Highfield Gears Ltd v James [1994] UKEAT 702_93_1205

EAT
Highfield Gears Ltd v James
[1994] UKEAT 702_93_1205 · 1994-05-12
HIS HONOUR JUDGE PEPPITT QC This is an appeal from a decision of the Leeds Industrial Tribunal sent to the parties on 23rd July 1993. The Tribunal found that the Respondent, Mr Lester James, had been unfairly dismissed by the Appellants and awarded him compensation of £13,857 subsequently reduced on review to £12,608.There is no appeal against the finding of unfair dismissal. Instead Mr Bear on the Appellants' behalf submits that in assessing compensation the Tribunal misdirected itself in two respects:(i) Having found that the dismissal was procedurally flawed it did not consider what chance there was that the Respondent would have retained his employment if the procedural unfairness had not occurred.(ii) Having found that the Respondent was guilty of misconduct it failed to give reasons for its refusal to make any deduction in the Respondent's compensation for contributory fault.The facts found by the Tribunal fall within a comparatively narrow compass. The Appellants design and manufacture gearboxes and transmission equipment. The Respondent was employed by them as a machine operator. At the date of his dismissal, the 5th August 1992, he had been so employed for 23 years.The Respondent's disciplinary record was less than wholly satisfactory. On 28th March 1991 he had received a written warning for what the Appellants regarded as a refusal to obey an order to rough-cut gears. The Appellants' code of conduct provided that such a warning remained in effect for 12 months (not eighteen months as appears from the decision) and it accordingly expired in March 1993.On 17th June 1993 there was a further incident when the Respondent refused to carry out work on a David Brown machine. He wished to do the work on his own Toss 380 machine because he regarded the David Brown machine as dangerous. He was interviewed on the same day and when pressed said that he would `go with the flow', that is do the job with reluctance. This did not satisfy the Appellants and the Respondent was told that he would be given a final written warning.There was a third incident on 10th July 1992 when once again the Respondent refused to carry out work on the David Brown. He was requested to do so by Mr Smith in the absence of his regular supervisor, Mr Sykes. The reasons given by the Respondent for his refusal were that the work involved lifting a heavy wormwheel, that the floor was slippery and that there was water on the machine. Mr Smith reported the incident to Mr Sharp the Production Director.The Respondent was away from work on holiday and as a result of sickness from 10th July to 3rd August. When he returned on 3rd August he was summoned to a disciplinary meeting at 9.05 a.m. He was given no prior notice of this meeting, which was to consider the incident on 10th July but he was permitted to have his Union representative with him. He was told that he was being disciplined for refusing to work on the David Brown machine [on 10th July]. The Respondent complained at his treatment, asking why he should give himself a hernia and said `why don't you sack me. I am not lifting those wheels onto the machine.' The Appellants took this to be a continuing refusal by the Respondent to work on the David Brown machine and suspended him for two days.On 5th August the Respondent was seen again and told by Mr Sharp that he was being dismissed. Mr Sharp said that in deciding to dismiss him for the incident of 10th July the Appellants had taken into account the written warnings which the Respondent had received as a result of the incidents in March 1991 and on 17th June 1992. In fact the latter warning, though dated 10th July 1992, was not delivered to the Respondent until he returned to work on 3rd August. The Respondent appealed against his dismissal but his appeal was dismissed on 11th August.The Tribunal found:(i) that the dismissal was based not only on the incident which took place on 10th July 1992 but also on the incidents of March 1991 and 17th June 1992 [paragraph 3].(ii) that in dismissing the Respondent on 5th August 1992 the Appellants should not have taken into account the March 1991 written warning which by then had expired [paragraph 5].(iii) that on 5th August 1992 Mr Sharp genuinely believed that the Respondent had refused the order to work on the David Brown machine on 10th July [paragraph 13].(iv) that Mr Sharp's belief was not based upon a proper investigation which would have revealed that the Respondent had an explanation for his refusal to work on the David Brown machine on 10th July. The explanation would have been that the wormwheel was heavy, that the floor around the machine was slippery with oil and that the machine itself was wet. Furthermore, the Respondent would have said that he did not refuse outright to work on the David Brown machine but offered to do so with assistance. [paragraph 13].(v) that for the reasons set out in (iv) above the Appellants' procedure was flawed. [paragraph 13](vi) that the Appellants' procedure was flawed firstly because the Respondent was not given the opportunity of confronting Mr Smith and giving his full account of what happened to Mr Sharpe before the dismissal and secondly, because `it may have been that the Appellants would not have considered that the misconduct on 10th July would have justified dismissal if they had heard the Respondent's case. [paragraph 15](vii) the Appellants' procedure was further flawed in that they wrongly took into account the March 1991 warning in deciding to dismiss. [paragraph 15](viii) the flaws in the Appellants' procedure were not cured by the Respondent's appeal.It was against this factual background that Mr Bear made his first submission. He based it on the speech of Lord Bridge in Polkey v. A E Dayton Services Ltd [1988] ICR 142 at p.163D-164C and the dictum of Browne-Wilkinson J. in Sillifant v. Powell Duffryn Timber Ltd [1983] IRLR 91 at p.96 which Lord Bridge cited with approval. Mr Bear submitted that this was not an `all-or-nothing' case. The Tribunal's view that a full explanation from the Respondent might have persuaded the Appellants not to dismiss him was a recognition that he lost no more than a chance of remaining in his employment. The compensation awarded to the Respondent could only be justified by a finding that had this explanation been given the Respondent would have been bound to retain his employment. This was inconsistent with the view which the Tribunal itself expressed. The Tribunal in assessing compensation under S.74(1) of the Employment Protection (Consolidation) Act 1978 should have assessed the value of the chance which the Respondent lost and reduced its award accordingly. There was no indication in the decision that the Tribunal had applied its mind to the question although invited to do so by the Appellants' representative.For the Respondent Mr Bruce Carr sought to uphold the Tribunal's decision by reference to Steel Stockholders Ltd v. Kirkwood [1993] IRLR 515 . In that case the employers had created an artificially narrow pool from which to select employees for redundancy. The Industrial Tribunal found that the employee's dismissal for redundancy was unfair. On appeal the employers basing themselves on Polkey (supra) contended that in assessing compensation the Industrial Tribunal had failed to consider the likelihood that the employee would have been selected for redundancy even if a proper selection procedure had been carried out. The Employment Appeal Tribunal sitting in Edinburgh held that Lord Bridge's observations in Polkey applied only to defects in the procedural steps taken by the employers. The selection of an artificially narrow redundancy pool was a defect of substance to which the principle did not apply. Lord Coulsfield giving the judgment of the EAT said at p.517, paragraph 7:In our view (Lord Bridge's) observations were directed to cases where the unfairness of a dismissal arises from a failure to take steps which can properly be described as `procedural'. They do not apply where the grounds for holding a dismissal unfair arise from the substance of the decision, as was, indeed, conceded on behalf of the appellants in the present case. It was however contended on behalf of the appellants that, in a case of redundancy, the basis of selection for redundancy was one of the procedural steps leading to a dismissal. It is true that Lord Bridge included the adoption of a fair basis of selection among the steps which he regarded as procedural. We do not, however, think that by doing so he can have intended that matters such as the choice of a pool or the adoption of criteria for selection should be treated as procedural. ...In any given case therefore it is necessary to consider whether the unfairness can properly be regarded as procedural or substantive."Mr Carr submitted to us that properly understood the Tribunal's decision must be regarded as founded upon substantive, not procedural, unfairness. He categorised as matters of substance the regard which the Appellants paid to the March 1991 warning, their reliance upon the 10 July 1992 warning notwithstanding that the Respondent had not refused outright to work on the David Brown machine and the fact that the latter warning was not delivered to the Respondent until 3rd August 1992. Mr Carr also submitted that the dismissal was substantively unfair in that the Appellants carried out no proper investigation of the offence which led to the dismissal so that their belief in the Respondent's misconduct was not based on reasonable grounds. Finally, said Mr Carr, the Appellants' failure to give the Respondent an opportunity to give his full account of what happened was a breach of natural justice and thus substantive rather than procedural.It is by no means easy in a case such as this to draw a clear distinction between procedure and substance. There may well, for example, be elements of unfairness in a dismissal which qualify under both heads. Mr Bear submitted that `anything coming between the identification of the reason for the dismissal and the dismissal itself was procedural' but we do not consider that this definition is apt to cover every situation. We wonder whether it is possible to produce a wholly satisfactory classification of those defects which are and those which are not to be regarded as procedural rather than substantive and we do not envy the task of Industrial Tribunals if they are required to decide where the line is to be drawn. In this connection we have considerable sympathy with the cri-de coeur expressed on the subject by the editor of the Industrial Relations Law Reports in [1993] IRLR at p.509.In this case, however, it is not necessary for us to decide whether we should follow Steel Stockholders . For we have come to the conclusion that most, if not all of the the defects which the Tribunal found rendered the dismissal unfair were, as the Tribunal itself determined, flaws of procedure. They were all part of the process by which the Appellants considered and finally acted upon Mr Smith's report of misconduct by the Respondent on 10th July 1992. It was that process which led to the Respondent's dismissal and thus part of the procedure which the Appellants adopted to determine whether the Respondent was guilty of misconduct and if so what should be the penalty. It seems to us therefore that Mr Bear's argument is well-founded.We propose therefore to remit the case to the same Tribunal to enable it to consider whether or not the Respondent's compensation should be reduced on the ground we have set out. We make it clear that we ourselves express no view on the matter which will be for the Tribunal to decide. The parties will be entitled to make further submissions on the issue but we direct that no further evidence shall be adduced.Mr Bear's second submission is based upon paragraph 16 of the Decision which reads as follows:
"The Tribunal having found that the dismissal was unfair have to make an assessment of compensation. The (appellants) have raised the question of contributory fault on behalf of the (respondent) but we do not find that this is an appropriate case for contribution and therefore the award which we make is without any deduction for contributory fault."
Mr Bear, citing Meek v. City of Birmingham [1987] IRLR 250 submitted that this part of the Tribunal's decision gave the Appellants no indication `why they had won or lost'. It was nothing more than an announcement of the result. Mr Carr submitted, rightly, that an Industrial Tribunal is not obliged to give full reasons for each and every one of its decisions and that in any event there were findings of fact in the decision which were capable of justifying the Tribunal's decision that the Respondent's compensation should not be reduced. However, if we considered reasons for this part of the decision should be given we should follow Yusuf v. Aberplace Ltd [1984] ICR 850 and simply ask the Tribunal to provide further elucidation.It is true, as Mr Carr submits, that there are a number of facts found by the Tribunal which if drawn together from the four corners of the decision could be said to justify the Tribunal's refusal to reduce the Respondent's compensation under sections 73(7B) and/or 74(6) of the 1978 Act. But there was also a finding that the Respondent had been guilty of misconduct [see paragraph 15]. In our judgment, the Appellants are entitled to know why the Tribunal did not regard that misconduct as justifying a reduction in the Respondent's compensation.But for the fact that we are remitting this case to the Tribunal on different grounds we would have followed Mr Carr's suggestion and simply invited the Tribunal to give reasons for its decision in paragraph 16. In the circumstances we propose to invite the Tribunal to consider this aspect of the case afresh after hearing further argument from the parties. No further evidence will be called and we again wish to make plain that we express no view on paragraph 16 of the Decision save to invite the Tribunal to reconsider it after argument.To this extent the appeal will be allowed.