Appeal No.	 EAT/1116/02/LA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 2 May 2003

Before
HIS HONOUR JUDGE J McMULLEN QC
MR B BEYNON
MRS R CHAPMAN

MR R L FIRTH	APPELLANT

BRC BARNSLEY LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR R THACKER
(of Counsel)
Instructed by:
Messrs Mill Kemp & Brown with Hinchliffe Baker
Solicitors
1-11 Huddersfield Road
Barnsley 
South Yorkshire S70 2LP	
For the Respondent	MR K SABRY
(of Counsel)
Instructed by:
Messrs Gordons Cranswick
Solicitors
14 Piccadilly
Bradford BD1 3LX	

HIS HONOUR JUDGE J McMULLEN QC

1	This case is about procedural unfairness in dismissal and Employment Tribunal procedure in dealing with contributory fault.  The judgment represents the views of all three members who pre-read the papers.  We will refer to the parties as Applicant and Respondent.

Introduction
2	It is an appeal by the Applicant and a cross-appeal by the Respondent in those proceedings against a Decision of an Employment Tribunal sitting at Sheffield, Chairman Mr G R Little, registered with Extended Reasons on 10 September 2002.  The Applicant was represented on the first day by a friend and on the second he represented himself.  The Respondent was represented by Mr Hall, solicitor, who has attended and helped us today.  The Applicant claimed unfair dismissal, giving nothing away as to the circumstances of his case or of his dismissal in his Originating Application.  The Respondent contended that the Applicant was fairly dismissed for gross misconduct.  

The issues
3	The essential issues were not defined by the Employment Tribunal but no criticism is made by the Applicant today about that.  As Mr Thacker engagingly put it, this was a knock-about Employment Tribunal case about unfair dismissal and thus the Tribunal was to decide the fairness of the dismissal, taking account of procedural matters.  

The legislation
4	The relevant provisions of the legislation to which the Tribunal expressly referred are Employment Rights Act 1996:
“98.1) In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show- 
(a) the reason (or, if more than one, the principal reason) for the dismissal, and
(b) that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.
(2) A reason falls within this subsection if it- 
a) relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,
(b) relates to the conduct of the employee,
(c) is that the employee was redundant, or
(d) is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.
4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)-  
(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) 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 Decision
5	The Tribunal found that the Respondent unfairly dismissed the Applicant but that he contributed to the dismissal to the extent of fifty per cent.  A hearing for remedies has been adjourned to a date three weeks from now.  

The Appeal and Cross-Appeal
6	The Appeal and Cross-Appeal are against respectively the finding on liability and the finding on contribution, or more accurately, the approach to the finding of contribution.  

The parties
7	The Applicant was employed by the Respondent as a forklift driver from 30 June 1975 until his dismissal on 18 June 2001.  The business of the Respondent is the manufacture of welded fabrications in Barnsley.  On the site where the Applicant was employed were a hundred or so employees, but the Respondent is part of a larger group employing up to three thousand people; that is relevant to the statutory test in section 98(4) about the resources and also relevant to the criticism which to we will advert of procedural unfairness in the handling of the disciplinary action.  

The facts
8	On 11 June 2001, the Applicant returned to work following absence on account of an accident at work.  His immediate manager, Mr Rockey, noticed a large plastic container behind the seat of the Applicant’s forklift truck.  When asked what it was, the Applicant explained that it was his practice to keep a container in his truck so that he could refuel his vehicle if he ran out of fuel some distance from the fuel pump.  This caused Mr Rockey to investigate the matter.  It turned out that a customer of the Respondent, Cobra Railfreight Ltd, had had problems with diesel fuel being stolen. In order to counteract that, it dyed its diesel purple; the Respondent does not use purple diesel.  Statements had been taken, together with a letter from Cobra, indicating that fuel was siphoned off at the Respondent’s premises from Cobra’s vehicles when they were visiting them.  

9	Two statements were taken but they were anonymised.  They indicated that the Applicant was engaged in that siphoning exercise.  As the Tribunal put it, curiously, no steps were taken by Cobra to draw this to the attention of the Respondent, it being satisfied to take action only in respect of its own employees.  The Applicant was summoned to appear; Mr Rockey conducted the disciplinary hearing, the Applicant was represented by his union, the ISTC, the names of the witnesses were not disclosed, although the statements were.  The decision of Mr Rockey was to dismiss the Applicant.  On appeal to Mr Cashmore, Mr Rockey’s superior, again the Applicant was represented and Mr Cashmore decided to uphold Mr Rockey’s decision.  

10	The Tribunal decided that the dismissal was unfair principally on procedural grounds, indicating that Mr Rockey should not have been involved in the investigation process because of the Applicant’s allegation against him that he had been victimising him over a period of time.  Secondly, the witness statements which had been produced included a statement or a comment by Mr Rockey himself. In order to avoid a conflict, the Tribunal held that a reasonable employer should have ensured that the disciplinary process and the decision to dismiss or not should have been transferred to someone else.  Mr Rockey should have disqualified himself because he had been involved in circumstances where disciplinary action had been weighed against the Applicant; a serious sanction had been imposed causing it to be put in doubt about whether he was the appropriate person to consider this matter.  

11	Thirdly, the Tribunal considered whether the appeal to Mr Cashmore had cured the defect which it had noted and it decided not.  It was concerned with the anonymised witness statement.  It said this:
“We remind ourselves of what was said in Ulsterbus -v- Henderson [1989] IRLR 253 and also note that the Asda Stores -v- Thompson [2002] IRLR 245 case permits an employer not to disclose the identity of witnesses where serious allegations are made concerning drug use and retribution is feared.  However, we read Ulsterbus and Asda on the basis that the overall consideration is that natural justice must apply in a domestic disciplinary process and a reasonable employer must satisfy the minimum requirements of the Burchell [1980] ICR 303 test.  Certainly, Ulsterbus does not preclude the production of witnesses and their cross examination and our experience shows that this is what often occurs during a disciplinary process.  Having regard to the applicant’s expressed concern that he was being set up we consider that in those circumstances it was particularly important that the applicant at the very least knew who had made the allegations against him and if there was then a request to do so, which we imagine there would have been, that cross-examination of those witnesses was allowed.  We cannot accept on the facts of this case that the witnesses were entitled to fear retribution.”
There then follow reasons for that conclusion.   

The Employment Tribunal directions
12	As can be seen the Tribunal directed itself to section 98 of the Employment Rights Act and the relevant authorities which we have extracted from its judgment above.  It will be noted that the Asda Stores case includes a lengthy citation from Linfood Cash and Carry Ltd -v- Thomson [1989] IRLR 235 EAT.  Mr Justice Wood presiding at the EAT gave ten points of guidance in respect of cases which involve dishonesty and allegation such as that.  

The Respondent’s case
13	We heard Mr Sabry, of Counsel, appearing today on behalf of the Respondent first, since his cross-appeal attacks the substantive Decision.  It was contended that the Tribunal had erred in law in that the appeal to Mr Cashmore was a complete re-hearing and that the finding by the Tribunal that his hearing did not cure the defect of Mr Rockey’s hearing was perverse.  

14	Secondly, principally because the Tribunal had found that Mr Cashmore did his best to investigate the Applicant’s claims, and that it is unreasonable to expect an employer to take disciplinary action out of the hands of immediate line management.  Thirdly it is contended that the decision to anonymise the statements against the Applicant was a reasonable decision and fitted with the guidance given within Asda Stores and Linfood and should not be interfered with by the Tribunal substituting, as it was put, its own view by reference to the final sentence which we have cited above.  

15	On behalf of the Applicant, it was contended that the Tribunal had decided as a matter of fact what was reasonable by reference primarily to the Burchell test, but of course including the special circumstances set out in Asda -v- Thompson.  It was indicated that the Tribunal had not fallen into the error of applying the Burchell test and the range of reasonable responses approach solely to the ultimate Decision, but had correctly applied it to the investigation as well, thus conforming to the judgment of the Court of Appeal in Sainsburys Superstores -v- Hitt (reference given)

The legal principles
16	The legal principles in an unfair dismissal case are well established and are found as correctly addressed by this Employment Tribunal in BHS -v- Burchell, Ulsterbus -v- Henderson, Asda Stores -v- Thompson, Linfood Cash and Carry -v- Thomson and Sainsburys -v- Hitt.  

17	On the substantive appeal, the Tribunal cannot be faulted in respect of the Decision which it made.  It was for it to decide against the standard of a reasonable employer whether the procedure which the Respondent adopted in coming to its conclusion was within the band of responses of a reasonable employer.  Its Decision in respect of both the hearing before Mr Rockey, and the decision not to disclose the names of the witnesses, are all supported by cogent reasons. We have been referred to aspects of the evidence which make clear to us that that reasoning is soundly based; see, for example, the minutes of the disciplinary hearing and the disciplinary appeal hearing.  We reject the contention that the Tribunal has substituted its view for that of the Respondent and will dismiss the cross-appeal.  

18	The Tribunal found that the Applicant contributed to his dismissal.  This is a reference to section 122(2) and 123(6) of the Employment Rights Act.  It is common ground that no submissions were made to the Employment Tribunal on this matter or upon the principles in Polkey -v- A E Dayton [1988] ICR 142. Sadly, the Tribunal fell into error in making that decision. Thus it is common ground before us that the Tribunal committed an error of law when it decided to reduce any compensation which it might award by fifty per cent.  
  
19	We accept the proposition that a Tribunal errs if it makes a decision without giving the parties the opportunity to make submissions upon it - see Optikinetics Ltd -v- Whooley [1999] ICR 984 and Market Force (UK) Ltd -v- Hunt [2002] IRLR 863 in relation to a Polkey point, where it was held:
“Where a tribunal reaches a decision upon a discrete issue without giving the opportunity procedurally to either party to address that issue, there is a failure of natural justice or a failure to hear the parties as it is appropriate that they should be heard.”
That is sufficient to dispose of the appeal.  The Tribunal committed the error of failing to allow the parties the opportunity to address it; Mr Hall has told us that it was not made clear at the outset whether or not all issues would be considered by the Tribunal.

Disposal
20	This matter must now be remitted to the same Employment Tribunal for it to determine, having heard the parties and, if necessary, heard evidence, upon which we will now hear from Counsel.  It is for the Tribunal to decide whether it needs evidence or not, but if either party wishes to call evidence, in relation to contribution and Polkey, then witness statements to that effect must be exchanged within fourteen days from today. In any event, the matter will be remitted to the same Employment Tribunal to consider at its remedies hearing which takes place on 20 May, any further evidence and submissions on those two points, and then to conclude its deliberations on the remedy.  

Costs
21	An application has been made for costs, pursuant to Rule 34 in that the Respondent had conducted itself unreasonably in the proceedings before this EAT.  We have not been shown a schedule, we have been told a rough figure for the total cost of the appeal is £1000 to £1500 and the figure put before us is £1000 plus VAT. We have been shown the direction given by Lord Johnstone allowing the appeal to go forward to a full hearing, category B. That entitles the Respondent to put in a Respondent’s answer and a cross-appeal which should be subject to the same sift.  The appeal has succeeded and the basis upon which it was defended in the Respondent’s answer and in the Skeleton Argument have not been relied on today.  We consider the failure to make that clear at an earlier stage to be unreasonable conduct.  In saying that we do not wish in any way to discourage advocates from making sensible forensic decisions.  Mr Sabry made one today which has saved us time, but it could have been made earlier since the point which he was raising hitherto has not been pursued before us.  The application is for a percentage of the preparation and attendance fees engaged in this case, and doing the best we can, we are prepared to decide ourselves that the figure should be £250 plus VAT, which is a quarter of the minimum figure.  Mr Sabry has behaved very professionally today in recognising that an argument was weak; nevertheless, time has been spent in preparing for this in a case which Lord Johnstone recognised, was reasonably arguable and has succeeded without any opposition.  We bear in mind that the cross-appeal would have involved us coming here anyway, and for that reason, have made a proportionate Order.