Appeal No.	EAT/1158/97

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 15 December 1998

Before
HIS HONOUR JUDGE D PUGSLEY
MS B SWITZER
MRS R A VICKERS

FINELIST GROUP PLC	APPELLANTS

MR T LONG	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR J LLOYD
(Solicitor)
Management and Personnel Services
St James's House
Frederick Street
Edgbaston
Birmingham B15 1JJ	
For the Respondent	NEITHER PRESENT
NOR REPRESENTED	

	JUDGE D PUGSLEY:	This is an appeal from the decision of the London South Industrial Tribunal - as they were then called - where, by a majority, they decided that the Applicant was unfairly dismissed and the Respondent was ordered to pay the Applicant the total monetary award of £2,699.   The Respondent has been debarred from defending the Appeal by an order of this Tribunal, dated 7 August 1998.

	The background to these matters is set out in the Tribunal decision from para 5 onwards.   The Tribunal made the following findings of fact..

“(1)	The Applicant was employed from 7 March 1993 to 31 May 1996, which was the effective date of termination.
(2)	The Applicant was employed as a sales representative for Edmunds Walker Ltd which is a subsidiary of Finelist Group Plc.
(3)	The Respondent company sells motor vehicles parts to the motor trade and it was part of the Applicant’s job to act as ambassador for the company and to develop new and existing business and to contribute to his branch reaching its target... [he] operated from one of the Group’s branches at Aylesford in Kent...
(4)	At the relevant time Mr Thomas was the Applicant’s Branch  Manager and Mr Fisher was the Regional Manager covering the Group’s operations in the south of England.
(5)	In February 1996, the company introduced a customer card record system with the aim of improving the company’s business and specifying the customer’s needs.   The customer card record system was aimed at logging objectives and setting out comments and actions, as well as monitoring the product and customer spending.
(6)	The Applicant had not maintained his customer cards correctly... and he had been constantly reminded to maintain [them] properly.
(7)	On 18 April 1996, a disciplinary meeting was held...it was noted that the Applicant was still not completing the cards properly and... he received a verbal warning.”
(8)	The Applicant was on sick leave during the latter part of April and there came to light two outstanding cash invoices made out to the Applicant for purchases of company goods.   The Respondent company operated a staff discount scheme for purchases of company products, but there were no credit facilities available and staff were obliged to pay for the goods on receipt.   Mr Fisher discovered that the two invoices... had not been paid.
(9) 	On making further enquiries, Mr Fisher discovered that there was an unacceptably high level of staff purchases being made by the Applicant.   Whereas the average staff purchase was about £20 per month the Applicant was purchasing company products at the rate of some £400 or more per month.   Mr Fisher formed the view that the Applicant was possibly abusing the staff discount scheme, and... [there may well be] some conflict of interest.
(11)	[Mr Fisher also found in] the Applicant’s branch... a business card showing ‘Mr Trevor Long’ as representing a ‘Commercial Vehicle Training Ltd’, a company which was not part of the Respondent’s group.
(12)	It also came to Mr Fisher’s attention that whilst Mr Long had been away from work ‘sick’, he had been... acting as a doorman at a nightclub, which was known to be a business venture of the Applicant’s.”

	The position can be summarised, then, by saying that Mr Fisher had discovered the Applicant had a business card for another company, showing him as a representative of them;  that his purchases of £400 per month on the staff discount were substantially over the average of £20 per month;  that, although such transactions must be authorised by a manager, an analysis showed that of the 12 transactions completed between February 96 and March 96 only 3 were authorised by Mr Thomas.  

	It is not very surprising that in the light of that Mr Fisher discussed the matter with others and Mr Mark Powell and Mr Fisher went to visit the Applicant at his home.   In view of the allegations and the response of the Applicant thereto the Applicant was suspended on full pay pending further investigations.

(17) 	Mr Powell and Mr Fisher assessed the Applicant’s performance and analysed the amount of goods which had been purchased...  Mr Powell believed the Applicant had been using the components purchased through the scheme to repair and maintain vehicles for a business interest.   This was in breach of the company’s policy.
(18)	Mr Powell also spoke to an employee of Commercial Vehicle Training Ltd who confirmed that the Applicant had done some work for them and was [acting] as a representative... through his contacts in the motor trade.”

	The company handbook, at part 4, defined gross misconduct as:

“(b) 	Any serious act which breaks the mutual trust and confidence or which brings or is likely to bring the Company into disrepute;
  (c)	Failing to comply with the Company’s credit, invoicing, collection and accounting procedures without any explanation which satisfies the Company;”

	There was a disciplinary meeting held on 31 May.   Various matters were considered.   The conclusions of the Tribunal are summarised in para 25 (at page 8 of their decision) and: 

“(26) 	At the conclusion of their meeting Mr Powell concluded that there was an accumulation of incidents and events which amounted to serious misconduct and dismissal was the appropriate penalty.   The Applicant was then dismissed.   The dismissal was... confirmed [by] letter dated 4 June 1996.”

	Having set out those narrative findings of fact the Tribunal noted there had been an appeal and the result of that appeal is that the Applicant remained dismissed.

	Having set out those findings of fact the Tribunal then split.   The Chairman, who was in the minority, put his position thus:

“12  The Chairman, in the minority, finds that this dismissal was fair.   He finds the Respondents did have a reasonable belief in the misconduct which was alleged.   This belief was based on reasonable grounds and followed a reasonable investigation.   The Chairman also finds that, in all the circumstances and particularly since Mr Fisher and Mr Powell did not believe that the Applicant had given honest and truthful answers to their questions, Mr Powell formed the view the view that there had been a breach of trust and confidence between them, justifying dismissal.   The Chairman finds that in those circumstances, dismissal was an option which was open to any reasonable employer to take.”

	The Chairman then went on to analyse some of the deficiencies alleged had taken place in the disciplinary hearing and went on to say that if there were any defects in the holding of the disciplinary hearing at such short notice the Chairman finds these defects were corrected on the appeal and there was no unfairness.   At paragraph 15 the Chairman sums up his position:

“15    The Chairman finds that Mr Powell did have a genuine belief that misconduct had been committed by the Applicant, and this belief was based on the reasonable grounds outlined above.   Mr Powell did have a proper investigation into the allegations, and both at the disciplinary hearing and certainly on the appeal, the Applicant had every opportunity to put forward his side of [the] case.   The Respondents had considered all aspects of the Applicant’s conduct and had formed the view that the Applicant had not been truthful during the investigations and the disciplinary hearing.   The Respondents formed the view that there had been a breach of trust and confidence and that dismissal was an appropriate option.
16.    In all the circumstances, the Chairman finds that dismissal was an option which was open to any reasonable employer to take in those circumstances, and the Chairman finds that the dismissal was fair.”

	The majority decision, of the two Industrial Members, was that the dismissal was unfair and their reasons are set out at para 17.

“The members, in the majority, find the dismissal unfair because:-
(1)	The Respondent summarily dismissed Mr Long for gross misconduct.   This should mean that the reason for the dismissal was that the Applicant had acted in such a way as to repudiate his contract of employment with a fundamental breach.
(2)	It was not outside the bounds of possibility that the Respondents could have justified their action on the grounds that there had been a breakdown in trust and confidence, amounting to a fundamental breach, using one or more of the following:
•	purchase of excessive quantity of discounted spares for unauthorised use;
•	reasonable belief that the Applicant was working for another company in conflict with the Respondent’s best interests - either his own business or CVT;
•	failure to comply with the company’s accounting procedures.
(3)	In practice, the Respondents failed to convince us that any of these three reasons was enough to justify summary dismissal, in the particular circumstances of the case and in a way that was supported by written and oral evidence.”

	Now, we may pause there.   The point is made by Mr Lloyd who appears for the Appellant that the majority were applying completely the wrong test.   They were applying the test of wrongful dismissal, namely, has the Applicant acted in such a way that the employers are entitled to dismiss him without notice?   And what Mr Lloyd said is straightforwardly this:   that that places far too high a burden upon the Appellant employer in an unfair dismissal case.   

	It is well categorised that what an employer must show is a reason for dismissal.   Once he has established what the reason is then one looks at the provisions of section 98(4) to say that was fair to treat that as a sufficient reason.   That the Chairman had accurately set out the test - in the paragraphs to which we have alluded - namely, that there were reasonable grounds for the employers’ belief that misconduct had been committed by the Applicant and that this belief was based on reasonable grounds outlined in the decision.

	Mr Lloyd argues that if one looks at the way in which the majority Members have approached the matter:  they have considered it as though it is for the employer to establish gross misconduct actually happened rather than apply the Burchall v British Homestores test, namely, is it established that the employer believed there had been misconduct and this misconduct was based on reasonable grounds, having made such inquiries and adopted such procedures as fair in all the circumstances?   We accept that criticism.

	Mr Lloyd goes on also to say that from time to time during their reasons, the majority do tend to ignore the guidance laid down in such well known cases as the Iceland Frozen Food case and ask the question what would they have done, or how evidence appears to them, rather than asking the more severely limited question:  were there grounds for the employers actions?   Thus, at the foot of para 17(5), the Tribunal note:

“	In all the circumstances, the Respondent was not justified in dismissing without notice the Applicant for this reason.
(6)	...So there can be no question of gross misconduct on this point.”

	It seems as though the Tribunal, rather than going down the well-worn route establishing unfair dismissal, was actually substituting its own view:  which it would be perfectly entitled to do if this was an action for wrongful dismissal, but this was unfair dismissal.   We think that Mr Lloyd is right in saying that the Tribunal majority Members were adopting the wrong test.   

	“In practice the Respondents failed to convince us that any of these reasons was enough to justify summary dismissal in the particular circumstances of the case and the way it was supported by written and oral evidence” is redolent of issues in a case for wrongful dismissal but is wholly erroneous for unfair dismissal.   

	Having said that - we have accepted Mr Lloyd’s submissions on those matters - we have gone on to consider at considerable length amongst ourselves, Mr Lloyd’s further submission which is that we should substitute a finding of a fair dismissal.   Mr Lloyd has pointed out with persistence, as well as charm, that the Tribunal made certain findings of fact which do not sit well with that part of the majority decision.   

	Having considered carefully Mr Lloyd’s submissions - and we make no secret of at times having found them more attractive at the beginning of our discussion than at the end of it - the difficulty is this:  we note in para 17(4) and (7) that the Tribunal seem to be groping towards a conclusion which is never clearly articulated that they regarded this dismissal as procedurally unfair.   They say at para 17 (4):

“	We found the evidence about the main reason(s) for dismissal to be inconsistent.   Different weight was given to different reasons at different times.   The letter of dismissal (R1/30), which must be accorded significant importance since it had to form the basis of the Applicant’s grounds of appeal, clearly sets out ‘poor work performance’ as the first of the complaints.   This was also the first reason cited in the letter of suspension.   Poor performance, albeit after an oral warning, is not grounds for summary dismissal.   During the hearing, however, this aspect was played down and witness statements seemed to emphasise the concern about the staff purchases.   Here again, however, the messages were confusing.   It was unclear as to whether the main problem was the outstanding balance, the lack of authorisation on the sales dockets, or the inference about a private business.   We are not convinced by the oral evidence  that all the issues argued before the Tribunal were put to the Applicant at his dismissal meeting, and certainly not with the same emphasis, particularly the question of authorisation.”

	Again, at para 17(7):

“	The belief that the Applicant was engaged in one or two other businesses with a consequent conflict of interest had the greatest potential for being considered as grounds for summary dismissal.   The company’s disciplinary procedures, whether or not seen by the Applicant, refer to ‘Working for a competitor, direct or indirect...’.   It was not established that CVT was a competitor.   A company teaching driving does not necessarily have a conflicting interest with the Respondents’ business.   Inferences were being drawn which may or may not have been correct but which do not seem to have been put to the Applicant.   It was not clear whether the Respondents were claiming that the Applicant’s own business interests, in addition to the nightclub, were primarily as a car salesman, a car repairer, a seller of spare parts or as a representative for a driving school.   All of those were mentioned or inferred in evidence.   A lack of clarity would make it more difficult for the Applicant to know what charges he has to answer.   Because there is such confusion we do not think the reason has been clearly established as of sufficient and consistent importance to be considered as gross misconduct.”

	At para 17(10) the majority say this:

"	The majority of grounds for complaint... were of a serious nature and could have justified dismissal if dealt with through a disciplinary procedure other than one resulting in summary dismissal.”

	With great respect to the Industrial Members, those passages could have been clearer, but we understand them to be saying by that, that they were concerned that the procedure that was adopted was not such that it enabled the Applicant employee to know the nature of the allegations made against him with such a particularity as to be able to deal with them.   In para 17(10), above, they seem to be saying that although they found it unfair this was a case of them going on to make a Polkey deduction as to what the consequences would have been if a fair procedure had been adopted.

	We do not consider we can accept Mr Lloyd’s seductive argument that this matter is so clear that we should substitute our own view.   Having considered his arguments at length, and at times having found them attractive, on mature reflection we have come to the view that these are matters which really ought to be considered by a Tribunal afresh.   We cannot say that the Industrial Members’ fears and qualms about the way this matter was dealt with are such that they can be overridden by us.   Their concerns about the procedure adopted and the reason for the dismissal is a permissible view for them to have and we believe it would be wrong for us to usurp their role and trespass upon their province.   We note, as a matter of interest, that the Tribunal found the Applicant was 70% to blame and they took a pretty poor view of his efforts to find alternative employment.

	We allow the appeal.   We direct it to be heard before a differently constituted Tribunal.   Whether or not the Respondent is now going to take any part, because he seems to be somewhat dilatory, which has led to the order to which I have already averted, is not for us to speculate upon.