ABBEY NATIONAL PLC v MISS BALJIT KAUR [2005] UKEAT 0271_05_0308

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2005] UKEAT 0271_05_0308Case No Appeal No. UKEAT/0271/05Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
ABBEY NATIONAL PLCAPPELLANTMISS BALJIT KAURRESPONDENT
Before
His Honour Judge McMullenDate 3 August 2005
[1]APPEARANCES For the Appellant MR RICHARD POWELL (of Counsel) of Messrs DLA LLP Solicitors Victoria Square House of Lords Victoria Square Birmingham B2 4DL For the Respondent MISS SUZANNE McKIE (of Counsel) Instructed by: Messrs Ellisons Solicitors Headgate Court Colchester Essex CO1 1NP SUMMARY Unfair Dismissal: Reasonableness of Dismissal(1) Employment Tribunal did not err in finding that Claimant was unfairly dismissed. As a matter of construction, the disciplinary procedure required a deliberate act for gross misconduct. The Respondent had operated on the basis simply that it required a breach of FSA rules.(2) Employment Tribunal erred in considering contribution: inadequate reasons. Remitted to Employment Tribunal HIS HONOUR JUDGE McMULLEN This case is about unfair dismissal and reduction in a compensatory award on the ground of contributory conduct. The judgment represents the view of all three members. We will refer to the parties as Claimant and Respondent. Introduction[2]It is an appeal by the Respondent in those proceedings against a judgment of an Employment Tribunal sitting over three days in Stratford East, Chairman: Mr M S Hallam, registered with Reasons on 21 January 2005. The Claimant was represented there and here by Miss Suzanne McKie of Counsel. The Respondent was represented by a solicitor who, today, instructs Mr Richard Powell of Counsel. The Claimant complained of unfair dismissal. The Respondent admitted dismissal but contended that it was for gross misconduct and was fair. If unfair, the Claimant contributed to it and her compensation should be reduced. The essential issue for the Tribunal to determine, therefore, was the reason for dismissal and whether it was fair. The Tribunal decided that the Respondent dismissed the Claimant for misconduct which was classified as gross misconduct; conduct falling, as it does, within s98(1) was a potentially fair reason. It went on to hold that the dismissal was unfair, both substantively and procedurally. It ordered the hearing on remedy which has not taken place and invited the parties to consider the services of conciliation through ACAS. The Respondent appeals against that judgment.[3]Directions sending this now amended Notice of Appeal to a full hearing were given at a Rule 3 hearing by Burton P following an opinion on the sift by Bean J that this case had no reasonable prospect of success. The legislation[4]The relevant provision of the legislation, in addition to sections 98(1) and (2) of the Employment Rights Act 1996 , to which we have referred, is section 98(4) which provides as follows: "(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)-(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and(b) shall be determined in accordance with equity and the substantial merits of the case".[5]Section 123 deals with compensation and provides for a reduction in compensation to be made as it would apply in our case on the ground that the Claimant contributed to her dismissal see section 123(1) and (6): "123. - (1) … the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer". (6) Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding.[6]The Tribunal directed itself by reference to section 98 and what we hold to be the leading authorities which are cited in its Reasons and which are Polkey vAE Dayton Services Ltd [1988] ICR 142 , Iceland Frozen Foods Ltd v Jones [1982] IRLR 439 , British Home Stores Ltd v Burchell [1978] IRLR 379 and Sainsbury's Supermarkets Ltd v Hitt [2003] IRLR 23 . The facts[7]The Respondent is a major high street banker. As for the Claimant, the Tribunal found: "5. The Claimant commenced work for the Respondent in July 1989 as a Cashier working at the Ilford branch. She was promoted to Customer Manager in 1999 and worked at the Ilford branch until December 2001 at which stage she transferred to the Barking branch. The Claimant's current line manager is Mrs Jean Day who took over as Branch Manager of the Barking Branch in July 2003. 6. During the autumn of 2003, the Claimant was going through a number of personal problems".[8]In addition to the short note taken by the Tribunal, it should be said that on 9 December 2003, the Claimant went through a very distressing personal experience. She returned to work on 10 December and on 12 December, was required again to work. She went on holiday from 13 to 22 December, during which time she was still suffering from stress. The Claimant returned to work on 29 December on a front desk dealing with queries from people seeking to open accounts. On that day, she made a mistake in opening a new account for a Mrs M, who was Ghanaian.[9]The nature of the mistake was explained by the Claimant's manager to be three-fold. The Claimant falsified the record on the customer's account to indicate that she had seen a British passport when she had seen a Ghanaian one, she failed to contact the bank's helpline, which was a requirement in such circumstances where proof is being offered in the form of a non-British passport, and she wrongly accepted as verification of the customer's address an unreceipted utility bill. As a result, disciplinary proceedings were brought against the Claimant. She was charged in a way in which we have not seen, but we are told is fully replicated in a dismissal letter, for the disciplinary proceedings resulted in her dismissal. The allegation was that she had seriously breached the anti-money laundering regulations by accepting a foreign passport as a UK passport and by accepting an unpaid bill as identification for opening purposes. The Claimant had the advantage to be represented by an officer of her trade union and notwithstanding that officer's efforts and arguments, the Claimant was dismissed.[10]The bank is regulated by the FSA. It has a sophisticated disciplinary procedure. For the purposes of our appeal, the procedure operates in respect of different forms of what might be described as disciplinary matters, so that under-performance, misconduct and misconduct warranting dismissal are treated in different ways, misconduct being a lesser matter. Misconduct warranting dismissal is provided for in paragraph 2.3. "2.3 Misconduct warranting dismissal Where there is a repetition of misconduct following the issue of a Final Written Warning or in the case where a Formal Written Warning was previously issued and the misconduct is of a serious nature, Dismissal with notice may apply. Where the outcome of the disciplinary hearing is a decision that an employee has committed an act of Gross Misconduct, this will normally result in Summary Dismissal. Gross Misconduct is any deliberate act committed which is or is potentially severely detrimental to the conduct of the business or harmful to the employee, other employees, customers or members of the public or which constitutes a serious breach of the contract of employment. Examples of Gross Misconduct are provided in the Appendix B of this Procedure. These examples may be reviewed from time to time".[11]That provides an express cross-reference to Appendix B which includes a list of disciplinary rules. We will reproduce it in full. "Appendix B Disciplinary Rules – Gross Misconduct The following examples are neither exhaustive nor exclusive and examples of misconduct not referred to here or indicated under Appendix A might also be considered gross misconduct: Theft or misappropriation of company, customer, employee or shareholders property or money; Dishonesty; fraud or deliberate falsification of any records whether or not for financial gain or other purposes. Conducting unauthorised transactions on own or other accounts. Physical violence including fighting; assault, aggression, verbal abuse, indecent and insulting behaviour or the possession of offensive weapons. Blatant disregard or infringement of health and safety rules or procedures including smoking where not permitted and placing others in a position of danger or potential danger. Deliberate damage to, or misuse of, company or other's property. The possession or illegal drugs or serious incapability due to alcohol or drugs. Serious negligence which causes unacceptable loss; damage or injury. Serious acts of insubordination, deliberate failure to follow reasonable instructions, a continuing period of unauthorised absence, negligence or deliberate carelessness. Serious breaches of confidentiality or other unauthorised disclosure of information unless provided by disclosure procedures under the Public Interest Disclosure Act 1998. Unauthorised or inappropriate use of e-mail, intranet/internet or other IT equipment or software. Deliberate or serious acts of discrimination, victimisation, bullying, or harassment against other employees or members of the public. Serious breaches of regulatory (e.g. Financial Services Authority), company or departmental rules, codes of conduct, policies and procedures. Deliberate or serious breaches of Statutes or Regulations including criminal offences related to, or occurring outside work. Serious breaches of confidence or acts which are likely to bring the Company's reputation or commercial activities into disrepute including misuse of the company's name. (This list may need to be added to by particular business areas to reflect specific issues relevant to the nature of the activities of that business).[12]The relationship between the words in the examples and the wording in 2.3 has been the subject of considerable argument before us and before the Employment Tribunal. In a nutshell, the question is: does every example within Appendix B require to be the subject of a finding that it was a deliberate act? The Tribunal came to the conclusion that the correct construction of these documents was that it did. It then went on to find that the Respondent had insufficient material to form a conclusion adverse to the Claimant on deliberateness for it said this. "33. The Tribunal then had to consider whether dismissal was fair or unfair. The Tribunal firstly considered the definition of gross misconduct contained in the Respondent's disciplinary procedures at page 24. Gross misconduct is described here as any deliberate act committed which is or is potentially severely detrimental to the conduct of the Respondent's business. In this case, the Tribunal was not satisfied that the Respondent made an appropriate finding that the Claimant's error in failing to properly identify the passport of Mrs Mensah as Ghanaian instead of British amounted to a deliberate act on the Claimant's part. Indeed, it was accepted by the dismissing officer, Ms Webb, that the error made by the Claimant could have been inadvertent. She also accepted that she did not make this finding in her conclusions after hearing the evidence at the disciplinary hearing on 9 March. Further, there is no such finding in the letter of dismissal contained at pages 77 and 78 nor is there any such finding in her reports to the appeal panel which is at pages 85 and 86. The Tribunal is of the opinion that it was necessary for either Ms Webb or Miss Burt to come to this conclusion based upon the evidence that either of them considered at the disciplinary hearing or the appeal hearing. It is clear to the Tribunal that on the basis of the evidence they heard at both of these hearings, there was no evidence produced that could lead them to this conclusion. As a consequence, the Tribunal was of the view that Ms Webb could not come to the conclusion that it was reasonable to summarily dismiss the Claimant pursuant to the Respondent's disciplinary procedure. 34 ... 35. Because of this fundamental error, the Tribunal was of the unanimous conclusion that the dismissal was unfair".[13]It further considered the allegation made by the Claimant that others had been engaged in similar breaches of procedure for it was admitted that the Claimant did not follow the standard procedures in the three ways charged. The Tribunal held that the Respondent had failed to carry out sufficient investigations. If it had done, it may well have come to the conclusion that its own procedures were not being followed and that the Claimant was simply one of a number of employees making similar "mistakes" (see paragraph 36 of the Reasons).[14]The Tribunal decided that the principles applicable in Polkey (above) were not in play and no issue arises in our case about that. It did, however, say this in response to the contention by the Respondent that there was contribution on the footing that there was an unfair dismissal. "40. …..With regard to the Claimant's contribution to her dismissal, the Tribunal again has concluded that the dismissal was substantively unfair for the reasons stated above and therefore the Claimant did not contribute to her dismissal and that no such reduction should be made for contributory fault." The Respondent's case[15]On appeal, five points are taken by Mr Powell for the Respondent. The first relates to the construction of the documents. Although initially indicating that this might be a matter which related to a criticism that the Tribunal had substituted its own judgment for that of the reasonable employer, he did, in the alternative, contend that as a matter of construction, the documents to which we have referred do not require a finding of a deliberate act. Secondly, he contended that the Tribunal's finding that there was no evidence to lead the Respondent to conclude that the Claimant had committed a deliberate act was one which was not open to it, having examined the evidence. Thirdly, he contended that the Tribunal had been incorrect in its approach to contributory fault for it had failed to give sufficient reasons and had used the linking of the two parts of the phrase, which we have referred to by the word "therefore", to indicate an error of law. Fourthly, this case was run on the basis that errors had occurred, but the Claimant had substantial mitigation which should allow her to escape the penalty of dismissal. This was a matter for the Respondent and its action fell within the band of reasonable responses. The Tribunal had failed to pay attention to a relevant factor, that is that the Respondent had been fined previously by the regulator for breaches. It was expressly submitted that the Respondent did not today, or any stage previously, rely on a criticism of the Claimant that would form a charge against her of carelessness. The claim was based on her breach of the disciplinary framework. The Claimant's case[16]On behalf of the Claimant, it is squarely submitted to us that this is a construction point which we must resolve. The correct construction of the documents is that deliberateness is required in order to trigger a finding of gross misconduct. The dismissal of the Claimant was partly procedural because it invoked a failure properly to investigate and thus the case fell within the doctrine of British Home Stores Ltd v Burchell [1978] IRLR 379 . Miss McKie did not demur when it was indicated that a failure in any one part of the Burchell test does not indicate automatic unfairness. Thus it appears to us to be common ground that everything must be looked at as a whole. The Tribunal did not err when it held that the Claimant did not contribute to her dismissal. The legal principles[17]The legal principles are not in dispute. The Tribunal must, in a case of misconduct, go through the stages set out in the authorities to which it and we have referred above. The Tribunal is also required to give reasons so that the parties can understand its decision making: see Meek v City of Birmingham District Council [1987] IRLR 250 . In a case where contributory fault is alleged, findings must be made and the conduct must be adjudged to be blameworthy: see Nelson v BBC No. 2 [1980] ICR 1110. When a new point is raised at the EAT, it will be allowed to be argued only in exceptional circumstances: see, for example Mensah v East Herts NHS Trust [1988] IRLR 531. Discussion and conclusions[18]First, we will deal with the new point issue. In our judgment, the Respondent is not seeking to raise a new point not raised below. It is plain that the Respondent is not alleging carelessness. No new point arises. As to the construction point, our view is that this is not easy. It was submitted to us that if that were the case, any ambiguity ought to be resolved against the maker of the document, which is the Respondent. When we construe this document, it appears to us that Ms McKee's construction is correct. The misconduct, defined as any deliberate act, can fall into two parts, each prefaced by the word "which" in clause 2.3; but both of them require a deliberate act. The examples of gross misconduct set out in Appendix B confuse the issue. The list includes matters which are plainly deliberate and intentional: theft, dishonesty, deliberate damage. It also includes matters where the use of the word "deliberate" is interposed as we have just cited it, including also deliberate or serious acts of discrimination. If "deliberate" was a feature of every one of these examples, it is unnecessary for the Respondent to have included the word "deliberate" in a number of places. But then there is a curiosity about the inclusion of serious negligence which, as Mr Powell rightly points out, is not capable of being deliberate and Miss McKie did not suggest otherwise.[19]On its own, the charge put against the Claimant is of serious breaches of the compliance requirements under the FSA. It seems to us that even without dedicating a specific construction, the use of the words "serious breaches" connotes that the Claimant has done something wrong deliberately. But if we are wrong about that, then an employee subject to this regime is to be guilty of gross misconduct only if the serious breaches of the FSA requirements is the result of any deliberate act committed by him or her. Such confusion and ambiguity as we have found to exist within this regime must be construed against the maker of the document. What this document indicates is that the Respondent will take very seriously and visit with dismissal, in appropriate circumstances, matters which are the subject of deliberate action.[20]Thus the Tribunal was correct in its finding that the Respondent would need to be convinced of deliberate commission of a serious breach. The Tribunal came to the conclusion in paragraph 33, which we have cited above, that there was insufficient evidence for the Respondent to reach that conclusion. We have, with Mr Powell's help, examined the Chairman's notes and we are grateful to the Chairman for producing them. It appears to us that the relevant officer, Miss Webb, was juxtaposing on the one hand a serious breach and on the other, some deliberate intention to breach the rules for he passages in her evidence include the following:
"I do not know if it was an error or negligence. I cannot get into her head but I found that it was a breach of procedure and serious enough to dismiss"
. When questioned by the Chairman:
'How did you decide Baljit's actions were deliberate?'
Ms Webb:
'It is difficult to say, because of bonuses and targets and pressure on staff to open accounts. I am not sure the action was negligent or deliberate. There is no personal gain, no dishonesty. It could have been negligent, but still would not have been acceptable'
. Chairman:
'Did you find it to be negligent?'
Ms Webb:
'I found it to be a breach of procedure'
And when questioned by Mr Lane, a member of the Tribunal, Ms Webb said: " "This is the issue of negligence. I do not know if it was deliberately falsified. Staff are just under pressure to open accounts".[21]It seems to us, therefore, that this officer of the bank was prepared to take disciplinary steps against the Claimant if there were a serious breach as it is accepted there was here of the FSA rules and was not required to form a view herself as to whether or not it was the result of deliberately committed acts of misconduct. As we have indicated, that construction is incorrect. This officer was operating on the basis purely of the wording in examples given.[22]We have no doubt that an employer so closely regulated, as this one is, is entitled to impose rigorous standards in relation to the FSA to be adopted by all its staff; but the confusion here is indicated, as we have said, by the requirement that there must be misconduct forming part of a deliberate act. We therefore uphold the Tribunal's decision as to construction and we reject the contention that there was evidence that satisfied the Respondent on that matter. We hold that no error was committed by the Tribunal, whether by substitution of its view or otherwise, in its depiction of the failure by the Respondent to meet the steps set out in BHS v Burchell . There was evidence before the Tribunal from the Claimant that others have made similar mistakes and the Respondent was, in the Employment Tribunal's judgment, falling below the standards of investigation required of a reasonable employer dealing with that allegation. The decision to dismiss the Claimant was found to fall outside the band of responses of a reasonable employer. We can see no error in the Tribunal's approach to that essentially fact finding matter, testing it against the standard of a reasonable employer within the bands of reasonable responses.[23]We then turn to the issue of contribution. Here, we are persuaded that the Tribunal made an error. First, it failed to explain its reasons for deciding against the Respondent's contention that there should be contribution. It failed to set out the basis upon which it rejected the Respondent's claim. The linkage between the substantive unfairness and no contribution is, in our judgment, an error of law. Many cases which are substantively unfair invoke the jurisdiction of the Employment Tribunal under s123 to reduce the compensation by reason of the Claimant's contribution. Indeed, it is more likely to be in substantively unfair than in procedurally unfair dismissals that the Tribunal will find a contribution. In a procedurally unfair dismissal, this usually involves the Respondent failing to carry out some objectively required reasonable step of investigation and that really is a matter which is in the hands of the Respondent. It is unlikely – we do not say impossible - that contribution will apply in such a case, but where, as here, an issue of contribution is raised, it should have been dealt with. We are not asked ourselves to substitute a view but both Counsel invited us, if this were to be our judgment, to send the matter back to the Employment Tribunal, and that is what we will do.[24]We have upheld the Tribunal's findings on liability. There has been no challenge to its findings on Polkey and there is no basis for us to hold that the parties, or more realistically the Respondent, has so lost confidence in this Employment Tribunal or that the Tribunal will behave unprofessionally when it visits the question of contribution. This case has to go forward to a remedy hearing and it is often thought that the issue of contribution is a remedy matter. There will be an opportunity, therefore, for a submission to be made - we hardly think it necessary for additional evidence – on the basis of contribution. We would very much like to thank both Counsel for their careful written arguments and the concise way in which they have presented the arguments to us today within the time available.[25]The Employment Tribunal made the point that ACAS is available for conciliation. We endorse that point.