Appeal No. UKEAT/0334/09/SM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 11 December 2009

Before
THE HONOURABLE MR JUSTICE WILKIE
MR P GAMMON MBE
MR D WELCH

MS J NOUSHOURI	APPELLANT

HBOS PLC	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR B SPELLER
(of Counsel)
Instructed by:
Messrs Funnell & Perring Solicitors
192-193 Queens Road
Hastings
East Sussex  
TN34 1RG	
For the Respondent	MR R WHITE
(of Counsel)
Instructed by:
Lloyds Banking Group Plc
Legal Services
1st Floor
38 St Andrew Square
Edinburgh  
EH2 2AD	

SUMMARY
JURISDICTIONAL POINTS
CLAIM IN TIME AND EFFECTIVE DATE OF TERMINATION

Employment Tribunal erred in law in concluding that it did not have jurisdiction as it misapplied the provisions relating to the time limit for commencing proceedings where the Claimant reasonably believes that a disciplinary or dismissal procedure is still being pursued.

The cross appeal on the substance of the claim, in essence a perversity challenge, fails.

THE HONOURABLE MR JUSTICE WILKIE 

1.	This is an appeal by Mrs Jo Noushouri against a decision of the Employment Tribunal sitting at Ashford in Kent on 7 and 8 January 2009 which dismissed, amongst other things, her claim to have been unfairly dismissed by her former employers HBOS Plc.  The Tribunal dismissed her complaint because it concluded that it was out of time and there were no grounds for extending time under the statutory scheme.  The Tribunal went on to consider the question of substance and concluded that had the claim been lodged in time it would have concluded that the Appellant had been unfairly dismissed.  That, in turn, has given rise to a cross-appeal by HBOS against that finding.

2.	We can deal fairly briefly with the surrounding facts.  The Appellant had been employed by the Respondent since 14 July 1986 and by the time she was dismissed she had racked up more than 21 years of continuous service.  She was dismissed on 11 September 2007.  We will consider the circumstances of that in due course.  That followed upon a disciplinary meeting held on 6 September.  At the meeting of 11 September she was informed that she was going to be dismissed, however, she was given the option to tender her resignation, the carrot for that being that she would receive her notice money if she resigned together with a standard form reference from the Respondent.  It was made clear to her at that time that if she did resign she would thereby be abandoning any right of appeal under the formal disciplinary process.  She did resign without, at that stage, the benefit of advice from a trade union representative who was not present and she was denied the opportunity of having such advice before responding to what the employer was saying.

3.	She then consulted solicitors, apparently, and on 4 December she sent a letter which was plainly drafted by her solicitors to HBOS.  The letter was headed “grievance” and it started by saying that she wished to raise a formal grievance in respect of her employment.  She then set out quite a lot of material going back in time to 2004 but in due course in the letter she focused on the fact of the determination of her employment.  She complains that the disciplinary process was flawed and she complains that when making a decision at her hearing no consideration had been given to a number of matters: her 21 years service, mitigating personal circumstances, the lack of support and training she had received in the position that she held, and so on.  The letter concludes in this way:
“I am raising this grievance as I need these matters to be formally addressed.  Please acknowledge receipt of this letter upon receipt and confirm when a response will be available.”

4.	On the following day the Respondent responded to that letter in a letter headed “grievance acknowledgement”.  It acknowledged receipt of the letter and then said this:
“This matter will be fully investigated, and you will be invited to attend a meeting, which will take place within the timescales outlined in the Grievance Policy and Procedures.” 

5.	They enclosed a copy of the grievance procedure.  A grievance hearing was held on 28 February 2008.  The Tribunal heard evidence about that and made certain findings about it.  Indeed it appears that there was no dispute about what the Respondent was saying in respect of certain exchanges that took place in the course of that meeting.  During the meeting the Claimant was asked:
“are you saying that if reinstatement were an option you would come back?”

6.	Her reply was:
“reinstatement is not an option.”

7.	She was then asked what she wanted and she said:
“I don’t want people to think they got rid of Jo easily.  I want people like Sandra investigated for the way they treated me, I want to be compensated for all losses I have incurred.”

8.	She was invited to consider her letter of 11 September which, amongst other things, acknowledged that she was waiving her right of appeal and she said:
“I didn’t think I could go through an appeal, I took advice from a solicitor and was told I had a right to grievance.”

9.	The circumstances which had given rise to the disciplinary proceedings which resulted in her resignation on 11 September concerned certain regulatory requirements of the Bank Code enforceable by the Financial Services Authority in relation to members of staff whom she was supervising selling financial products.  She had some responsibility for ensuring the integrity of that process and in particular in ensuring the competence of those employees who were engaged in that type of activity.  It seems not to have been in dispute that there were shortcomings in the way in which she had supervised and recorded the activities being undertaken and, as a result, management concluded that there had been a number of breaches of the FSA rules, that the Claimant had deliberately made false entries into the records and as a result of that she was invited by Human Resources to the disciplinary hearing.  The allegations she faced were of deliberately falsifying colleagues’ relevant records and she was warned that it could lead to her dismissal.  At the substantive hearing she was represented by union representatives and she indicated that the three cases where she had wrongly recorded that face-to-face interviews had happened when they had, in fact, not occurred were mistakes.

10.	The Respondents are nothing if not meticulous in their record keeping as one would expect from an organisation of their size and in the area of activity with which we are concerned.  The records included a document entitled “disciplinary hearing outcome rationale”.  It was filled out by the relevant HR person who not only conducted the hearing but took the decision that the Appellant should be dismissed.  That is a proforma which has a number of headings with spaces for specific entries in relation to the particular facts of the hearing.  For example, under “experience and history” the fact of her 21 years service and her current role is noted.  Under the heading “the motive” asking questions like, “Why has the colleague behaved the way they have?  Was there any personal gain?  Was it done wilfully or under direction of their manager?” the entry is, “No personal gain.  Blames being short staffed”.  There is then a heading “risk or impact on business” and under that it said, “High risk for cost/reputation/customer service and FSA”.  There is also a section for mitigating circumstances which in this case was filled in as follows, “Ongoing relationship issues.  Violent partner.  Close relative died”.

11.	There is then a heading which is headed “next steps” and that sets out a series of matters for the decision maker.  Then there is a heading which is entitled “rationale for your decision and sanctions to be applied”.  There is then set out underneath a part which the decision-taker has signed and dated, which comprises a comprehensive series of sanctions available together with factors to consider.  In particular at stage three, amongst the sanctions identified are, “Final written warning, usually for 12 months.  Transfer to a different work role.  Amending terms and conditions.  Adjusting or withholding bonus.  Withholding annual salary review”.  Each of those is ticked by the decision maker.  Amongst the sanctions also in the list are, “Dismissal with notice and summary dismissal (i.e. with no notice for gross misconduct only)”.  Neither of those possible sanctions is ticked by the decision maker.  The hearing at which the matter was canvassed with the Appellant was on 6 September 2007 and that is the date on this form.  It is apparent, therefore, that the decision to dismiss, which was announced to the Appellant on 11 September, did not reflect the thinking apparently being engaged in by the decision maker on 6 September 2007.

12.	After the grievance meeting had taken place on 28 February 2008, on 4 March 2008 the Claimant presented her claim to the Employment Tribunal.  She had been dismissed, alternatively resigned, on 11 September 2007 and accordingly, had the normal three-month time limit been the relevant one, that institution of proceedings would have been significantly out of time.  Therefore, the Tribunal had to consider the statutory provisions which were then in force under the Provisions of the Employment Act 2002 and regulations made under it.  Section 33 of that Act is entitled “consequential adjustment of time limits” and provides that the Secretary of State may in relation to a jurisdiction listed in schedule 3 or 4, by regulations make provision about the time limit for beginning proceedings in respect of a claim concerning a matter to which a statutory procedure applies.  Regulations may make provision extending or authorising the extension of the time for beginning proceedings, and so on.

13.	Schedule 3 and 4 include proceedings in the Tribunal for unfair dismissal.  The regulations made pursuant to the 2002 Act are the Employment Act 2002 (Dispute Resolution) Regulations 2004.  Regulation 3 concerns the application of dismissal and disciplinary procedures and provides that, subject to paragraph 2 in Regulation 4, the standard dismissal and disciplinary procedure applies when an employer contemplates dismissing or taking relevant disciplinary action against an employee.  Regulation 6 concerns application of the grievance procedures and that provides in general that grievance procedures apply but in particular Regulation 6(5) provides:
“Neither of the grievance procedures applies where the grievance is that the employer has dismissed or is contemplating dismissing the employee.” 

14.	The Tribunal, in this case, was to some extent exercised over the question whether, in the circumstances where the employer announces to the employee an intention immediately to dismiss them but offers the prospect of resigning and the employee takes it up, that is properly to be described as a “dismissal” or a “constructive dismissal”.  It seems to us that that was a debate which was unnecessary for the Tribunal because it is clear that, whether or not technically the Appellant was dismissed or resigned in circumstances giving rise to a constructive dismissal, the only statutory provisions which could extend the period of time from the normal three months were the provisions relating to dismissal and disciplinary procedures.  It is right that Regulation 15 of the regulations also makes provision in certain circumstances for time to be extended where what has been gone through is a grievance procedure.  Whilst in many, if not most cases in which constructive dismissal is alleged, the grievance procedure will indeed be the focus of the consideration of the Tribunal.  In the particular circumstances of this case Regulation 6(5) makes it clear that those grievance procedures were irrelevant in circumstances where the grievance was that the employer was, at the very least, contemplating or had already dismissed the employee.  

15.	Regulation 15 makes provision for the extension of time limits and provides as follows:
“(1) Where a complaint is presented to an employment tribunal under a jurisdiction listed in Schedule 3 or 4 and - 
(a) either of the dismissal and disciplinary procedures is the applicable statutory procedure and the circumstances specified in paragraph (2) apply; or

(b) either of the grievance procedures is the applicable statutory procedure and the circumstances specified in paragraph (3) apply;
the normal time limit for presenting the complaint is extended for a period of three months beginning with the day after the day on which it would otherwise have expired.

(2) The circumstances referred to in paragraph (1)(a) are that the employee presents a complaint to the tribunal after the expiry of the normal time limit for presenting the complaint but had reasonable grounds for believing, when that time limit expired, that a dismissal or disciplinary procedure, whether statutory or otherwise (including an appropriate procedure for the purposes of regulation 5(2)), was being followed in respect of matters that consisted of or included the substance of the tribunal complaint.” 

16.	Thus, given the chronology to which we have referred the complaint was presented in respect of a jurisdiction listed in schedule 3 or 4, “unfair dismissal”, and was presented after the expiration of the normal time limit but within a period of three months after the day on which the normal time limit would have expired.  Accordingly it would be in time if the circumstances referred to in 1(a) arose, namely that the employee presented a complaint to the Tribunal after the expiry of the normal time limit for presenting the complaint but had reasonable grounds for believing when that time limit expired that a dismissal or disciplinary procedure, statutory or otherwise, was being followed in respect of matters that consisted of or included the substance of the Tribunal complaint.

17.	The question the Tribunal, therefore, had to consider was whether the Appellant had reasonable grounds for believing that the process, which had begun on 4 December by the letter written by her and responded to on 5 December by the letter of the Respondent, was such as fell within Regulation 15(2).  The Tribunal addressed this issue at paragraph 38 of the decision.  It starts off by recording that in the judgment of the Tribunal the Claimant gave informed consent to surrendering her right of appeal bringing the disciplinary procedure to an end.  They then continue as follows:
“The letter of 4 December is consistent with the fact that the Claimant was also claiming that she had been constructively dismissed and was complaining about the disparity in treatment between herself and Mr Hackett, which then became a sex discrimination claim.  Both of those aspects of the claim required a grievance to be raised and in our judgment that was the purpose of the letter that was written on 4 December.  It was a letter of grievance and is headed as such.  As at 10 December 2007 the Claimant did not have reasonable grounds for believing that a dismissal or disciplinary procedure, whether statutory or otherwise, was being followed.  This conclusion is reinforced by the replies the Claimant gave at the grievance meeting.  Those were not the replies of someone wishing to reverse the decision to dismiss.  They are the replies of someone going through the grievance procedure as a preliminary to making a Tribunal claim.  Regulation 15(2) does not apply and the Tribunal does not have jurisdiction to hear the Claimant’s claim for unfair dismissal as it was presented out of time.”

18.	It is right to say that within the body of the decision there is passing reference to the case of Towergate London Market Ltd v Harris [2008] EWCA Civ 433 although it is fair to say that at one stage they misnamed the case, but there is nowhere in the Tribunal decision any acknowledgement of the approach which was described in Towergate London Market Ltd v Harris by the Court of Appeal endorsing, as it did, the view of this Tribunal in the same case.  Namely that this is an area of law where technical precision of language is not to be regarded as necessarily determinative.

19.	Mr Speller has criticised the language of paragraph 38 and in particular he focuses on the sentence in which it appears that the Tribunal equates a statutory disciplinary procedure with a procedure in which the person invoking it wishes to reverse the decision to dismiss.  He says that that fails to address the language of Regulation 15(2) which requires the Tribunal to focus on whether the person invoking the procedure has reasonable grounds for believing that it is a dismissal or disciplinary procedure being followed in respect of matters that included the substance of the Tribunal complaint.  He invites us, in particular, to have regard to the words of Keene LJ at paragraph 47 of the decision in Towergate London Market Ltd v Harris.  It says that:
“The appeal tribunal took the view that these demonstrated a belief that there was an ongoing procedure putting in issue her dismissal.  It is quite true that in her letter she described what she was doing as raising a grievance, but her complaint was patently about her redundancy and consequent dismissal.  In common parlance, she had a grievance about her dismissal, and she stated that she was entitled to a meeting to resolve this issue.  That is an indication that she believed that some sort of procedure relating to her dismissal was being followed.  It will be borne in mind that the belief does not have to be that a statutory procedure is being followed: the words ‘or otherwise’ in Regulation 15(2) indicate that a belief in other forms of procedure will suffice.  Clearly the so-called grievance related to her dismissal, as did the meeting to which she believed herself to be entitled.  She was, in reality, seeking to challenge that dismissal through the company's internal procedures.”

20.	In paragraph 49 he concluded that in those circumstances it was open to the Employment Appeal Tribunal to reach the conclusion that it did and to hold that Regulation 15 had been satisfied on the evidence.  He also draws our attention to what Wilson LJ said at paragraph 53 and in the concluding words of paragraph 56.  He said this:
“Within the meaning of the legislation, as in common parlance, an employee can have a ‘grievance’ that an employer has dismissed him or is contemplating dismissing him.  But, notwithstanding that such is a grievance, neither of the grievance procedures applies to it.”

21.	He refers then to Regulation 6(5):
“So as it happens, Mrs Harris said nothing objectionable nor misconceived when, in her letter dated 25 January 2006, she stated that she wished ‘to raise a formal grievance in respect of [her redundancy]’.”

22.	Then in paragraph 56 he says this:
“(a) Both parties must then have believed that they were following a non-statutory procedure in respect of a looming issue in relation to the fairness of her dismissal.
(b) Take Towergate’s provision of the documents to Mrs Harris on 5 January 2006.  What did it expect her to do with them?  It expected her, with the help of her union representative, to analyse them and in the light of them either to accept that her dismissal was fair or formally to contend that it was unfair.  Thus the non-statutory procedure was still being followed.
(c) Finally, take Mrs Harris’ letter dated 26 January 2006.  In it she formally contended that her dismissal was unfair; asked for a meeting; said, rightly or wrongly, that she was entitled to the meeting; indicated that she wished her union representative to accompany her to it; articulated an aspiration that the issue be resolved by 23 February 2006; and said that she awaited Towergate’s comments.
(d) … In my view the only inference reasonably to be drawn from the sequence and content of the communications set out in (a) to (c) above is that on that date Mrs Harris had reasonable grounds for believing that, with the active cooperation of Towergate up to that point, she was following a non-statutory dismissal procedure with a view to resolving the issue of the fairness or otherwise of her dismissal without resort to the Tribunal.”

23.	In our judgment those words of Keene LJ and Wilson LJ could equally be applied to what was happening in this case.  Initiated by the letter of 4 December and taken forward by the letter of 5 December and as it turned out culminating in a meeting on 28 February.  In our judgment the Tribunal, by focusing exclusively on the question of whether the Appellant was seeking at that stage, by 28 February, to reverse the decision to dismiss, amounts to a material misdirection.  Similarly it is apparent that from the words of the Court of Appeal in Towergate the mere fact that it is anticipated that she might not succeed in obtaining satisfaction from her erstwhile employer and was, therefore, acting in part with a view to clarifying the position for eventually being ventilated at a Tribunal, does not amount in law to a correct basis for concluding that this was not a Regulation 15(2) procedure that she believed reasonably she was going through.

24.	Similarly the fact that in the course of the meeting she made it clear that she was not at that stage realistically going to achieve reinstatement but was seeking compensation rather underscores similarity between her situation and the situation described in Towergate.  In our judgment, therefore, the Tribunal simply failed to analyse or consider properly the way in which Regulations 15(1)(a) and (2) should be construed in the light of the Court of Appeal authority in Towergate London Market Ltd v Harris and they have erred in law in concluding that the claim was out of time.  Accordingly, the appeal of the Appellant succeeds; the claim was made in time, the Employment Tribunal had jurisdiction to decide her complaint and should have done.  The Employment Tribunal did of course consider unfairness on a contingent basis and they concluded that they would have found that the dismissal was unfair and each side has treated that as if it were a finding of unfairness in the event that the Appellant’s appeal on the time point were to succeed, and we have, therefore, heard full arguments about it.

25.	The decision of the Tribunal in this respect is contained at paragraph 41 which reads as follows:
“The Tribunal would have taken into account the form completed by Mrs McCain after the disciplinary interview on 6 September.  She had obviously considered the options and had for her own benefit noted the options she believed to be available.  These did not include dismissal.  This was what was in her mind at the time and we find that the options she was considering were the options of a reasonable employer bearing in mind the Claimant’s length of service, her relative inexperience as a first line supervisor, the pressures of short staffing, the way Mr Hackett had been treated, and the personal pressures of which the Respondent was aware.  For some reason about which we have not been told, Mrs McCain subsequently made the decision that dismissal was inevitable.  In view of all the mitigating factors and in view of what Mrs McCain initially felt after the interview we would have come to the conclusion that dismissal would not have been within the band of reasonable responses of a reasonable employer.”

26.	Her evidence in relation to that discrepancy is, to some extent, recorded in the Tribunal’s decision but it is of interest that both Counsel who have appeared before us were Counsel who appeared before the Employment Tribunal and each of them has made it very clear to us that despite this being a matter which was asked about, and no doubt with a considerable focus of attention, the witness, Mrs McCain, had been entirely unable to explain why it was that the form which she had filled out, she filled out without any reference to dismissal and yet five days later the decision was one of dismissal.  In fact, Mr White who appeared for the Respondents rather indicated that she was unable even to remember why she had filled the form out in the way that she had.  The Tribunal, in dealing with her evidence at paragraph 18, and having described the way in which she had filled the form which we have described, said this:
“The Tribunal did not hear any persuasive reason why the position had changed.  Mrs McCain said in evidence that she later concluded that the Claimant had lied from the start, that the Claimant knew that she should not have done what she did, she could have admitted her fault but instead she had tried to blame others who were not as experienced as she nor had held a management position.  None of these reasons explain why Mrs McCain had completed the post interview form in the way she did.”

27.	In our judgment that paragraph, supplemented by the very frank acceptance by both Counsel that this witness was really struggling to find any explanation why she had filled out the form in one way and had then decided in a completely different way five days later, rather supports the conclusion of the Tribunal that they were faced with a highly unusual situation where a very large organisation has produced documentation which on its face purports not just to be an aide-mémoire but to be the rationale for the outcome of the disciplinary hearing and then for no reason given in evidence the decision is completely different five days later.  Whilst of course Mr White is correct to say that in theory for conduct of this type dismissal might well in many cases be within the band of reasonable responses, what we have to remember is that the statutory test is not precisely framed.  It depends whether, in the circumstances, the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissal, and that the phrase, culled from the authorities, “that the decision to dismiss must be within the band of reasonable responses” is not a statutory test but is a phrase used and has to be applied in the particular circumstances of each individual case with which an Employment Tribunal has to deal.

28.	This was no doubt a highly unusual set of circumstances because what we have is a very experienced HR manager going through a process which is extremely well documented and has set out a whole series of answers in respect of motive and mitigating circumstances which, in the judgment of the Tribunal, warranted her conclusion at the end of that process, that the range of reasonable responses available to her were what she had indicated and did not include either dismissal with notice or summary dismissal.

29.	In those circumstances and in the absence of any reason for her to have changed her mind, again supported by what both Counsel have said occurred at the Employment Tribunal, it is, in our judgment, wrong for Mr White to say that they must be wrong in categorising the decision to dismiss as one which falls outside the band of reasonable responses in this particular set of circumstances.  In effect, it amounts really to a perversity argument and, as is well established, the hurdle to be surmounted by a party seeking to argue perversity is extremely high.  This was a highly unusual set of circumstances and the Tribunal was plainly puzzled about the change and was given no assistance whatsoever by the Respondent whose HR representative had taken such an inconsistent line, having apparently gone through the reasoning process and concluded that dismissal was not an option in this case.  In those circumstances, in our judgment, the decision, therefore, that the dismissal was unfair is one which was neither wrong in law, nor can properly be described as perverse and, therefore, the cross-appeal fails.

30.	The result is that there is a lawful finding by the Employment Tribunal that the Appellant was unfairly dismissed where it had jurisdiction to do so.  Therefore, we remit the matter back to the same Tribunal, if practicable, for it to consider remedy.