Appeal No. UKEAT/0204/12/SM

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8JX

	At the Tribunal
	On 19 October 2012
	   Judgment handed down on 3 December 2012

Before
HIS HONOUR JUDGE PETER CLARK
MR D SMITH
MRS L S TINSLEY

SPS TECHNOLOGIES LTD	APPELLANT

MR K C CHUGHTAI	RESPONDENT

Transcript of Proceedings

JUDGMENT

	

APPEARANCES

For the Appellant	MR ANDREW SMITH
(of Counsel)
Instructed by:
EEF Ltd Legal Services
Broadway House
Tothill Street
London
SW1H 9NQ	
For the Respondent	MR IQBAL MOHAMMED
(of Counsel)
Instructed by:
Irwin Mitchell LLP Solicitors
Imperial House
31 Temple Street
Birmingham
B2 5DB	

SUMMARY
UNFAIR DISMISSAL-Reasonableness of dismissal

Majority lay members of ET substituted their view for that of the employer in this case of admitted (serious) misconduct. Finding of unfair dismissal set aside. Had it stood, a finding of 100 per cent contribution and a similar Polkey deduction would have followed. 
    
HIS HONOUR JUDGE PETER CLARK
Introduction
1.	This is the full hearing of an appeal by SPS Technologies Ltd, the Respondent before the Leicester Employment Tribunal (Employment Judge Legard, Ms Endersby and Mr Bhogaita) against that Employment Tribunal’s majority Judgment (Employment Judge Legard dissenting) that the Claimant, Mr Chughtai, was unfairly dismissed; that there should be no Polkey deduction from his compensatory award and that he contributed to his dismissal to the extent of 30 per cent. The Employment Judge would have found the dismissal fair; alternatively he would have made both a 100 per cent Polkey deduction and a 100 per cent finding of contributory conduct. That Judgment, with reasons, was promulgated on 22 December 2011. Based on the majority findings, remedy was subsequently assessed at £43,330.19 by a Remedy Judgment dated 5 April 2012. 

The Facts
2.	We take the facts from the unanimous findings of the Tribunal (para 5).

3.	The Respondent, a subsidiary of a large American-based company, PCC, specialises in the manufacture of fasteners for the aerospace industry. It is a safety critical industry where the failure of a product could result in a catastrophic failure and loss of life, with attendant reputational damage to the Respondent. 

4.	The Claimant was a long-serving employee, commencing on 20 November 1978, working as a Laboratory Controller at the Respondent’s Barkby Road site in Leicester. His immediate line manager was Mr John Fowler. The Claimant’s principal task was to ensure that the results of various tests conducted on a variety of aircraft parts had been manufactured to the appropriate standard. 

5.	The Respondent’s Code of Conduct emphasised the principle that there can be no compromise on safety standards. All records must be 100 per cent accurate. 

6.	Their disciplinary policy included, as an example of gross misconduct, falsification of company records.

7.	In February 2011 a ‘whistleblowing’ complaint was received at the Head Office of the American parent company. The author claimed to be an employee at the Leicester site, naming the Claimant as the person engaged in this misconduct, described as fabrication of stress durability test results. The informant added;

“I suspect that John Fowler the lab manager is aware of this but will most likely deny knowledge. I also believe that other managers may be aware…”

8.	The principal allegation against the Claimant was that having received information that a product sample had failed the relevant test, he then entered different (false) scores, showing a pass, on the cardex system.

9.	On 2 March 2011 the whistleblowing complaint was passed to Mr Clifton, Vice-President Quality and Continuous Improvement, based in America. He promptly boarded a flight to the UK in order to carry out an investigation. He was joined by a specialist metallurgist employed by the company on 10 March, Mr Drinkwater.

10.	As part of that investigation Messrs Clifton and Drinkwater analysed some 12,000 records and interviewed 19 employees within the laboratory at Leicester, including the Claimant three times and Mr Fowler four times.  Mr Clifton gave evidence before the ET. 

11.	The Claimant was asked not to work over the weekend of 5/6 March 2011 and was interviewed on Monday, 7 March. During interview he frankly admitted falsifying records in the way described by the whistle-blower, but contended that he did so with the knowledge and approval of Mr Fowler. He was suspended on that day. No other employee; including Mr Fowler was suspended at any stage. Throughout the investigation Mr Fowler denied knowledge of the Claimant’s practice of falsifying company records. 

12.	Significantly, we think, the ET majority lay members made a finding (para 5.17) that having heard the Claimant give evidence before them, they accepted his account that he acted with Mr Fowler’s knowledge and approval. The Employment Judge formed the contrary view (the ET did not hear from Mr Fowler) but reminded himself (correctly in our view) that the Tribunal’s role was to assess the reasonableness of the Respondent’s actions and belief. 

13.	Some of the employees (particularly Messrs Lightfoot and Sidat) supported the Claimant’s account that management either were or ought to have been aware that records were being routinely falsified. 

14.	Despite a far-reaching and highly technical investigation, Messrs Clifton and Drinkwater were unable to find any corroborative forensic evidence which suggested that Mr Fowler was engaged in and/or authorised the falsification of test data.

15.	At each interview the Claimant was accompanied by a Trade Union representative. The ET found unanimously (para 5.23) that in light of his experience, position and comments during interview he appreciated at all times that the falsification of test records was wrong and amounted to serious malpractice. The Respondent reasonably believed this to be the case. 

16.	The Claimant attended a disciplinary hearing before Mr Smith, HR Director, on 15 April 2011. The Claimant asserted that the non-suspension of Mr Fowler showed double standards.

17.	The ET found (para 5.29) that Mr Smith, who gave evidence below, had made up his mind before the hearing that the Claimant was guilty as charged. Following a 30 minute adjournment Mr Smith summarily dismissed the Claimant.  

18.	Against his dismissal the Claimant appealed to Mr Jerram, General Manager and an appeal hearing took place on 13 May. We should repeat what the ET unanimously concluded about the Jerram appeal; 
“5.32 We were unanimously impressed by Mr Jerram and the evidence he gave. We were persuaded that, had Mr Jerram unearthed any evidence which had or could have led to Mr Fowler being found responsible and/or aware of the malpractice in question then he (Mr Jerram) would have had no hesitation in ensuring that he (Mr Fowler) was brought to book. Indeed, we accepted his evidence that, having been handed by the Claimant 4 separate pieces of evidence (namely cardex entries which tended to show discrepancies relating to product tests bearing Mr Fowler’s stamp), Mr Jerram went out of his way to try and catch Mr Fowler out. He interviewed Mr Fowler who gave a plausible explanation for the discrepancies (including ‘factoring’). However, not content with these explanations, Mr Jerram sought further opinion from Mr Brooks, a highly respected metallurgist within the business as well as Mr Tye. Neither had any knowledge and/or advance warning or Mr Fowler’s explanation but both, coincidentally supported Mr Fowler’s position. Indeed both Brooks and Fowler (wholly independently) produced detailed mathematical calculations supporting the cardex figures to within .2% of each other. It followed that Mr Jerram had no basis, forensic or otherwise, to justify taking action against Mr Fowler.”

19.	The ET added (para 5.33) that Mr Jerram made clear in his evidence that irrespective of whether Mr Fowler was guilty or not, the outcome for the Claimant would have remained the same; that was, to uphold the Claimant’s dismissal. 

The law
20.	Neither party before us levels any criticism of the law set out at para 4 of the ET reasons, no doubt articulated by the legally-qualified Employment Judge. We shall not repeat it here, but in particular we note that the ET refer to the well-known Burchell test (without expressly observing the change in the burden of proof effected by the Employment Act 1980; a point favouring the Claimant) and the approach of Browne-Wilkinson P in the Iceland Frozen Foods case (later approved by the Court of Appeal in Foley v Post office (2000)ICR1283), emphasising (para 4.7) 
“The one clear and consistent principle… that it is not for the Tribunal simply to substitute its own opinion for that of the employer as the whether certain conduct is reasonable or not…”

21.	We also note the ET’s self-direction as to inconsistency of treatment between employees (para 4.10), referring to Post Office v Fennell (1981)IRLR 221 (CA): Hadjioannou v Coral Casinos (1981) IRLR 352 (EAT) (we would add, specifically approved by the Court of Appeal in Paul v East Surrey DHA (1995) IRLR 305, paras 34-35, per Beldam LJ) and Securicor Ltd v Smith (1989) IRLR 356 (CA). We shall return to the disparity of treatment point in our conclusions. 

22.	Further, the ET noted that where misconduct is admitted, the need for a far-reaching enquiry diminishes (see RSPB v Croucher (1984) IRLR 525) and that the final question was whether dismissal of the Claimant fell within the range of reasonable responses (affirmed in Foley). 

The Employment Tribunal’s conclusions
23.	As to fairness, the majority held (paras 7.2-7.6);
(1)	That the failure to suspend Mr Fowler at the outset fatally undermined the integrity of the disciplinary process thereafter. Further, the Claimant ought to have been given the witness statements.
(2)	‘A reasonable employer, following a detailed investigation of the ‘common practice’ allegations, would have concluded that the Claimant was telling the truth and accordingly would have then taken action short of dismissal’(para 7.3)
(3)	The disciplinary hearing was a foregone conclusion and the decision to dismiss was predetermined.
(4)	The employer’s investigation over relied on a technical investigation of the cardex system.
(5)	Answers given by Mr Fowler were at best equivocal and at worst non-existent (silence). 
As to remedy the majority concluded;
a.	That there should be no Polkey deduction (para 8.1)
b.	The Claimant did contribute to his dismissal to the extent of 30 percent (para 9.1)

24.	Whilst our task is not to express any preference for either the majority or minority views, both may be permissible, we simply record that the Employment Judge took the view that, as to liability, it would have been irrational for the Respondent not to have dismissed the Claimant. He admitted data fabrication (amounting to misconduct); the Respondent carried out a thorough investigation. The decision not to suspend Mr Fowler at the outset was within the band of reasonable responses; however, the question of whether he ought to be suspended was irrelevant to the Claimant’s dismissal. Although the dismissal was unsatisfactory (Mr Smith’s prejudgment) that procedural defect was cured on appeal. Dismissal plainly fell within the band; that was the case regardless of whether Mr Fowler was implicated. The dismissal was fair. Alternatively, the Employment Judge would have applied a 100 per cent Polkey deduction and a finding of 100 per cent contribution had the dismissal been unfair. 

The role of the Employment Appeal Tribunal
25.	Appeals to the Employment Appeal Tribunal are on questions of law only. It is clear that the EAT must not simply substitute its view for that of the ET; see, by way of example, the observations of Longmore LJ in Bowater v Northwest London Hospitals NHS Trust (2011) IRLR 331, para 19, and Graham v DWP (2012) IRLR 759, where a division on which I sat was held by the Court of Appeal to have been wrong to conclude that the ET had substituted its view for that of the employer. We bear that guidance in mind in approaching the present appeal. 

The appeal
Unfair dismissal 
26.	The first question raised by Mr Smith is whether the majority below substituted their assessment of the Claimant’s credibility for that of the Respondent, particularly in relation to the ‘common practice’ allegation (see para 7.3). We have no doubt that they did. Although invoking the ‘reasonable employer’ mantra, what the majority was clearly stating at para 7.3, notwithstanding the clear direction in law from the Employment Judge (para 4.7-4.8) is that having heard the Claimant (but not Mr Fowler) they believed his account as they stated at para 5.17 and so too ought the Respondent. That is a wrong approach in law. 

27.	However, the error in the majority’s approach goes much further. They plainly formed the view that the Respondent ought to have concluded that the falsification of records admitted by the Claimant was common practice endorsed by Mr Fowler, as evidenced by some of the laboratory staff interviewed during the Clifton enquiry (see para 5.18). However, that was not the ET’s task. They had to decide whether there was disparity of treatment between Claimant and Mr Fowler, such that the failure to suspend and/or discipline Mr Fowler rendered the Claimant’s dismissal unfair. 

28.	If that was their conclusion, and it is not clearly explained, they failed to ask themselves the proper question, which was whether the Respondent acted outside the range of reasonable responses in the comparative treatment of the Claimant and Fowler. 

29.	First, they appear to have overlooked the unanimous findings of the ET expressed at paras 5.21 and 5.32; despite a far-reaching investigation Messrs Clifton and Drinkwater were unable to find any forensic evidence against Mr Fowler, and try as he may Mr Jerram was unable to catch Fowler out. Based on those factual findings, had they asked themselves whether the Respondent’s conclusion that Fowler was not guilty of the allegation levelled by the Claimant fell within the range of reasonable responses, they were bound to answer that question in the affirmative. The distinction drawn between the Claimant’s case and that of Fowler was not irrational (see Securicor v Smith). The cases were not truly comparable (Hadjioannou).

30.	Yet more fundamentally, even if the Claimant had been provided with the witness statements collected at the investigation stage (he did not receive them prior to the internal appeal hearing, it is now common ground) and had Mr Jerram accepted that Fowler was complicit in the practice of falsifying records the outcome, as the ET unanimously accepted (para 5.32), would have been that both men, Fowler and the Claimant, would have been dismissed (‘brought to book’). This is not a case like Securicor v Smith, where two people are disciplined, arising from the same incident and ultimately one is dismissed and the other not, based on a rational distinction between their respective levels of culpability. Here, either both were to be dismissed if guilty of misconduct, or, as was the case, one was guilty on his own admission whereas nothing was proven to the Respondent’s satisfaction against the other. 

31.	Separately, the finding as to the investigation (expressing the majority’s own assessment) at para 7.5 is inconsistent with the unanimous findings of fact at para 5.21, but in any event the majority appear to have overlooked the agreed fact that the Claimant admitted falsification from the outset. Nevertheless, the Respondent carried out a thorough and far-reaching investigation not least; it is plain, because they took the original whistle-blowing allegation very seriously. That is unsurprising in such a safety critical industry. 

32.	Finally, if and insofar as the majority found that dismissal for the misconduct fell outside the band of reasonable responses, we have no hesitation in saying that such a conclusion was perverse. The procedural defect at the dismissal stage (see para 7.4) was, on the face of the findings of fact at para 5.32, plainly cured on appeal.

33.	In short, we are satisfied that for all these reasons the majority finding of unfair dismissal cannot stand: the appeal is allowed and the claim is dismissed. 

Remedy
34.	For completeness, had we upheld the finding of unfair dismissal we should, in common with the Employment Judge, have allowed the appeal on remedy and substituted a finding of 100 per cent contribution and made a similar Polkey deduction. The facts speak for themselves.