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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> First West Yorkshire Ltd (t/a First Leeds) v. Haigh [2007] UKEAT 0246_07_2011 (20 November 2007) URL: http://www.bailii.org/uk/cases/UKEAT/2007/0246_07_2011.html Cite as: [2007] UKEAT 0246_07_2011, [2008] IRLR 182, [2007] UKEAT 246_7_2011

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APPEARANCES

 

For the Appellant	MR SIMON ROBINSON (Solicitor) Messrs Ford & Warren Solicitors Westgate Point Westgate Leeds West Yorkshire LS1 2AX
For the Respondent	MR DESHPAL PANESAR (of Counsel) Instructed by: Messrs Laytons Solicitors 22 St John Street Manchester M3 4EB


 


SUMMARY

Unfair dismissal – Reasonableness of dismissal

Where an employee is long-term absent on grounds of ill health, and his pension scheme contains provisions entitling him to an ill health pension on grounds of permanent incapacity, an employer will generally be expected to give consideration to ill health retirement before dismissing for incapacity.

The Tribunal did not err in law in approaching the case on that basis, and further it did not err in law in holding that it was unreasonable for the employer to give the employee an ultimatum whereby it would retain him if he agreed to make no application for ill health retirement and dismiss him if he did not agree.


 


HIS HONOUR JUDGE RICHARDSON

1. This is an appeal by First West Yorkshire Limited ("the Company") against a judgment of the Employment Tribunal sitting in Leeds dated 26 February 2007. By its judgment the Tribunal held that the Company had unfairly dismissed Mr Terry Haigh from his employment as a bus driver. Mr Haigh had nearly 30 years' service. He turned 60 on 26 October 2006, 8 months after his dismissal, which took effect from about 28 February 2006.
2. The appeal concerns long term absence on grounds of ill health. Where an employee's pension scheme contains provisions entitling the employee to an ill-health pension on grounds of permanent incapacity, is a Tribunal entitled to expect the employer to give consideration to retirement on ill health grounds before dismissing the employee?

Mr Haigh's health

3. On 25 June 2005 Mr Haigh had some kind of brain disturbance while he was driving a bus. His doctor suspected a stroke. Mr Haigh was signed off as unfit to work. The DVLA suspended his PSV licence for 12 months. The Company had an occupational health adviser, Dr Fyfe. On 11 October he wrote confirming that the licence was suspended "for 12 months minimum". He said that Mr Haigh remained unfit, but might be fit for alternative duties if available prior to June 2006.
4. However there was a second attack during that month. It was unlikely that Mr Haigh would be able to reclaim his PSV licence until 12 months after that episode – that is to say, until October 2006, when he would attain the age of 60.
5. On 14 February 2006 Dr Fyfe wrote to the Company, in circumstances which we will describe more fully below. He said –

"Unfit for work. Had further episode in Oct 05 which makes the date he could possibly regain his licence Oct 06. He would be fit for sedentary alternative duties such as clerical work but not for cleaning or other manual duties involving stairs. I am writing for an up to date report. His condition cannot be classified as permanent at this stage"

This was the state of the medical evidence when Mr Haigh was dismissed. It is, however, convenient to bring the picture up to date to the Tribunal hearing.

6. On 9 March 2005 Dr Fyfe received a letter from the specialist treating Mr Haigh. This letter reads as follows –

"Thank you for your letter of 20th February 2006. I note that you have enclosed Mr Haigh's consent to discuss information and that he does not wish to see the report before it is disclosed to you.

I thought the best thing was probably to send you copies of all correspondences between myself and Mr Haigh's GP. As you will see, there is no doubt that he has had an episodic cerebral disturbance but I have a strong suspicion that it is likely to be vasospastic rather than thrombo embolic - recent echocardiogram was entirely normal. As I stated in my last letter, the difficulty from a DVLA perspective is going to be the lack of prior migrainous history but, paradoxically, the more events he has, the more confident of that diagnosis I will be. Indeed, I suspect when he next comes to outpatient I will suggest a trial of Pizotifen as a migraine prophylactic agent.

Clearly decision about suitability to drive PCV's is one for the DVLA Medical Branch but I would have felt that if the attacks cease, given that he has no residual deficits, they would consider continuing to licence him although they might request an exercise ECG.

I trust this provides the information you require but if not please do not hesitate to contact me."

7. So Mr Haigh's suspected stroke proved not to be a stroke. Dr Fyfe could not have been expected to know this himself; that is no doubt why he had checked the diagnosis with the specialist. By the time of the hearing before the Tribunal, which was in October and November 2006, he had been given the all clear to drive buses. He was in fact at that time installing kitchens.

The Company's policies

8. The Company had a sick pay scheme. Mr Haigh was entitled to a maximum of 26 weeks' full pay and 26 weeks' half pay. There was a discretion to extend the period of allowance. But, of course, the Company was not bound to allow an employee to take all available sick pay before dismissing him.
9. Paragraph 3(11) of the Scheme provided as follows –

"i "An employee whose sickness or injury has rendered him/her unsuitable, either on a temporary or long term basis, for continued employment in his/her normal post will be considered for suitable alternative employment at the appropriate rate of pay by the company, subject to there being a vacancy. Exactly what constitutes suitable alternative employment would in each circumstance be the subject of consultation between management, the appropriate Trade Union official, and the employee.

ii In the event that there is no reasonable prospect of such an employee being able to take up any alternative employment with the company (or if no alternative employment is available in these circumstances) then he/she may be retired or employment with the company terminated on medical grounds."

10. The reference to being retired must be seen in the context of the Company's pension scheme. There was an enhancement to the pension scheme which allowed retirement on the grounds of permanent incapacity. Although we have not seen the scheme in full, it would appear that an employee would qualify if a doctor signed a medical certificate of permanent incapacity confirming two things. Firstly, that the employee was permanently incapable of discharging efficiently the duties of their employment because of ill health or infirmity of mind or body. Secondly, if a comparable post was available, that the employee was incapable of discharging efficiently the duties of any other comparable employment with their employer for the same reasons. The doctor who signed the certificate had to have an occupational health qualification, and would no doubt usually be engaged by the Company.
11. Although the Tribunal had no precise figures, it is plain that retirement on an ill-health pension was a real benefit to an employee. It seems that 6.6 years of reckonable service would be credited to Mr Haigh for the purpose of working out his pension. Equally there was a financial cost to the Company, which (the Tribunal was told) would have to fund that additional credit by a payment to the pension fund.
12. The Company also had what it termed a holding register. If an employee was placed on the holding register he remained an employee and his seniority and continuity of employment was preserved. But being on the holding register did not carry any entitlement to sick pay. Indeed the Tribunal understood that as a condition of going on the holding register sick pay would cease; presumably going on the holding register was a direct alternative to dismissal.

Dismissal

13. At a meeting called on 20 October (after step one of the standard dismissal and disciplinary procedure had been complied with) the Company's manager Mr Booth decided that Mr Haigh should be dismissed on the ground of incapability. The Tribunal record that he took the view that Mr Haigh's ill health was not permanent. However, as an alternative, he accepted a proposal by the union that Mr Haigh should go on the holding register – which, as we have seen, involved stopping his sick pay.
14. Although Mr Haigh may initially have accepted this decision, within a short time he appealed against the stopping of his sick pay and made it clear he did not accept being put on the holding register. So there was a further meeting on 16 November 2005. By this time everyone knew about the second episode. At this meeting, since Mr Haigh did not agree to stay on the register Mr Booth dismissed him, with notice which would expire on 8 February 2006.
15. The appeal against this decision was heard by Mr Eames. As at 24 January, when the appeal was first heard, Mr Eames knew that Mr Haigh was awaiting further test results. Mr Haigh's union official asked for an adjournment until all relevant information had been considered. Mr Eames granted a short adjournment until 8 February but then dismissed Mr Haigh even though there was no further medical information.
16. The final appeal was to Mr Graham, the managing director. Since the medical picture was incomplete he adjourned the appeal and made arrangements for Mr Haigh to see Dr Fyfe. This led to the letter dated 14 February which we have already quoted.
17. On 24 February the appeal resumed. The result of the appeal was that Mr Haigh was given a choice. Either the appeal would be dismissed; or he could remain on the books, with sick pay extended until 20 May 2006, but on the basis that he would then go onto the holding register and retire of his own free will at the age of 60 without any further appeals and (we stress) with no application for an ill-health pension.
18. So Mr Haigh was given a choice. Either he took some further sick pay but lost all opportunity to seek an ill-health pension; or he was dismissed. Mr Haigh declined to accept the Company's terms and was dismissed.
19. Thus far our findings summarise what the Tribunal itself found. The Tribunal did not go on to ask what would have happened if the Company had waited for the letter from Mr Haigh's consultant. As we shall see, it considered that this was a matter to be taken into account when it came to remedy. One thing is certain. If the Company had received the consultant's letter it would have known that his consultant did not consider him permanently unfit or likely to be permanently unfit; and (if the Company shared the letter with him) Mr Haigh would have known this as well. Beyond that, nothing is certain. The Company might well not have seen the need to place upon him the condition on which it had insisted; and if it did he might not have seen any need to object to it. So he might have been allowed to have his additional sick pay, go on the holding register and retire at 60. Moreover, there might have been a chance, if he went on the holding register, that he would have got his job back as a bus driver once the DVLA ban expired. These are possible outcomes; there may be others.

The Tribunal's reasons

20. The Tribunal gave itself a succinct and accurate self direction as to the "range of reasonable responses" test applicable under section 98(4) of the Employment Rights Act 1996. It made reference to the statutory dismissal and disciplinary procedures and dealt with them in its decision; nothing turns on them. The Tribunal did not mention section 98A(2) of the 1996 Act, although we are told that reference was made to the provision during submissions.
21. The Tribunal was critical of the Company at each stage of the process for the insufficiency of its consideration of the medical evidence, particularly on the question of ill health retirement.
22. Concerning the first meeting in October 2005 the Tribunal said –

"10. Mr Booth took the view that because the Claimant could reapply for his licence in June 2006 the position was not permanent and therefore the question of ill-health retirement could not arise. He appears to have failed to see the significance in the medical report that the Doctor had stated that the suspension or revocation of the licence was for a minimum of twelve months. In truth without a medical report saying whether or not it would be permanent Mr Booth was not in a position to come to that view. He decided that the Claimant should be dismissed on the grounds of capability."

23. Concerning the meeting in November 2005, when Mr Booth dismissed Mr Haigh, the Tribunal said –

"16. Mr Booth does not seem to have considered, as he had done on the previous meeting in October, whether the Claimant might qualify for ill-health retirement. In our view he was not entitled to take that course of action especially when it had been reported that there was a further stroke and as a matter of commonsense the question of whether the Claimant would ever be able to return to work ought to have been considered by Mr Booth. When we say considered by Mr Booth we mean simply that he ought to have obtained medical evidence at least from the Occupational Health Department before he could skip the important step of iIl-health retirement."

24. Concerning the meeting in February 2006, when Mr Graham affirmed Mr Haigh's dismissal after receiving the letter from Dr Fyfe, the Tribunal said –

"19. At the resumed hearing on 24 February 2006 Mr Graham interpreted that letter as indicating that the Claimant was not permanently incapable of work as a bus driver. The letter from Dr Fyfe simply does not carry that meaning. It expresses the view that a conclusion could not be reached at that time. We accept that there was no clerical vacancy available at the time."

25. It is also important to note that the Tribunal said in paragraph 25 of its reasons –

"One of Mr Booth's targets or objectives was to cut down on sickness absence which was a problem for the Respondent and in particular the long term sick. It seems to us that the company made a general policy decision that if someone was not going to come back to work within a reasonable length of time then the extended sick pay provisions would be cut short. In general terms and given the wording of the scheme there is nothing to prevent the employer doing that."

26. The Tribunal's overall conclusions were as follows –

"35 The Claimant was employed for thirty years and in those circumstances he was entitled to be given careful consideration in relation to his dismissal. It is a matter of commonsense that as people get older they may become ill as a result of the aging process and the general deterioration of the body. It is for that reason that there are ill-health retirement provisions inserted into this and many other contracts of employment.

36. The singular feature of this case which drives us to the conclusion that the dismissal was unfair is quite simply that it appears that the company wanted to avoid the cost of the Claimant taking ill-health retirement. It may well be the case that the Claimant wanted to carry on with his sick pay for at least a year and possibly until he got to the age of sixty which would have happened in October 2006. That was the Claimant's position through a great deal of the procedure which he went through within the company. However, what the Claimant wants and what the company is required to deliver in terms of good industrial relations may often be two different things.

37. It is clear however that when it came to the crunch at the last meeting with Mr Graham and the Claimant was faced with the possibility that he might have to forego ill-health retirement he was unwilling to take that step. That was not unreasonable of him. At that stage he could not say if the condition he suffered from would stop him driving permanently. However, it was unreasonable of Mr Graham and the company to try and foist that solution upon him. That is particularly so when the company simply did not know because it did not have any medical evidence to say so whether or not the condition suffered by the Claimant would be permanent and whether or not he was going to be permanently incapable of driving and therefore entitled to ill-health retirement at an enhanced rate. The company could have taken the Claimant off sick pay pending the outcome of medical tests they were entitled to do so - but they were not entitled to seek to deprive the Claimant of the right to claim ill-health retirement if ultimately he was considered to be permanently unfit. In the event that the Claimant is now fit to return to bus driving the Polkey issue will be dealt with at the remedy hearing."

Statutory provisions

27. The key statutory provisions governing unfair dismissal, so far as relevant to this case, are the following-

"98 General

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

(a) the reason (or, if more than one, the principal reason) for the dismissal, and

(b) that it is either 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 the employee held.

(2) A reason falls within this subsection if it-

(a) relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do.

(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 of whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonable 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.

98A Procedural fairness

(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if-

(a) one of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 (dismissal and disciplinary procedures) applies in relation to the dismissal,

(b) the procedure has not been completed, and

(c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.

(2) Subject to subsection (1), failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of section 98(4)(a) as by itself making the employer's action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure."

Submissions

28. On behalf of the Company Mr Robinson makes the following submissions.
29. Firstly, he submits that the Tribunal erred in law in holding that the Company was bound to consider whether Mr Haigh was entitled to retirement on ill health grounds before considering whether to dismiss him on grounds of sickness. He argues that entitlement to retirement on ill health grounds was a distinct matter, governed by a distinct set of provisions of its own. If there had been no entitlement to retirement on ill health grounds, dismissal would certainly be within the band of reasonable responses for an employer; at the very earliest Mr Haigh was not going to be fit to be a bus driver for a further 8 months, and he had already been off work for 8 months. He submits that the existence of an entitlement to retirement on ill health grounds cannot alter this position. For the purposes of unfair dismissal the question is whether the Company made a fair assessment of the likelihood that he would be able to return to work, not of the likelihood that he would be able to claim a benefit. He referred to Spencer v Paragon Wallpapers Limited [1976] IRLR 373 at paragraph 14 for a succinct statement of what, for the purposes of unfair dismissal, was expected of an employer.
30. Secondly, he submits, correctly, that the "range of reasonable responses" test applies to every aspect of a decision to dismiss, including investigation: see, for example, Sainsbury's Supermarkets Ltd v Hitt [2003] IRLR 23. The Tribunal could only have come to the conclusion it reached by substituting its own view for that of the Company. It could not be said to be outside the band of reasonable responses for the Company to dismiss a man who had been absent sick for 8 months and who would be absent for at least another 8 months.
31. Thirdly, he submits (mainly in his skeleton argument) that the Tribunal must have disregarded important matters. In particular, the Company's knowledge that on no possible view would Mr Haigh be returning before October 2006, and further, that as things stood Mr Haigh wanted to take retirement in October 2006. He submits that the only difference between the Company's position and Mr Haigh's position was a short period of sickness pay at half rate.
32. Fourthly, he submits that the Tribunal overlooked section 98A(2) of the Employment Rights Act 1996 – the so called "Polkey reversal" provision. He refers to Alexander v Bridgen Enterprises [2006] IRLR 422 at paras 56-57 and 64. Failure to await a final medical report would be a procedural matter in the broad sense laid down by these cases. The Tribunal ought to have considered whether the Company would in any event have decided to dismiss Mr Haigh if it had obtained the report. The Tribunal heard evidence from Dr Fyfe which could have satisfied the requirements of section 98A(2). He accepts, we think, that on the Tribunal's view of the case section 98A(2) did not arise; but in reliance on his earlier submissions he argued that if failure to obtain a medical report was the only reason for dismissal, then section 98A(2) ought to have been considered.
33. In response to these submission Mr Panesar on behalf of Mr Haigh submits that the Tribunal made no error of law in reaching its conclusions.
34. Mr Panesar accepts that the Tribunal took the view that the Company should have regard to the ill health retirement provisions of its pension. Indeed he submits that the Tribunal was bound to do so because the motivation of the Company, in dismissing Mr Haigh, was bound up with its desire to prevent him from applying for ill health retirement pension. The Company ought to have made the enquiries which it made in February at an earlier stage; in any event, having adjourned the appeal in order to make medical enquiries, it was unreasonable then not to wait for the result of Dr Fyfe's letter to the consultant. Dr Fyfe had given no concluded opinion, and was not a specialist in stroke.
35. He submits that the Tribunal demonstrated by its reasons that it had the correct legal test in mind. It was then not for the Appeal Tribunal to interfere, unless it was demonstrated that the Tribunal could not have applied that test.
36. Further, Mr Panesar submits that in any event the Tribunal's judgment could be upheld on the basis that the Company did not seek proper medical evidence prior to dismissal quite irrespective of any question relating to the permanent incapacity under the ill health retirement provisions.
37. We drew to the attention of Mr Robinson and Mr Panesar two cases concerning the implication of terms into a contract of employment where there was permanent health insurance: Aspden v Webbs Poultry & Meat Group (Holdings) Ltd [1996] IRLR 521; and Brompton v AOC International Ltd and Unum Ltd [1997] IRLR 639. Mr Robinson submitted that these cases did not affect his central proposition, which was that the employer was not obliged to have regard to ill health retirement provisions for the purposes of unfair dismissal.

Our conclusions

38. To our mind there is no doubt that the Tribunal took the view that the Company as a reasonable employer, ought to have given consideration to whether Mr Haigh was entitled to take advantage of the ill health retirement provisions of the pension scheme. This appears from several passages in the reasons which we have already quoted. The Tribunal did not think the Company could "skip the important step of ill-health retirement". The Tribunal said that the Company "was not entitled to seek to deprive the Claimant of the right to claim ill-health retirement if ultimately he was considered to be permanently unfit".
39. The question then arises: was the Tribunal correct in this view?
40. As a general rule, when an employee is absent through ill health in the long term, an employer will be expected, prior to dismissing the employee, to take reasonable steps to consult him, to ascertain by means of appropriate medical evidence the nature and prognosis for his condition, and to consider alternative employment. An employer who takes such steps will generally meet the standard set out in section 98(4).
41. Where, however, an employer provides an enhanced pension on retirement through ill health, it seems to us that an employer will also be expected to take reasonable steps to ascertain whether the employee is entitled to the benefit of ill health retirement.
42. We reject Mr Robinson's submission that the Company was not required to give consideration to the question of ill health retirement. Our reasons are the following.
43. Firstly, the Company's sickness policy, which we have already quoted, expressly stated that it would consider retirement along with termination on medical grounds. This policy seems to us to be entirely proper and correct. We think that good industrial practice requires nothing less in a case where an employee who is long term sick may be entitled to an enhanced retirement pension on grounds of ill health.
44. Secondly, entitlement to an enhanced retirement pension is established, under the Company's insurance scheme, by a certificate signed by an occupational health advisor. It must follow that any entitlement to the benefit will generally be referred by the Company to its occupational health advisor for a decision. In our experience this is common practice in industry. The Company therefore had an essential role in ensuring that retirement is considered before an employee is dismissed.
45. Thirdly, under section 98(4) whether it is reasonable to dismiss is to be decided in accordance with equity and the substantial merits of the case. If an employer could proceed to dismiss a sick employee who might be entitled to an enhanced retirement pension without considering that question, substantial injustice might occur. An employer who had conferred a valuable benefit on an employee might hinder his ability to claim it carelessly, arbitrarily or even deliberately. It may be that the employee would have a common law claim against the employer; but that is no substitute for proper consideration of the matter by the employer before dismissal.
46. We accept that it may be possible for an employee who has been dismissed without consideration of an ill health retirement provision to bring a claim for breach of contract or in some other way to assert a claim under the pension scheme. We do not need to reach any conclusion on this point, and we did not have before us the full terms of the scheme or Mr Haigh's terms and conditions of employment. Indeed if there were no express provision enabling him to make a claim it might be necessary to imply such a provision: see, by way of analogy (but no more) Brompton v AOC International Ltd and Unum Ltd [1997] IRLR 639 and Aspden v Webbs Poultry & Meat Group (Holdings) Ltd [1996] IRLR 521.
47. But the potential for an employee to bring a claim afterwards is no substitute for the orderly consideration of the matter prior to retirement by the Company and its occupational health advisors with such outside advice as is necessary. If it is established that an employee is entitled to take retirement with an enhanced pension, dismissal will often be avoided altogether.
48. We therefore agree with the Tribunal that fairness requires the reasonable employer to give proper consideration to an ill health retirement scheme before he dismisses for long term sickness.
49. We do not, therefore, consider that the Tribunal erred in law in its approach to the ill health retirement provisions of the pension scheme.
50. It seems to us that, once this proposition is granted, the conclusion which the Tribunal reached was open to it on the facts of this case. Prior to dismissal the question whether Mr Haigh's condition was permanent was never answered. Indeed it goes further; the question whether Mr Haigh actually had a stroke was never answered. So far as we can see no enquiries had been made by the occupation health physician prior to February 2006.
51. The managing director, Mr Graham, was right to await an up to date report from Dr Fyfe. But Dr Fyfe had himself, quite rightly, written to the specialist for an opinion. The Tribunal was entitled to find that Mr Graham should have waited for that opinion.
52. Further, in our judgment, the Tribunal was fully entitled to find that it was unreasonable to make Mr Haigh choose between dismissal and forgoing any right to an enhanced pension. We can see no good reason for imposing this choice on him. At the time there was no clear evidence either way as to whether Mr Haigh was entitled to ill health retirement on grounds of permanent incapacity. There was no justification for imposing this choice on him.
53. We turn finally to the argument concerning section 98A(2). We do not think section 98A(2) had any application, on the facts of this case. The Tribunal did not consider that failure to obtain the medical report "by itself" made it unreasonable to dismiss. Section 98A(2) is directed to the case where there is some procedural lapse in a dismissal investigation or process. Here the fault was more fundamental. The Company wished to close off the prospect of a claim under the ill health pension provisions.
54. For these reasons the appeal will be dismissed. The question for the Tribunal, on which it rightly concentrated, was whether it was reasonable for the Company to dismiss when and how it did – forcing Mr Haigh to choose between dismissal or forgoing any right to claim an ill-health pension, and without waiting for a report on the question whether he was permanently incapacitated. The Tribunal did not err in law in concluding that the dismissal was unfair.