Appeal No. EAT/995/93

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 25th April 1995

	Before

	THE HONOURABLE JUSTICE MUMMERY (P)

	MISS C HOLROYD

	MR D A C LAMBERT

MR D SOJKOWSKI	APPELLANT

BNR EUROPE LIMITED	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR S JONES
(of Counsel)
Field Simpson
Parkes Solicitors
1 London Street
Reading
Berkshire
RG1 4QW

For the Respondents	MR P T ROSE
(of Counsel)
Northern Telecom Europe Ltd
Maidenhead
Berkshire
SL6 1AY

	MR JUSTICE MUMMERY (PRESIDENT):   This is an Appeal from the Decision of the Industrial Tribunal held at Reading on 14th and 15th January 1993 and 28th and 29th June 1993.

	The Tribunal unaminously decided that Mr D Sojkowski had been fairly dismissed by his employers, BNR Europe Ltd on 5th May 1992. The Tribunal gave Full Reasons for that Decision and notified them to the parties on 11th October 1993. 

	Mr Sojkowski, who had conducted his case in person in the Tribunal, decided to Appeal on the ground that the Tribunal's decision contained errors of law. His Notice of Appeal was served on 22nd November 1993.

	At the hearing of the Appeal he has been represented by Mr Jones. Mr Rose represented the Employers, as he represented them before the Tribunal.

	In order to understand the various points of law it is necessary to look at the history of the proceedings and at the facts found by the Tribunal.

	Mr Sojkowski started his case on 11th July 1992. He complained he had been unfairly dismissed from his position as a member of the scientific staff of BNR Europe in their electronic engineering, design and development department. He had been employed by them from the beginning of April 1985 down to his dismissal on 5th May 1992.

	He summarised his complaint as follows:

		"1.	I used the company appeals procedure against a decision that I should be  placed on a work performance improvement procedure. PIP. A large part of the appeals procedure was a sham."

		"2.	Much misleading information had been put forward by the managers which frustrated my appeal."

		"3.	After the final stage of the appeal I had sent a memo to the Managing Director requesting, with reasons, a second meeting. The Managing Director had previously heard the final stage of the appeal. This appears to have triggered events for the dismissal."

		"4.	I had been partaking in the work performance improvement procedure. PIP exactly as required. My performance was stated as being satisfactory. The procedure had been running for a fraction of the full duration."

		"5.	Several of the managers consulted in the dismissal decision had been influencing matters in a biassed and unsatisfactory way both in terms of the company normal practices and the ACAS Code of Practice on Disciplinary Practice and Procedures in Employment."

		"6.	I had no knowledge that dismissal was being decided upon."

	He amplified that summary by a detailed account of the circumstances in which he was dismissed and a detailed account of the various events leading up to the imposition of the PIP procedure, his appeals and his dismissal.

	The Company contested the claim. Their case was that they had dismissed him, but it was fair. They set out their version of what had occurred on various dates between January 1992 and the dismissal in May 1992. Their main point in paragraph 13 of their Notice of Appearance was this:

		"The Respondent concluded that the Applicant was only paying "lip service" to the Plan and that the continuance of the Plan would have no effect on the Applicant's performance and attitude. In the light of this and in view of what was considered to be an irreversible breakdown in the relationship between the Applicant and his manager Ms Reinboth, the Respondent concluded that there was no alternative but to terminate the Applicant's employment."

He was informed out that decision on 5th May and he received payment in lieu of notice together with an additional ex-gratia payment. 

	A further point was taken that, even if the dismissal was unfair, Mr Sojkowski had contributed to his own dismissal and that any award of compensation should be reduced accordingly. They contended that in all the circumstances it would not be just and equitable for him receive any further compensation.

	That was the way that the parties faced one another when the matter came before the Tribunal on the first day of the four day hearing.

	It is significant to note the way the Tribunal saw the contest in the first two paragraphs of their Full Reasons:

		"1	Mr Daniel Sojkowski was formerly employed by the respondents BNR Europe Ltd as a designer in their electronic engineering Design and Development department at Maidenhead, Berkshire. He was concerned with the design and development of hardware and software used in connection with telephone circuitry. He complains that he was unfairly dismissed by his employers."

		"2	The respondents case is that whilst they accept they dismissed him, they did so fairly. The reason they say, was that there was a complete breakdown of trust and confidence between the management and the applicant which reached such a state that there was realistically no alternative but to terminate the applicant's employment. They invite us to categorise the reason for the dismissal, for the purposes of Section 57 of the Employment Protection (Consolidation) Act 1978 as "some other substantial reason"."

	That is the starting point of the argument on this Appeal, whether the Tribunal erred in law in their classification of the reason for Mr Sojkowski's dismissal.

	In order to explain that argument, we refer section 57 of the 1978 Act which contains general provisions relating to fairness of dismissal. Section 57(1) and (2) provide that it is for the employer to show the reason for the dismissal, that it is one of the reasons contained in those sections. The second stage of the enquiry under Section 57(3). That is whether the dismissal was fair having regard to the reasons shown by the Employer and all the circumstances of the case, whether in those circumstances the Employer acted reasonably or unreasonably in treating the reason shown as a sufficient reason for dismissing the employee. All the argument in this case is concentrated on the first stage. Section 57(1)(a) provides this:

		"(1) In determining for the purposes of this Part whether the dismissal of an employee was fair or unfair, it shall be for the employer to show -

			(a)	what was the reason (or, if there was more than one, the principal reason) for the dismissal, and
			(b)	that it was a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."

Subsection (2) provides:

		"(2)	 In subsection (1)(b) the reference to a reason falling within this subsection is a reference to a reason -"

There are four reasons. The only one relevant for today's case is (b):

		"(b) related to the conduct of the employee"

	When a comparison is made between section 57(1)(b) and section 57(2) it is clear that `some other substantial reason' must be a reason of a kind that does not fall within the particular reasons, such as a reason related to conduct of the employee contained in section 57(2). If the facts show that the principal reason given by the employer is one that relates to the conduct of the employee then it cannot, on the true construction of section 57, be `some other substantial reason', falling within section 57(1)(b).

	It is unnecessary to refer to the lengthy summary of the evidence in the case, which they heard from Miss Reinboth, the manager of the department at Maidenhead, and Mr Sojkowski's immediate superior; Mr Judge of the Human Resources department of the Company at Maidenhead; Mr Perry the Vice-President, of Northern Telecom Europe and, at the relevant time, Managing Director of the Company. The important passage in the Tribunal's decision is contained in the findings of fact and the application of the law to those facts in paragraphs 19, 21 and 22 of the Decision. In summary, the Tribunal accepted the submissions of the Company, first, as to the correct classification of the reason for dismissal and, secondly, as to the contribution of Mr Sojkowski to his own dismissal under section 76(6) of 1978 Act.

	On the first point, the Tribunal concluded that the reason for the dismissal was `some other substantial reason'. In order to see whether that is a correct classification, it is necessary to examine the findings of fact made by the Tribunal. The Tribunal found in paragraph 19:

		"... Miss Reinboth formed the view that [Mr Sojkowski's] performance in relation to inter-personal skills and communication needed improvement. She proposed that he was placed on a PIP. This would not normally equate to disciplinary action nor was it intended to do so. The applicant made extensive efforts to query her assessment. She alleged and he denied that he was abusive to her and swore at her. If it necessary for us to reach a finding of fact on this particular facet of the case we are satisfied that he did so and so find. The respondents' case is that it was a reasonable instruction that he undertake the Performance Improvement Plan. By seeking to challenge management's decisions and opinions in inordinate detail, he was, in fact frustrating the PIP to the point of refusal to comply with it. Mr Perry's decision in the light of the reports he received and, in particular, in the light of the applicant's memo dated 9 April 1992 was that there really was no point in continuing with the PIP. An impasse had been reached in which the only effective solution would be to terminate the applicant's employment. Consideration had been given to his transfer to another department but it was deemed inappropriate to transfer a problem from one department to another."

	This series of contentions by the employers was broadly accepted by the Tribunal in paragraph 21 of the Decision. They said:

		"... Having observed the applicant conducting his own case and giving evidence we are drawn to the conclusion that the respondents' assessment of him was correct. He was pedantic and was unable to acknowledge the existence of, not much less agree with, any viewpoint which did not concur with his own. The respondents' management team had invested an enormous amount of time in the applicant. Mr Perry made the decision to dismiss the applicant having formed the opinion that no further useful purpose would be served in continuing the PIP. On the information before him that was a view that the was eminently entitled to form and, for what it may be worth, it is one which the Tribunal wholeheartedly shares. The applicant had been warned that failure to complete the PIP would lead to his dismissal. The PIP had not run its full course and we have considered whether or not the respondents acted unfairly in dismissing him before it had done so. In the particular circumstances of this case we have concluded that they did not. Whatever his other personal characteristics may be, the applicant is highly intelligent and had a detailed grasp of company procedures relating to Human Resource Reviews, Performance Improvement Plans and the like. He was not an employee who could have easily be taken advantage of by management and it is difficult to resist the conclusion that he was "playing along" with management with the intention of causing them inconvenience. Whatever his intention may have been in writing the memo of 9 April 1992 (and we do not accept the explanation that he put forward) it was eminently open to an employer to conclude that he had no intention of accepting either the letter or the spirit of the PIP. The decision to dismiss was one which a reasonable employer might have taken despite the fact that the plan had not yet run its full course. The applicant knew that failure to complete it satisfactorily could lead to dismissal and, in our view, no further warnings would have been appropriate or necessary. We find that the dismissal was fair. ..."

They conclude that the reason for dismissal was "some other substantial reason".

	In criticising that conclusion, Mr Jones has taken in detail through the chronology of events by reference to the contemporaneous documents. Between 22nd January 1992 and 5th May 1992 there were a series of meetings between representatives of the Company and Mr Sojkowski about identified weaknesses in his communication skills. It was recommended Performance Improvement Plan to be applied to him. These were lengthy meetings. They were attended by Miss Reinboth and on some occasions, by Mr Judge, from the Human Resources Review. Decisions were taken at the end of January 1992 from which, Mr Sojkowski appealed to Miss Reinboth's immediate superior, Mr Hall, the Senior Development Manager. He rejected the appeal. There was a further appeal at the end of March to the Vice-President of Northern Telecom Europe, Mr Perry, Managing Director of the Company. The result of that appeal was to make some amendments, but the ultimate result of the appeal process was that the Performance Improvement Plan was to apply to him and to commence from 6th April. There were further meetings in April.  

	On 6th April a meeting took place with Sojkowski, Mr Reinboth and Mr Judge to discuss amendments to the PIP. A note of that meeting made by Mr Judge said this:

		"Discussed PIP procedure, mentioned that Liz Beck may deputise for CJ as an observer. Showed DS the revised PIP." 

		"DS was told that he would not "suddenly" (unexpectedly) be told, at the end of his PIP that he had failed." 

		"DS was advised that ultimately his failure (if it happens) will lead to the termination of his employment (providing that sufficient warnings had been given.)"

Following that, there was memo from Mr Sojkowski dated 9th April. He stated that he believed that the decision communicated in the memo to him, was not based on a proper evaluation of the necessary factors. He proposed that there be another meeting. Another meeting took place on 21st April and following that a letter was prepared dated 1st May which was handed to Mr Sojkowski at a meeting on 5th May when he was dismissed. That meeting was attended by Mr Judge, Miss Reinboth and Mr Sojkowski.

	I will read the letter:

		"Dear Dan

		It is with regret and disappointment I note that you still feel BNR has not dealt fairly with you in relation to your Performance Improvement Plan (PIP). This despite the considerable time and effort invested into the process by your manager, your senior manager, your managing director and the human resources department.

		Given that the PIP has been drawn up with the specific intention of addressing your teamwork and communication skills and the fact that you still apparently do not see these as an issue. I feel that the situation can no longer be resolved.

		[The letter goes on to] ... suggest that there is no alternative but to give you three months notice that we intend to terminate your employment. This will take place with immediate effect. ..."

There is reference to two cheques totalling £13,599.20. Mr Sojkowski was shown that letter on 5th May and, as requested, he signed the bottom of it, indicating that he accepted that amount in full and final settlement of all of all and any claims that he had against the company in respect of the termination of his contract of employment. The note of the meeting of 5th May said:

		"At this meeting D Sojkowski was asked if he had see a cocos from J Perry dated April 29th. Following this it was stated to D Sojkowski that in my opinion and the opinion of his managers all possible avenue's had been explored in an attempt to resolve the situation. It was also pointed out to D Sojkowski that in my opinion and J Perry's opinion, there had been irreversible breakdown in the relationship between himself and his manager. Therefore D Sojkowski was given his termination of employment letter (dated 1st May)."

	Those are the crucial facts on which there has been legal argument. In support of the Decision of the Tribunal, Mr Rose argued that the Tribunal had found, and were entitled to find on the evidence, that this was a case of "some other substantial reasons" of a kind to justify dismissal. He submitted that the Tribunal had found that Mr Sojkowski had failed to accept, in principle, the imposition of the PIP. That failure precipitated the impasse. The findings of fact were that there had been an impasse, a breakdown in the relationship between the parties. It was not a case of incompetence, or incapacity that led to his dismissal. It was not a case where he was dismissed on grounds of misconduct. It was a breakdown in the relationship. That was not a conduct case. The Tribunal had correctly accepted the contention of the Company that that was the reason which justified his dismissal. He pointed to the fact that there was warning of the risk of dismissal, and that, once that test was passed, (that is, the test for the reason for dismissal) it was plainly a question of fact for the Tribunal as to whether the dismissal was fair or unfair. That was a matter which this Tribunal could not interfere with.

	We are unable to accept that submission for these reasons. On the correct construction of section 57(1) and (2) of the 1978 Act, if the facts on which the employer relies to dismiss an employee relate to the conduct of the employee, then the correct classification of the reason for dismissal is that contained in Section 57(2)(b). The case cannot be slotted in to "some other substantial reasons" in Section 57(1)(b). We accept the submission of Mr Jones that there was an error of law on the part of the Tribunal in misclassifying the reason. It may be asked what difference does that make? We accept Mr Jones's submissions that it does make a difference. The effect of misclassification is that, when considering whether the Employer acted fairly, the Tribunal would have to have regard to the principles and guidelines applied by the Courts, as relevant to dismissals relating to conduct. Those principles and guidelines do not necessarily apply to dismissals for "some other substantial reason". Relevant examples of the guidelines and principles have been pin-pointed by Mr Jones as relating to, first, the desirability of an employee being warned that his conduct is putting him at risk of dismissal. This is particularly important in circumstances where, as here, it appears that Mr Sojkowski had been specifically assured that he would not suddenly be told that he had failed to comply with the PIP. It is also relevant to the requirement, in general, that an employee should, before being dismissed, be given a chance to explain himself to the person who is dismissing him for reasons which relate to his conduct. It is relevant to the applicability of contractual disciplinary procedures, which may relate to conduct, but not relate to other reasons for dismissal. In particular, Mr Jones referred us to the provisions in the Terms and Conditions of Employment. First those under the heading `Inadequate or Unsatisfactory Work Performance'. It is provided that:

		"Similar procedures [similar to those which are mentioned in relation to performance improvement and disciplinary procedures] apply where an employee's standard of work is considered to be unsatisfactory.

			Where a manager considers that an employee's work performance is below the standard expected, the employee will be informed in writing and given a specified period in which to improve. The manager will provide training and encouragement to reach the required standard and this will be recorded in the letter.

			If performance does not reach the required standard within the agreed period, the employee will be liable to demotion or dismissal without further notice."

There is also a passage relied on in the `Appeals Procedure' which Mr Jones drew to our attention. That relates to the various stages of the `Appeals Procedure'. Mr Sojkowski went through stages two and three. This is stated at the end of stage three:

		"All interviews will be in private and will be confidential. The Company guarantees that use of this procedure will in no way effect the employee's career prospects."

For all those reasons Mr Jones submitted (and we agree) that the Tribunal failed to classify correctly the reason for dismissal. In our view, the facts found in paragraph 21, (and by reference back to paragraph 19), show that the principal reason for Mr Sojkowski's dismissal related to his conduct. Mr Rose's argument that this amounts to a breakdown of trust and confidence or irretrievable breakdown in relationships at work or impasse, are, in our view, skilful attempts to circumvent the difficulties in facing the facts of this case. If one asks of any of those phrases, why was there a breakdown in trust and confidence? Why was there an irretrievable breakdown in relationships? Why was there an impasse? The answer is, in each case, the same. It comes back to the conduct of Mr Sojkowski in relation to the imposition of the PIP upon him.

	In those circumstances, it is not necessary for us to consider the alternative argument which Mr Jones advanced that the Tribunal had reached a perverse decision, and misdirected itself in law, in relation to the application of Section 57(3). 

	There is only one point left in the case. That concerns the final paragraph of the Decision, paragraph 22, where the Tribunal said this:

		"22.  If our finding of fair dismissal is open to criticism through a failure to warn the applicant during the currency of the PIP or to allow the PIP to run its full course it might then be said that the dismissal was unfair. If so it would only be unfair on that narrow procedural ground and we are satisfied that the applicant would have been dismissed at the conclusion thereof. His contribution towards his own dismissal would be regarded as 100% and he would be entitled to no compensation save for the salary which he would have earned during its remaining term. This would more than be covered by the ex-gratia payment paid to him and no award of compensation would be due."

On that part of the case Mr Rose submitted that there was no point in this case being remitted to the Industrial Tribunal for a fresh hearing, because the conclusions of the Tribunal under Section 74(6) on Contributory Fault meant that Mr Sojkowski would recover nothing. He was 100% to blame for his own dismissal. We are unable to accept this argument. If there was a legal error in the classification of the reason for dismissal, that error might, in our view, affect the way in which the Tribunal considered the question of contribution. In deciding that Mr Sojkowski had contributed to his own dismissal by 100%, the Tribunal failed to ask themselves what would have happened had Mr Sojkowski been warned that the Company considered that he was not complying with the PIP and that his dismissal was being considered. Those would be relevant matters, if, as we believe to be the case, the principal reason for his dismissal related to his conduct. We are unable to accept Mr Rose's submission on the question of contributory fault.

	The consequence is this. Unfortunately, nearly three years after the dismissal has taken place, we must now order that the case is remitted to be heard by a different Industrial Tribunal. We say unfortunately, because, through no fault of the parties, this case has had to wait for a long time for the Appeal to be heard. We appreciate the difficulties that the Industrial Tribunal will have in dealing with the matter afresh, so long after the events have taken place. It is also unfortunate for both sides to have to repeat a hearing that had taken a considerable amount of time on the first time around. Nevertheless, there is no way in which we can see to escape this. Our function is to hear appeals on points of law. If there is an error of law, then the Decision is flawed. Unless we are confident that there is only one answer to the case, the remission to an Industrial Tribunal is unavoidable. 

	For all those reasons, the Appeal is allowed and the case is remitted to a different Industrial Tribunal, to be re-heard.