MR J WALKER v SECRETARY OF STATE FOR TRADE & INDUSTRY [2006] UKEAT 0321_05_1701

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2006] UKEAT 0321_05_1701Case No Appeal No. UKEAT/0321/05Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR J WALKERAPPELLANTSECRETARY OF STATE FOR TRADE & INDUSTRYRESPONDENT
Before
Mr Justice Langstaff Mr C Edwards Mrs A GallicoDate 17 January 2006
[1]APPEARANCES For the Appellant MR ROBIN WHITE (of Counsel) Instructed by: Messrs Baily & Goff with Khilkoff-Boulding & Co St James House 53-55 Spital Street Dartford Kent DA1 2EB For the Respondent Mr B HOOPER (of Counsel) Instructed by: The Treasury Solicitor (Employment Law Team) 1 Kemble Street London WC2B 4TS SUMMARY Unfair Dismissal: Reasonableness of Dismissal/Procedural Fairness/Automatically Unfair Dismissal Whether Employment Tribunal in error in concluding that Claimant "did not know until a very late date that he would (suffer a loss of pay while off sick)" when the evidence agreed to have been given was that he had known for nearly three months prior to his return to work, and the dismissing officer accepted that had she realised this, she might possibly not have dismissed. Employment Tribunal treating the factual issues which were for the employer to determine as their own to decide. Held in error. THE HONOURABLE MR JUSTICE LANGSTAFF This appeal, against a decision of a Tribunal sitting at London (South) whose extended reasons were promulgated on 18 March 2005, raises the question whether the British Home Stores Ltd v Burchell [1978] IRLR 379 test is honoured if the employer conducts an investigation which, in its design, is reasonable but either fails to enquire into an obvious matter of importance, or misunderstands the result of the investigation which has been conducted.[2]It arises in this way. The Tribunal dismissed a claim by the employee, Mr Walker, that he had been unfairly dismissed. He had been employed by the Department of Trade & Industry from February 1993, having earlier been employed in the Civil Service since February 1989. He was an assistant director in the Standards & Technical Regulations Directorate of the Department of Trade & Industry. He was dismissed on 23 February 2004. That followed an extensive period of time during which he was absent from work.[3]In February 2003, so the Tribunal found, he went off sick, suffering from adhesive capsulitis of his shoulders, particularly the right - a condition more commonly known as frozen shoulder. The honesty and accuracy of that diagnosis was accepted ultimately before dismissal by the employer. For that condition Mr Walker underwent a manipulation under anaesthetic in June 2003. He also had two courses of cortico-steroid injection into the joint. He was on full pay throughout the period from February 2003 until 18 July 2003. Then, he was placed on sick pay at pension rate. That gave him an income which amounted to only one-fifth of full pay.[4]The Tribunal found that he had a hobby of racing motorcycles. During the time that he was absent from work and therefore personally, though with the assistance of medical certificates signed by his general practitioner, asserting that he was unable to perform the duties of his office, he continued to engage in competitive motorcycle racing events. The Tribunal at paragraph 5.11 of its decision found that he undertook five two-day events involving no less than 15 races, each of which would have a practice session prior to the race. Understandably when this came to the attention of the employer, the employer wondered whether there was an inconsistency between Mr Walker's alleged inability to perform his work properly through illness and his active participation in motorcycling races.[5]He did not return to work despite the reduction in his pay until October 2003. When he returned he was examined by Dr Murphy who was the employer's medical adviser. At an examination on 22 October 2003 he was found to be complaining of pain on raising and extending his arms, although he appeared to have had no difficulty changing his clothes before and after the formal part of the examination and was reported to be a vague historian by Dr Murphy. He gave Dr Murphy the impression that although he had participated in motorcycle racing, this was on one occasion only and not otherwise.[6]This inconsistency, and therefore the apparent "swinging the lead" as the employer thought, required investigation. The Tribunal found that on 19 December 2003 there was a disciplinary meeting between Mr Walker and a Mrs Heyhoe whose formal position was that of the Director of Human Resources Operations.[7]At about that time in extensive written comments the employee claimed that there was no inconsistency between participating in motorcycle racing and a difficulty in working at a keyboard which, it was his belief, exacerbated his shoulder symptoms. He did not, in December, produce any medical evidence which directly supported that claim. Nonetheless, prior to a second interview which was held on 16 February 2004, he produced voluminous material which made a number of points: in particular he produced material which alleged (see page 50 of the bundle) that in charging him with gross misconduct (the gross misconduct being dishonesty and an abuse of the sick pay provisions) he felt that the Department had not fully considered a number of matters, in particular the nature of his illness and the recovery period, the treatment he had sought, the particular duties of his post, the financial penalties of being on unpaid sick leave, the lack of guidance from his employer as to what activities can legitimately be performed whilst sick and the nature of motorcycle racing.[8]It is common ground that a decision to dismiss Mr Walker was made as a consequence of all of the material (and considering it) and the interview by Mrs Heyhoe, and was expressed in terms of a letter dated 23 February 2004 from her to him. In that letter on the second page Mrs Heyhoe described the decision which she was to make. She identified in the first two paragraphs whether or not there was, in her view, on the material before her any inconsistency between the Claimant's professed inability to work at his keyboard before he returned to work in October 2003 and his participation in motorcycle racing. She concluded that there was. She then continued in the next paragraph to say this: "I have also considered the question of your financial position and whether you would have deliberately stayed on sick leave unless you were genuinely unable to return to work. Your failure to provide certificates and the late notification of being off pay off pay suggests that you may not have realised the full financial implications of remaining off work. I am not, therefore, convinced of this argument, particularly as you returned to work quickly after going off pay".[9]That paragraph relates to the way in which Mr Walker was apparently approaching his employers. He was advancing the view that he believed that working at a keyboard would exacerbate his symptoms and that, in practice, motorcycle racing did not significantly do so. Therefore, he was addressing the genuineness of his symptoms. The issue as to pay is that he claimed, understandably, that if he had not believed that working exacerbated his condition, there would have been the strongest possible financial incentive to return to work after 23 July 2003 (when, it appears, he had a letter from the Respondent identifying that he would then be placed on pension pay, the net result being, as we have already explained, that he would lose 80% of his remuneration). To suffer that for the period he did was therefore, he argued, a clear demonstration of the genuineness of his belief in the effects of work upon his shoulder, whatever else he might be able to do in his spare time. We return to Mrs Heyhoe's letter. She summarised her decision thus far in these words:
"I have therefore concluded that the charges set out in the letter dated 4 December 2003 [we interpose those were charges of dishonesty and abuse of the sick pay provisions] have been substantiated"
. We note, in passing, that those charges related not just to dishonesty, but also to the abuse of the sick pay provisions and therefore related centrally to pay.[10]She went on in the letter to consider what, in the light of the acceptance of the accuracy of the charge, was the appropriate penalty. She included a number of matters relevant to that in the next following paragraphs, including a failure by Mr Walker to submit medical certificates and attempts to deny the extent of his racing, together with the evidence of the medical adviser in relation to the ease with which he undressed, compared with his limited ability when formally examined, so as to conclude that he had been dishonest to such an extent that the relationship of trust had irretrievably broken down and he should therefore be dismissed.[11]These were matters which the Employment Tribunal in its decision (at paragraph 5.20) thought served only to give the employer further information about matters which tended to confirm the Respondent's view that he was guilty of the misconduct charged. Against that background, we turn to the Tribunal's decision. The Tribunal's Decision[12]The Tribunal had to determine whether or not the dismissal was fair or unfair by applying the well-known words of section 98 of the Employment Rights Act 1996 which we need not repeat here. That necessarily involved the Tribunal in determining not whether it (the Tribunal) thought that the dismissal was one which it would have advised, but whether the employer was or was not acting reasonably in treating misconduct as a reason for the dismissal. Conventionally, that involved an application of the well-known tests set out in British Home Stores Ltd v Burchell [1980] ICR 303 . In effect, and summarising, those tests require that when there is a dismissal, the employer must have an honest belief in the employee's guilt. Secondly, that belief must be based on reasonable grounds. Thirdly, that must be after a reasonable investigation. It may be that it then leads to the fourth question: whether if, in that way, an offence is proved to the employer's satisfaction, dismissal is a response, which falls within a range of reasonable responses open to an employer so placed.[13]The Tribunal heard evidence from Mrs Heyhoe. That evidence is not directly reflected in any passage in its decision. We have been given a note of that evidence which both advocates before us accept we should rely upon. It is verified by a letter of 19 September from the Chair of the Tribunal concerned. In that evidence, Mrs Heyhoe accepted that Mr Walker must have received a letter of 23 July which showed that the pay reduction was to take effect from 18 July. She acknowledged that the period of his reduced pay was obviously longer than she had thought. She accepted that Mr Walker appeared to be in financial difficulty. The passage of evidence is to the effect that if she had realised at the time what she knew now, when it was pointed out to her in cross-examination, it might possibly have changed her view in respect of the decision to dismiss. To a question summarised as "finances might well have made a difference?" at page 3 of the note, her answer is recorded as "made a difference for financial part might have made a difference. Difficult to answer hypothetical questions".[14]Upon this foundation, it is suggested to us by Mr White, Counsel for the Claimant, that the Tribunal fell into an error of law. What it accepted at paragraph 11 was the belief of the Respondent that the Claimant was guilty of misconduct. That was a recognition of the first limb of the Burchell test. In paragraph 12 it found that having received evidence of his motorcycle racing, the employer had reasonable grounds to believe that misconduct had occurred. That equates to the second limb of the test. At paragraph 13 the Tribunal concluded that the investigation carried out by the Respondent was fair and reasonable. It continues in paragraph 13 to note:
"We were satisfied that Ms Heyhoe had regard to all of the matters put before her at the disciplinary meeting. She took time over her decisions and adjourned to allow time to gather all of the information she considered necessary to arrive at a fair decision"
. Then at paragraph 14, in a crucial paragraph, the Tribunal say this:
"The Claimant asserts that he had a financial incentive to return and would have returned to work earlier than he did had he not been unwell, which Ms Heyhoe did not properly take into account. The Tribunal found that matters relating to his finances were not so straightforward. We found that the Claimant did not know until a very late stage that he would no longer be in receipt of full sick pay during his sick leave period. We could not be satisfied in those circumstances the extent to which this affected his decision to remain absent from work. We were satisfied that the Respondent could reasonably conclude on the evidence before it that the Claimant was guilty of the gross misconduct charged"
. The Tribunal then went on to consider whether the response to conduct so proved fell within the range of reasonable responses and concluded that it did.[15]Earlier in its decision the Tribunal had recited the submissions made on the basis of the evidence before it which were addressed to it by the parties. It noted that the first argument for the employee was that a Ms Baker, who participated in the procedures surrounding the dismissal, did not take into consideration the Claimant's argument that he was on one-fifth of his pay and that it made no sense for him to remain off sick if he was not sick. Mrs Heyhoe was confused about the evidence as to whether the Claimant was having financial difficulties and she took no steps to sort out that confusion. Later, in the same passage after a reference to the Polkey vAE Dayton Services Ltd [ 1988] ICR 142 case, the submission is recorded as being "Mr Walker had no motive for staying off sick towards the end of the sick period and he suffered financial hardship from July 2003".[16]Accordingly, as we see it, what the Tribunal had to deal with was a decision to dismiss which, on its own terms, was reached upon two principal bases or planks (as they have been called the argument before us). Both Counsel before us accept that there were two planks at the start of the passage in the letter headed "Decision". Both accept that the second of those planks was the question whether or not the financial position of the Claimant argued for the genuineness of his belief that, whatever else he might be able to do because of the particular movement of his shoulders, working would exacerbate his problems.[17]The Tribunal itself had plainly noted that this was a principal argument before it since its task was to consider how the employer addressed the process of dismissal. We consider that it was incumbent upon this Employment Tribunal to deal with the argument that had been addressed to it. Of course, we recognise that an Employment Tribunal should not be required, at pain of committing an error of law, to have to deal with every single argument which is advanced before it by a party. Some arguments may simply be irrelevant. Many are peripheral. We accept what Mr Hooper for the Respondent before us says that much depends upon the weight of the issue to which the argument is directed. However, if a fair reading of the position is that the Tribunal had before it evidence from which it could fairly be said that the dismissing manager had made a mistake, that that mistake went centrally to her rejection of a major plank of the employee's case for his retention in employment and of innocence of the charge and if she, herself, had in evidence accepted that had she known the true state of affairs, it might have made a difference, then one might expect the Tribunal to deal with that particular issue. This is particularly so if the Tribunal recorded that a submission inviting them to do so had been addressed to it. Instead of doing that, this Tribunal, in our view, did not, in paragraph 14, address the approach of the employer to the information it had or did not have. Instead, it asked itself what it might have found in respect of the finances of Mr Walker.[18]The findings are expressed in imprecise terms. To say that the Tribunal found that the Claimant did not know "until a very late stage" begs, for instance, the question of when that might be. That he would no longer be in receipt of full sick pay during this sick leave period begs the question of whether the Tribunal appreciated the extent to which his income would be reduced. Paragraph 14 has no hint of any acceptance of the evidence which we have recited and which is common ground, nor does it deal with the submissions as to the effect of it. Arguably, therefore, unless Mr Hooper could persuade us otherwise, this appears to be a case of a Tribunal misunderstanding or misapplying the evidence before it in determining whether or not the employer had or had not reached a valid fair reason to dismiss. We are particularly concerned that at least one reading, and it seems to us the preferable reading, of paragraph 14 would indicate that the Tribunal in that paragraph were looking not at what was in the mind of the employer, but at their own view of the factual issues which, as is trite law, were not directly for review. The Employer's Submissions[19]For the Respondent employer Mr Hooper has argued that the Tribunal had concluded, as indeed in terms they did, that the investigation here by the employer was reasonable. He has argued that the point taken by Mr White has been described by him as an argument in respect of the reasonableness of the investigation to that effect that Mr White complains that Mrs Heyhoe did not properly investigate the true position in respect of the finances of the employee. Instead, he says, this was in truth, if it were to be categorised under the Burchell test at all, an absence of reasonable grounds upon which to base a decision.[20]We shall deal shortly with that point in saying that we reject it. It seems to us that the Burchell test indicates an approach to the determination of what is fair and reasonable in all the circumstances when the question is whether an employer has acted reasonably or unreasonably in treating a reason which he has as appropriate for dismissal. To be chained by the category under the Burchell test such that an advocate cannot advance a challenge to the reasoning of a Tribunal where it is in error (e.g. if his Notice of Appeal relates to "head 2" rather than to "head 3") is to be constrained by formalism at the expense of substance when the substance is sufficiently indicated by the Notice of Appeal in the first place. In short, we do not think, in this case, it matters significantly whether the mistake is categorised as one of failure to investigate or a failure to have reasonable grounds for a view. If there was a mistake and if it was one or the other, then the real issue which arises is whether or not the mistake is of such a character that a failure to recognise it by a Tribunal itself becomes an error of law which entitles this Tribunal to allow an appeal against the Employment Tribunal's decision.[21]He continues, with rather more promising prospects, to note that although much depends upon the importance of the mistake, here there were not just two planks for the decision to dismiss: there were the additional matters mentioned in the paragraph which immediately follows in the dismissal letter. The Employment Tribunal regarded those as strengthening the view of the employer and thus as entitling the employer to have that view strengthened as to the dishonesty of Mr Walker. He notes that the finding that there had been a reasonable investigation might be assisted by knowing what the conclusion of any such investigation would be. Thus he argues that if an employee complains to a Tribunal that the employer has failed to investigate a particular matter which he has raised in his defence in disciplinary hearings, but if, on investigation of the true facts, although the employer failed to do so, the point is simply worthless and of no weight, then is a factor which the Tribunal can take into account. It might be categorised perhaps by saying "there was a mistake. So what? It would have made no difference". Although that might, in the case of some mistakes, lead one instinctively to conclude that the process was unfair and that the proper analysis was to ask whether there should be a deduction from compensation to represent the chances of dismissal (had the investigation been carried out properly), it might also, argues Mr Hooper in effect, be relevant to knowing whether the investigation itself was a proper one. It must be the case (and we accept it must be the case) that the investigation by an employer is not to be equated with a public investigation into a disaster, nor a police investigation into a crime of significance. It is inevitably conducted within the context of employment, within a limited time scale, by people whose functions are not necessarily to conduct investigations and against the background of facts which have, of necessity, to be quickly established and often on a summary basis. Accordingly, we must not expect too much of an investigation before it is held to be reasonable.[22]However, Mr Hooper goes on. He argues that the finding here that there had been a reasonable investigation must be placed in the context in which it occurred. The way the case was put to the employer by the employee focused not upon the question of his finances but largely upon medical issues. He centred his defence on there being no inconsistency between participating in motorcycle racing and being unfit to work principally at a keyboard. He produced two letters: the first of 16 December 2003; the second on 20 January 2004 in which he put forward information to support his claims of innocence. They do not contain very much material about his finances. It was appropriate, therefore, says Mr Hooper for the Tribunal to look at the employer as one who was dealing with matters where it might be forgiven for not seeing the importance or potential importance of that which was financial, because it was obscured by the significance that was allegedly attached to other matters.[23]We have to say we think that latter submission overstates the point. It does so for two reasons. First, in both letters there is reference to the financial matters. Indeed, the citation we have already given from the earlier of those two shows that it was one of five main matters which the Claimant was suggesting that his employer had not considered. In the second, he even stated in one sentence that "you are well aware that as of July 2003 I stopped receiving sick pay. Again, this weighs toward the fact that I was still injured". He told his employer the information as to the date upon which his pay was reduced and he made a point of it. However, the real answer, we think, to the context point is that in the submissions which the Tribunal itself records as being made, the Claimant put it up front; and secondly, so far as the employer's decision is concerned, as Mr White points out in reply, the employer regarded it as one of the two planks upon which to base the initial decision that the charge had been proved. There is, therefore, no substance here to any suggestion that the significance of finance was simply obscured by the welter of material (much other material though there was).[24]Thus, we come to our conclusions and our review of the applicable law. Mr Hooper makes an overall point that this appeal is one which relies upon perversity. He draws our attention to what Mummery LJ said in the case of Yeboah v Crofton [2002] EWCA Civ 794 , at paragraph 93 in particular, that an appeal based on an allegation of perversity ought only to succeed where an overwhelming case is made out that the Employment Tribunal reached a decision which no reasonable tribunal, on a proper appreciation of the evidence of the law, would have reached. Even in cases where the Appeal Tribunal has grave doubts about the decision of the Employment Tribunal, it must proceed with great care.[25]We not only accept that, as we must, but we also note that it is not for us to form any factual, conclusion. It is only open to us to ask whether the Employment Tribunal erred in law in the way in which it approached the decision of the employer which is impugned before it. However, the Tribunal must have expressed what Mummery LJ described as a "proper appreciation of the evidence". To examine whether it has done so falls short, we emphasise, of entitling this Tribunal to consider the evidence before the Employment Tribunal and to come to its own appreciation such that it may then describe its own view as proper and that of the Employment Tribunal as improper. This principle gives no scope for that sort of factual review; but it does permit acknowledging that a Tribunal may misunderstand the evidence or misapply it. At paragraph 95 in the same decision, Mummery LJ went on to say this: "Inevitably there are from time to time cases in which an Employment Tribunal has unfortunately erred by misunderstanding the evidence, leading it to make a crucial finding of fact unsupported by evidence or contrary to uncontradicted evidence. In such cases, the appeal will usually succeed, but no appeal on the question of law should be allowed to be turned into a rehearing of parts of the evidence by the Employment Appeal Tribunal".[26]Here, it seems to us that we simply do not know what this Employment Tribunal made of the evidence of Mrs Heyhoe, particularly where she appears, as is common ground, to have conceded that she made a mistake. More than that, her own evidence was that it was a mistake which was of significance in that if she had realised it at the time, it might possibly have made a difference. That this is no mere word taken in isolation in cross-examination representing a possible view of the facts is borne out when one considers the letter of dismissal. That shows the importance of the view which Mrs Heyhoe had that once he had been put on sick pay or pension pay, Mr Walker quickly returned to work. That she regarded as supporting her view that there was inconsistency, or at least that Mr Walker should not have the benefit of being able to argue that he had a genuine belief in the effects of work upon him, because he would not otherwise have suffered the loss of pay that he did.[27]Accordingly, we would expect this Tribunal, if it were acting without error of law, to have set out the submission of the Claimant as it did and to have dealt with it, as it did not. We cannot say for ourselves what that answer might have been, although it may well have been that the employer was not entitled to dismiss upon the basis of the evidence before it, as appreciated by Mrs Heyhoe. It cannot be said, returning to the point with which we began this judgment, that a reasonable investigation is to be categorised by the way in which the investigation is conducted without also having regard to the way in which the information which ought to have been produced from it is used by the dismissing officer. If an investigation reasonably carried out does not uncover some evidence which is not obvious, then anyone would forgive an employer for not revealing what is underneath the stone which remains unturned. It is, however, different if one of the principal focuses of the enquiry is into pay; it is different if a central aspect of the defence relates to pay; it is different if the employee himself identifies the date upon which pay was significantly reduced and frames an argument as to his veracity upon it. Adopting Mr Hooper's approach in evaluating the weight, we think this is a weighty matter which therefore required the employer, if the employer was properly to proceed in accordance with British Home Stores Ltd v Burchell to have a proper appreciation of the facts and that it is likely that the process was flawed by a failure to do so.[28]However, we can take it no further than that. We think it is not a decision for us to take. It is simply our function to ask whether this Employment Tribunal erred in law or not. It may be that the Tribunal did, indeed, consider the point and have good grounds for rejecting it and coming to the conclusion which it did. It might alternatively be that it did not, but would come to the view, once reminded of the evidence which Mrs Heyhoe gave, taking a view of its significance and perhaps being assisted by the views which we, with the assistance of the advocates, have expressed in deciding that this was a dismissal which was unfair and then proceed to decide whether and to what extent the Polkey decision should apply. Indeed, it would then be for a Tribunal no doubt to consider whether and to what extent any suggestions of contributory fault would further reduce the degree of any compensatory award. These are all decisions which we cannot take. But the decision which we can take, and do, is that in our view for the reasons we have given, this Tribunal was in error of law in concluding in its reasons, as it did, that the British Home Stores Ltd v Burchell test had been satisfied and that the dismissal was fair. It is obvious from what we have said that we simply cannot say with any certainty that the decision to which the Tribunal came was plainly and unarguably right. Indeed, to his credit, it was not suggested directly by Mr Hooper that we should so find. There was here a conflict of medical evidence. Whereas it might be open to an employer to accept one medical view as opposed to another in the course of an appropriate investigation, whether the employee was or was not being honest and genuine in his view that working might hurt him. The medical evidence was in conflict as to whether that was so and whether motorcycling would not. Accordingly, the matter of his reduction in pay and its effect upon him is of some considerable importance. Without that being so, we could not have come to the conclusion which we do. The Effect of the Decision[29]The effect of this decision is that the appeal must be allowed and we must remit the case for rehearing by a Tribunal. We have considered the guidance given in Sinclair Roche & Temperley v Heard and we think that, in this case, our conclusion has been heavily influenced by an absence of expressed reasoning which this Tribunal (which has otherwise carefully established facts and set out the relevant evidence) had in mind. We see no reason, although we have not invited submissions upon it as yet, but we see no reason at this stage why the matters should not be remitted to the same Tribunal to reconsider its decision in the light of our reasons, but we will be prepared to hear Counsel upon it if Counsel wish to urge us to take a different view. Submissions[30]So far as the remission is concerned, we think that the important points here are proportionality and Tribunal professionalism on the one hand and the question whether there is a "second bite" on the other. We, as our decision indicates, are not persuaded that the Tribunal had necessarily not thought of the point; it may be a failure of expression. We are conscious that the Tribunal has not expressed a view as to the honesty or otherwise of the witnesses before it which might affect or might be a prejudgement of views which they come to on Polkey or contribution. For those reasons, we think that our initial instincts are correct and we will remit to the same Tribunal. The only exception we would make to that is if it should prove administratively difficult for Croydon to arrange it, then we would not be averse to it going to another Tribunal. So it will have to go to the same Tribunal, but the order will be "remit to the same Tribunal unless there are administrative difficulties in that occurring".