HERTZ (UK) LTD v MR P FERRAO [2006] UKEAT 0570_05_1003

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2006] UKEAT 0570_05_1003Case No Appeal No. UKEAT/0570/05Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
HERTZ (UK) LTDAPPELLANTMR P FERRAORESPONDENT
Before
His Honour Judge J BurkeDate 10 March 2006
The Claimant was dismissed in December 2004 after defects in his performance had appeared in August 2004. Because of the delay and for other reasons which they set out in detail the Tribunal were not satisfied that the dismissal was truly for misconduct and therefore found that the dismissal was unfair. Held that the Tribunal's conclusion was not made in error of law and was open to them on the facts, the appeal failed.The Tribunal deducted 10% from compensation because the employee did not pursue an internal appeal. They erroneously held that the transitional provisions in Regulation 18 of the Dispute Regulations did not apply; but the only answer on the facts, had those transitional provisions been applied, would have been that the employers did not contemplate dismissal etc before 1 October 2004. Therefore the Tribunal were right, albeit for the wrong reasons, to make the deduction. The employee's cross-appeal failed.

HIS HONOUR JUDGE BURKE QC

The Nature of the Appeal and Cross-Appeal

Hertz (UK) Ltd ("Hertz") appeal against the judgment of the Employment Tribunal, chaired by Mr Gordon and sitting at London Central, sent to the parties with written reasons on 15 August 2005. By that judgment the Tribunal concluded that the Claimant, Mr Ferrao, had been unfairly dismissed by Hertz and ordered Hertz to pay to Mr Ferrao £9,061.20 by way of compensation. The basis of the finding of unfair dismissal was that Hertz had failed to establish what was the reason for the dismissal of Mr Ferrao and, accordingly, in the absence of a potentially fair reason for the admitted dismissal, the Tribunal were obliged to find that the dismissal was unfair. However, the Tribunal reduced the compensation awarded to Mr Ferrao by ten per cent pursuant to Section 31(2) of the Employment Act 2002 because Mr Ferrao failed to exercise his right under Hertz's disciplinary procedure to appeal against his dismissal.By the appeal Hertz challenge the Tribunal's conclusion that no potentially fair reason for the dismissal was shown. Mr Ferrao resists the appeal; and he cross-appeals on the ground that the Tribunal should not have reduced his compensation as they did. Hertz have been represented before us, as before the Tribunal, by Mr Sethi of Counsel. Mr Ferrao has been represented by Ms George, a solicitor from the Paddington Law Centre. We are grateful to both for their helpful and able submissions. Ms George represented her client in a manner which convinced us that there was, in this appeal, no question of any inequality of arms.

The Facts

Mr Ferrao was employed from April 2001 by Hertz at their Marble Arch Branch in London. That branch was one of the largest and busiest of Hertz branches; about 200 vehicles were kept there. In June 2002 Mr Ferrao was promoted to the job of Fleet Supervisor which involved closed monitoring of that large fleet of vehicles. As part of his duties he was required to carry out everyday a "Vehicle Physical Check" or "VPC"; this involved his going round the premises and checking off the presence of each vehicle, the index number of which appeared on a computer-produced list, as being present at the branch. If on this check a vehicle was found to be present, Mr Ferrao would enter a tick on his list. If not, he would put a circle round the index number of the relevant vehicle on his list and, if after further enquiries the vehicle was still not located, he would report to the Branch Manager. It seems that vehicles were sometimes not easy to find on the premises; it was, as the Tribunal found, a requirement that a full search be carried out. The Tribunal found that the obligation of Mr Ferrao that he should do this check regularly was important both for security and for auditing purposes and that Mr Ferrao's job was said in his job description to be a high profile and demanding one. He was, in terms of seniority, next in line to the Branch Manager and two Duty Managers.On 4 August 2004 Mr Ferrao was given a final written warning for being absent from work on 9 July 2004. On the same day he started a lengthy pre-arranged holiday; and the Branch Manager, Mr Sinclair, learnt that, on the previous day, Mr Ferrao had signed off the VPC form as "OK", indicating that there were no missing vehicles when there were, as the form showed, four missing vehicles the absence of which had not been drawn by Mr Ferrao to Mr Sinclair's attention or to the attention of any other manager. The vehicles were found; and the Tribunal said, at paragraph 18, that on this occasion Hertz suffered no loss; but a retrospective check of VPCs was carried out; and it revealed that there were ten VPCs missing from the relevant folder, most of which ought to have been completed and placed in that folder by Mr Ferrao.When Mr Ferrao returned to work from his holiday on 6 September, Mr Sinclair told him of the deficiencies in the VPC for 3 August and of the missing VPCs in July. The Tribunal found that Mr Sinclair told Mr Ferrao that those matters would be investigated and reported to the Regional Manager, Mr Sharrock, but that Mr Sinclair did not tell Mr Ferrao that the outcome could be disciplinary proceedings. The Tribunal, recorded, at paragraph 20 of their Judgment, that Mr Ferrao had in cross-examination said that Mr Sinclair had made it clear to him that he could face disciplinary proceedings and that his job was at risk. The Tribunal did not accept this admission by Mr Ferrao because, they said, Mr Ferrao had succumbed to the weight of a series of suggestions put to him in cross-examination when Mr Sinclair's own evidence as to what he said to Mr Ferrao did not go that far.After this meeting, Mr Ferrao went back to work and continued to work in his usual way; he heard nothing more about the matters raised by Mr Sinclair until the end of November. He thought that the matters raised by Mr Sinclair on 6 September were not regarded as important any more; the Tribunal regarded that as a reasonable view. It was Mr Sinclair's evidence that, between 6 September and 26 November, he was closely monitoring Mr Ferrao and checking whether or not Mr Ferrao was complying with his duties in relation to the VPCs. The Tribunal did not accept this part of Mr Sinclair's evidence for reasons to which we will come later in this judgment. However, Mr Sinclair did eventually discover that Mr Ferrao had missed three more VPCs between 14 and 22 October inclusive. The Tribunal found that Mr Sinclair decided at some point that something had to be done and that there should be an investigatory interview. On 26 November Mr Sinclair called Mr Ferrao into his office without any prior notice; and an investigatory meeting took place. As to 4 August Mr Ferrao said that he might have simply forgotten to tick off the relevant vehicles after he had found them. It was agreed that they had indeed been located. He also said that he found difficulty in completing the VPCs on a busy Friday and that he could not remember all of the circumstances as to what had happened in August. The Tribunal accepted Mr Ferrao's evidence that he had previously told Mr Sinclair of his Friday difficulties.As to the missing VPCs for October, Mr Ferrao explained that one of the relevant days was a Friday but that otherwise he did not know why he had not done what was required. At the end of the meeting Mr Sinclair said of the VPCs, "it needs to be done everyday". Mr Ferrao said:
"Can we find a way to control it."
Mr Sinclair answered:
"Yes, once it's completed, bring it to me or to a Duty Manager and we will sign it."
Mr Ferrao said: "Okay I'll do my best to do this, I report missing cars to you as well." and the investigatory meeting ended.The Tribunal concluded that, by this exchange, Mr Sinclair and Mr Ferrao had found a solution to the problem for the future but that, nevertheless, Mr Sinclair passed the notes of the Investigatory Meeting to Mr Sharrock who, on 17 December, invited Mr Ferrao to a disciplinary hearing. Mr Ferrao was charged with three matters, namely the missing VPCs in July and October, the failure to report four missing vehicles on 3 August and a matter relating to attendance. At the end of the disciplinary hearing Mr Sharrock decided to dismiss Mr Ferrao; he was given a letter in these terms:
"The reason for this decision is your gross misconduct, specifically your failure to complete Vehicle Physical Checks as per Hertz procedure:-
Your failure to complete a Vehicle Physical Check on 10 separate occasions in July 2004 and a further 3 occasions in October 2004 putting Hertz assets at risk.Upon completing a Vehicle Physical Check on 3 August 2004 you failed to report four missing vehicles, putting Hertz assets at risk.""The dismissal was immediate; Mr Ferrao was escorted from the premises.There was a dispute as to what was said at this hearing about an appeal. Mr Sharrock's evidence was that he told Mr Ferrao that he could telephone the Human Resources Department and that he needed to do so; Mr Ferrao's evidence was that this did not happen. The Tribunal preferred Mr Ferrao's account.Thus, Mr Ferrao's employment came to an end.

The Tribunal's Decision as to Unfair Dismissal

The Tribunal expressed their conclusions as to the unfair dismissal claim at paragraphs 35 to 48 of their Judgement. They started at paragraph 35 by, correctly, stating that under Section 98(1) of the Employment Rights Act 1996 it was for Hertz to show the reason for the dismissal. They then said:"We are not satisfied that the Respondent (Hertz) has done so".At paragraph 36 they said that they had been unable to accept parts of the evidence of Mr Sinclair and Mr Sharrock and could not say from the evidence that they had heard why the investigation procedure was carried out in November 2004, why the disciplinary hearing was conducted and why Mr Ferrao was dismissed. They said that they did not accept the reasons for those actions put forward by Hertz which were, as Hertz's response shows, that in relation to the VPCs Mr Ferrao had been guilty of gross misconduct.In paragraphs 37 and 38, to which we will return in more detail later, the Tribunal considered whether it was reasonable of Mr Sharrock to take the view that Mr Ferrao had falsified records or has otherwise been guilty of gross misconduct. At paragraphs 39 and 40 they set out their conclusion that Hertz did not regard what Mr Ferrao had done or failed to do in relation to the VPCs as being as important or crucial, as Hertz had sought to make out. In paragraphs 41 to 45 they set out five further reasons why they did not accept Hertz's evidence as to the reason for the dismissal; and in paragraph 46 they concluded this passage in their judgment in these words:
"46 So this is why we cannot accept the reason for dismissal given by the Respondent is the correct reason."
They went on to say that, although a number of alternative possibilities as to a real reason for the dismissal had been canvassed, none was regarded by them as more than a possibility and that it was not for the Tribunal to speculate as to the real reason.Accordingly they concluded that Hertz had failed to show the reason why they dismissed Mr Ferrao and that therefore the dismissal was unfair.

The Submissions on the Appeal and

Our Conclusions

Mr Sethi put Hertz's appeal forward on two broad bases, namely(1) that the Tribunal had, in reaching their decision, confused the task of determining the reason for the dismissal, required by Section 98(1) and(2) of the 1996 Act, with the task of determining, in the light of the employer's reason for dismissal, namely in this case misconduct, whether the dismissal was fair required by Section 98(4) of that Act. Mr Sethi described these two stages, between which he submitted the Tribunal had become confused, as the first stage and second stage. Alternatively or cumulatively he submitted that the Tribunal's decision in respect of the first of these stages was in various respects perverse. In support of these two broad bases of attack on the Tribunal's decision, Mr Sethi made a number of detailed criticisms of individual aspects of the Tribunal's decision and submitted that the decision was perverse as a whole in the light of the Tribunal's findings of fact. We will seek in this judgment to address the detailed criticisms first and then consider the position overall.The starting point of Mr Sethi's first line of attack is uncontroversial; he submitted that, in order to establish what was the reason or the principal reason for dismissal for the purposes of Section 98(1) of the 1996 Act, the employer has to establish a genuine belief in the reason which caused him to dismiss and that whether it was reasonable to hold that belief was irrelevant to the ascertainment, at the first stage, of the employer's reason. He relied upon the well-know dictum of Cairns LJ in Abernethy v Mott, Hay and Arderson [1974] ICR 323 at page 330, approved by the House of Lords in W Devis & Sons Ltd v Atkins [1977] ICR 677, in the speech of Viscount Dilhorne, with whom Lords Diplock, Simon, Edmond-Davies and Fraser agreed, at page 678:
"A reason for the dismissal of an employee is a set of facts known to the employer, or it may be of beliefs held by him, which cause him to dismiss the employee. If at the time of his dismissal the employer gives a reason for it, that is no doubt evidence, at any rate as against him, as to the real reason, but it does not necessarily constitute the real reason. He may knowingly give a reason different from the real reason out of kindness…"
That well established principle was applied by the Court of Appeal more recently in Post Office v Foley [2000] IRLR 827 in which Mummery LJ with whom Nourse and Rix LJJ agreed, said, at paragraph 32:
"The Post Office established to the satisfaction of the employment tribunal that the reason for the dismissal of Mr Foley related to his conduct within the meaning of s.98(2)(b), ie unauthorised absence from duty for part of a duty on 16 May 1997. That was the reason for dismissal in the accepted sense that it was a set of facts known to the Post Office, or a set of beliefs held by it, which caused it to dismiss Mr Foley: Devis & Sons v Atkins …"
In The Maintenance Co Ltd v Dormer [1982] IRLR 491 the employee, who was the employer's managing director, had entered into an arrangement with his brother whereby vehicles no longer required by the employers were sold by the brother ostensibly for a price ascertained by company's Transport Manager; in fact the brother would sell vehicles at a higher price, to the knowledge of the employee, and would retain the difference. The Tribunal decided that the employers genuinely believed that the employee had been guilty of dishonesty but that that belief was unreasonable; they concluded that dishonesty was not the reason for the dismissal. The EAT, presided over by Browne-Wilkinson P, allowed the employers' appeal which was not, on that issue resisted; the position in law was succinctly stated at paragraph 14 of the judgment in these terms:
"… The reason for dismissal which has to be shown is the reason which in fact led the employer to take the decision to dismiss. Whether or not it was a reasonable belief falls to be considered under s.57(3). The only relevant question for the purpose of s.57(1) is - 'what was the employer's actual reason?'"
Further examples of a Tribunal's confusing the first stage, that of ascertaining the reason for the dismissal, and the second stage, that of ascertaining whether it was reasonable to dismiss for that reason, is to be found in Kent County Council v Gilham [1985] IRLR 18 (see paragraphs 18 and 19 of the Judgment of Griffith LJ) and in Post Office Counters Ltd v Heavey [1989] IRLR 513.Ms George did not dispute these principles or that, if the Tribunal had confused the first stage with the second stage in this case, they would have erred in law. Her case was that the Tribunal had made no such error; and we have to decide whether the Tribunal did or did not make such an error.As the passage in Abernethy which we have quoted above makes clear, it is in law open to a Tribunal to reject or not to accept as the true or genuine reason for the dismissal the reason proffered by the employer. The issues for us are whether the Tribunal reached their conclusion by making that error or whether they reached a conclusion which has, applying the definition of perversity set out by the Court of Appeal in Yeboah v Crofton [2002] IRLR 643, been overwhelmingly demonstrated as perverse.We propose to consider the passages in the Tribunal's judgment on which Mr Sethi focussed, following broadly the sequence of the judgment, a mode adopted by Mr Sethi in his Notice of Appeal and in his Skeleton Argument, although - and we say this in no critical spirit – in his oral submissions he made his points in a somewhat different sequence. We will address, in relation to each relevant section of the Tribunal judgment, Mr Sethi's points as to confusion between stage 1 and stage 2 and, where applicable, his perversity arguments.We will first consider what, in paragraphs 19 to 23, the Tribunal said about Mr Ferrao's awareness that his job was at risk. In paragraph 19 the Tribunal said that they needed to understand the reason for the delay between Mr Sinclair's speaking to Mr Ferrao about his failures in respect of the VPCs on 6 September and the investigatory meeting on 26 November and the subsequent disciplinary hearing on 21 December. That issue was potentially relevant both to the issue of the true reason for the dismissal – for the delay was capable of being an indication that the reason put forward by Hertz for the dismissal was not genuine – and to the issue of fairness. Having indicated that they needed to understand the reason for the delay, the Tribunal continued:
"We also needed to understand how far the Claimant was aware that his job was at risk at that time, because this would affect the question of fairness in the way he was treated and the fairness of his dismissal. So we examined the evidence very carefully in relation to this."
Mr Sethi submitted that the passage which we have quoted constituted a clear example of the Tribunal's considering matters relevant to stage 2, the fairness stage; and that submission is correct; that indeed is what the Tribunal said in the passage which we have just set out. However, paragraphs 19 to 23 of the judgment form part of the section in which, from paragraphs 3 to 34, the Tribunal set out their findings of fact. At that stage the Tribunal had not yet expressed any decision on the stage 1 issue; and we do not regard it as surprising or in any way as constituting or evidencing an error of law that the Tribunal should express a view that, if they found that Mr Ferrao had not been informed that his job was at risk on 6 September, that would affect any question of fairness. It was, however, in our judgment also open to the Tribunal to regard their finding that Mr Ferrao was not told on 6 September that his job was at risk as an indication that his conduct after that point was not regarded as serious or job-threatening and, therefore, as an indication that the true or genuine reason for the dismissal was not that which Hertz asserted.In paragraphs 19 to 23 the Tribunal were not expressing any conclusions as to that reason. When they came to do so, in paragraphs 39 to 45, they did include as one of their reasons, set out in paragraph 43, that, had the conduct up to 6 September been "that important"; Mr Ferrao would have been notified by Mr Sinclair that the misconduct was important and that it would be likely to lead to disciplinary action; but this was never said to him. There is nothing in paragraph 43 or in the surrounding paragraphs which shows that, in considering the stage 1 issue and, in particular, in putting forward as one of the reasons for rejecting Hertz's case on that issue the failure on the part of Mr Sinclair set out in paragraph 43, the Tribunal took into account whether it would have been fair to have dismissed in the light of that failure or otherwise made the error of building stage 2 factors into their stage 1 decision.Mr Sethi submitted that the rejection of Mr Ferrao's answers in cross-examination on the issue of what he was told on 6 September was perverse. Mr Sinclair, he told us, did not remember when he gave evidence whether he had said anything about disciplinary proceedings or Mr Ferrao's job being at risk; Mr Ferrao's concession in cross-examination was crucial because it provided plain evidence that Mr Ferrao had been so told. The Tribunal should not have rejected this evidence on the basis of their view of Mr Ferrao's temperament; to do so was to make the mistake of substituting their views for those of the employer which the Tribunal should not have done, either in relation to stage 1 or in relation to stage 2.We do not accept this argument. Whether Mr Ferrao knew, as a result of the September meeting with Mr Sinclair, that his job was at risk was relevant to fairness; and it was potentially relevant for the Tribunal to consider whether, in deciding to dismiss, Hertz were reasonably entitled to believe that Mr Ferrao knew from September of the risk of disciplinary proceedings, so that the investigation and disciplinary proceedings in November/December would not have come as a surprise to him. The point was also relevant to the genuineness of Hertz's reason for dismissing for the reasons which we have already set out. It was therefore material for the Tribunal to consider whether Mr Ferrao's concession in cross-examination that he did so know from September was acceptable.The Chairman was asked to answer a specific question addressed to him by the EAT as to Mr Sinclair's evidence on this topic. He recorded Mr Sinclair as saying:

"I knew on 9 August that this could result in disciplinary action"

But has also said, in cross-examination:

"I probably did not mention"

(to Mr Ferrao on 6 September)

"that there would be a disciplinary … I know of nothing said to alert him at that time to possible disciplinary action."
In the light of that evidence from Mr Sinclair it was, in our judgment, open to the Tribunal, who heard and saw Mr Ferrao give evidence and being cross-examined by Mr Sethi, to conclude, in the light of the evidence of Mr Sinclair and in the light of the nature of the cross-examination which, no doubt, they closely observed and in the light of Mr Ferrao's making what seemed to the Tribunal to be another unnecessary concession during the course of the disciplinary proceedings, (when he said that his personal problems were irrelevant,) to reject what Mr Ferrao said in cross-examination and to find as a fact that he had not been told that there might be disciplinary proceeding or that his job was at risk.The next area of criticism was directed at the Tribunal's approach to delay. The Tribunal made it clear, at paragraph 19, that they were concerned about the delay between the meeting of 6 September and the investigatory meeting on 26 November and the subsequent disciplinary meeting. They said that they needed to understand the reason for the delay and were critical of it; see paragraphs 19, 36 and 39.Mr Sethi submitted that the delay point went to fairness i.e. stage 2, and not to the reason for the dismissal. We do not agree. There was an issue as to whether the alleged misconduct was genuinely Hertz's reason for dismissing Mr Ferrao; in deciding upon that issue it was, in our judgment, open to the Tribunal to regard the delay between early September and late November as an indication that the alleged misconduct, the bulk of which had occurred before the September meeting and was, even then, of some age (because Mr Ferrao had been on holiday) was not the genuine reason for dismissal. The Tribunal were entitled to think that, unless the delay was satisfactorily explained; if Mr Ferrao's conduct in relation to the VPCs had been the genuine reason for dismissal Hertz would have acted more quickly. Thus, as is clear from paragraph 19, the Tribunal looked to see whether there was a satisfactory explanation for the delay. While the delay could also have been a factor going to fairness, it was not exclusively a factor going to fairness.In their consideration section, at paragraph 36, the Tribunal concluded that there had not been a satisfactory explanation of the delay. They set out why they reached that conclusion. At paragraph 25 they said that they did not accept Mr Sinclair's evidence that between 6 September and 26 November he had been monitoring Mr Ferrao and set out their reasons for that finding. In paragraph 39 they said again that they did not accept Mr Sinclair's explanation of the delay, in so far as it was based upon a professed inability to proceed unless or until two duty managers were at the branch. That part of Hertz's explanation was rejected. The Tribunal said in terms that, if the alleged misconduct had been regarded by Hertz as seriously as Hertz wished the Tribunal to believe it would have been dealt with as soon as possible after 6 September. These points were capable of undermining Hertz's case as to their professed reason for the dismissal.Was it perverse of the Tribunal to reject Mr Sinclair's explanations? Mr Sethi pointed out that the Tribunal found, at paragraph 24, that in October Mr Ferrao missed three more VPCs and that "during this time" Mr Sinclair decided that something had to be done about Mr Ferrao; this, it was suggested, explained why the investigatory meeting occurred when it did; the Tribunal did not explain why the further three missing VPCs in October did not satisfactorily account for or at least in part account for the timing of the November investigation. He further submitted that it was perverse for the Tribunal to find that Mr Sinclair was not monitoring Mr Ferrao when he himself discovered three further missing VPCs in October.Ms George referred us to what the Tribunal gave, in paragraph 25, as the reason for rejecting Mr Sinclair's evidence about monitoring, namely that that evidence only came out when Mr Sinclair was asked to explain why, after September, he permitted Mr Ferrao to carry on working as before. She pointed out that, as the Tribunal said in paragraph 26, the suggested monitoring was not referred to in the Notice of Appearance or in Mr Sinclair's witness statement. The Notice of Appearance at paragraph 10 refers only to the discovery of the three further missing VPCs "upon further investigation" which was inconsistent with continuous monitoring from 6 September; the suggestion of monitoring was first put forward in the course of Mr Sinclair's evidence when he was asked in cross-examination to explain the delay. Hence the Tribunal's reference to the sequence of that evidence.Mr Sethi was not able successfully to rebut these points; and, in the context described by Ms George, the Tribunal's rejection of the monitoring evidence could not be said to have been perverse; there was material before the Tribunal which entitled them to reach the conclusion they reached on that factual issue.The Tribunal however gave further reasons, in paragraph 26, for their finding of fact on this issue, namely that Mr Ferrao had not noticed any monitoring and that Mr Sinclair could not explain why, if he had been monitoring Mr Ferrao, he did not in October immediately raise with him the further missing or uncompleted VPCs. Mr Sethi argued that the first of these two further reasons was unsustainable because all that was being done was checking the relevant file in the office to see if the VPCs were there; but at least in part the criticism of Mr Ferrao was one of misrecording; and proper monitoring to check the misrecording, which was being put forward by Hertz as the most serious of the alleged misconduct, obviously required much more then simply checking the file.We must be careful not to come too enmeshed in the detail; all these arguments on the facts were available to Mr Sethi at the hearing; and he no doubt deployed them with persuasive ability; but they did not prevail Our task, in considering perversity, is to examine whether there was some material upon which the Tribunal were entitled to reach the factual conclusion now impugned and whether that conclusion was one to which a reasonable Tribunal could come or whether, on the contrary, an overwhelming case that it was not such a conclusion had been demonstrated. In our judgment there was such material, as we have said earlier. The way in which the monitoring evidence came out was of itself enough. It was not necessary that there should have been monitoring on a regular basis for Mr Sinclair to have discovered in October that there were further VPCs missing. The Tribunal's conclusion as to monitoring was not one which no reasonable Tribunal could reach; it is not for us to say whether we would or might have reached the same conclusion; without having seen the witnesses we could not begin to do so; what we are clear about is that at the Tribunal's conclusion as to monitoring was not one which has been plainly or overwhelmingly demonstrated as perverse.It was not, as we understood Mr Sethi's submission, contended that the Tribunal's rejection of the explanation for the delay, based on Hertz's professed inability to proceed in the absence of two Duty Managers at the branch, was perverse; we are confident that it was not; the Tribunal have set out detailed reasons for that conclusion which were plainly based on the evidence.Mr Sethi went next to paragraphs 27 - 33 of the Tribunal's judgment in which the Tribunal set out their factual conclusions as to what happened from the investigatory meeting on 26 November to the dismissal. He was critical, firstly in that section, of the Tribunal's saying, in paragraph 28, in the context of Mr Ferrao's explanation to the Tribunal of his reasons for not completing the VPCs for Friday 27 October, namely that he was having difficulties with doing VPCs on Fridays and had told Mr Sinclair earlier of those difficulties; which explanation had not been given by Mr Ferrao at the investigatory meeting that Mr Ferrao was not the sort of person to challenge his manager at such a meeting. The criticism was that that was irrelevant to the Stage 1 issue. Mr Sethi's argument on this point is sound; the point was not relevant to the genuineness of Hertz's reason for dismissal; but that point is not put forward by the Tribunal as a basis for their rejection of Hertz's case as to the reason for the dismissal; the Tribunal were in this section of their Judgment, in which they were setting out their factual conclusions, simply resolving an area of factual dispute and explaining why they resolved it as they did.The next point arising from this section of the judgment relates to the Tribunal's finding that, at the close of the investigatory meeting, Mr Sinclair and Mr Ferrao arrived at a solution to the VPC problems, yet nevertheless Hertz pursued the disciplinary process by Mr Sinclair's sending the notes of that meeting to Mr Sharrock. We have set out at paragraph 7 above what the Tribunal found had passed between Mr Sinclair and Mr Ferrao at the end of that meeting. At paragraph 45 the Tribunal said:
"45 Finally, the Investigatory Meeting concluded, as we have said, with a resolution of the problem over the VPCs. The Claimant promised to bring completed reports either to Mr Sinclair or to the Duty Manager for them to sign and that this was going to be the procedure from then on. This was a solution to the problem and so as a result of that discussion it had been brought home to the Claimant how important the VPCs were. Despite having dealt with the immediate problem in this way, the Respondent decided to proceed to a Disciplinary Hearing. No satisfactory reason why this happened was given to us."
Mr Sethi submitted that the Tribunal's approach to this part of the story was in error or perverse because(1) there was no new solution(2) Hertz did not suggest that they would not proceed with the disciplinary process.As to (1) Mr Sethi's argument was that, on the Tribunal's earlier findings, Mr Ferrao was already obliged to do what the suggested new solution required of him – see paragraphs 6 and 13 to 15 in which the relevant duties are described – and that what was agreed at the investigatory meeting did not resolve the problem because it did not ensure that, when doing his checks, Mr Ferrao identified every car.As to (1), Mr Ferrao's duties, as the Tribunal held them to be, required him to report to a manager if, on checking the fleet, it appeared that a vehicle was missing; see paragraph 14. The arrangement made at the end of the investigatory meeting required Mr Ferrao to report everyday to Mr Sinclair or a duty manager and to have the VPC signed off at a managerial level. There was no finding nor was it suggested that that step had previously been required; and it was, in our judgment, open the Tribunal to interpret what occurred as a new solution. As to (2) what was agreed may not have been a perfect solution, in that it did not ensure the accuracy of the document which Mr Ferrao was to have signed off at managerial level; but it did ensure that Mr Ferrao would complete a VPC for each day, which tackled the predominant problem.Ms George argued that the Tribunal's finding that Mr Sinclair and Mr Ferrao had agreed a new regime had the effect of "breaking the chain of causation" so that Hertz were thereafter not entitled to rely on any past shortcomings in relation to the VPCs on Mr Ferrao's part. However, if the Tribunal had accepted Hertz's reason for dismissal and had proceeded to consider fairness, while they would have had to have taken into account in such consideration that the new regime had been set up and, we were told, complied with, the existence of the new regime agreed between Mr Sinclair and Mr Ferrao would not, in our judgement, have prevented the Tribunal from finding that the dismissal was fair in the absence of any suggestion that Mr Sinclair had, when agreeing that new regime, indicated that the slate would be wiped clean or had otherwise waived or foregone reliance on past failures. Thus we do not accept that argument put forward by Ms George; but the Tribunal were, for the reasons we have given, entitled to conclude that a solution to the problem had been reached; and it was, in our judgment, open to them in the light of that solution and in the absence of any satisfactory explanation of Hertz' decision to proceed to a disciplinary hearing despite that solution, to regard this aspect of the history as a pointer against the genuineness of Hertz' proffered reason for dismissal. They were, of course, not bound so to regard it; and they were certainly not bound to reject that reason; but we do not see any error of law on their part in reaching the conclusion which they set out in paragraph 45, which was open to them and which was not, in our judgment, perverse.In paragraph 31 the Tribunal made findings of fact as to what occurred at the disciplinary hearing on 21 December. They found that, in the course of that hearing, Mr Ferrao demonstrated the same personality trait, of succumbing to pressure, as that observed by the Tribunal in the course of his cross examination and described by them at paragraph 20. It was submitted that the Tribunal were, in that passage, again considering facts relevant only to stage 2; and again we agree; but that too does not form part of the Tribunal's reasons, set out at paragraphs 39 – 45, for not accepting Hertz's reason for dismissal.We take the same view about the last aspect of the disciplinary hearing to which Mr Sethi directed our attention, namely the Tribunal's finding at paragraph 33 as to the way in which Mr Ferrao was escorted from the building after, at the end of the hearing, Mr Sharrock had given him the dismissal letter. The Tribunal made that finding in the context of an issue as to what was said about an appeal. That issue was potentially relevant to fairness; but it does not form part of the Tribunal's reasons for not accepting Hertz's proffered reason for dismissal.We have already identified (at paragraph 11 above) the content of paragraph 36, in which, at the beginning of their "considerations" section, the Tribunal set out their conclusion that Hertz had not established the reason for the dismissal. It is necessary, because of the strong attack made by Mr Sethi, to set out the next paragraph of the judgment at paragraph 37, as follows:
"37 We need to explain a little further about why we say this. It is not just a question of credibility. Mr Sharrock told us that he was justified in dismissing the Claimant for gross misconduct because the Claimant had "falsified records". The question of the falsification of records came up because it is one of the examples of gross misconduct listed in the Staff Handbook (page 59). The list is a non-exhaustive one but Mr Sharrock was asked in cross-examination which category he relied on. He doggedly persevered with his view that the Claimant had falsified records. To our minds, unanimously, we think that the reference to falsification of records in the Staff Handbook must inevitably imply some sort of dishonesty. What it is not talking about is mistakes, such as overlooking the completion of documents, or even writing "OK" when things were not properly checked, which is what the allegations here are about at their very highest. There was no dishonesty, the vehicles were found. The allegations against the Claimant were never said by the Respondent to amount to more than a matter of error, mistake, or negligence. So we think that Mr Sharrock was unreasonable in taking the view that the Claimant falsified records. Had the Respondent shown that the Claimant had been dismissed for this reason, we would have regarded Mr Sharrock's view on this matter to be one which no reasonable employer could have held. We would say this bearing in mind that different employers might hold different views about the same events but still act reasonably. There is no one reasonable view. Some employers would take a harsher view than others. The view they take could still be reasonable."

In summary Mr Sethi's criticisms of this paragraph were:-

(1) Hertz relied on dishonesty in respect of the 3 August VPCs

(2) In relation to those VPCs(a) there were grounds for a genuine (and reasonable) belief in dishonesty(b) it was not the Tribunal's function to consider whether Mr Ferrao was guilty of dishonesty at stage 2, still less at stage 1.(3) If in so far as the Tribunal were of the view that this could not have been a case of gross misconduct and therefore were entitled to doubt the genuineness of the proffered reason for dismissal, that was perverse because, in relation to 3 August, there was a case of dishonesty. Mr Ferrao had signed off the VPC as "OK"(4) Whether the vehicles were found or not was irrelevant; there were serious breaches of procedure which put Hertz' assets at risk.(5) If the tribunal were right to say that the allegations against Mr Ferrao did not amount to error, mistake or negligence, the Tribunal were finding that there was a statutorily permissible reason for dismissal i.e. incapability and should, if they so found, have dealt with the case on that basis and proceeded to consider fairness; but in any event such a conclusion was perverse; the shortfall of Mr Ferrao's performance was correctly regarded by Hertz as misconduct in accordance with the guidance given in Sutton and Gates (Luton) Ltd v Vauxhall [1979]IRLR 486.Ms George in response pointed out that the evidence did not disclose any suggestion to Mr Ferrao by Hertz that he had been dishonest nor was dishonesty put to him during the Tribunal hearing. The dismissal letter also made no reference to dishonesty. The evidence was that Hertz criticised Mr Ferrao for error, mistake and negligence. The Tribunal had before it the full notes of the investigatory meeting and/or the disciplinary meeting which did not reveal any allegations of dishonesty; the Tribunal were therefore bound to conclude that Hertz had not at the time of the dismissal viewed Mr Ferrao's conduct as dishonest.It was, she submitted, in the context of that conclusion that the Tribunal took the view that they did as to whether it was reasonable for Mr Sharrock to regard Mr Ferrao as having falsified records. In any event the Tribunal did not make the mistake of treating any such unreasonableness that unreasonable count as a basis for their rejection of Hertz's proffered reason for dismissal, as is revealed by their use of the words "had the Respondent shown that the Claimant had been dismissed for this reason, we would have regarded Mr Sharrock's view on this matter to be one which no reasonable employer did could have held.We prefer Ms George's submissions. In our judgment while the events of 3 August might have been regarded as examples of negligence, the Tribunal were entitled to conclude, in the light of the absence of any contemporary reference to or accusation of dishonesty, that Hertz had not (prior to the proceedings) alleged dishonesty and could not reasonably have relied on dishonesty before the Tribunal, whether in respect of 3 August or on a wider basis. Furthermore, if the Tribunal did take that absence into account, in assessing the genuineness of Hertz's professed reason for dismissal, they would have been entitled to do so; for, in the absence of any genuine belief in dishonesty, it might be thought that Hertz could not have genuinely regarded Mr Ferrao's conduct as amounting to gross misconduct. We agree that the fact that the missing vehicles were found on 3 August does not lead to the conclusion that there was no dishonesty; but the sentence "there was no dishonesty, the vehicles were found" does not necessarily mean "there was no dishonesty because the vehicles were found" as opposed to "there was no dishonesty and no loss resulted". In any event that specific criticism made at paragraph 37 by Mr Sethi, if valid, goes to detail only and does not, in our view, undermine the thrust of what the Tribunal were seeking to express.However, we agree with Ms George that the sentence starting "had the Respondent shown" demonstrates that the Tribunal were not, in that part of paragraph 37, setting out their reasons for rejecting Hertz case as to the reason for dismissal. They were setting out why, had they been satisfied as to that reason, they would have found against Hertz on the fairness issue.The Tribunal do not appear to us to have made the error of thinking that, unless what was complained of amounted to gross misconduct, Hertz could not succeed in establishing a statutory permissible reason for dismissal. They were not satisfied that the dismissal was for a reason based on inadequacies in Mr Ferrao's performance in relation to the VPCs at all. They did not, as we see it, make any finding which reveals a conclusion on their part that the reason for dismissal was incapability or make what, for these purposes, we will regard as the mistake of regarding misconduct, including carelessness or sloppiness short of gross misconduct as incapability. Their general conclusion was that the misconduct reason had not been proved; the thrust of paragraph 37 was that, if that reason had been proved, the Tribunal would not have regarded it as fair to have dismissed for that reason.We turn to the last individual section of the judgment which was the subject of criticism, namely paragraph 39. Mr Sethi's criticisms of these paragraphs were based to a substantial degree on the first sentence of paragraph 39:
"39 Here we need to examine how seriously the Respondent really did regard what the Claimant did or failed to do."
There and in what followed, Mr Sethi submits, in addressing the question as to how seriously Hertz regarded Mr Ferrao's shortcomings, the Tribunal were again trespassing into areas which went to fairness and not to the reason for the dismissal.We take the view that in paragraphs 39 to 45 the Tribunal can be seen to have been setting out in detail the reasons for their general conclusion as to the proffered reason for dismissal are set out at paragraphs 35 and 36. These reasons are set out in those paragraphs; and the conclusion is repeated at paragraph 46 in these words:
"so this is why we cannot accept the reason for dismissal given by the Respondent is the correct reason"
. Those words confirmed that the preceding paragraphs set out the reasons for that general conclusion.There are six such reasons. The first, set out in paragraphs 39 and 40, is that if misconduct had been the genuine reason for dismissal, Hertz would have acted much more quickly; the delay was not satisfactorily explained; there was ample opportunity for the process to have been carried out much earlier. The second, at paragraph 41, is that, despite their apparent belief in the seriousness of Mr Ferrao's shortcomings, Hertz permitted him to carry on as before without any day to day monitoring. The third, at paragraph 42 - which may perhaps not be logically different from the second - is that Mr Sinclair did not monitor Mr Ferrao. The fourth (paragraph 43) is that Mr Sinclair did not inform Mr Ferrao on 6 September that the matter was important and would be likely to lead to disciplinary action as the Tribunal would have expected if Hertz had genuinely believed in serious misconduct. Fifthly, at paragraph 44, the Tribunal concluded that in reality there was no risk of loss. Finally, at paragraph 45, the Tribunal referred to the solution which they had earlier found to have been achieved at the investigatory meeting and the absence of any satisfactory explanation of Hertz's decision despite that solution to proceed to a disciplinary hearing.We have referred above in detail to Mr Sethi's criticisms of the Tribunal's conclusions on the monitoring issue and on the new solution issue and to our rejection of those criticisms. As to the other conclusions in these paragraphs, all were, in our judgment, open to the Tribunal on the evidence and in respect of none of them has it been overwhelmingly made out that no reasonable Tribunal could have so concluded. Each of the reasons advanced by the Tribunal in those paragraphs was capable, as we see it, of being regarded by the Tribunal as evidence contraindicating the genuineness of Hertz's professed reason for dismissal; these reasons, as expressed by the Tribunal, do not go or go only to the fairness issue but go to the issue which the Tribunal purported to decide. They were all capable of supporting the conclusion expressed by the Tribunal at paragraph 46.We have sought to address, in the preceding paragraphs of this judgment, the detailed argument put before us. It is now necessary to look generally at the Tribunal's judgment as a whole. Mr Sethi submitted that it was perverse for the Tribunal to reject Hertz's reason for dismissal as "not the correct reason" – see paragraph 46 – when repeated shortcomings in Mr Ferrao's discharge of his duties in relation of the VPCs had been discovered, there had been an investigatory interview, Mr Ferrao had been charged with offences of misconduct, there have been a disciplinary hearing and he was dismissed expressly for that misconduct.The Tribunal accepted all those basic facts which were, indeed, not in dispute. However, the Tribunal were entitled to look beyond that framework at the detailed history of what had occurred. When they considered the detail, they concluded, for the reasons we have summarised, that Hertz had not established that misconduct was the reason for the dismissal. For the reasons we have set out this was a conclusion on the facts which was supported by evidence and which was open to the Tribunal to reach; and it was not tainted by error of law. Neither of the two thrusts of Mr Sethi's argument, as we here identified them at paragraph 15 above have been made out.We should add that we do not accept Mr Sethi's criticisms of the words "the correct reason" in paragraph 46. Those words do not, when considered in the context of the judgment as a whole and in particular in the context of the words "the real reason" in the first sentence of the following paragraph, indicate that the Tribunal were considering whether the misconduct reason was "correct" in the sense of reasonable or justifiable. We see the word "correct" as synonymous with the word "real" in the next sentence.Finally, we come to Mr Sethi's further point that the Tribunal, ought, if good practice were to have been followed, to have found and stated what, in their judgment, was the reason or the principal reason for Mr Ferrao's dismissal. He pointed out, correctly, that the Tribunal is not bound by the reason given by the employer or the label attached to the employer's belief and is able to find another reason falling within Section 98 (eg capability rather than conduct, or some other substantial rather than redundancy – See Hannan v TNT-IPEC (UK) Limited [1986] IRLR 165. Thus, Mr Sethi argued, whatever the true reason was, the Tribunal should determine it. He relied on British Railways Board v Jackson [1994] IRLR 235, CA in which the Tribunal had found the dismissal of a buffet car steward unfair because, although he was prohibited from taking on to a train his own goods which might be sold in the buffet, he had been discovered with such goods in his possession before he got on the train and had, therefore, not yet broken that prohibition. The Court of Appeal allowed the employer's appeal from the EAT which had upheld the Tribunal's decision. The ratio was that the Tribunal had misdirected themselves by asking the wrong question, namely were the employers justified in treating the employee as being in breach of the relevant rule? when the correct question was – Was it reasonable for the employers to conclude that the employee intended to use the goods to trade for his own advantage? See paragraph 26 of the judgement of Waite LJ. However, Mr Sethi took us to paragraph 23 of that judgment in which Waite LJ said:
"The Industrial Tribunal also refrained from making any finding as to what the reason for the dismissal had precisely been. They were entitled, strictly speaking, so to do. There is no express requirement in the section that the Tribunal should state the reason found for dismissal; it is technically sufficient to find that an employer has fulfilled the requirements of subsection (1) by showing that there was a reason and then to assign the dismissal reason (without specifying its terms) to an appropriate category under subsection (2). It is nevertheless the ordinary practice of the Tribunals, when answering the question under s.57(1)(a) to make a finding specifying exactly what the reason for dismissal was. There are obvious good reasons for that. By taking such a step at the outset the Industrial Tribunal provides itself with an aide-memoire regarding the precise reason for dismissal, which it is helpful to have in mind when the members proceed thereafter to apply to it the criteria of reasonableness and sufficiency involved in the remaining questions which s.57(3) requires them to answer. It also provides the means of demonstrating to any appellate court that in applying those criteria they have directed themselves to a dismissal reason that was properly found and correctly defined."
Mr Sethi accepted that this part of Waite LJ's Judgment was, strictly, obiter dicta; but, he submitted, it was important and highly desirable that the Tribunal should make a finding as to the reason for dismissal so as to show that the Tribunal had properly and safely approached the reasons issue. However, in our judgment the present case is very different from Jackson ; in Jackson there was no doubt that the reason for the dismissal was misconduct, whether or not the Tribunal correctly expressed it. In the present case the Tribunal's conclusion was that, although Hertz put the case forward on the basis that the reason for the dismissal was misconduct (which could, no doubt, have been regarded alternately as in-capability, consisting of Mr Ferrao's failures properly to carry out his duties in relation to VPCs), that was not the true reason for the dismissal. The Tribunal said, at paragraph 46, that they could not accept that the reason for dismissal given by Hertz was the correct reason, for the reasons they set out. They did not believe that that was, in truth, what caused or principally caused Hertz to dismiss Mr Ferrao. If that was a conclusion properly open to them on the facts, it is not in our judgment undermined by their inability to ascertain the true reason on the facts. It cannot be a necessary prerequisite to the rejection of an employer's case as to the reason for dismissal that it should be possible for the Tribunal to ascertain the true reason; there may be cases in which the Tribunal simply does not believe the employer's assertion as to his reason for dismissal and in which the true reason does not emerge from the evidence. In some cases the evidence may be such as to enable the Tribunal to ascertain and make a finding as to the true reason. In other cases there may be no or no sufficient such evidence; and in such cases, as the Tribunal in the present case rightly reminded themselves, the Tribunal should not enter into speculation. The Tribunal here found themselves unable on the evidence to identify the true reason; they explained why that was so in paragraph 47 and directed themselves not to speculate. That was, in our judgment, a permissible approach to the evidence; and it was not wrong in law; nor does it weaken or cast doubt upon the conclusion as to Hertz's professed reason for dismissal set out at paragraph 46.Accordingly for the reasons we have set out the appeal fails.

The Cross-Appeal

The Tribunal held, at paragraphs 56 to 58 of their Judgment, that contrary to the arguments put forward on behalf of Mr Ferrao, they were obliged by Section 31(2) of the Employment Act 2002 to reduce the compensation awarded to Mr Ferrao by at least ten per cent, unless there were exceptional circumstances as provided by Section 31(4); they concluded, for reasons which they set out in paragraph 58, that the appropriate level of reduction was ten per cent.It seems from paragraph 57 of the Judgment that the Tribunal believed the argument as to the non-application of Section 31(2) of the 2002 Act to be based in some way in Regulation 3 of the Employment Act 2002 (Dispute Resolution) Regulations 2004 ("the Dispute Resolution Regulations") which provides, so far as material, that:
"3(1) Subject to paragraph (2) and Regulation 4, the standard dismissal and disciplinary procedure applies when an employer contemplates dismissing or taking relevant disciplinary action against an employee."
These regulations did not come into force until 1 October 2004.The Tribunal held that Section 31 of the 2002 Act applied in the present case because Section 29(1) of the Act provides that:
"Schedule 2 (which sets out the statutory dispute resolution procedures) shall have effect."
Schedule 2 of the Act sets out the statutory dispute resolution procedures to which Regulation 3 of the Dispute Resolution Regulations refer. Those procedures, the Tribunal concluded, were, as a result of Section 29(1) of the Act, in force irrespective of the provisions of the Dispute Resolution Regulations; and, there having been a failure by Mr Ferrao to complete the relevant statutory procedure because he had failed to appeal against his dismissal, the Tribunal regarded themselves as obliged by Section 31(2) to make at least a ten per cent reduction. Inferentially the Tribunal appear to have concluded that the effect of Section 29(1) was such that Section 31 applied whenever Hertz first contemplated the dismissal for Mr Ferrao.For that reason the Tribunal held that Regulation 18 of the Dispute Resolution Regulations, which is headed transitional provisions and provides that:
"These Regulations shall apply – (a) in relation to dismissal and relevant disciplinary action, where the employer first contemplates dismissing or taking such action against the employer after these Regulations come into force; and (b) in relation to grievances, where the action about which the employee complains occurs or continues after these Regulations come into force,
but shall not apply in relation to a grievance where the action continues after these Regulations come into force if the employee has raised a grievance about the action with the employer before they come into force."did not operate so as to limit the application of Section 31(2) of the Act.In our judgment the Tribunal in so holding fell into error. First, neither Section 29(1) of the 2002 Act nor Schedule 2 of that Act rendered Section 31(2) operative. Section 29 merely states that Schedule 2 "shall have effect"; in other words the statutory dispute resolution procedures set out in Schedule 2 shall be effective; the provision for deduction from an award of compensation in Section 31(2) and the provision for increase in an award of compensation in Section 31(3) of the Act are (as is obvious) neither part of Section 29 nor part of any of the statutory procedures; those provisions were not introduced by or made effective by Section 29 or Schedule 2. Section 31(1) to (5) came into force on 1 October 2004 by virtue of paragraph 2(2) of the Employment Act 2002 (Commencement No 6 and Transitional Provision) Order 2004; thus, prior to 1 October 2004, no Tribunal could put Section 31(2) or Section 31(3) into effect, irrespective of the effectiveness, if any, of Section 29.The Tribunal in this case, adjudicating as they were in the summer of 2005, were therefore, right to treat Section 31(2) as in force, albeit if for the wrong reason; but did Section 31(2) apply to this case the events in which straddled the coming into force of those provisions? The answer to that question rested not in Section 29 of the Act but upon the various transitional provisions. One such provision, paragraph 3 of the Commencement Order referred to above, did not help to answer that question; it provides that Section 31 and Schedule 2 of the Act should not apply where the employee presented his complaint to the Tribunal prior to 1 October 2004; that had not occurred in this case.Regulation 3 of the Dispute Resolution Regulations is not a transitional provision and does not contribute to the answer to the question we have stated above. It simply provides that, of the statutory procedures set out in Schedule 2 of the Act, when an employer contemplates dismissing or taking disciplinary action short of dismissal against an employee the standard dismissal and disciplinary procedure applies unless the modified dismissal and disciplinary procedure applies under Regulation 3(2) or neither such procedure applies in circumstances falling within Regulation 4. Until Regulation 3 came into effect, none of the Schedule 2 procedures applied at all.The key to the answer to the question lies, in our judgment, in Regulation 18 of the Dispute Resolution Regulations. Those Regulations and Section 31(1) to (5) of the Act came into force on the same day, 1 October 2004; prior to that date no question of any reduction in an award of compensation by reason of any failure on the part of an employee to comply with the statutory dispute procedures, assuming that those procedures were in effect before 1 October 2004 (contrary to our view), could arise; but after that date Regulation 18 had the effect that, if the employer first contemplated dismissing or taking disciplinary action short of dismissal before 1 October 2004, the Regulations, including Regulation 3, did not apply and there could be no deduction for failing to comply with any of the statutory dispute procedures; but if such first contemplation occurred after that date, the Regulations and Section 31 did apply; and there could be such a deduction.That the Tribunal erred by, in effect, by-passing Regulation 3 and Regulation 18 altogether on the basis of the terms of Section 29 of the Act is, in our judgment, confirmed by the fact, perhaps unnoticed hitherto in this case, that Section 29 of the 2003 Act itself did not come into force until 1 October 2004; see the same paragraph of the Commencement Order as that to which we have referred above.The Tribunal, therefore, had pursuant to Regulation 18 of the Dispute Resolution Regulations to consider a purely factual issue, namely whether Hertz first contemplated dismissal or disciplinary action short of dismissal prior to 1 October 2004. If they did, then the effect of Regulation 18 would be that no reduction under Section 31(2) could be made; if they did not, then the Tribunal were bound to reduce the award by a minimum of ten per cent, unless Section 31(4) applied.Mr Sethi did not seek to argue against the above analysis; with wholly professional candour he indicated that he did not understand the basis for the Tribunal's decision that the Dispute Resolution Regulations did not apply or were not material, although he did not formally concede that the Tribunal had erred in law. We have no doubt that they did err in law in regarding Regulation 18 as immaterial and in failing to pose to themselves and then to answer the factual question which necessarily arose from the terms of that Regulation.Must we, therefore remit this case to the Tribunal to decide that factual question? We have to say that, mindful of the provisions of Rule 2(a)(2) of the EAT Rules 1993 as amended that, so far as practical, we should deal with appeals in ways which are proportionate to the importance and complexity of the issues, we are very reluctant to remit where the amount hanging on the answer to the factual question is no more than just over £900.00. Ms George expressed the view that the issue was perhaps not worth a remission.Accordingly both parties addressed us in some detail on the evidence which went to that factual question. Ms George on behalf of Mr Ferrao, with candour equal to that of Mr Sethi, accepted that the evidence as to August 2004 was not sufficient to establish that Hertz, at that time, contemplated dismissal or disciplinary action short of dismissal; but, she submitted, the Tribunal's finding in paragraphs 19 and 20 of their Judgment that, on 6 September 2004, Mr Sinclair told Mr Ferrao what he had learnt in August about Mr Ferrao's failures as to discharge his duty in relation to the VPCs and that that would be investigated and referred to the Regional Manager, necessarily provided an affirmative answer to the question whether, prior to 1 October 2004, Hertz had contemplated disciplinary action. Mr Sethi, in contrast, submitted that the Tribunal had expressly found that Mr Sinclair did not refer to disciplinary proceedings, did not tell Mr Ferrao that his job might be at risk and had rejected Mr Ferrao's evidence that Mr Sinclair had referred to those matters. It was, he submitted, on the basis of those findings unnecessary to remit the outstanding question to the Tribunal; and to do so would run the risk of a finding which would be contradictory to the finding that Mr Sinclair did not mention disciplinary proceedings at all at that stage.In our view the Tribunal's findings of fact demonstrate that Hertz did not in September 2004 contemplate dismissal or disciplinary action. If such action had been contemplated, Mr Sinclair would surely have done something to pursue that contemplation even if he did not, as it was likely he would have done, mention the risk of disciplinary proceedings or dismissal to Mr Ferrao; but Mr Sinclair did not even commence an investigation which might have led to disciplinary proceedings prior to 1 October 2004. Nor, as the Tribunal found, was he monitoring Mr Ferrao. On the facts as the Tribunal determined them to be the Tribunal, were there to be a remission, would in our judgment have to find that there was no contemplation of dismissal or disciplinary action short of dismissal before 1 October 2004. Therefore, on a proper application of the relevant transitional provisions, the Tribunal would necessarily have concluded that they were required to make the deduction which, by another route, they decided that they were obliged to make.For these reasons the Cross-Appeal must fail.

Result

For the reasons we have set out both the Appeal and the Cross-Appeal fail; and both are dismissed.