HONDA OF THE UK MANUFACTURING LTD v MR C W GOBBY [2011] UKEAT 0264_10_0302

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2011] UKEAT 0264_10_0302Case No Appeal No. UKEAT/0264/10Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
HONDA OF THE UK MANUFACTURING LTDAPPELLANTMR C W GOBBYRESPONDENT
Before
Mrs Justice SladeDate 3 February 2011
[1]APPEARANCES For the Appellant MR DAMIAN BROWN (of Counsel) Instructed by: Squire, Saunders & Dempsey (UK) LLP 2 Park Lane Leeds LS3 1ES For the Respondent Written Representations SUMMARY UNFAIR DISMISSAL – Reason for dismissal including substantial other reason Honda appealed a finding of unfair dismissal. There was a cross appeal from the failure of the Employment Tribunal to make a compensatory award. The Claimant was summarily dismissed for gross misconduct. The Claimant faced two charges: fraud in using a company credit card and making inconsistent statements about what the card was used for. The Claimant was dismissed on these charges. On appeal the dismissal was upheld but the ET Reasons were internally inconsistent as to whether the decision to dismiss was upheld for making misleading statements and for fraud or for making such statements and for breach of company credit card rules but not fraud. On a fair reading of the Reasons the finding by the ET as to the reason for dismissal could not be identified. There were other errors in the Reasons including substitution: the ET said that they did not believe the Claimant had been fraudulent. Appeal allowed because the ET failed to make a finding as to the reason for the dismissal. The Reasons did not begin to comply with English v Emery Reimbold & Strick Ltd [2003] IRLR 710 . Cross appeal academic. Case remitted for rehearing to a differently constituted ET. THE HONOURABLE MRS JUSTICE SLADE DBE Introduction This is an appeal by Honda of the UK Manufacturing Ltd ("Honda") from a finding of an Employment Tribunal by Judgment and Reasons entered in the register on 11 March 2010, that they had unfairly dismissed Mr Gobby. The Employment Tribunal made a basic award of £3,630 but no compensatory award. Mr Gobby cross-appeals from the decision of the Employment Tribunal not to make a compensatory award.[2]Honda is represented by Damian Brown of counsel. Mr Gobby is not present or represented. He made an application for an adjournment of this hearing. He made that application two days ago. The ground for his application was that Honda were using all the local legal firms and therefore making it impossible for an ex-employee to take legal action against them. He also wrote that he would not be attending as the person who is now his boss was away and he had been left in charge of the business.[3]The application for an adjournment was refused by the Deputy Registrar on the following grounds:
"The Notice of Hearing was sent out on 20 October 2010 and the Respondent has had ample time to arrange representation."
[4]Mr Gobby emailed the Employment Appeal Tribunal in the early hours of this morning having been notified of the decision to refuse the adjournment. He emailed as follows:
"Thanks for the email but unfortunately my legal brief has only just quit due to working with Honda. I call this unfair but if that's your verdict then this is also an unfair appeal."
[5]Although there is no formal appeal against a refusal of an adjournment we have considered Mr Gobby's request for an adjournment and note that, whereas on 1 February he was saying that it was impossible for an ex-Honda employee to get legal representation as Honda were using all the local firms, this morning he said that "his legal brief" had just quit. Mr Gobby had ample time to prepare for the hearing and we will consider his case on his written representations and his Respondent's answer and cross-appeal. There is no reason why this appeal should be adjourned. The Relevant Facts[6]Mr Gobby was employed by Honda, the motorcar manufacturer, from 19 October 1998 until his summary dismissal on 8 January 2009. Latterly he worked as a paint project engineer. His position required him to travel. The Employment Tribunal found at paragraph 7.2 of their Reasons:
"2) …For this purpose he was provided with a company charge or credit card in his name the company's only responsibility being to indemnify Barclaycard in the event of him defaulting in payments for three [successive] months. 3) On being given the card the claimant signed an agreement which provided inter alia that it was to be used for business travel expenses only and other use could result in disciplinary action which could result in dismissal."
[7]On 14 September 2005 Mr Gobby signed as accepting the terms and conditions of the provision to him of the "HUM Corporate Card". The card was a credit card. The terms and conditions included the following:
"(1) The charge card is to be used for business travel expenses only. Any other use could result in disciplinary action, which could result in dismissal. All associates will agree to pay Barclays Bank by direct debit. . .. (7) It is the associates' responsibility to ensure that they reconcile, complete and have authorised their expense claims within the time allocated for that month. Failure to do so could result in an expense claim not being processed. A non-settlement of the charge will result in a £15 charge plus interest at 2% per month on any outstanding balance payable by the associate."
[8]Honda had a disciplinary policy and procedure. The disciplinary procedures provided as follows:
"7.0 GROSS MISCONDUCT 7.3 . .. Deliberately or wilfully tampering with or hindering a disciplinary/grievance investigation whether inside or outside the workplace... providing false information . .. Fraud or attempted fraud."
There is also a section in the procedure dealing with misconduct. The procedure on appeals provides:
"The outcome of the appeal will be notified in writing and the whole process normally concluded within 28 days from receipt of the appeal letter."
[9]Rather than seeking to paraphrase the relevant findings of fact made by the Employment Tribunal, we set them out in full: 4) "In breach of these terms the claimant used the card to draw down cash during October and November 2008 following his son's 18 th birthday and the breakdown of domestic machinery at his house. 5) This breach of agreement came to the respondent's attention on 9 December 2008 when Nigel Williams wrote to the claimant asking him to attend an investigation meeting on 10 December with Gordon Williams his section manager. The notes of that meeting are agreed and recorded at pages 29 to 30 of the bundle. 6) In reporting on his investigations Gordon Williams invited the claimant to a further investigatory meeting on 12 December and informed him that the allegation was fraud. The claimant was unable to attend the further meeting but wrote providing a schedule of what the money drawn down on the card had been used for. 7) The meeting was rescheduled for 17 December. Gordon Williams noting that the explanations given by the respondent in the schedule were at variance with that originally given by the claimant and adding a charge of providing false information to the charge of fraud. 8) The reconvened investigatory meeting was held and at no time did the claimant dispute the facts but sought to explain the variance in his explanations as to the use of the money maintaining that he believed what he said to be true at the time. 9) Gordon Williams submitted an investigation report and a disciplinary meeting [was] convened to consider both charges. Such meeting being held on 19 December. 10) The claimant was at no time called on to make any payments to Barclaycard having cleared the balance on the account before 17 December 2008. The claimant had never intended that the respondent should make any payment and had no dishonest intent in using the facility of the card for which he was primarily liable. 11) The disciplinary meeting was held on 19 December and 8 January 2009 by Nigel Williams who concluded that the two charges amounted to acts of gross misconduct and dismissed the claimant reminding him of his right of appeal. 12) The claimant appealed on 13 January on three grounds:- 1. No financial gain or loss 2. No hindrance was made presumably to respondent 3. The penalty was not in line with that imposed in similar circumstances where employment had been continued. He additionally mentioned that he believed the respondent was anxious to shed workers, specifically 27 engineers, and believed this might have played some part in the respondent's decision. 13) The appeal meeting was conducted on 27 January jointly by Simon Robins the Divisional Manager and Cliff Powell of Associate Services. Whilst the minutes at pages 72 to 73 are agreed it is clear that no consideration was given at that meeting or subsequently to the third ground for appeal. Cliff Powell in breach of the respondent's disciplinary procedure wrote to the claimant on 9 March some 5 to 6 weeks after the hearing dismissing the appeal stating that the dismissal was maintained. Although it was noted that the appeal was against dismissal for 'fraud' and 'providing false information' the reason for confirmation of dismissal was misuse of company charge card and breach of the company rules." The Decision of the Employment Tribunal[10]The reasoning and conclusions of the Employment Tribunal are set out in paragraphs 8-12 of their Reasons:
"8. The Law The relevant Law is to be found in the Employment Rights Act 1996 as amended which we interpret with the benefit of judgments of the EAT and the Courts. 9. Decision As we had indicated to the parties our main concerns are the charge of fraud and the conduct of the appeal. The charge card agreement was uncertain in its terms, saying that misuse "could be" as opposed to 'will be' regarded as 'misconduct' not 'gross misconduct' and 'could' result in dismissal not 'will' result in dismissal. We are satisfied that the claimant was not dishonest in his use of its facilities and had indeed cleared the balance on the card. We also note that the findings of the appeal on the charge of fraud are ambivalent. 10. The appeal was not in our findings conducted or dismissed in accordance with the respondent's disciplinary policy and either the practice or policy need to be changed to ensure that there is consistency for that is important in all disciplinary matters. We find that the charge of fraud was inappropriate and to that extent the dismissal of the claimant was unfair. 11. However it is the case that the claimant breached the respondent's policy in his misuse of the charge card and gave a variety of explanations to the respondent as to what the money was used for. These admitted offences amount to matters which together reasonably removed the respondent's trust and confidence in the claimant as an employee and the decision to dismiss was not outside the range of reasonable responses by a reasonable employer. 12. We are unanimous in our finding that in these circumstances there should be a basic award to the claimant which we calculate as being 11 weeks pay at £330 per week being the relevant figure at the date of dismissal, giving a figure of £3,630 but make no compensatory award as the dismissal was in our view inevitable."
Submissions of the parties[11]A number of grounds of appeal are advanced by Mr Brown on behalf of Honda. They were summarised as follows in the Notice of Appeal:a. "The Tribunal substituted its view for that of the employer in relation to the misconduct of the Respondent;b. The Tribunal erred in its construction and/or criticism of the employer's procedure in that it contrasted 'could be dismissed' with 'would be dismissed' and reads words into the procedure which were not there;c. The Tribunal erred in its approach to the Appeal, failed to provide proper reasons or findings or erred in concluding that the appeal was defective in that the Respondent's comparator argument was not 'dealt with', when in fact he put no evidence of such disparate treatment forward; the Tribunal also drew a distinction between the reason for dismissal at first instance and on appeal which it was not legitimate to make;d. Analysis of the law - there is none at all;e. The Tribunal erred in awarding a basic award when it had held that dismissal was inevitable and/or ignored the other reason relied upon by the appellant for dismissal namely that the Respondent misled the investigator/disciplinary panel."[12]Mr Brown contended on behalf of Honda that there was no sufficient analysis of the law in the judgment of the Employment Tribunal. At paragraph 29 of the Notice of Appeal it is pleaded: "where a Tribunal does not recite the statutory test, or at least a summary of it, there may well be an inference that it has got it wrong as is asserted here from that fact".[13]We considered whether a challenge to the decision of the Employment Tribunal on the basis of their failure to decide what the employer's reason for the dismissal of Mr Gobby was is properly raised in the Notice of Appeal. Based on the contentions in the Notice of Appeal as developed in the skeleton argument set out below, we have concluded that it is. At paragraph 30 of the Notice of Appeal it is said:
"The Tribunal should have determined [the] principal reason for dismissal. If it was fraud and that reason was unfair it should then have explained in terms why it was appropriate to award a basic award."
[14]The material sentence there is, "The Tribunal should have determined [the] principal reason for dismissal".[15]Although at paragraph 27 of his skeleton argument Mr Brown suggests that the final decision to dismiss was based on breach of the company's charge card agreement rules and giving "a variety of explanations", he wrote, "this is a false trail as on these 'admitted offences' dismissal was within the range of reasonable responses". To this effect he relies on paragraph 7.13 of the judgment of the Employment Tribunal in which the Tribunal held:
"Although it was noted that the appeal was against dismissal for 'fraud' and 'providing false information' the reason for confirmation of dismissal was misuse of company charge card and breach of the company rules."
[16]However, in paragraph 9 of their judgment the Employment Tribunal held, "We also note that the findings of the appeal on the charge of fraud are ambivalent". Neither the dismissal letter nor the letter dismissing the appeal were in the bundle of documents for the Employment Appeal Tribunal; however we looked at them de bene esse . Mr Brown fairly acknowledged that the appeal letter does not make it clear whether the appeal was dismissed on the basis that fraud was made out or whether it was on the basis that the dismissal of the appeal was because of breach of the terms for use of the credit card was made out. He said that the letter goes either way at best. We agree with that categorisation having looked at the letter dismissing the appeal.[17]At paragraph 33(a) of the skeleton argument on behalf of Honda it is contended that:
"Apart from the specific defects set out in the Notice of Appeal and discussed in this skeleton, the ET erred as follows: in failing to identify the principal reason for the dismissal (see British Railways Board v Jackson [1994] IRLR 235) - had it done so, it would probably have avoided falling into the errors it did in considering the fraud aspect of the dismissal;"
[18]Mr Brown submitted that in holding "we are satisfied that the claimant was not dishonest", the Employment Tribunal fell into the error of substituting their own view of the conduct of Mr Gobby rather than considering whether Honda's view of it was reasonable. Related to this point is the contention that the Employment Tribunal substituted their view of the appropriateness of the charge of fraud rather than considering its reasonableness. Further it was pointed out that there is a difference between a finding of misuse of the charge card and a finding of fraud, referred to by the Employment Tribunal, in paragraph 9 of the Reasons.[19]Mr Brown submitted that the Employment Tribunal misinterpreted both the charge card conditions and the disciplinary appeal procedures. It is said that the Employment Tribunal erred in finding that the charge card agreement was "uncertain in terms", because it stated that the misuse of the card "could", not "will be", regarded as "misconduct", not "gross misconduct", and, "could" rather than "will" result in dismissal.[20]The relevant passage of the charge card agreement does not refer to misconduct at all. It lays down possible consequences of breach. Mr Brown submits that the Employment Tribunal erred in their view of the Agreement. He points out that if the terms of the Agreement had stated that misuse of the card would lead to dismissal Honda could be open to challenge as foreclosing any decision as to the appropriateness of dismissal on any particular facts.[21]Further it was contended by Mr Brown that the criticisms of the appeal conducted by Honda are ill founded. The criticism of inconsistency was not supported by the evidence. The clocking offence for which there was no dismissal was of a different nature and gravity. Further, delay in communicating the outcome of Mr Gobby's appeal was not, as the Employment Tribunal held it to be, a breach of the disciplinary procedure. The term "normally" was used in the procedure as specifying a time within which the outcome of an appeal would usually be communicated but "normally", not a fixed time.[22]Other points were advanced in support of the challenge to the decision of the Employment Tribunal that Honda's conduct of the appeal was unsatisfactory. It was contended on behalf of Honda that no basic award should have been made as the Employment Tribunal found that dismissal of Mr Gobby was inevitable.[23]In his Respondent's answer, cross-appeal and skeleton argument, Mr Gobby contends that the Employment Tribunal erred in their award. He contends:
"[That] The award is basic shows that fraud was not committed and this should be increased to show the full value to include stress, unable to get a job due to be labelled to being a thief."
[24]In effect this is a cross-appeal from the failure to make a compensatory award. In his written documentation Mr Gobby stated that no fraud was committed and, "this was verified by the judgment". He makes a number of challenges to Honda's investigation and decision-making in his case. In his skeleton argument he also pointed out that the money charged to the credit card was paid by him to Barclaycard. He pointed out that he had worked for the company for ten years and had no warnings. Discussion and Conclusion[25]In deciding a claim for unfair dismissal, the first step in the reasoning of an Employment Tribunal should be to decide the statutory question in the Employment Rights Act 1996 section 98(1). That is: "(1) In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it shall be for the employer to show— (a) the reason (or, if more than one, the principal reason) for the dismissal".[26]The reason for dismissal is fundamental to an Employment Tribunal's assessment of its fairness. The statutory provisions are so well-known that it may be thought they do not bear repetition. However, in this case, because the Employment Tribunal did not, in our view, decide what the reason for dismissal was, we do set out further provisions of the statute to emphasise the importance of that first step in a Tribunal's decision-making. Section 98(4) provides:
"(4) In any other case where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)— (a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and (b) shall be determined in accordance with equity and the substantial merits of the case."
[27]It is quite apparent and well established that the assessment of the reasonableness of the dismissal depends on whether the assessment of reasonableness of the employer in treating it being the reason for dismissal shown by the employer as sufficient reason for dismissing the employee.[28]Decisions of Employment Tribunals are not to be construed as statutes. However, they should state the applicable legal principles and how those have been applied to relevant facts to reach their conclusions. In English v Emery Reimbold & Strick Ltd [2003] IRLR 710 Lord Phillips MR, held:
"The essential requirement is that the terms of the judgment should enable the parties and any appellate tribunal readily to analyse the reasoning that was essential to the Judge's decision."
[29]We have considered whether on a fair reading of this judgment it can be said that the Employment Tribunal made a decision as to the reason for dismissal. They refer in their judgment to the charges against Mr Gobby. Those are referred to at paragraph 7.7 as a charge of fraud and a charge of providing false information. They found that the disciplinary hearing concluded that those two charges were made out.[30]The Tribunal then came to make findings of fact regarding the appeal. The Tribunal concluded at paragraph 7.13:
"Although it was noted that the appeal was against dismissal for 'fraud' and 'providing false information' the reason for confirmation of dismissal was misuse of company charge card and breach of the company rules."
However, the observation in paragraph 9 of their judgment, that the findings of the appeal on a charge of fraud are ambivalent, illustrates that the Tribunal did not come to a clear conclusion as to the ultimate reason for the dismissal of Mr Gobby.[31]Nor is it possible in our judgment to discern from the paragraphs in their Reasons headed "Decision" the conclusion of the Tribunal on the reason the employer dismissed Mr Gobby. The Tribunal concluded that the dismissal was unfair. However, it is not safe to assume that the reason for dismissal upon which the Tribunal was acting was misuse of the company charge card or breach of policy, because, in paragraph 11 they observed that dismissal for the admitted offences - which include breach of policy and misuse of the charge card - would not be outside the range of reasonable responses by the reasonable employer.[32]Is the Tribunal therefore to be taken to have concluded that the reason for the employer dismissing Mr Gobby was fraud. However, such a conclusion would perhaps run counter to the finding of the Employment Tribunal as to the conclusion of the appeal hearing referred to by the Employment Tribunal at their paragraph 7.13 that the reason for confirmation of dismissal was misuse of company charge card and breach of company rules.[33]We conclude that the judgment of this Employment Tribunal fails to make a decision as to the employer's reason for dismissal. That failure is so fundamental that the decision of the Employment Tribunal cannot stand. We have concluded that this matter should be remitted for rehearing to a differently constituted Employment Tribunal. No doubt that Employment Tribunal will reach a decision on the reason Honda dismissed Mr Gobby. They will no doubt consider whether the reason for the dismissal was fraud, which formed one of the two charges levelled against Mr Gobby or misuse of the charge card. We do not accept what may have been suggested by Mr Brown, that fraud and theft had different meanings in the employment context than in the criminal law. The ingredients are the same, although the procedures for investigating them and their consequences are different.[34]There may well be strength in the other grounds of appeal advanced by Mr Brown, in particular the ground relating to substitution by the Tribunal of their view as to whether fraud had taken place rather than assessing whether the employer acted reasonably, if it so concluded, and other matters such as consideration of a reduction of the basic award pursuant to Employment Rights Act 1996 section 122. However, we have reached the clear conclusion that this Employment Tribunal decision cannot stand for the fundamental reason that the Tribunal failed to take the first step in the reasoning necessary for considering an unfair dismissal claim.[35]In these circumstances, the cross-appeal is academic because the decision of the Tribunal is to be set aside and the claim remitted for rehearing for a differently constituted Employment Tribunal.