Appeal No.UKEAT/0645/05/MAA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
On 30 January 2006

Before
HIS HONOUR JUDGE McMULLEN QC
DR S CORBY
MRS M McARTHUR FCiPD

ENTERPRISE LIVERPOOL PLC	APPELLANT

(1) MR P BAURESS 
(2) MR A EALEY 	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR ABAYOMI ALEMORU
(Solicitor/consultant)
Vista Employer Services Ltd
Regent House
Heaton Lane
Stockport SK4 1BS	
For the Respondents	MR ADAM CHARLES
(of Counsel)
Instructed by:
Messrs O H Parsons & Partners Solicitors
3rd Floor
Sovereign House
212-224 Shaftesbury Avenue
London WC2H 8PR	

SUMMARY

Unfair Dismissal: Reasonable of Dismissal

Employment Tribunal wrongly distinguished Securicor Ltd v Smith [1985] IRLR 356 CA and perversely found the employer did not act rationally when it treated employees, whose circumstances were different, differently.

HIS HONOUR JUDGE McMULLEN QC
1.	A quarter of a century ago, the plays of Alan Bleasdale made memorable the lives of a gang of construction workers in Liverpool in the 1980’s.  The practice of working for other people, while being paid by their own employer and using its plant and materials, was known as “doing a foreigner”.  The Employment Tribunal, in the case on appeal, freely uses but does not define that practice, no doubt because it is the lingua franca of the parties, their representatives and the administration of justice in Liverpool.  It is a useful short-hand term we adopt. The case is about disparity of punishment for doing a foreigner.  Three workers, it is said, were treated differently in the same circumstances and thus ought to have had the same outcome and not been sacked. 

2.	We will refer to the parties as the Claimants (whose two cases are identical) and the Respondent.  The judgment represents the views of all three members.

Introduction
3.	It is an appeal by the Respondent in those proceedings against a judgment of an Employment Tribunal sitting at Liverpool (Chairman: Mr M D Homfray-Davies) registered with reasons on 12 September 2005.  The Claimants were represented by an officer of UCATT, their trade union, and today by Mr Adam Chambers of Counsel.  The Respondent was represented there and here by Mr Abayomi Alemoru who was then a solicitor employed by the Engineering Employers’ Federation and today appears as a consultant.  

4.	The Claimants each claimed unfair dismissal.  The Respondent contended it had dismissed them for misconduct and fairly.  The essential issue, as defined by the Employment Tribunal, was as follows.
“They both admitted the misconduct alleged. The issue for us to decide was, whether their dismissals were fair, in particular, had the respondent treated them equitably in all the circumstances of the case since Mr Bracken had not been dismissed for similar misconduct”.
The Tribunal decided that each was unfairly dismissed and awarded compensation which was slashed by 75% to take account of their blameworthy conduct so that each was awarded £1212.50, representing 25% of what would otherwise have been awarded.  The Respondent appeals against the substantive judgment.  There is no cross-appeal against the reduction of the compensation.  Directions sending this appeal to a full hearing were given in chambers by HH Judge Richardson.

The law
5.	The relevant provisions of the legislation is s98 of Employment Rights Act 1996 which the Tribunal considered. There is no dispute that the Respondent proved the Claimants were dismissed for misconduct, so the issue is fairness: 
“98 (4)	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”. 

6.	The Tribunal also considered the leading authorities which are Hadjioannou v Coral Casinos Ltd [1981] IRLR 352 EAT, Securicor Ltd v Smith [1985] IRLR 356 CA, Paul v East Surrey District Health Authority [1995] IRLR 305 CA.  In addition, we were referred to London Borough of Harrow v Cunningham [1995] IRLR 256.  The impact of those authorities is set out in paragraph 6.4 of the Employment Tribunal’s judgment which both representatives before us accept as a correct statement of the law and is as follows.
“Ultimately the question for the employer is vvhether in the particular case dismissal is a reasonable response to the misconduct proved; if there is an established policy applied for similar misconduct. it would not be fair to change the policy without warning if the employer has no established policy but has on other occasions dealt differently with misconduct properly regarded as similar, fairness demands that the employer should consider whether in all the circumstances, including the misconduct proved, more serious disciplinary action is justified.  In this case, we interpret that guidance as posing three questions: is the conduct  similar?  Was there a bench mark penalty for that conduct?  Having considered all the circumstances in the case, was the respondent justified in departing from the benchmark?”
 
The facts
7.	The Respondent is in the business of providing repair and maintenance services to tenants in respect of particular housing estates of Liverpool Corporation.  It employs over 300 people and is effectively doing the work that, at one stage, was done in-house by this and many other local authorities.  

8.	Each Claimant was employed as a joiner, having very recently completed his apprenticeship with the Respondent.  Each had three years’ service.  Each was required to visit tenants’ premises to complete jobs as directed by their supervisor.  It was a requirement that they attend to such jobs punctually.  A van, uniform, tools and materials were provided for the exclusive purpose of carrying out the jobs allocated to them.  The Claimants were spotted by three managers one morning in the Respondent’s van in the Respondent’s uniform in a place in Liverpool where they should not have been, at a time when they should have been working for the Respondent.  They were doing a foreigner.  They were approached. They denied doing a foreigner until the point was put to them the third time.  An excuse of having permission was given, but the managers reported the Claimants and, in due course, an investigation was conducted by the project manager, Mr Hankin.  

9.	He conducted a hearing where the Claimants were represented by an officer of UCATT.  He came to the following decision which is set out in a letter.
“‘My Decision and Reasons for It
1.	You used a company vehicle without authority. and failed to follow a reasonable management instruction to attend a prearranged appointment with a client and used company time to carry out non company business.
i.	What you were authorised to do on the morning of 4th November 2004 was go to Alexandra Walk, North Liverpool.
ii.	You knew that you should get there in good time. That is why Luck telephoned you at 8.15 am.
iii.	However, you chose to go off route. I do not accept that you went off route in order to buy a drill bit. The first place that you went to was an address on the Dovecote to measure up for a foreigner. It seems strange that you would go there first and foremost before attending to the work that you had been instructed to do and knowing that you must do it in good time. It seems reasonable to conclude that this was the reason for your visit to the Dovecote.
iv.	In doing so you failed to attend the job for one of our clients at the appointed time and that is totally unacceptable, irrespective of whether or not you had at some point intended to get a drill bit as well. You should not be attending to your own affairs in work's time and in work's transport and at the expense of the company and therefore our client's.
v.	Therefore, I have decided to dismiss you with immediate effect as I view your actions as gross misconduct.
vi.	In mitigation you said that you felt that you had permission to be on the Dovecote. I simply do not accept that you had any such permission to be there and do anything in respect of a foreigner. I have also considered the fact that you are a short serving employee not long out of your apprenticeship. However; that in my view does not excuse your actions. It is a basic requirement of any job to do as instructed, to use an appointed vehicle for the purpose it was intended and not to do work on a job of your own for your own potential gain. I do not therefore feel that the nature of your service in any way provides enough mitigation’”.
That reasoning was preceded by factual conclusions which, although the Tribunal indicated there was little dispute about the facts, involve significant findings against the Claimants.  It is sufficient for us to say that the decision and the reasons for it set out above are amply made out by the factual conclusions also set out in the the letter.  

10.	The Claimants appealed and contended that there had been less favourable treatment than that afforded to a Mr Bracken who in similar circumstances had not been dismissed. He was given a final written warning  Thus the dismissal was unfair.  At the internal appeal, they continued to assert that they had permission to be where they were at that time.  The decision by an appeal panel was to uphold the manager’s decision, having carefully investigated the circumstances surrounding Mr Bracken’s disciplinary action.  So a letter was written, which read as follows.
“At the hearing I asked for an explanation as to why you felt that the decision to dismiss you was unfair. John Winstanley put forward the grounds for your appeal as follows:
1.	Inconsistency of treatment - John indicated that there had been previous cases where colleagues had committed similar offences to the one that you committed that did not result in dismissal. I asked John to give me details. At the hearing John did not give any details. I asked if you were aware of any specific cases. You were unaware of any specific cases. Unable to make a decision based upon the information, or lack of it, that I had in front of me, I decided to adjourn to investigate further.
I then wrote to John on 23rd December 2004 asking that he provide me with details of any previous case about which he was aware. He subsequently provided me with details of a previous case which on the face of it did not appear dissimilar to you case. Further investigation was conducted into that case. This included contacting Gerard McGrath, HR Manager; who was ultimately responsible for issuing a final written warning in that case.
As a result I learned that the person disciplined in that case had admitted his wrong doing from the very outset and did not attempt to justify his actions by suggesting that he was somehow authorised to do what he should not have been doing, in a place that he should not have been. That contrasts with your case because you claim that you had permission from Luck Isobar to be where you should not have been, doing something that you should not have been doing.
Another difference between your case and the earlier case is that you did not have as long and as good a service record, which seemed to provide mitigating circumstances in the other case.
Also I have taken into account the fact that you did not appear to be aware of the previous case and the way in which it appeared to have been treated and this could not therefore have created any expectation in you that you would not be dismissed for the type of offence that you were dismissed for. I did not find any evidence of such behaviour being tolerated as a matter of course”.

11.	The Tribunal considered the circumstances and and answered the question as follows:
“In our judgment the conduct was similar; Mr Bracken had set a benchmark; and it was not reasonable for the respondent to depart from it.  In these circumstances the claimants were unfairly dismissed”.  
It then went on to conclude that the Claimants had contributed to their dismissal and reduced the compensation in accordance with ss122 and 123 Employment Rights Act 1996.

The Respondent’s case
12.	On appeal, it is contended that the judgment of the Employment Tribunal failed to consider the second part of the judgment set out by the Court of Appeal in Paul above which is as follows.
“30.		The first question, therefore, is whether the industrial tribunal could reasonably infer from the reasons given by the appeal panel either that they had failed to consider the arguments on disparity or that, having considered them, they had [rationally concluded that the cases advanced were not truly comparable. I do not consider that either inference could properly be drawn from the appeal panel's findings. It is clear that the comparable cases relied upon before the appeal panel were explored in the evidence before it and that, in giving its reasons for dismissing Mr Paul's appeal, the panel had, as it said in the second paragraph, carefully considered the cases put forward by Mr Coomber as well as the documents presented. In paragraph (c) the panel said it was satisfied that the action taken in the case of Mr Verling was appropriate, and in paragraph (g) it dealt with the 1980 case which is not now contended to be comparable. In paragraph (h) it expressed the view that the evidence before it was insufficient to support the contention that Mr Paul had been treated differently from other employees who had been found drunk on duty, and it noted that Mrs Rice had in fact been dismissed for drinking on duty. Finally, in paragraphs (h) and (i), it turned to the case of Mr Verling and the complaint that he had acted improperly or exceeded his authority in his handling of Mr Paul's behaviour on the night in question, and it rejected that contention”.
14.	It is accepted that the correct question was asked, but the test applied did not bring in the band of reasonable responses of an employer to these circumstances.  The Tribunal judgment was perverse, for the employer here had not acted irrationally. It  differentiated the cases of Mr Bracken on the one hand from the Claimants on the other by reason of their length of service (30 years of Mr Bracken and three years of the Claimants); Mr Bracken’s immediate acceptance of guilt, whereas the Claimants continued to dispute it and, as the Tribunal engagingly put it, to “tell a fib”.  They asserted that they had permission to be there and lied about their reasons.  Thus, the Tribunal concluded that the conduct was similar.  There is no dispute by Mr Alemoru that there is similar conduct, but he contends that the Tribunal wrongly and perversely failed to consider those two factors.  It also failed to follow Securicor (above) by which it was bound.

The Claimants’ case
15.	On behalf of the Claimants, it is contended that the Tribunal was correct to use the term “benchmark” as indicating a standard beyond which it is possible to measure the distance travelled to see whether a relevant decision fell within that band.  It is not a tariff.  The words “rational” and “reasonable” are interchangeable.  It is accepted that there was no established policy for dealing with such matters (see, for example, Hadjioannou above).  When  misconduct is sufficiently similar, the question is: was there a good reason for departing from the way in which it had been done in the past?  Would a reasonable employer respond in the same way?  Consistency is the touchstone of a reasonable employer and this Tribunal, having decided that there was no good reason to depart from the approach in Mr Bracken’s case, could not be impeached on appeal.  

Conclusions
16.	Our task has been made simple by the advocates today by their acceptance of the correctness of the self-direction given by the Tribunal (para 7 above).  The real question is whether the Tribunal erred in its application of the test.  The conclusion which we have reached is that it did.  

17.	We see no problem with the use of the word “benchmark” in these circumstances.  It is, after all, a standard or a point of reference.  It is quite appropriate, when a named comparator for disciplinary treatment has been put forward, to treat the case as a point of reference against which the standards of a reasonable employer can be tested.  

18.	The Tribunal plainly erred in distinguishing, and thus not following, Securicor on the sole ground that it related to the decision of an appeal panel. The rationality of an employer’s decision includes both the thinking of the manager who dismisses, and the body determining any appeal, and includes all material available or reasonably available, up to the conclusion of the appeal decision.

19.	It is accepted by Mr Chambers that, looked at in isolation, it is relevant and reasonable for an employer to consider length of service and, on the face of it, to treat employees with respectively 30 and three years’ service differently in the approach to disciplinary sanctions.  .  

20.	Mr Chambers also accepts that it is relevant to consider whether there has been an immediate admission, as there was in Mr Bracken’s case, or the telling of untruths and the continued assertion by the Claimants that thery had been given permission by a supervisor to be where they were.  It is, however, contended that it is wrong to take each of those issues singly.  In our judgment, that approach is incorrect.  It is accepted by the Respondent that there were certainly two matters which called for an explanation as to why there was a departure from the approach to misconduct by Mr Bracken. Since neither of them can be said to be an unreasonable step for an employer to have taken or an irrational consideration, when the two are put together, it cannot be said the Respondent’s action was outside the band of reasonable responses. 

21.	The Respondent acknowledged that there were similarities in that the headline offence of doing a foreigner was committed by both Mr Bracken and the Claimants.  They had both used the company vehicle and were both using the uniform, but the differences are ones which, in our judgment, a reasonable employer should have considered, and did consider, here.  It considered the difference in service, having fully investigated Mr Bracken’s background and his unblemished record of 30 years.  It also considered the fact that these were relatively junior employees, and whether or not that should be a reason for not dismissing them.  It rejected that.  The Respondent here considered the different response of Mr Bracken and the Claimants when confronted.  The Tribunal considered that the involvement of the police in Mr Bracken’s case made it unsurprising that Mr Bracken had immediately admitted wrong doing.  We consider, however, that a similar approach should have been adopted when the three managers confronted the Claimants.  Yet these two Claimants initially denied the reason for their being there and continued to assert, both at the disciplinary and the appeal hearings, that they had permission from the supervisor, which was not true.  

22.	Thus, the Tribunal erred, in effect, in deciding that the Respondent acted outside the band of reasonable responses when it took into account those two differences between Mr Bracken’s and the Claimants’ cases.  Had it decided correctly according to the test which it set itself, it could not have held that it was beyond the band of reasonable responses for the Respondent to have taken account of those two matters and to have treated the Claimants differently, ie to have departed from the Bracken benchmark.  

23.	It is our conclusion that the Tribunal erred and substituted its view for that of the reasonable employer facing these circumstances, when it upheld the Claimants’ cases.  We are very grateful to both Mr Alemoru and to Mr Chambers for their concise and helpful submissions today.  The appeal is allowed and the awards set aside.