant had received two copies of that memo, one of which he passed on to his team. The other one had upon it a handwritten note from Mr Clarke, indicating that if there was any problems he should be contacted.  The memo draw attention to the company policy stating “you should not accept any gift, entertainment, hospitality or personal benefit which could be perceived as having been offered because of the business relationship, or to gain business advantage either for yourself, or immediate family, except in the normal performance of your duties, or of a token nature, from any organisation or business which has, or wishes to have dealings with the company.”  
6.	The Tribunal found that the applicant was well aware of this policy, even though he had not previously received a specific memorandum to that effect. In paragraph 3(n) the Tribunal recorded that that memorandum had confirmed the Respondents’ policy which had been set out in the code of conduct, of which employees were aware and was in evidence before the Tribunal.  A paragraph of that code of conduct stated that:
“At common law all employees are under a duty to work honestly, faithfully and loyally for their employer.  This is an implied contract condition of any contract of employment breach of which will be breach of contract.  This is commonly called the duty of fidelity and is fundamental to the whole basis of the employment relationship” and a paper headed “Hospitality/Entertainment/Gifts” at R7 it states “you should disclose any hospitality to your manager and discuss whether that has a legitimate business connection.  Certain types of hospitality, for example foreign travel or hospitality involving your family will rarely have a direct business connection.  In such cases you should seek permission from your head of department before accepting any such offer.”
In 3(o) the Tribunal found that: 
3(o). “There was a risk that the commercial contract between the respondents and Bulmers might have put into jeopardy had Bulmers’ found out that another supplier of cider was involved with the respondent’s employees and the same disclosure could have effected the business relationship which the respondent had with Bulmers. If Mr Clarke had been asked for his permission to proceed with the sponsorship of the party by MCT, he would have refused because of that risk.”
The party did go ahead, without Mr Clarke’s knowledge or of or permission for the significant financial involvement of MCT with the provision of what was consumed at the party.  That the cost was not merely trivial is apparent from the Tribunal’s findings at paragraph 3(w) on page 12 of our appeal file, where it is recorded that the bill without accommodation charges had totalled over £1,100 and Manager had been told to send the drinks bill totalling £509 to the applicant.  The rest of the bill was to go to Mr Knox in the Marketing Department and the arrangement had been that the applicant would settle the bill later with free stock, rather than in cash.  Mr Clarke, when he found out about it, had been “shocked at the extravagance of the event.”  Before the Tribunal the applicant conceded, as we have already noted and as recorded in paragraph 4 of the Tribunal’s statement of reasons, that he had made an “error of judgment” by not informing Mr Clarke of the involvement with MCT in the Christmas party.

7.	However, he contended the party had not been particularly lavish, the punishment had been excessive and he had accordingly been wrongly and unfairly dismissed.  The respondents, on the other hand, relied on their own disciplinary and appeal hearings as justifying the course that had been taken of imposing summary dismissal.  In particular, they drew attention as recorded in paragraph 6 of the Tribunal’s reasons to the necessity, in the respondents’ business, for staff to comply with the respondent’s own rules because of the potential for entertainment and hospitality to be abused and for that reason, it was necessary for permission for such a party to be obtained beforehand.  The applicant had not sought it and had been secretive about the manner in which he had gone about organising the event and the party had not been specified in his work sheet.  What he had done had risked both upsetting a business arrangement and giving the wrong signals to Bulmers, the preferred suppliers.  As the Tribunal recorded, it was not in issue that the reason the applicant had been dismissed was gross misconduct in the view of the employers.

8.	The issues, therefore, before the Tribunal on the applicant’s originating application, were first whether the employer’s view was within the band of reasonable responses for an employer in these circumstances and whether the dismissal had been fair in all the circumstances; and secondly, whether the dismissal without notice had amounted to a breach of the appellant’s employment contract.  That second issue was in our judgment, closely bound up with the first, since if conduct had been established, which a reasonable employer in the circumstances could have regarded as gross misconduct, with a potential breach of trust and confidence on the part of the employee being involved, that would have amounted to serious misconduct, justifying a summary dismissal under the normal principles of the law of contract and therefore rebutting the second separate ground of complaint.

9.	Mr Cape, who appeared on behalf of Mr Robertson before us summarised the grounds on which it was alleged the Tribunal had erred in law with the aid of a skeleton argument, as being first that the Tribunal had erred in failing apparently to address in their decision at all the issue which had been raised in the originating application as to whether there had been a breach of contract in the timing and manner of Mr Robertson’s dismissal without notice.  Secondly, he submitted that the Tribunal had erred in particular, in failing to make specific findings and record sufficient reasons in relation to the three separate elements which had been alleged in the letter of dismissal, to which we have already referred, as being the grounds amounting to gross misconduct warranting summary dismissal.  In particular, he submitted that the Tribunal had failed to make and record adequate findings, or justifiable findings having regard to the evidence on the involvement of the non-preferred supplier.  Further, that the Tribunal had erred in paragraph 7 of their stated reasons to which we have referred, in simply recording that, it was not an issue that the applicant had been dismissed for gross misconduct, without specifying in detail whether they accepted or rejected the employer’s contention that this had been on the ground of lack of permission by Senior Management for the holding of the party and the involvement of the non-preferred supplier, MCT.  Finally he said that the Tribunal had erred in failing to address the question of whether the level of expenditure involved in this particular case, in the event organised by the appellant, was excessive by comparison with the scale of expenditure on other, similar events that had been organised; including what was referred to as the “official” joint party for the Sales teams which had also been held, and reflected the practice in previous years.  Related to those points, Mr Cape submitted that the Tribunal had erred in accepting that the disciplinary process in this case had been an adequate and sufficient basis for summary dismissal, since the investigation carried out by the Senior Management involved had not, in Mr Cape’s submission, involved adequate consideration of the comparison of the level of expenditure between previous parties and the one organised by the appellant.  

10.	We have considered all of those submissions but have not concluded that any one of them gives rise in our view to an arguable ground for saying that the Tribunal’s decision on the unfair dismissal issue was erroneous in law, so as to warrant our directing that that issue should go forward to a full hearing of this Tribunal.  It is in our judgment apparent from the findings made by the Tribunal, in the context of the documentary and other evidence put before them which they recorded (the principal document is the letter of dismissal, which is also before us) that the Tribunal were finding that what this appellant had been dismissed for was organising a party for his own sales team on 18 December 1998, involving substantial financial support from a non-preferred supplier, without obtaining the authorisation from his superior manager, which was essential, further the failure to obtain it involved a breach of the trust and confidence the employers were entitled to place in the appellant as an employee, having particular regard to the fact that the need to obtain such authorisation, had been expressly drawn to his attention only a week or so earlier in the memorandum of 3 December 1998 to which the Tribunal referred in paragraph 3(m) of their findings.  We do not find the Tribunal’s stated reference in paragraph 7 of their reasons to the gross misconduct as having:
7. “Related to the organisation of a party on 18 December for the South Tyne Sales Team and the involvement of a non-preferred supplier.”
as in any way failing to make it clear that the Tribunal were accepting that (1) the substantial reason for dismissal was that the applicant had failed to obtain approval of the event and had in the respondent’s words referred to in the paragraph immediately above being:
“Secretive in the manner in which he had gone about organising the event;”
and that (2) those facts established a reasonable case for summary dismissal, so as to render the dismissal fair within s.98 Employment Rights Act 1996.  

11.	It is true that the Tribunal did not purport to make and record their own findings as to whether the level of expenditure involved in the 1998 event was or was not substantially in and had official permission, which Mr Cape submitted should have been taken into account as comparable.  The submission that that amounted to an arguable error of law in our judgment misses the point.  Insofar as the level of expenditure is being relied on as a separate head in the grounds of dismissal given by the employer in the dismissal letter, we think a fair reading of that letter is that the point being made is that the level of expenditure involved in this particular event was substantial and not merely token or trivial.  The dismissal was not being put forward on the basis that the amount level of expenditure involved in this particular event was excessive by comparison with other approved events.  It was that this was an unauthorised event involving unauthorised sponsorship from another supplier, which could prejudice the employer’s business, and that the level of involvement and the size of the event made clear that what was being done was not merely the acceptance of trivial amounts of business hospitality from other suppliers, but was a substantial involvement on the part of the unauthorised supplier.

12.	Having regard to that, we consider that the Tribunal’s stated conclusion that they accepted the grounds of the dismissal as having been fair in all the circumstances is adequately explained in their decision and justified on the facts that they recorded, in particular the passages to which we have referred making clear that official authorisation was essential in any case where hospitality was to be accepted, whatever the type of event and irrespective of who was to be involved, and also that there had been substantial reasons for the respondent’s policy of requiring authorisation for any involvement with non-preferred suppliers.  In addition, it appears to have been common ground before the Tribunal that the requisite authorisation from Mr Clarke had never been sought or obtained, so that the absence of any specific finding by the Tribunal on the lack of permission, is not in our judgment any arguable ground for saying that their recorded reasons failed to make clear the grounds of their decision or were erroneous in law.

13.	For similar reasons to those we have given in relation to Mr Cape’s points on the level of expenditure, we do not accept his submission that there was any error of law on the part of the Tribunal in failing to hold the respondent’s disciplinary process defective.  Again the point at issue was not an exact comparison of the amounts of the bills involved, to which Mr Cape did draw our attention, but that a substantial financial involvement with a non-preferred supplier had been engaged in by Mr Robertson without obtaining the permission that was essential.  

14.	Mr Cape also criticised the Tribunal’s acceptance of the conclusions of the respondents’ disciplinary process by saying that the Tribunal were wrong to conclude that the two managers involved would have been able to take a detached view of the evidence presented to them, in particular because they had not themselves carried out an investigation into the amounts.  In our judgment that was a matter for determination by the Tribunal who heard the whole of the evidence in the case.  We cannot see that there is any ground in law for this Tribunal to interfere with the conclusion of fact expressed by the Tribunal in paragraph 8(b) of their stated reasons (on page 15 of the appeal file before us) that by the virtue of the extensive experience and the seniority of the two managers they referred to (Mr Crossley, and Mr Embleton who actually read the letter of dismissal) they were satisfied that those persons would have been able to take a detached view of the evidence presented to them.  We accordingly reject the submission that the Tribunal should have held the respondent’s disciplinary process defective on the ground of any lack of objectivity.

15.	For those reasons, we reject Mr Cape’s submissions as regards to the unfair dismissal issues involved in this case.  That leaves the breach of contract claim.  As we have said, on the basis of the Tribunal’s findings on the other issues in the case, which we do not see any reason for this Tribunal to disturb, it is apparent that the appellant had been dismissed by his employer for conduct amounting to serious misconduct, contrary to the respondents Code of Practice which was a reasonable matter to refer to in the context of a contract claim, as was expressly done in the passage to which we have already referred in paragraph 3(n) of the Tribunal’s findings.  However the Tribunal expressly found that the sanction of summary dismissal had been a reasonable one in the circumstances: paragraph 8 (b) – 8 (c).

16.	Those circumstances appear to us on the Tribunal’s findings to justify a summary dismissal under normal principles of employment contract law in just the same way as the Tribunal found that they justified the dismissal as fair for the purposes of s.98 of the Employment Rights Act 1996.  Therefore, although we accept as correct Mr Cape’s submission that the Tribunal’s decision as recorded in the extended reasons issued to the parties, may require a technical correction in that it does not expressly record any specific finding on the breach of contract issue, we are not satisfied that on the findings which they did make, which we do not consider should be disturbed, there is any material or substantial error in the conclusion they undoubtedly reached, which was to dismiss the whole of Mr Robertson’s complaint, such as to warrant us directing a full hearing on the ground of the technical omission of an express finding on the breach of contract claim alone.

17.	For those reasons, we are not satisfied that there is any materially arguable ground in law to warrant us directing a full hearing of this appeal before the Employment Appeal Tribunal and we accordingly now unanimously dismiss the appeal.