Appeal No. UKEAT/0081/04/TM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 19 March 2004

Before
HER HONOUR JUDGE WAKEFIELD
MR D A C LAMBERT
MRS R A VICKERS

PENROY LTD T/A RAINBOW INTERNATIONAL	APPELLANT

MR T W HARRIS	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR M WEST
Representative
Instructed by:
Peninsula Business Services Ltd
Riverside
New Bailey Street
Manchester
M3 5PB	
For the Respondent	MR R OULTON
(Of Counsel)
Instructed by:
Messrs Evans Harvey 
Solicitors
34 & 39 Morshead Road
Crownhill
Plymouth
PL6 5AH	

SUMMARY

Following a finding that there had been constructive dismissal, Employment Tribunal did not consider whether fair or unfair nor whether there should be reduction in compensation by reason of contributory fault on Polkey.

HER HONOUR JUDGE WAKEFIELD

1.	This is an appeal by Penroy Ltd t/a Rainbow International against the decision of an Employment Tribunal sitting at Exeter on 29 October 2003 by which it was determined that the Respondent to this appeal, Mr Terry Harris (who had been the Applicant before the Employment Tribunal), had been unfairly dismissed.  An order was made for compensation to be paid to Mr Harris in the sum of £4,861.24.

2.	The brief background facts, set out much more extensively in the Extended Reasons which were sent to the parties on 20 November 2003, were these.  Mr Harris had been employed by the Appellant since 21 April 1999 as a Senior Operation Technician.  On 28 May 2003 he was suspended on full pay following allegations that he had made racist remarks regarding an agency worker with whom he had been expected to work that day.  Shortly after this suspension Mr Harris was certified by his general practitioner as being unfit for work due to work-related stress and thereafter the suspension was lifted and he was paid statutory sick pay.  

3.	The Appellant told Mr Harris that a disciplinary procedure would be implemented as regards the allegations but that it would not take place until he was fit to participate.  In the event and in circumstances set out fully in correspondence between the parties, which correspondence is summarised in paragraphs 9-22 of the Extended Reasons, the proposed disciplinary meeting did not take place as Mr Harris whilst still off sick resigned by letter dated 25 July 2003.  He claimed to have been unfairly dismissed.

4.	By the Notice of Appearance, the Appellant denied that there had been a dismissal but added in paragraph 6 of the particulars of resistance the following:

“6.	In the further alternative, if, which is denied, the Tribunal finds that the applicant was dismissed, it is contended that the reason for dismissal was some other set of circumstances justifying dismissal within the meaning of section 98 of the Employment Rights Act 1996 and was fair in the circumstances.”

5.	At the Employment Tribunal hearing three matters were advanced by Mr Harris in support of his assertion that the Appellant had committed a repudiatory breach of his contract of employment entitling him to resign.  Two of these bases were rejected by the Employment Tribunal.  However as to the third, being the apparent ignoring by the Appellant of a request by Mr Harris that a potential and relevant witness to the remarks alleged to be racist should be called to give evidence before the disciplinary hearing, the Employment Tribunal said this at their paragraphs 24-26:

“At the time the respondent failed to respond to the applicant’s request there had already been a long suspension, there had been extensive correspondence and the applicant was getting no substantive response to the letters that he was writing.  At the end of June the respondent said the disciplinary procedure was going ahead whether the applicant was present or not and without responding to the applicant’s insistence that the man in the van was a material witness.
25	It is relevant in our view to consider Mr Cook’s evidence about this potential witness as we heard it today.  In summary he saw no point in bringing this witness along because, in his view, the respondent had evidence of two occasions on which racist remarks had been made.  There was the evidence of Mrs Cook and there was a statement that had subsequently been obtained from a Mr Stone in relation to other events which were not put to the applicant on 28 May.  His evidence was not relevant to the matters that were set out as being the subject of the disciplinary investigation.  In Mr Cook’s view, what was the point of investigating further the precise contents of the telephone conversation with Mr Thompson?
26	We have given this anxious consideration.  In our view the applicant was entitled to feel that he was getting nowhere and that the respondent’s failure to respond to a clear and sensible request that a disciplinary procedure should be conducted in accordance with ordinary notions of fairness amounted to a repudiation of his contract of employment.  In our considered view there was a fundamental breach of the contract of employment here.”

The Employment Tribunal then go on to consider whether the Applicant resigned in response and found that he did.
 
6.	Having thus found that Mr Harris had been entitled, in view of the Appellant’s conduct, to resign, the Employment Tribunal added in their paragraph 27:

“27	Accordingly we find that the applicant was constructively dismissed in this case and his claim of unfair dismissal succeeds.”

7.	They had earlier recorded in their paragraph 2 of the Extended Reasons the following:

“The respondent does not put forward in the alternative a potentially fair reason for dismissal.”

8.	The Tribunal then immediately proceeded in paragraphs 28-30 of the Extended Reasons to the quantification of compensation and in so doing made no reference to the possibility of a reduction by reason of contributory fault nor did they mention as potentially relevant, as regards the time over which a compensatory award was to run, the principles arising from the decision in the case of Polkey v A E Dayton Services Ltd [1987] IRLR 503.

9.	By the Notice of Appeal, expanded in skeleton argument and further expanded in oral submissions before us today, it is said that in making this decision the Employment Tribunal erred in law in the following respects.  Firstly, that they failed to consider the reason for dismissal put forward by the Appellant in the Notice of Appearance and failed to consider whether the dismissal was fair in terms of section 98(4).  Secondly, that they failed, in calculating compensation, to consider issues of contributory fault or a possible Polkey reduction.

10.	On behalf of the Respondent it is today conceded that the Employment Tribunal was obliged, having found that there had been a constructive dismissal, to consider whether such dismissal was fair or unfair.  It is contended however that consideration was properly given to this matter in terms of paragraph 26 of the Extended Reasons, the first two sentences of which I have just read.  We cannot accept that the Employment Tribunal is there considering anything other than the potential fairness of the disciplinary procedures to be adopted by the Appellants.  It is not an analysis, such as is required by section 98(4) of the Employment Rights Act, of all the circumstances nor whether (to quote subsection (4)) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee.

11.	As to the alleged failures of the Employment Tribunal in calculating compensation, it is pointed out quite correctly on behalf of the Respondent that it would be for the employer to raise and prove by evidence that there had been contributory conduct.  We note however that in paragraph 11 of the Extended Reasons the Tribunal had said this:

“It is not necessary to review that detail because as we have made clear during the course of the hearing it is no part of our function today to make findings of fact about what the applicant may or may not have said by way of a racist remark.”
 
12.	It therefore appears that the Tribunal were not prepared in the course of the hearing to entertain any evidence as to events which could be relevant to issues of contributory fault.  We find therefore that this Employment Tribunal did make errors of law in failing to consider the reason advanced by the Appellant in the Notice of Appearance for the dismissal, in failing to consider fairness in terms of section 98(4) of the 1996 Act and in refusing or otherwise failing properly to consider whether any reductions were to be made in the award of compensation to reflect Mr Harris’ own conduct or the possibility of a fair dismissal in due course.

13.	The appeal must therefore be allowed.  The decision as to the dismissal having been unfair is quashed.  The decision as to the amount of compensation to be awarded is quashed.  We have been addressed by both parties as to the way forward in the event of our decision being as it is.  Although the Employment Tribunal as constituted on 29 October 2003 clearly heard some evidence they did not hear all that may be relevant to the issues we find they neglected to address.  The finding of repudiatory breach is not challenged in this appeal and will therefore stand in any event.  We therefore consider in these circumstances that it is best left to the Regional Chairman to determine the constitution of an Employment Tribunal to consider the further matters.  The case is remitted on this basis for hearing as to the issue of fairness of the dismissal and the proper award of compensation.