CALDERDALE METROPOLITAN BOROUGH COUNCIL v MR S P BALMFORTH [2000] UKEAT 7701_99_1307

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2000] UKEAT 7701_99_1307Case No Appeal No. EAT/701/99 & EAT/989/99Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
CALDERDALE METROPOLITAN BOROUGH COUNCILAPPELLANTMR S P BALMFORTHRESPONDENT
Before
Mr Justice Keene Mrs J M Matthias Mr D NormanDate 13 July 2000
[1]APPEARANCES For the Appellant MR A DENT (of Counsel) Calderdale Metropolitan Borough Council Law and Administration Department Crossley House Halifax HX1 1UG For the Respondent MISS I OMAMBALA (of Counsel) Employment Rights Unit UNISON 1 Mabledon Place London WC1H 9AJ MR JUSTICE KEENE : There are two appeals listed before us today in this matter, one as to liability and the other as to remedies. By the agreement of Counsel we have decided, as a procedure, that we will deal with the liability appeal first and only if we dismiss that appeal will it be necessary to go to deal with the remedies appeal. Both appeals are from decisions of an Employment Tribunal sitting at Leeds, where the tribunal held that the respondent had been unfairly dismissed and wrongfully dismissed by the appellant.[2]The respondent had worked for the appellant Council for some 11 years and certainly in more recent years as a payroll officer in the Social Services Department. During that time he had also worked in his spare time as a barman at the Halifax Golf Club, apparently, as the tribunal found, to the knowledge of the appellant.[3]The respondent was dismissed in October 1998 for gross misconduct in the shape of abusing the Council's sickness procedures, a decision which was upheld on internal appeal.[4]The Employment Tribunal took the view that there was no gross misconduct and so the summary dismissal was in breach of contract. On unfair dismissal it found that the Council had dismissed Mr Balmforth for a reason related to conduct, so that the issues remaining by virtue of section 98(4) of the Employment Rights Act 1996 were whether the employer acted reasonably or unreasonably in treating that conduct as a sufficient reason for dismissing him and whether dismissal overall was fair or unfair according to equity and substantial merits of the case.[5]In due course, at a further hearing, the tribunal ordered that the respondent be reinstated and paid the sum of £8,386.69 less tax and National Insurance as arrears of pay between the termination of his employment and his reinstatement.[6]It is a matter of some regret that the tribunal's findings of fact in its extended reasons for deciding that the respondent had been wrongfully and unfairly dismissed do not provide very much detail. The tribunal recorded it as "common ground" that a number of facts existed. Those related to the period of time for which the respondent had worked for the Council and his secondary employment, as it was described, doing bar work at the Halifax Golf Club. But the second of the items of common ground was recorded as follows: [ Mr Balmforth ] "was away from work due to medically-certified stress-related illness and while he was away from his primary employment as a finance officer for that reason he continued to work in his secondary employment doing bar work." The tribunal noted that that was reported to the Council anonymously and the Council investigated and subsequently dismissed the respondent.[7]The appellant in its Notice of Appeal disputes that it was common ground that the respondent was away from work due to medically-certified stress-related illness. On the evidence before the tribunal it seems that the passage we have quoted was only partly accurate. Apart from the documentary evidence, all the evidence at the liability hearing came from the Council. That was because the tribunal accepted a submission from Mr Balmforth's representative that there was no case to answer. The respondent therefore never gave evidence and the case was effectively stopped at half-time. But what the tribunal did have was evidence about the respondent's absence from work during certain periods together with the reason for such absence as indicated, for the most part at least, by doctor's certificates and also the hours which he worked at the Golf Club as a bar man during those periods of absence. The Council's concern related to two periods of absence on sick pay, one from 24th September 1997 to 7th December 1997 and a second period from 9th March 1998 to 29th March 1998. During the first of those periods the respondent was initially absent from work for about 3½ weeks with what was described in the doctor's certificate as "URTI", in common parlance a chest infection. It was only after that that the certificates changed and began referring to the absence being due to "acute Anxiety State". The absence from work in March 1998 was also certified as being due to acute Anxiety State.[8]The Council's case included evidence that during these periods of sickness absence the respondent had worked a substantial number of hours at the Golf Club. In the absence of any evidence to the contrary, the Council's evidence seems to have been accepted. It showed that during the first full week when the respondent was absent with a chest infection, he worked 29 hours at the Golf Club including one day when he worked for 13½ hours and two days when he worked until 2 a.m.. In the two following weeks, still absent with a chest infection, he worked for 21 hours and 20 hours respectively, including one day of 13 hours and two days when he worked until 1 a.m. and 1.30 a.m.. In two of the November weeks when he was absent from work with "acute Anxiety State" the evidence showed him working totals over of 21 hours and 31 hours per week. It appears from the evidence that at no time, during these periods of absence on grounds of sickness, did the respondent inform the Council that while he was too ill work for them he was working on a regular and substantial basis for another employer, while, of course, still receiving sick pay from the Council.[9]The tribunal found that the Council regarded his conduct as an abuse of the sickness procedure and as dishonest, amounting to a breach of trust. But it nonetheless concluded that the dismissal was both wrongful and unfair.[10]The tribunal's reasoning is not entirely easy to discern. The tribunal observed that there was no term in the contract, by which it seems to have meant "express" term, that the respondent should report his continuing work at the Golf Club during his period of sickness. It found that there was no conflict of interest as such between the two jobs and it then stated that there was no contractual way in which the Council could tackle the situation. It then stated it could see no misconduct on the part of the respondent and that the Council had got carried away by what it called a "gut reaction". Therefore, there was no case for the respondent to answer on wrongful dismissal.[11]The tribunal recognised that the position was different in respect of unfair dismissal. It found that the Council had shown that it had dismissed for a reason related to conduct and the tribunal then turned to the issue of reasonableness.[12]It reminded itself that there was no burden of proof in respect of reasonableness, but stated that it was open to it to say that, having heard the Council's evidence, there was nothing which could be usefully answered by Mr Balmforth. There was no benefit in continuing the hearing further. It found, therefore, that there was no case to answer. In essence, it then found that the dismissal was unfair.[13]On behalf of the appellant this morning, Mr Dent emphasises that the Council genuinely believed, as the tribunal found, that the respondent was guilty of misconduct. He acknowledges that the tribunal stated the test properly in respect of reasonableness, namely that there was no burden of proof upon either party, but he submits that the tribunal in effect misapplied that test. It prevented itself from forming a balanced view on that issue by stopping the case at half-time. It also prevented itself from considering whether there was any contributory negligence or contributory fault on the part of the respondent.[14]Mr Dent refers to the decision of this tribunal in London Borough of Hackney v Usher [1997] ICR 705 , which indicates, he says, that only in rare cases should a submission of no case to answer be acceded to. He submits that what the respondent was doing undermined the relationship of trust between employer and employee and that a reasonable employer was entitled to take the view that what had happened breached the contract and amounted to a proper basis for dismissal.[15]On the issue of wrongful dismissal itself, Mr Dent contends that the tribunal confined itself to the express contractual terms in relation to whether or not there was a breach of contract. It is submitted that there are implied terms in a contract of employment like this, and in particular, one of trust and confidence between employer and employee. Moreover, it is said that the contract in the present case provides expressly for gross misconduct to justify summary dismissal. To be off work with an illness and claiming sick pay but to continue remunerative employment elsewhere is, it is contended, capable of being gross misconduct and a breach of contract and yet the tribunal appears to have assumed otherwise.[16]For the respondent, Miss Omambala stresses that there is a power possessed by an Employment Tribunal under Rule 9(1) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 1993 , Schedule 1, to stop a case if the tribunal takes the view that that is an appropriate course of action in the interests of justice. The power under Rule 9(1) is, she says, a very broad one enabling the tribunal to regulate the conduct of the proceedings as it thinks fit. In the present case the appellant Council was able to call all the evidence which it wished and of course there was no obligation on the respondent to give evidence in any event.[17]It is accepted on behalf of the respondent that this power to stop a case is to be exercised with caution. It is not suggested by Miss Omambala that the Council's case before the Employment Tribunal was utterly hopeless. But she submits that the tribunal's powers to accede to an application that there is no case to answer are not confined to that situation. She seeks to distinguish the case of the London Borough of Hackney v Usher on the basis that there the Employment Appeal Tribunal found that the Employment Tribunal had gone wrong in law because it had actually expressly referred to the onus of proof when there was not such onus arising, so, that there was clearly a misdirection.[18]It is submitted on the behalf of the respondent that this Appeal Tribunal should only intervene if the tribunal below got the exercise of its powers hopelessly wrong. Consequently, it is argued that it was acceptable on the facts of this case for the Employment Tribunal to rule that there was no case to answer.[19]Finally, on this aspect of the case, it is contended by Miss Omambala that the tribunal did not find that all of the respondent's absence was due to stress related illness.[20]On the topic of wrongful dismissal, it is contended for the respondent that the tribunal's decision does not suggest that it was confining itself simply to the express contractual terms. But, in any event, it is said there was no allegation before the tribunal that there was an implied term in the contract which had been broken by the employee.[21]We can say straightaway that we have concluded that the Employment Tribunal went wrong in a number of respects. There is a power which an Employment Tribunal possesses to stop a case at half-time by accepting a submission of no case to answer. That was established in Coral Squash Clubs Ltd v Matthews [1979] ICR 607 , and these days it certainly derives from the general power which a tribunal possesses to deal with the conduct of the hearing and to regulate its own procedures: see Rules 9(1) and 13(1) of the 1993 Rules to which we have already referred. This will normally be a power which will only be exercised where the onus of proof rests upon a party which has failed to discharge that onus. Even where there is no onus of proof on an issue, as is the case with the issue of reasonableness in unfair dismissal cases, it is open to a tribunal, in an extreme case, to find that on an employer's own evidence the dismissal was outside the range of reasonable responses of an employer and was unfair. But that is a situation which is likely to be relatively rare, because it requires the tribunal to be satisfied that nothing by way of evidence from the employee could alter that position. That might arise, for example, if an employer's evidence established that it had dismissed for a reason related to conduct when the conduct in question was so patently trivial or unobjectionable that the employer's case was hopeless. As this Appeal Tribunal said in the London Borough of Hackney v Usher , at page 714, the case law establishes that:
"It is only in exceptional cases that it will be unnecessary to hear both sides before reaching a decision."
Those comments may have been obiter as Miss Omambala suggests, but they were nonetheless in our judgment accurate statements of the principles on which an Employment Tribunal should act in exercising this power in instances where there is no onus of proof upon a party.[22]This present case, in our judgment, did not meet that criterion. The respondent was not only working extensive hours on another job while receiving sick pay from the Council, but he did not tell the Council that this was happening. The Council, as the tribunal found, regarded this as an abuse of the sickness procedure and as dishonest, a breach of trust by someone who was employed by it as a pay roll officer. The Council's case on reasonableness was far from being a hopeless one.[23]The Employment Tribunal seems to have assumed that because the Council raised no objection to the respondent working in his spare time at the Golf Club when he was working for the Council, there could be no objection to him working at the Golf Club when he was absent from work on grounds of sickness, with first a chest infection and then acute anxiety. But the position was arguably very different, because the Council was in the latter situation paying the respondent when he was not giving them the benefit of his work on the footing that he was unfit for work. We say "arguably" because evidence from the respondent could well have thrown more light on the situation. As the President, Lindsay J, pointed out at the preliminary hearing of these appeals, there were a series of questions on which the respondent's evidence could well have been relevant covering: what his duties were as the barman; why he did not tell the Council what he was doing; how it was when he could not work as a payroll officer because of a respiratory infection he could nonetheless work as a barman; and why he was not fit to do at least some work for the Council during these periods. In the case of Hutchinson v Enfield Rolling Mills Ltd [1981] IRLR 318 , where an employee absent on grounds of sickness was seen at a demonstration, the Employment Appeal Tribunal said this at page 320, paragraph 16:
"In paragraph 4 the tribunal seems to have taken the view that since Mr Hutchinson had produced a sick note, it was no concern of the employers to challenge whether or not he was in fact sick … they go on to say that the employers were not concerned with where he was or what he was doing. That, in our view, is a total misapprehension. The employer is concerned to see that his employees are working when fit to do so; and if they are doing things away from their business which suggests that they are fit to work, then that is a matter which concerns them."
We agree with the comments of the Employment Appeal Tribunal in that passage.[24]We conclude, therefore, that the Employment Tribunal went wrong in law in its approach to the exercise of its powers to stop the case after hearing only one side. It should not have done so.[25]Secondly, it does seem to have misunderstood the evidence about the medical reason for the respondent's absence from work during the first 3½ weeks. We cannot accept that that part of the tribunal's decision properly reflects to the evidence before it. It makes no reference whatsoever to the quite considerable period of time when the respondent was absent from work with the chest infection. That is relevant because there was some suggestion that in the later period, when the respondent was certified as suffering from acute stress condition, his work as a barman might have been of some therapeutic value. The same point, on the face of it, could not have been made about the period when he was off work with the chest infection.[26]Thirdly, we are concerned at the very generalised findings of fact and the lack of reasons given by the tribunal for concluding that the respondent had been unfairly dismissed. It is impossible to tell whether the tribunal approached this matter in the proper fashion by looking at it from the position of a reasonable employer, rather than simply arriving at its own view of the Council's response. It may have done so, but the reasons given are so cursory that it is impossible to tell. After identifying the issue of reasonableness in paragraph 10 of its extended reasons, it then seems to go straight to its conclusion that dismissal was unfair without spelling out how it reached that conclusion. Miss Omambala in her valiant efforts to uphold the tribunal's decision acknowledged that insofar as there are reasons, they seem to be spread throughout the decision. We, for our part, find it impossible to reconstruct the decision in such a way as to identify the reasons. There is an obligation upon Employment Tribunals to make the appropriate findings of fact in sufficient detail in a case of this kind and then to set out reasons which are clear and adequate to support the conclusions at which it arrives. In this case, this tribunal failed to do that. For all these reasons, the appeal as to unfair dismissal must succeed.[27]As to the finding of wrongful dismissal the tribunal does appear to us to have approached that topic simply on the basis of the express terms of the contract of employment. It appears to have taken the view that because there was no explicit reference in the documents to the sort of situation which occurred in this case, there was no contractual right to dismiss for such conduct. But the contract, by incorporating the Council's disciplinary procedures, provided for dismissal for gross misconduct and it was clear that the examples of gross misconduct given in the appendix to those procedures were merely examples of gross misconduct and not exhaustive. Moreover, no consideration seems to have been given by the tribunal to the possibility of implied terms in the contract, such as a term requiring an employee to act honestly towards an employer who is paying sick pay. As we have indicated, Miss Omambala argues that there was no allegation before the tribunal below of any implied term being broken. That does not seem to us to be right because we have the Chairman's Notes of Evidence and those, at page 24 of the bundle, indicate that one of the Council's witnesses explicitly referred to there having been a breach of trust on the part of the respondent by claiming sick pay while receiving pay elsewhere. That breach of trust could only have been a reference to the implied term of trust and confidence between employer and employee. We conclude that the finding of wrongful dismissal cannot, on the basis on which it was arrived at, be upheld. The appeal on that aspect therefore will also be allowed[28]In those circumstances, it is unnecessary to consider in detail the remedies appeal. We shall simply set aside the orders made by the tribunal below. This matter will be remitted for hearing before a differently constituted tribunal.