Appeal No. UKEAT/0204/12/SM
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8JX
At
the Tribunal
On
19 October 2012
Judgment handed down on 3 December
2012
Before
HIS
HONOUR JUDGE PETER CLARK
MR D SMITH
MRS L S TINSLEY
SPS
TECHNOLOGIES LTD APPELLANT
MR
K C CHUGHTAI RESPONDENT
Transcript of Proceedings
JUDGMENT
APPEARANCES
|
For the Appellant
|
MR
ANDREW SMITH
(of Counsel)
Instructed by:
EEF Ltd Legal Services
Broadway House
Tothill Street
London
SW1H 9NQ
|
|
For the Respondent
|
MR IQBAL MOHAMMED
(of Counsel)
Instructed by:
Irwin Mitchell LLP
Solicitors
Imperial House
31 Temple Street
Birmingham
B2 5DB
|
SUMMARY
UNFAIR DISMISSAL-Reasonableness of dismissal
Majority lay members of ET substituted their view for that of the
employer in this case of admitted (serious) misconduct. Finding of unfair
dismissal set aside. Had it stood, a finding of 100 per cent contribution and a
similar Polkey deduction would have followed.
HIS HONOUR JUDGE PETER CLARK
Introduction
1.
This is the full hearing of an appeal by SPS Technologies Ltd, the
Respondent before the Leicester Employment Tribunal (Employment Judge Legard,
Ms Endersby and Mr Bhogaita) against that Employment Tribunal’s majority
Judgment (Employment Judge Legard dissenting) that the Claimant, Mr Chughtai,
was unfairly dismissed; that there should be no Polkey deduction
from his compensatory award and that he contributed to his dismissal to the
extent of 30 per cent. The Employment Judge would have found the dismissal fair;
alternatively he would have made both a 100 per cent Polkey
deduction and a 100 per cent finding of contributory conduct. That Judgment,
with reasons, was promulgated on 22 December 2011. Based on the majority
findings, remedy was subsequently assessed at £43,330.19 by a Remedy Judgment
dated 5 April 2012.
The Facts
2.
We take the facts from the unanimous findings of the Tribunal (para 5).
3.
The Respondent, a subsidiary of a large American-based company, PCC,
specialises in the manufacture of fasteners for the aerospace industry. It is a
safety critical industry where the failure of a product could result in a
catastrophic failure and loss of life, with attendant reputational damage to
the Respondent.
4.
The Claimant was a long-serving employee, commencing on 20 November
1978, working as a Laboratory Controller at the Respondent’s Barkby Road site in Leicester. His immediate line manager was Mr John Fowler. The Claimant’s
principal task was to ensure that the results of various tests conducted on a
variety of aircraft parts had been manufactured to the appropriate standard.
5.
The Respondent’s Code of Conduct emphasised the principle that there can
be no compromise on safety standards. All records must be 100 per cent
accurate.
6.
Their disciplinary policy included, as an example of gross misconduct,
falsification of company records.
7.
In February 2011 a ‘whistleblowing’ complaint was received at the Head
Office of the American parent company. The author claimed to be an employee at
the Leicester site, naming the Claimant as the person engaged in this
misconduct, described as fabrication of stress durability test results. The
informant added;
“I suspect that John Fowler the lab manager is aware of this but
will most likely deny knowledge. I also believe that other managers may be
aware…”
8.
The principal allegation against the Claimant was that having received
information that a product sample had failed the relevant test, he then entered
different (false) scores, showing a pass, on the cardex system.
9.
On 2 March 2011 the whistleblowing complaint was passed to Mr Clifton, Vice-President
Quality and Continuous Improvement, based in America. He promptly boarded a
flight to the UK in order to carry out an investigation. He was joined by a
specialist metallurgist employed by the company on 10 March, Mr Drinkwater.
10.
As part of that investigation Messrs Clifton and Drinkwater analysed
some 12,000 records and interviewed 19 employees within the laboratory at
Leicester, including the Claimant three times and Mr Fowler four times. Mr
Clifton gave evidence before the ET.
11.
The Claimant was asked not to work over the weekend of 5/6 March 2011
and was interviewed on Monday, 7 March. During interview he frankly admitted
falsifying records in the way described by the whistle-blower, but contended
that he did so with the knowledge and approval of Mr Fowler. He was suspended
on that day. No other employee; including Mr Fowler was suspended at any stage.
Throughout the investigation Mr Fowler denied knowledge of the Claimant’s
practice of falsifying company records.
12.
Significantly, we think, the ET majority lay members made a finding
(para 5.17) that having heard the Claimant give evidence before them, they accepted
his account that he acted with Mr Fowler’s knowledge and approval. The
Employment Judge formed the contrary view (the ET did not hear from Mr Fowler)
but reminded himself (correctly in our view) that the Tribunal’s role was to
assess the reasonableness of the Respondent’s actions and belief.
13.
Some of the employees (particularly Messrs Lightfoot and Sidat)
supported the Claimant’s account that management either were or ought to have
been aware that records were being routinely falsified.
14.
Despite a far-reaching and highly technical investigation, Messrs
Clifton and Drinkwater were unable to find any corroborative forensic evidence
which suggested that Mr Fowler was engaged in and/or authorised the
falsification of test data.
15.
At each interview the Claimant was accompanied by a Trade Union representative.
The ET found unanimously (para 5.23) that in light of his experience, position
and comments during interview he appreciated at all times that the
falsification of test records was wrong and amounted to serious malpractice.
The Respondent reasonably believed this to be the case.
16.
The Claimant attended a disciplinary hearing before Mr Smith, HR
Director, on 15 April 2011. The Claimant asserted that the non-suspension of Mr
Fowler showed double standards.
17.
The ET found (para 5.29) that Mr Smith, who gave evidence below, had
made up his mind before the hearing that the Claimant was guilty as charged.
Following a 30 minute adjournment Mr Smith summarily dismissed the Claimant.
18.
Against his dismissal the Claimant appealed to Mr Jerram, General Manager
and an appeal hearing took place on 13 May. We should repeat what the ET
unanimously concluded about the Jerram appeal;
“5.32 We were unanimously impressed by Mr Jerram and the
evidence he gave. We were persuaded that, had Mr Jerram unearthed any evidence
which had or could have led to Mr Fowler being found responsible and/or aware
of the malpractice in question then he (Mr Jerram) would have had no hesitation
in ensuring that he (Mr Fowler) was brought to book. Indeed, we accepted his
evidence that, having been handed by the Claimant 4 separate pieces of evidence
(namely cardex entries which tended to show discrepancies relating to product
tests bearing Mr Fowler’s stamp), Mr Jerram went out of his way to try and
catch Mr Fowler out. He interviewed Mr Fowler who gave a plausible explanation
for the discrepancies (including ‘factoring’). However, not content with these
explanations, Mr Jerram sought further opinion from Mr Brooks, a highly
respected metallurgist within the business as well as Mr Tye. Neither had any
knowledge and/or advance warning or Mr Fowler’s explanation but both,
coincidentally supported Mr Fowler’s position. Indeed both Brooks and Fowler
(wholly independently) produced detailed mathematical calculations supporting
the cardex figures to within .2% of each other. It followed that Mr Jerram had
no basis, forensic or otherwise, to justify taking action against Mr Fowler.”
19.
The ET added (para 5.33) that Mr Jerram made clear in his evidence that
irrespective of whether Mr Fowler was guilty or not, the outcome for the
Claimant would have remained the same; that was, to uphold the Claimant’s
dismissal.
The law
20.
Neither party before us levels any criticism of the law set out at para
4 of the ET reasons, no doubt articulated by the legally-qualified Employment
Judge. We shall not repeat it here, but in particular we note that the ET refer
to the well-known Burchell test (without expressly observing the
change in the burden of proof effected by the Employment Act 1980; a
point favouring the Claimant) and the approach of Browne-Wilkinson P in the Iceland
Frozen Foods case (later approved by the Court of Appeal in Foley
v Post office (2000)ICR1283), emphasising (para 4.7)
“The one clear and consistent principle… that it is not for the
Tribunal simply to substitute its own opinion for that of the employer as the
whether certain conduct is reasonable or not…”
21.
We also note the ET’s self-direction as to inconsistency of treatment
between employees (para 4.10), referring to Post Office v Fennell (1981)IRLR
221 (CA): Hadjioannou v Coral Casinos (1981) IRLR 352 (EAT) (we
would add, specifically approved by the Court of Appeal in Paul v East
Surrey DHA (1995) IRLR 305, paras 34-35, per Beldam LJ) and Securicor
Ltd v Smith (1989) IRLR 356 (CA). We shall return to the disparity of
treatment point in our conclusions.
22.
Further, the ET noted that where misconduct is admitted, the need for a
far-reaching enquiry diminishes (see RSPB v Croucher (1984) IRLR
525) and that the final question was whether dismissal of the Claimant fell
within the range of reasonable responses (affirmed in Foley).
The Employment Tribunal’s conclusions
23.
As to fairness, the majority held (paras 7.2-7.6);
(1) That the failure to suspend
Mr Fowler at the outset fatally undermined the integrity of the disciplinary
process thereafter. Further, the Claimant ought to have been given the witness
statements.
(2) ‘A reasonable
employer, following a detailed investigation of the ‘common practice’
allegations, would have concluded that the Claimant was telling the truth and
accordingly would have then taken action short of dismissal’(para 7.3)
(3) The disciplinary hearing was
a foregone conclusion and the decision to dismiss was predetermined.
(4) The employer’s investigation
over relied on a technical investigation of the cardex system.
(5) Answers given by Mr Fowler
were at best equivocal and at worst non-existent (silence).
As to remedy the majority concluded;
a. That
there should be no Polkey deduction (para 8.1)
b. The
Claimant did contribute to his dismissal to the extent of 30 percent (para 9.1)
24.
Whilst our task is not to express any preference for either the majority
or minority views, both may be permissible, we simply record that the
Employment Judge took the view that, as to liability, it would have been
irrational for the Respondent not to have dismissed the Claimant. He
admitted data fabrication (amounting to misconduct); the Respondent carried out
a thorough investigation. The decision not to suspend Mr Fowler at the outset
was within the band of reasonable responses; however, the question of whether
he ought to be suspended was irrelevant to the Claimant’s dismissal. Although
the dismissal was unsatisfactory (Mr Smith’s prejudgment) that procedural
defect was cured on appeal. Dismissal plainly fell within the band; that was
the case regardless of whether Mr Fowler was implicated. The dismissal was
fair. Alternatively, the Employment Judge would have applied a 100 per cent Polkey
deduction and a finding of 100 per cent contribution had the dismissal been
unfair.
The role of the Employment Appeal Tribunal
25.
Appeals to the Employment Appeal Tribunal are on questions of law only.
It is clear that the EAT must not simply substitute its view for that of the ET;
see, by way of example, the observations of Longmore LJ in Bowater v
Northwest London Hospitals NHS Trust (2011) IRLR 331, para 19, and Graham
v DWP (2012) IRLR 759, where a division on which I sat was held by the
Court of Appeal to have been wrong to conclude that the ET had substituted its
view for that of the employer. We bear that guidance in mind in approaching the
present appeal.
The appeal
Unfair dismissal
26.
The first question raised by Mr Smith is whether the majority below
substituted their assessment of the Claimant’s credibility for that of the
Respondent, particularly in relation to the ‘common practice’ allegation (see
para 7.3). We have no doubt that they did. Although invoking the ‘reasonable
employer’ mantra, what the majority was clearly stating at para 7.3,
notwithstanding the clear direction in law from the Employment Judge (para
4.7-4.8) is that having heard the Claimant (but not Mr Fowler) they believed
his account as they stated at para 5.17 and so too ought the Respondent. That
is a wrong approach in law.
27.
However, the error in the majority’s approach goes much further. They
plainly formed the view that the Respondent ought to have concluded that the
falsification of records admitted by the Claimant was common practice endorsed
by Mr Fowler, as evidenced by some of the laboratory staff interviewed during
the Clifton enquiry (see para 5.18). However, that was not the ET’s task. They
had to decide whether there was disparity of treatment between Claimant and Mr
Fowler, such that the failure to suspend and/or discipline Mr Fowler rendered
the Claimant’s dismissal unfair.
28.
If that was their conclusion, and it is not clearly explained, they
failed to ask themselves the proper question, which was whether the Respondent
acted outside the range of reasonable responses in the comparative treatment of
the Claimant and Fowler.
29.
First, they appear to have overlooked the unanimous findings of the ET
expressed at paras 5.21 and 5.32; despite a far-reaching investigation Messrs
Clifton and Drinkwater were unable to find any forensic evidence against Mr
Fowler, and try as he may Mr Jerram was unable to catch Fowler out. Based on
those factual findings, had they asked themselves whether the Respondent’s
conclusion that Fowler was not guilty of the allegation levelled by the
Claimant fell within the range of reasonable responses, they were bound to
answer that question in the affirmative. The distinction drawn between the
Claimant’s case and that of Fowler was not irrational (see Securicor v
Smith). The cases were not truly comparable (Hadjioannou).
30.
Yet more fundamentally, even if the Claimant had been provided with the
witness statements collected at the investigation stage (he did not receive
them prior to the internal appeal hearing, it is now common ground) and had Mr
Jerram accepted that Fowler was complicit in the practice of falsifying records
the outcome, as the ET unanimously accepted (para 5.32), would have been that
both men, Fowler and the Claimant, would have been dismissed (‘brought to
book’). This is not a case like Securicor v Smith, where two
people are disciplined, arising from the same incident and ultimately one is
dismissed and the other not, based on a rational distinction between their
respective levels of culpability. Here, either both were to be dismissed if
guilty of misconduct, or, as was the case, one was guilty on his own admission
whereas nothing was proven to the Respondent’s satisfaction against the other.
31.
Separately, the finding as to the investigation (expressing the
majority’s own assessment) at para 7.5 is inconsistent with the unanimous
findings of fact at para 5.21, but in any event the majority appear to have
overlooked the agreed fact that the Claimant admitted falsification from the
outset. Nevertheless, the Respondent carried out a thorough and far-reaching
investigation not least; it is plain, because they took the original
whistle-blowing allegation very seriously. That is unsurprising in such a
safety critical industry.
32.
Finally, if and insofar as the majority found that dismissal for the
misconduct fell outside the band of reasonable responses, we have no hesitation
in saying that such a conclusion was perverse. The procedural defect at the
dismissal stage (see para 7.4) was, on the face of the findings of fact at para
5.32, plainly cured on appeal.
33.
In short, we are satisfied that for all these reasons the majority
finding of unfair dismissal cannot stand: the appeal is allowed and the claim
is dismissed.
Remedy
34.
For completeness, had we upheld the finding of unfair dismissal we
should, in common with the Employment Judge, have allowed the appeal on remedy
and substituted a finding of 100 per cent contribution and made a similar Polkey
deduction. The facts speak for themselves.
