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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Granges Building Systems Ltd (t/a Glostal Monarch) v. Hill [2000] UKEAT 666_99_1810 (18 October 2000) URL: http://www.bailii.org/uk/cases/UKEAT/2000/666_99_1810.html Cite as: [2000] UKEAT 666_99_1810

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APPEARANCES

 

For the Appellant	MR C HENSON (Representative) PPC Consultants Ltd Enterprise House Great North Road Little Paxton Cambs PE19 4BQ
For the Respondent	THE RESPONDENT IN PERSON


 


MR COMMISSIONER HOWELL QC

1. In this appeal, which is before us today for full hearing, a company called Granges Building Systems Ltd, trading as Glostal Monarch seeks to have set aside as erroneous in point of law the decision of the Bristol Employment Tribunal contained in Extended Reasons dated 1 April 1999, and before us at pages 5 – 8 inclusive of the appeal file. Those reasons record the findings and reasons for a decision which was originally reached by the Tribunal after a hearing over a period of one day on 4 February 1999, and deliberations by the Tribunal on 8 February when Summary Reasons were issued, which are also before us in the appeal file.
2. There was then a further hearing held on 7 May 1999 at which a further determination was reached on the question of remedy. That had been deferred to that later hearing following the Tribunal's finding after the first hearing that the Respondent, Mr Paul Michael Hill, who was a former employee of the Appellants before us, had been unfairly dismissed on 23 September 1998 from his employment with them, which at that time was with the status of a Production Manager designate, meaning that he was promoted to be the Production Manager on a trial basis. He had been given that appointment on 1 July 1998, after a period of over nine years continuous employment with the company in the capacity of a team leader, that is in a supervisory capacity in the works. The company's business is that of producing glazing units for the building industry.
3. The background to the Respondent's dismissal was that in the course of a batch of glazing units being produced, in the summer of 1998, it had become apparent that some substantially sub-standard material had been wrongly passed; and the employee initially concerned with having passed it, a Mr Kevin Regan, was questioned and initially alleged that he had been directed to pass the sub-standard material by Mr Hill who was in a superior position to him.
4. Evidence before the Tribunal was given to the effect that Mr Regan had initially entered a false statement in the company's production records to the effect that he had been instructed to pass the material by Mr Hill, or that Mr Hill had himself OK'd the material. Again, according to the evidence before the Tribunal, it appeared that this incorrect entry had been subsequently Tippexed out by Mr Regan, and confused and conflicting versions of events given to the company's superior management by Mr Regan and others in the course of the subsequent investigation.
5. However, at the conclusion of the management investigation, Mr Hill had found himself dismissed on the basis of the company's belief that he had behaved dishonestly over the affair. As recorded in the disciplinary findings which are before us at page 13 of the appeal bundle, it appeared, at that stage, to be being alleged that several employees had indicated that he had been placing improper pressure on them, and that they were afraid to give direct evidence as to his involvement in the affair. As the manager investigating the complaints recorded, he found it clear that Mr Hill had lied to him consistently about these issues, obviously a very serious allegation to make against any employee, and particularly serious in view of Mr Hill's then position as the Production Manager.
6. The upshot was that after an appeal process conducted by the Respondent's financial director, Mr Hill was advised by letter dated 20 October 1998 that his appeal against his summary dismissal by the company was unsuccessful, although at that stage, an offer of a payment in lieu of notice was made, having regard to his length of service with the company. However, so far as Mr Hill was concerned, that did not remove the obvious adverse effect on his record, of a finding of having been dismissed for gross misconduct, and he took the matter further by way of application to the Employment Tribunal.
7. The Tribunal, as we have said, went into the material before them and recorded extended reasons for their decision, in paragraph 10 of which they said that they had reminded themselves of the provisions of section 98(4) of The Employment Rights Act 1996 and the now well established and understood tests as to the questions of reasonableness, which arise under that sub-section.
8. The Tribunal had already recorded a finding which is not in dispute, and we consider quite beyond dispute, that the reason for the Applicant's dismissal had been a belief on the part of the employer that Mr Hill had lied about authorising the inspector, Mr Regan to release the defective material. That was the subjective reason which, as recorded in the investigation note to which we have already referred, actually led the employer in this case to terminate Mr Hill's employment summarily.
9. Thus the Tribunal, entirely correctly in our view, held that the initial requirement on the employer of showing that the reason for the dismissal had been one of the potentially fair reasons within section 98(2) of The Employment Rights Act 1996 had been established. The whole case therefore fell to be determined on the questions of reasonableness under section 98(4) which provides that:

"(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question of whether the dismissal was fair or unfair (having regard to the reasons shown by the employer) -

(a) depends upon whether in the circumstances ……. the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case."

The Tribunal referred in paragraph 10 of their Extended Reasons specifically to the guidelines in British Home Stores -v- Burchell [1980] ICR 303, and said that taking account of those guidelines, the Tribunal was satisfied that whilst the Respondent may have had a belief in the guilt of the Applicant:

"we are not satisfied on the evidence that such a belief was based upon reasonable grounds having regard to our findings as set out above"

10. In the circumstances they found that the penalty of dismissal was not within the range of reasonable responses for the employer. They further added that they did not consider taking into account equity, and the substantial merits of the case, and the length of the Applicant's service with the Respondent company that they acted as any reasonable employer would have done in all the circumstances. Accordingly the Tribunal found Mr Hill's dismissal was unfair.
11. That conclusion appears to us to have been based in particular on the Tribunal's view that objectively the dismissal of Mr Hill, in the circumstances disclosed by the enquiries conducted by the employer, was outside what could be considered a reasonable response on the part of the employer: notwithstanding that it had conducted a fairly detailed investigation, involving enquiries made of other members of the staff who had been involved in the events giving rise to Mr Hill's dismissal, and an appeal process conducted by the financial director to which we have already referred.
12. We should add that in the Summary Reasons, issued two days after the original hearing and recording the substance of the Tribunal's decision, the Tribunal recorded that the dismissal was found by them to be unfair, having regard to the criteria in section 98(4) of The Employment Rights Act for two stated reasons: namely:

"(a) the Tribunal is not satisfied that the respondents belief, in the light of the evidence before them was based upon reasonable grounds;

(b) whilst the matter was adequately investigated the Tribunal are not satisfied on balance that the respondents have acted within the range of responses of a reasonable employer."

13. So that at that stage, the Tribunal do appear to have regarded the investigation, that had been carried out by the employer, as an adequate one for some purposes, although that Statement of Summary Reasons makes entirely clear the Tribunal's view, recorded in more detail in their later Extended Reasons, that the result of the process had not, as a matter of objective fact, been a dismissal which could be characterised as a reasonable dismissal on the standards required by the British Home Stores -v- Burchell test.
14. The Tribunal further adverted to a number of aspects of the investigation itself in their Extended Reasons, in a way which suggests to us, that the way in which that investigation was undertaken, while it may have involved making the right enquiries, left something at least to be desired. For example in paragraph 5 it is recorded that disciplinary meetings were held in September 1998 at which serious allegations had been put to the Applicant, in particular that he had lied about his involvement in the passing of the defective shipment, and that pressure had been put on the inspector concerned to withdraw his initial statement implicating Mr Hill in the wrongful act of passing defective work.
15. However it is recorded by the Tribunal in that paragraph that no notes were taken of any interviews undertaken by the member of the management carrying out that investigation, a Mr Peart, or any other person interviewed identified. And it is further apparent from the Tribunal's own findings as recorded in paragraph 8 about the evidence on some of the disputed issues, that Mr Peart and Mr Sissons (the director who conducted the appeal) appeared to have accepted evidence from Mr Regan and others, and to have acted on a view as to Mr Hill's dishonesty, about which the actual evidence gave serious cause for concern whether such evidence was rightly to be viewed as reliable for that purpose. For example Mr Regan had withdrawn his complaints, there was a lack of any substantive evidence to support the suggestion by Mr Peart that he was continuing to pursue the complaints because of "unrest on the shop floor" with the implication that this was in some way attributable to Mr Hill, and that evidence had been taken into account from another employee, Karl Looney, even though this was of a hearsay nature only.
16. To some extent, therefore, the Tribunal's detailed reasons for the conclusions to which they came that, objectively, they considered this to have been an unreasonable and therefore unfair response for an employer in these circumstances, reflected at any rate the inadequate conclusions drawn in the investigative process, if not deficiencies or inadequacies in the way the process itself was carried out.
17. On behalf of the employers, Mr Henson who has appeared before us today, sought to make a number of criticisms of the Tribunal's decision, as recorded in those reasons. For present purposes we can summarise them under three heads.
18. First, Mr Henson submitted that having regard to what is now clear, that the British Home Stores -v- Burchell test requires a Tribunal merely to be concerned with whether a reasonable employer might have acted as this particular employer did in imposing the sanction of summary dismissal for gross misconduct, the Tribunal have, wittingly or unwittingly, misdirected themselves and skidded off into considering and substituting their own view of what might have been reasonable or what they might reasonably have done as an employer in corresponding circumstances. This, said Mr Henson, embodied a misdirection because it is now apparent as a result of the recent decisions by the Court of Appeal and this Tribunal that it is the former and not the latter test of reasonableness that must be applied for section 98(4). In particular he referred us to the recent decision of this Tribunal in Beedell -v- West Ferry Printers Ltd [2000] IRLR 650 as demonstrating that the original test in Burchell is the test that must be applied by all Employment Tribunals in approaching these questions of reasonableness under section 98(4) in unfair dismissal cases. The correctness of what was said in Beedell was affirmed shortly afterwards by the Court of Appeal in Post Office -v- Foley CA 31 July 2000.
19. In particular, Mr Henson said that it could be seen from the fact that the Employment Tribunal reached a conclusion in favour of the employee and against the employer that it must have misdirected itself in the way it applied the statutory tests and the guidelines in the authorities. His submission was that, since the Tribunal had plainly accepted and recorded that the employer had a genuine belief in the employee's dishonesty at the time it imposed the penalty of dismissal, and the Tribunal appeared to have accepted, at least in its summary reasons, that an adequate investigation had been carried out by the employer before summary dismissal for gross misconduct based on that belief was imposed, that must be an end of the matter.
20. No Tribunal in these circumstances, submitted Mr Henson, could reasonably conclude anything other than that if the employer remained with an honest and genuinely held belief in the employee's dishonesty, having carried out a reasonable investigation, then summary dismissal was a reasonable penalty for any such employer, in the circumstances, to impose.
21. That submission we found superficially attractive but in the end we have concluded that it is the wrong way of analysing the test that needs to be applied by a Tribunal in these circumstances. We consider that the Employment Tribunal was correctly addressing a further and important question required of it by the test as laid down in Burchell and the subsequent authoritative cases, namely, objectively was this, or was this not a reasonable or unreasonable dismissal in the context of section 98(4) in all the circumstances of the case, applying the test of what a reasonable or an unreasonable employer might objectively have done, in the circumstances as they appeared to the employer at the time dismissal was imposed.
22. We consider that in reaching the conclusion that this was an unreasonable dismissal by that standard the Tribunal were carrying out exactly the analytical process required of them by the Burchell test, and in particular, the second stage of that test as cited by His Honour Judge Clark in the judgment of this Tribunal in Beedell's case at paragraph 55 where he quotes Mr Justice Arnold in the well known passage where what is described as the threefold Burchell test is laid down:

"First of all there must be established by the employer the fact of that belief (that is, in the employee's misconduct) that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain the belief And thirdly, we think,that the employer, at the stage at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case"

23. We consider that Mr Henson's way of formulating what must be addressed by a Tribunal was itself erroneous in that it elided the separate and important second stage of the process, namely that the Tribunal must be satisfied that the genuinely held belief by the employer in the employee's dishonesty was based on reasonable and not unreasonable grounds in imposing the sanction of summary dismissal for gross misconduct. In other words, that even if an investigation in which all the right people are asked the right questions has been carried out, it is a necessary and important separate stage of the Tribunal's enquiry whether the results of that investigation should have led a reasonable employer to conclude that the incidents, or conduct complained of, warranted the penalty of summary dismissal.
24. The Tribunal in the present case despite their acceptance that the Respondent may have had a belief in the Applicant's guilt, recorded specifically that they were not satisfied on the evidence that the belief in the circumstances of this case was based upon reasonable grounds, having regard to the findings which they made.
25. Consequently they recorded that they found that the penalty of summary dismissal was not within the range of reasonable responses in the circumstances of this particular case. In reaching that conclusion we are completely satisfied that they applied the right criteria as to reasonableness under section 98(4) in particular in relation to the second stage of the Burchell test which, in our view, is essential and different from either the first or the third stages, of genuine belief by the employer and conduct of a reasonable investigation.
26. For those reasons we were not persuaded by Mr Henson's first point that there was something erroneous in law or perverse in the Tribunal's having reached the conclusion they did, having regard to their findings on the first stage of the virtual test and their having recorded in the summary decision that the investigation had been carried out in their words "adequately".
27. That brings us on to Mr Henson's second submission which is that even if the Tribunal had formulated the test for themselves correctly, nevertheless their decision had to be set aside because of the inadequacy of their recorded findings and reasons for reaching the conclusion that they did. In particular he submitted that he relied on the apparent inconsistency that we have already referred to between the Summary Statement of Reasons referring to an adequate procedure and the apparent defects of the procedure referred to in the various points in the Extended Reasons. He further said that the Tribunal's findings of fact in paragraph 8 of their Extended Reasons, on which they principally based their conclusion that the substance of the decision to dismiss Mr Hill had been an unreasonable one despite the investigation carried out, were in some ways inconsistent with the view that should have been taken by the Tribunal on the evidence as it was put before them.
28. We think this Tribunal would have been better, in the circumstances of this particular case, to state its findings and reasons in its Statement of Reasons more fully and systematically, having regard to the way the matter had been put before them. Also there was what appears to us a regrettable delay, apparently due to administrative and other reasons, before the Extended Reasons could actually be produced by the Chairman and issued on 1 April 1999. But we have at the end of the day not been persuaded that the fairly short explanation of reasons on these factual issues given by the Tribunal in paragraph 8 in particular, of their Extended Reasons, fell short of the required standard for such reasons as to amount to an error of law on the part of the Tribunal.
29. Of course, it is necessary for the benefit of employers, as well as employees, that a person reading the Tribunal's statement of findings and reasons should readily be able to understand why the case has been decided in the way it has, and that the Tribunal has sufficiently addressed its mind to all the material issues of fact as well as of law. But it has been said many times that a Tribunal's Statement of Reasons is not to be a work of great elaboration: it must give a reasonable understanding of why the case has gone the way it did, but it is not necessary for it to deal in detail with every single piece of evidence that is put before the Tribunal. It is always a balancing exercise which side of the required line a particular set of extended reasons may fall, but we have unanimously reached the conclusion that the doubts that Mr Henson has put before us, on various aspects of the way the Tribunal's reasons are recorded here, do not amount to a demonstration that the Tribunal's Statement of Reasons is so inadequate as to leave significantly in doubt the basis on which their decision, in favour of the employee in this case, was reached on the issue of whether his summary dismissal for gross misconduct was based on reasonable grounds on the part of the employer, applying the tests we have already indicated.
30. That leaves the third main submission which Mr Henson made to us which was to the effect that there had been a breach of natural justice, in the way the proceedings were conducted, in that the member of Mr Henson's organisation who was handling the proceedings on behalf of the employer at the Tribunal level, had sought to raise, but had wrongly been excluded from pursuing, an issue referred to shortly as "contribution": namely that if the summary dismissal for gross misconduct, actually imposed on this employee, was found to be an unfair dismissal so that some rights of compensation, or some remedy was available for it under the Employment Rights Act, nevertheless, having regard to the circumstances of the case and to the conduct of the employee himself, this was a case where some reduction of either the basic or the compensatory award was appropriate under section 122 or 123(6) of the Employment Rights Act 1996.
31. What appears to have happened was that the representative on behalf of the employer did raise this issue of contribution, and indicated that they wished to make submissions on it, in the course of final submissions although after all the evidence at the hearing on 4 February 1999 had been concluded, and after Mr Hill had completed all his submissions on the appeal and sat down. That was of course, a fairly late stage of the proceedings for such an issue to be raised, although we do take into account that it is not uncommon that questions of remedy, and therefore questions of how much compensation an employee should be awarded, (and thus also any question of contribution) are commonly deferred until after the main issue of liability has been dealt with by the Tribunal. In common with what is almost standard practice, the Tribunal in this case, as we have already indicated, did in fact defer the question of remedy to a subsequent hearing which did not take place until May 1999.
32. However although this issue had been flagged up for the Tribunal by what the representative had said in his submissions on 2 February 1999, (and that is accepted by the Chairman whose comments on this question have been helpfully obtained, at page 4D of our bundle, where he confirms that his note does reveal that the representative, Mr Delafield did refer to contribution when making his closing statement on 4 February) although that did take place, and is not in dispute, unfortunately when the Tribunal came to give its decision on 4 February, nothing more was said about contribution and the question of when, or how, that might be considered by the Tribunal. Nor was it in fact considered by the Tribunal or dealt with at the subsequent hearing on remedy which took place on 7 May 1999.
33. Here, we have been persuaded by Mr Henson's arguments that the Tribunal did fall into error in not, at any rate, addressing the possible application of section 122 and 123(6) to the award of compensation, either in the main decision it gave as recorded in the Extended Reasons on 1 April 1999 in directing that that issue should be dealt with at a further hearing, or in fact dealing with it at all, as far as we can see, from the records before us of the hearing on remedy which took place on 7 May 1999.
34. We do not of course express any view, one way or the other, on whether in the circumstances of this case, a claim that the compensation ought to be reduced on the ground of contributory fault on the part of the employee, would have any hope of succeeding in front of a Tribunal, but what appears to have gone wrong is that the opportunity for the employers to make whatever submissions they felt able to, on that issue appears, probably by oversight, to have been lost in the course of the way the proceedings were dealt with by the Tribunal.
35. We consider that that unfortunately makes it necessary for us to direct that that issue, and that issue alone, should now be considered by the Tribunal since the opportunity for it to be considered has got lost along the way and in the way the case has been dealt with so far.
36. Therefore to that extent we do accept Mr Henson's submissions and we will set aside the decision of the Tribunal to the extent only of directing that the case should be remitted to the same Tribunal for that issue of contribution to be considered in the context of the remedy awarded, with each (if any) alteration to the compensation award as the Tibunal may think fit to be made in the light of its decision on the contribution issue. In all other respects, we confirm the Tribunal's decision on the question of whether a reasonable employer would have dismissed the employee in these circumstances, summarily on the ground of gross misconduct, which was the substance of the decision on unfair dismissal.
37. That will enable you, Mr Henson, to put forward any arguments that your clients may think it right to put forward on contribution that they may not have been able to put forward in the way that the case has been dealt with so far, so to that extent only the appeal is allowed and we set aside the decision of the Employment Tribunal.