MR L EDWARDS v 1) BEACON CARE GROUP LTD 2) BEACON CARE HOLDINGS PLC 3) ASHVIEW HOUSE LTD [2009] UKEAT 0431_08_2003

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2009] UKEAT 0431_08_2003Case No Appeal No. UKEAT/0431/08Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR L EDWARDSAPPELLANT1) BEACON CARE GROUP LTD 2) BEACON CARE HOLDINGS PLC 3) ASHVIEW HOUSE LTDRESPONDENT
Before
His Honour Judge Peter Clark Mr T Stanworth Mr D WelchDate 20 March 2009
[1]APPEARANCES For the Appellant MR STEPHEN HEATH (of Counsel) (appearing via the Bar Pro Bono Unit) For the Respondent MR MICHAEL SALTER (of Counsel) Instructed by: Messrs Lyons Davidson Solicitors Park House 87 Burlington Road New Malden Surrey KT3 4QP SUMMARY RACE DISCRIMINATION: Direct / Comparison PRACTICE AND PROCEDURE: Disposal of appeal including remission Direct racial discrimination – correct comparator – whether earlier CMD ruling misinterpreted by Employment Tribunal at substantive hearing – answering correct question in determining issues in case – case remitted for further consideration to same Employment Tribunal. HIS HONOUR JUDGE PETER CLARK This matter has been proceeding before the Stratford Employment Tribunal. The parties are Mr Leon Edwards, Claimant and(1) Beacon Care Limited(2) Ashview House Limited(3) Beacon Care Holdings PLC, Respondents. By a Judgment with Reasons promulgated on 10 March 2008, following a hearing held on 7-9 January that Tribunal (Judge Milmo QC, Mr D J Adsett and Mr W T Vaughan) determined Mr Edwards' complaints of unfair dismissal, racial discrimination and failure to pay notice pay and holiday pay. For our purposes the focus is on the complaints of racial discrimination. The Employment Tribunal upheld that complaint insofar as it related to the Respondents' failure to respond to the Claimant's grievance letters of 28 August, 30 August and 6 September 2007 but dismissed all other complaints under that head.[2]The Claimant's Notice of Appeal was initially rejected on the paper sift by HHJ McMullen QC under Employment Appeal Tribunal Rule 3(7). However, following a Rule 3(10) hearing before HHJ Burke QC the appeal was permitted to proceed on all grounds save for a contention that the Employment Tribunal's Reasons were not ' Meek compliant'.[3]At the outset of this hearing I heard an appeal by the Claimant against the Registrar's refusal to allow him to adduce fresh evidence on appeal. I refused that application for the reasons which I gave in a preliminary oral judgment.[4]Against that background we turn to the substantive issues in the appeal. The Facts[5]The Employment Tribunal found the following material facts.[6]Between January and September 2006 the Claimant was employed either by Beacon Care Holdings or Ashview House Ltd at their Ashview House Care Home, near Basildon, Essex. He is black and of African origin. He was originally interviewed by Gary Scott, then Group Operations Manager, who did not give evidence before the Tribunal, and offered the post of Home Manager at Ashview House. That offer was then set out in a letter dated 27 January 2006, accompanied by a "Contract of Employment" which the Claimant signed. Confusingly, the contract was expressed to be for a fixed term of three months and the letter stated that there would be a probationary period of one month; the contract itself provided, in the first paragraph, that the first six months would be treated as a probationary period, whereas the seventh paragraph said that the first month would be probationary.[7]A factual issue arose as to whether, after three months employment, the Claimant received a further letter dated 27 April 2006 extending the probationary period by a further six months. Mr Edwards told the Employment Tribunal that he never received that letter, a copy of which the Respondents were unable to produce, and the Tribunal believed him[8]We pass over the various inspections of the home related in the Employment Tribunal's fact-finding and pick-up the story (paragraph 18) on 23 August 2006 when a meeting took place between the Claimant and Mr Scott, who told him that he had been investigated for sexual harassment and there was substantial evidence against him. He was told to resign or face disciplinary proceedings. The Claimant replied that he had no reason to resign as the allegations were all false. He was told to go home and think about it.[9]Shocked by this turn of events the Claimant was off sick until 26 August. By then he had been told not to go into work unless Mr Scott was present. That day, he said in evidence, two residents at the Home told him that Mr Scott had informed them that he, the Claimant, had been dismissed. It also appeared that £200 was missing from the safe; only the Claimant and Mr Scott had access to that safe.[10]The Claimant attended for work on 28 August and saw Mr Scott, who asked him to hand over all documents relating to petty cash and the finances of the care home. The reason for that request was unclear. The keys to the home were also taken from him. Later that day the Claimant composed a lengthy written complaint to Mr Sheikh, Managing Director of the Third Respondent, who did give evidence before the Employment Tribunal. In that letter the Claimant said:
"I am compelled to put forward a complaint because I have been treated unfairly, with some bias and prejudice and been discriminated against because of my colour race or [ethnicity]."
He both faxed and sent by recorded delivery that letter to the Beacon Care office. On 30 August 2006 he sent a second grievance letter by the same means. The Claimant told the Employment Tribunal that he also spoke to Mr Sheikh by telephone on 30 August 2006, to be told that he had received the Claimant's first letter but had not read it.[11]Mr Sheikh was an unsatisfactory witness. He denied receiving either written grievance but the Employment Tribunal did not believe him for the reasons given at paragraph 21.[12]The Claimant was again off sick from 29 August to 7 September 2006.[13]On his return to work on 7 September the Claimant had a meeting with Mr Scott, who told him that he was still on probation (which the Claimant denied); it was being reviewed and that in light of the most recent inspection report his employment was being terminated with immediate effect. That was followed by a letter of dismissal and a second letter dated 30 August asking him to attend a probation review meeting on 4 September accompanied by a copy of a letter dated 27 April which the Claimant asserted and the Employment Tribunal accepted he had not previously received. The Claimant attempted to appeal to Mr Sheikh by letter dated 8 September; apart from an acknowledgement dated 12 September the employer made no attempt to process the appeal. The Employment Tribunal decision Unfair dismissal[14]The Employment Tribunal rejected the complaint of unfair dismissal by reason of making a protected disclosure (paragraph 27). The Claimant had insufficient service to bring a claim of 'ordinary' unfair dismissal, although the Employment Tribunal found that his dismissal was 'unquestionably unfair' (paragraph 31.2). Pausing there, but for his lack of qualifying service we take that to mean that it was both unfair under s98 of the Employment Rights Act 1996 and automatically unfair under s98A, there having been no attempt by the employer to comply with the statutory dismissal and disciplinary procedures. Racial discrimination[15]We deal first with the finding of unlawful direct race discrimination on the part of the Respondents in failing to deal with the Claimant's grievances (Reasons, paragraphs 38-42). Having comprehensively rejected the Respondents' varying factual case as to the grievances (paragraph 38), the Employment Tribunal constructed a hypothetical comparator: a white manager with some seven months service, whom the Respondents (possibly) believed was still under probation and was the subject of an unfavourable report after a recent CSCI inspection and who had written grievance letters setting out a substantial number of complaints about the way in which he had been treated by the Respondents and one of its senior managers. Would those grievances have been disregarded and received no response, asked the Employment Tribunal? Their answer was in the negative, for the reasons given (including the fact that his grievance raised a complaint of racial discrimination) and, in the absence of any explanation by the Respondents unlawful discrimination was found to have taken place. There is no cross-appeal against that finding.[16]Turning then to the complaint of dismissal being an act of unlawful race discrimination (paragraph 31) the Employment Tribunal rejected the Claimant's named actual comparator, Michelle Rutherford, as not being truly comparable and again constructed a hypothetical comparator, namely a white manager with a similar length of service to that of the Claimant, in charge of a Beacon Care Home which received a similarly unfavourable CSCI report as that given to Ashview House. Making that comparison, the Employment Tribunal concluded that the white manager's employment would similarly have been terminated. Thus, in respect of his dismissal, the Claimant did not receive less favourable treatment than his hypothetical white comparator.[17]It will be immediately apparent that the hypothetical comparator constructed for the dismissal complaint differed from that in relation to the failure to deal with his grievances complaint in one material respect. In the latter construct the comparator had raised those grievances; in the former that feature is absent. Why? The answer is supplied by the Employment Tribunal at paragraph 31.2. Although, in the absence of evidence from Mr Scott (who effected the Claimant's dismissal) the lodging of grievances by the Claimant was of potential significance, the Employment Tribunal considered themselves debarred from considering whether there was any link between the grievance letters and the Claimant's dismissal by a ruling given in the course of a Case Management Discussion (CMD) held before Judge J M Jones on 23 May 2007.[18]At paragraph 18 of her Order dated 7 June 2007 Judge Jones said "During this CMD hearing, the Claimant made an application to amend his Claim to include the claim that the reason for his dismissal was the fact that he had lodged written grievances with the Respondents on 29 August 2006, 30 August 2006 and 6 September 2006. The Tribunal refused leave to the Claimant to add this as [sic] a list of issues to be determined by the Tribunal."[19]Judge Milmo's Tribunal referred to paragraph 18 of

Judge Jones' Order; they did not refer to paragraph 19, which began:

"However, the existence of the grievances will form part of the factual matrix to be evidenced at the [substantive] Hearing."
[20]That ruling by the Milmo Employment Tribunal, its 'self-denying ordinance' as Mr Heath describes it, is the subject of a ground of appeal before us (Grounds 5(1)(i) and 5(2)). We deal with that aspect of the appeal now. Mr Heath submits that what Judge Jones did at paragraph 18 of her Order was to rule out an amendment to the claim to add a complaint of victimisation contrary to s2 of the Race Relations Act 1976 (RRA), that is , that in dismissing him, the Claimant was less favourably treated by the Respondents than a comparator who had not done a protected act, namely raised a complaint of racial discrimination by way of grievance because he had done the protected act. However, in relation to the complaint of dismissal as an act of direct racial discrimination, Mr Salter accepts, we think rightly, that in constructing the hypothetical comparator for that purpose, the Employment Tribunal omitted a relevant factor (to be seen in the 'grievance' comparator) namely that he had lodged the grievances raised by the Claimant. Mr Salter acknowledges that in failing to take into account that factor (permitted, we think, by paragraph 19 of Judge Jones' CMD Order) the Employment Tribunal fell into error. How that error is to be dealt with we consider when coming to the disposal of the appeal. We note, for completeness, that dismissal was one of the Claimant's allegations of direct discrimination (CMD Order, paragraph 7.1).[21]The final finding in relation to direct discrimination which it is necessary for us to consider is that headed by the Employment Tribunal 'Failure to investigate allegations made about the Claimant' (paragraphs 36-37).[22]It was the Claimant's case that on three separate occasions he was made aware of allegations of sexual harassment made against him, the last being at the meeting with Mr Scott on 23 August 2006 to which we have referred earlier.[23]At paragraph 7.7 of Judge Jones' CMD Order one of the issues of direct race discrimination for the substantive hearing was formulated in this way: "failed to fairly investigate allegations made about the claimant." [our emphasis][24]It is plain on reading paragraphs 36-37 that the Milmo Tribunal transposed that issue as a failure to investigate allegations made about the Claimant. The omission of the word 'fairly' changed the whole sense of the Claimant's allegation. As Mr Heath points out, the Claimant's complaint, in his first grievance letter and in his pleadings, was that he had been given no opportunity to answer the allegations referred to by Mr Scott. The question was not whether Mr Scott had carried out any investigation, but whether, in the absence of evidence from him, the Claimant had raised a prima facie case of less favourable treatment compared with, we venture to suggest, a white manager against whom similar allegations of sexual harassment had been made. If so, then an explanation was required from the Respondents and, in the absence of evidence from Mr Scott, none was forthcoming. The reverse burden of proof under s54A RRA would then be engaged. It does appear strange, in these circumstances, that this part of the Claimant's claim failed(a) because it was misstated and(b) in the absence of evidence from the Respondent . Mr Salter was unable to persuade us that this was a correct approach by the Employment Tribunal and again we accept Mr Heath's submission that the Tribunal fell into error. Disposal[25]Having established two errors of law Mr Heath goes further. He submits that in rejecting the Claimant's case that his dismissal was an act of direct racial discrimination the Employment Tribunal reached a perverse conclusion. We need not here rehearse the approach of the Court of Appeal to the perversity ground of appeal set out in Yeboah v Crofton [2002] IRLR 634 , paragraphs 92-95, per Mummery LJ. Specifically, Mr Heath submits that there was no evidence (see Yeboah , para. 95) to support the Employment Tribunal's finding at paragraph 31.1 that:
"The evidence was that that [dismissal] was commonly the fate of managers of homes which failed to meet a significant number of statutory standards."
[26]We accept Mr Salter's submission that there was evidence before the Employment Tribunal to support that finding; paragraph 18 of Mr Sheikh's witness statement asserted that fact; it therefore cannot be said that there was no evidence to support the relevant finding.[27]In these circumstances we consider that the two matters on which we have upheld this appeal should return to the Employment Tribunal for further consideration. Mr Heath has not persuaded us that we should reverse the Employment Tribunal's finding on discriminatory dismissal. Mr Salter invites us to direct that these two points should be considered by a fresh Tribunal. Mr Heath asks us to send the matter back to the same Tribunal chaired by Judge Milmo. We have in mind the helpful guidance on remission provide by Burton P in Sinclair Roche & Temperley v Heard [2004] IRLR, para. 46, approved by the Court of Appeal in Barke v Seetec [2005] IRLR. Although the case was heard just over a year ago and we believe that Judge Milmo sits part-time, we are satisfied that the Tribunal showed a balanced approach to the case and we can rely on its professionalism in considering the matter afresh. Further, remission is not to be taken as an opportunity for the parties to call further evidence. The matter may be dealt with by way of submissions. No further evidence is necessary (for the limits of a remission by the Employment Appeal Tribunal see particularly the Court of Appeal decision in Aparau v Iceland Frozen Foods Plc (No. 2) [2000] ICR 341 ). Such a course is, we think, proportionate in saving expense to the parties. Accordingly the matter will, if practicable, return to Judge Milmo's Tribunal.[28]Finally and for the avoidance of doubt the only issues to be resolved on remission are:(1) has the Claimant raised a prima facie case of less favourable treatment when compared with a hypothetical white manager with the characteristics identified at paragraph 31.1 of the Tribunal's Reasons plus the feature that he had raised grievances as had the Claimant (apart from an allegation of racial bias) on grounds of his race in relation to his dismissal and, if so, have the Respondents provided an adequate explanation for his dismissal which is in no sense whatsoever on the grounds of his race ( Igen v Wong [2005] IRLR 258 ), and(2) was the Claimant subjected to a failure by the Respondents to fairly investigate allegations of sexual harassment made against him? If so, has he raised a prima facie case that he was thereby treated less favourably than a hypothetical white manager against whom such allegations were made on grounds of his race? If so, have the Respondents provided an adequate explanation for that less favourable treatment which is unconnected with his race?[29]To this extent the appeal is allowed.