Appeal No. UKEAT/0358/10/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 12 May 2011
	   Judgment handed down on 12 July 2011

Before
MR RECORDER LUBA QC
MR A HARRIS
MR M WORTHINGTON

SOUTH TYNESIDE COUNCIL	APPELLANT

MRS A WARD	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR H MENON
(of Counsel)
Instructed by:
South Tyneside MBC
(Legal Services)
Town Hall & Civic Offices
Westoe Road
South Shields
NE33 2RL	
For the Respondent	MRS J CALLAN
(of Counsel)
Instructed by:
Messrs Mincoffs Solicitors
5 Osborne Road
Newcastle-upon-Tyne
NE2 1SQ	

SUMMARY
UNFAIR DISMISSAL – Reasonableness of dismissal
DISABILITY DISCRIMINATION – Reasonable adjustments

Long-serving employee. Multiple grievances against her line managers. Unable to continue working in the same department.  Employer willing to provide suitable alternative employment. After long period of negotiations between employer and employee, in order to bring matters to a head, employer gives three months notice of dismissal but continues to offer alternative employments (with continuity of employment) which are unreasonably refused during the notice period. Employment Tribunal hold that the dismissal was unfair because at the date notice was given it was premature (no precise offer had been made and the grievance procedure was incomplete). 

The Tribunal also held that the same two matters constituted failure to make reasonable adjustments for the disabled employee.

Issue on appeal: whether Employment Tribunal should have considered reasonableness of dismissal as a whole i.e. embracing all matters between giving of notice and its expiry – including rejection of reasonable offers carrying continuity of employment and abandonment of grievances which had had no prospect of success.

Appeal allowed and remitted to same Tribunal to further consider.

MR RECORDER LUBA QC 
Introduction
1.	This is an appeal by an employer, South Tyneside Council (‘the Council’), from a decision of the Employment Tribunal at Newcastle Upon Tyne, upholding the claims of Mrs Ann Ward that she had been subject to disability discrimination and had been unfairly dismissed by the Council.  The claims had been heard in November 2009 and were determined in a very full reserved judgment.

2.	Both parties sought a review of its substantive decisions by the Employment Tribunal itself.  Their applications culminated in another judgment of the Employment Tribunal given on review in November 2010.

3.	The Council’s grounds of appeal challenge both the original and review decisions, on multiple grounds. The amended grounds of appeal extend over 10 closely-typed pages. There was also initially a cross-appeal by Mrs Ward but that was not pressed further before us and shall stand dismissed.

4.	For the reasons that we give later in this judgment, this appeal will be allowed on a single issue that touches both the aspects on which Mrs Ward was successful – disability discrimination and unfair dismissal.

5.	However, it succeeds only on a pure point of law. We are confident that, with the assistance of our judgment, an Employment Tribunal of the same constitution can sensibly reconsider matters without needing to re-hear the (very considerable) evidence and can proceed to determine the claims on remission.  It will be for the Employment Tribunal itself to determine whether it would be assisted by further oral or written argument by the parties.  For our part, we would make it clear that we have been considerably assisted by both the written and oral arguments of counsel for both parties.

6.	As the appeal is being remitted to the same Employment Tribunal we shall give only the barest account of the facts and the issues.  Nothing in our judgment should be taken to influence the Employment Tribunal either way on the ultimate judgments that fall to be made applying the law as we hold it to be.

Essential background
7.	Mrs Ward had a significant period of service with the Council. She began work as an Accounts Clerk in March 1987 becoming a Service Support Officer by July 1987. She was continuously employed up to the expiry of her period of notice on 18 January 2008.  For the bulk of that time she had been engaged in providing administrative support in the Environmental Health (‘EH’) team.

8.	Difficulties appear to have arisen from about 2003/2004, at which time three changes occurred in succession.  First, in August 2003, a Ms Katy Fortune became Mrs Ward’s line manager.  Second, a Mr Andrew Wainwright was appointed as the new overall manager in the EH team.  Third, the team relocated to new open plan offices.

9.	The Employment Tribunal’s judgment offers an exhaustive account of what occurred in the period running forward from those changes until the ultimate termination of Mrs Ward’s employment.  For present purposes it is sufficient to recount that Mrs Ward alleged that the two new managers eroded her job content, made her work more physically demanding or difficult and subjected her to unreasonable criticism. Those and related matters triggered a host of grievances initiated by Mrs Ward.  The reference to making her tasks more demanding is relevant to the fact that Mrs Ward is a person with disabilities.

10.	During the period of the Employment Tribunal’s factual review there were significant periods of absence from work and from April 2007 a period of deployment of Mrs Ward to work in a different team, the Council’s Anti-Social Behaviour (‘ASB’) team.  Matters appear to have come to a head in October 2007.

11.	By then Mrs Ward had asked to be permitted to return to her post in the EH team. The Human Resources manager (Mr Gibson) had declined that request as he did not consider it reasonable for her to return to a post in respect of which there were still unresolved and significant grievances and the advice he had from occupational health was that she should not return to the EH team but should be offered suitable alternative employment elsewhere in the Council.

12.	In an attempt to force the Council’s hand, Mrs Ward presented herself for work in the EH team on 2 October 2007 with the intent of causing embarrassment or disruption if (as occurred) she was not permitted to resume her former duties.  That manoeuvre having failed, she returned on the following day to her temporary placement in the ASB team, which placement had been extended to the end of October 2007.

13.	Mr Gibson had a meeting with Mrs Ward on 17 October 2007 in which he told her that her employment was to be terminated with notice, although continuing attempts could and would be made to secure her some alternative employment with the Council that could be taken up before the notice period expired.  That decision was confirmed in writing the following day (18 October 2007) in these terms:

“In relation to your continuing employment, I would confirm that it is our intention to continue to seek alternative employment for you at Scale 3 within the Council.  That you have been back at work for some time now indicates your fitness to attend work and carry out such duties.  I indicated that your placement within the Anti-Social Behaviour team, would come to an end on Friday 26 October, as communicated previously, and that we would then commence your notice period, of 12 weeks.  If a vacancy proved suitable in the meantime, then this would mean your employment would continue.
[…]
I also confirmed that we did not consider it appropriate for you to return to your substantive role in Environmental Health, especially considering you had a number of grievances outstanding which you did not see as having been resolved.”

14.	The letter also made reference to further meetings and a medical report. Indeed, by 18 October 2007 there remained a number of extant unresolved grievances.

15.	No alternative suitable employment had been found by 26 October 2007 when the placement in the ASB team expired and from that date until her notice period expired Mrs Ward was, in effect, on ‘gardening leave’.  That is not to say that there was anything other than a great deal of continuing communication between the parties about resumption of employment in the EH team, extant grievances, an appeal against the decision to dismiss, and options for alternative employment (including a formal offer).  It is not necessary to add here to the full account of that period given in the Employment Tribunal’s judgment.

16.	It is sufficient to indicate for present purposes that Mrs Ward had not returned to work for the Council in any capacity before her notice expired by effluction of time on 18 January 2008, which was the effective date of termination of her employment.

Proceedings before the Employment Tribunal
17.	Mrs Ward presented many claims to the Employment Tribunal. In the course of the proceedings, a number were either withdrawn or dismissed.  In respect of those that remained, the Employment Tribunal received (as might have been expected in relation to events spanning three or four years) extensive written and oral evidence over the course of a very lengthy hearing.

18.	As to the claim for unfair dismissal, the Employment Tribunal found that Mrs Ward was unfairly dismissed on 18 January 2008 and that she did not contribute to her own dismissal.  However, it found that she would have been dismissed in any event two months after the 18 January 2008 and it limited any award to that two-month period.

19.	The Employment Tribunal rejected the proposition that the reason for dismissal had been ‘capability’.  It found that the real reason comprised ‘some other substantial’ reason namely that the Council:

“…could not allow [Mrs Ward] to return to her previous post for her own potential (sic) welfare, because of the risk to her health and she had refused any alternative posts when all reasonable efforts had been made to find her one. 
Indeed, in our view, the reason for her dismissal was that there was no alternative post available for her, and she had, in the view of the [Council] unreasonably refused to accept posts which had been offered to her.” (Judgment paras [61]-[62])

20.	The Employment Tribunal accepted that this might be a potentially fair reason for dismissal but found that this dismissal had been unfair in two respects, each related to the Employment Tribunal’s assessment that giving notice of dismissal on 17/18 October 2007 had been premature.  As to the first respect in which the dismissal was premature, the Employment Tribunal said (at [64]):

“Whilst not substituting our judgment for that of the employer, it seems to us that the potentially fair thing for any reasonable employer to have done would have been to at least wait for the offer of the allegedly suitable alternative post to be made, and then, if it were to be refused, to warn that refusal may lead to dismissal, and then, and only then, if the post was still refused, (assuming there were no other alternative posts) to proceed to dismiss.  The chronology of the events in this case, however, meant that there was a dismissal first, and the only way of avoiding it was for it then to have been withdrawn.  As indicated above, that is still a dismissal, and, in these circumstances, an unfair one, prompted, no doubt, by the understandable degree of exasperation felt by the [the Council] with [Mrs Ward’s] ever-growing number of grievances, and lack of any likely resolution of her original workplace issues which then went back some 18 months.”

21.	The second respect in which the dismissal was said to have been premature was that, at the date notice was given, Mrs Ward had an extant grievance which had not by then passed through the fourth (and final) stage of a hearing by elected members. That hearing had been scheduled for 29 November 2007.  The Employment Tribunal held (at [65]) that:

“…to dismiss at that time, when an internal and agreed procedure which might have led (and was still being represented to [Mrs Ward] as doing so) to the claimant being able to return to her previous post remained to be completed, was unfair.”

22.	In respect of disability discrimination, the Employment Tribunal found that Mrs Ward had been the victim of unlawful discrimination by the Council in that it had not made reasonable adjustments in two respects, namely:

“(a) re-deploying her to a Scale 3 post in the Anti-Social Behaviour Unit in or about September 2006; and
(b) awaiting the hearing of her Stage 4 grievance appeal to Elected Members due to be heard on 29 November 2007 before dismissing her, and/or the making of a formal offer of a suitable alternative position, and affording her a reasonable time in which to accept it.”

23.	As will be apparent from the wording of those two matters, the first related to an earlier re-deployment to the ASB team (and is not subject of any appeal). The second is bound up with the two aspects which the Employment Tribunal had found rendered the dismissal unfair.

24.	The Employment Tribunal dismissed claims against the second and third Respondents to Mrs Ward’s claims – Ms Fortune and Mr Wainwright – and scheduled a remedies hearing in respect of the successful claims against the Council for a later date.

25.	As noted above, these decisions were confirmed on review.

The Appeal: the cases for the respective parties
26.	In his written and oral submissions for the Council, Mr Menon sensibly and helpfully collapsed the extended grounds of appeal into a single fundamental proposition that, in respect of both unfair dismissal and the second dimension of the disability discrimination finding, the Employment Tribunal had erred in law by treating the dismissal as having occurred on 18 October 2007 and as having been - at that date - irremediably tainted by the twin respects in which the Employment Tribunal had found had it to have been unfair.

27.	His submission was that, on a proper approach to its respective functions of determining fairness or unfairness of a dismissal and the reasonableness or otherwise of possible ‘adjustments’, the Employment Tribunal should have looked at the whole situation working back from the actual date of the termination of the employment (in January 2008).  Had it done so, he submitted, it may well have found that whatever unfairness or deficiency had occurred on 18 October 2007 that had long since been overtaken by events in the subsequent three months before the employment ended.  He pointed in particular to: (1) the offer and unreasonable rejection of suitable alternative employment early in that period and (2), in respect of the grievance, a failure to participate in meetings in that period and the fact that the scheduled final stage of the grievance procedure (following a postponement of the 29 November 2007 hearing at Mrs Ward’s request) never did result in any finding in her favour.

28.	He took us through the judgment, and review decision, of the Employment Tribunal in detail - drawing attention to those many passages in which they had treated “the dismissal” as a single event taking place by the latest on 18 October 2007 and also to further passages said to demonstrate that the Employment Tribunal had treated nothing that had happened subsequently as having cured, or having had the capacity to cure, the unfairness of giving notice of dismissal at that date.

29.	The thrust of the Council’s case before the Employment Tribunal on review had been that a focus exclusively on 17/18 October was unrealistic in the context of a case in which an employer was saying, in effect, “we will spend the next three months trying to agree with you some alternative deployment with the Council which will enable your employment to continue rather than be terminated under the extant notice.”  That approach, Mr Menon submitted, was a fair one in the circumstances and only failed because Mrs Ward unreasonably rejected what was, on any view, suitable alternative employment which became available in that interregnum.  Indeed, within days of the end of her ASB placement.

30.	He submitted that the Employment Tribunal had become deflected by Mr Gibson’s reference in evidence to his understanding that the notice of dismissal on 18 October 2007 was, in effect, “conditional” and would be “withdrawn” if an alternative post was found and accepted.  This was treated by the Employment Tribunal as raising an issue of law about whether there could be conditional notices and whether they could be unilaterally withdrawn.

31.	At that point, Mr Menon’s submissions took in a treatment of the relevant authorities on conditionality/withdrawal (or otherwise) of notice of dismissal but, in sum, the contention he advanced was that on a true construct of the notice of dismissal it had nothing to do with conditionality or unilateral withdrawal.  The whole, and obvious, premise was that a successful identification and acceptance of an alternative post would lead to the continuation of the employment by mutual consent.

32.	Notwithstanding the centrality of the above-described challenge, Mr Menon did not abandon his subsidiary perversity challenge to the Employment Tribunal’s finding that the Council could not rely on Employment Rights Act 1996 section 98A(2).

33.	For Mrs Ward, Ms Callan developed helpful submissions essentially seeking to uphold the decision of the Employment Tribunal for the reasons it had given both in its initial judgment and on review.  She submitted that the Employment Tribunal had made no error in treating this as a quite ordinary dismissal on notice rather than something conditional or capable of being withdrawn.

34.	Her case was that it had been entirely open to the Employment Tribunal to find, as it had, on both the unfair dismissal claim and the disability discrimination claim, that this was a case in which the employer should have waited for a specific offer of alternative employment to be made and for a grievance procedure to be seen through.

Discussion & Conclusion
35.	We must begin our discussion of this appeal by paying tribute to the Employment Tribunal for the full and comprehensive way it has set out its findings of fact and its reasoning leading to its conclusions.  From them, the parties can see clearly why, in the Employment Tribunal’s judgment, certain claims succeeded, to what extent (if at all) success was to be limited, and which claims failed.

36.	However, that very transparency enables us to discern without any hesitation a clear misdirection in law by the Employment Tribunal which we consider was then applied to consideration of both the unfair dismissal claim and the termination-related aspects of the disability discrimination claim.

37.	We entirely understand how the layman’s reference by Mr Gibson to the notice of dismissal being conditional or capable of withdrawal led the Employment Tribunal to heavily emphasise that this was (as we agree) a case in which the employer was unilaterally exercising a power to terminate an employee’s employment at the end of a stipulated period of notice.  We reject, as the Employment Tribunal did, the proposition that this notice was conditional or anything other than a unilateral notice that employment would terminate when it eventually did. In our judgment Mr Menon’s submissions in this regard can draw no comfort from Rai v Somerfield Stores Ltd [2004] IRLR 124 which turns on the ascertainment of effective date of termination and is thus wholly distinguishable from the present case in which no such issue arises.

38.	But the error, to which this diversion led, was an “ossification” of the dismissal as an event which occurred by delivery of the letter of 18 October 2007.  A fair reading of the initial judgment and review decision makes plain that the Employment Tribunal did not consider that anything which could have happened or did happen between 18 October 2007 and 18 January 2008 could ‘undo’ what it perceived as having been the two unfair aspects of giving notice when the employer did.

39.	The Employment Tribunal relied on Harris and Russell Ltd v Slingsby [1973] ICR 454 for the uncontroversial proposition that notice once given cannot unilaterally be withdrawn.  But that decision of the NIRC is also authority for the proposition that ‘by agreement’ such notice may be withdrawn so that the employment continues notwithstanding expiry of the notice period.  That was highly material to the way the Council’s case was being put.

40.	In our judgment, it was a requirement of the jurisdiction that they were exercising for this Employment Tribunal to consider the fairness or otherwise of the termination of employment on 18 January 2008 in the round.  That involved engaging with and delivering judgment upon the Council’s case that (to put it shortly in our own terns):

(1)	Any initial procedural unfairness in giving notice before a specific offer of alternative employment was put on the table was outweighed by the fact that when, well before the anticipated expiry of the notice period took effect, such an offer was made as anticipated, it was unreasonably rejected.  Had it been accepted, the earlier prematurity would have become irrelevant as the termination of employment would (by consent) have either been deferred or avoided.  Any such procedural unfairness as had occurred was, in effect, trumped by the capricious refusal of the opportunity of continued employment in a different post by Mrs Ward; 

and (to like effect)

(2)	Any procedural unfairness in giving notice before the final stage of the grievance procedure had been completed had to be looked at in overview.  As emerged, that final stage was never in fact completed during the notice period or otherwise. The context from October 2007 to January 2008 was of non co-operation by Mrs Ward in bringing matters to a conclusion. Considering events in the round would demonstrate that no real ‘opportunity’ had been lost because Mrs Ward would have unreasonably been holding out for her old position back and, unrealistically, for the removal of two managers before that could/would happen: see Employment Tribunal judgment at [70] –[73]. The Employment Tribunal had itself found Mrs Ward’s perception of the issues, and her evidence, unsatisfactory and it was highly unlikely that any outcome of the grievance procedure could have brought her any satisfaction at all.

41.	In contrast, a fair reading of the judgment and the decision on review demonstrates to our unanimous satisfaction that this is a case in which – to use language from Mr Menon’s skeleton argument – “the approach adopted by the Employment Tribunal effectively stopped the clock” at the date the period of notice started.

42.	That approach cannot be squared with the statutory language of section 98(4) of the Employment Rights Act 1996 which requires the Employment Tribunal, when determining whether the dismissal of an employee is fair or unfair, to have regard to whether “in the circumstances” the employer acted reasonably in treating the reason for dismissal as sufficient and to make the assessment of fairness/unfairness “in accordance with equity and the substantial merits of the case”. There is no statutory definition of ‘dismissal’ (see Rai v Somerfield Stores Ltd [2004] IRLR 124, EAT, para [21]) which could support its being limited to the moment at which a notice of termination is issued.

43.	It is settled law that, in conducting the statutory exercise, an Employment Tribunal may, and in some circumstances must, have regard to what takes place between the giving of notice, the date of commencement of that notice and the ultimate termination of the employment. Otherwise, not least, Employment Tribunals would never have regard to such matters as the substance and procedure of internal appeals against decisions to dismiss.

44.	Indeed, the Employment Tribunal itself appeared - in its review decision at paragraph [15] - to have accepted that this is indeed the law.  Responding to the very point now advanced before us, the Employment Tribunal said in para [15]:

“…[W]hat the Tribunal is really doing, it seems to us, is looking at the whole process of dismissal.  As has been said in other contexts (appeals – see West Midlands Co-operative Society v Tipton 1986 ICR192) dismissal is a process, not an event, as highlighted by the fact that a Tribunal takes into account the appeal process, which often takes place long after the dismissal takes effect, in assessing the fairness of the dismissal as a whole.  That rather demonstrates that it can be an error to identify any particular precise, and perhaps artificial, point at which the issue of fairness falls to be decided.  The requirement of s.98 is to look at ‘all the circumstances’.”

45.	The Employment Tribunal go yet further and set out passages from the judgment of Lord Justice Simon Brown (as he then was) in Alboni v Ind Coope Retail Ltd [1998] IRLR 131. The learned Lord Justice expressly there approved this part of the headnote of the earlier case of Stacey v Babcock Power [1986] ICR 221:

"... when considering whether an employee had been unfairly dismissed within the meaning of section 57(3) ... it was necessary to take account of the whole process of dismissal initiated by the giving of notice and completed by its expiry rather than regarding the giving of the notice of dismissal as fixing the moment of dismissal and precluding consideration of events which occurred during the notice period ..."

46.	LJ Simon Brown, when applying that proposition to the case before him, said that it was:

“entirely clear that the Industrial Tribunal in the present case were not merely entitled, but were bound to have regard to events between notice and dismissal, both for section 57(1) purposes and also, indeed to my mind a fortiori, for section 57(3) purposes.”

47.	It is right at this point to acknowledge that Ms Callan did not seek to suggest that the law was otherwise.  Indeed, in the course of submissions she acknowledged that it did not matter from which end (the giving of notice or its expiry) an Employment Tribunal began the examination of fairness of a dismissal provided that they look “at the whole”.  Indeed, as the editors of Harvey’s indicate, at [824.05]:

“In practice, events occurring during the notice period are more likely to impact upon the fairness of the decision rather than affecting the reason why the dismissal was carried out.”

48.	However, despite having set out the passages from the authorities, in their review decision, the Employment Tribunal then fail to apply them to the ascertainment of fairness overall.  At the end of paragraph [16], they rightly reject what they perceive to be Mr Menon’s submission that one looks only at the end of the process.  But having done so, they direct themselves that the dismissal must have been fair at the time notice is first given and remain so throughout. That necessarily excludes the possibility of a dismissal, which was potentially unfair when the clock of notice was activated, becoming nevertheless fair by the time the clock stops.  It is that possibility that requires examination on the facts of this case.

49.	By paragraph [18], the Employment Tribunal’s review decision has again reverted to treating the unfairness of the dismissal as standing or falling at the date when the decision to dismiss was taken on 17/18 October 2007.  That clearly echoes the main judgment at paragraphs [60]-[65] in which the Employment Tribunal manifestly treat the giving of notice as “the dismissal”, the fairness of which – at that date – it treats itself as exclusively confined to deciding.

50.	Despite our clear conclusions on the point of law, we have sufficient confidence in the calibre of the consideration that this Employment Tribunal has already given to the factual aspects of this matter to be prepared, without hesitation, to remit the unfair dismissal and disability discrimination claims to the same constitution for further consideration - embracing the broader approach that we have been satisfied is what the law requires, rather than the narrower one earlier taken by the Employment Tribunal.

51.	It necessarily follows that, on remission, and taking that broader approach, the Employment Tribunal may come to a different ultimate decision, a modified decision or one which produces entirely the same result.  Application of the facts found on a proper direction as to law is entirely for the Employment Tribunal.

52.	It seems to us that the termination-related aspects of the successful disability discrimination claim are so intertwined with the shortcomings which were said to have rendered the dismissal unfair that they too must be remitted for further consideration.  Likewise, the question of whether – in the event of a further finding of unfair dismissal – what occurred between 18 October 2007 and 18 January 2008 would cause the Employment Tribunal to take a different view of whether Mrs Ward contributed (and if so to what degree) to the ultimate termination of her employment.

53.	Indeed, it is a striking feature of the Employment Tribunal’s judgment that, by treating the dismissal as having occurred at the moment notice was given, the Employment Tribunal are able to hold that there has been no contribution by Mrs Ward to her own dismissal notwithstanding its clear conclusions that: (1) she unreasonably rejected satisfactory employment elsewhere in the Council offered months before her notice expired and would have held to such rejection whatever adjustments or accommodations the Council would have made for her; and (2) that there was no sufficient merit in her grievances to suggest any prospect of success with them had they been pressed to a conclusion and fully and completely considered  before notice expired.

54.	However, we do not consider that the Employment Tribunal was wrong to find that the Council could not, in all the circumstances, rely on section 98A(2) Employment Rights Act 1996.  Mr Menon’s challenge to that aspect of the Employment Tribunal’s decision-making is not infused by the more fundamental error already described and his perversity challenge gets nowhere near the high threshold for success that an appeal on that ground must achieve.  Indeed, if anything, the failure of the appeal on section 98A(2) rather strengthens the general point on the main appeal.  In an obiter passage in Alexander v Bridgen Enterprises Ltd [2006] IRLR 422, Elias J said this at [64]:

“It is arguably implicit in section 98A(2) that in order for the dismissal to be fair, it is necessary for the employer to show not merely that the employee would have been fairly dismissed if appropriate procedures had been complied with, but that he would have been dismissed at the same time as he was.”

55.	As we have sought to explain, that implication is not generally the position in respect of claims for unfair dismissal.

56.	Accordingly, we will order that this appeal be allowed to the extent indicated in this judgment and that the judgments of the Employment Tribunal at paragraphs 9(b), 10, 11, 12 and 13(b) shall be remitted to the same Tribunal for further consideration in the light of this judgment.  The cross-appeal will stand dismissed.