Appeal No.	UKEAT/0238/03/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 11 November 2003

Before
HIS HONOUR JUDGE BIRTLES
MR D G LEWIS
MR D WELCH

ADVANCED COIL SLITTERS LTD t/a ACSL	APPELLANTS

1) MR A LAING
2) MR S SINGH	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR D McILROY
(of Counsel)
Instructed by:
DAS Legal Expenses
Insurance Company Ltd
In-House Litigation Section
Personal Commercial Claims Dept
	
For the Respondents	MR A STAFFORD QC
(of Counsel)
Instructed by:
Messrs Morgan Cole
Solicitors
167 Fleet Street
London EC4A 2JB	

HIS HONOUR JUDGE BIRTLES

Introduction
1	This is an appeal from the Decision of an Employment Tribunal sitting at Bedford on    6 - 8 January 2003 and 10 January 2003 (discussion).  The Chairman was Mr G M Pettigrew and the members were Mr J Flint and Mrs P Tobin.  The Employment Tribunal unanimously decided that the Respondents were unfairly dismissed by reason of conduct and ordered compensation in the sum of £14,455.31 to be paid to Mr Singh and the sum of £19,996.28 to be paid to Mr Laing.  The Decision of the Tribunal was sent to the parties and entered in the register on 18 February 2003.  

The Employment Tribunal’s Decision
2	The Employment Tribunal Decision is in conventional form and runs to 42 pages.  It begins by setting out the nature of the complaints and the witnesses and documents (paragraphs 1 -3), the issues it had to decide (paragraph 4), the material facts (paragraphs 5 - 94), the law (paragraphs 95 - 97), the legal submissions (paragraphs 98 - 111), its conclusions (paragraphs 112 - 130) and the calculation of the award made to the Respondents (paragraphs 131 - 136).  For the purposes of this judgment we adopt the facts found by the Employment Tribunal.

3	Mr Laing was dismissed on two grounds of gross misconduct: one of fraudulently claiming overtime and the other of wilful disregard of his duties and/or instructions in relation to his employment (letter of dismissal EAT bundle pages 78-89).  Mr Singh was dismissed on one count of gross misconduct: one of wilful disregard of his duties and/or instructions in relation to his employment (letter of dismissal EAT bundle pages 90-99).  The allegation of wilful disregard of duties was put on the basis that the Respondents were experienced employees, on whose shifts a significant number of incidents had occurred, with the result that other employees had spontaneously complained to management.  There were too many incidents, concentrated into too short a period of time, for them to have been anything other than deliberate.  The Respondents’ case was that the Appellants had not followed a fair procedure prior to dismissing them, and that the Appellants’ real reason for dismissing them was that the Appellants had decided to get rid of them following a re-organisation.  That second argument was rejected by the Employment Tribunal: Decision paragraph 112.  The Appellants’ case was that the Respondents’ behaviour was explicable as a reaction to a re-organisation which had seen them demoted in terms of responsibility and facing a pay cut.  

The material facts
4	The Appellants are a family run company of precision engineers employing about forty people.  Mr Laing commenced employment in 1985.  Mr Singh commenced employment in 1989.  Later both were Shift Managers and paid a monthly salary.  Production was organised on three shifts running through the day and night.  There were a variety of machines numbering about twenty in all.  In an average month there were about 400-500 jobs going through the shop, that is about 170 per week.  At any one time, about 20 to 40 jobs would be running in the shop.  Clearly smooth running of the shop depended on the supervisors meeting to pass on information and jobs that were running, problems encountered and what were the priorities for the oncoming shift.  

5	The company commenced the introduction of quality management to ISO-9002 standards in July 2001.  In August 2001 the Managing Director, Mr Moffat decided to try alterations to the structure for managing production.  He decided that a Shift Manager, Mr Gould, should be Production Manager.  This entailed a significant reduction in the scope of the duties of Mr Laing and Mr Singh who lost their responsibilities for planning, allocating and prioritising work.  The Tribunal found that there was a substantial difference in the scope and impact of their duties, in that they remained responsible for implementation but not for planning and organisation.  Their salaries were unchanged.  

6	Shortly before Christmas 2001, the system for authorisation of overtime and changes in hours was reviewed when a new swipe card system was introduced.  It was decided that for all hourly paid employees any change in hours would require authorisation by Mr Moffat or Mrs Bergson (Assistant Manager Director) and that there would be no overtime for monthly paid staff.  Mr Moffat told Mr Gould that there would be no more overtime.  Mr Moffat had given Mr Gould authority for overtime working.  His overtime payments were authorised by Mr Ward, the Production Director.  When it was discovered that two overtime payments had been claimed by Mr Laing for February and March 2002, Mr Gould was asked and he confirmed that he had told Mr Laing of the change in instructions regarding overtime.  Mr Laing was asked about the matter.  He said that Mr Gould had told him, but Mr Laing had assumed he was joking, and therefore there had been a misunderstanding.  This explanation was accepted by Mr Moffat and Mrs Bergson at the time.

7	As the trial restructuring was confirmed and Mr Laing and Mr Singh were offered new posts as Setters at an hourly rate plus an allowance for shift responsibilities.  Negotiations got nowhere and the Appellants sent letters on 1 May 2002 giving twelve weeks notice of change in remuneration to the new lower pay.

8	At about the same time the Appellants received complaints from four employees. They were:	(i) Mr Fry, Shift Supervisor
	(ii) Mr Gould, Production Manager
	(iii) Mr Poppy, Machine Setter/Operator
	(iv) Mr Patterson, Machine Setter/Operator.
All these people said, in different ways, that the performance of Mr Laing and Mr Singh had deteriorated as supervisors.  Their complaints are set out in the Decision paragraphs 30-34.   

9	On 8 May Mrs Bergson suspended Mr Laing and Mr Singh and had investigation meetings with them: Decision paragraph 36-42.  A disciplinary hearing for Mr Singh was heard on 20 May 2002: Decision paragraphs 43-54.  By letter dated 27 June 2002 Mrs Bergson wrote to Mr Singh summarily dismissing him for gross misconduct.  On 16 July 2002 Mrs Bergson wrote to Mr Singh setting her reasons: Decision paragraph 55 and EAT bundle pages 90-99.   Mr Singh appealed against that summary dismissal and the appeal was heard by Mr Moffat on 10 September 2002.  The appeal was dismissed: Decision paragraph 56.  

10	Mrs Bergson held an investigation meeting with Mr Laing on 8 May 2002: Decision paragraphs 36, 57-61.  Mrs Bergson held a disciplinary hearing for Mr Laing on 23 May 2002 and 30 May 2002: Decision paragraphs 64-80.  In a critical paragraph the Employment Tribunal said this:
“80  Mrs Bergson did further research into the history of overtime payments.  In her investigations, Mrs Bergson deliberately did not ask Mr Moffat what the position was, because she foresaw that he might need to take an appeal, so she did not want him to have been involved in the case before then.  She asked the Production Director and the Production Manager.  She did not examine Mr Laing’s old payslips.”

She concluded that Mr Laing had been entitled to overtime for weekend working, prior to the new instruction from Mr Moffat in December 2001: Decision paragraphs 81-82.  Mrs Bergson reached a number of conclusions about both fraudulent claiming overtime and wilful disregard of duty/instructions: Decision paragraph 83.  By letter dated 31 May 2002 Mrs Bergson summarily dismissed Mr Laing for gross misconduct.  By letter dated 13 June 2002 she set out her reasons in detail: Decision paragraph 84 and EAT bundle pages 78-89.  Mr Laing appealed against that decision to Mr Moffat.  The appeal hearing was heard on 19 July 2002.  Mr Moffat dismissed the appeal: Decision paragraphs 85-86.
The Employment Tribunal’s conclusions
11	In relation to Mr Laing, the Employment Tribunal approached the matter in the same way as Mrs Bergson by dividing its findings into two parts.  It pointed out that in relation to the deliberate under-performance issue her dismissal letter contained no reasoning other than to prefer the evidence of the various witnesses against the explanations given to her by Mr Laing.  The Tribunal therefore examined the specific allegations that Mrs Bergson had before her when she drew her conclusions.  It examined each of those issues in turn: Decision paragraphs 119-120, 127.  In the case of Mr Laing the Employment Tribunal found that there was no evidence on which a reasonable employer could have found that there were reasonable grounds to believe that Mr Laing had made deliberate mistakes.  On the overtime issue the Employment Tribunal found that the investigation carried out by Mrs Bergson was not such as was reasonable in the circumstances and that, if such an investigation had been carried out, it would have brought forward information corroborating Mr Laing’s own explanation.  In those circumstances the Tribunal found that the belief held by Mrs Bergson was not one that a reasonable employer could have had reasonable grounds for.  The Tribunal therefore found that the Appellants had acted unreasonably in all the circumstances in treating their reason for dismissal as a sufficient reason for dismissing Mr Laing.  Mr Laing was therefore unfairly dismissed.  

12	In relation to Mr Singh the Employment Tribunal went through each of the allegations of non performance of duties: Decision paragraphs 126-129.  It concluded that with the exception of one incident of leaving the shop floor for forty minutes between 9.10 pm and 9.50 pm, there were no instances in respect of which a reasonable employer could have found that there was deliberate intent to avoid carrying out his duties.  It said this:
“Mrs Bergson was, in effect, left with only generalised assertions and the Tribunal found that no reasonable employer would have come to a conclusion about deliberate misconduct on the basis of generalised assertions without evidence of deliberate intent.”
Decision paragraph 128.

13	In relation to the one incident of leaving the shop floor the Tribunal asked itself whether a reasonable employer might have dismissed a supervisor for absenting himself from the shop floor, whilst remaining in the factory, for a period of around half an hour without any evidence on that particular occasion that there had been any harm done to production or to the shift handover.  The Tribunal found that no reasonable employer would have dismissed for a first offence of this character: Decision paragraph 129.  The Employment Tribunal therefore found that the Appellants did not act within the range of reasonable responses when they dismissed Mr Singh and therefore his dismissal was unfair: Decision paragraph 130.  

The Amended Notice of Appeal
14	By an Amended Notice of Appeal dated 7 July 2003 the Appellants appeal on four separate grounds.  We are grateful both to Mr David McIlroy and Mr Andrew Stafford QC for their helpful Skeleton Arguments and oral submissions.  We propose to take each of the grounds of appeal in turn.  

Ground One
15	This ground of appeal is that the Tribunal erred in law in that it substituted its own view of what constituted a reasonable investigation into the allegations that Mr Laing had made fraudulent claims for overtime, instead of applying the objective standard of the reasonable employer: Sainsbury’s Supermarkets Ltd -v- Hitt [2003] IRLR 23.  This complaint relates to Mr Laing only and relates solely to the issue of the alleged fraudulent claims for overtime. The Employment Appeal Tribunal approached the matter in the following manner: 
(i) It identified the evidence which was before Mrs Bergson: Decision paragraph 121.
(ii) It noted that Mrs Bergson had preferred the evidence of Mr Gould to that of Mr Laing.  It commented that Mrs Bergson was entitled to do this: Decision paragraph 121(iii).  It identified evidence which was not before Mrs Bergson.  This was first, Mr Laing’s payslips, and, second, the evidence which Mr Moffat could have given: Decision paragraph 122. 
(iv)  It analysed Mrs Bergson’s reasons for not taking evidence from Mr Moffat and found those reasons to be unconvincing: Decision paragraphs 122-123.
(v) The Tribunal evaluated the investigation having regard to the evidence, which was available to Mrs Bergson, and that evidence which was not.  It expressed its conclusion in the following words:
“….the investigation carried out into this matter was not such as was reasonable in the circumstances …”
Decision paragraph 124.
(vi) The Tribunal went on to make a further comparison with the objective standard of a hypothetical employer: 
“…the belief held by Mrs Bergson was not one which a reasonable employer would have had reasonable grounds for”
Decision paragraph 124.

16	Mr McIlroy submits that the Employment Tribunal should not have found that there was any failure by Mrs Bergson because she did not look at Mr Laing’s payslips and did not ask Mr Moffat whether there had been any arrangement over overtime pay between them.  He argues that this is the Employment Tribunal substituting its view of what is a proper investigation in the circumstances of the case.  In particular he relies upon the fact that when Mr Fry was recalled at the disciplinary hearing he gave evidence which flatly contradicted Mr Laing’s assertion that he regarded Mr Gould’s instruction about not claiming overtime as a joke.  Mr McIlroy further argues that although the Employment Tribunal records Mr Fry’s evidence: Decision paragraph 31.1, it does not consider properly the impact of that evidence on the Appellants’ case.  

17	In our judgment the Employment Tribunal did not err in law in its Decision in this case.  It considered the relevant authorities: Decision paragraphs 115-116, and then went on to consider the nature of the evidence before Mrs Bergson.  There is no dispute in this case that it would have been a simple matter for Mrs Bergson to speak to Mr Moffat (this was a company of forty people) and she had ready access to Mr Laing’s payslips.  There was no practical difficulty about her checking these two primary sources of information.  Given that undisputed evidence, the Employment Tribunal was fully justified in reaching the conclusion that it did.  

Ground Two
18	The complaint here is that the Employment Tribunal erred in its approach to the allegation of wilful disregard of duties.  This applies to both Mr Laing and Mr Singh.  Mr McIlroy submits that the Employment Tribunal misdirected itself in law in approaching each of the incidents of alleged disregard of duties individually and asking itself whether, taken in isolation, there was evidence from which a reasonable employer could have concluded that the incident had occurred deliberately.  The correct approach which the Tribunal ought to have adopted is analogous to the one used to determine cases of discrimination, where an Employment Tribunal can only properly consider whether or not to draw an inference of discrimination after an evaluation of the evidence as a whole.  In support of his submissions Mr McIlroy points out in his helpful Skeleton Argument a number of findings of fact made by the Tribunal, but submits that the Employment Tribunal ought to have made further findings of fact which he enumerates.  

19	The Employment Tribunal sets out the submissions made to it in detail and, in particular, Mr McIlroy’s submission that the Employment Tribunal should look at the cumulative effect of the allegations: Decision paragraphs 110-111.  In our judgment, it accepted that submission.  It said this:
“116  The Tribunal approached the matter in the following way.  In relation to the allegations that there had been deliberate and wilful failures, the Tribunal was invited by Counsel for the Respondents to take the approach of beginning with the specific allegations against the Applicants.  If the Tribunal were to find in relation to those specific incidences that the Burchell test was satisfied in relation to a deliberate refusal to carry out their duties, then the Tribunal should be prepared to accept that the Respondents acted reasonably in accepting the general assertions of failure to perform as further evidence of wilful failure.  The Tribunal accepted that this was the right approach.  It would not have been reasonable for the Respondents to have dismissed the Applicants on the basis of generalised assertions or accusations.  If an employer makes generalised accusations against an employee, all that the latter can do is to make general denials.  They therefore considered the individual allegations which were specifically made against the Applicants.”

20	The Employment Tribunal then went on to consider the individual allegations and reached the result set out earlier in this Judgment which is that in the case of Mr Laing there was no basis upon which a reasonable employer could have found that any action with which Mr Laing was charged was deliberate, and in the case of Mr Singh, there was only the single issue of absence from the shop floor which was deliberate.  In our judgment the Employment Tribunal evaluated the evidence before the employer on each of the specific charges in an objective manner.  That is clear from the language used by the Tribunal itself: Decision paragraphs 119- 128 inclusive.  Having reached its conclusions on the individual charges there was nothing (other than the single charge proved against Mr Singh) which would have justified a reasonable employer in finding that there was deliberate intent to refuse to carry out duties/instructions.  If there is no material on which that exercise can be carried out then there is no objective basis for a reasonable employer to find that there was deliberate intent not to carry out duties/instructions on the part of Mr Laing and Mr Singh.  Neither do we find any assistance in the analogy with discrimination law.  Mr McIroy was unable to show us any authority to the point.  We do not believe that there is any such authority.  The analogy is bad because as the Courts have pointed out on many occasions, discrimination is notoriously difficult to find hard evidence of, and many discrimination cases are matters of inference from primary facts.  That cannot and should not be the case where gross misconduct is alleged.  There the evidence will normally be clearly in the open.  

Ground Three
21	The complaint here is that the Employment Tribunal erred in law in concluding that Applicants had not contributed to their own dismissal.  The Employment Tribunal dealt with this in paragraph 131 of its Decision where it said this:

“The Tribunal considered whether the Applicants had caused or contributed to their dismissal and whether it would be just and equitable for their awards of compensation to be reduced.  The Tribunal found that this was not the case.  There was no evidence to show that, in relation to the performance of their jobs, Mr Singh and Mr Laing had done more than make mistakes or allocated work in priorities which their employers might not totally have agreed with.  In relation to leaving the shop floor to have their meeting, the Tribunal found that a reasonable employer would not have classified this conduct in the circumstances as more than reprehensible at a very minor level and in relation to the overtime claim Mr Laing had acted perfectly properly.  In those circumstances, the Tribunal decided not to reduce the amounts of compensation.”

22	Mr McIlroy accepts that Ground Three of the Amended Notice of Appeal is essentially linked to Ground Two.  In the light of our findings on Ground Two, we can see no arguable ground of appeal here.  The Employment Tribunal were fully entitled to come to the view on the individual instances of alleged misconduct that it did.  It heard and evaluated the evidence and applied the law correctly.  The result of its findings are that there was no deliberate misconduct on the part of either Mr Laing or Mr Singh (with the exception of the short absence from the shop floor).  In the absence of misconduct, it is impossible to see how that misconduct made it an error of law for the Tribunal to reduce compensation either under section 122(2) and 123(6) of the Employment Rights Act 1996: see Nelson -v- BBC ( No 2) [1979] IRLR 346.  

Ground Four
23	This ground of appeal seeks to argue that the Employment Tribunal erred in law in that it failed to give any reasons for awarding Mr Laing the sum of £1,350 in respect of petrol allowance.  This part of Mr Laing’s award appears in the calculations of the Employment Tribunal: paragraphs 134 and 135.  Mr McIlroy argues that a claim for a petrol allowance was made in the Originating Application at the lower rate of £80 per calendar month and the Tribunal was in error in awarding him £25 per week, i.e. £100 per calendar month.  The Employment Tribunal heard the evidence.  It was entitled to make that finding of fact.  

Conclusion
24	In our judgment there was no error of law by this Employment Tribunal which gave a careful and fully reasoned Decision.  The appeal will be dismissed.