CONNEX SOUTH CENTRAL LTD v MR D GREEN [2001] UKEAT 1221_99_0503

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 1221_99_0503Case No Appeal No. EAT/1221/99Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
CONNEX SOUTH CENTRAL LTDAPPELLANTMR D GREENRESPONDENT
Before
Mr Justice Charles Miss C Holroyd Mr R SandersonDate 5 March 2001
[1]APPEARANCES For the Appellant MR A ROSS (of Counsel) Messrs Vizard Oldham Solicitors 42 Bedford Row London WC1R 4JL For the Respondent MR M McDONOUGH (Consultant) Messrs McDonough & Associates Linburn House 342 Kilburn High Road London NW6 2QJ MR JUSTICE CHARLES : Introduction We have before us an appeal and a cross-appeal from a decision of an Employment Tribunal sitting at Brighton. The Extended Reasons for their decision were sent to the parties on 13 September 1999.[2]The parties to the proceedings are Mr Green (the Applicant before the Employment Tribunal) and Connex South Central Ltd (Connex) the Respondent before the Employment Tribunal.[3]The decision of the Employment Tribunal was that:
"1 The applicant's breach of contract claim is dismissed. 2 The applicant was unfairly dismissed and the question of remedy is adjourned until 20 September 1999 at Brighton."
[4]In addition to their conclusion that the Applicant was unfairly dismissed the Employment Tribunal made the following further findings in paragraph 9 of the Extended Reasons which is in the following terms:
"9 We do not find that the applicant contributed to his dismissal having concluded that his unauthorised absences were linked with his illness and the effects of the medication that he was taking. Further, having concluded that the reason for the unauthorised absence in both October 1998 and January/February 1999, was linked to his illness and the medication, we make no Polkey reduction, since we do not consider it likely that, had there been a proper investigation into the applicant's explanation for the conduct, he would have been dismissed."
[5]Initially, Connex appealed against the finding of unfair dismissal. The original Notice of Appeal also contained alternative grounds relating to the conclusions of the Employment Tribunal in paragraph 9 of their Extended Reasons as to(a) contributory fault under Sections 122(2) and 123(6) of the Employment Rights Act 1996 (the ERA) and(b) the Polkey reduction.[6]Following the preliminary hearing before this Tribunal the grounds of appeal were amended. The amended grounds of appeal begin with the following statement:
"The Appellant (Connex) accepts for the purposes of this Appeal that the Respondent employee was unfairly dismissed on procedural grounds."
The main grounds of appeal (which are particularised in the Notice of Appeal) related only to the decisions on the Polkey reduction and contribution and are in the following terms:
"1 The Tribunal's decision is perverse and/or amounts to a misdirection in law in that no Polkey deduction was made when it was just and equitable to do so. 2 The Tribunal's decision that the Respondent had not caused or contributed to his dismissal is perverse and/or amounts to a misdirection in law. In view of the findings of fact that the Respondent had been absent without leave, the Tribunal should have reduced both the basic and the compensatory awards."
[7]I pause to comment that in our judgment, given the findings of the Employment Tribunal, the original appeal against the finding of unfair dismissal was hopeless. Indeed, we are surprised that it was launched. The fact that it was seems to us to demonstrate a failure by Connex to recognise (or properly recognise) the serious failings in the procedure that was adopted included amongst which were failures:(a) to have proper regard to the Applicant's illness, the background to it and its effect, and(b) to have any, or any proper, regard to the effect of the Applicant's medication including a failure by the person who decided to dismiss the Applicant to take the trouble to read the leaflet provided to him as to the effects of that medication which included information that such effects of the Applicant's medication included poor memory, mood swings and panic attacks.[8]During the course of the hearing before us we were told by Counsel for Connex that this information accorded with what the person who decided to dismiss the Applicant was told by the Applicant's representative. But in our judgment this does not excuse his failure to read the leaflet and, in effect, to disregard the cause and nature of the Applicant's illness and the effect of that illness and his medication.[9]On the evidence before them the Employment Tribunal found, and in our judgment on that evidence they were plainly entitled to find that (with our emphasis):
"The applicant did return to work during the uncertificated period, but on 9 and 10 October and 27 and 28 October, the applicant failed to attend work or notify the respondent of that fact and these dates were not covered by medical certificates. The failure to contact the respondent was not deliberate, but a result of his illness and the effects of the medication (see paragraph 4(f) of the Extended Reasons)."
[10]In our judgment this is an important finding in the context of Connex's appeal. The cross appeal[11]This is by the Applicant, Mr Green, against the dismissal of his claim for breach of contract. It turns on the question whether having regard to the terms of his contract of employment he was entitled to notice.[12]It is common ground that he was dismissed without notice on 9 February 1999.[13]During the course of the oral submissions the divide which appeared to exist between the parties on their respective skeleton arguments as to the construction of the contract of employment and the effect of Section 86 ERA disappeared. This was because (in our judgment correctly) Counsel for Connex accepted that Connex could only dismiss without notice if the conduct of the Applied relied on to found that dismissal was properly described and treated as "gross misconduct".[14]This was common ground.[15]The dispute therefore became one as to whether in reaching their conclusion that Connex were entitled to dismiss the Applicant without notice the Employment Tribunal took this approach.[16]On behalf of Mr Green it was argued that they did not take this approach and that their approach had been to construe the contract as one which entitled Connex to dismiss without notice whether or not the Applicant's conduct amounted to "gross misconduct".[17]It was argued on behalf of Connex that the finding of the Employment Tribunal that Connex were entitled to dismiss without notice was a finding that his conduct amounted to gross misconduct and this was relied on as indicating an inconsistency of approach and conclusion by the Employment Tribunal when they came to deal with the Polkey reduction and contribution under Sections 122(2) and 123(6) ERA.[18]We shall return to this dispute. The background facts[19]These are set out in paragraphs 4(a) to (l) of the Extended Reasons. We have already referred set out subparagraph (f) and set out subparagraph (b) later in this judgment. We will not set out the remainder of the subparagraphs in this judgment but they should be read with it. The breach of contract claim[20]This is dealt with in paragraph 6 of the Extended Reasons which makes reference to the Applicant's terms and conditions of employment which are set out in paragraph 4(b) of the Extended Reasons. That subparagraph and paragraph 6 of the Extended Reasons are in the following terms:
"4 (b) The applicant's terms and conditions of employment were set out in a contract signed by the applicant and dated 12 November 1988. The Rules of Employment and Disciplinary Procedures were set out in a Rule Book which was subsequently varied in January 1997 after the respondent took over from their predecessor, British Rail to include the Connex South Central Rules of Conduct. The Procedure Agreement 4 at paragraph 4 states: 'The disciplinary procedure is viewed primarily as a means of imposing sanctions, but is intended to emphasise and encourage improvements in the conduct of employees'; Both documents provide that the respondent may dismiss without notice an employee for certain offences, including, amongst other things absence from duty without leave. When an employee was unable to attend work for any reason, it was a requirement for them to phone in to their Supervisor immediately to inform them of the situation to enable that employee's duties to be covered. Failure to do so created operational difficulties for the respondent and failure to notify was defined as being absent without leave and was regarded as serious because of the operational difficulties that resulted. 6 Breach of Contract Claim The applicant's terms and conditions of employment set out in the contract of 12 November 1988 and the Connex South Central Rules of Conduct make it clear and unambiguous that the respondent may dismiss without notice an employee who is absent from work without permission. That was quite clear to the applicant and indeed, he had already received a reprimand for being absent without permission. When dealing with the breach of contract claim, it is not for us to consider unfairness but whether, under the contract, the respondent could lawfully dismiss without notice in this particular set of circumstances. We therefore find that in accordance with the contract of employment, the dismissal without notice was not wrongful and the applicant's claim for breach of contract is dismissed."
[21]In our judgment when these paragraphs are read alone, or together with the remainder of the Extended Reasons, they demonstrate that the Employment Tribunal did not base their conclusion that there had been no breach of contract on a consideration of the question whether the Applicant's conduct amounted to "gross misconduct".[22]It follows that in our judgment, contrary to the submission made on behalf of Connex, the Employment Tribunal do not expressly, or by implication, find in dismissing the breach of contract claim that the Applicant's conduct amounted to "gross misconduct".[23]In our judgment the approach of the Employment Tribunal was that as absence without permission was something which the contract said entitled Connex to dismiss without notice the dismissal was not in breach of contract.[24]As we have said, it was common ground before us that this was an incorrect approach in law to the construction and application of the contract, having regard to the provisions of Section 86 ERA.[25]Accordingly in our judgment the Employment Tribunal erred in law in their construction and application of the contract.[26]In our judgment when the Extended Reasons are read as a whole it is apparent that the Employment Tribunal did not consider that the Applicant's conduct amounted to "gross misconduct". In our judgment it follows therefrom that the Employment Tribunal erred in law in dismissing the Applicant's breach of contract claim. The extent of that claim was that he was entitled to notice. We return later to further arguments addressed to us on the cross appeal as to whether or not it is a purely academic appeal having regard to the compensation awarded for unfair dismissal. The Polkey reduction[28]We have already set out at paragraph 9 of the Extended Reasons. This should be read with paragraph 8 thereof which is in the following terms:
"8 We find that the respondent did not act reasonably in all the circumstances. We are satisfied as far as this case is concerned that Mr Belmore did genuinely believe that the applicant was guilty of misconduct, but we conclude that the investigation was not reasonable. Mr Belmore accepted that the applicant was suffering from a genuine illness. Whilst the applicant accepted that he had been absent without leave, he put forward an explanation that the reason for this was connected with his illness and the medication that he was taking. That explanation required investigation. We find that Mr Belmore did not carry out a proper investigation so far as that explanation was concerned. He made no efforts to check out the applicant's contentions, nor discuss with Miss Somerville the applicant's sickness. Mr Belmore disregarded the applicant's illness. Mr Belmore did not have reasonable grounds to conclude the applicant was guilty of misconduct because there was no proper investigation. Proper procedures were not followed in that Mr Belmore failed to advise the applicant and his representative that separate punishments would be awarded for the various dates of absence. The absences in January/February 1999 were taken into account by both Mr Belmore and Mr O'Meara without advising the applicant or his representative accordingly. To give the applicant a final warning for 10 October absence and then to dismiss him immediately for the absence on 27 October was unfair. Further, we find that the appeal was flawed in that Mr O'Meara did not deal with it as a re-hearing of the case, but merely as a review of the punishment. We therefore find that the dismissal was fair."
[29]Relevant dates and events were:(a) the disciplinary hearing was based on two periods of absence in October 1998 which are included in a "Form 1" dated 15 January 1999,(b) after that the Applicant was absent for a few days without notifying Connex and he was written to about those absences,(c) the Employment Tribunal find that those absences were as a result of the Applicant's continuing distress regarding his medical condition (see paragraph 4(h) of the Extended Reasons) and in our judgment it clearly follows that the finding concerning the earlier absences in paragraph 4(f) of the Extended Reasons, which we have set out above, also applies to these later absences; and(d) the disciplinary hearing was held after the further absences. The "charges" were not amended or added to but both Mr Belmore (the person who made the decision to dismiss the Applicant) and Mr O'Meara (the person who heard his appeal) took these later absences into account.[30]As I have mentioned it is asserted that the decision to make no Polkey reduction was perverse and amounted to a misdirection in law.[31]We do not agree.[32]It was argued that by stating that:
"we do not consider it likely that, had there been a proper investigation into the Applicant's explanation for the conduct, he would have been dismissed."
The Employment Tribunal erred in law because they should not have been considering likelihood, or making an "all or nothing" assessment but should have been considering what, if any, percentage reduction should be made.[33]We agree that in considering the Polkey reduction the Employment Tribunal should have been considering what, if any, percentage reduction should be made and thus at that stage there was no need for an "all or nothing" approach and it would not be the correct approach to take (see for example paragraph 30 of the judgment of Lord Bridge in the Polkey case reported at 1987 IRLR 503 ).[34]However, in our judgment when the Extended Reasons are read as a whole the Employment Tribunal were considering what reduction (if any) should be made and were not taking an "all or nothing" approach and in this argument Connex are taking an inappropriately narrow or literal approach by reference to the use by the Employment Tribunal of the word "likely" in paragraph 9 of the Extended Reasons.[35]In our judgment it is clear from the Extended Reasons as a whole that the Employment Tribunal were clearly of the opinion that no percentage reduction should be made and this is what they meant in paragraph 9 of the Extended Reasons.[36]In reaching this conclusion we have had regard to the fact that the Employment Tribunal do not set out the " Polkey " principle relating to compensation. However, it is a well known one and it seems to us clear that the Employment Tribunal were considering the Polkey decision only in connection with what, if any, reduction should be made when assessing compensation and that they had the correct approach in mind.[37]In our judgment given their findings of fact the conclusion of the Employment Tribunal to make no Polkey reduction was well within the band of decisions reasonably open to them.[38]Indeed, and in any event, in our judgment on the findings of fact made by this Employment Tribunal any Employment Tribunal properly directing itself in law would not have made a Polkey reduction in the assessment of compensation. In reaching this conclusion we have had regard to the following points:(a) the earlier warning was given in very different and distressing circumstances for the Applicant,(b) in our view (and it is plain that this was also the view of the Employment Tribunal) if there had been further charges added at the time of the disciplinary hearing to take account of the later absences in the circumstances of this case it would clearly have been unfair to treat the October absences as warranting a warning and the later absences as warranting dismissal. In our view, in the circumstances of this case, the only reasonable and fair course for Connex to have taken would have been to have treated all the absences together both as a matter of substance and procedural fairness. This is because the Employment Tribunal found that they all related to the Applicant's illness and the effect of that illness and the medication he was taking.[39]We have already mentioned that we reject the argument advanced on behalf of Connex that there is an inconsistency between the finding of the Employment Tribunal that the dismissal was not a breach of contract and their finding on the Polkey reduction. We repeat that this is because in our judgment the Employment Tribunal did not find, expressly or by inference, in respect of the breach of contract claim that the Applicant's conduct amounted to "gross misconduct".[40]It follows, in our judgment, that on the findings of fact made by the Employment Tribunal if Connex had acted fairly both as a matter of substance and procedure it would not have dismissed the Applicant on the basis of his absences in October 1998 and January/February 1999.[41]This aspect of the appeal is therefore dismissed. Contributory fault[42]In support of this part of the appeal Counsel for Connex referred us to Optikinetics Ltd v Whooley [1999] ICR 984, in particular at 988 G to 989 E, where Judge Peter Clark in giving the judgment of this Tribunal sets out the proper approach to contribution, both in relation to the basic and compensatory awards. We accept that that summary helpfully sets out the position derived from earlier authority.[43]The first point made in the Optikinetics case is that before making any finding of contribution the employee must be found guilty of culpable or blameworthy conduct. The enquiry as to this is directed solely to the employee's conduct and not to that of the employer or others.[44]We have also had regard to Harvey on Industrial Relations and Employment Law, paragraphs D1 2725 to 2728 and 2742 to 2744 in considering whether the Applicant in this case was guilty of culpable or blameworthy conduct.[45]Connex argued that the absences of the Applicant and the findings of the Employment Tribunal in respect of them demonstrated that he had been guilty of culpable or blameworthy conduct. An important factor in that argument was the assertion we have rejected that in dismissing the Applicant's breach of contract claim the Employment Tribunal found (or accepted) that his absences amounted to "gross misconduct". On the basis of that assertion it was put on behalf of Connex that such "gross misconduct" was culpable or blameworthy conduct. That argument falls with our rejection of its underlying premise.[46]Further, as we have already mentioned, the Employment Tribunal found that the Applicant's unauthorised absences (and his failures to contact Connex concerning his absences) were not deliberate but were a result of his illness and the effects of his medication.[47]It is clear to us that the finding on contribution contained in paragraph 9 of the Extended Reasons is based on that finding. In our judgment the Employment Tribunal had evidence upon which they could base that finding. Further, in our judgment, it founds a conclusion that the Applicant was not guilty of culpable or blameworthy conduct and thus the conclusion reached by the Employment Tribunal that he did not contribute to his dismissal.[48]In our judgment it follows that in reaching their conclusion on contribution the Employment Tribunal did not misdirect themselves in law and their decision is not perverse.[49]Accordingly this aspect of the appeal is also dismissed. The cross appeal[50]We have found that the Employment Tribunal erred in law in dismissing Mr Green's breach of contract claim. But in paragraph 26 above we say that we will return to consider whether Mr Green's cross appeal is academic having regard to the compensation awarded for unfair dismissal. The compensatory award included 32 weeks net earnings and thus covered Mr Green's notice period. That award was not capped.[51]In those circumstances we agree with Connex that the cross appeal is academic because Mr Green could not obtain any further damages or compensation for wrongful dismissal on the basis that if he were to do so he would enjoy double recovery.[52]It was argued on behalf of Mr Green that this was not so. Reliance was placed on the decision of this Tribunal in Cerberus Software Ltd v Rowley [1999] IRLR 690 for as we understood it two propositions namely(a) that Mr Green was entitled to payment in lieu of notice in addition to compensation for unfair dismissal, and(b) that, in any event in respect of his claim for wrongful dismissal his damages or award should be based on his gross pay for his notice period. In our judgment the Cerberus case does not support those propositions. The primary reason for this is that in the Cerberus case this Tribunal was not dealing with a claim for damages for wrongful dismissal but with a claim for payment in lieu of notice under the express terms of the contract . This is made clear by paragraphs 3 to 7 and 20 and 21 of the judgment. Paragraph 3 refers to the normal position in respect of a claim for damages for wrongful dismissal and the later paragraphs make it clear that the Cerberus case was not such a case. This is also made clear from the conclusion in the Cerberus case that the principle of mitigation of damages did not apply with the result that the employer had to pay the sum due under the contract without mitigation. It is plain that the duty to mitigate applies to a claim for damages for wrongful dismissal (see for example Harvey paragraph A658 and paragraph 3 of the judgment in the Cerberus case).[53]It is also well established (see for example Harvey paragraph A 661-680 and paragraphs A 681 and 686) that damages for wrongful dismissal (that do not exceed £30,000) and the compensatory award for unfair dismissal are calculated on net earnings and that double recovery under those heads cannot be made in respect of the same period. I repeat that the Cerberus case (itself and in its discussion and application of the Delaney case referred to in it) was not dealing with a claim for damages for wrongful dismissal and it follows that the passage in paragraph 18 thereof referring to an agreed gross payment in lieu of notice(i) is dealing with a different situation to that which exists in this case (see again Harvey paragraph A 661-680), and(ii) does not support the argument put on behalf of Mr Green that his damages for wrongful dismissal should be calculated by reference to his gross pay.[54]In those circumstances we will make no order on the cross appeal.