ZIMMER LIMITED v MR N BREZAN [2008] UKEAT 0294_08_2410

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2008] UKEAT 0294_08_2410

Case No Appeal No. UKEAT/0294/08

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

ZIMMER LIMITEDAPPELLANT

MR N BREZANRESPONDENT

Before

His Honour Judge Burke

Date 24 October 2008

[1]APPEARANCES For the Appellant MR D OUDKERK (of Counsel) Instructed by: Messrs Boyes Turner Abbots House Abbey Street Reading RG1 3BD For the Respondent MR R WHITE (of Counsel) Instructed by: Messrs Gorvins Solicitors 2-14 Millgate Stockport Cheshire SK1 2NN SUMMARY UNFAIR DISMISSAL: Procedural fairness/automatically unfair dismissal This judgment addresses only the issue as to whether the Employment Tribunal's finding of automatically unfair dismissal was wrong in law. All other issues were adjourned. The Employment Tribunal found that the Step 1 letter was insufficient because it did not inform the employee that he was at risk of dismissal. It was argued that the statutory procedure did not so require and that the conclusion to the opposite effect in Alexandra v Brigden

[2006] ICR 1277

and HomeServe v Dixon 0122/07/CEA were obiter. The court held that the conclusions, albeit obiter at least in Alexander , were correct and should be followed. The Tribunal's decision was upheld. HIS HONOUR JUDGE BURKE QC In this appeal Zimmer Limited (whom we shall call ZL) challenge the judgment of the Employment Tribunal, sitting at Reading and chaired by Employment Judge Lewis, that the Claimant before the Tribunal, Mr Brezan, was unfairly dismissed by ZL, that he had contributed to his dismissal by one-third and that he should be awarded a sum in excess of £1,500 pursuant to a breach of contract claim. The Employment Tribunal's judgment was sent to the parties on 20 November 2007.

[2]In their Notice of Appeal, ZL challenged all three aspects of that decision. For reasons which we set out in a brief judgment earlier today, in order fairly and appropriately to address the appeal, insofar as it challenges the Tribunal's conclusions that the dismissal was unfair under section 98(4) of the 1996 Act ,as to contributory conduct and on the breach of contract claim, we need to put questions (the precise terms of which we will discuss with counsel after this judgment is completed) to the Tribunal. We have, therefore, adjourned those issues to a future date to be considered in the light of the answers which the Tribunal provides.

[3]However, one of the bases on which ZL were found to have unfairly dismissed Mr Brezan was that the dismissal was automatically unfair, pursuant to section 98(A)(1) of the 1996 Act, because there was a failure on the part of ZL to comply with the statutory dismissal and disciplinary procedure set out in Schedule 2 to the Employment Act 2002 . That conclusion of the Tribunal is also challenged in this appeal; that challenge, which cannot be affected by the concerns which have caused us to ask questions of the Tribunal or by any of the potential answers to those questions, Mr Oudkerk on behalf of ZL and Mr White on behalf of Mr Brezan have agreed can be determined today; and we have heard full argument upon it. This judgment, therefore, goes to that issue only. We will, in due course, when this hearing is resumed, come to address the other issues raised by this appeal.

[4]For the limited purpose of his judgment, the facts need to be recited only in very general terms. Mr Brezan was employed by ZL as a Regional Sales Manager for a very large territory covering much of the south of England. He was allowed to use his own car for business purposes and to claim for mileage used for those purposes and for other expenses verified by receipts. Late in 2006 he was selected by the Sales Director for promotion to a new role which would have been office-based. He raised concerns that, in an office-based role, he would lose his entitlement, inter alia , to mileage payments, in particular for travel to and from his home. As a result Ms Wheale (ZL's HR Director) decided to look at Mr Brezan's mileage and expenses claims. When she did so, for a period earlier in 2006, she noticed that they seemed higher than those put in by others in similar jobs but in other regions. For current purposes we need only say that she investigated further and her concerns grew. On 7 November Ms Wheale and Mr Brezan met. She drew his attention to her concerns. He gave an explanation into which we need not go.

[5]Later that day Ms Wheale sent Mr Brezan an email in these terms:

"Dear Nico, With reference to our meeting earlier today I am taking this opportunity to confirm that a disciplinary meeting has been arranged with myself and Tony Lowther to take place on Thursday 9 th November at 9.00 in the Zimmer offices in Swindon. This meeting is to discuss your mileage and expense claims that have been submitted and that we have discussed at our meeting today. You have the right to be accompanied by a Zimmer employee, who can act as a witness for you during the meeting but who cannot answer questions on your behalf. Please find attached a copy of the Zimmer Disciplinary Policy for your perusal. If you have any questions in relation to this meeting then please do not hesitate to give me a call."

[6]The disciplinary policy thus attached was lengthy and detailed. It set out various procedural stages and identified a list of behaviour which might be considered as misconduct and of behaviour which might be considered as gross misconduct. On its page 6 it said, under the heading "Stage 4 dismissal":

"In cases of (1) a one-off act of gross misconduct, seriously poor behaviour or seriously poor attendance or (2) a failure to improve conduct, behaviour, attitude, performance or attendance following a final written warning within a reasonable time dismissal with or without notice or other alternative sanctions [such as demotion or suspension without pay] will be made." under the heading of "

Gross misconduct", it identified breach of trust and confidence and falsification of receipts or documents, including timesheets and clocking records. Under "Misconduct" (not gross misconduct) it identified, in particular, failure to comply with a reasonable order, instruction or contractual requirement or work rule, unprofessional conduct, failing to record any matter which it is the staff's duty to report or record.

[7]After further meetings Mr Brezan was eventually dismissed for misconduct by Mr Lowther on 24 November. The issue which we now have to determine is whether the Tribunal erred in law in concluding that that dismissal was automatically unfair by reason of ZL, failure to comply with step 1 of the statutory Standard Dismissal with Disciplinary Procedure.

[8]The Tribunal, at paragraph 5.5 of their judgment, said this:

"Shortly afterwards, and on the same day, Ms Wheale sent the Claimant an email (R1 383) inviting him to attend a disciplinary meeting on 9 November. For reasons set out below, we reject the submission that this complied with step 1 of the statutory disciplinary procedure, and it follows that the consequent dismissal was automatically unfair and that the issue of uplift falls to be considered."

[9]They enlarged on that, at paragraphs 9.2 and 9.3 of their judgment, as follows:

"The original email invitation (R1 383) relied upon by the Respondent as a step 1 matter, was, in our judgment, not compliant with step 1 of the statutory procedures. Furthermore, even with the statutory disciplinary procedures not in force, we would have found it an unfair element in the disciplinary procedure in accordance with section 98(4). We accept that it refers to a disciplinary meeting and that it identifies 'mileage and expense claims' as the item for discussion. It does not indicate that there is a potential case of gross misconduct, and it therefore does not indicate that dismissal is a risk of the meeting. It wrongly identifies the Claimant's right of accompaniment, and it allows less than 48 hours before the meeting. We stress that these last two matters are particularly important and are not matters of mere form. Accompaniment and time to prepare are most important to an employee who understands that his job is at risk than otherwise. The email does not refer to a single individual transaction which is under consideration but only identifies the issue generically. We were grateful to be referred to paragraph 12 of the judgment of the EAT in Home Serve Emergency Services Ltd v Dickson (UK EAT 0127/07/2706) in confirming that step 1 requires that 'the employee simply needs to be told that he is at risk of dismissal and why'. 9.3 We treat the records of the meetings of 9 November and 15 November with caution, having found that they were incomplete. While the Respondent could not in principle be criticised for making all the paperwork available to the Claimant to carry out the 'validation,' we are satisfied that it was not made clear to him that the purpose of this exercise was to save his employment, rather than to facilitate his promotion."

[10]Mr Oudkerk submits that the Tribunal erred in concluding that the email of 7 November did not constitute compliance with the requirements of step 1 of the statutory procedure.

[11]In order to deal fully with the arguments, it is necessary to set out, first of all, section 98(A)(1) of the 1996 Act which provides as follows:

"98A(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if- (a) one of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 (dismissal and disciplinary procedures) applies in relation to the dismissal, (b) the procedure has not been completed, and (c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements."

[12]The procedures referred to in that section are (as we have already said) to be found in Schedule 2, Part 1, Chapter 1 to the Employment Act 2002 . The relevant provision is as follows:

"Step 1: statement of grounds for action and invitation to meeting 1 (1) The employer must set out in writing the employee's alleged conduct or characteristics, or other circumstances, which lead him to contemplate dismissing or taking disciplinary action against the employee. (2) The employer must send the statement or a copy of it to the employee and invite the employee to attend a meeting to discuss the matter."

[13]Mr Oudkerk, naturally, starts his submission by referring us to the words of paragraph 1(1) of the statutory procedure. He submits that the natural meaning of those words, applied to a dismissal case (or indeed to any other case), is that all employers are required to do is to set out in writing the alleged conduct in a conduct case, or characteristics or other circumstances in a case which is not a conduct case, which have given rise to the employers' contemplation of dismissal and that there is no obligation on the employer in the "step 1 letter" (as it is called in employment law jargon; although it does not need to be a letter it needs to be in writing; nobody would suggest that an email is not sufficient for the purpose) to set out that he is contemplating dismissal. He points to the comma between the words "circumstances" and "which" in the second line of paragraph 1(1), which in his submission, demarcates the obligation which is set out before it and distinguishes it from the words which describe the conduct to be set out which come after it. Thus, he submits, the only correct construction of the words of the statutory provision is that the Step 1 letter should set out sufficient about the relevant conduct or characteristics or other circumstances.

[14]He has drawn our attention to the decision of the Employment Appeal Tribunal, presided over by Underhill J, in YMCA Trading v Stewart

[2007] IRLR 185

, in which the EAT, by a majority, allowed the employer's appeal against the Tribunal's conclusion that the employers had failed to comply with either step 1 or step 2 of the statutory procedure and emphasised the importance, when considering issues as to such compliance or failure of compliance, of considering only the simple and non-technical terms of the statute and of not bringing into consideration the more elaborate requirements of fairness or good industrial practice.

[15]When the words of the statute are looked at in that focused way, Mr Oudkerk submits, only one construction is possible; and the "step 1 letter" (the email in this case), which made no reference to possible dismissal, was sufficient. He acknowledges that, in Alexander v Brigden Enterprises

[2006] ICR 1277

, the Employment Appeal Tribunal, presided over by Elias J, came to a different conclusion, as did the EAT, presided over by His Honour Judge Clark, in Home Serve Emergency Services Ltd v Dixon (unreported

EAT/0127/07/CEA

); but he submits that the views expressed in Alexander were obiter and set in the context of the absence of any or any full argument and that the views expressed in Home Serve can be similarly regarded. In any event, he submits, we are not bound by either authority and should be persuaded to come to a different conclusion.

[16]On this issue Mr White relies on the two authorities to which we have just referred, and on the importance of the employee's knowing, if a step 1 letter is to be of value, what it is he is or may be facing, so that he can consider the allegations being made against him in the light of the possible sanction which may follow.

[17]In Alexander the Employment Tribunal considered, as the first issue before them, whether there had been a sufficient Step 1 letter, in a case in which the Claimants were dismissed for redundancy. The Step 1 letter relied upon informed the Claimants that their positions were at risk of redundancy and, therefore, it referred to the risk of dismissal. In a judgment, which was plainly intended to lay down principles generally as to the nature of the relevant requirements of the statutory procedures, the EAT, at paragraphs 33 to 37, described the purposes of those procedures and said that they represented a basic statutory minimum standard. At paragraph 34 the Employment Appeal Tribunal said:

"34. First, the purpose of these statutory procedures is to seek to prevent the matter going to an Employment Tribunal if possible by providing the opportunity for differences to be resolved internally at an earlier stage: see the observations in the Canary Wharf case, para. Hence the reason why these procedures apply at the stage when dismissals are still only proposed and before they have taken effect. However, to achieve that purpose the information to be provided must be at least sufficient to enable the employee to give a considered and informed response to the proposed decision to dismiss." and at paragraph 38 they said: "38. Taking these considerations into account, in our view, the proper analysis of the employer's obligation is as follows. At the first step the employer merely has to set out in writing the grounds which lead him to contemplate dismissing the employee, together with an invitation to attend a meeting. At that stage, in our view, the statement need do no more than state the issue in broad terms. We agree with Mr Barnett that at step one the employee simply needs to be told that he is at risk of dismissal and why. In a conduct case this will be identifying the nature of the misconduct in issue, such as fighting, insubordination or dishonesty. In other cases it may require no more than specifying, for example, that it is lack of capability or redundancy. That is consistent, we think, with the approach which this Tribunal has adopted in relation to grievance procedures in the Canary Wharf and other cases. Of course, most employers will say more than this brief statement of grounds, but compliance with the statutory minimum procedure is in our view met by a limited written statement of that nature."

[18]The conclusions set out in paragraph 38 have, as His Honour Judge McMullen QC said in his written comments when this appeal was considered at the sift stage of the EAT's procedures, been consistently followed by Tribunals.

[19]They were followed, too, in Home Serve, in which the EAT were considering the employer's appeal against the Tribunal's decision that the employee had been unfairly dismissed by reason of the absence in the Step 1 letter of any reference to dismissal, as a possible outcome of a disciplinary meeting to which that letter invited him. At paragraph 12 the EAT said:

"12. We shall turn to the provisions relating to the basic award later in this judgement. We deal first with the finding of automatically unfair dismissal under section 98A(1). It is convenient to deal with the two steps of the DDP in turn. Step 1: Mr Hignett submits, first, that on its wording step 1 does not require the employer to state that he is contemplating dismissal or some other disciplinary sanction. The difficulty with that submission is a passage in the judgment of the President in Alexander , paragraph 38, where he said this: "

Taking these considerations into account, in our view the proper analysis of the employer's obligation is as follows. At the first step the employer merely has to set out in writing the grounds which lead him to contemplate dismissing the employee, together with an invitation to attend a meeting. At that stage, in our view, the statement need do no more that state the issue in broad terms. We agree with Mr Barnett that at step 1 the employee simply needs to be told that he is at risk of dismissal and why. In a conduct case this will be identifying the nature of the misconduct in issue, such as fighting, insubordination or dishonesty." We do not propose to depart from that statement of the law contained in Alexander ."

[20]Thus, the principle expressed in Alexander was applied to a case where the letter was defective in that it did not refer to dismissal as a possible outcome, the identical shortcoming to that identified by the Tribunal in the first case.

[21]We accept that in Alexander what the EAT said in paragraph 38 of their judgement as to a requirement that the step 1 letter should tell the employee that he is at risk of dismissal, in addition to telling him why was strictly obiter dicta; for the step 1 letter in that case did inform the employees of that risk; and the principle enunciated in the fourth sentence of paragraph 38, i.e. that the employee must be told that "he is at risk of dismissal and why" would appear to have been based on the argument of counsel for the employers, with which it is unlikely that counsel for the employee would have disagreed (if asked). However, we do not accept Mr Oudkerk's elegant deconstruction of that paragraph, which was intended to show that the sentence to which we have just referred was an anomaly within a paragraph which otherwise stated that the only requirement was to tell the employee what were the conduct or characteristic or circumstances which the employer had in mind. In our judgment, the paragraph must be read as a whole. The obligation to tell the employee that he is at risk of dismissal did not need to be set out with any greater degree of elaboration. On the other hand, the obligation to tell the employee why he was at risk of dismissal did need to be set out with a greater degree of elaboration because in practice there can be many different answers to the question:

" how far do we have to go in telling him why?"

In that paragraph we have no doubt that the EAT was seeking to make clear in general terms, how far, in a step 1 letter, in that respect the employers were required to go. We do not doubt that the President and his colleagues intended to state the two-fold requirement which the paragraph sets out and to do so by way of guidance to Employment Tribunals and to employers and to employees.

[22]Whether paragraph 12 in Home Serve is technically obiter dicta , as Mr Oudkerk suggested, we rather doubt. It is true that the EAT went on to conclude, on the facts, that the employee in that case did know that the employers were contemplating dismissal; but had paragraph 12 been decided in the opposite direction what was said most certainly would have been ratio; and it is certainly arguable that paragraphs 12 to 14 of the EAT's judgement contain two ratios as to step 1. But we do not wish to get embroiled in technicalities as to what is or not is obiter dicta ; for we are not bound by either authority; and we would not hesitate, if we were persuaded that Mr Oudkerk's submissions were correct, to disagree with what our colleagues have set out in those two authorities:

[23]However we are not persuaded that the EAT overstated the requirements of a step 1 letter in either decision. We accept that paragraph 1(1) of the statutory procedure could be construed as requiring only the limited obligation on which Mr Oudkerk relies, but in our judgment the relevant words can and should be construed consistently with the view taken by the EAT in Alexander and Home Serve, to which we have referred, namely, that the words which appear after the comma, despite the comma, are descriptive of the obligation contained within the procedure and not merely descriptive of the words which precede the comma. That, in our judgment, is consistent (and the alternative is not consistent) with the aims and purposes of the statutory provisions as described by the EAT in paragraph 34 of Alexander , in our view correctly. Unless the employee is enabled to understand from the step 1 letter that he is at risk of dismissal, in our judgment the purpose of the Step 1 letter in a dismissal case cannot be properly achieved. The employee is plainly entitled to have some idea what type of sanction is in the mind of the employer or, at least, in a dismissal case, that dismissal is in the mind of the employer, so that he knows the potential extent of what it is that he may be facing when, armed with the information given to him by the Step 1 letter, he goes to the Step 2 meeting.

[24]In what we have said we are not, in our judgment, departing in any sense from the principle expressed in YMCA Training, in which (as Mr Oudkerk realistically accepts) Alexander was quoted and its correctness was not queried. The issues in that case were different issues; but the principle is of course applicable, that we must concentrate on the words and purposes of the words of the statutory procedure. That we have done. We have not gone beyond them. Accordingly, Mr Oudkerk's first point fails. Employment Tribunals should follow what the EAT said in Alexander .

[25]His second point is that on the facts of this case (just as on the facts of Home Serve ) the employee, Mr Brezan, had been given the relevant information, i.e. knew that dismissal was contemplated. We accept that on the facts of a particular case it is open to a tribunal to consider that the Step 1 letter, and information provided with it, can be regarded, in the individual circumstances of the case before them, as sufficient to communicate the risk to the employee of dismissal, albeit the letter itself does not expressly say that. Home Serve is a clear example of that type of case. Here Mr Oudkerk submits that sending the disciplinary procedure with the email, which process bore within it the contents which we have described, could have only have meant to Mr Brezan that he was at risk of dismissal and that that was borne out at the following disciplinary meeting when Mr Brezan said that he understood very clearly why he was at that meeting i.e. the meeting of 9 November.

[26]We do not accept that submission, attractively as it was put. The email said only that the meeting was to discuss Mr Brezan's mileage and expense claims which had been discussed earlier that day. It made no reference to misconduct, still less gross misconduct. As we have already said, it did not direct Mr Brezan's attention to any specific part of the lengthy disciplinary document. It was possible from the letter for anyone to think that the employers were thinking, or might be thinking, not in terms of dismissal at all but in terms of relying on unprofessional conduct or failing to record matters which should be recorded or on other matters falling within the definition of "misconduct" as opposed to "gross misconduct"; the whole series of meetings (according to the Tribunal's findings) took place within the context of what appeared to the Tribunal to be an ongoing discussion about the mileage claims.

[27]At paragraph 9.3 of the judgement the Tribunal expressly found as fact that it was not made clear to Mr Brezan that the purpose of the exercise being carried on was to enable him to save his employment, rather than to facilitate his promotion. That finding of the Tribunal appears to us to make Mr Oudkerk's second point unsustainable; but, even without that finding, we would not have come to the conclusion, on the facts as found and on the documents that we have seen, that this was a case analogous to Home Serve or a case in which it could be said that the employee knew from the step 1 letter and what accompanied it, before he went into the meeting of the 9th, November, that he was at risk of dismissal.

[28]It is true that the note of the meeting of 9 th November, which the Tribunal found to be accurate but incomplete, records Mr Brezan as saying that he understood very clearly why he was there; but that is ambiguous. It does not mean necessarily that he understood that he was there to try and keep his job, as opposed to being there to explain what had happened in relation to his mileage claims and why he had done nothing wrong or nothing very wrong. We are not persuaded by that note to regard Mr Oudkerk's point as being any stronger than it would be without it.

[29]For those reasons we are not persuaded by Mr Oudkerk's second point either; and thus we come to the conclusion that the Tribunal's decision that there had been an automatically unfair dismissal was correct and that, in that respect, this appeal must be dismissed.