Appeal No. UKEAT/0054/13/SM

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

		At the Tribunal
		On 8 July 2013

Before
HIS HONOUR JUDGE SHANKS

MR J MALLENDER

MR D NORMAN

DSG RETAIL LTD	APPELLANT

MR S MACKEY	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR JASON GALBRAITH‑MARTEN
(of Counsel)
Instructed by:
DAC Beachcroft LLP
Portwall Place
Portwall Lane
Bristol
BS99 7UD	
For the Respondent	MR RHYS JOHNS
(of Counsel)
Instructed by:
Jennings Solicitors
17 Goring Road
Llanelli
SA15 3HF	

SUMMARY
UNFAIR DISMISSAL
Reason for dismissal including substantial other reason
Procedural fairness/automatically unfair dismissal

Claimant was dismissed because the Appellant employer believed he had neglected his duties and subsequently lied about the matter.  The Employment Tribunal’s decision that this was not a reason which related to his conduct was unsupportable.  Further the ET’s decisions that there were in any event no reasonable grounds for the employer’s belief, that they failed to carry out a reasonable investigation and that the sanction of dismissal were unreasonable were based on irrelevant considerations and/or overlooked important considerations and/or involved the ET substituting its views for those of the employer.  Case remitted to be heard by a fresh ET.

HIS HONOUR JUDGE SHANKS
Introduction
1.	This is an appeal by DSG Retail Limited from a decision of the Employment Tribunal sitting in Cardiff, which was sent to the parties on 5 November 2012.  The Tribunal found that the Claimant, Shaun Mackey, was unfairly dismissed and that he had contributed to his dismissal as to 10%.

The background
2.	The Claimant was a store manager at the Respondent’s Llanelli store.  It was common ground that Boxing Day is the Appellant’s busiest trading day and that all staff are asked to work on that day.  The Llanelli store is right beside the rugby stadium and on Boxing Day 2011 there was an important game between the Scarlets and the Ospreys.  On that day, it is not disputed, that the Claimant attended the match for a period of time; nor is it disputed that he exited and re‑entered the store through the back warehouse door in defiance of standing security rules. 

3.	Mr Heaps, the Regional Manager, learnt of this on 17 January 2012; as he had already arranged a meeting with the Claimant it turned into an investigatory meeting relating to his attendance at the rugby game.  The Claimant admitted during that meeting that he had been at the match but he said he had not been there from the beginning and he was only there during his lunch break, having established that the store was not busy enough to require his attendance.  He said he had left the store at about 2.15 pm and that he had gone to the match alone.  Mr Heaps was suspicious as the Claimant had bought tickets for the match in advance, he had not obtained authorisation and he appeared to need to check his calendar when Mr Heaps asked him about what had happened.

4.	Mr Heaps believed that the Claimant’s responses at the meeting were evasive and he put in train further investigation and in due course disciplinary proceedings.  There was CCTV footage which showed that the Claimant had left the shop floor of the Appellant’s store at 14.04 and that he had returned at 15.57, that is almost two hours later.  The CCTV relating to the back door to the warehouse was not working as the Claimant would have known.  A statement encapsulating the times that I have mentioned was served on the Claimant in advance of the disciplinary hearing.  That hearing was held on 31 January 2012 by Steve Worboys.

5.	The Claimant attended the disciplinary hearing with a union representative.  Mr Worboys and the Claimant watched the CCTV together at the outset of the meeting.  The Claimant told Mr Worboys that he did not leave the store itself at 14.04 but that he had stopped on his way out and had a discussion with staff in the warehouse.  He said in particular that he had spoken to David Sheppard for 10 or 15 minutes.  He said that he had left the game early and had got back to the store at about 3.15pm.  He said that he had had another chat with David Sheppard and with David Rees and that he had then entered the shop floor as shown by the CCTV at 15.57.  Although a Mr Teiron Jones appeared to be returning with him on the CCTV, the Claimant denied going to the game with Mr Teiron Jones.  He said specifically: “We weren’t together”; in that way he maintained what he had told Mr Heaps, namely that he went to the game alone.  He made the point that he had worked for the Appellants for 26 years and he acknowledged that the investigation and disciplinary hearing were putting his integrity in question.

6.	Mr Worboys adjourned the hearing for an hour and 20 minutes, as it turned out, during which time he obtained four statements from relevant people mentioned by the Claimant in the first part of the disciplinary hearing, namely Mr Rees, Mr Teiron Jones, Mr Sheppard and a Mr Morris.  None of those witnesses supported what the Claimant had been saying.  On the contrary, they indicated that the Claimant had left the store at about 2.00pm, that he returned at about 4.00pm, that he had attended the whole game and that he had gone to the game with Mr Teiron Jones.

7.	The disciplinary meeting resumed and those statements were put to the Claimant.  He repeated that he had gone to the game for only an hour and that he did not return with Mr Teiron Jones.  He was asked whether he wished to add anything and he said “no”; earlier on in the second part of the meeting he had said that he wanted to get the hearing finished.

8.	The decision of Mr Worboys as he stated it at the time is set out in the notes of the meeting, which are in the EAT bundle at pages 117 to 119 as follows:

“Shaun, after listening to you today and asking you questions regarding the disciplinary matter, I have reached my decision.  First of all, it is my reasonable belief that you did leave the store for almost two hours based on the CCTV footage and the witness statement I have taken today.  Also, this brings into question your integrity, in my opinion, with the business.  Secondly as you already admitted yourself, failing to follow the Company procedure for entering and leaving your store.  Also, in leaving your store on Boxing Day as the Store Leader, on one of our busiest trading days of the entire year I see this as serious neglect of your duties as a Store Manager.  I have taken into account your previous history in the Business, which has no issues and your length of service of 26 years, however, these points again lead to the fact that you should know better.  Therefore, it is my decision to summary (sic) dismiss you based on serious neglect, which contravenes your terms and conditions of employment.  This is of immediate effect and without notice.  You have the right to appeal; which will be detailed in your outcome letter.”

At that point the Claimant’s union rep said:

“Shaun, would you like to say something.  Ok, based on the statement that you have read from David Sheppard he would like to dispute this.  And he has not had time to consider these facts.”

The answer given by Mr Worboys was:

“This matter is closed.  This will form part of your appeal notes.”

9.	The Tribunal dealt briefly with what happened on the appeal at paragraph 10 of its Reasons in this way:

“The Claimant appealed his dismissal on the grounds that in summary there were evidential problems with the case of the Respondent, others had acted in a similar way or breached the security policy without being dismissed, and that the Claimant had not viewed the CCTV until the day of the hearing and felt it was made difficult for him to speak to witnesses.  The Claimant stated that he believed the decision to dismiss him was ‘harsh, unfair and inconsistent’.  The appeal was heard on 15 February 2012 by Mr Jon Shaw, Divisional Director.  Mr Shaw made inquiries of Angela Rees and Mr Heaps regarding points raised by the Claimant regarding the process itself, and ultimately decided to dismiss the appeal.”

The law
10.	The relevant law is contained in s.98 of the Employment Rights Act 1996: 

“98(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—
[…] 
(b) relates to the conduct of the employee,
[…]
(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 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.”

11.	In relation to conduct cases and s.98(4), the case law has grafted on the classic three tests laid down in British Home Stores Ltd v Burchell [1978] IRLR 379: were there reasonable grounds for the conclusion reached by the employer? was there a reasonable investigation? and was the sanction reasonable?  All those tests must be looked at from the point of view of a reasonable employer and not from the point of view of the Employment Tribunal substituting its own views.  So far as the burden of proof is concerned, it is now established that on s.98(4) there is a “neutral burden” and in this respect it is accepted that the Tribunal may have got it wrong in their recitation of the law in paragraph 13 where they said in the last sentence:

“A neutral burden of proof applies regarding whether a reasonable investigation was carried out, as confirmed in the case of Sheffield NHS v Crabtree.”

In fact, the neutral burden applies to all three questions.

The reason for the dismissal
12.	Dealing first with the reason for the dismissal, the Respondent’s grounds of response at page 49 of the bundle stated that it was a reason relating to conduct.  However, the Employment Tribunal found at paragraph 27, in the last sentence, that:

“The Respondent has failed to show the dismissal was for conduct and therefore the Claimant succeeds with his claim for unfair dismissal on this basis alone.”

13.	That conclusion was somewhat surprising in the light of a number of conclusions of fact in the Reasons.  First of all, in paragraph 9 the Tribunal had said this:

“In the view of Mr Worboys … the critical question for him was whether or not the Claimant was telling the truth.  Mr Worboys considered the sales figures, which showed significant volume of sales, and formed the view that the store was busy and that the Claimant had been absent for more than an hour.  He also considered the security breach as being part of wrongful action on the part of the Claimant.  As a result, Mr Worboys took the decision to dismiss the Claimant, and in his evidence testified that the main reason was being he believed the Claimant had lied.”

In paragraph 25 they said:

“Both Mr Worboys and Mr Shaw gave evidence that the crux of the matter for them was that in their view the Claimant was lying about his movements.  They did not accept that the Claimant might have been mistaken; both believed on the balance of probabilities that Claimant was lying and as a result was unfit to hold the responsible role of manager.”

Then at paragraph 29 the Tribunal, after concluding that the Claimant had not shown that the dismissal was for conduct, went on to say this:

“ … Mr Worboys clearly believed the Claimant had neglected his duties and further believed him to be lying about what had happened ...”

It seems clear to us based on those findings of fact that the Respondent had established that the reason for the dismissal related to the conduct of the employee.

14.	The Tribunal’s reason for their conclusion at paragraph 27 appears to be that set out at paragraph 26 where they say:

“In the judgment of the Tribunal, the Claimant was not dismissed for neglecting his duties despite the letters he received from the Respondent.  The Respondent says he was dismissed because the Respondent (acting through its managers) ceased to have trust and confidence in him as a store manager.  This is not a conduct reason in the judgment of the Tribunal.”

That reasoning does not seem to take account of the fact that if indeed the Respondents did cease to have trust and confidence in the Claimant, that was clearly because of his conduct and the section requires only a reason which “… relates to the conduct of the employee”.  It seems to us that a finding that the dismissal did not relate to conduct was unsupportable in the light of the evidence and the Tribunal’s findings which are outlined above.

Fairness
15.	Assuming that the Tribunal were wrong on the question of reason for dismissal, it is necessary to look at their findings in relation to reasonable grounds, reasonable investigation and reasonable sanction.
  
16.	First, so far as whether there were reasonable grounds for the conclusions reached by the employer, the Tribunal dealt with that at paragraph 30 where they say:

“The Tribunal judges that the belief was not based on reasonable grounds.”

A number of reasons are given for this conclusion in paragraph 30.  Most of those reasons, as counsel pointed out, are to do with the investigation and not whether there were reasonable grounds for the employer’s belief.  The one exception to that is this statement:

“The Claimant’s integrity was impugned by the Respondent due to discrepancies of 10‑20 minutes, which in the judgment of the Tribunal were not significant.”

It is quite apparent there that the Tribunal are there substituting their opinion of the evidence that had to be considered by the employer for the opinion of the employer.

17.	Further, and most significantly, it is clear that the Tribunal wholly failed to take account of or grapple with the points that are set out at paragraph 31 of the Appellant’s skeleton argument letters (a) to (k), points that Mr Galbraith‑Marten says together gave more than reasonable grounds for a conclusion that the Claimant had been guilty of misconduct and had been lying about it.

18.	It seems to us that the Employment Tribunal have erred in law in the way they have dealt with the question of reasonable grounds.  They have failed to take into account all the relevant evidence and they have not asked themselves the right question, namely whether there were reasonable grounds for the Respondent’s belief, but have instead asked themselves whether they shared the Respondent’s belief.

19.	Second, the question of reasonable investigation.  Again, the Tribunal found at paragraph 31 that the investigation was not reasonable.  They go on to identify a number of points which are rather scattered throughout the succeeding paragraphs.  First, they criticise Mr Heaps for not giving notice of the nature of the meeting he held with the Claimant on 17 January 2012 and for jumping to conclusions about the Claimant’s honesty.  However, it was never suggested that Mr Heaps took any decision in relation to dismissal: all he did was to pass the matter on to the next stage.

20.	At paragraph 32 three main points are set out which are then put in slightly different ways throughout succeeding paragraphs, but which amount to this: first, the Tribunal considered that the Claimant was not given proper warning that his integrity was in question in this whole process; second, they criticised the way that the statements were taken in the middle of the disciplinary hearing on 31 January 2012 and that he was not given adequate warning before having to deal with them; and third, they criticise the employer for not allowing the Claimant to view the CCTV 24 hours in advance of the disciplinary hearing.

21.	As to the first point, the lack of warning about integrity, it is perfectly apparent from the notes of the disciplinary hearing that the Claimant knew that his integrity was being challenged.  The issues as to his integrity were really wrapped up with the whole circumstances of what had been happening on the day in question and the exact points relating to his integrity really only emerged during the hearing.  That point also goes to the fact the statements were taken during the hearing: the need to take statements from particular individuals really only emerged during the hearing.  It would have been possible to adjourn the hearing after the statements had been obtained but the employers cannot be criticised, in our view, for not having supplied those statements before the hearing started.  So far as the CCTV is concerned, in our view, that is a matter of almost no significance because, as we have said, the timings were disclosed, everybody watched the CCTV together and nobody suggested at the time there was any problem about that.

22.	It seems to us that the Employment Tribunal in dealing with the question of reasonable investigation really overlooked those points.  They also failed to take any account of the fact that no adjournment was requested by the Claimant or his union rep and they entirely failed to consider whether the appeal to Mr Shaw remedied any unfairness that might have flowed from the fact that the Claimant was presented with the statements in the middle of the disciplinary hearing.  Mr Johns suggested that the Claimant was told that he could not contact witnesses and that somehow this operated on his mind between disciplinary hearing and the appeal hearing so that the point was not remedied, but the Judgment is entirely unclear on this point and it may have to be investigated further at a hearing in due course in front of the Employment Tribunal.  But, in any event, we are clear that the Employment Tribunal erred in law in addressing the question of whether there was a reasonable investigation.

23.	The third issue was whether the sanction was reasonable.  We remind ourselves that the question is whether dismissal came within the band of reasonable responses open to a reasonable employer having reached the views that the employer had about what the Claimant had done.  Again, the Employment Tribunal in paragraph 35 reached the view, it seems, that the sanction of dismissal was not within the band of reasonable responses open to a reasonable employer.  They state that they were conscious that they must not substitute their own view for that of the employer; they refer to the Claimant’s clean record and lengthy service (that, of course, was something expressly referred to by Mr Worboys in his reasons for dismissal) and then they go on to say this:

“As Counsel for the Claimant submitted, the Respondent seemed to take the view that because the Claimant disagreed about the timings, he was lying.  The witnesses for the Respondent did not accept any possibility that the Claimant could have been honestly mistaken about the events of Boxing Day.  In the Judgment of the Tribunal, a reasonable employer would have considered carefully whether the Claimant was lying or mistaken.  The tone of the treatment of the Claimant was set by the meeting with Mr Heaps, who viewed any failure to instantly recall the events of a day weeks previously as ‘evasion’.  The same applied to the timings suggested by the Claimant.  The Tribunal accepts his evidence in this regard - normal people do not time all their conversations, and the difference between 10 minutes or 15 minutes is insignificant.”

24.	In relation to that reasoning, which basically led the Tribunal to the conclusion that the sanction of dismissal was not a reasonable sanction, we would observe, first, that the employer who is the person who has to make the decision concluded that the Claimant was lying about his movements on that day.  That was, in our view, clearly a conclusion that was open to a reasonable employer based on the material the employer had.  Second, we again note that Mr Heaps’ involvement was really neither here nor there.  And, third, we note that the last sentence was really clear evidence that the Tribunal was substituting their view for that of the employer.  So, we are also of the view that the Tribunal erred in their approach to sanction and, in our view, taking all that into account, the finding of unfair dismissal in this case simply cannot stand.

Disposal
25.	Given that conclusion we do not propose to deal with the question of contributory fault.  We are clear that the matter will have to be remitted to a different Employment Tribunal (whether that is an Employment Judge alone or an Employment Judge with members is for others to decide).  

26.	It was submitted by Mr Galbraith‑Marten that we could take the decision on unfair dismissal ourselves but there are one or two factual areas (one referred to in the course of this Judgment) that would need to be investigated further before a decision could be made, and the general practice is not for this Tribunal to take a decision like this unless it follows inevitably from facts found by the Employment Tribunal.