THE ROYAL BANK OF SCOTLAND PLC v MRS S MCADIE [2006] UKEAT 0268_06_2911

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2006] UKEAT 0268_06_2911Case No Appeal No. UKEAT/0268/06Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
THE ROYAL BANK OF SCOTLAND PLCAPPELLANTMRS S MCADIERESPONDENT
Before
Mr Justice Underhill Mr D EvansDate 29 November 2006
[1]APPEARANCES For the Appellant MR D BROWN (of Counsel) Instructed by: Messrs Brodies Solicitors 15 Atholl Crescent Edinburgh EH3 8HA For the Respondent MR C OVER (Solicitor) Messrs Over Taylor Biggs Solicitors 4 Cranmere Court Lustleigh Close Matford Business Park Exeter EX2 8PW SUMMARY Unfair Dismissal – Reasonableness of dismissal The employee developed a stress-related illness which the Tribunal held was attributable to the conduct of one of her managers and which was then exacerbated by the mis-handling of the employer's Grievance Procedure – After a year she was dismissed for incapacity, in circumstances where both her position and the medical evidence was unequivocal that there was no prospect of her ever returning to work – The Tribunal held that the dismissal was unfair because the illness had been caused by the employers' unreasonable behaviour – Held that that was a misdirection and that in the circumstances the dismissal could not have been held to be unfair – Observations on the decision in Betty. THE HONOURABLE MR JUSTICE UNDERHILL This is an appeal by the employer, Royal Bank of Scotland, against the decision of an Employment Tribunal sitting at Ashford that the respondent employee, Mrs. McAdie, was unfairly dismissed. The essential facts for the purpose of this appeal can be summarised as follows:(1) The initial problem with Mr. Geerts. Mrs. McAdie was first employed by the National Westminster Bank (subsequently acquired by the Royal Bank of Scotland) in 1983. In summer 2003 she was working as a Customer Services Officer at the Bank's Bromley branch. In July of that year she was transferred, on a temporary basis, to its branch at Swanley. She was not happy about the move, and on 4 July 2003 she complained to Mr. Geerts, the manager to whom her own manager reported. They had a meeting on 17 July 2003. A note of the meeting was taken and was sent to her, but it was incomplete, and she wrote to Mr Geerts on 22 August drawing attention to the omissions. In response, Mr. Geerts spoke to her on the telephone on 4 September. Mrs. McAdie alleged – and the Tribunal in due course found - that in the course of that conversation Mr. Geerts spoke to her in a way which was inappropriately authoritarian and unsympathetic. She wrote to him again on 17 September, dealing further with the omissions from the notes but also referring to his manner in their recent telephone conversation as "extremely intimidating and bullying". He failed to reply for over a month and when he eventually did reply she found his response unsatisfactory. Meanwhile, on 10 September Mrs. McAdie went off sick, with symptoms which were in due course diagnosed as due to work-related stress: as it turned out, she never returned to work.(2) The submission of the grievance. On 6 November 2003 Mrs. McAdie submitted a grievance under the Bank's procedure, complaining both about the original problem concerning her transfer and about the conduct of Mr. Geerts.(3) The first stage of the grievance. There were delays in arranging a meeting under stage 1 of the procedure; but Ms. Magson, a Regional Director, saw Mrs. McAdie on 22 January 2004. She gave her decision at a further meeting on 16 February, confirmed by a letter of 21 February. As regards the complaint against Mr. Geerts, she decided that his letters to Mrs. McAdie had properly addressed the points raised by her, a conclusion with which the Tribunal disagreed. As regards the telephone conversation of 4 September she had made some very limited enquiries, but she decided that that was not a matter with which she could deal: she said that it fell to be dealt with, if at all, under the Bank's Dignity at Work policy. She sought to dissuade Mrs. McAdie from taking that course, saying that from her initial enquiries she did not think that either Mrs. McAdie or Mr. Geerts had been "constructive" during the conversation. The Tribunal was critical of how Ms. Magson handled this point, since the Dignity at Work policy was not an alternative to the grievance procedure. Ms. Magson did decide that Mr. Geerts was at fault in not replying earlier to Mrs. McAdie's letter of 17 September 2003; and as a result of that decision he wrote to her on 23 February to apologise. She also noted other delays in correspondence, though she made no formal decision in relation to them.(4) The second stage of the grievance. On 4 March 2004 Mrs. McAdie invoked the second stage of the grievance procedure. That was conducted by Mr. May, the Managing Director of Commercial Banking South. He asked Mrs. McAdie for any further information she wanted to give and asked her in particular what she would regard as a suitable resolution. She replied on 6 April. In response to Mr. May's specific query she said:
"It is extremely difficult to verbalise how I feel after 20 years in the bank's employment. I am not experienced in these matters, but the only suitable resolution in my opinion, albeit not one that I wish to take, would be for the bank to offer me recompense for the losses I would incur if I were to leave the bank's employment ."
Mr. May was not obliged under the procedure to have a meeting and he did not do so. He conducted a "desktop review". He gave his decision on 22 April. He repeated the Bank's apologies for the delays in the correspondence, but as regards the complaints about Mr. Geerts' conduct, he rejected these on the (erroneous) basis that they had been fully investigated by Ms. Magson and no evidence of inappropriate behaviour had been found. He assured Mrs. McAdie that she was a valued member of staff and offered her a return to work in different roles or at different locations of her choosing. As to this, the Tribunal said (at para. 48 of the Judgment):
"The Claimant told the Tribunal that she accepted that Mr. May had done his best to get her back to work. It was her view that by then it was too late and her health had been affected." (It may be, though nothing turns on this, that Mrs. McAdie was referring not only to Mr. May's approach at this stage – when he had not in fact met her - but also to the meeting which he held with her in August (see below).) (5) The initiation of the sickness procedure. In June 2004, when Mrs. McAdie had been off work for about nine months, the Bank decided to activate its long-term sickness procedure. An Occupational Health and Safety Consultant, Miss Young, who had received a report from Mrs. McAdie's GP, reported on 19 July 2004 that the problem was primarily a management one which had resulted in ill-health: if the problems could be solved, she expected that Mrs. McAdie would get better. She suggested a phased return to work. A meeting took place on 4 August, chaired by Mr. May and attended by the Claimant. The Bank made it clear that it was keen for her return to work. Mrs. McAdie said that she wanted to pursue her grievance to the next stage – stage 3 - and handed in a formal letter to that effect; but she agreed that once that letter was responded to she would meet the (new) manager at the Bromley branch to discuss a return to work. In the event, such a meeting never took place because of a confusion about when or whether stage 3 had been concluded. (6) The later stages of the sickness procedure. Mrs. McAdie saw an occupational health doctor, Dr. Harvey, on 12 November 2004. He diagnosed "a severe adjustment disorder secondary to alleged workplace issues including harassment"
. He doubted if her condition was susceptible to treatment in view of "the depth of her ill-feeling towards the employers and the strength of her sense of injustice". He found that "recovery is realistically only likely to happen if there were satisfactory resolution of the issues at work, which now appears impossible". His detailed assessment was summarised in a subsequent report by a Dr. Reed dated 9 December, who did not himself see Mrs. McAdie. It was in fact only his report which was supplied to the Bank; but it is a reasonably accurate summary of Dr. Harvey's fuller findings. His "background/findings" read: This [member of staff] exhibits ongoing distress and upset relating to her perception of how the Bank has treated her. It appears that a relatively minor issue has escalated through a variety of grievance procedures to the point where [she] cannot contemplate a return to work due to an irretrievable breakdown in her relationship with the Bank. Currently there is a lot of upset and anger, but it is not thought that medical treatment will help in this situation because her feelings and symptoms are so closely related to her employment dispute situation. The DDA is unlikely to apply to this case as there is insufficient evidence to suggest sufficiently adverse effects on day to day activities. This sort of situational problem is normally dealt with by resolving outstanding issues, mediation or redeployment. However in this case the strength of negative feeling towards the Bank is such that a return to work in any capacity does not seem feasible. However I would state that the primary reason for not returning to work is one of failing to resolve an employment dispute, and not due to a primary medical problem. This lady appears unable or unwilling to accept the resolution that has been offered, but this is not a medical issue. A return to work with the Bank in any circumstances in this context will not be successful and would precipitate a deterioration in health. However this would not be helped by medication. [Long-term disability] must be declined in this situation as the primary reason for absence is an unresolved employment dispute. His recommendation was: If continued efforts at a redeployed return to work fail then this lady is likely to remain unable to return to work for the foreseeable future. This lady is medically fit enough to return to an alternative job (with accommodations) but is unable to do so due to continued ill-feeling and not being able to agree the resolution of her grievance, which are management and not medical issues. He expressed the view that "no further referral to [occupational health] or medical treatment is likely to alter this situation". (7) The meeting of 22 December 2004 and Mrs. McAdie's dismissal. Mrs. McAdie was asked to a meeting under the sickness procedure on 22 December 2004. It was again chaired by Mr. May. Both parties had Dr. Reed's report. Mrs. McAdie was accompanied by a representative. There was a full discussion. Mrs. McAdie said that she was unable to return to work and asked to be "allowed to leave [the Bank's] service with dignity", by which she meant with some appropriate compensation (cf. (4) above). After an adjournment Mr. May announced his decision. Mrs. McAdie was given twelve weeks' notice of dismissal on grounds of ill-health. Her dismissal was confirmed by letter the following day. (8) The appeal. Mrs. McAdie appealed against the decision. The appeal was heard by Mr. Hunter, a senior manager. It was unsuccessful. It is to be noted, however, that – consistent with what she had been saying prior to her dismissal – Mrs. McAdie's stance at the appeal hearing was not that she wanted the employment to continue but that she wanted compensation for loss of her job. She told Mr. Hunter that if she had received an apology or acknowledgment of error "at the outset" then she could have returned to work; but when she was asked "given where we are today, what else did she consider the bank should do" she said that there was "no remedy" and that that indeed had been her position throughout the grievance process. She accepted that her feeling was that her trust and confidence in the group had been destroyed and that she could not return to it; she should leave "with a clean reference and compensation".[2]Mrs. McAdie started Employment Tribunal proceedings on 20 May 2005, claiming for unfair dismissal and sex discrimination. The case came before the Tribunal over three days in January 2006. The Tribunal reserved its decision, which was sent to the parties on 15 February. The sex discrimination claim was dismissed, but the Tribunal upheld Mrs. McAdie's claim of unfair dismissal, subject to a Polkey reduction of 50%. Its reasons appear at paras. 81-87 of the Judgment, which are in the following terms:
"81. The Tribunal concluded that the reason for dismissal was capability. This is a potentially fair reason for dismissal. The Respondent had obtained medical reports about the Claimant's medical condition and had discussed the matter with the Claimant before dismissing her. 82. However, the Tribunal considered that to decide the unfair dismissal on this basis would be to oversimplify the circumstances of this case. The Tribunal concluded that the Claimant's health condition had been caused by the Respondent and the way in which they had dealt with her grievance. We should therefore take this into account in considering the fairness of the dismissal. 83. We concluded that the reason for the Claimant's incapacity was the failure of the Respondent to address her original grievance in respect of Mr Geerts and in particular his failure to amend the minutes to reflect the discussion that that had taken place and the way in which he had spoken to the Claimant on the telephone on 4 September 2003. The Tribunal concluded that these two issues were never properly addressed despite the lengthy procedure that had occurred. 84. The Tribunal concluded that Ms Magson had missed the point with regard to the minutes and had not properly investigated the allegations with regard to the telephone call, believing that she could not deal with the matter. Although she felt that she could not deal with it she recommended that the Claimant did not pursue it. Mr May then dealt with it, but on the basis of Ms Magson's incomplete investigation. Therefore, the matter was never properly resolved and nothing was done to ensure that the Claimant and Mr Geerts could work together in the future. The Tribunal concluded that any reasonable handling of this grievance would have ensured that this was one of the outcomes. 85. The Tribunal noted that during his evidence Mr Hunter referred to the telephone call and in particular Mr Geerts' manner as "unfortunate"
. This had never been recognised by the Respondent or conveyed to the Claimant. In fact, the opposite had happened and her grievance had not been upheld in respect of this complaint. 86. The Tribunal concluded that the Respondent had gone through the motions in respect of their procedures but had never properly addressed the complaint that was being made. This in turn had an effect on the Claimant's health. 87. Having reminded itself that the Tribunal must not substitute its own view of what should have occurred, the Tribunal were satisfied that no reasonable employer would have dismissed in these circumstances because no reasonable employer would have found themselves in these circumstances. A reasonable employer would have investigated the matter properly at an early stage. If, despite such an investigation, the outcome was not satisfactory to the Claimant the employer would have been on firm ground to consider termination of employment in due course."[3]Mr. Brown, who appeared before us for the Bank, questioned whether the Tribunal was entitled, without hearing medical evidence, to reach the conclusion that it did in para. 82, namely "that the Claimant's health condition had been caused by the Respondent and the way in which they had dealt with her grievance". He noted that she had some previous history of stress and that she went off sick as early as 10 September, before her grievance had even been raised, let alone (mis-)handled. He also submitted that the various criticisms made by the Tribunal, both of Mr. Geerts and of the managers involved in handling the grievance, are comparatively minor and the severity of Mrs. McAdie's reaction is so disproportionate as to raise serious questions about causation. He also pointed out that she made many other criticisms which the Tribunal did not uphold. However, it is convenient for us for the present to accept that it was open to the Tribunal to reach the conclusion that it did on this point and to consider the issues on that basis.[4]The situation where an employer has dismissed an employee on account of ill-health or incapacity for which he is in whole or in part responsible has been considered in three decisions of this Tribunal – London Fire and Civil Defence Authority v Betty [1994] IRLR 384; Edwards v Governors of Hanson School [2001] IRLR 132; and Frewin v Consignia Ltd (unreported EAT/0981/02). In Betty Morison P appeared to say that the fact that the employer had been responsible for the incapacity which was the reason for a dismissal should as a matter of principle be ignored in deciding whether it was reasonable to dismiss for that reason. But Bell J in Edwards and Judge Reid QC in Frewin expressed the view that, if that was what Morison P meant, it over-stated the position. We agree. It seems to us that there must be cases where the fact that the employer is in one sense or another responsible for an employee's incapacity is, as a matter of common sense and common fairness, relevant to whether, and if so when, it is reasonable to dismiss him for that incapacity. It may, for example, be necessary in such a case to "go the extra mile" in finding alternative employment for such an employee, or to put up with a longer period of sickness absence than would otherwise be reasonable. (We need not consider the further example, suggested by Bell J in Edwards , of a case where the employer, or someone for whose acts he is responsible, has maliciously injured the claimant, since there is no suggestion that those are the facts here. But we should say that we find some difficulty with the implication that in such a case there could never be a fair dismissal.) However, we accept, as did Bell J and Judge Reid, that much of what Morison P said in Betty was important and plainly correct. Thus it must be right that the fact that an employer has caused the incapacity in question, however culpably, cannot preclude him for ever from effecting a fair dismissal. If it were otherwise, employers would in such cases be obliged to retain on their books indefinitely employees who were incapable of any useful work. Employees who have been injured as a result of a breach of duty by their employers are entitled to compensation in the ordinary courts, which in an appropriate case will include compensation for lost earnings and lost earning capacity: tribunals must resist the temptation of being led by sympathy for the employee into including granting by way of compensation for unfair dismissal what is in truth an award of compensation for injury. We also agree with Morison P in sounding a note of caution about how often it will be necessary or appropriate for a tribunal to undertake an enquiry into the employer's responsibility for the original illness or accident, at least where that is genuinely in issue: its concern will be with the reasonableness of the employer's conduct on the basis of what he reasonably knew or believed at the time of dismissal, and for that purpose a definitive decision on culpability or causation may be unnecessary.[5]We proceed, therefore, on the basis that the Tribunal did not err in principle in being prepared to take into account the fact (as it found) that the Bank was responsible, and culpably so, for Mrs. McAdie's ill-health; but also that it is important to focus not, as such, on the question of that responsibility but on the statutory question of whether it was reasonable for the Bank, "in the circumstances" (which of course include the Bank's responsibility for her illness), to dismiss her for that reason. On ordinary principles, that question falls to be answered by reference to the situation as it was at the date that the decision was taken. Thus the question which the Tribunal should have asked itself was "was it reasonable for the Bank to dismiss Mrs. McAdie on 22 December 2004, in the circumstances as they then were, including the fact that their mishandling of the situation had led to her illness?".[6]That was not the approach which the Tribunal avowedly took. The elegantly-expressed reasoning at para. 87 of the Judgment - "no reasonable employer would have dismissed in these circumstances because no reasonable employer would have found themselves in these circumstances" – focuses explicitly not on what it was reasonable for the Bank to do in the circumstances in which it found itself (however culpably) but on whether it should have got into those circumstances in the first place. If that is really the approach taken by the Tribunal it was plainly a misdirection. It would apply in any case where the employer has negligently injured an employee and would have the result, which as we have said above is not the law, that the employer in such circumstances could never fairly dismiss.[7]We have considered whether this may not be a case where the Tribunal surrendered to the temptation of a pithy phrase and in so doing misrepresented what were in fact its real reasons. But the entirety of the reasoning in the paragraphs set out above is in keeping with para. 87. The focus is wholly on establishing that Mr. Geerts had behaved badly towards Mrs. McAdie; that the Bank had never properly resolved the grievance arising out of that conduct; and that that was the cause of Mrs. McAdie's illness. There is no consideration of what, having reached that regrettable situation, it was reasonable for the Bank to do. It is also worth noting that in its reasoning on the Polkey issue, the hypothetical fair procedure considered by the Tribunal was one in which either Ms. Magson or Mr. May had fully investigated Mr. Geerts' conduct at stage 1 or stage 2 of the grievance procedure – i.e. over six months previously.[8]It remains for us to consider whether, if the Tribunal had asked itself the right question, it could properly have concluded that the Bank's decision to dismiss Mrs. McAdie was outside the range of reasonable responses: if so, the right course would be for us to remit the case for the Tribunal for further consideration. But we do not believe that such a conclusion would be open on the facts of this case. The position as at 22 December 2004 was very stark. The medical evidence was unequivocal both that Mrs. McAdie was unfit for work and that there was no prospect of recovery: even if the Bank had been able to offer some solution (perhaps involving a re-opening of the grievance or a full apology) that was not going to be acceptable – see para. 1(6) above. Mrs. McAdie herself said the same, both to the Bank and in her evidence to the Tribunal - see paras 1(4), (7) and (8). She wanted the employment to terminate, but she wanted compensation. This was not therefore a case of the kind to which we refer at the end of para. 4 above, where there was something more which the Bank, having caused the illness, could and thus should have done to try to save Mrs. McAdie's employment. Mr. Overs, who appeared for Mrs. McAdie both before us and in the Tribunal, submitted that if Mr. May had, on 22 December, acknowledged the Bank's failings up to that point and given her the chance to reconsider her position in the light of that recognition, there was a good chance that she might have done so and a return to work have been negotiated: instead, the Bank was, up to the last, making sympathetic noises but refusing to acknowledge that it had done anything wrong. But even if there was some chance that a belated recognition of error might have borne fruit (which the available evidence hardly supports), the question is whether it was unreasonable of Mr. May not to have taken that course. We do not see how it could be. The crucial point is that neither the doctors nor Mrs. McAdie herself were suggesting that there was any possibility of the employment continuing. Mrs. McAdie was saying the opposite, and in emphatic terms. There was in truth no alternative to dismissal.[9]In these circumstances we must allow the appeal and dismiss Mrs. McAdie's claim. We do not do so without feeling real sympathy for her. The Tribunal found that the Bank failed to carry out its own grievance procedures properly. Even if that factor contributed to, rather than wholly causing, Mrs. McAdie's break-down in health, it is very regrettable that that has led to her losing her employment after twenty years' loyal and valued service. But the Tribunal was not hearing a claim for damages of the Eastwood v Magnox or Majrowski type (see [2005] 1 AC 503 and [2006] ICR 1199 ). It was only entitled to award compensation if the Bank's decision to dismiss Mrs. McAdie was unreasonable in the circumstances in which it was taken.