Appeal No. UKEAT/0198/11/RN

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

		At the Tribunal
		On 24 February 2012

Before
MR RECORDER LUBA QC
MS K BILGAN
MR T HAYWOOD

KALTZ LTD	APPELLANT

MRS B HAMER	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR SIMON GORTON
(One of Her Majesty’s Counsel)
Instructed by:
Messrs DWF Solicitors
5 St Paul’s Square
Old Hall Street
Liverpool
L3 9AE
	
For the Respondent
	MR BENJAMIN MILLER
(Solicitor)
Messrs Fieldings Porter LLP
Silverwell House
Silverwell Street
Bolton
Lancashire
BL1 1PT	

SUMMARY
UNFAIR DISMISSAL
Contributory fault
Polkey deduction

Employee dismissed following disciplinary proceedings for: (1) misconduct towards other staff; (2) misconduct in attitude to directors; and (3) disclosure of information from staff payroll (3 instances).

Employment Tribunal reject claims of wrongful and unfair dismissal but find dismissal ‘automatically unfair’ because one instance of disclosure was a protected disclosure: Employment Rights Act 1996 s.103A.  At remedies hearing, no deduction from compensation made on account of either (a) the other conduct or (b) possibility that she would have been dismissed on the other grounds.

Employer’s appeal on compensation allowed and remitted to Tribunal to re-consider.  If no deduction was warranted its Reasons should, given the factual background, explain why not.

MR RECORDER LUBA QC
Introduction
1.	This is an employer’s appeal from the decision of an Employment Tribunal regarding the financial remedy to be awarded to an employee consequent upon her unfair dismissal.  The dismissal was found to have been automatically unfair on the basis that the main or principal reason for dismissal was that the employee had made a protected disclosure.  There is no longer an extant appeal by the employer from that liability finding.  The employer’s case on this appeal is about remedy.  The Grounds of Appeal are that the Employment Tribunal erred in law in failing to reduce the employee’s compensation on account of either: (1) her own contribution to her dismissal (i.e. her conduct); or (2) the likelihood of the termination of her employment in any event.  The employee’s case is that the Employment Tribunal made no such error, and that its conclusions should be upheld.

The facts and the Judgment of the Employment Tribunal
2.	Mrs Hamer had been employed from 2001 to 2009 as the administration manager of Kaltz Ltd, which we shall continue to refer to as ‘the employer’.  Following a disciplinary meeting held on 16 July 2009 she was dismissed for gross misconduct on that date.  Her appeal against that decision under the employer’s procedures was unsuccessful.

3.	She brought to the Employment Tribunal Service claims of sex discrimination, wrongful dismissal and unfair dismissal.  The Employment Tribunal at Manchester, Judge Ross and members, following a hearing and deliberations extending over three days, rejected the claims for sex discrimination and wrongful dismissal.  The Employment Tribunal found, however, that the principal reason for the dismissal was that Mrs Hamer had made a protected disclosure, and that her dismissal had, in consequence, been unfair.

4.	The Employment Tribunal found that the relevant facts, in very short summary, were these.  Mrs Hamer had faced disciplinary proceedings, in which three matters had been raised against her: first, misconduct in her attitude to staff; secondly, misconduct in her attitude to directors and in the disrespect shown to them; and thirdly, gross misconduct for her disclosure of confidential information from the employer’s payroll (to which she had had access in the course of her work).  Within the third category there were three sub‑allegations of disclosures of confidential information, two of which were not protected disclosures, and one of which was found by the Employment Tribunal to be a protected disclosure (because it tended to show or disclose wrongdoing by the employer).

5.	The particular subject of the protected disclosure was the amount of salary being paid to a Mr White, another employee.  Mrs Hamer made a disclosure relating to his salary because she reasonably believed that Mr White was receiving an amount of pay, while on paternity leave, that was less than he had had a right to receive.  The Employment Tribunal rejected by a majority Mrs Hamer’s claim that, absent the legal effect of her being dismissed for making a protected disclosure, her dismissal had been unfair.  In terms of what might be called for these purposes “ordinary unfair dismissal”, the Employment Tribunal decided that the employer had had a genuine belief on reasonable grounds, and after a reasonable investigation, that the misconduct alleged against Mrs Hamer had been established.  On the material available to the employer, dismissal was, the Employment Tribunal found, within the range of reasonable responses open to such an employer.  But the Employment Tribunal further held that the fact, and it is their finding of fact, that the main reason for the dismissal was the making of the protected disclosure meant that by operation of law that dismissal was automatically unfair (see section 103A, Employment Rights Act 1996).

6.	Following a further hearing, attended by counsel on both sides, the Employment Tribunal made the remedies award that is the subject of this appeal.  The total awarded was £33,941.20.

The appeal
7.	The employer, represented before us by Mr Simon Gorton QC, contends that the Employment Tribunal erred in the two respects identified at the outset of this Judgment.  The first criticism is essentially one of misdirection.  Mr Gorton submits that the Employment Tribunal directed itself that as a matter of law and/or legal principle it could not or should not take account of an employee’s conduct in a case of unfair dismissal that is automatically unfair by reference to a protected disclosure.  If such a direction was made by the Employment Tribunal, as he submits it was, then he contends it was wrong in law, in that there is no statutory rule, or authority by way of precedent, that forecloses the making of a reduction in compensation on account of conduct in a case of unfair dismissal for making a protected disclosure.  The simple reply advanced by Mr Benjamin Miller, appearing before us for Mrs Hamer, is that the Employment Tribunal made no such self‑direction but straightforwardly determined on the facts of the specific case that no reduction was warranted in this particular case.  Plainly those competing submissions require us to give close consideration to the terms of the Employment Tribunal’s reasoning in its Judgment on remedy.  We will call the point at issue “the misdirection point”, and we will return to it later in this Judgment.

8.	Staying with the issue of conduct, Mr Gorton next submits that even if the Employment Tribunal did not err by way of misdirection, nevertheless its conclusion that there was no conduct on the part of Mrs Hamer for it to take into account is inconsistent with its findings on the ordinary unfair dismissal claim and the rejection by it of the wrongful dismissal claim.  Each of those was, he submits, premised on the proposition that there must have been at least some misconduct on the part of the employee.  In response, Mr Miller points to the clear finding by the Employment Tribunal, in paragraph 3 of the remedies Judgment, to which we shall shortly come, that it had found no blameworthy or culpable conduct on the part of his client.  Any seeming inconsistency could, in his submission, be explained by the absence of a causal connection between any historic acts of misconduct and the actual dismissal.

9.	Mr Gorton’s second major ground for criticism of the Employment Tribunal is that it did not address properly the question of whether Mrs Hamer would have been, or was likely to have been, dismissed in any event.  Having heard argument on the point, he submits that the Employment Tribunal does not address the matter at all in its remedies Judgment.  Had it done so, he argues, not least based on the findings contained in the Judgment on liability in relation to ordinary unfair dismissal and wrongful dismissal, it could and should have held that the employer would have dismissed in any event based on the other allegations of misconduct excluding the protected disclosure.  He relies for the proposition that an award may be significantly reduced in such circumstances on the well‑known authority of Polkey v A E Dayton Services Ltd [1988] ICR 142 HL; we will call this “the Polkey point”.  In response, Mr Miller does not dispute that Polkey may apply by analogy at least to some extent in this class of case (that is to say, automatic unfair dismissal for the making of a protected disclosure), but he submits that the Employment Tribunal made no error at all.  For the reasons that it gave in its liability Judgment, he submits, the Employment Tribunal was fully entitled to be satisfied that the other disciplinary matters alleged against Mrs Hamer, even had they been wholly established, were unlikely to have resulted in her dismissal.

Discussion and conclusions
10.	Although we have carefully considered the whole of the two Judgments of the Employment Tribunal and the totality of the submissions made to us for the purposes of reaching our conclusions on the points argued, we shall express our reasons on each point separately and in turn.  First, the misdirection point.  The most material parts of the Employment Tribunal’s remedies Judgment are paragraphs 1‑3.  We set them out as follows:

“1. We must award the claimant by way of remedy what is just and equitable in all the circumstances of the case.
2. We have considered the submissions of both parties in relation to contributory fault.  We are not satisfied that this is a case where it is just an equitable to reduce either the basic award or the compensatory award for contributory fault.  We found in our Judgment that the claimant was dismissed for making a protected disclosure.  Having made a finding that the principal reason for dismissal was the protected disclosure we are not satisfied it is appropriate or indeed just and equitable to make a deduction for contributory fault.
3. The ‘ordinary’ unfair dismissal claim did not succeed before the majority.  The compensation flows from the public interest disclosure claim form.  Where we made findings in relation to conduct in our Judgment these findings were made as we considered the principles established [sic] British Home Stores v Burchell [[1978] IRLR 379]:- did the respondent have a genuine belief based on reasonable grounds following a reasonable investigation of the claimant’s misconduct, for the purposes of the claim for ‘ordinary’ unfair dismissal.  This Tribunal did not make and does not make any findings that there was culpable or blameworthy conduct of the type to justify a reduction in the award of compensation.  We are satisfied for these reasons that it is not appropriate to make a deduction for contributory fault.”

11.	We have read and re‑read those paragraphs and have had the benefit of counsel’s arguments as to whether or not they suggest or evidence a misdirection in law such as that contended for by Mr Gorton.  We are unanimously satisfied that they do not.  First, paragraph 1 opens with a succinct direction to the broad just and equitable jurisdiction in “the circumstances of the case”.  That language is wholly inconsistent with the proposition that the Tribunal were applying a delineated or narrow approach.  Second, they refer to having considered the submissions of both parties.  We were told that they had had full submissions from both counsel on the question of contribution.  Had they, as a result of them, been satisfied that some limiting rule bound them to a particular result, it is singularly striking that they do not identify it.  Third, the language they have used is not that of the application of a narrow or limited rule.  It is more consistent with the expression of what conclusions have been drawn as to what would have been just and equitable in the particular circumstances of this case.  The use in this context of the phrasing “… this is a case …” in paragraph 2 and the use of “… for these reasons …” in paragraph 3 exemplifies that approach.  Accordingly we do not find that the first ground of appeal is made out.

12.	However, we are satisfied that there is merit in Mr Gorton’s alternative ground on this conduct question.  Mr Gorton is right to draw attention to the fact that the protected disclosure was not the only matter on which the employer in this case had based and pursued disciplinary proceedings.  There were two other disclosures and another two instances of misconduct (in relation to the directors and other staff).  In the liability Judgment at paragraph 35, when dealing with the ordinary unfair dismissal claim, the majority found that Mrs Hamer was, “being disciplined for her insubordination towards a director and had disclosed confidential payroll information […]”.  In paragraph 17 of the same Judgment they record that one of the non‑protected disclosures of confidential information was admitted by Mrs Hamer, and in respect of the other non-protected disclosure of confidential information her denial was counteracted by a statement from another staff member.  In our judgment, it was incumbent upon the Employment Tribunal in reaching its finding that there was no culpable or blameworthy conduct on the part of the employee to explain how this other conduct was immaterial on the question of compensation.  We cannot tease that out of the paragraphs extracted above, and it requires explanation.

13.	Likewise, Mr Gorton is right to submit that there is an unexplained oddity or inconsistency in that the Employment Tribunal dismissed the wrongful dismissal claim on the grounds that there had been gross misconduct justifying summary dismissal (see paragraph 57 of the liability Judgment).  Notwithstanding that finding, when it came to assessing compensation, the Employment Tribunal had found that there had been no relevant misconduct on Mrs Hamer’s part.  This apparent inconsistency may be explicable by virtue of the fact that the Employment Tribunal were not taken in the course of the proceedings before them to the Employment Rights Act 1996, section 43J.  That provides as follows:

“(1) Any provision in an agreement to which this section applies is void in so far as it purports to preclude the worker from making a protected disclosure.”

14.	Had they been directed to that provision, they may well have found that the protected disclosure in this case did not amount to a breach of the relevant provision of any agreement between the employer and the employee, but even that would have left them to deal with the other two non‑protected disclosures.  Again, it is not for this Employment Appeal Tribunal to seek to find or develop explanations that the Employment Tribunal have not themselves given.  It seems to us that the ultimate conclusion of the Employment Tribunal in their remedies Judgment may be capable of explanation in the light of the earlier liability findings, but it is for the Employment Tribunal to give that explanation and not for us.

15.	We have reached much the same conclusion on the Polkey point.  The matter of a potential Polkey deduction was argued before the Employment Tribunal on both sides.  The Employment Tribunal, sadly, does not expressly deal with it.  In our judgment, we cannot safely draw inferences from the liability Judgment that would enable us to uphold the Employment Tribunal’s decision not to make a Polkey-type deduction or reduction.  That is all the more so in the absence of any discussion or reasons on the point in the remedies Judgment at all.  As we have indicated, on this aspect the remedies Judgment makes no mention of the employer’s case, viz that even if the protected disclosure is put to one side, this was an employee who faced two disciplinary charges for misconduct and two further allegations of unauthorised disclosure.  Moreover, this was a case in which a complaint of wrongful dismissal was rejected, and a case in which the claim for ordinary unfair dismissal was rejected by the majority.  In those circumstances, an Employment Tribunal may nevertheless be entitled not to make a Polkey reduction, but they were obliged to give their reasons for not doing so, and that they have not done.

16.	For all those reasons, the Judgment on the assessment of the appropriate remedy in this case cannot stand.  We do not consider it a case in which we could or should substitute a decision ourselves; the matter will have to be remitted.  We have carefully considered Mr Gorton’s submission that this is a case in which it would be wrong to direct remission to the same Employment Tribunal.  We have, however, essentially allowed the appeal on the basis that the Employment Tribunal has not sufficiently explained the reasons for its conclusions.  It should have the opportunity to reconsider those conclusions with the benefit of this Judgment and with the benefit of such further submissions as it directs it should receive.  We are confident that it will discharge its judicial functions in coming to legitimate and lawful conclusions accompanied by a sufficiency of reasoning.  We therefore remit the question of the assessment of compensation to an Employment Tribunal of the same constitution.

17.	For those reasons, the appeal will be allowed on grounds 2 and 3, and ground 1 will be dismissed; the question of compensation will be remitted to the same Tribunal.