Appeal No. UKEAT/0416/10/DA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 13 January 2011

Before
THE HONOURABLE MR JUSTICE WILKIE
MS G MILLS CBE
MS N SUTCLIFFE

MISS P I DAVIES	APPELLANT

SANDWELL METROPOLITAN BOROUGH COUNCIL	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR IVAN YATES
(Representative)	
For the Respondent	MR DAVID MAXWELL
(of Counsel)
Instructed by:
Sandwell MBC Legal Services
Freeth Street
Oldbury
West Midlands
B69 3DE	

SUMMARY
UNFAIR DISMISSAL - Reasonableness of dismissal

The Employment Tribunal misdirected itself in regarding as relevant the fact that there had been no appeal against a final warning, where failure to appeal did not denote acceptance of the correctness of the warning, where a question had arisen and been considered by the ET about whether the final warning was valid.

THE HONOURABLE MR JUSTICE WILKIE

1.	This is an appeal by Miss Davies against the decision of the Employment Tribunal at Birmingham which dismissed her claim for unfair dismissal brought against her erstwhile employers, Sandwell Metropolitan Borough Council.  She has been very ably represented by Mr Yates, a lay representative before us as she was before the Tribunal.  The Respondent to the appeal has equally ably been represented by Mr Maxwell of counsel, who also appeared before the Tribunal.  We are indebted to both of them, both for their succinct written skeleton arguments and the brevity and effectiveness with which they have addressed us.

2.	The hearing before the Employment Tribunal started on 22 September 2008 and ended on 5 December 2008, after 22 days of hearing, plus two days during which the panel convened to consider its decision.  The decision was issued on 23 March 2009.  The Claimant was employed by the Respondent as a teacher in science at Willingsworth High School.  She had qualified as a teacher in 1996.  Her first appointment as a teacher was on 1 September 1996.  Her appointment at Willingsworth High School was on 24 February 2003. 

3.	She had been issued with a verbal warning on 8 September 2004.  One month later, on 8 October 2004, it was said that there was a science lesson in which the way in which she was said to have conducted herself gave rise to complaints, in essence, of inappropriate conduct during a lesson.  That complaint was supported by written statements made by a substantial number of pupils who were said to have been in attendance in that lesson.  She was suspended as a result of those complaints on 21 October.  On 10 February 2005, she received a final written warning, which was based on a single allegation concerning her conduct in that lesson.  

4.	She returned to work following her suspension on 15 March 2005.  She had appealed against that final written warning.  Initially, the appeal was to be by way of a review, but she and her representatives argued that it should be by way of a re-hearing because of an evidential issue to which we will return.  Eventually, the Respondent relented and agreed to have an appeal by way of a re-hearing.  Unfortunately, by that stage, there was a degree of suspicion on the part of the Claimant and that suspicion was shared by her union representative, who, on 12 May 2005, wrote to her a letter advising to her to think very carefully about whether she really wanted to take up the appeal which was on offer, as her representative suspected that, as the hearing of the appeal could result in an increased level of sanction if the appeal were unsuccessful, the Respondent might take the opportunity, given by her pursuing an appeal, to dismiss her, rather than merely upholding the final warning.  The Employment Tribunal found as a fact that the Claimant accepted this advice and, for that reason, had allowed the appeal to lapse.  

5.	Matters then proceeded. There were a series of further complaints made against the Claimant in the early part of 2006.  She was again suspended on 1 March 2006.  There was a disciplinary hearing in relation to ten matters of complaint on 12 and 13 September 2006.  In the event, the Respondent was satisfied that five out of those ten allegations were made out and dismissed her by giving her notice on 9 October 2006.  

6.	The Employment Tribunal extensively considered, in the course of those 20-odd days, both documentary and oral evidence, not only on the substance and the procedure which led immediately to her dismissal, but also in relation to the allegation which had resulted in the final warning.  As far as the five allegations of misconduct which had given rise immediately to the dismissal, the Tribunal concluded that two of them, allegations 1 and 4 (concerning students walking out of and not attending lessons) were not allegations where the Respondent had satisfied the Burchell test (British Home Stores v Burchell [1978] IRLR 379).  Accordingly, they concluded that no reasonable employer (on the evidence before the committee which took the decision to dismiss) could reasonably conclude that she was guilty of misconduct in relation to either of those two charges.

7.	In respect of two of the other charges, namely the TA incident and the visit of the Blood Transfusion Service, the Tribunal concluded that the Respondent had satisfied the Burchell tests.  In relation to the TA incident, the Tribunal concluded that the panel was entitled to regard it as a serious dereliction of her duties as a classroom teacher.  In relation to the visit of the Blood Transfusion Service, the Tribunal concluded that the Respondent was entitled to come to the conclusion that the misbehaviour was serious, that it brought the school into disrepute and that the Claimant had shown a bad example to the pupils in her charge.

8.	In relation to the fifth allegation, concerning the parents’ evening, the Tribunal concluded that the Respondent was entitled to conclude that the Claimant had not been giving proper attention to her duties and that her failure had amounted to misconduct.  The Respondent, in submissions, had conceded that the gravity of that misconduct was not such that that failure alone would justify dismissal.  

9.	In fact, the evidence of the maker of the decision to dismiss and, as a result, the position of the Respondent was that it did not rely on any of those findings of misconduct on their own as justifying the decision to dismiss.  The reason for the dismissal was the fact of those findings of misconduct, and the fact that any one of them, coupled with the final written warning, was sufficient to cross the threshold whereby the decision to dismiss was said by the Respondent to be within the range of reasonable responses.

10.	Accordingly, a crucial part of the Respondent’s case (and a substantial part of the evidence and argument at the hearing) concerned the validity of the final written warning.  In that respect, the Tribunal had to consider not only the arguments of substance: to the effect that the allegations were said by the Appellant to be untrue and part and parcel of a conspiracy involving either pupils and/or members of staff against her; but also a significant procedural complaint made on behalf of the complainant.

11.	The disciplinary hearing which considered the “final warning” allegation and whether or not it warranted a final warning was held on 10 February 2005.  On that date, the Claimant had produced to the disciplinary committee documentary evidence, which the Employment Tribunal concluded was cogent evidence, which fundamentally undermined what the pupils supporting the complaint were saying.  She produced evidence that she had not been teaching static electricity on 8 October 2004, that her lesson on that subject had taken place some eight days earlier on 30 September 2004 and that this appeared to be corroborated by the students’ workbooks.  In addition, she sought to produce to the disciplinary committee evidence of her classroom registers, which appeared to show that two of the pupils who had made statements describing the incident which was said to have occurred on 8 October 2004 were not even present in her class on that day.

12.	The Tribunal concluded, as was indeed the case, that the committee refused to admit this documentation or to hear evidence about it because the Claimant had not provided details of it seven days in advance of the hearing.  Therefore, the presenting officer had not had an opportunity fully to investigate them.  The Tribunal pointed out that the Respondent’s disciplinary procedure did not, in fact, require an employee to provide advance notice of evidence upon which they intended to rely.  However, in any event, the Tribunal’s view was that a reasonable employer, in those circumstances, would have been willing, if necessary, to adjourn the disciplinary hearing to ensure that this new evidence could properly be investigated.

13.	The Tribunal, in paragraph 26.5 of the decision, recorded that the evidence before the Tribunal of those who had been conducting that hearing (and in particular, Mr Dunnaker, who was the chairman of the disciplinary committee in relation both to the final warning and to the decision ultimately to dismiss) was that they had not regarded the new evidence as being particularly significant, on the basis that: the other evidence was overwhelming; that it did not really matter on which particular day the incident had taken place; and that, even if two of the students who had made statements were not there on that occasion, whichever date it was, there were a substantial number of others who had made statements who clearly were.  The Tribunal’s view in relation to this is set out at paragraph 26.6.  It reads as follows:

“This appears to us to fundamentally miss the potential importance of the new evidence.  Clearly if two pupils who were not present have made statements the investigator would need to establish why they had made those statements and this could have exposed evidence of a conspiracy instigated by some of the pupils (or even potentially members of staff) to fabricate the incident.  We are bound to say that if the Claimant had been dismissed for that incident and if an unfair dismissal claim had come before this panel on those facts, it is likely that we would have concluded that the dismissal was unfair because of the Respondent’s failure to properly investigate.”

14.	The Tribunal then went onto consider, at paragraph 26.7, the history of the Respondent offering the Claimant an appeal against the final warning and concluded that the appeal had been withdrawn because, at that stage, all that was on offer was an appeal by way of review, rather than a re-hearing, which would, of course, have precluded her relying on the new evidence because the review would only be based on the evidence that was considered by those conducting the original hearing.  

15.	At paragraph 26.8 of their decision, the Tribunal say as follows:

“If the matter had rested there then we repeat our view that if we were considering an Unfair Dismissal claim on those facts we may well conclude that the Respondents had not adequately investigated.  Furthermore, if the matter had rested there we may well have concluded that a reasonable employer, considering the existence of this final written warning, may have found it appropriate and necessary to reopen the circumstances of the final written warning and complete the investigation to establish whether or not it had been correctly imposed.  However, matters did not rest there.”

16.	The Tribunal then set, out in the succeeding paragraphs, the fact that, following the abortive appeal hearing, there had been correspondence, at the end of which the Respondent had agreed to offer an appeal against a final warning by way of a re-hearing, which would have permitted fresh evidence to have been considered.  As we have already indicated, that offer was never taken up, effectively for the reason (as the Tribunal found) that the Claimant was not prepared to take the significant risk of an appeal by way of re-hearing, given the advice that she had been given by her trade union representative.  

17.	The Tribunal then considered how those subsequent events impacted on their decision on the fairness of the dismissal.  At paragraph 27, they say as follows:

“In these circumstances the final written warning having been given an appeal by way of complete rehearing having been offered and the Claimant apparently having decided not to pursue the appeal, we are satisfied that the principles set out above in the Tower Hamlets [Tower Hamlets v Anthony [1989] IRLR 394 (CA)] and Stein [Stein v Associated Dairies Ltd [1982] IRLR 447 (EAT)] cases are entirely applicable to this case.  The Governors were entitled to proceed on the basis that there was an extant final written warning.  They were under no obligation to reopen and further investigate it and the Tribunal has no legitimate purpose in doing so either.  We are satisfied that that final written warning had been issued in good faith and that there were prima facie grounds for it.”

They went on to conclude that, on the basis that there was a valid final written warning in place, the decision of the Governors subsequently to dismiss her in the light of the subsequently found misconduct (and in the light of the final written warning) was within the range of reasonable responses available to them.  Consequently, the claim for unfair dismissal was dismissed.

18.	The Claimant sought to appeal.  She focused on a number of points, which included an alleged error of law in that the Employment Tribunal had regard, or undue regard, in considering the validity of the final written warning to the fact that there had been no appeal against the final warning, even though one had been offered by way of a full re-hearing.  The appeal was submitted to the EAT and subjected to the sift process originally on the papers, Keith J considering the matter on 5 June 2009.  He concluded that there was no arguable case and a direction under rule 3 was issued. As she was entitled, the Claimant sought an oral hearing under rule 3(10), which took place on 12 August 2009 before HHJ McMullen QC.  He, too, decided that there were no arguable grounds for appeal.  

19.	Again, as she was entitled to do, the Claimant appealed his decision dismissing her appeal to the Court of Appeal.  The single judge, Sir Richard Buxton, upheld her appeal and granted her permission to appeal, but on a limited basis as identified by him in his Reasons for the decision.  He says, amongst other things, as follows: 

“The case, however, turns on the validity of that final warning which was important in the employer’s decision to dismiss the applicant and in the ET’s upholding of that dismissal.  It is arguable, at least in the context of Rule 3(10), that after a hearing with all the defects listed by the ET in paragraphs 26.3 to 26.6 of its determination, it was simply not open to a reasonable employer to issue a final warning, with all the potential consequences that that has.  It was for the reasonable employer and not for the employee to correct those defects by further action.  If the warning was in employment terms a nullity, failure to appeal against it could not improve it.  The matter might be different if the employee’s action in not appealing involved or implied an admission that the allegations made against her were true, but the terms of the NASUWT letter show that that was not the case.  This approach, including a refusal to regard a failure to appeal as conclusive, would seem to be consistent with the approach of the EAT in Co-operative Retail Services v Lucas [1993] UKEAT/145/93 a determination that carries the authority of Mummery LJ when he was President of the EAT.”

20.	The issue of the extent to which it is open to an Employment Tribunal to consider the validity of a final warning, when considering a claim of unfair dismissal, where this dismissal (or the decision to dismiss) was only taken because there was in existence a final warning, and, if so, the extent to which an Employment Tribunal is entitled to go behind the final warning in order to consider whether it ought appropriately to have been relied on by the employer, has been the subject of significant appellate authority.  In the case of Stein v Associated Dairies Ltd [1982] IRLR 447, the EAT considered this issue.  In the judgment of the Tribunal delivered by Lord McDonald , at paragraph 6, he said as follows:

6	“It was argued before the industrial tribunal on behalf of the Appellant that he should never have been given a final warning at all.  We do not consider that it was the function of the Industrial Tribunal to sit in judgment upon this matter.  It was sufficient if they were satisfied that the final warning had been issued in good faith and that there were at least prima facie grounds for following this procedure.  That having been done, they were in our view entitled, in the event of a subsequent serious offence whilst such warning was still outstanding, to dismiss the Appellant.  This, in fact, is what they did.
7	It was argued before us, however, that the final warning which had been issued was under appeal within the domestic procedure of the Respondents at the time when they decided to dismiss.  It was suggested that in these circumstances, they should not have dismissed the Appellant until the outcome of that appeal was known.  The Industrial Tribunal have dealt with this point.  They point out that if this is correct, it could give rise to abuse, particularly in a case such as the present where, for some reason or another, it was going to take several months before the appeal was heard and concluded.  In the event, we were informed that the appeals of the employees affected by the final warning were dismissed, but that is irrelevant in the present situation because the Respondents were not to know, at the time when the decision to dismiss was taken, what the outcome of the appeal would be.  What they did know, however, was that a final warning had been given and the Tribunal were satisfied that that was a genuine action taken upon prima facie reasonable grounds.  We do not consider that it can be laid down as a general proposition that in every case where an employee is dismissed for a subsequent offence at a time when his final warning for a previous offence is under appeal, there is an obligation upon employers not to dismiss until that appeal has been decided.  Certainly, if there was anything to suggest that the warning had been issued for an oblique motive or if it was manifestly inappropriate, that is a matter which a tribunal could take into account.” 

21.	That approach was considered in the case of Tower Hamlets Health Authority v Anthony [1989] IRLR 394 by the Court of Appeal.  That approach was adopted in paragraph 10 of the lead judgment in that case delivered by May LJ.  He said as follows:

10	“The view of the EAT in Stein’s case appears clearly from the judgment of Lord McDonald and the passages which I have quoted and indeed was, as I think, correctly stated by the EAT in their judgment in the instant case where they said, ‘Where a warning is a prerequisite to dismissal, an employer has to take into account the fact that an appeal is pending when considering whether to dismiss or not.  And a little later in the judgment: ‘That is to say an employer in the circumstances of this case, where a warning is a prerequisite to dismissal, has got to take an appeal into account when considering whether to dismiss or not.’
… 
	In a case such as this, the fact that an employee has received a formal warning at some stage prior to the ultimate dismissal is one of the circumstances in the case which a reasonable employer should take into account and which an industrial tribunal should also, as an industrial jury, take into account in passing judgment on the actions of the employer.  Similarly, the fact that that warning is still subject to an undetermined appeal is one of the circumstances of the case which a reasonable employer should take into account and which, similarly, an industrial tribunal should take into account in deciding whether or not the employer has acted unreasonably in ultimately dismissing the employee.
	…
But the fact of the warning, providing that it is given on adequate evidence and not for any oblique or improper motive, and the fact that it is still subject to an appeal, remain throughout at least two of the circumstances in a case which a reasonable employer and an industrial tribunal should take into account.” 

Then, at paragraph 12:

12	“In my judgment therefore, the industrial tribunal in the instant case erred in concluding that the two formal warnings which had been given should be disregarded because they were still subject to an appeal when the employee was dismissed and the EAT in their turn also erred in upholding that decision of the industrial tribunal.” 

22.	Finally, reference was made by Sir Richard Buxton to the case of Co-Operative Retail Services Ltd v Lucas, where the decision of the Tribunal was delivered by Mummery LJ, who was then President.  That was a case in which there had been a disciplinary hearing in June 1991.  Criticisms were made at the hearing about the Claimant’s performance.  A final warning was issued to her.  She was informed that she had a right to appeal, but did not avail herself of that right.  There was a further disciplinary hearing in August 1991 in relation to other matters.  The upshot of that was that a decision was made to dismiss the Claimant.

23.	The CRS, in defending the unfair dismissal claim, made reference to the fact that she had received a final written warning in relation to her conduct on 1 July, that she had not appealed that warning and that subsequently she had committed various further acts which led to the disciplinary hearing on 2 August and the decision to dismiss her.  It was accepted before the industrial tribunal that the incidents which had led the hearing in August were not in themselves a justification for disciplinary action, let alone dismissal.  Accordingly, the case turned on the fact that there had been a prior final written warning.  In that case, the industrial tribunal had concluded that no reasonable employer would have dealt with the matters raised in June by way of a final written warning.  Accordingly, the Tribunal disregarded the fact of the final written warning when considering the response of the employer in August 1991.  

24.	The issue which arose for decision in that case was whether the industrial tribunal had misdirected itself in so approaching the matter.  The EAT found that there was no misdirection and applied the cases of Stein and Tower Hamlets Health Authority.  The industrial tribunal had directed itself in the following terms:

“We are, however, quite clear that on the evidence we have heard that no reasonable employer would have dealt with these matters by way of a final written warning, which is what in fact the Respondent did.” 

25.	Reference was made to the passages to which we have already referred in the case of Stein at paragraphs 6 and 8.  It does not appear to have been argued in that case that the fact that there had been no appeal against a final warning was in any way relevant to the consideration of the industrial tribunal as to the validity of the final warning or otherwise.  It seemed, by inference or by implication, to have been the case that if the Tribunal concluded that, as a matter of substance, the final warning was invalid having regard to the test identified in Stein, and followed in Tower Hamlets, the fact of there having been no appeal against it would not save it from invalidity.  As Sir Richard Buxton indicated in his decision in this case, that does seem to be consistent with what he identified as the point in the appeal.

26.	In the present case, the carefully constructed decision of the Employment Tribunal did consider the question of the validity of the final warning by reference to the procedural defects to which we have referred, namely the refusal to grant an adjournment in order to admit what was plainly relevant evidence.  In paragraph 26.8, dealing with the matter as the argument had to that point developed, the Employment Tribunal gave an indication (but, of course, did not formally decide) that in those circumstances, a dismissal following the final warning would necessarily have been unfair.  

27.	The decision of the Tribunal that the decision to dismiss was, in fact, fair, however, was very carefully constructed.  It is clear from paragraph 27 that it was wholly dependent upon the fact that, subsequently, the offer of an appeal by way of re-hearing had not been taken up and that, accordingly, by the time the disciplinary committee was considering the question of dismissal, arising out of the subsequent misconduct, by reference to the final warning, the Tribunal considered that the fact that the final warning had not been appealed meant that its validity could not be questioned.  Accordingly, it concluded, (applying the correct test) that the final warning had been issued in good faith and that there were prima facie grounds for it.

28.	Mr Maxwell has argued that this is the correct approach.  He points out that the focus of the Employment Tribunal has to be on the final decision to dismiss; that those who are operating, and subject to, internal disciplinary procedures are entitled to conclude that those procedures will have some significant degree of finality, particularly if a decision is taken, an appeal offered, but not taken up.  He says that it would be contrary to policy, and inconsistent with the decision in Stein and Tower Hamlets, for the validity of a final warning to be subject to the same test, and therefore the same potential level of scrutiny, as the decision to dismiss.  In our judgment, he is correct in his concern.  He is also correct in the way he reads the decisions in Stein and Tower Hamlets.

29.	The test required by Stein to be satisfied before it would be appropriate for an ET to look behind a final warning is deliberately couched in more exacting terms than the test for unfairness in respect of a dismissal, provided the final warning has been issued in good faith and there are prima facie grounds for it; or, to put it another way, provided the warning has not been issued for an oblique motive or has not been manifestly inappropriately issued, the employer and the Employment Tribunal is entitled to regard the final warning as valid for the purposes of any dismissal arising from subsequent misconduct, provided that the subsequent misconduct is such that, when taken together with the final warning, the dismissal or the decision to dismiss is a reasonable one. 

30.	Where, however, in our judgment, the Employment Tribunal has misdirected itself in this case is in its approach to the question of an appeal not being launched against the final warning.  It is clear from Stein and Tower Hamlets that the fact that an appeal has been launched but has not yet been concluded is a matter of relevance which has to be considered both by the employer and by the Employment Tribunal.  However, in the case of Co-Operative Retail Services Ltd v Lucas, the fact that the final warning had not been appealed was not considered worthy of argument, where the circumstances of the issuing of the final warning were apparently so egregious that the Tribunal was satisfied that the more exacting test described in Stein had been satisfied.  As Sir Richard Buxton put it in relation to this case: 

“If the warning was in employment terms a nullity, failure to appeal against could not improve it.” 

This must be the more so where, as here, the reason for the employee not pursuing the appeal did not involve any explicit or implied admission that the allegations made against her were true.  She was following advice from her union that there were significant dangers for her in taking up the offer.  In our judgment, therefore, the Employment Tribunal in this case misdirected itself by having regard to the fact that there had been no appeal against the final warning when considering whether or not the dismissal was fair.  

31.	We asked both Mr Yates and Mr Maxwell what their submissions were as to the appropriate order that we should make were we to find, as we have, that the Tribunal misdirected themselves in this limited way.  I think it is fair to say that each of them, very sensibly, adopted a similar attitude.  We are not in a position to conclude whether the appropriate finding by the Tribunal, properly directing itself, would be that the dismissal was fair or unfair.  That remains an issue properly to be considered by the same Tribunal which heard the evidence and had the documentary material.

32.	In our judgment, therefore, the case should be remitted to the same Tribunal for it to consider the question of fairness or unfairness by reference to the criticisms it made of the procedural defects in the final warning hearing, having regard to the tests identified in Stein and Tower Hamlets but disregarding the fact that there was no appeal against the final warning and on the basis of further legal submissions to be made on behalf of the Claimant and the Respondent, but not requiring the Tribunal to hear any further evidence.

33.	In the event that they were of the view that the dismissal was unfair, it would be for the same Tribunal to consider remedies, having regard to matters such as contribution and/or the question whether there was a prospect (and if so, to what extent) of the same result having fairly been reached, given the principles set out in Polkey v A E Dayton Services Ltd [1987] IRLR 503.  That is not a matter for us, as it is for the Tribunal to decide whether or not the decision to dismiss was fair or unfair in the light of the judgment which we have just given.  

34.	We anticipate that the hearing on remission in respect of all matters would not take more than a day.  We are acutely aware that over 20 days of hearing have already taken place in this case and we would not wish to add substantially to the burden of both parties in relation to the remitted hearing.