Whitbread Plc (t/a Thresher) v Farrand [1995] UKEAT 324_94_0703

EAT

Whitbread Plc (t/a Thresher) v Farrand

[1995] UKEAT 324_94_0703 · 1995-03-07

MR JUSTICE LEVY QC: Miss C Farrand was born on 19 October 1960. By April 1993 she had been employed with Whitbread Plc ("the Appellants") in these proceedings through their subsidiary, Thresher, for nearly seven years. In a letter to the Appellants dated 15 June 1993, she said she had a happy and successful career maintaining good customer care, achieving budgets and running a tightly controlled stock system, with good results for stock over those years. On 23 April 1993 the Appellants were sent a letter by the Giro Bank from which they banked stating that the Bank would be sending them separately a Statement of Account showing a debit correction of £100. The debit correction is shown at page 50 of the paying in slip relating to that debit of £100 is shown at page 50 of the Appellants' bundle of documents through which Mr Benson has taken us through at some length today. As

Miss Farrand, the Respondent to the appeal, has not attended or been represented today, this was necessary. The figures on that slip show that cheques to a value of £272.50 were presented to the Bank, we think in two envelopes, but the cheques in the two envelopes amounted to £172.50.

Some six weeks later, on 3 June, a Mr Gammage went through the store at which Miss Farrand was working and taxed her with the omission. The next day he wrote to her in these terms:

"Dear Mrs Farrand

I am writing to confirm our interview on 3 February 1993 when I suspended you without pay. I informed you at the meeting that the suspension would enable me to carry out a full and fair investigation of the facts before making any decision on the most appropriate course of action. I have now had an opportunity to look into this matter and I would therefore require your attendance at a meeting on Thursday 10 June 1993 at 12.00 noon in the Hagley Road Branch. As this meeting may be of a disciplinary nature, you are entitled to bring a representative with you. Please confirm your attendance at this meeting by telephoning my secretary..."

Mr Gammage signed the letter as the Area Sales Manager of the Appellants.

The Appellants' bundle contains notes of what happened at that meeting at pages 53-55. Miss Farrand was given the opportunity of reading the notes of the meeting but she did not take it. Part of the notes of the meeting say this: after one of several adjournments which took place during it, Mr Gammage explained the problem was not that a mistake had lost the company a £100, but if proper procedures had been followed and cashed checked to "DCBB" (one of the company's forms), which we think stands for "Daily Cash Banked Books", the shortage would have been identified and action taken to recover the money. The meeting ended on this note: Mr Gammage stated that there would be "summary dismissal for failing to protect company cash through neglecting to follow laid down company cash handling procedures, which resulted in a £100 loss to the company."

On 10 June Mr Gammage wrote to Miss Farrand in these terms:

"I regret to inform you that I must confirm your dismissal from employment with Thresher, as advised at our meeting on Thursday, 10th June, 1993. The meeting was conducted in the presence of Mr. C.P. Cocker, Area Sales Manager, you chose to be represented by Norma Chatman.

Your dismissal is in accordance with the Company's Disciplinary Procedure and is due to failing to protect Company cash in relation to Company cash handling procedures. This constitutes gross misconduct and in consequence you are dismissed summarily.

You will not receive payment in lieu of notice or accrued holiday pay.

You will receive your final payment up to and including Friday, 4th June, 1993. This will be forwarded directly to your home address together with your payslip and P45.

Under the Company's Disciplinary Procedure you are entitled to appeal against this decision to Mr. S. Langhorn, Regional Sales Manager, at the above address, within five working days of receipt of this letter."

Miss Farrand wrote a letter dated 15 June, to a part of which I have already referred, indicating that she wished to appeal against the decision and in setting out some of her qualifications and she says of page 3 of that letter "it was not until June 3 that I was even informed of the problem, some six weeks after the events, so it is difficult to remember the events". Mr Langhorn replied to her on 25 June setting up a meeting on 8 July. That meeting duly took place and we have photocopies of somebody's attendance notes of that meeting. In the course of this appeal Mr Benson has taken us through at some length the various documents of the Appellants, which Miss Farrand and others had to complete in the course of her and their employment so that we could understand the way in which the Appellants' system operated. The persons present at the meeting were Miss Farrand,

Mr Rogers, Mr Gammage, Mr Langhorn, Regional Sales Manager, and one David Hisps. A Mr Langhorn was running the meeting and it commenced with Mr Gammage giving an account of what happened. After he had given that account Mr Gammage left the meeting. It was apparent that by the time the matter came to Mr Langhorn that on the right hand column on page 42 of one of the forms, there were apparent discrepancies in the silver and copper signed by Miss Farrand as correct and the amounts of silver and copper sent for banking, a discrepancy of some £38 or so. At the end of the interview there is this passage:

"Mr Langhorn: do you agree that your management lost a £100?

Miss Farrand: Yes

Mr Langhorn: did you make the figures up on the day in question or did you count it?

Miss Farrand: I cannot remember

Mr Langhorn: could you have amounted together possibly the change stated at £38 was not correct, it would have been something else ?

Mr Langhorn: so the figures were made up?"

we are told that the words that day have been added by Miss Farrand who answered:

"Yes. I believe this is harsh it should have been a written warning

Mr Langhorn: and you are looking for reinstatement

Miss Farrand: I want to clear my name. When a shop is taking £8,500 a week, a £100 is a nominal amount.

Mr Langhorn: do you want to add anything else?

Miss Farrand: no"

Someone else is recorded to have asked Miss Farrand to read the notes, make any changes and sign them if she agreed, which she did, making the alteration noted. The note ends with this from Mr Langhorn:

"we have discussed your experience and background, we have lost company cash because of your negligent cash handling. There is no suggestion that you stole the money, consequently then you can access a reference from Thresher's, this will make no reference to theft. If you think I am being unfair you have the right to appeal to Brian Wisdom, Operations Director for Thresher's. We will confirm this in writing."

Mr Langhorn duly confirmed the meeting in a letter sent to Miss Farrand on 8 July

1993.

This reads as follows:

"Further to your appeal on 6th July 1993, against your dismissal, when you were represented by

Mrs. Rogers, this letter is to confirm the fact that I am upholding the decision to dismiss on two grounds:-

Firstly, that your negligence in not adhering to company cash handling procedures resulted in a loss to Thresher of £100, and secondly, that you falsified company documentation, which is also a criminal offence, in that you:

(i) falsified, and then signed as being correct, the figures on the Daily Cash Balancing Book on 16th April 1993.

This you admitted at your appeal, and,

(ii) On 16th April overstated and signed for the total cheques banked by £100 more than you had signed on the Business Done; coincidentally the same date that there was a shortfall in cash banked of the exact same amount.

Under the company's disciplinary procedure, you are entitled to appeal against this decision to Mr. B.P. Wisdom, Operations Director, at Sefton House, 42 Church Road, Welwyn Garden City, Herts,

AL8 6PJ..."

We note that although according to Mr Langhorn there was a criminal offence committed by Miss Farrand they were prepared to give her a reference which would make no reference to theft. We do not know whether that would have referred to the other alleged criminal offence or not. Before describing events which followed, it is perhaps desirable briefly to refer to the Appellants' disciplinary procedure which did set out the different penalties which could be given where disciplinary action was taken against an employee. From this procedure, we find "Examples of behaviour resulting in disciplinary action. It is difficult to define all cases of misconduct, the following list is a guide but is not intended to be exhaustive." Then there is a passage dealing with a formal, verbal warning, (with which we are not concerned) then a passage dealing with a written warning. The penultimate line in that passage on penalties for such facts is "not following cash handling and cash security procedures." (Pausing there, we would anticipate that that is the matter that Miss Farrand referred to in her note on the interview record the letter to which we have had referred.) That is the offence it appears to us from what we have seen from the documents that was being put to her throughout the interview, until the final passage of her interview with Mr Langhorn and finally gross misconduct. One of the matters considered gross misconduct as set out on the penultimate line of the passage is falsification of documentation.

On the same day as Mr Langhorn wrote to Miss Farrand upholding the dismissal on those two grounds, she made her complaint to the Industrial Tribunal. Her complaint stated:

"I was employed as a Branch Manager, there was a cash handling discrepancy of £100. I was summarily dismissed for gross misconduct. I was not given an opportunity I feel to find the anomaly give my seven years service and an exemplary record, I feel I was treated badly. I feel my dismissal was grossly unfair".

The Appellants' answer was submitted on 22 September 1993. It stated:

"the applicant was dismissed for the reasons set out in the letter to her, dated 10 June 1993 and 8 July 1993, copies of which are attached".

Those are letters already set out in this judgment. At that time the Appellants appear not to have appreciated that only the letter of 10 June 1993 set out the reason for her dismissal. The letter of 8 July 1993, came as a result of disciplinary hearings, after she had already been well and truly dismissed.

The hearing before the Industrial Tribunal took place at Birmingham on 7 January 1994. We have been reminded by Mr Benson of the duties of a Tribunal in giving reasons for his decision and the well-known decision in Meek v City of Birmingham District Council

[1987] IRLR page 250

paragraph 6 of the decision Bingham LJ giving the leading judgment:

"On appeal to the EAT against that decision a number of criticisms were made of the reasons which the Industrial Tribunal had given for its decision. In the course of the EAT's judgment, given by Mr Justice Popplewell, a series of detailed criticisms was made of the reasons given by the Tribunal. It is I think for present purposes sufficient to refer only to the summary of the EAT's reasons where Mr Justice Popplewell this:

`We have considered the submissions made on both sides and finally have come to the conclusion that this decision is indeed flawed by the wrong application of the Tribunal to the questions which they had to ask themselves, by the absence of factual determination which would have enabled the parties to know what it was that they could or should have done, and by the introduction of matters which do not seem to us to have particular relevance to their decision'."

Bingham LJ continued:

"It is unnecessary, I think, to say anything about the first and third of those reasons. Argument in this court has concentrated on the second, namely that the decision of the Industrial Tribunal lacked the factual determination which would have enable the parties to know what it was that they could or should have done, and we have been referred to authority on the question of the extent to which Industrial Tribunals are required to give reasons for their decisions. The overriding rule on this subject is in these terms: `The decision of the Tribunal shall be recorded in a document signed by the Chairman which shall contain the reasons for the decision'."

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 conclusion 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."

Bingham LJ went on to give references to various other decisions about the needs to fully set up the facts and give reasons for them.

The full reasons of the Industrial Tribunal were sent to the parties on 15 February 1994. They were, putting it mildly, somewhat short. The unanimous decision of the Tribunal was that the Applicant was unfairly dismissed and the Tribunal reduced the amount of the award by 50% under Section 74 (6) of the Employment Protection Consolidation Act 1978 (1978 Act) because the Tribunal found that the dismissal was to some extent contributed to by the actions of the Applicant, and that the reduction in the amount of the award was just and equitable. They reduced the award by 50% in the case.

The reasons are contained in three fairly short paragraphs. But at the end of the third paragraph there is this passage:

"we have also considered the test laid down in British Home Stores v Burchell. We have to satisfy ourselves what the reason for the dismissal was. The reason for dismissal was not adhering to the cash handling procedures and emphasis added, falsifying company documentation. We find that the company did have a genuine belief that there had been some falsification of company documentation. We also find they had carried out an investigation, which overall we consider to be reasonable. The part of the test which the company fails on is the question of whether the company has acted reasonably in treating it as sufficient reason for dismissal".

Paragraph 4 of the reasons continues:

"we find in this case that the response, i.e. dismissal, did not fall within the bounds of reasonable responses. We have asked ourselves the question, would any reasonable employer have dismissed, bearing in mind the circumstances of this particular case and we find in this case that no reasonable employer having these facts before them, would have dismissed and it is on that ground alone that the employers fail. We do feel that the Applicant has caused or contributed to her dismissal and we have already indicated the percentage of discount which was allowed."

On 22 March 1993 the Notice of Appeal was lodged against that decision by the Appellants. Mr Benson, in mounting the appeal, of course referred us to the case of Iceland Frozen Food v Jones

[1982] IRLR 439

, where he correctly submitted it was held that the proper question for the Industrial Tribunal was whether, in the particular circumstance of the case, the decision to dismiss the Respondent fell within the bounds of reasonable responses which a reasonable employer might have adopted. We can well see that the Iceland Frozen Food question was the proper question here but we are quite unable to see from the decision of the Industrial Tribunal whether or not they properly posed that question. They seem to have made a finding that the reasons for dismissal were for two reasons which they set out, first the case handling procedures and secondly falsifying company documentation. The first of those fell in the first band of penalties, the second in one which justified instant dismissal. There is no reason given for them setting out why those reasons for dismissal were found. If the second reason played any part in the decision, we can well understand the force of the Iceland case. However, there are insufficient findings of fact for us to determine whether or not the Industrial Tribunal did properly the test which it should have done.

In these circumstances we think Mr Benson is right in saying that a question of law arises here and with some reluctance, we have concluded it is necessary to allow this appeal to the extent that we think there must be a re-hearing before a freshly constituted Tribunal. We should say that there have been other attacks on the decision made by Mr Benson, but in the light of the decision that there should be a further hearing, we do not think it is desirable that we should say more about such attacks.