Case No 4107861/2019Venue EdinburghHearing 20 & 21 November 2019
Between
Ms J FordClaimantBFE Electrical LimitedRespondent
Before
Employment Judge M SangsterDate 25 November 2019
JUDGMENT
The judgment of the Tribunal is that the claim of unfair dismissal does not succeed and is dismissed.
REASONS
[1]The claimant presented a complaint of unfair dismissal. The respondent admitted the claimant was dismissed, but stated that the reason for dismissal was capability, which is a potentially fair reason. The respondent maintained that they acted fairly and reasonably in treating misconduct as sufficient reason for dismissal and had acted within the band of reasonable responses. E.T. Z4 (WR)[2]The respondent led evidence from Iain Burt (IB), Office Manager and John McCormack (JM), Director. The claimant gave evidence on her own behalf. A joint set of productions was lodged.
Issues
[3]Was the reason for the claimant’s dismissal a potentially fair reason, within the meaning of s98(1) or (2) of the Employment Rights Act 1996 (the ERA)?[4]Was the claimant’s dismissal for that reason fair in all the circumstances, in terms of s98(4) ERA?[5]If the dismissal was unfair, what, if any, compensation should be awarded taking into account:a. whether, if procedurally unfair, the claimant would have been dismissed in any event (Polkey v AE Dayton Services Limited [1987] 3 All ER 974);b. whether the Respondent unreasonably failed to comply with the Acas Code of Practice on Discipline and Grievance Procedures (the Acas Code); andc. whether, by her conduct, the claimant had contributed to her dismissal. Findings in Fact[6]The Tribunal found the following facts, relevant to the issues to be determined, to be admitted or proven.[7]The respondent operates as a specialist in electrical installations. They are based in Livingston, but operate throughout the UK. They employ approximately 22 employees.[8]The respondent has a disciplinary policy which sets out the procedure used to address issues in relation to conduct and poor performance, as well as the right of employees to appeal any disciplinary decision taken. It is stored on the respondent’s shared drive and all office based employees have direct access to it, via their computers.[9]The claimant commenced employment with the respondent in February 2016. She was employed by the respondent as a telesales assistant. She worked on a part time basis, working 9am to 1pm, Monday to Friday. Her role involved contacting existing and potential customers to promote new business and generate sales.[10]The claimant was the only part time employee in the respondent’s sales team. The other members of staff worked full time: 9am to 5pm, Monday to Friday. There were initially two other individuals employed in the sales team. A third commenced in October 2018.[11]Members of the sales team worked to monthly targets. Initially these were set at £3,000 for the claimant and £6,000 for the full time team members. In/around August 2018, targets were increased to £5,000 and £10,000 respectively. This increase was reasonable in light of the fact that the targets had not been increased for 10 years and the fact that team members were regularly exceeding the previous targets.[12]All team members were able to assess their performance against their targets on a day to day basis. Monthly reports were also produced.[13]One of the full time members of the sales team was also the Sales Manager. She provided coaching to the team on how to secure sales and the team could go to her for advice and help on a daily basis. The claimant regularly sought advice from the Sales Manager. She did not request any additional or formal training to enable her to undertake her role or meet her targets.[14]On 8 October 2018, the claimant received a verbal warning in relation to her performance, as she was not meeting her sales target of £5,000 per month.[15]In October and November 2018 the claimant secured sales of £1,955.50 and £1,198.28 respectively. She was absent due to illness for the majority of December 2018.[16]On 9 January 2019, the claimant received a final written warning in relation to her performance up to the end of November 2018. She understood that this related to the fact that she was not meeting her monthly sales target. The final written warning confirmed that an immediate improvement was required and that a likely consequence of failing to improve was dismissal. The final written warning stated that it would remain live for 12 months and confirmed claimant’s right to appeal within 7 days. The claimant was aware of her right to appeal, but chose not to do so.[17]Over the next four months the claimant secured sales as followsa. January 2019 – £1,590.87;b. February 2019 – £1,864.80;c. March 2019 – £15,707.93; andd. April 2019 – £427.94.[18]The claimant’s March 2019 sales figures included one sale for £13,826.16, which was attributed to the claimant. The claimant made the initial contact for this sale, and arranged for JM and his colleague to visit the potential customer. The sale was however only secured following several meetings which JM and his colleague held with the customer, which the claimant was not involved in. Had this sale not been included in the claimant’s monthly figures, she would have secured sales of £1,881.77 for the month of March 2019.[19]Towards the end of April 2019, IB and JM had a discussion about the sales secured by the claimant since the final written warning was issued at the start of January 2019. They noted that, with the exception of March 2019, the claimant was not meeting her monthly sales targets on a consistent basis. Generating sales at this level was required to ensure that her continued employment was sustainable. JM and IB felt that the March 2019 figures were an exceptional situation, which would not be repeated. Given the sales the claimant was normally generating each month, it appeared that her continued employment may not be sustainable.[20]On 25 or 26 April 2019, IB prepared a letter inviting the claimant to a disciplinary hearing on 1 May 2019, stating that the hearing to discuss ‘disciplinary allegations of misconduct, namely that of unsatisfactory performance’. The letter confirmed the claimant’s right to be accompanied at the meeting and that a potential outcome of the meeting was dismissal. IB hand delivered the letter to the claimant on the day it was prepared, in order that she had sufficient notice of the disciplinary hearing the following week.[21]JM chaired the disciplinary hearing on 1 May 2019 and IB was also present. At the meeting, the respondent explained that the claimant was not meeting her sales targets. The figures achieved were discussed and the claimant was asked if she had anything to say in response. She did not. She was informed that she would be dismissed as a result of unsatisfactory performance and that she would be paid in lieu of her contractual notice period.[22]A letter addressed to the claimant was then prepared by IB, confirming the claimant’s dismissal and the reasons for this. It also confirmed the claimant’s right to appeal the decision. The letter was sent by IB to the claimant on 1 May 2019. She did not submit an appeal against the respondent’s decision.[23]In the period from October 2018 to May 2019 all of the other members of the respondent’s sales team also received warnings for not meeting their sales targets, but these were at the level of verbal/written warning. None progressed to final written warning stage.[24]The claimant secured some agency work following the termination of her employment and commenced an alternative position on 30 September 2019. Submissions[25]Both parties helpfully produced a written submission, which they then spoke to. Claimant’s submissions[26]The claimant submitted that the respondent’s evidence was not credible and the evidence of the claimant should be preferred where there is any dispute between the parties.[27]The respondent did not hold a genuine belief of the claimant’s incapability. The claimant’s figures from January onwards show that her performance was improving. There was no evidence to suggest that the claimant was underperforming as suggested, nor that she was underperforming any more than other members of staff. The whole team were consistently failing to meet their targets. No assistance or training was provided to the claimant by the respondent to help her improve her performance.[28]The respondent failed to carry out a reasonable investigation. The conduct of the disciplinary hearing was substantively and procedurally unfair. The respondent did not give the claimant any notice of the disciplinary hearing. She was not provided with details of the allegations in advance and was given insufficient opportunity to respond to the allegations during the course of the disciplinary hearing. The outcome of the disciplinary hearing was prejudged.[29]Dismissal was not within the band of reasonable responses open to the respondent in the circumstances. The claimant was treated inconsistently with other members of the sales team, who were also underperforming.[30]The claimant did not receive written notice of the outcome of the disciplinary hearing. She did not appeal against her dismissal as she did not receive the dismissal letter of 1 May 2019 setting out her right to do so. Respondent’s submissions[31]The respondent submitted that the claimant was fairly dismissed by reason of capability. Support, advice and coaching to improve her sales performance was provided by the respondent throughout the claimant’s employment. Despite this, she did not meet her targets. She was provided with a final written warning in which she was informed that she needed to meet her sales targets and warned that dismissal may result if she did not.[32]The claimant consistently failed to meet her sales targets following the issuing of the final written warning. As a result, the respondent honestly believed, on reasonable grounds, that she was not capable of carrying out her role. It was reasonable for them to take into account the fact that she had a live final written warning. Given that the final written warning was not appealed by the claimant at the time, and there has been no assertion of exceptional circumstances, the Tribunal should not look behind that.[33]A fair procedure was followed, in keeping with the Acas Code. The respondent carried out an appropriate investigation, informed the claimant of the allegation, held a disciplinary hearing with her, advised her of the outcome in writing and provided her an opportunity to appeal.[34]The respondent applied formal disciplinary sanctions to all other employees in the sales team when they were not performing. Poor performance was accordingly not condoned by the respondent. The claimant’s circumstances were not truly parallel to that of other employees – no other members of the sales team were on a final written warning and some were in different roles or given latitude as they had just commenced employment with the respondent.[35]The claimant’s dismissal and the procedure adopted, in the circumstances, fell within the band of reasonable responses.
Relevant Law
[36]S94 ERA provides that an employee has the right not to be unfairly dismissed.[37]In cases where the fact of dismissal is admitted, as it is in the present case, the first task of the Tribunal is to consider whether it has been satisfied by the respondent (the burden of proof being upon them in this regard) as to the reason for the dismissal and that it is a potentially fair reason falling within s98(1) or (2) ERA.[38]If the Tribunal is so satisfied, it should proceed to determine whether the dismissal was fair or unfair, applying the test within s98(4) ERA. The determination of that question (having regard to the reason shown by the employer):- “(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking), the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and (b) shall be determined in accordance with equity and the substantial merits of the case.”[39]In the case of Alidair Ltd v Taylor [1978] IRLR, Lord Denning stated ‘Whenever a man is dismissed for incapacity or incompetence it is sufficient that the employer honestly believes on reasonable grounds that the man is incapable or incompetent. It is not necessary for the employer to prove that his is in fact incapable or incompetent.’ Accordingly, where an employee has been dismissed for capability, there are two questions to be addressed by the Tribunal when considering reasonableness, namely:(i) Whether the employer honestly believe the employee was incompetent or unsuitable for the job? And(ii) Whether the respondent had reasonable grounds for that belief.[40]Where warnings have been given, the Tribunal requires to consider whether it was reasonable for the employer to dismiss on the grounds of capability, taking into account all the circumstances, including the warning. It is not for the Tribunal to consider whether the issuing of the warning was appropriate, but rather whether it was reasonable for the employer to take this into account. In making this assessment, Tribunals should consider whether the warning was issued in good faith, whether there were prima facie grounds for issuing it and whether it was manifestly inappropriate. Where a final written warning has not been appealed, there would need to be exceptional circumstances for going behind the earlier disciplinary process and, in effect, re-opening it (Davies v Sandwell Metropolitan Borough Council [2013] IRLR 374 and General Dynamics Information Technology Limited v Carranza UKEAT/0107/14).[41]It is also essential that a fair procedure is followed. The Acas Code states that employers should carry out any necessary investigations to establish the facts of the case, inform employees of the basis of the problem, give them the opportunity to put their case in response and allow the employee to appeal against any formal decision made.[42]Before dismissing on the grounds of incapacity, an employer should inform the employee of the respects in which they are failing to do their job adequately, warn them of the possibility or likelihood of dismissal on this ground and give them an opportunity to improve their performance (James v Waltham Holy Cross Urban District Council 1973 ICR 398).[43]In determining whether the employer acted reasonably, it is not for the Tribunal to decide whether it would have dismissed for that reason. That would be an error of law as the Tribunal would have ‘substituted its own view’ for that of the employer. Rather, the Tribunal must consider the objective standards of a reasonable employer and bear in mind that there is a range of responses to any given situation available to a reasonable employer. It is only if, applying that objective standard, the decision to dismiss (and the procedure adopted) is found to be outside that range of reasonable responses, that the dismissal should be found to be unfair (Iceland Frozen Foods Limited v Jones [1982] IRLR 439). Discussion & Decision[44]The Tribunal referred to s98(1) ERA. It provides that the respondent must show the reason for the dismissal, or if more than one the principal reason, and that it was for one of the potentially fair reasons set out in s98(2). At this stage the Tribunal was not considering the question of reasonableness. The Tribunal had to consider whether the respondent had established a potentially fair reason for dismissal. The Tribunal accepted that the reason for dismissal was capability – a potentially fair reason under s98(2)(a).[45]The Tribunal then considered s98(4) ERA. The Tribunal had to determine whether the dismissal was fair or unfair, having regard to the reason is shown by the respondent. The answer to that question depends on whether, in the circumstances (including the size and administrative resources the employer is undertaking) the respondent acted reasonably in treating the reason as a sufficient reason for dismissing the employee. This should be determined in accordance with equity and the substantial merits of the case. The Tribunal was mindful of the guidance given in cases such as Iceland Frozen Foods Limited that it must not substitute its own decision, as to what the right course to adopt would have been, for that of the respondent. There is a band of reasonableness within which one employer might reasonably dismiss the employee, whereas another would quite reasonably keep the employee on. If no reasonable employer would have dismissed, then dismissal is unfair, but if a reasonable employer might reasonably have dismissed, the dismissal is fair.[46]The Tribunal referred to the case of Alidair Ltd v Taylor. The Tribunal was mindful that it should not consider whether the claimant was in fact incapable of carrying out her role, but rather whether the respondent honestly believed that was the case and whether the respondent had reasonable grounds for that belief. Did JM have an honest belief?[47]The Tribunal concluded that JM did have an honest belief that the claimant’s performance would not improve to the level required and she was therefore incapable of carrying out her role. Were there reasonable grounds for JM’s belief?[48]JM noted that the claimant had a monthly sales target of £5,000 which he felt to be reasonable and achievable. Coaching, support and advice was provided to the claimant throughout her employment, to assist her in undertaking her role. At no stage had the claimant highlighted any particular difficulties or impediments to her undertaking her role. She had not requested additional support or training.[49]JM had regard to the fact that the claimant was issued with a final written warning for failing to reach her targets in January 2019, which she had not appealed against. The claimant accepted that she had received this. She understood that this related to the fact that she was not meeting her monthly sales target. On the basis that the claimant did not appeal against this, and no exceptional circumstances were demonstrated, the Tribunal concluded that it was appropriate to take this at face value and not consider in detail the circumstances in which this was issued. The Tribunal concluded, as a result, that it was reasonable for JM to take this into account. Even if the claimant had appealed however, the Tribunal would have reached the same conclusion. Given the sales figures upon which the final written warning was based (less than 40% of target), it is clear that there were prima facie grounds for issuing the warning and it was not manifestly inappropriate. The evidence presented to the Tribunal did not suggest that the final written warning was issued in bad faith.[50]JM reviewed the sales figures achieved by the claimant since the final written warning was issued. He put these figures to the claimant during the disciplinary hearing and she did not dispute them. Other than one month (March 2019), the claimant had not met her target. She achieved 32% of her target in January 2019, 33% in February 2019 and only 8.5% in April 2019. JM believed that others were largely responsible for securing the large sale attributed to the claimant in March 2019. But for this, the claimant would only have achieved 38% of her target in March 2019.[51]No other employees were in truly parallel circumstances to those of the claimant. None had been issued with a final written warning.[52]The Tribunal concluded, as a result, that JM had reasonable grounds for his belief that the Claimant’s performance would not improve to the level required and she was therefore incapable of carrying out her role.
Procedure
[53]The Tribunal noted that the claimant had been issued with a final written warning on 9 January 2019. She accepted that she had received this. She understood that this related to the fact that she was not meeting her monthly sales target. The Tribunal concluded, as a result, that the claimant had been informed of the respects in which she was failing to adequately perform her role, namely failing to meet her sales target, and given an opportunity to improve. She was also informed that she could be dismissed if she did not do so.[54]The respondent collated the evidence of the sales figures generated by the claimant following the issuing of the final written warning, in advance of the disciplinary hearing. In the circumstances, this was the only step required to investigate matters. The Acas Code confirms that, in some cases, the collation of evidence is all that is required by way of investigation. There were no further steps which the respondent should, reasonably, have taken in the circumstances.[55]There was a dispute between the parties in relation to whether the claimant received a letter inviting her to the disciplinary hearing on 1 May 2019. The letter produced to the Tribunal was dated 1 May 2019. IB’s evidence was that this was an error and the letter was in fact produced and hand delivered to the claimant on 25 or 26 April 2019. The claimant’s evidence was that this was not received and she had no notice whatsoever that a disciplinary hearing would take place, or the matters to be discussed. The Tribunal preferred the evidence of the respondent on this point for the following reasons:a. The Tribunal considered that, if the letter had been created after the event, as asserted by the claimant, there would not have been an error in the date of the letter: it would have been created bearing the date on which the respondent stated it was provided to the claimant; andb. If no notice whatsoever had been given, the claimant would have challenged this by way of appeal or, at very least, mentioned this in her ET1 form. She did not do so.[56]The letter inviting the claimant to the disciplinary hearing did not set out, in detail, the matters to be discussed at the disciplinary hearing. It merely stated that the purpose of the hearing was to consider and discuss an allegation of unsatisfactory performance. Given the circumstances, where the claimant had received a final written warning and had only met her sales target on one out of the four months since, the Tribunal concluded that the claimant was aware of what was meant by unsatisfactory performance. There was accordingly sufficient detail in the letter for the claimant to prepare for the disciplinary hearing.[57]At the disciplinary hearing the facts, brief as they were, were presented to the claimant. Her sales figures and performance against her target were discussed and she was afforded the opportunity to respond. She did not raise any issues. She was then informed of that she was to be dismissed as a result of her unsatisfactory performance.[58]There was a dispute between the parties as to whether written confirmation of the outcome of the disciplinary hearing was provided to the claimant. The respondent’s position was that IB prepared the letter dated 1 May 2019 immediately following the disciplinary hearing and sent this to the claimant. The claimant’s position was that this was not received. On balance, the Tribunal accepted the respondent’s evidence. If the claimant had not received this then the Tribunal felt she would have raised this with the respondent. In any event however, the outcome had been confirmed at the disciplinary hearing, so the claimant was aware of the decision.[59]There was also a dispute between the parties as to whether the claimant had been afforded the opportunity to appeal against her dismissal. The claimant stated that she had not, as she did not receive the letter dated 1 May 2019. The respondent indicated that she did have the opportunity to appeal, as their disciplinary procedure confirms this right is open to all employees, whenever a disciplinary sanction is imposed, and the right was also outlined in the letter dated 1 May 2019 confirming the outcome of the disciplinary hearing. The Tribunal concluded that the claimant was afforded the opportunity to appeal. This was confirmed in the letter dated 1 May 2019. Even if this was not received however, the right was stated in the respondent’s disciplinary procedure. In addition, the claimant confirmed that she had received the final written warning and confirmed that she was aware of her right to appeal against the decision at that stage, but chose not to do so. She would accordingly also have been aware of the right to appeal against her dismissal.[60]The Tribunal find that the procedure adopted by the respondent was fair and reasonable in the circumstances. Conclusions re s98(4)[61]For the reasons stated above and taking into account all the circumstances, including the size and administrative resources of the respondent, the Tribunal conclude that the respondent acted reasonably in treating the claimant’s conduct as a sufficient reason for dismissal. The decision to dismiss the claimant for capability, and the procedure adopted by the respondent when reaching that conclusion, fell within the range of responses open to a reasonable employer in those circumstances.[62]For these reasons, the claim of unfair dismissal is dismissed. Date of Judgement: 25th November 2019