SAINSBURY’S SUPERMARKETS LTD v MR P J HITT [2001] UKEAT 887_00_2012

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 887_00_2012Case No Appeal No. EAT/887/00Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
SAINSBURY’S SUPERMARKETS LTDAPPELLANTMR P J HITTRESPONDENT
Before
His Honour Judge J R ReidDate 20 December 2001
[1]APPEARANCES For the Appellant MR JASON GALBRAITH-MARTEN (of Counsel) Instructed By: Group Legal Services J Sainsbury Plc Stamford House Stamford Street London SE1 9LL For the Respondent NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE RESPONDENT JUDGE J R REID QC : This is an appeal from a decision of an Employment Tribunal sitting at Exeter on 12 June 2000. By a majority the Tribunal held that Mr Hitt had been unfairly dismissed. Against this decision Sainsburys appeal.[2]The appeal arises because of the confusion which existed as to the proper interpretation of section 98 of the Employment Rights Act 1996 during the period between the decision on the EAT in Midland Bank v Madden [2000] IRLR 288 and the clarification of the law by the Court of Appeal (reversing that decision) at [2000] IRLR 827 . The Court of Appeal restated the law as it had been understood to be before the EAT decision. The Employment Tribunal in this case faithfully followed (as it was bound to) the decision of the Employment Appeal Tribunal. As a result it erred in law. The question in this appeal is whether the result can stand notwithstanding the error of law. The Facts[3]Mr Hitt began his employment with Sainsburys in April 1991 and immediately before his dismissal he was employed as a baker at their Barnstaple store. On 11 September 1999 the Health And Beauty Assistant at the store reported that a box of razor blades which she had hidden behind some other products in the health and beauty aisle in the warehouse while she took a tea break between approximately 5.30 and 6.35am were missing on her return. The Duty Manager obtained a record of all those employees who had clocked in between 5.30 and 7.30am (some 22 in number) most of whom were employed in the bakery or butchery departments and commenced a security search of their lockers. Mr Hitt entered the warehouse during the course of the search and was invited to attend a search of his own locker which he did. According to Sainsburys, he was nervous and his voice was shaking while the search was conducted: he did not accept this was so and the Tribunal made no finding either way. The missing razor blades were found concealed under some spare overalls in his locker. He denied all knowledge of how they had got there but suggested that they must have been planted there. Later he named a number of employees who had keys which fitted his locker. These were checked. Sainsburys also investigated all the keys held by the bakers and involved the applicant's union representative in those investigations as a result of which it was established that the only person in the store at the relevant time who had a key which fitted Mr Hitt's locker was the Bakery Manager Mr Tucker. From statements made to the Security Officer by Mr Tucker and the Health And Beauty Assistant who had reported the razor blades missing it was established that Mr Hittt had left the bakery department on at least two occasions to obtain stores from the bakery aisle which was adjacent to the Health and Beauty aisle from which the razor blades had gone missing and he was seen there by the Health and Beauty Assistant when she returned to the warehouse after the tea break at approximately 6.35am. Mr Hitt conceded that he had the opportunity to take the razor blades. Mr Hitt's case was that someone must have planted the razor blades on him and by the time of Employment Tribunal hearing he was claiming that "Pat Tucker was the only person that I can put it down to" and that this was part of a management vendetta in an effort to get him out. He was called to a disciplinary meeting on 16 September to answer a charge of attempted theft. The hearing was adjourned for further investigation and during the adjournment the Store Manager spoke to Mr Tucker and ascertained he had only been in the store (as opposed to the warehouse) between 5.00am and 7.00am and had remained in the bakery department throughout. On 30 September the disciplinary hearing was reconvened and Mr Hitt was dismissed for gross misconduct. He appealed and the appeal was heard by the District Manager. He dismissed the appeal, having come to the conclusion that there was no doubt that Mr Hitt took the razor blades. The Tribunal's Decision[4]The Tribunal made their findings of fact and then turned to the law. They set out the relevant parts of section 98 and then referred to the difficulty created by the EAT decision in Madden . They said:
"4. The confusion for us arises from the state of the existing case law on the interpretation of these statutory provisions. The starting point is the 'Burchell test' which was established by the EAT in British Home Stores Limited v Burchell [1980] 1CR 303 and, since being cited with approval by the Court of Appeal in W Weddel & Co v Tepper [1980] IRLR 96 CA has come to be regarded as the leading authority on what is now section 98(4) of the 1996 Act i.e. the reasonableness test mentioned above. Thus the EAT in Burchell stated as follows: "
What the Tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the ground of the misconduct in question (usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time. That is really stating shortly and compendiously what is in fact more than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief. And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds, at any rate at the final stage at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further." However, the EAT in Midland Bank plc v Madden [2000] IRLR 288 states that in relation to the above citation from B urchell [1978] IRLR 379 , "it was, so to speak, a section 98(1) and (2) question that was then being addressed." That is to say it is to be applied to the reason for the dismissal shown by the employer under section 98(1) and (2) and not the reasonableness of the dismissal under section 98(4). Thus Mr Justice Lindsay states in Madden that "It (the Burchell test) does not require the Tribunal unquestioningly to accept the employer's alleged reason; on the contrary, each of the three parts of the test requires an evaluation of the relevant evidence by the Tribunal and in each case that is an evaluation which can, on proper evidence, conclude contrary to the employer's assertions. 5. That is the approach which we have followed while reminding ourselves that it is sufficient for the respondent to believe in the applicant's guilt on a balance of probabilities and that it does not have to be satisfied as to his guilt beyond all reasonable doubt." This, as the skeleton argument lodged on behalf of Mr Hitt accepted, in the light of the decision of the Court of Appeal in Madden was wrong in law.[5]The Tribunal then went on to identify the principal issue as being whether the respondent had adequately investigated the possibility of the razor blades having been planted in the applicant's locker, as he alleged, in view of the fact that several employees possessed keys which fitted his locker. The majority of the tribunal concluded that Sainsburys' investigations in that respect were inadequate. In their view, taking into account that the lockers were in cloakrooms to which all employees had access, the respondent should have investigated all the employees who were in the store at the time (and not merely those who clocked in between 5.30 and 7.30am) in order to identify those who held a key to fit Mr Hitt's locker and could have been in the warehouse at the relevant time. Indeed, they were critical of the fact that Sainsburys did not know, and took no steps to establish, which of its employees were actually in the store at that time. Further, the majority considered that Sainsburys failed to investigate adequately the whereabouts of Mr Tucker during the relevant time in order to eliminate the possibility that it was he who might have planted the blades in the applicant's locker, bearing in mind that he did have a key to it. In the view of the majority, a full and thorough investigation of all those matters should have been carried out by Sainsburys before "it labelled the applicant a thief for the rest of his life".[6]The majority view was expressed thus:
"Accordingly, in the view of the majority when the respondent formed its belief in the applicant's guilt it had not carried out as much investigation into the matter as was reasonable; it therefore failed to show a reason for the dismissal which satisfied the Burchell test as restated by the EAT in Madden ; and it therefore acted unreasonably in dismissing the applicant because its belief in his guilt was flawed."
Sainsburys' Submissions[7]For Sainsburys counsel submitted that the paragraph which contained the material findings of the majority, is littered with references that suggested that the majority were substituting their view for that of the employer, using phrases such as:
"in their view" and "the majority considered"
. He submitted that had the correct test been applied the only conclusion open to the Tribunal would have been that the dismissal was fair. The extent of the investigation carried out was clearly adequate and the approach adopted should be that by the Court of Appeal in Madden at paragraphs 54 to 80. Since, save in respect of one minor matter, the facts in this case were not in dispute this case was an appropriate case for the Appeal Tribunal to substitute its decision rather than remit. Mr Hitt's case[8]Mr Hitt did not appear at the hearing of the appeal. His application for an adjournment was refused and he no longer had legal representation. However whilst he was still represented counsel had submitted a skeleton argument. The substance of it was that the error in the Tribunal's decision was immaterial. The Tribunal, it was submitted, set out the issue correctly. It was the issue which had to be addressed at the third stage of the Burchell test. The only error was that the Tribunal addressed the issue at the wrong stage in the process. It made a permissible finding of fact that Sainsburys had not carried out as much investigation as was reasonable in the circumstances because Sainsburys did not undertake the specific steps identified by the Tribunal (ie identifying the employees who were in the store at the material time, investigating all of them and, in particular, checking on the whereabouts of Mr Tucker. This, it was said, led to the inevitable conclusion following from that finding was that the dismissal fell foul of the Burchell test and was unreasonable for the purpose of section 98(4). Conclusions[9]The starting point must be that the Employment Tribunal's decision was flawed in the way it approached the law because it was constrained to follow the Madden heresy. The majority therefore wrongly took the view that the finding of an inadequate investigation meant that it had failed to show a reason for the dismissal which satisfied the Burchell test as restated by the EAT in Madden and so acted unreasonably in dismissing the applicant because its belief in his guilt was flawed. The question that then arises is whether the error of law might have made a difference to the outcome of the hearing in the Employment Tribunal.[10]The distinction between what happened in this case and in the Madden case is that in the Madden case the Tribunal substituted its view of the evidence for the view of the employer. As Mummery LJ (with whose judgment Nourse and Rix LJJ agreed) said at para 76:
"It impermissibly substituted itself as employer in place of the bank in assessing the quality and weight of the evidence before Mr Fielder, principally in the form of the investigating officer's report. Instead it should have asked whether, by the standards of the reasonable employer, the bank had established reasonable grounds for its belief that Mr Madden was guilty of misconduct and whether the bank's investigation into the matter was reasonable in the circumstances."
In para 78 after dealing with the extent of the Tribunal's substitution, he went on:
"In my judgment no reasonable tribunal, properly applying the approach in Burchell and Iceland Foods to the facts could have concluded either (a) that the bank had failed to conduct such investigation into the matter as was reasonable in all the circumstances or (b) that dismissal for that reason was outside the range of reasonable responses."
In the present case the Tribunal did not seek to weigh the evidence available to the employer. The issue before it was not whether the decision made by the employer was within the band of reasonableness on the material before the employer but whether the decision was vitiated by the failure of the employer to make reasonable investigations.[11]What the Tribunal was concerned with in this case was the first of the two elements with which Mummery LJ was concerned in para 78 of his judgment in the Madden case. The "range of reasonable responses" test is relevant to the second of those elements, not the first. In dealing with the first the Employment Tribunal is concerned with the adequacy of the investigation process: ie "that the employer, … at the final stage at which he formed that belief [of guilt] on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case." The Tribunal is required to form a view on this issue by the words of section 98(4)(b). Subsection (4) requires the Tribunal (having been satisfied that the employer has fulfilled the requirements of subsection (1)) to decide the fairness of the dismissal(a) depending on whether in the circumstances the employer acted reasonably in treating the reason shown as sufficient reason for dismissal and(b) "in accordance with equity and the substantial merits of the case".[12]It is under the heading of "the equity and the substantial merits of the case" that the adequacy of the investigation comes into play. If the incident leading to the dismissal has not been the subject of an investigation which is in all the circumstances reasonable, the disciplinary decision of the employer will be flawed even if(a) on the material available to him in the absence of a reasonable investigation he has reasonably formed the view that the employee was guilty and(b) the dismissal was within the reasonable range of responses. In this case the majority of the Tribunal came to a conclusion on the facts that the investigation was not in all the circumstances adequate. It may well be that at any rate some members of this panel of the EAT would have come to a different decision from that of the majority of the Employment Tribunal on the adequacy of the investigation in this case, but it is not for us to substitute our view of the facts for that of the Employment Tribunal and we do not think we can properly say that the decision of the majority on the adequacy of the investigation was perverse.[13]The position in this case is that the Employment Tribunal came to a conclusion by a wrong route to which the majority would have come if the right route had been followed. The equity and substantial merits of the case demanded that there be such investigation of the allegation as was in all the circumstances reasonable before the dismissal. On the finding of fact by the majority, there was not such an investigation. The error of law merely led the Tribunal to address the correct issue of law at the wrong stage. It did not affect the outcome. In those circumstances the appeal will be dismissed.

Cited in 3 later judgments