SPP Ltd v Taylor [1995] UKEAT 231_95_1610

EAT
SPP Ltd v Taylor
[1995] UKEAT 231_95_1610 · 1995-10-16
MR JUSTICE MUMMERY (PRESIDENT): This is an appeal against the decision of the Industrial Tribunal held at Manchester on 5 December 1994. The Tribunal heard a claim of unfair dismissal by Mr Stephen Taylor, who had been employed as a Supervisor by the Respondent, SPP Limited. In his Originating Application to the Tribunal on 9 May 1994, he complained that he had been unfairly dismissed from his position, over an alleged discrepancy on a clock-card. The claim was resisted by SPP Ltd., who stated in their Notice of Appearance that Mr Taylor had been dismissed for dishonesty and gross industrial misconduct.In the Extended Reasons notified to the parties on 17 January 1995, the Tribunal stated that they had unanimously decided that the complaint of unfair dismissal succeeded. Summary Reasons were sent to the parties on 3 November. The Tribunal reconvened to deal with the question of remedy and received a request for extended reasons, which were given. The Tribunal then proceeded, on the basis of their decision that there was unfair dismissal, to make an award in favour of Mr Taylor of a basic award of £820 and a compensatory award of £7,787.43. SPP Ltd., were dissatisfied with the decision on liability and also on a question of contributory fault, which had been raised by them but rejected. They appealed by a Notice of Appeal dated 23 February 1995.On the hearing of the appeal, Mr Chronias argued the case of SPP Ltd., and Mr Hantom argued for Mr Taylor. The Extended Reasons record that Mr Taylor was dismissed from his job as a Supervisor on 20 April 1994. There was no dispute about the fact of dismissal. They stated that SPP Ltd., denied that it was unfair in the context of Section 57(3) of the 1978 Act maintaining that the Applicant was dishonest, and that such dishonesty amounted to gross misconduct, justifying summary dismissal. The dismissal was fair.The Tribunal's conclusion was that SPP Ltd., had not discharged the onus on them under Section 57(1), of showing that there was prima facie a fair reason to dismiss. It followed from that the dismissal was automatically unfair. As the Tribunal said in paragraph 7 of the decision, there was in those circumstances no need for them to consider the requirements of Section 57(3) of the 1978 Act . Nevertheless they did go on to deal with Section 57(3) in paragraphs 8 and 9 of their decision, on the basis that they might be wrong in holding that the employer had failed to establish a potentially fair reason for dismissal. The conclusion on that was stated in paragraph 9:
"... Had it been necessary to do so the Tribunal would have found that the dismissal was unfair in the context of Section 57(3) of the Act."
The Skeleton Arguments on this appeal reveal that there is no longer an issue about the point under Section 57(1). It is conceded on behalf of Mr Taylor, and, in our view, rightly conceded, that the Tribunal was in error of law in relation to the finding that there was no potentially fair reason within Section 57(1). The Skeleton Argument put in by Mr Hantom says:
"... The findings of fact demonstrated that the Appellant [SPP Ltd] genuinely believed that the Respondent had acted dishonestly and that was a potentially fair reason on which the Appellant could rely such as to justify the Respondent's dismissal."
The result of that correct concession is that the argument on the appeal this morning has focused on the question whether there was any error of law in the Tribunal's handling of their alternative finding, that the dismissal was unfair in the context of Section 57(3). Mr Chronias argues for SPP that the Tribunal did not correctly address the question for decision under Section 57(3). We should therefore allow the appeal and remit the case to be decided by a different Industrial Tribunal. Mr Hantom argues that we should dismiss the appeal because, even though there is an error under Section 57(1), there is no error of law under Section 57(3).In order to decide those competing contentions, it is necessary to look briefly at the facts found in the decision. The Tribunal found that Mr Taylor started working for SPP Ltd., on 13 June 1989. He was employed as a Supervisor at the date of his dismissal in April 1994. SPP Ltd., is a small company employing 30 people at the factory in Burnley, on the Smallshaw Industrial Estate. They are engaged in manufacturing plastics. Mr Taylor was employed, working normally on five shifts a week; each shift was of 10 hours duration. They set out the events which they found had occurred between the 16 and 20 April.On Saturday 16 April Mr Taylor was working an additional shift on overtime. One of the employees reporting to him was Mrs McCluskey. She asked him for time off to keep a hair appointment. He suggested she might do it during the lunch break; though the lunch break was only 30 minutes long. He told her not to clock-out or to clock-in when she returned, but he would see her later during the shift and sort out the question of her time recordings for the purposes of payment with the company's accountant who was responsible for the wages. Mrs McCluskey did not return from her hair appointment until nearly 5.00 p.m. The shift was due to finish at 6.00 p.m. Mr Taylor did not have the opportunity to sort out the position: he was under pressure that day with a number of inexperienced operatives on his shift. He did not put the matter straight that day, so far as Mrs McCluskey's time card was concerned, but he intended to do so the following week. Mr Taylor did not work on Monday 18 April. He was told to take that shift off in lieu of the extra shift he had worked on Saturday 16th. Mr Dickinson, SPP's General Manager, had been informed on Sunday 17th that Mrs McCluskey had been absent from work for a part of the shift on the 16th. Mr Taylor returned to work on the 19th.Mr Taylor and Mrs McCluskey were interviewed by Mr Dickinson on that day and suspended for gross misconduct. Mr Taylor was told to return to the factory at about 3.00 p.m. on Wednesday 20th, when he would be interviewed again. When he was first interviewed by Mr Dickinson and Mr Sellick, SPP's Production Manager, immediately after reporting for work on the 19th, he was informed that SPP were aware that Mrs McCluskey had left work on Saturday's shift without any record being made on her time sheet. Mr Taylor made no immediate response to that, because it was not made clear to him that his conduct was being investigated. He thought it was Mrs McCluskey's conduct that SPP were investigating. At a second interview on 19th April, Mr Dickinson put it to him that he was in breach of SPP's disciplinary rules and it was suggested that he had been dishonest. In the second interview he confirmed that he had given Mrs McCluskey permission to be absent from her shift; he advised her that he would sort out the detail on her clock card at a later stage, when he had an opportunity to do so, to ensure that she was not paid for any time that she did not work. SPP persisted in the charge that his conduct was dishonest and amounted to gross misconduct and the only penalty for that, in accordance with disciplinary procedure, was summary dismissal. The disciplinary hearing which resulted in summary dismissal occurred on 20 April.Those were the facts found by the Tribunal. We should point out that there were other matters raised in the case which would be relevant to the determination of the dispute, but there were no findings of fact on them. For example, in paragraph 6 of the decision it is stated that Mr Taylor agreed he had been guilty of some misconduct in allowing the clock card to go forward in the way described, but maintained that it did happen quite frequently on the night shift, with the tacit agreement of the management. That may be something material to the determination of the reasonableness of Mr Taylor's dismissal, but there was no finding of fact by the Tribunal on that. It appears to us that, having found those facts, the Tribunal misdirected itself in relation to Section 57(1) of the 1978 Act . Such a misdirection is conceded by Mr Hantom.The Tribunal focused, in their consideration in paragraphs 5, 6 and 7 of the Extended Reasons on the allegation of dishonesty. The case of SPP was that there had been dishonesty. The view of the Tribunal was that there was no evidence that Mr Taylor had ever been dishonest. That led the Tribunal to conclude that a prima facie fair reason to dismiss had not been shown, and that the dismissal was automatically unfair. We need not say any more about that than refer to Mr Hantom's concession that the test of whether there was a potentially fair reason for dismissal is not whether or not there was dishonesty. It is sufficient, in the case of a dismissal for a reason relating to conduct, for an employer to show that he genuinely believed that there had been misconduct on the part of an employee, that he had reasonable grounds for believing that and had made a reasonable investigation into it.In coming to the conclusion under Section 57(1), the Tribunal simply looked at the issue of whether or not dishonesty was proved, they found that it was not. That erroneous approach, in our view, has been carried over into the consideration of Section 57(3); because what the Tribunal did in paragraphs 8 and 9 was to purport to address themselves to Section 57(3) without either setting out the statutory sub section, or without even summarising the relevant considerations under Section 57(3). As appears from the only case cited in this appeal, Conlin v United Distillers [1994] IRLR169 , there is a failure in this case to adopt the correct approach. Paragraph 6 of the judgment of the Court of Session in that case says:
"What a Tribunal is required to do under Section 57(3) is to consider whether in the circumstances of the case dismissal fell within the range of responses open to a reasonable employer."
The E.A.T. in that case came to the conclusion that the Industrial Tribunal's statement of reasons did not indicate that they had applied that test. It is not always essential to make an express reference to Section 57(3), but if no express reference is made, it is desirable that the wording of it be summarised. In the absence of either an express reference or a summary, it may be difficult on an appeal to conclude that the Industrial Tribunal properly applied its mind to the statutory requirements. In this case there is no express reference to the wording of Section 57(3) or even a summary. So we look to paragraphs 8 and 9 of the decision with a critical eye. Our view is that the more one looks at paragraphs 8 and 9, the less satisfactory is the reasoning. In paragraph 8 the Tribunal say:

"... there was demonstrable unfairness in the way the dismissal was effected."

They consider procedural matters. They say:"To act fairly the respondent would be required to put to the applicant in unequivocal terms at the investigatory interview any alleged misconduct of his in to which they were enquiring."...They say that was not done and that Mr Taylor was not unnaturally a little cautious when responding to the initial questions put to him by Mr Dickinson about Mrs McCluskey. They comment on the speed with which the investigation was made and Mr Taylor dismissed and conclude that he did not have a requisite time to put the clock card in order, as he was intending to do with the firm's accountant, so as to ensure the employee concerned did not get paid for work she had not done.In our view, there is an error of law in that part of the decision. It is clear from the authorities, as summarised in Harvey on Industrial Relations and Employment Law Vol.4 paragraph 980:"In a case of unfair dismissal, the tribunal should state what it found to be the principal reason for the dismissal..."...Without identifying the principal reason for dismissal, this Industrial Tribunal proceeds to consider whether there was unfairness in the manner in which the dismissal was effected. The reason why the Tribunal have failed to identify the reason for dismissal, is that they concentrated their attention on whether or not the dishonesty alleged was a reason for dismissal. Having found that it was not, they failed to address the question as to what would be the reason for dismissal on the basis of their consideration of Section 57(3). The Tribunal addressed the question of Section 57(3) without identifying the reason for dismissal. It is clear from the terms of Section 57(3) that the identified reason for dismissal is relevant to the question whether the dismissal was fair or unfair. Section 57(3) requires the Industrial Tribunals to have regard to the reason shown by the employer for dismissal, and then to ask itself whether the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing. The Tribunal failed to identify the reason for dismissal for the purposes of their alternative consideration of Section 57(3).The error is emphasised in paragraph 9 of the decision:
"Throughout his evidence the respondent's General Manager [Mr Dickinson] maintained that the reason for the dismissal was dishonesty but there was no evidence of dishonesty before the Tribunal whatsoever, although the applicant did agree that he was guilty of a procedural failure. Had it been necessary to do so the Tribunal would have found that the dismissal was unfair in the context of Section 57(3) of the Act."
The comments in paragraph 9 show that the Tribunal did not address Section 57(3) correctly and that they found that the dismissal was unfair, because an allegation of dishonesty had been made, when there was no evidence put before the Tribunal to justify it. That is not a correct application of Section 57(3). In these circumstances we agree with Mr Chronias that there is an error of law in this decision. The error is that the finding of unfairness in Section 57(3) was predicated on, and undermined by, the error of law in the consideration of Section 57(1). The Tribunal failed to address itself to the appropriate test under Section 57(3), as to whether SPP Ltd., had acted reasonably in all the circumstances. That failure misled the Tribunal to direct itself in a way which led it to substitute its own view for that of the employer. That is an error of law.In those circumstances we are unable to accept Mr Hantom's submission that, having regard to the findings of fact, the decision on Section 57(3) was correct in law. We allow the appeal. There has been a disagreement between Mr Chronias and Mr Hantom as to what we should do in consequence of that. Having considered the matter at some length, we have reached the conclusion that the only satisfactory course is to direct that this matter be re-heard by a different tribunal. If this matter goes back to the same tribunal, the hearing may not be satisfactory from the point of view of SPP Ltd. We are faced with a decision where there is a clear finding against SPP Ltd., on both Section 57(1) and Section 57(3). The error of Section 57(1) is conceded. It would be preferable for this matter to be reconsidered by a different tribunal. We hope that this will not add much more to the expense and time taken than would be involved in remitting the matter to the same tribunal.In our view it is so difficult to disentangle Section 57(1) from Section 57(3) that a clean start is preferable to remitting the case to deal with just one part of the matters in dispute. The Skeleton Arguments also raise questions of contributory fault, which were considered by the Industrial Tribunal. The contention of contributory fault was rejected. It is not necessary or desirable to examine that. It may be a hypothetical point. If the Industrial Tribunal at the re-hearing considers that the dismissal was fair, no question of contributory fault will arise. If they find it is unfair, it will be open to the Tribunal to reconsider that in the light of all the evidence at the re-hearing.For those reasons we allow the appeal and remit the matter for re-hearing by a different Industrial Tribunal.