E-FREIGHT LTD v MR J LONG [2009] UKEAT 0010_09_1706

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2009] UKEAT 0010_09_1706

Case No Appeal No. UKEAT/0010/09

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

E-FREIGHT LTDAPPELLANT

MR J LONGRESPONDENT

Before

His Honour Judge Reid

Date 17 June 2009

[1]APPEARANCES For the Appellant MISS SARAH MALIK (of Counsel) Instructed by: Messrs Geldards LLP Solicitors The Arc Enterprise Way Nottingham NG2 1EN For the Respondent MR MATTHEW RICHARDSON (of Counsel) Instructed by: Messrs Bart-Willliams & Co Solicitors 34-36 High Street Barkingside Ilford Essex ID6 2DQ SUMMARY UNFAIR DISMISSAL: Reasonableness of dismissal The Respondent below employed the Claimant to run its transport business. The business lost its most valuable customer but the Claimant concealed the loss from the directors. Because of the concealment he was dismissed. The Employment Tribunal took the view that it would have conducted further inquiries and that the penalty of dismissal was outside the range of reasonable responses. Held: despite its reference to the appropriate authorities the Tribunal had entered the arena and substituted its own view for that of the employer. Appeal allowed. Claim for unfair dismissal dismissed. HIS HONOUR JUDGE REID QC The business which the Respondent had was, to a substantial extent, based on business for DHL. DHL was an important customer, representing about one-quarter to one-third of its business prior to December 2007. There was a substantial downturn in the level of the Respondent's business in December 2007 and January 2008. The problem, in part, was that DHL had determined that it would no longer do business with the Respondent as a result of a late delivery. It appears that it may be that the cause of the late delivery was the sudden illness of the driver.

[2]The Claimant who effectively ran the business day to day took the view that the loss of the business was temporary and that he would be able to sweet-talk DHL into resuming its dealings with the Respondent. However there were two meetings at which concerns were raised with the Claimant by the directors Mrs Templeton and her husband, Mr Templeton, about the level of business with the Claimant. The Claimant did not, on either occasion, reveal the fact that the Respondent had lost the DHL business. Matters were clearly serious in that, on 14 February, the latter meeting, Mrs Templeton made the Claimant and other members of staff aware that she and her husband were planning to sell their house to raise capital to inject into the business, though it appears that was plan later modified to attempting to re-mortgage their house to obtain further finance.

[3]Whilst the Claimant was on leave on 29 February, the Respondent's operation manager, Mr Ashwell, told the Claimant's assistant, Mr Timms, to telephone DHL for more work. At that point Mr Timms told Mr Ashwell that the Respondent had lost the DHL business. This was something which was known to the members of the Claimant's department, but not known to Mrs Templeton because the Claimant had concealed that fact at the January and February meetings.

[4]The Claimant returned from holiday on 3 March and discovered, he thought, that there was some business upturn, but he was called to a meeting with Mrs Templeton later that day and he then admitted when it was put to him that he had not told her about the DHL matter and he asserted that he was confident that the business relationship would be resumed. Mr Templeton then suspended him, pending an investigation into his failure to report the loss of the DHL account. The Tribunal found, as a fact, that there was no note of a suspension meeting, of the fact of a suspension, or of his being informed that his job might be at risk. He was not shown any documents relating to loss of business or the upturn which he says he had observed.

[5]Mrs Templeton then conducted an investigation. That investigation consisted in telephoning R&K, which appears to be an organisation synonymous with, or part of, DHL and being told by somebody there that hell would freeze over before they used the Respondent company again.

[6]The Respondent then wrote to the Claimant, calling him to a disciplinary meeting. The letter calling him was, simply, in these terms:

"We request that you attend a disciplinary hearing on Thursday 13 th March at 11:30 at E-freight. You may have a witness of your choice at the meeting."

[7]The letter did not identify the charge, though it is clear to us that the Claimant knew perfectly well what the matter of complaint was, nor did it identify expressly that he was in danger of losing his job.

[8]The meeting was then held. The notes of the disciplinary meeting show that Mrs Templeton set out her concerns about the withholding of information, that this could have affected the financial plans and it might have led to re-mortgaging their home. In the meeting the Claimant admitted the loss of the account, apologised, said he had not intended to mislead and maintained his belief that the business might be regained. He said in answer to the observations, "You knew fully what the situation was, concerning the company finances, but you still chose to withhold important information from us at a managers' meeting":

"Yes I did and I thought I'd get more work in to cover the lost work". "

You still failed to tell us and you misled us and the other managers, not once but twice, at two separate meetings". Answer, "With the revenue hopefully about to improve, it wouldn't matter". It was then put to him that had they still had the R&K, i.e. the DHL account, "We would not have had to stand vehicles up, losing money and making major losses. The main thing is you didn't communicate to us and you failed to inform us of important information at a managers' meeting. Have you anything further you want to add?" And he responded, "Can I just mention, I have been a loyal, hard-working member of your staff for five years and didn't go out to generally deceive you". I think it might be said from that last exchange that it was by that time at least fairly clear to the Claimant that his job might be on the line.

[9]The Tribunal made its findings of fact, set out Section 98 of the Employment Rights Act 1996 , so far as material, referred to British Home Stores Ltd v Burchell

[1978] IRLR 379

, EAT and Iceland Frozen Foods Ltd v Jones

[1983] ICR 17

, EAT, mentioned two other cases referred to them, Webb v Airbus

[2008] ICR 561

, CA and Alexander v Bridger

[2006] IRLR 822

, EAT and then went on to make its findings. They found that the Claimant had not been given any disciplinary warnings before his dismissal, and they added that if they were wrong about that any purported warning did not relate to the DHL matter and had expired by January 2008. They found that the Respondent believed the Claimant had committed misconduct by reason of the failure to report the loss of DHL business, dealing there with what might be described as limb 1 of Burchell . They refer to the extent of Mrs Templeton's investigation and then went on:

"13. If the Respondent had serious concerns about the Claimant's failure to report the loss of DHL as a client, those concerns were not set out in writing to the Claimant. Had consideration been given to dismissal as a potential outcome, a reasonable employer would have provided the information that the Claimant was at risk of dismissal. It would have stated why."

[10]It did not of course do so in writing, but it is pretty clear, as we have indicated, from the material before us, that he knew precisely why he was summoned to a disciplinary hearing and that last answer indicates that he was well aware that his job was on the line.

[11]It went on to suggest that at the disciplinary hearing Mrs Templeton considered only one sanction, that of summary dismissal, and did not consider the range of issues set out in the terms and conditions of employment which could have warranted a lesser sanction. That is a reference to the disciplinary code of the Respondent which does provide for the possibility of a final written warning.

[12]The Tribunal then went on in these terms:

"14. In considering whether the sanction of dismissal was reasonable in all the circumstances, the Tribunal was not provided with any evidence by the Respondent to show that it lost any money or that its Directors took any personal financial steps by reason of the Claimant's failure to inform them of the loss of the DHL business as part of the general downturn. The Claimant's evidence is accepted that R&K had not expressed its intention to cease dealing with the Respondent in the same terms as described by Mrs Templeton. He confirmed to the Respondent that, with revenue improving, he believed the loss of R&K/DHL was temporary and would not affect the Respondent's long-term business as it was part of the general ups and downs of the business. He had not intended to mislead the Respondents but apologized for not having informed them. 15. The Claimant's explanation is accepted [i.e. by the Employment Tribunal] that he was unaware of the implications of the loss of the DHL business. However, although this was important information, the circumstances were that it was common knowledge in the Claimant's team and no evidence of actual loss or hardship to Mr and Mrs Templeton, the main reason presented as underlying the seriousness of the Claimant's omission, was presented either to the Claimant or the Tribunal."

[13]That, in fact, seems to us is a gloss. The seriousness was that a trusted senior employee had concealed from the managers the loss of something between one-quarter and one-third of the company's business. That was what was complained about. The Tribunal went on:

"A reasonable employer under those circumstances would not have summarily dismissed the Claimant as the sanction for poor judgment in failing to report the loss of the customer. There is no evidence to support the Respondent's assertion that the Claimant withholding information was a factor in the downturn of the business or actually in costing them money or had any other effect."

[14]In our judgment, when making those findings, the Tribunal is firmly coming down into the arena and determining what it would have done. It may be expressed in terms of a reasonable employer, but it seems to us that this was a classic case of a tribunal forming its own view as to what would have been reasonable, first, in relation to the investigation and, second, in relation to the penalty.

[15]The Tribunal went on to say that the Respondent failed to give the appeal adequate consideration and refers, in a somewhat odd finding, to the fact that Mr Templeton took into account what the Respondent described as "previous expired informal warnings". Given the Tribunal's earlier finding that there were none or that they had expired, it is not entirely clear how that fits in, but the position so far as that is concerned, it seems to us, is that, again, the Tribunal is looking at what it would have done. At paragraph 18, it continued:

"18. The Tribunal considered whether dismissal was within the range of reasonable responses whilst not placing itself in the role of the employer. Under the circumstances, that dismissal did not appear to be within the range of sanctions contemplated by the Respondent, a reasonable employer would have referred to its disciplinary procedure and would have considered a final written warning as a sanction."

[16]The Tribunal there, it seems to us, is again substituting its own view for consideration as to whether the steps taken and the consideration given by the employer was reasonable. Here we have a situation where the Tribunal has criticised the extent of the investigation. In our judgment, at that first stage, it is substituting its own view. The charge was non-disclosure. What was needed by way of investigation was to discover whether or not the contract had indeed been lost (that was confirmed by phone call) and there was the admission of non-disclosure. What more, one might ask rhetorically, was needed? In our judgment, the Tribunal could not properly go on to discuss the other matters which the members of the Tribunal might, had they been the employers, have done.

[17]Then it goes on to consider the sanction and, again, it takes the view that the reasonable employer would have considered a final written warning as a sanction. The Tribunal does not, in fact, go so far as to say "would have imposed a final written warning", but that appears to be the import of what it was saying. In our judgment, given the seriousness of this non-disclosure, irrespective of the financial effect that it might have had or did have on the employer or the employer's corporators, this was a situation where a reasonable employer could perfectly well have taken the view that this was a case which merited dismissal.

[18]By way of a post-script in relation to that, the Tribunal made a number of findings about the absence of evidence as to the financial effects. It was noting, for example, that there was no evidence to support the Respondent's assertion that the Claimant withholding information was a factor in the downturn of the business or actually cost them money or had any other effect. That is a finding which was only material if the Tribunal was substituting its own view. Beyond that, there was the assertion by the employer in the passage that I read from the notes of the disciplinary hearing as to the consequences. What the Tribunal does not do is say, "We do not accept that there were any such effects". It demonstrates by referring to the absence of evidence before it a clear indication that the members of the Tribunal were examining this matter as if they were the employers, rather than standing back and considering whether what was done was in the range of responses of a reasonable employer.

[19]In those circumstances, it seems to us that the Tribunal erred in law in the manner in which it approached this case and that the Tribunal properly directing itself would necessarily have come to the conclusion that the Claimant below (the Respondent here) was not unfairly dismissed and would therefore have dismissed his application.

[20]We propose to allow the appeal and substitute for the determination by the Employment Tribunal, a declaration that the Claimant was not unfairly dismissed.