Kelly v Supershades Ltd [1995] UKEAT 727_92_0902

EAT
Kelly v Supershades Ltd
[1995] UKEAT 727_92_0902 · 1995-02-09
MRS JUSTICE SMITH: This is an appeal by Miss Kelly against the decision of Industrial Tribunal sitting at Newcastle-upon-Tyne on 22 & 23 June 1992. The unanimous decision of the Tribunal was that the Appellant, Miss Kelly was unfairly dismissed by the Respondents, Supershades, but that she should receive no compensation. The Tribunal took the view that the dismissal was unfair only by reason of procedural irregularities and that if a fair procedure had been carried out, the same result would have followed.By this appeal the Appellant seeks to establish that the Industrial Tribunal was wrong to find that the dismissal was unfair only on procedural grounds. Miss Cleave, who appears on behalf of the Appellant, submits that it was substantively unfair. Further, or in the alternative, if that argument be rejected, she submits that the Industrial Tribunal were perverse in holding that the result would have been the same if a fair procedure had been followed. The Respondents have not attended upon this appeal. They rely on the Industrial Tribunal's Decision.The facts found by the Tribunal are as follows. The Appellant was employed by the Respondent from 16 October 1989 to 23 January 1992 as a lamp shade trimmer.The Respondent is a company engaged in the manufacture of lamp shades at premises in Cramlington and at the time of the Appellant's dismissal employed approximately 150 people. In about 1991 the Clothing and Textile Section of GMB union sought recognition by the Respondent and the Appellant and one Sean Telford were elected as "shop stewards" by those employees of the Respondent who joined the GMB: The union was not recognised by the Respondent by January 1991 and has never been recognised. Therefore the Appellant and Mr Telford had no official standing as union representatives in the Respondent's organisation.The Appellant received a first written warning (R1) on 1 October 1990, following a verbal warning in August 1990 as to her attendance. On 28 August 1991 a final written warning was issued (R2) warning the applicant that she would be dismissed for any further breach of company disciplinary procedure. These warnings were issued under the Respondents' disciplinary code to which it is necessary to refer.The code envisaged three types of disciplinary offence: minor general misconduct, serious misconduct and gross misconduct. In respect of minor general misconduct a three stage disciplinary procedure was laid down. The first stage provided that on the first occasion on which there was a breach of discipline, there would be a verbal warning given by the General Manager, details of which would be kept on the employee's record card. The second stage provided that if within six months of the date of the first warning, further disciplinary action were required, a written warning specifying the offence would be issued by the General Manager and the details entered on the employee's record card. The final stage provided that, if within six months of the issue of a written warning, further disciplinary action were required, a final written warning would be given by the General Manager. The warning would specify the offence and would inform the offender that any further breach of discipline would result in dismissal. That warning would remain on the employee's record card for twelve months. Dismissal would only be by the General Manager or his authorised deputy. Examples of minor general misconduct were given and included bad timekeeping and attendance. Examples of serious misconduct included disregard for work safety rules and failure to carry out a reasonable order. Examples of gross misconduct included fighting whilst on company premises, fraudulent time recording and intoxication by drink or drugs. The code provided that at any stage of the procedures an employee would have the right, if he or she so wished, to be accompanied by a fellow employee of his or her choice. The code also provided for an appeal to the next higher level of management. A final appeal would be heard by the Managing Director.The Tribunal concluded that the final written warning given to the Appellant in August 1991, on account of her attendance record, had been given in breach of the company's procedure. It had been given more than six months after her first written warning and accordingly was not strictly in compliance with the code.That was the background to the events which occurred on 23rd January 1992. At 10am that day, Mr Gordon Atkinson, one of the Respondent's managers, saw the Appellant using the pay phone near her place of work. The pay phone had been installed in August 1990 for the use of employees. A notice was displayed adjacent to it which limited its use to break times and emergencies. The Appellant was aware of these rules and when she used the pay phone at 10am on 23 January she knew she was breaking them. Her tea break was due to start at 10.10am and she could then have used the telephone quite properly. Mr Atkinson reported that he had seen the Appellant using the telephone and Mr John Taylor, the Factory Manager was alerted. He enquired of the Appellant's supervisor and found that she had not been given permission to use it. At 10.30 that morning, Mr Taylor called the Appellant into his office. The only other person present was Mrs Patterson, her supervisor. Mr Taylor asked her why she had used the phone at 10am. She said that it was personal and refused to elaborate. The Tribunal found that the Appellant said that she thought the rule about the use of the telephone was stupid. They also found that the Appellant continued adamantly to refuse to answer the questions put to her about the use of the telephone. In fact, as she told the Tribunal, she had tried to make three calls. She tried to contact Mr Emmerson, a GMB official; she contacted her doctor to cancel an appointment and she made an enquiry about a typewriter she had seen advertised for sale.The 10.30am meeting was terminated without anything having been said to the Appellant as to her future. The Tribunal found that she had not been told that she was to attend a disciplinary meeting at 10.30am. She went into the meeting not knowing what it was about. She was not invited to have a friend or representative with her.A further meeting was arranged by Mr Taylor, which took place at 3pm that afternoon. The Appellant, Mr Taylor and Mrs Patterson were present. By this time Mr Taylor had looked at the Appellant's disciplinary records. The Appellant was asked if she wanted a witness and she said that she would like Sean Telford to be present. He was called into the meeting but he was not given any opportunity to speak to the Appellant before the meeting resumed. He was not told what the meeting was about and he was not shown the Appellant's earlier disciplinary warnings. Mr Taylor told the Appellant that there was no alternative to dismissal as a result of unauthorised use of the telephone. She was handed a letter of dismissal which had already been typed. It said:
" Dear Miss Kelly.
After receiving your final written warning on 28th August 1991 you are now in breach of your contract i.e. leaving your work station without authorization. We therefore have no alternative but to terminate your employment with us as from Thursday 23rd January 1992."The Appellant appealed against that decision and her appeal was heard on 28 January by Mr Healer, the Managing Director. He dismissed the appeal. The Tribunal observed that both Mr Taylor and Mr Atkinson were consulted by Mr Healer in the course of that appeal, a procedure of which they were critical.The Appellant had alleged in her Originating Application that she had been dismissed for trade union activities and that her dismissal was automatically unfair under section 58 of the Employment Protection (Consolidation) Act 1978 , which was then in force. She had amended her application to add, in the alternative, that if she had not been dismissed for trade union activities, her dismissal was nonetheless unfair. The Industrial Tribunal required her to present her evidence before that of the Respondents although the Respondents had admitted the dismissal and the employment had lasted for more than two years. The Tribunal considered that the burden of proof lay on the appellant to show that the reason or the principal reason for her dismissal was that she had engaged in trade union activity. In this the Industrial Tribunal plainly erred. Section 57 of the 1978 Act provides that it is for the employer to show the reason or the principal reason for the dismissal and to show that it is one which is capable of being a fair reason. The position has been made clear in the case of Maund v Penwith District Council [1984] ICR 143. That authority shows that it is for the employer to show what the reason for the dismissal was. Where an employee contends that there was a reason different from that contended for by the employer, the employee bears only the evidential burden of showing that there is a real issue as to whether the employer is right.Here the Industrial Tribunal erred in placing the burden of proof on the employee. However Miss Cleave for the Appellant has accepted that the Industrial Tribunal's rejection of the section 58 claim was in such clear terms that it must follow that the same conclusion would have been reached even if the Tribunal had properly applied the burden of proof. Thus, she has not pursued this argument in support of this appeal and we say no more about it.The Industrial Tribunal were satisfied that the reason the employer dismissed this Appellant was misconduct. Having so found, they turned their attention to section 57(3) of the 1978 Act. At paragraph 6 of their decision they said this:
"The first matter considered by the Tribunal was whether the dismissal of the applicant for using the 'phone was excessively harsh and therefore outside the range of disciplinary decisions open to the respondent. The applicant's record with the respondent was prima facie not good, but the final written warning of 28 August 1991 was issued wrongly, in that it was in breach of the respondents' disciplinary procedures. The Tribunal therefore approached the matter on the basis that that warning should be disregarded, as should the earlier warnings, and that therefore, for this purpose, the applicant had a clean record."
Pausing there, that paragraph could be criticised on the basis that the Tribunal were there substituting their own approach rather than considering the reasonableness of the employers' decision. If that passage throws any light onto what the Tribunal thought of the employers' actions, it must be that they thought the employer was acting unreasonably as treating this applicant as being subject to a final written warning. Then at paragraph 7 they said:
"It was the respondents' case on fairness that the applicant worked in a factory and that continuity of process was essential. The Tribunal accepted this, as it was clear that if employees were to leave their workstation without permission as they chose production would suffer to the detriment of the respondent and its employees. A single absence, as in this case, would have no serious effect upon production, but the cumulative effect of many absences throughout the factory would be serious. The respondent was therefore entitled to take a serious view of breach of this rule. The applicant was being paid to work for the respondent in producing its products throughout the day, apart from recognised breaks. In this case the applicant could have made her calls quite properly had she waited ten minutes for the morning break. Clearly, the applicant preferred to use company time to transact private business, thereby preserving her own breaks for other purposes. On this point the Tribunal found that the respondent was entitled to view dismissal as an option open to it and that the Tribunal could not substitute its own opinion for that of the respondent had it been different, which is was not."
In respect of paragraphs 6 and 7, Miss Cleave submits that the Industrial Tribunal's conclusion is perverse. She submits that as the Tribunal have approached the matter on the basis that the Appellant had a clean record, it would be perverse to hold that dismissal was a permissible option for this very trivial offence. She submits that the unauthorised use of the telephone was not a dismissable offence if considered alone. That is the way in which it should have been viewed and was the way in which the Tribunal clearly did view it.We have looked at the notes of evidence and it is clear to us that the original dismissal and the appeal were decided on the basis that the Appellant had a bad disciplinary record and that this offence was a last straw. It is clear to us that the Respondents did regard the offence as having been aggravated by the Appellant's attitude towards the rule, namely that she thought it was stupid. It is also clear to us that they did not, at least until re-examination of Mr Taylor, suggest that the offence standing alone might warrant dismissal. We have observed from the notes of evidence that there was a distinct shift of ground during Mr Taylor's evidence, once it had been pointed out to him in cross examination that the final warning had not been given in compliance with the disciplinary code. This shift of emphasis was initiated by a question from a member of the Tribunal. In re-examination Mr Taylor said, for the first time, that he regarded the offence as serious misconduct. He thought the Appellant had failed to carry out a reasonable order. As we say, it appears to us that that represented a considerable shift of ground.We consider that in approaching the matter as they did in paragraph 7, the Industrial Tribunal was wrong to treat the Appellant as having a clean disciplinary record. She did not. If she had, the employer would not have been entitled to dismiss her for the unauthorised use of the telephone. We think that because of the Industrial Tribunal's conclusion that this woman ought to be treated as having a clean record, they distorted the facts of the matter so as to support their conclusion that dismissal was an available option. Much of paragraph 7 is not supported by material to be found in the Chairman's notes of evidence.Having said that we none the less think that the Tribunal's final conclusion on this point was plainly right. This Appellant had a poor disciplinary record for attendance prior to her offence of unauthorised use of the telephone. It is true that she ought not to have been under a final warning but none the less she had a poor record and one which it was reasonable for the employer to take her record into account. This offence was not, in our view, trivial. It was not of the most serious, but it was aggravated by her attitude towards the rule. We agree with the Tribunal's conclusion that dismissal was an option open to these employers, although not with their reasoning.The Tribunal then turned to consider the fairness of the employers' procedure. They were very critical of it and in our judgement rightly so. They were critical of the meeting which was held at 10.30 in the morning. The Appellant was not told in advance of its purpose. She had no opportunity to prepare. She was not offered representation. The Tribunal thought that she had been unwise not to give such explanation as she had for using the telephone but they accepted that, in the circumstances of that meeting, there might be some justification for her not having advanced her reasons at that time. They considered that the 3.00pm meeting was even more unsatisfactory. The dismissal letter had already been typed. It was not a consultative or investigatory meeting. In reality it served only to tell the Appellant of a decision already made. Mr Telford had no time to discover the facts and was unable to take any useful part in the proceedings. Finally the Tribunal were critical of the appeal conducted by Mr Healer, in that he had not approached the matter with an open mind but had allowed himself to consult with Mr Taylor and Mr Atkinson who had been involved earlier.Having considered these procedural defects, the Tribunal held that the dismissal was procedurally unfair. They then heard submissions as to whether the award should be reduced on the ground that the result would or might have been the same even if the procedure had been fair. They also considered contributory conduct by the Appellant, who, in the submission of the Respondents had behaved dishonestly in refusing to say whom she had telephoned. At paragraph 16 of the decision the Tribunal said:
"The Tribunal considered the question from two points of view. First that the applicant's conduct was a serious breach of discipline, followed by a lack of honesty with the respondent. Applying section 73(7B) of the Act to the Basic Award and section 74(6) of the Act to the Compensatory Award and second from the Polkey position, ie would a fair procedure have produced another result applying section 74(1) of the Act to the Compensatory Award. It was open to the Tribunal to say that a fair procedure might have produced another result, in which case some reduced compensation would be appropriate, or to say it would have made no difference, in which case no compensation would be awarded. Looking at the matter robustly, the Tribunal found that a fair procedure could not have produced any other result and on the basis of that and the contribution of the Appellant found that it was not appropriate to award any compensation."
The first observation which must be made is that it is not clear to us whether the Industrial Tribunal intended to reduce the basic award to zero under section 73(7B). However it may be that that was their intention. The argument advanced by Miss Cleave is that the decision to reduce the compensatory award to zero is perverse as these are such serious breaches of procedure. She submits that no reasonable Industrial Tribunal could conclude that a fair procedure could not have produced any other result. We have come to accept that submission.We do think that the Industrial Tribunal have erred in their assessment of the seriousness of this final act of misconduct. We need not repeat what we have said earlier but we do consider that their decision to treat the Appellant as being of good record resulted in a distortion of their view of the seriousness of the final offence. They added to that, as we have seen, the finding that the Appellant was dishonest. We can not see how a refusal to answer a question could amount to dishonesty. The Appellant admitted using the telephone; she admitted that she knew that it was against the rules; she said that she thought that it was a stupid rule and refused to say to whom she had been speaking. We consider that her conduct was uncooperative but we can not castigate it as dishonest nor do we consider that any reasonable Tribunal could. Further when one considers the procedural breaches, we think that they were very serious indeed. We have pictured to ourselves the scene, as it would have been at a properly convened disciplinary meeting. The Appellant should have known what it was she faced. She should have had the opportunity to speak to Mr Telford in advance. The warning letter should have been produced to her. Probably the error in respect of the final warning would have been discovered. We find it impossible to conclude that there was no chance that the Appellant would have escaped dismissal. We think there would have been quite a good chance. We consider that no reasonable Tribunal could have reached the conclusion that a fair procedure could have made no difference to the result. On this aspect of their decision we consider the conclusion was perverse.We have considered what should be done. We have come to the conclusion that it would be inappropriate to send this case back to the Tribunal for reconsideration of an aspect of the case on which we have concluded that they have reached a perverse decision. We consider that we have sufficient material before us to make our own decisions on the reductions which should apply in this case.Accordingly we have considered the application of section 73 and section 74. We consider that the basic award should be reduced under section 73(7B), on account of the Appellant's contribution to her dismissal by her own misconduct. We regard her misconduct as being quite serious. There was a deliberate breach of the rules, criticism of the rule and an uncooperative attitude to investigation. We think it is just and equitable to reduce the basic award by 75%.Turning to the compensatory award we consider first the extent to which the award should be reduced under section 74(1). We think that there was about an even chance that the Appellant would not have been dismissed had a fair procedure been carried out. Therefore under that subsection the award would be reduced by 50%. We then consider what further reduction, if any, should be made under section 74(6), to take account of the Appellant's contribution to her dismissal by her misconduct. We think that there should be a further reduction and that the total reduction of the compensatory award should be 80%. In other words she will receive 20% of the appropriate compensatory award. Accordingly this matter will be remitted to the Industrial Tribunal for the assessment of compensation in accordance with this judgement, unless of course, in the meantime a figure for compensation can be agreed.