Leicester University Students' Union v Mahomed [1994] UKEAT 4_93_1310

EAT
Leicester University Students' Union v Mahomed
[1994] UKEAT 4_93_1310 · 1994-10-13
MR JUSTICE PILL: This is an appeal by Leicester University Students' Union (the Union) against the unanimous decision of an Industrial Tribunal held at Leicester that Mrs Kulsum Mahomed had been dismissed unfairly and had been discriminated against on the ground of her race. She was awarded compensation of £6031.47 for unfair dismissal and compensation of £2000.00 under the Race Relations Act for injury to her feelings.On 23rd May 1993 the Union applied for an extension of time in which to apply for a review of the decision, promulgated on 24th November 1992, that Mrs Mahomed had been dismissed unfairly. The Union sought to argue that the Industrial Tribunal did not have jurisdiction to hear her complaint of unfair dismissal in that she had not been employed by the Union for a period of two years. The application was refused. In addition to the appeal against the substantive decisions, which was made by notice dated 31st December 1992, the Union seek leave to appeal upon the jurisdictional point. It is also argued that leave is not required because this Tribunal is obliged to declare the decision of the Industrial Tribunal a nullity for want of jurisdiction.Mrs Mahomed's application was treated as a complaint of unfair dismissal as well as a complaint of racial discrimination though form IT1 did not expressly include that complaint save in the supporting statement. Mr Wyatt, for the Union, accepts that the Tribunal were entitled to treat the claim as one of unfair dismissal, as well as racial discrimination, and further accepts that, on the information before them, they believed, and were entitled to believe, that they had jurisdiction. It was only much later that those advising the Union appreciated that there might have been a point upon whether Mrs Mahomed had been employed for the qualifying period of two years.In box 8 on IT1 Mrs Mahomed stated in reply to the instruction "Please give the dates of your employment" that it began in January 1987 and ended on 14th October 1991. There is no dispute about the date of termination. At box 4 of their notice of appearance, the Union answered "Yes" to the question "Are the dates of employment given by the Applicant correct?" .In her supporting statement in answer to the request on IT1 "Give the full details of your complaint" Mrs Mahomed stated:-"I began working for Leicester University in January 1987 and on October 1st 1990 I became the Office Supervisor for Leicester University Students' Union" .The reference, to what at any rate potentially are two separate employing entities, was almost certainly merely a way of introducing the date at which the Applicant's alleged difficulties arose.

At paragraph 2 of their decision, the Tribunal stated:-

"The Applicant who is an Asian lady was originally employed by Leicester University. She obtained employment with the Students' Union, which was effectively a promotion. Although the University and the Union are separate entities, employment with the two was counted as being continuous" .It is not clear how the reference to "separate entities" arose but it is clear, as Mr Wyatt who also appeared before the Industrial Tribunal accepts, that no point was taken upon the qualifying period of two years which exists in cases of unfair dismissal. There was no evidence of the relationship between what were stated to be two separate entities or as to the legal personality of either of them. It was accepted that the employment was "continuous" .

A. THE JURISDICTIONAL ISSUE

Mr Wyatt now seeks to take the point that the relevant employment began only on 1st October 1990, that is within two years of the date of dismissal. He accepts that a term as to continuity of employment for certain purposes; sick pay, holiday pay, superannuation, redundancy and maternity benefit had been included when Mrs Mahomed was promoted. Mr Wyatt submits that, whatever the contractual position, the "period of continuous employment" required to give the Industrial Tribunal jurisdiction did not exist. The period is to be computed in accordance with Section 151 and Schedule 13 of the Employment Protection (Consolidation) Act 1978 (the Act). Paragraph 18 of Schedule 13, under the heading "Change of Employer" does provide that the continuity of the period of employment is not broken when an employee is taken into the employment of an "associated employer" of the first employer but a Applicant can take advantage of that only if at least one of the employers is a limited company ( Gardiner v London Borough of Merton [1980] IRLR 472 ). Mr Wyatt accepts that there was no evidence before the Tribunal as to whether either of the employing bodies in this case was a limited company. We suspect that neither of them was.Mr Wyatt further submits that the concession as to the continuous period of employment made before the Industrial Tribunal does not create a right to bring a claim. Jurisdiction in the Tribunal cannot be created by contract or consent ( Standing v Eastwood and Co (1912 5 B.W.C.C. 268) at 271 per Fletcher Moulton LJ ). Upon the evidence now available the award was a nullity and the sum paid under it is returnable as it would be in any case in which it subsequently emerged that the qualifying period had not been served.Section 54(1) of the Act provides that:"in every employment to which this Section applies every employee shall have the right not to be unfairly dismissed by his employer" .Section 64(1)(a) provides that:"Section 54 does not apply to the dismissal of an employee from any employment if the employee was not continuously employed for a period of not less that two years ending with the effective date of termination" .In the absence of the qualifying period, Mrs Mahomed did not have the right not to be dismissed unfairly.Mr Wyatt relied upon the decision of this Tribunal in House v Emmerson Electric Industrial Controls [1980] ICR 795 where an unsuccessful Applicant sought leave to argue a jurisdictional point not raised at the hearing before the Industrial Tribunal. At page 800C, Talbot J stated:-"For instance, if an Industrial Tribunal had accepted jurisdiction and made a finding in favour of an employee when quite plainly that Industrial Tribunal had no such jurisdiction to do so, what they did would have been a nullity and this Appeal Tribunal ought to say so. It seems to us that it is impossible to put the contrary in any different light. If an Industrial Tribunal has accepted jurisdiction when it had no jurisdiction to do so, and it that emerges at the hearing of an Appeal, then it is for the Appeal Tribunal to rule upon it accordingly. Though, therefore, this is a new point presented to us, and though this is in a way a departure from what is a settled practice, we think that it involves a matter of jurisdiction and that we ought to consider it" .British Midland Airways Limited v Lewis [1978] ICR 782 was decided under Section 1 and Schedule 1 of the Trade Union and Labour Relations Act 1974 which re-enacted the provisions as to unfair dismissal in the Industrial Relations Act 1971. An airline pilot complained that he had been unfairly dismissed and the Industrial Tribunal, without considering whether or not they had jurisdiction to hear the complaint on the ground that the employee might ordinarily work abroad, found that the dismissal was unfair. The case had been listed before the Industrial Tribunal upon the jurisdictional question but in the event nobody adverted to it. Giving the judgment of this Tribunal, Phillips J stated:-"This being a question as to jurisdiction, the Industrial Tribunal should have taken the point themselves even if the parties did not; and they cannot merely by silence confer upon themselves a jurisdiction which they do not have" .That statement must be read in the context of the Schedule. Paragraph 9(2) provided that paragraph 4 of the Schedule did not apply to any employment where under the contract of employment the employee ordinarily worked outside Britain. Paragraph 4(1) provided that: "in every employment to which this paragraph applies every employee shall have the right not to be unfairly dismissed by his employer and the remedy of an employee so dismissed for breach of that right shall be by way of complaint to an Industrial Tribunal under part three of this Schedule and not otherwise" .Mr Wyatt referred to Russell v Elmdon Freight Terminal Limited [1989] ICR 629 in which House was distinguished. As in House , an Applicant was faced with a finding that the Industrial Tribunal had no jurisdiction. He sought leave to appeal to establish by another route under Schedule 13 the necessary continuity of employment under Section 64(1)(a). Knox J giving the judgment of this Tribunal stated, at page 633D, that:-"We have come to the conclusion that the statement to be found in House is not to be construed as meaning that any and every point on jurisdiction, whether or not it may involve the adducing of further evidence, can be taken at any stage in the proceedings. For that in our view would be much too wide a principle. In each case in our view, the Court has to decide on balance whether justice requires that the new point should be allowed to be taken" .The Tribunal regarded continuity of employment, and therefore the qualifying period, as a question of jurisdiction (page 631 A-D). Knox J also pointed out that House was not a case where the Industrial Tribunal had accepted jurisdiction when they had no jurisdiction to do so. He continued:-"As to that there can, in our view, be no doubt at all, but that the point can be argued before the Appeal Tribunal" .However in Barber v Thames Television PLC [1991] ICR 253 Knox J giving the judgment of the Employment Appeal Tribunal stated (at page 267G) that:-"We do not accept the proposition that any and every contention by a party to an appeal that that party by calling further evidence can show that the applicant's case falls outside the jurisdiction of the industrial tribunal has to be acceded to on appeal. A question of jurisdiction is not necessarily and in all circumstances a trump card which if played upon an appeal automatically determines the appeal in favour of the party playing that card" .

Having cited Talbot Jin House , Knox J continued:-

"It does not however follow from this that all jurisdictional points must be allowed at any stage even if they involve a further hearing to establish further facts. In our view in each case the appeal tribunal has to decide on balance whether justice requires that the new point should be allowed to be taken. If it appears on existing evidence that the decision appealed from is a nullity that will be a consideration of overwhelming strength. Where what is relied upon is a chance of establishing a lack of jurisdiction by calling fresh evidence which was always available the case is far less straightforward" .

At page 269A Knox J added:-

"We are unpersuaded that it would be just for the employers to have a second bite at the cherry of trying to persuade the industrial tribunal that the employee is disqualified by Section 64(1)(b) of the Act by advancing evidence which was always available but was not used for what no doubt at the time seemed, to be excellent reasons"
Section 64(1)(b) imposes an upper age limit on the application of Section 54.It must be added that the decision in Barber was reversed on appeal ([1992] ICR 661) upon construction of Section 64(1)(b) in the light of definitions in Section 153 of the Act. The present issue did not arise for decision. While Dillon LJ did conclude by stating (at page 672E) that the applicant was "therefore precluded by Section 64(1)(b) from making his complaint to the industrial tribunal" it does not appear that the distinction between jurisdiction to consider a complaint and the existence of a right not to be dismissed was either considered or in issue in the Court of Appeal.Mr Wyatt submits that he has a right to argue the point as a jurisdictional point and that upon the evidence now available the Industrial Tribunal had no jurisdiction so that its award is a nullity.There appears to have been an assumption in some of the cases that the absence of a qualifying period (alleged retrospectively in this case) deprives the Tribunal of jurisdiction. In both House and Russell there were attempts, on appeal, to create a different basis for proving the qualifying period.We base our conclusion upon a consideration of the relevant sections of the Act. Section 67(1) of the 1978 Act provides that:"a complaint may be presented to an Industrial Tribunal against an employer by any person (in this part referred to as the Complainant) that he was unfairly dismissed by the employer" .If such a complaint is presented to the Tribunal, the Tribunal must consider whether the Complainant was unfairly dismissed and, in doing so, must have regard to whether the right not to be unfairly dismissed exists. When considering the complaint, the Tribunal will need to consider the evidence as to whether the right not to be unfairly dismissed is established and that will involve considering any evidence as to whether Section 54 applies or does not apply. That is a matter of evidence, however, and the right under Section 67 to present a complaint does not depend upon prior proof that Section 54 applies. Jurisdiction to consider the complaint is conferred by Section 67. If, on the evidence, the qualifying period is not established, the Applicant has not established the right conferred by Section 54. It does not follow that a Tribunal decision that the right exists, made upon a complaint being presented to it and upon the evidence, was made without jurisdiction if it subsequently transpires that the qualifying period had not been served.That interpretation is in our view fortified by consideration of sub-sections (2) and (3) of Section 67. Sub-section (2) provides that an Industrial Tribunal "shall not consider a complaint under this Section unless it is presented to the Tribunal before the end of three months beginning ......" . That goes to jurisdiction and there is no equivalent provision with respect to the qualifying period. Sub-section (4) provides that a Tribunal shall consider a complaint under the Section where a dismissal is with notice and the complaint is presented after notice given but before the effective date of termination. The sub-section covers a situation which may arise in cases where the qualifying period has been served and cases where it has not. The words "shall consider a complaint" are impossible to reconcile with the view that the Tribunal has no jurisdiction to consider the complaint.If Lewis is authority for the proposition that the Industrial Tribunal had no jurisdiction, we would distinguish it on the ground that the wording in the 1974 Act Schedule is different from that in Section 67. The wording of the Schedule lends itself more readily to the need to establish the right as a pre-condition of the complaint. If we are wrong about that, we follow the approach of Knox J in Barber . Justice does not require that the new point should be allowed to be taken.Before the Industrial Tribunal was a written admission of a qualifying period of employment. There was further enquiry at the hearing and that admission was confirmed. The question of the two employers was raised and it was admitted that the employment was "counted as being continuous" . On the evidence the Tribunal were entitled to conclude that the Applicant had a right not to be unfairly dismissed. We do not consider that further investigation of the nature or length of the employment was required of them in the circumstances. The Tribunal were entitled to conclude on the evidence that the qualifying period had been served and could go on to consider whether the dismissal was unfair. A finding that the qualifying period had not been served would of course preclude a finding of unfair dismissal. The decision of the Tribunal was not a nullity for want of jurisdiction even if, given the opportunity, the employers could now produce evidence that the qualifying period had not been served. Proof that the qualifying period had been served is a pre-condition to a finding of unfair dismissal, and the issue may often conveniently be taken as a preliminary point, but it is not a pre-condition to the Tribunal having jurisdiction. Alternatively it would not be right at this stage to allow the employers to call fresh evidence.If the Tribunal had jurisdiction to make a decision that the right not to be dismissed unfairly was present, leave is required to amend the notice of appeal to allow the Union to argue that the Applicant's right was excluded by Section 64. We have no hesitation in refusing leave. We have referred to the admissions the Union made. The University could be expected to have links with its Students' Union and no evidence was called as to the relationship between them. A continuity term had been included in the contract of employment upon promotion and the Applicant was entitled to believe she was protected in that respect. The point was not raised until six months after the Tribunal's decision. Justice does not require that the new point should be allowed to be taken; in our view it requires that it should not be taken. The Tribunal were also right to refuse the application for an extension of time for a review. The employers cannot have "a second bite of the cherry" .

B. THE MERITS

As already mentioned, Mrs Mahomed's difficulties began late in 1990 when two female part-time employees supervised by her were extremely unhelpful to her. This led to a report to the Staff Committee by the Manager and the report was, as the Tribunal found, fairly critical of the two women and fairly complimentary about Mrs Mahomed.In the summer of 1991, a memorandum was issued to all three women telling them that things must improve. In about August 1991 it was decided to re-organise the reception area. The opportunity was taken to separate Mrs Mahomed from the two women. It was done in such a way as to deprive Mrs Mahomed of her supervisory role though she remained on the same pay. She was not prepared to accept that and was dismissed.

The Tribunal found that the dismissal was unfair. They stated:-

"10. As I have said, it is always open to an employer to re-organise in the interests of efficiency or economy or for some other reason in the best interests of the business. In our view, however, it is not open to an employer to implement such a re-organisation in such a way as to avoid resolving a problem between groups of employees without grasping the nettle of resolving who is at fault.
11. It seems to us that the Respondents in this case took the easy way out. They should have held a formal hearing and made findings of fact as to who was to blame, if anyone, for the problems in the reception area. The re-organisation should then have been implemented as if no problem existed because that would have been resolved by action taken by the employer. If, for example, an enquiry had found that Mrs Hodgkins and Mrs Chambers were to blame, they would have been given a warning as to their future conduct and dealt with in a disciplinary manner if there had been further problems. In the present case, they have effectively found the Applicant guilty of contributing to the problem in the reception area without having made any findings of fact following a proper hearing" .The Tribunal also found that Mrs Mahomed was "directly discriminated against on the grounds of her race" . They stated:-
"14. With regard to the allegation of direct racial discrimination, there is, of course, no direct evidence of discrimination as is invariably the case. We know, of course, as does everyone else, that discrimination does take place within our society. It is the duty of an Industrial Tribunal to draw inferences of discrimination, where appropriate, from the facts in particular cases.
15. It is a fact, in this case, that the Applicant was treated less favourably than were Mrs Hodgkins and Mrs Chambers in the re-organisation of the reception area. It is a fact that Mr Mathison's report criticises Mrs Hodgkins and Mrs Chambers and, to some extent, praises the Applicant. It is a fact that no action whatsoever was taken on that report.16. It is a fact that the Applicant is coloured and that Mrs Hodgkins and Mrs Chambers are white. It seems to us that we are here able to draw the inference that the reason for the less favourable treatment of the Applicant was because of her colour. She clearly suffered detriment because she was dismissed" .When considering damages, the Tribunal also stated in paragraph 18 that:"the discrimination here arose because of weak management - a failure by the Respondents to grasp the nettle" .Mr Zimuto, for Mrs Mahomed, while accepting that there is a "considerable degree of economy" in the reasons given by the Tribunal, submits that the decision upon unfair dismissal should be upheld. They were entitled to find that the linking of the difficulties between Mrs Mahomed and the two other women with the general re-organisation was unfair and the conclusion that the dismissal was unfair was justified on the findings of fact. As to racial discrimination, it is submitted that the Tribunal were entitled, on the facts they found, to infer racial discrimination.For the Union, Mr Wyatt submits that the Tribunal have taken over the function of the employer by attempting to direct a particular way in which the employer should have acted. That is not the role of the Tribunal. The finding was not justified on the evidence.As to the complaint of racial discrimination, Mr Wyatt submits that the Tribunal have not applied the correct test. They should have compared what the employers did with what they would have done if there had not been a racial difference. He relies upon the decision of the Court of Appeal in Qureshi v London Borough of Newham [1991] IRLR 264 to support the proposition that weak management does not become discrimination merely because the person affected by it is from an ethnic minority.In Meek v City of Birmingham District Council [1987] IRLR 250 Bingham LJ stated, at page 251, that:-"It has on a number of occasions been made plain that the decision of an Industrial Tribunal is not required to be an elaborate formalistic product of refined legal draughtsmanship but it must contain an outline of the story which has given rise to the complaint and a summary of the Tribunal's basic factual conclusions and a statement of the reasons which have led them to reach the conclusions which they do on those basic facts. The parties are entitled to be told why they have won or lost. There should be sufficient account of the facts and of the reasoning to enable the EAT or, on further appeal, this Court to see whether any question of law arises; and it is highly desirable that the decision of an Industrial Tribunal should give guidance both to employers and trade unions as to practices which should or should not be adopted" .The problem with the Tribunal's decision upon unfair dismissal is that they have not addressed themselves to the particular facts in considering whether the dismissal was fair or unfair. Under Section 57(3) of the Employment Protection (Consolidation) Act 1978 that "shall depend on whether in the circumstances (including the size and administrative resources of the employers undertaking) the employer acted reasonably or unreasonably" . The employers were entitled to expect a reasoned decision. What the Tribunal have done is to state, as if it were a proposition of law, that an employer cannot implement a re-organisation without first "grasping the nettle" of what might be an unconnected problem between groups of employees and resolving that problem. It is not a universally applicable principle that such a problem must first be resolved so that the re-organisation can be implemented "as if no problem existed" . Each situation must be considered on its own merits and the question whether the employers have acted reasonably in the particular circumstances considered. The Tribunal have purported to state, without any sufficient reasoning, what they consider to have been the only course of action lawfully open to the employers. Further, it cannot reasonably be said that the employers have "effectively found the Applicant guilty of contributing to the problem in the reception area" . That statement compounds the error of assuming that a re-organisation can only ever properly be conducted after what may be merely personality clashes have first been resolved on their merits.The complaint of unfair dismissal will be remitted to a differently constituted Industrial Tribunal for re-hearing.As to the complaint of racial discrimination, it is of course open to a Tribunal to draw inferences from the primary facts they have found. Direct evidence of racial discrimination is unusual ( King v GB China Centre [1992] ICR 516 at 528 ). If no explanation for a decision is put forward by the employer or if the Tribunal considers the explanation to be inadequate or unsatisfactory it will be legitimate for the Tribunal to infer that the decision was taken on racial grounds. King does not require that the inference must automatically be drawn. A finding that an explanation is unsatisfactory does not necessitate or render inevitable a finding that the real reason for the decision was a particular form of discrimination, namely application of a racially based criterion. Whether an inference should be drawn in a particular case depends, as in all fact finding exercises, upon the application of common sense and judgment to all the relevant evidence and circumstances.In this case, the employers gave an explanation. The Tribunal have not found that explanation satisfactory. It was the "easy way out" . There was "weak management" and a failure to "grasp the nettle" . On that finding, the explanation found may be unsatisfactory in the context of a decision to dismiss but it is an explanation inconsistent with the finding that the decision was taken on the ground of race. Upon the Tribunal's findings, there is no suggestion of an overt or even an underlying racially based criterion. The Tribunal did not find that there was a racial element in the dispute between the women. Even if there was, there is nothing to suggest that the failure to grasp the nettle resulted from the colour of Mrs Mahomed or the difference in colour between her and the other women. The inference that the reason for the less favourable treatment of the Applicant was because of her colour is inconsistent with the specific finding as to what happened. Upon the Tribunal's finding, it cannot properly be inferred that the employers' treatment of Mrs Mahomed would have been different if her colour had been different. In Qureshi , Lord Justice Leggatt stated at page 267 that "incompetence does not, without more, become discrimination merely because the person affected by it is from an ethnic minority" . With the substitution of management for "incompetence" , that principle in our view and upon the Industrial Tribunal's findings, applies in the present case.We have considered whether the finding of the Tribunal should be reversed on this issue. We have however concluded that this might result in an injustice to Mrs Mahomed. We have remitted the issue of unfair dismissal and this issue should also be remitted so that the entire factual background (save upon the issue of the qualifying period) can be considered by a differently constituted Tribunal.