John Carr (Sheffield) Ltd v Emsell & Ors [1994] UKEAT 455_92_2904

EAT

John Carr (Sheffield) Ltd v Emsell & Ors

[1994] UKEAT 455_92_2904 · 1994-04-29

JUDGE J PEPPITT QC:

This is an appeal from a decision of the Sheffield Industrial Tribunal communicated to the parties on the 3rd June 1992. The Tribunal held by a majority that the five Applicants before it had been unfairly dismissed but they had contributed to their dismissal by their conduct to the extent of 80%.

The employers now appeal against that decision. They appear before us represented by Mr Stout. None of the five Respondents appear before us or are represented.

The Appellants are joinery manufacturers in Sheffield. They have a workforce of some 450 persons. The workforce includes 12 loaders. Before July 1991 the loaders were paid a collective bonus based upon the work which together they did. But in July 1991 the Appellants instituted a new bonus system designed to provide a more personal incentive to the loaders. They selected teams of two and the bonus entitlement was to be related directly to the work which that team of two did. In simple terms each team would collect a ticket showing the quantity of doors or windows, as the case may be, which were to be loaded that day. They would then load the items shown on the ticket and record them on a bonus sheet. Their bonus would be calculated in accordance with what appeared on the bonus sheet. The system was inaugurated after full consultation between the Appellants and the loaders and their Union and was the subject of an initial trial period of 14 days. During that initial trial period it appeared to have worked well and on the 27th July 1991 the system was put into full operation.

After a comparatively short period the Appellants became aware that there was an increasing discrepancy between the number of items shown on the loading tickets and the number of items allegedly loaded as set out in the loaders' loading sheets. The discrepancy increased over the following weeks to a point when approximately 30% more items were alleged to have been loaded than appeared on the loading tickets. At that stage the Appellants decided to make what we think can properly be called "discreet enquiries" as to what was going on. The evidence before the Industrial Tribunal came firstly from Mr Bruck, who said at page 42 of his statement which was put in evidence:

"At my suggestion Ron Nowill made discreet enquiries of the Distribution Team to ensure that they fully understood how to operate the new Bonus Scheme and he reported back that it seems they knew what they were doing and how the scheme operated."

Mr Nowill's evidence of this aspect of the story appears from page 23 of the Tribunal bundle. What he said was:

"About 4 weeks after the holiday (10 August) I found that there were overbookings. I did not say anything to the individuals. I was told the investigation was under way and I was not to do so."

It follows, we think, from that that from the time when the Appellants first began to investigate the discrepancies no direct approach for an explanation was made to the loaders concerned until the 28th October 1991 when all twelve of them were interviewed and asked for an explanation. The interviews did not produce from any of the loaders any explanation which satisfied the Appellants, who came to the conclusion that the only explanation for the discrepancies was dishonesty on the part of the loaders. Accordingly, on the 7th November, all twelve were given formal interviews by Mr Allott and Mr Nowill as a result of which they were summarily dismissed.

That, in broad terms, is the scenario against which Mr Stout, on behalf of the Appellants, now appeals before us. He relies upon four grounds. His first ground is that:

"The Tribunal was wrong in Law in reaching a finding that the loaders in the Applicant's employ were not consulted and their actual practices in operating the system were not examined as found by the Tribunal (paragraph 7, first finding) or that the Appellants had failed to counsel or advise the loaders to ensure that they were operating the system properly (paragraph 7, second finding) as there was no evidence adduced to support such finding and the Appellants corroborated evidence was contrary to such findings."

When we look at paragraph 7 of the decision we read that the paragraph begins as follows:

"There are certain facts which we consider to be of importance in this matter. First, no discussions about the bonus system took place between the respondents and the applicants from 27 July to 28 October 1991. It is true that the respondents investigated and went through all the available records with great thoroughness. Nevertheless the applicants were not consulted and their actual practices in operating the system were not examined."

So far as we can see that finding by the Tribunal was wholly justified by the evidence. It is not suggested that the bonus system was not inaugurated after full consultation between the Appellants and the loaders and their Unions. But once the Appellants' suspicions were aroused and their investigation started it is not suggested by Mr Stout that there was any direct approach for an explanation to the men until the 28th October. Rightly or wrongly the only indirect contact which the Appellants seem to have had with the loaders was the indirect contact of Mr Nowill inaugurated by Mr Bruck in the circumstances which we have described. Accordingly, it seems to us that the Tribunal were perfectly entitled to reach that conclusion, and the conclusion that after the investigation had begun the Appellants failed to counsel or advise the loaders to ensure that they were operating the system properly. So, we think, there is nothing in Mr Stout's first point which would cause us to think again about the findings made by the Tribunal.

His second point is:

"The Tribunal was wrong in Law in reaching a finding that after the interview of 28th October 1991 the discrepancies continued unabated . . ."

Mr Stout rightly points out that the only evidence on this matter was the evidence of Mr Bruck, which the Tribunal expressly accepted. That was to the effect that after the interviews of the 28th October there was a marked reduction in the discrepancies between the Bonus Sheets and the Loading Tickets.

We accept Mr Stout's submission that there was, there, a clear instance of a finding which was not supported by the evidence. We have considered the impact and significance of that finding in the overall context of the dismissal, and for reasons which will emerge later in our judgment, we have come to the conclusion that it had no decisive part to play in the decision which the Tribunal took and accordingly, should not be regarded as invalidating it.

The substance of the Appellant's appeal really emerges from paragraphs (3) and (4). Paragraph (3) reads:

"The Tribunal having properly reminded itself in paragraph 10 of the Decision that it was not for them to say what they would have done had they been in the position of the Applicants misapplied themselves in law by proceeding in paragraph 11 of its decision to do precisely this in their justification for reaching the decision they then made."

We find that submission difficult to accept. Immediately before the findings complained of, in paragraph 11 of the decision, the Tribunal in paragraph 10, say:

"We remind ourselves that we do not have to say what we would have done if we had been in the position of the respondents. We have to say whether or not their decision fell into the band of reasonable responses of a reasonable employer."

It is not suggested that that was other than the proper test. There follows the findings of which Mr Stout complains, in paragraph 11, and then in the first sentence of paragraph 12 the Tribunal go on:

"The majority of the tribunal think that the respondents did not act reasonably and that the decision fell outside the band of reasonable responses."

It is not suggested that that is not a proper answer to the question which the Tribunal asked itself in paragraph 10.

It seems to us, therefore, that we can only read the findings in paragraph 11 of the decision as findings in relation to the question which the Tribunal was considering that is, whether the conduct of the Appellants fell within or without the band of reasonable responses available to them. It is inevitable that in answering that question the Tribunal must inevitably rely upon their own views. What they must not do is to come to the conclusion that they would have acted differently and criticise the employer on that ground. Here, we think the Tribunal was clearly stating that for the reasons set out in paragraph 11 of the decision the Appellants' response to the conduct of the Respondents was outside the band of reasonable responses available to an employer. So viewed, it seems to us, that the criticism levelled at it by Mr Stout cannot be maintained.

The fourth of Mr Stout's grounds is based on perversity, paragraph (4) reads:

"The Tribunal having found that the Appellants after a thorough enquiry believed the Applicants had deliberately over-claimed bonus to their financial advantage and that after further finding that the Applicants had behaved dishonestly the Tribunals decision that such conduct did not fall with s.57(3) of the Employment Protection (Consolidation) Act 1978 and was not within a band of reasonable responses to such conduct and was perverse in that it was one which no reasonable Tribunal directing itself properly on the Law, could have reached, or alternatively, was one which was obviously wrong."

It seems to us that the difficulty in the way of that submission is to be found in the assertion that the Appellants founded their belief after a thorough enquiry. In paragraph 11 of the decision, it seems to us, that that was just what the Tribunal did not find. The finding was that the Appellants genuinely believed that the Applicants were deliberately over claiming bonus and that the figures which the Appellants produced fully justified that conclusion. But when it came to the question of investigating the individual responsibility of the twelve loaders the Tribunal was less satisfied. We do, however, criticise the extent and the reasonableness of the enquiries.

"We accept that a great deal of clerical work was involved, nevertheless, we think that the loaders themselves should have been included in the enquiries. In the initial stages it seems to us it would have been logical and prudent to follow specific loads or tickets and enquire, at the time the figures were recorded, why the discrepancies arose. If that had been done the escalating problem might well have been nipped in the bud."

The Tribunal arrived at the position, therefore, of being satisfied that the Appellants genuinely believed that the Respondents were deliberately over claiming bonus, that that belief was well founded, but that it was reached by the Appellants without reasonable enquiry. In the light of those findings, it seems to us that the Tribunal was perfectly entitled, to find as it did, that the dismissal was unfair for want of a reasonable enquiry into the responsibilities of each of the men, but that because, in the view of the Tribunal the men were, in the event, guilty of knowingly over stating their bonus claims, their compensation should be significantly reduced. In the event the Tribunal held it should be reduced by 80%. We think that is a finding which the Tribunal were entitled to make.

We can see nothing perverse in this decision. This does not necessarily mean we, or any of us, would have come to the same conclusion ourselves but we are wholly unable to say that it is not a decision which a Tribunal might reasonably have reached. Accordingly, for that reason too, this appeal must be dismissed.

We leave it only with our gratitude to Mr Stout, who has taken every point that was to be taken on the Appellants behalf and has done so with trenchancy, courtesy and a good deal of force.