MR K CHAND v (1) MRS D M ZICCHI (2) MRS R PATEL [2001] UKEAT 1376_00_2106

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 1376_00_2106Case No Appeal No. EAT/1376/00Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR K CHANDAPPELLANT(1) MRS D M ZICCHI (2) MRS R PATELRESPONDENT
Before
Mr Justice Nelson Mr D Norman Mr R N StrakerDate 21 June 2001
[1]APPEARANCES For the Appellant MR S MOON (Consultant) 83 High Street Great Barford Bedford MK44 3LF MR JUSTICE NELSON This is a preliminary hearing in an appeal against the decision of the Employment Tribunal sitting at Stratford of 21 September 2000. In its unanimous decision the Employment Tribunal found that Mrs Zicchi was unfairly dismissed and ordered the Respondent to pay her as compensation £2,975.40 and that Mrs Patel was unfairly dismissed and the Respondent was ordered to pay her as compensation £730.80.[2]The circumstances of the case were these. The Appellant is the sub-post master and operates a sub post office in Manor Park. It has within it a retail confectionery store and is in small self-contained premises. Within those premises is the safe and all the post office equipment and property. The accounts to the post office were completely separate from the store and all the cash, documentation, equipment remained in the ownership of the post office. The Appellant had to account weekly.[3]Substantial losses began to be experienced by the Appellant from about November 1999. Those losses continued in spite of the weekly balancing of the books on a Wednesday afternoon and continued through until December 1999. In January 2000 over £1,000 went missing.[4]These losses were substantial and indeed sufficient to threaten the business of the Appellant and it is noted in paragraph 8 of the Tribunal's decision that by January 2000 the Respondent was becoming desperate because he was personally liable for all losses. The post office can withdraw a licence if they have reason to doubt a sub-post master's credit worthiness.[5]During the time when his concern had been mounting, the Appellant had raised the obvious concern with his staff. He had done that on a weekly basis on each Wednesday. He voiced his concerns to the staff that the situation was, and I quote from the Tribunal decision:
"Unacceptable and could not continue"
He asked the staff, that is to say the Applicants as they were then, if they had any idea why these shortfalls existed and each one said that she had no idea.[6]The only people with access to the post office section throughout the whole of the relevant period were the Appellant, his wife and the two Respondents. There had been access to the Respondent's sons earlier but as soon as the losses started he stopped that and ensured that of his family only he and his wife could enter. The Appellant kept the key with him at all times.[7]In February 2000, after the fourth consecutive 3-figure weekly loss, the Appellant spoke to the Respondents again about the urgency of the situation. On 16 February he suspended them from their work.[8]An enquiry was instigated by an advisory service from the National Federation of Sub-Post Masters and a Mr Abraham came in order to consider the matter and carry out an investigation. He did so, and at the second meeting that he had a substantial interview took place with each of the Respondents, in which it was made clear that it was not a disciplinary hearing. Neither of the Respondents were accused directly of any dishonesty but were told that it was an investigation.[9]Indeed the letter that was sent out said:
"A meeting has been arranged for Wednesday afternoon to discuss losses suffered in the post office. There is a set procedure. I will explain to you what the losses are, you will then have an opportunity to provide any ideas about why the money is missing. Peter Abraham has been brought in to investigate what has gone wrong. Only when the investigation has finished will we then tell you as to the future of your employment. You have the right to have someone with you at the meeting; normally this would be another employee…."
[10]The interviews took place consecutively on 23 February and, as I have indicated, the Respondents were each told that it was investigatory and were not accused of any offence. The report subsequent to these interviews was produced by Mr Abraham within a few days of the meeting. He was, the Tribunal recorded:
"unable to find any facts which would isolate where the errors or losses were occurring"
[11]He wrote as part of his report:
"It would therefore appear that the only appropriate way of proceeding would be for Mr Chand to dispense with the services of both members of staff, appreciating that this may mean that an innocent person is having action taken against them."
The report concluded by saying:
"A copy of this report is to be sent to each employee explaining the reasons for their termination of employment and to advise them that they have the right of appeal which should be in writing before the close of business on Tuesday 29 February 2000."
[12]The report was duly sent. Each of them took it to contain effective dismissal from their employment. Each of them appealed in writing. There was no hearing but by letter dated 7 March 2000 each was told that their appeal had been unsuccessful. The Tribunal reminded itself that, where there was a reasonable suspicion that one or two, or possibly both, employees must have acted dishonestly, it is not necessary for an employer to believe that either of them acted dishonestly, relying on the case of Monie v Coral Racing Ltd [1980] IRLR 464.[13]In paragraph 25 of their decision the Tribunal found as follows:
"In this case we find that the investigation carried out was as thorough as could be expected in the circumstances of the case. We find that the reason for the dismissal of each Applicant was a reasonable suspicion that one or two, or possibly both of them, must have acted dishonestly. We are anxious to remind the parties that this Tribunal cannot ask itself the question and therefore cannot decide the question whether the Applicants or either of them was dishonest. In an unfair dismissal claim such as this we merely have to ask ourselves whether the dismissal was fair or unfair. The Applicants have said that they have come to this Tribunal to clear their reputations. We have explained to them that it is not within our jurisdiction to deal with that point. We wish to state that we express no view one way or the other as to the truth of the allegation or not."
[14]The Tribunal then went on to find that:
"…the employer has fulfilled the requirements of sub-section (1) of Section 98 of the Employment Rights Act 1996 by showing that the reason for the dismissal of each Applicant related to the conduct of each Applicant."
They went on to consider whether the dismissals were fair or unfair and set out in their paragraph 26 the basis upon which they carried out their enquiry into that matter.[15]In paragraph 26, they say that they bear in mind that the question depends upon whether in the circumstances, including the size and administrative resources of the employers undertaking, the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee and directed themselves that this should be determined in accordance with equity and the substantial merits of the case. It is conceded on behalf of the Appellants that this was a proper recitation of the law that they had to apply.[16]The complaint however in the first ground raised on behalf of the Appellants is that, although they had effectively set out the correct test, in neither paragraphs 27 nor 28 where they make their conclusions, does the Tribunal adequately reflect consideration of the particular facts of this case, namely that this was a small sole undertaking, in which the employer and the relevant employees lived and worked cheek by jowl, and discussed all matters relevant to the books and the money on a regular basis. The fact that this was such a small undertaking was something the Tribunal should have expressly reminded themselves of, in order to make sure that they considered the matter appropriately.[17]In Mackellar v Bolton [1979] IRLR 59 and Duffy v Yeomans & Partners Ltd [1994] IRLR 642, it has been held that the failure to take a procedural step is not necessarily fatal and that what must be taken into account is the conduct of the employer and in particular matters such as the size of the undertaking.[18]The paragraphs which are relied upon by Mr Moon in saying that the Tribunal failed properly to apply the law that they had correctly set out at paragraph 26 are paragraphs 27 and 28 and because of the detailed nature of the attack made upon them, we consider it appropriate to cite those in detail.[19]In paragraph 27 the Tribunal said as follows: 27. "In considering this aspect of the case, we have been particularly struck and influenced by the fact that the meeting on 23 March was declared by Mr Abraham to be not a disciplinary meeting. He specifically stated to Mrs Zicchi that she was not being accused of anything and at least implied the same to Mrs Patel. Therefore, neither lady would have felt that they had to defend themselves at that investigatory meeting. The next thing that happened was that on 26 February they received Mr Abraham's report which dismissed them. Mr Chand admitted that he had never asked them in to discuss the report or to have any meeting whatsoever.[20]The Tribunal continue: 28. In our judgement this cannot be right. Persons who had been told that they were having an investigatory meeting only and had been told that they were not accused of anything would not expect to be dismissed without any further opportunity or meeting at which the possibility of dismissal was put before them. In our judgement this was a procedural defect of great significance. It appears to us that the Applicants were not given an opportunity, as accused persons, or as suspected persons, to deal with their potential dismissal" The Tribunal therefore went on to hold that the dismissal was unfair in the case of each Applicant.[21]Mr Moon rightly concedes that these findings and the facts indeed demonstrate that there was no disciplinary meeting here at all. But he nevertheless submits that, given the circumstances of their employment, the small nature of the premises where they worked, the fact that it was a sole undertaking, there was no lack of knowledge on their part of any of the gravity of the situation, and that they had had many opportunities over the previous months to deal with what they knew perfectly well were accusations, there was no need for a final confrontation as a procedural step to take place in those particular circumstances.[22]We have to decide whether there is an arguable case here; that the Tribunal made an error of law in dealing with the matter in the way that they did. We are satisfied that they made no such error. The failure to provide a disciplinary hearing, even in circumstances such as these, is indeed significant, as the Tribunal stated in their decision.[23]The nature of such a hearing, not being merely investigatory but accusatory, gives those who are accused the opportunity to raise in express form answers to the complaints made directly against them by way of accusation at that stage. Not having had that opportunity earlier was a fundamental defect in the procedure carried out by the employer and the Tribunal's decision to this effect is, in our view, correct and cannot be faulted. We therefore reject and dismiss the first ground put in the grounds of appeal on behalf of the Appellant.[24]The second ground relates to the meaning of the word 'conduct' in Section 122 (2) of the Employment Rights Act 1996 and as to whether this means conduct contributing to the dismissal or should be given a wider meaning. It is submitted by Mr Moon that it should be given such a wider meaning on the facts of this case, so as to permit within the expression 'conduct' the act of resignation.[25]If that were not to be so, it would lead to the absurd result, Mr Moon submits, of the first Respondent, who in fact resigned from her employment shortly after dismissal, being given the full basic award, when in fact she was no longer, and was not going to be any longer employed. Such a matter is plainly, on the face of it, "conduct" which should be considered.[26]The fact that this is so is because, Mr Moon submits, Section 122 (2) contains no words within it which suggest that the word 'conduct' should be limited to contributory conduct. Indeed the word 'conduct' is solely related to whether it is just and equitable in the circumstances for the Tribunal to make a reduction of the basic award.[27]Whilst we do not regard this as necessarily being an argument which has enormous weight to it, we recognise that it has some force and we have concluded that it is in fact arguable and that therefore permission should be given to the Appellant to take this matter to a full hearing.[28]In relation to the third ground it is submitted that, again, in relation to Section 122 (2) the word 'conduct' should be given the same meaning as it is given in Section 98 (2)(b) of the Employment Rights Act 1996 , namely that the conduct of one employee can be imputed to more than one employee for the purposes of assessing dismissal. By parity of reasoning the same argument should be applied here so that, although the Tribunal could not determine whether one or the other of the Applicants before it had in fact been guilty of dishonesty, it was perfectly proper for them to make a deduction from the award of each of them on the grounds that the conduct of one could be imputed to the other.[29]Again, we consider that this is a matter which is at least arguable and for which permission should be granted for the matter to go to a full appeal. We should say that we have been greatly assisted by the arguments put before us by Mr Moon today, which have been relevant and concise and for that we are grateful.