Appeal No. UKEAT/0029/04

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH EH3 7HF

	At the Tribunal
	On 18 November 2004

Before
 
THE HONOURABLE LORD JOHNSTON
MR J M KEENAN
MISS A MARTIN

 
ERIC SUTHERLAND MANZIE	APPELLANT

 

 
OPTOS PLC	RESPONDENT

 
 
Transcript of Proceedings
 
JUDGMENT

 

 

 

 
 
	APPEARANCES

 

 
For the Appellant

 

 

 

 
 
For the Respondent	Mr M McMichael, Solicitor
Of-
Messrs Muir Myles Laverty
Solicitors
Meadowplace Building
Bell Street
DUNDEE   DD1 1EJ

 

 
 
Mr A Taylor, Solicitor
Of-
Messrs Fyfe Ireland
Solicitors
30 Queensferry Road
EDINBURGH   EH4 2HG	

 

 

 

 

 

 

 

 

SUMMARY
 
UNFAIR DISMISSAL
 
Unfair dismissal – compensation – Polkey deduction

 

 

 

 

 

 

 

 

 

LORD JOHNSTON:
 
1.	This is an appeal at the instance of the employee in respect of a decision by the Employment Tribunal sitting in Dundee, which found that the appellant had been unfairly dismissed by the employer respondents and monetary orders were made.  However, they suffered a deduction of respectively 50% with regard to the dictum of this Tribunal in Fisher v California Cake & Cookie Ltd [1997] IRLR 212 consequent upon the decision of the House of Lords in Polkey v A E Dayton Services Ltd [1988] ICR 142 and also a further contribution of 50% in relation to contributory conduct.  The deductions that were made accordingly had the effect of reducing the compensatory award of £31,750 to £8,687.50 and the basic award from £1,500 to £750.
 
2.	The only challenge before us related to these two discounts or deductions but it is important to understand the background.
 
3.	The appellant’s dismissal arose from an investigation by the employer, subsequent to a foreign trip to China, in respect of his expenses.  The allegation against him was that he had made a fraudulent claim and this allegation was sustained and led to his dismissal.
 
4.	The policy of the company appears to be to pay a subsistence allowance of £25 a day when a person is away overnight on business and receipts are not required.  It is to be noted at once, therefore, there is a claim entitlement for every day that a person is away, whatever he spends.  However, there was also apparently a convention that if more than one employee went out together, say for dinner, and one paid the whole bill, the same would be repeated the other way round if it happened again.  However, it is clear from the evidence, that the claim for daily subsistence would be made by each person irrespective of the operation of that convention.
 
5.	The Tribunal categorised the way the matter was handled by the employer as grossly unfair.
 
6.	Without rehearsing the evidence, the basic elements of this unfairness were, firstly, a denial of opportunity to the appellant to see notes prepared by his fellow employee as regards the expenses issue in China which formed the base of the case against him but were never shown to him.
 
7.	Secondly, the investigatory and disciplinary hearings were conducted by the same person, who was directly involved in the matter.  Thirdly, at the appeal hearing he was given no opportunity to be represented, despite his statutory right to the same, and it also appears that the employer prejudged the issue.  It is significant that the two principal witnesses, on behalf of the employer, namely, a Mrs Jackson and a Mr Stevenson, were categorised at best as unreliable and in Mrs Jackson’s case, worse.
 
8.	The relevant part of the Tribunal’s decision is as follows:-
 
“In the present case, we have set out earlier in these extended reasons the various bases upon which we have held that the respondents dismissed the applicant unfairly.  In large measure, the defects to which we have drawn attention were procedural in nature and as we have said we consider that this is indeed an appropriate case in which to consider whether or not the Polkey discount ought to be applied to the applicant's compensatory award.  In that connection, although we have not made any reference to the issue in our findings in fact, there was is  evidence to the effect that the applicant regularly complained about the inadequacy of the respondents' overnight expenses and we accept that on 18 April 2002, Paul McEwan, the respondents' Assistant Finance Director, had gone over with the applicant the respondents' expenses policy in light of various over-claims the applicant had recently made.  It is also clear that in the exchange of e-mails  which we have set out earlier in our findings-in-fact and which began on 1 October 2002, the applicant accepted that Cathy Jackson had indeed paid for most of his evening meals on the visit to China, but at no stage during the course of that lengthy exchange of e-mails did the applicant ever make the point which he made before this tribunal to the effect that the meals to which he had treated Cathy Jackson in Beijing on 10 September 2002 had cost the rough equivalent of the meals which she had bought for him in the earlier part of the China visit and that, accordingly, the company's convention on expenses had been followed. Moreover, we also have in mind that when the applicant was interviewed by Kenneth Wood and Paul McEwan on 13 January 2003, according to the note made by Mr Wood at R18/2, the applicant "...admitted he only paid for 9th in total & that he should not have claimed for the other dates".  In addition, in the course of the disciplinary hearing held on 17 January 2003, the applicant confirmed that his expenses claims for the period from 5 to 8 September were incorrect.  At the appeal held on 31 January 2003, the applicant described his incorrect claims as 5  "mistakes or errors" adding that he was off sick at the time his expenses claim for September 2002 had been drafted, and that he had been receiving methadone injections at the time. We assume that to be a reason for the "mistakes or errors" which the applicant consistently asked the respondents for the chance to correct. Accordingly, in some respects, we understand why it was that the respondents concluded that the applicant had sought to defraud them. On the other hand, and we have already referred to these issues in the course of these extended reasons, if the applicant had been dealt with in a fair and proper manner, with full consideration given to all the relevant issues, it is by no means certain that a reasonable employer would have concluded that the applicant had attempted to defraud them.
 
In yet another case, Fisher V California Cake & Cookie Ltd [1997] IRLR 212 (Employment Appeal Tribunal), the Tribunal held that in addressing the hypothetical question as to whether adopting a fair procedure would have achieved the same result, for the purposes of unfair dismissal compensation, the tribunal must conduct its own investigation and reach its own conclusion.  Where the tribunal determines that the evidence at least supports the position that dismissal would have occurred in any event, it is necessary that it thereafter addresses the question of whether dismissal would or would not have occurred as a matter of probability, to be assessed in percentage terms. Accordingly, what we now have to do is to decide, on the basis of the conclusions which we have reached what, in percentage terms, would likely have happened if all the issues of unfairness which we have held established had not taken place, and instead, the applicant had been dealt with fairly. In our view, and upon that basis there would still have been a fifty per cent chance that dismissal would have been appropriate if a proper process had been adopted since it would have been open to the respondents to have concluded that the applicant had attempted to defraud them.  Equally, however, we consider that if that proper process had taken place, then a different conclusion that fraud had taken place, would have been reached, namely that, the applicant, had attempted to follow the convention on expenses where two employees were away overnight together.  The result of our conclusion is that the compensatory award which we shall calculate shortly requires to be halved to take account of the views that we have reached on the issue of the "Polkey discount".
 
Before we turn to our calculations, there is one further matter we require to consider, and this applies to both our calculation of the basic and the compensatory awards, and that is the question of whether or not there exists, over and above the "Polkey discount" any contributory conduct on the part of the applicant, since if there is, then an appropriate percentage discount requires to be made to the basic award, and in the case of the compensatory award, a further percentage discount over and above the "Polkey discount".   In that latter connection, in Rao V Civil Aviation Authority [1994] IRLR 240, the Court of Appeal held that the making of both deductions, namely for the Polkey discount and in respect of contributory conduct, did not amount to a double penalty for the employee.  Here, for the reasons which are set out earlier, we consider that the applicant must share the blame for what befell him. It is clear that he made, at the very best, an inaccurate claim for his September 2002 expenses and we have already set out his explanations which were made to the respondents at both the disciplinary hearing and the appeal which followed thereon. Frankly, the applicant made what we can only regard as a "complete mess" of his September 2002 expenses claim form and we consider that his contribution to his own dismissal falls to be assessed at 50 per cent.  Accordingly, we now turn to calculate the compensation which falls to be awarded to the applicant and this we do as follows:-
 
1.	1.                   Basic Award - the applicant had 4 complete continuous years of employment with the respondents, he was 45 years of age at the time of dismissal, and his week's pay is well in excess of the statutory maximum of £250 for basic award purposes. The applicant is accordingly entitled to a basic award of 6 x £250 = £1,500 less 50% for contributory conduct = £750.
 
2.	Compensatory Award - despite making reasonable attempts to obtain alternative employment, the applicant has still failed to do so. We understand it to be agreed that the applicant's true net month's pay, taking account of issues such as a car allowance and bonus, amounted to some £2,100 per month and from the date of the applicant's dismissal on 17 January 2003 to the last date of the hearing, which was on 17 December 2003, is a period of 11 months.  Over that period, the applicant has therefore lost 11 x £2,100 = £23,100.  As for the future, the applicant told us that he had applied for a number of jobs in the recent past and that he felt reasonably confident. In that connection the applicant is a time-served fitter and has a BSc in mechatronics engineering and has a broad basis of both qualifications and experience.  In all the circumstances, we consider it appropriate to allow the applicant a future period of wage loss amounting to a further 4 months x £2,100 = £8,400, making a total wage loss of £31,500.  To this figure, we shall add a further £250 to compensate the applicant for the loss of his statutory rights, with the result that his total gross compensatory award is £31, 750.  From this figure, we require to deduct the "Polkey discount" of 50 per cent, = £15,875 and from that figure, a further 50 per cent to take account of the extent of contributory conduct which we have found established with the result that the net compensatory award due to the applicant is £7,937.50. This, together with the basic award of £750 makes a total monetary award of £8,687.50.
 
Finally, since the applicant has been in receipt of Jobseeker's Allowance, recoupment of benefits may apply and we have set out in our annex to this decision an explanation of how the recoupment procedure operates.”

9.	Mr McMichael, appearing for the appellant, submitted that, so far as the Tribunal had addressed the issue of fairness, they had adequately recorded the evidence and reached competent and relevant conclusions, a matter which was not challenged by Mr Taylor, appearing for the respondents.  However, when they came to consider a question of a deduction, as focussed in the passage we have quoted, they went completely off the rails by making an award of 50% without any justification, the proper question being, “What effect would a fair procedure have had on the result that actually happened, namely, dismissal?”  Furthermore, Mr McMichael went on to submit there was no basis for any assertion, validly, that the appellant had contributed to his dismissal by his own conduct, certainly to the extent of warranting a decision of 50% contribution.
 
10.	Mr Taylor, appearing for the respondents, submitted that the Tribunal had properly addressed the question they were entitled to consider in relation to the Polkey discount, and, furthermore, pointed to certain evidence of admissions by the appellant, that he had made mistakes which were sufficient to found a basis for the assertion that his conduct in making the expenses claim contributed to his dismissal.
 
11.	In considering this matter, we have to record that the way this employee was treated by his employer offends practically every aspect of fairness that can be imagined.  He was not given sight of the case against him.  The evidence of the witnesses, stating the case against him, appears at best to have been unreliable.  There appears to have been a question of “judge in his own cause” by the person conducting both the investigatory and disciplinary hearing.  The appeal process appears to have been a sham on the basis that the evidence as disclosed was prejudged, and, in any event, most importantly of all, the employee was denied his statutory right to be represented.
 
12.	12.              Against that background, we cannot conceive how it can be said, applying the Fisher exercise, that dismissal could even have been considered likely.  The most likely result for a fair procedure would have been, at worse for the appellant, an indication that he had made some mistakes, which certainly would not warrant dismissal as a reasonable response.  We are therefore at a loss to know why the Tribunal suddenly determined to make a 50% deduction.  The level of unfairness at each aspect of this case negatives any notion that a Fisher deduction should be achieved.
 
13.	Equally, when it comes to contributory conduct, while it may be that the employee admitted to making a mistake, it seems to us that, at the end of the day, all he did was to claim for subsistence allowance on a daily basis, to which he was entitled, whatever his actual expenditure.  How that can even be said to be a contributory cause to a charge of fraud, is, again, something we do not understand.  We do not consider the finding as to contribution can stand at all.
 
14.	In these circumstances the appeal is allowed and the gross monetary awards, in respect of the basic award and compensation, will be substituted subject to a deduction of the sum of £2,024 which we were told had already been paid in respect of the original award, being the amount above the prescribed element.
 
15.	In these circumstances, the decision of the Tribunal, in respect of monetary award, is quashed and we will substitute the figure on a net basis of £31,226.