Gondalia v Tesco Stores Ltd (Unfair Dismissal : Reasonableness of dismissal) [2015] UKEAT 0320_14_2001
EAT
Gondalia v Tesco Stores Ltd (Unfair Dismissal : Reasonableness of dismissal)
[2015] UKEAT 0320_14_2001 · 2015-01-20
[27]“Mr Wicks, in his submissions, equated use of Peter Jones’s telephone for any personal reason with dishonesty. But the test of dishonesty is not simply objective. What one person believes to be dishonest may in some circumstances not be dishonest to others. Where there may be a difference of view of what is dishonest, the best working test is in our view that propounded by Lord Lane CJ in the R v Ghosh [1982] QB 1053 75 Criminal Appeal Reports at 1054. In summary, there are two aspects to dishonesty, the objective and the subjective, and judging whether there has been dishonesty involves going through a two-stage process. Firstly, one must first of all decide whether according to the ordinary standards of reasonable and honest people what was done dishonest. Secondly, if so, then one must consider whether the person concerned must have realised that what he or she was doing was by those standards dishonest. In many, but not all, cases where actions are obviously dishonest by ordinary standards, there will be no doubt about it. In the present case, in our view, it was not necessarily obvious that using the appellant’s telephone for personal calls was ‘dishonest’. Much might depend upon the circumstances of the particular case. The appellant, however, did not investigate the question of dishonesty. It assumed it from the making of any personal calls, putting it into the same category, in effect, as stealing money. Mr Wicks is entitled to argue that a reasonable employer would be entitled to regard what Mrs Coyne admittedly did as dishonest. But even so, her dishonesty, such as it was and if it was, did not in our view mean that the appellant necessarily had to dismiss her. Yet Mr Hunt clearly, on our interpretation of the tribunal’s finding at paragraph 23, took the view that dismissal was an inevitable consequence. The disciplinary code highlighted that dishonesty was normally regarded as serious misconduct, normally leading to dismissal, and indeed gave it as an example of gross misconduct that is particularly likely to lead to dismissal. But that terminology must, in our view, mean that it did not inevitably lead to dismissal, or at least that the information given to the employee by the employer was that it did not inevitably lead to dismissal. In all those circumstances, in our view, as the tribunal concluded, the duty on the appellant to act fairly and reasonably required that it should investigate the seriousness of the offence in the particular case.”34. Mr Sykes also referred to the Court of Appeal’s Judgment in the case of Whitbread plc t/a Whitbread Medway Inns v Hall [2001] IRLR 275 and in particular to paragraph 13 of the Judgment. The important fact in this case was that the Appellant, certainly at the stage of Mr Lane’s dismissal hearing, plainly admitted what she had done and clearly stated that she believed she was doing nothing wrong. Part of that included her position that two members of staff had authorised a rebate, at least one of them knowing that there was a price anomaly at the time she authorising the rebate. The fact that Employment Judge Ryan made no reference to Ghosh was, Mr Sykes submitted, because he had persuaded himself that there was really no issue about the Appellant’s state of mind. This resulted from the letter that she had written to Mr Winter. But, submitted Mr Sykes, Employment Judge Ryan was wrong to do this because he failed to recognise that this was not an admission that all along she had appreciated that what she was doing was wrong. It was at best an admission that she had come to learn as a result of discussions with her trade union representative that what she was doing might be regarded as wrong and that she now recognised that.35. Moreover, the value of this was dubious, submitted Mr Sykes, because it had been withdrawn. But quite clearly, it was the mainspring of the Judgment at paragraph 15.5. The importance of this error was that Employment Judge Ryan had failed to consider her state of mind as one of the circumstances under section 98(4) of the Employment Rights Act 1996 . The Appellant plainly had not regarded herself as having done anything dishonest. In fact, at the dismissal hearing, she had quite boldly asserted her right to behave as she had done. Mr Sykes accepted that many might regard her conduct as unattractive. Some might think of it as morally wrong. But neither was to the point. The question was, should her position have been a factor considered in deciding whether or not her dismissal had fallen within the band of reasonable responses? Other aspects of that were important as well. Her behaviour had in fact been transparent, and if Employment Judge Ryan had approached this point from a point of view of asking, as the Ghosh test required, whether the Appellant subjectively recognised that she was wrong and that others recognised that she was wrong, then the discussion in relation to section 98(4) should have been somewhat different.36. On behalf of the Respondent Mr Ryan submitted that the Employment Judge had quite correctly directed himself as to law. Either the Ghosh case, and its gateway into this area of law, and the John Lewis case, simply did not apply in this context or, even if they did apply, there was no reason for thinking that, on the facts of the case, Employment Judge Ryan had not quite correctly directed himself in relation to the test. This was, submitted Mr Ryan, a short and simple case. It had taken a day or less, and it involved an issue of misconduct where on any objective view of the propriety of the conduct, whether one described it as dishonesty, something which Mr Ryan submitted it should not be described as, or whether one simply looked upon it as unacceptable conduct, the world at large would see that the Appellant had been behaving wrongly. There was no error in the Written Reasons not referring to dishonesty or the Ghosh test. There was no finding of dishonesty made by Employment Judge Ryan because dishonesty was not an issue in the case. Judge Ryan’s description of the reason for dismissal at paragraph 15.1 did not involve dishonesty, and the reference to common sense was clearly a reference to the fact that any objective and general view would be that this was unacceptable conduct.37. Indeed Mr Ryan was at pains to emphasise that Ms Root, the trade union representative who had been at the dismissal hearing, was of the view that this was unacceptable conduct. This proposition he got from paragraph 13.18 of the Judgment. There were, submitted Mr Ryan, very considerable dangers in applying the Ghosh test in this area of law and in the forum of Employment Tribunals. What might prove to be a useful direction to juries in criminal cases did not necessarily translate well into a different context. This was recognised in regulatory discipline cases such as those conducted by the General Medical and Dental Councils (see the cases of Uddin v GMC [2012] EWHC 1763 and Edward Mills v GDC [2014] EWHC 89).38. Furthermore, the direction in Ghosh was by no means ubiquitous in criminal cases and was usually given only in limited circumstances when the defendant raised the issue that he or she did not think that he or she had been dishonest. In civil cases generally the balance of authority at a high level favoured taking an objective view of matters such as breach of trust and one that did not necessarily involve concepts of dishonesty. For all those reasons, Mr Ryan submitted that the Ghosh test was not an applicable test.39. He further submitted that, even though it was absent from the Judgment, the cases referred to by Employment Judge Ryan and the structure of his Judgment showed that this was an entirely conventional decision made in relation to section 28(4) of the Employment Rights Act 1996 by applying the so-called Burchell test, which Employment Judge Ryan had quite correctly set out at the start of his Judgment in paragraph 6. That was a template that he had imposed on himself and which he had quite properly followed. In any event, paragraph 15.5 of the Judgment was to be understood as an acceptance of the proposition that the reason for dismissal was unacceptable conduct.40. Mr Sykes’ second submission was that Employment Judge Ryan had made the same error as the Employment Tribunal in Brito-Babapulle v Ealing Hospital NHS Trust [2013] IRLR 854 , namely the conduct in the case being admitted and not in dispute and being properly characterised as gross misconduct, of the Tribunal then moving straight to a consideration as to whether dismissal was a reasonable response. The real flaw in this decision, submitted Mr Sykes, was that Employment Judge Ryan had thus effectively short-circuited consideration of “in all the circumstances” part of the statutory formulation in section 98(4). What had been omitted in this case was consideration of mitigation and the fact that the employee had behaved in an entirely open way and had not believed that she had done anything dishonest or had acted unacceptably. He relied upon paragraph 16 of the Judgment of Hale LJ (as she then was) in Whitbread plc v Hall , where it is made clear the band of reasonable responses applies to both investigation and sanction. That of course was reinforced by paragraph 34 of the Judgment of Mummery LJ in Sainsbury’s Supermarkets v Hitt [2003] IRLR 23 . The problem with the Judgment, submitted Mr Sykes, was that it did not address the way in which the Appellant was putting her case.41. In answer Mr Ryan submitted that the Employment Judge had quite clearly considered section 98(4). The whole of paragraph 15 of the Judgment was setting out that consideration, and there was no basis for the suggestion that the error in the Brito-Babapulle case had been made by Employment Judge Ryan.42. Mr Sykes’ third point was that there was no proper consideration by Employment Judge Ryan of a number of factors such that the decision was one that no Employment Tribunal, properly directing itself, could have reached. He accepted that this was, in the words of the Court of Appeal in Yeboah v Crofton [2002] IRLR 634 , “a high hurdle”, but he submitted that the decision did not engage with a number of important factual matters in the case, in particular that the employee did not believe that she had done anything wrong and that she had done it overtly and that management had given her the rebate even though at least on one occasion it was known that this is what she was doing.43. As I have already said, as a result of the hearing before HHJ Eady, Mr Sykes amended his Notice of Appeal, so he put the third ground in the alternative, that this was an inadequately reasoned decision. There were at various part of the Judgment, he submitted, a failure by Employment Judge Ryan to explain his findings as opposed to simply reciting what they were. He relied upon paragraph 15.1 as being a paragraph that was not adequately explained; likewise, paragraph 15.8. In particular he asked, “Where is the answer to the points raised by Mr Tomlinson at paragraph 14 of the Judgment?”44. Mr Ryan submitted that by no stretch of the imagination could this case be regarded as a case in which the Employment Tribunal, on the evidence before it, reached a conclusion that no Tribunal properly directing itself on the facts could have reached. In order to find perversity one needs to see an overwhelming case. This was not, in Mr Ryan’s submission, an overwhelming case. As to the inadequacy of reasons Mr Ryan reminded us that what is essentially required is that the parties should know why one has won and one has lost. In a one-day case one cannot expect a wealth of detail in the reasoning, and not everything needs to be set out. Here the case passed the so-called Meek test and it was adequately reasoned. Conclusions45. It may be that in the future it will be necessary to consider in detail the extent to which it is helpful or sensible to have opened a gateway into employment law from jurisprudence about directions to a jury as to dishonesty in a criminal case. We have some sympathy with Mr Ryan’s submissions that it may be far too complicated to import a yet further consideration into the steps to be taken in deciding whether a dismissal has been fair or unfair under section 98(4) and the gloss or template placed on it or over it by Burchell v BHS [1978] IRLR 379 . It is not necessary, however, for us to decide that matter in order to dispose of this appeal.46. We do not doubt that the subjective state of mind of an employee accused of misconduct is a relevant consideration. Nor can it be doubted that an objective view of that conduct will be of equal importance. Whether appeals to common sense or, for that matter, a handbook that defines gross misconduct by reference to common sense is a sensible way of approaching internal rules as to conduct or an external arbitration upon decisions relating to them is a matter that may need to be argued further in this case or in another, but we need say no more about it at this stage.47. Plainly the issue was the Appellant’s conduct, and the question of the acceptability of that conduct. Those were matters that needed to be considered under section 98(4). Whether the word “dishonesty” is used or is not used will not necessarily be conclusive in an analysis of what sort of conduct it is. Where concepts such as personal gain are invoked, issues of honesty or dishonesty may or may not arise. Where conduct is regarded as unacceptable and as leading to a loss of trust, as appears to have been the case with Mr Lane, are all matters that will need to take a place amongst the circumstances to be considered in deciding whether the sanction of dismissal was within the band of reasonable responses, which is just another way of saying whether the factors set out in the statutory language of section 98(4) have been evaluated one way or another.48. The first ground of appeal in this case, in our judgment, would not result in the appeal succeeding. The fact that Employment Judge Ryan did not give himself a Ghosh direction or approach the matter in relation to the concepts involved in the jury direction suggested by the Lord Chief Justice in Ghosh is not, in our view, an error of law. The question is whether the circumstances were considered in his analysis in paragraph 15 of the Judgment as required by section 98(4).49. Mr Ryan submitted that this was a case that involved the authority cited by Employment Judge Ryan at paragraph 10 of the Judgment, Paul v Surrey District Health Authority [1995] IRLR 305. This was a case relating to a discrepancy between the treatment of two nurses who had been drinking on duty on Christmas Eve. Mr Ryan sees a direct application of the facts and judgment in that case to this case. Try as we might we cannot make the connection that he believes is such a very clear one. In his view it shows that Employment Judge Ryan was considering, in the context of section 98(4), the position of other managers who were involved in this case and who gave the rebate or refund to the Appellant. We have tried very hard to follow where it is in the Judgment that Employment Judge Ryan, having cited the case, makes good its application to the circumstances with which he was faced. That is an important aspect of the second ground of appeal, because what is suggested by Mr Sykes in his submission is that the Employment Tribunal had simply moved from the reason for dismissal (paragraph 15.1) straight to consideration of whether that reason, in all the circumstances of the case, was a sufficient reason to justify the dismissal. We do not think that it is clear one way or another whether Employment Judge Ryan did make that mistake. The reason we do not think it clear one way or another relates to the reasons overall, and we will return to that in a moment. 50. Before that we must address the issue of perversity. Whilst this is a case in which a conclusion has been reached from a number of factors that do not appear to us to be very clear we do not think that it could be said that there is an overwhelming case of perversity here. Indeed the whole of this appeal seems to us to lead to the conclusion reached by HHJ Eady, that this was a case where it might be arguable that there was inadequacy of reasons. 51. This Tribunal is the first to acknowledge the difficulties that face Employment Tribunals. Nowadays they are under very considerable pressure. We do not accept, however, Mr Ryan’s characterisation of this case as a simple one-day dismissal case. It was certainly a one-day case and obviously a dismissal case. It did, however, in our judgment raise some issues that required careful analysis and careful explanation. Some of the Judgment is carefully set out and in some detail. Mr Sykes was tempted to say in regard to paragraph 10, where a citation was not supplied, that this was evidence that the Judgment had not been checked. We do not accept that. 52. But the Judgment does seem to us to comprise a series of unexplained assertions. Paragraph 13.20 analyses what the juxtaposition of the Claimant’s case and the Respondent’s case. But, having identified those as the competing ways of viewing the matter, although it can be fairly be said, as Mr Ryan does, that the Judgment must mean that the Respondent’s analysis has been expected, there is no explanation as to why that is so. Furthermore it is quite clear from paragraph 14 that the fact that this rebate had been authorised by managers and that the Claimant had acted overtly throughout was clearly laid before Employment Judge Ryan as a matter that ought to be considered the answer that he gives at paragraph 15 is, in our judgment, entirely inadequate. To say simply that this did not specifically address the legal principles does not explain at all why the fact that she did this openly and that she was authorised to do it by others is not something which should be weighed in the balance and, if found wanting, an explanation provided as to why that makes no difference to the outcome. 53. Moreover there appears to be no place whatsoever in the analysis for the Appellant’s position that at the outset she did not believe that she had done anything wrong. It is tempting to think of the dismissal in this case as a composite of both the dismissal hearing and the appeal hearing and to reach the conclusion that, because she had admitted at appeal that she now recognised something was wrong, therefore the appeal answers everything and cures everything. If that is the analysis and the answer, then it ought to be clearly set out by Employment Judge Ryan. Also there is this difficulty with it, namely that, as Mr Sykes identified, this was an expression of hindsight on the part of the Appellant. The issue at the stage of dismissal must be her state of mind at a particular time. There is, it seems to us, no discussion of that all in paragraph 15.8. 54. Another problem arises out of the three paragraphs, 15.1, 15.4 and 15.5. We would connect 15.4 and 15.5 together. We do not accept Mr Sykes’ submission that 15.5 is a critical factor that answers everything in the case. It is simply, in our judgment, a finding that it was reasonable for the Respondent genuinely to believe that the Appellant had committed misconduct as alleged, because she accepted that she had acted in that way. But that goes too far if, as Mr Ryan seeks to do, one analyses Employment Judge Ryan’s reasoning as being that she has accepted that she had behaved wrongly. This takes us back to paragraph 15.1 as both Mr Ryan and Mr Sykes suggest. But there is a problem with paragraph 15.1 because it is asserted the Respondent had shown that the reason for dismissal was that the Appellant knew she was not legitimately entitled to do what she had done. Where is the finding that supports that contention? If it is that Mr Lane believed that she was not legitimately entitled, that is a different matter to what is stated at paragraph 15.1. When one turns to paragraph 15.8 and links it with paragraph 14, we can see that essentially, at least on the face of the Written Reasons, these factors are being considered by Employment Judge Ryan as mitigation. The matter was, in our judgment, much broader than that. It is impossible to discern from paragraph 15.8 that the Employment Judge was taking into account her position and the factors that had been mentioned by Mr Tomlinson at paragraph 14 let alone answering them 55. The Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013 , at paragraph 62(5), now set out what the reasons in an Employment Tribunal Judgment should amount to. As well as identifying the issues, the findings of fact must be stated. The relevant law must be stated and how it has been applied to those findings in order to decide the issues. It seems to us that Employment Judge Ryan has not done that in relation to the issues raised by paragraph 14. We refer to the familiar authority of Greenwood v NWF Retail Ltd [2011] ICR 896 . That was a case relating to the 2004 Rules , and what was said by a division of the Tribunal in that case was that the Judgment had to demonstrate substantial compliance with the Rules. It would not matter that the structure of the Rules was not necessarily explicitly visible, but what would have to be obvious from the structure of the Judgment was that the formal substantial requirements of the Rule had been complied with. In this case it seems to us that paragraph 15.8 in particular, but the Judgment overall, is not telling us what the resolutions of important issues actually has been. It asserts the conclusion which it adopts from the Respondent’s case and submissions. But that is not, in our judgment, an adequately reasoned decision. Accordingly we will allow the appeal on that ground. The Application for Review 56. Our decision having been announced, Mr Sykes submits that it should be reviewed on this basis. We have reached the conclusion that the appeal should succeed on the third alternative ground, namely that it is an inadequately reasoned decision. Part of our analysis has been that the Employment Tribunal Judge did not, in his Judgment at paragraph 15.8, appear to have answered the issues raised on behalf of the Appellant by her then representative at paragraph 14 of the Judgment. These have been described by Mr Sykes during the course of the hearing as aspects of mitigation. He submits that if we find that the decision is inadequately reasoned in that the Appellant does not know why she has lost in respect of those alternative matters, then it follows that we ought to allow the appeal on ground 2 as well. 57. Ground 2 argues that the Employment Judge erred by failing to apply the requirement to look at all the circumstances, including mitigating factors, in applying the band of reasonable responses test to the decision made by the employer in this case. He submits that there is said to be, in the Judgment of Hale LJ in Whitbread v Hall , the need to look at all the circumstances. Particular reliance was placed on the Brito-Babapulle v Ealing Hospital NHS Trust case. That also was said to involve the consideration of the presence of what are described as mitigating factors. It is said that the Judge had failed to consider two factors in particular, those set out at paragraph 38 of the Skeleton Argument, namely that the conduct was authorised and that there was no investigation of the managers. 58. We do not accept that we should, in the circumstances of this case, review the judgment just given. In the Judgment of this Tribunal in Zinda v Governing Body of Barn Hill Community High School [2011] ICR 174 various factors relating to whether or not this Tribunal should review its own decisions were set out at paragraph 47. First of all, reviews would be rare. Secondly, fresh evidence might be a basis for a review, but, obviously, that is not a consideration here. Thirdly, the underlying purpose of a review is the correction of mistakes. Fourthly, review should not be used as a substitute for an appeal; the EAT must not conduct a review which amounts to an appeal against its own decision. Alternatively, in an appropriate case, it might be preferable in some cases for the Employment Appeal Tribunal to conduct a review rather than compel an applicant for review to pursue an appeal. 59. Those, it seems to us, are the relevant considerations when deciding whether or not to review a judgment. We have reached the conclusion in this case that the error made in the Brito-Babapulle case, and, for that matter in the Whitbread v Hall case, of finding gross misconduct and then axiomatically concluding that the dismissal must be within the range of reasonable responses, has not arisen in this case. Employment Judge Ryan has not suggested for one moment that other factors are irrelevant. He has only mentioned the employee’s good record at paragraph 15.8. But that does not mean that the genuine belief Employment Judge Ryan found the Respondent had in respect of the misconduct and his further finding that such a belief was on reasonable grounds meant that Employment Judge Ryan had moved straight to considerations under section 98(4). Paragraph 15.6 is an analysis of the investigation. He plainly did not move straight from having found that there was a genuine belief on reasonable grounds to considering whether it was, in those circumstances, appropriate for the sanction of dismissal. It is perfectly true, of course, that he does not mention some of the factors set out by Mr Tomlinson but that is why we have concluded this is an inadequately reasoned decision. 60. The fact that Mr Sykes, in his Skeleton Argument or in his Amended Grounds, complains that those matters were not taken into account does not, in our judgment, mean that he can succeed on ground 2, which is based on the proposition that the Employment Tribunal has simply moved from one premise to another. It does not seem to us that it is possible to say from paragraph 15.8 exactly what has been taken into account. All that it is possible to discover is that the Employment Tribunal has not given answers to the issues raised by Mr Tomlinson, as set out at paragraph 14. In those circumstances it does not seem to us that the appeal in relation to ground 2 should succeed. The fact that two factors are not mentioned is a matter, in our judgment, of lack of reasoning, not an indication that none of the circumstances have been taken into account. 61. That said, Mr Syke’s submission begs the question as to how we should dispose of this case. In our judgment this is not an inadequately reasoned decision in the sense that the Employment Tribunal should simply cast an eye over it and add one or two passages to it to clear up some ambiguities; this is an inadequately reasoned decision in the sense that it simply does not fulfil the criteria for a properly reasoned decision, either as set out in paragraph 62(5) of the Employment Tribunal 2013 Rules or in accordance with Meek v Birmingham City Council [1987] IRLR 250 . 62. The failure to adequately reason a decision in some circumstances may be a flaw, but in some circumstances it may make the decision totally flawed. In the case of Sinclair Roche Temperley v Heard [2004] IRLR 763 the then President, Burton J, set out at paragraph 46 a number of considerations to take into account in deciding the terms of a remission. In our judgment this is a totally flawed decision by Employment Judge Ryan. It would also be, in terms of paragraph 46.5 of the analysis of the division presided over by Burton J, be a second bite of the cherry. We do not think that it would be an appropriate disposal of this case to remit it to Employment Judge Ryan. In our judgment it should go back to a differently constituted Employment Tribunal for a re-hearing. In reaching that conclusion we have taken account of the fact that Mr Ryan has told us that some of the witnesses employed by the Respondent are no longer employed by the Respondent. That does not seem to us to be a reason why the matter should not go back for a complete rehearing if, as we have decided, it is a proper and just disposal of the case. That is the order that we will make.