Appeal No. UKEAT/0057/11/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 4 August 2011

Before
HIS HONOUR JUDGE McMULLEN QC
MRS A GALLICO
MR P M SMITH

ADVANCE SECURITY UK LTD	APPELLANT

MISS R SHEEBA	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MS KAREN LEIBERT
(Solicitor) 
Advance Security UK Ltd
HR Department
Suite 5 
Isleworth Business Complex
St John’s Road
Isleworth
TW7 6NL	
For the Respondent
	MS SHERINE DAVY
(of Counsel)
Free Representation Unit
6th Floor
289-293 High Holborn
London
WC1V 7HZ

SUMMARY
STATUTORY DISCIPLINE AND GRIEVANCE PROCEDURES – Whether infringed
UNFAIR DISMISSAL – Contributory fault

The Employment Tribunal was entitled to find a breach of statutory Step 2 when the two written accounts of complaints against the Claimant were not shown to her before the Step 2 meeting.

The Employment Tribunal erred when it failed to give reasons in response to a submission that the Claimant contributed 100% to her dismissal. s 123(6) inserts a mandatory consideration into the wide discretion under s123(1). Polkey and contribution are separate processes. That point remitted to the same Employment Tribunal.

HIS HONOUR JUDGE McMULLEN QC

1.	This case raises two discrete points relating to a finding of automatic unfair dismissal for failing to follow statutory procedures, and the assessment of compensation where it is said the Claimant contributed to her dismissal.  It is the Judgment of the Court to which all members appointed by statute for their diverse specialist experience have contributed.  We will refer to the parties as the Claimant and the Respondent.

Introduction
2.	It is an appeal by the Respondent in those proceedings against the Judgment of an Employment Tribunal chaired by Employment Judge Spencer sitting at London South, registered with Reasons on 29 November 2010, and a remedy Judgment, registered with Reasons on 13 June 2011.  In total the hearing has taken four days, and a day in chambers, for when the Tribunal found in favour of the Claimant it hoped the parties would reach agreement on compensation, but that did not occur, and the Tribunal met again to award compensation of £1,680.17.  There is no appeal against that figure.

3.	The Claimant was represented at the substantive hearing by counsel, and today is represented by Ms Sherine Davy of the Free Representation Unit.  The Respondent has been represented throughout by Ms Karen Leibert, in‑house solicitor for the Respondent.  The Claimant made a number of claims, substantially for ordinary unfair dismissal contrary to section 98, and automatic unfair dismissal contrary to section 98A, of the Employment Rights Act 1996.  The Tribunal upheld the Claimant’s case under both sections and dismissed other points.  The Respondent appeals pursuant to directions given by HHJ Serota QC and HHJ Richardson identifying the two short points.

The legislation
4.	The relevant legislation is both procedural and substantive.  As to the procedure, where the statutory regime applied it contained the following requirements.  There is no objection to the summary of the law given by the Employment Tribunal, which was as follows:

“58. By Part 1 of Schedule 2 to the Employment Act 2002 (now repealed but in force at the date of the Claimant’s dismissal) an employer is required to go through a three stage procedure when contemplating dismissing an employee.  The standard procedure requires:-
(a)  Step 1.  The employer must set out in writing the nature of the employee’s conduct, capability or other circumstances which may result in dismissal of disciplinary action, send a copy of the statement to the employee and invite the employee to a meeting where the issue can be discussed.
(b)  Step 2.  The meeting must take place before action is taken and the employer must have informed the employee the basis for including in the step 1 statement the ground given in it and have given the employee a reasonable opportunity to consider it and his/her response to it.  After the meeting the employer must inform the employee about any decision and offer the employee the right of appeal.
(c)  Step 3.  If the employee wishes to appeal, he or she must inform the employer.  If the employee informs the employer of his wish to appeal the employer must invite him to attend a further meeting.  Having been so invited the employee must take all reasonable steps to attend the meeting and after the appeal meeting the employer must inform the employee of his or her final decision.
59. By virtue of section 98A (also now repealed but in force at the date of the Claimant’s dismissal) an employee shall be regarded as unfairly dismissed if:-
(a)  One of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 (dismissal and disciplinary procedures) applies in relation to the dismissal,
(b)  The procedure has not been completed, and
(c)  The non completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.”

5.	Conduct is a potentially fair reason for dismissal pursuant to section 98(1), and fairness is judged by section 98(4).

6.	Turning, then, to compensation, the Tribunal did not address itself expressly to the relevant provision, which is section 123 as follows:

“123.  Compensatory award
(1)  Subject to the provisions of this section and sections 124, 124A and 126, the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.
[…] 
(6)  Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding.”

7.	It is common ground that, where a dismissal has been caused by a procedural failing, the principle in Polkey v A.E. Dayton Services Ltd [1987] IRLR 503 applies.

The facts
8.	We can state the facts briefly as the scope of the appeal is narrow.  The Respondent is a nationwide provider of security services employing 3,500 people. The Claimant was employed from 25 January 2008 until her dismissal on 24 February 2009.  She was a security officer working as a plain‑clothes store detective.  Her role was to prevent shoplifting.  The Claimant was assigned to a number of retail stores including Iceland.  The Tribunal found the there is an industry standard procedure where the store detective considers there has been shoplifting, known as SCONE, an acronym for:

“Selection – the item must be seen by the detective to be taken from display by the customer.
Concealment – the detective must see the customer conceal the item.
Observation – the detective must maintain constant observation from selection to non payment and exit.  There must be no gaps in observation.
Non payment – The customer passes the last point of sale without making an offer of payment.
Exit – the customer must be off the premises to prove the intention to permanently deprive.”

9.	The Claimant contended she had not been trained in SCONE, but this was roundly rejected by the Employment Tribunal.  For the most part it found her evidence unreliable, inconsistent and muddled, and a crucial conflict of evidence occurred, notwithstanding the Tribunal finding in her favour.

10.	The Claimant was the subject of a complaint made by a customer’s daughter, and a report was made by the manager of the Iceland store.  The Claimant was given material sufficient to satisfy Step 1, and called to a meeting, but the Tribunal found that the two documents (that is, the complaint written by the customer’s daughter and the report by the Iceland manager) were not given to her in advance of the meeting.  The manager had them at the meeting, and apparently they were shown to her then.  Nevertheless, the Claimant gave a detailed written response indicating in the Respondent’s submission that she knew enough about this for her to know the basis upon which she was to face disciplinary proceedings.  

11.	The Tribunal found that the failure to provide these two materials made the dismissal unfair under section 98A(1); that is, Step 2 was not completed.  In respect of section 98(4) similar findings were made.  The Claimant never accepted that what she had done was wrong, and the Tribunal then said this about the defects found at the disciplinary hearing:

“83. Taken as a whole we conclude that the defects at the disciplinary hearing were remedied on appeal and that the Claimant had had a proper opportunity to put her case.  Moreover, in the light of the Respondent’s finding that the Claimant had not applied SCONE and had not accepted that what she had done was wrong, the decision to dismiss was reasonable within the terms of section 98(4).  The Respondent had reasonably concluded during the disciplinary process that, despite training, the Claimant had failed to follow SCONE.  Mr Amor and Mr Logan had concluded that this was ‘foolhardy’ (in Mr Amor’s words) or ‘reckless’ (Mr Logan).  We accept that this was a conduct issue.  As SCONE was central to the Claimant’s job as a security officer and a failure to follow it was likely to have serious consequence it is difficult to see how she could have been retained by the Respondent.”

12.	The Tribunal therefore moved to remedy, and said this:

“84. At the liability hearing the parties were invited to make submissions as to contribution, Polkey and any uplift under section 31(3) of the Employment Act 2002.  Section 98A(2) of the ERA is not applicable because the Respondent has not complied with the statutory dismissal procedures.  However it is the Tribunal’s view that had the Respondent postponed the disciplinary hearing to ensure that she had the statements and a trade union representative, she would have been dismissed in any event, albeit at a later date once the proper process had been complied with.  Accordingly we conclude that the Claimant should receive a basic award and a compensatory award of three weeks’ pay, which reflect the possible delay to allow for proper representation.  Given this finding it is not appropriate to make any further deduction for contribution.”

13.	Following the finding as to automatic unfairness, the Tribunal awarded a 40 per cent uplift in the compensation, which is on a statutory scale of between 10 and 50 per cent, and there is no challenge to that finding.

The Respondent’s case
14.	The Respondent makes two short points.  First, management made enough known to the Claimant for her to understand the basis of the case she had to meet, relying on Ingram v Bristol Street Parts [2007] UKEAT/0601/06, and the Tribunal had erred in finding Step 2 was not complied with.  The Tribunal failed to give reasons as to why it did not order contribution.  Conduct alone was the reason for dismissal and the Tribunal ought to have made a finding of contribution.  Paragraph 83, cited above, carries with it the implication that there was contribution by the Claimant, and in the circumstances Ms Leibert had asked the Employment Tribunal to order a 100 per cent contribution.

The Claimant’s case
15.	On behalf of the Claimant it is contended that the document that the Claimant filled in herself obviously contained details that she remembered by reference to her own material, but where there were two other documents it was important that they were given to her.  It was open to the Tribunal to find that there was a breach of the procedure when the Respondent did not make these available to her.  As to contribution, it is no longer pursued that the Claimant lacked training, but that the just and equitable jurisdiction under section 123 given to the Employment Tribunal allowed it to make the finding that there should be no further deduction for contribution.  The Tribunal had not made a finding of contribution, and therefore section 123(6) did not come into play.

The legal principles
16.	The legal principles are helpfully set out in Alexander and Anor v Brigden Enterprises Ltd [2006] IRLR 422, where Elias P said the following:

“Taking these considerations into account, in our view, the proper analysis of the employer's obligation is as follows.  At the first step the employer merely has to set out in writing the grounds which lead him to contemplate dismissing the employee, together with an invitation to attend a meeting.  At that stage, in our view, the statement need do no more than state the issue in broad terms.  We agree with Mr Barnett that at step one the employee simply needs to be told that he is at risk of dismissal and why. In a conduct case, this will be identifying the nature of the misconduct in issue, such as fighting, insubordination or dishonesty.  In other cases it may require no more than specifying, for example, that it is lack of capability or redundancy.  That is consistent, we think, with the approach which this tribunal has adopted in relation to grievance procedures in Canary Wharf Management Ltd v Edebi [2006] ICR 719] and other cases.  Of course, most employers will say more than this brief statement of grounds, but compliance with the statutory minimum procedure is in our view met by a limited written statement of that nature.
It is at the second step that the employer must inform the employee of the basis for the ground or grounds given in the statement.  This information need not be reduced into writing; it can be given orally.  The bases for the grounds are simply the matters which have led the employer to contemplate dismissing for the stated ground or grounds.  In the classic case of alleged misconduct this will mean putting the case against the employee; the detailed evidence not be provided for compliance with this procedure, but the employee must be given sufficient detail of the case against him to enable him properly to put his side of the story.  The fundamental elements of fairness must be met.”

17.	Further, in Ingram the holding is the following:

“21. The Tribunal was wrong to assume that the statutory requirements obliged the employers to provide in advance all the evidence on which they intended to rely.  It merely requires sufficient material to enable the employee to put her side of the story.”

18.	As to contribution, the Judgment of Ingram is also of assistance, since it dealt with the two points that are live in our case.  The President dispatched an argument as to 100 per cent contribution in the following way:

“18. We reject that argument.  There is no reason in principle why Parliament should not take the view that no compensation at all should be awarded, even where the employer's procedural failings are significant, if the justice of the case does not merit it.  Similarly there is nothing intrinsically objectionable to Parliament stating that in the usual case compensation should be increased for a failure to comply with the statutory procedures but that there may be circumstances where no compensation at all should be awarded.  The intention of Parliament has to be gleaned from the language used in the statute and not from some a priori assertion of what Parliament must be taken to have thought desirable. 
19. Second, it is alleged that the finding of 100% contributory fault was in any event perverse given the procedural defects.  Mr Sykes submitted that there could not be a finding of 100% contribution where the employer was at fault.  We do not accept that.  Whenever there is a finding of unfair dismissal, it must follow that the employer has not acted appropriately.  If Mr Sykes were right, there could never be a finding of 100% contributory fault, yet there is House of Lords authority establishing otherwise: see Devis v Atkins [1997] AC 931.  We accept the submission of Ms Palmer that the authorities establish that the employee's blameworthy conduct must be considered to determine the extent to which it has caused or contributed to the dismissal, not to the unfairness of the dismissal: see e.g. Gibson v British Transport Docks Board [1982] IRLR 228, paras 28-29.  Mr Sykes referred to certain obiter comments of mine in the case of Kelly‑Madden v Manor Surgery [2007] ICR 203; [2006] IRLR 17 at para. 61 which he submits supports the conclusion that where there are significant procedural errors by the employer, a finding of 100% contributory fault is never appropriate.  I was not intending to lay down such a principle; indeed, I was purporting to follow the Gibson case and nothing I said in Kelly‑Madden should be treated as inconsistent with it.  Sometimes procedural failings by the employer will be causally relevant to the dismissal itself, and where that is so a finding of 100% contributory fault is unjustified.  But that is not this case.  It is plain beyond doubt that the blameworthy conduct of the employee was the sole factor resulting in this dismissal.  The failing in procedure at best went to the peripheral issue of how long the admitted wrongdoing had taken place.”

Discussion and conclusions
19.	We have decided to allow the appeal in part.  We prefer the argument of Ms Davy in respect of the procedural failing, and that of Ms Leibert as to contribution.  

20.	First, as to the statutory procedure, an Employment Tribunal is in the best position to decide what is fair employment procedure.  It is drawn from people with experience in this field and sees every day criticisms of procedures, some of which it upholds and some of which it does not.  It is put there by Parliament to decide what is a proper procedure.  In this case, it decided that the failure by the Respondent to provide the two documents, which, it has to be said, are crucial documents, was unfair.  That is sufficient for section 98(4) and there is no appeal. 

21.	It went on to say that it was automatically unfair in respect of the statutory procedure under s98A.  We see no error in its depiction of that failing by the Respondent as a matter of construction.  It was simply focussing on the two documents.  They were of great importance, and we accept Ms Davy’s submission that, although the Claimant was able to write an account, once it became clear that there were two accounts against her she ought to have had the opportunity to prepare her account in the light of them. This case is distinguishable from Ingram, where there was a failure to provide the whole of a sequence of invoices; in this case, the only relevant materials are the two statements of the complainant’s daughter and the manager.  The Tribunal was entitled, using its experience, to decide that this was a failing and, applying the law upon which it was correctly directed, to decide that it was a breach of the Step 2 procedure.

22.	As to contribution, there is considerable force in Ms Leibert’s submission that paragraph 83 above contains a criticism of the conduct of the Claimant as being blameworthy, the necessary ingredient under section 123(6).  The Tribunal did not expressly address itself in respect of section 123.  It may be as a matter of construction that Ms Leibert is right that there is only one conclusion to be drawn, which is that there was a finding of contribution in paragraph 83, but the Tribunal did not say so and, since a submission was made to it by Ms Leibert, it was bound to do so.  The sole reasoning of the Tribunal in relation to contribution is in the last line of paragraph 84 above.  

23.	Ms Davy argued that what the Tribunal here was saying was that it was not just and equitable in the light of the limited reach of the award it made (effectively, only three weeks’ pay) to make any further reduction in respect of contribution.  We disagree.  It is plain that the Tribunal was considering contribution in the light of what it had said at paragraph 83.  It behoves the Tribunal to say whether it accepts the case made by the Respondent that there has been contribution to or causation of dismissal.  It is possible even in a procedural defect case for there to be contribution (see the passages in Ingram we have cited above). Just because the Employment Tribunal has limited the loss to three weeks (under Polkey we assume) does not mean it is just and equitable to refuse to order contribution. They are separate processes and s 123(6) inserts a mandatory consideration into the wide discretion under s123(1).

24.	We invited the parties at the outset to say whether they wished us to decide this matter if we were in favour of the Respondent, or to send it back.  There has been no agreement on this. We regard it as an error by the Tribunal to provide no further reasons than that which is at the end of paragraph 84, and so the matter will be sent back to the same Employment Tribunal.  Weak resistance was offered by Ms Davy to this; we pointed out that this is the very Tribunal which has found in favour of her client on unfair dismissal, from which there was no appeal by the Respondent, and in respect of compensation, again, from which there was no appeal.  We have confidence in this Tribunal to decide this narrow matter, the sole issue upon which any error has been detected.  It will make a decision in answer to Ms Leibert’s submission already made that there should be a finding of contribution and, if there was, it is bound by section 123(6) to make such deduction as it considers appropriate.  We very much hope that a sixth day before this Employment Tribunal can be avoided.  We will invite the parties to make written submissions upon this and see what happens. Fourteen days from today written submissions will be made and given to the Claimant about whether there should be a finding on contribution and what the finding should be.  The Claimant will have 14 days to do written submissions, and then it will be open to the Tribunal to make a decision on the written submissions or, if it wishes, to call for a hearing.  The parties consent to this procedure. The appeal is allowed in part.