Conduct dismissals: back to basics - Case Round-Up August 2015

In this month's round-up, Mark Shulman consultant solicitor with Keystone Law, looks at recent cases which review the basic principles applicable in dismissals for misconduct.

Mark Shulman, Consultant Solicitor at Keystone Law

Was an ET justified in finding that an employee's dismissal for misconduct was unfair? Yes, said the Court of Appeal in [Newbound v Thames Water Utilities Ltd ]()[2015] EWCA Civ 677. Not many unfair dismissal cases reach the Court of Appeal ("CA") and so this case serves as a useful reminder of various basic principles in conduct cases. The appeal raised the familiar question of when an ET is justified in finding that an employer's decision to dismiss on the grounds of conduct was unfair.

*The Claimant was employed by Thames Water and his duties included ensuring that all annual conditioning inspections of special valves in sewers were completed correctly and on time. He was dismissed summarily for gross misconduct after 34 years' service.

The Claimant's inspection team manager had made it clear in a briefing that workers were required in future to use breathing apparatus when carrying out sewer inspections. The Claimant understood this and signed the relevant paperwork. However, when on site for a sewer inspection, the Claimant and a colleague put on their personal protective equipment and discussed with a Mr Andrews (the person responsible on-site for health and safety), whether it was safe to enter the chamber without the breathing apparatus. A gas monitor was checked and the readings were within safe parameters. The Claimant and his colleague then entered the chamber wearing only respiratory dust masks rather than full breathing apparatus. After being in the chamber for approximately five minutes, the Claimant and his colleague received a call from the safety team for them to vacate and it was at that point that the field service manager noticed that neither the Claimant nor his colleague were wearing breathing apparatus.

The chamber had to be vacated because a special winch was required in the event of an emergency to lift someone from inside who might be injured. It was Mr Andrews' responsibility to arrange a winch, but he had failed to ensure that one was available. He returned within the hour with the winch and gas checks were again carried out by the safety team and the atmosphere was found to be within safe parameters. Mr Andrews again allowed the Claimant and his colleague to enter the chamber without wearing breathing apparatus.

In the light of breach or procedures discovered by the field service manager, an investigation was then carried out by Thames Water. The investigation did not include any discussion with the Claimant. Both the EJ and the CA found this omission surprising.

Practice point: Therefore, practitioners should note that normally a disciplinary investigation would include a discussion with the employee concerned about the allegations, although a failure to do so will not automatically make the investigation unfair (as indeed was the decision in the present case).

After a disciplinary hearing, Thames Water decided that the Claimant was guilty of "…a serious infringement of health and safety rules and a serious breach of the company's health and safety policy". He was summarily dismissed. A charge of misconduct (not gross misconduct) was laid against Mr Andrews and he received a written warning to remain on file for 12 months.

The Claimant unsuccessfully appealed against his dismissal, suggesting that the working method he employed was not an individual occurrence, but a commonplace practice.

ET findings
At an ET the crucial question was whether Thames Water had acted reasonably or unreasonably in treating the Claimant's conduct as a sufficient reason for dismissal - a question to be decided having regard to equity and the substantial merits of the case.

The EJ found that the Claimant had in the past exercised his discretion in deciding whether or not to use breathing apparatus. Such earlier use of discretion had not led to disciplinary action as Thames Water was prepared to rely on the Claimant's skill, knowledge and experience. The EJ concluded that no reasonable employer would have dismissed the employee in these circumstances and that the decision to terminate his employment was perverse.

Alternatively, the Claimant's dismissal was unfair because of the disparate treatment of the Claimant and Mr Andrews, even though they had performed different roles.

*Contributory conduct
*However, the EJ also found that the Claimant's failure to take heed of what he was told about the use of breathing apparatus and his action in entering the sewer without it being used amounted to blameworthy and culpable conduct. The EJ assessed contributory conduct at 40%, to be deducted from both the basic and the compensatory awards for unfair dismissal.

EAT appeal
Thames Water successfully appealed to the EAT on the basis that the EJ had failed to consider the reasonableness of the gravity with which Thames Water had viewed the Claimant's conduct.

The EAT considered that despite a correct self-direction, the EJ had fallen into error by assessing the fairness of the dismissal on his own view of the facts and their significance, rather than considering whether dismissal was within the range of reasonable responses of a reasonable employer in the circumstances. The EJ could only find the dismissal to be unfair if no reasonable employer taking into account all the relevant circumstances would have dismissed the Claimant.

On the disparity point the EAT considered that the approach adopted by the EJ was to consider how Mr Andrews should have been treated and to decide on the relative culpability of the Claimant and Mr Andrews. This approach was erroneously based on the EJ's own view of the relative culpability of the Claimant and Mr Andrews, rather than a consideration of whether it was within the range of reasonable responses for Thames Water to form that view.

Court of Appeal
The Claimant appealed to the CA. The judgment contains very useful references to the relevant basic legal principles in conduct cases:-

* it is for the employer to show what was the reason for dismissing the employee (Section 98(1) of the Employment Rights Act 1996); * "… the determination of the question whether the dismissal is 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." (Section 98(4) ERA 1996);

a judge or Tribunal must consider whether the employer has acted in a manner a reasonable employee might have acted: Iceland Frozen Foods Ltd v Jones *[1982] IRLR 439, EAT. it is not the role of the Tribunal to put itself in the position of the reasonable employer: Sheffield Health and Social Care NHS Trust v Crabtree UKEAT/0331/09/ZT, and London Ambulance Service NHS Trust v Small *[2009] IRLR 563; * the range of reasonable responses test applies to the investigation as it does to the decision to dismiss for misconduct: Sainsbury's Supermarkets Ltd v Hitt [2003] ICR 111, CA; the fairness of a dismissal falls to be judged on the basis of the facts known to the employer at the time of the decision to dismiss (Devis v Atkins .

However, whilst the "band of reasonable responses" has been a stock phrase in employment law for over thirty years, it was important not to overlook section 98(4)(b) of the 1996 Act which directs ETs to decide fairness "in accordance with equity and the substantial merits of the case". Parliament did not intend this to be a matter of procedural box-ticking. An ET is therefore entitled to find that dismissal was outside the band of reasonable responses without being accused of placing itself in the position of the employer.

*There are two types of disparity argument:

(a)  where the employer has previously treated similar behaviour less seriously e.g. if such behaviour has on previous occasions not even been treated as a disciplinary offence, (often described as condonation);

(b) where two employees involved in the same incident are treated differently.

Both were in play in the present case. It is legitimate in disparity cases for an employer to take into account not only the nature of the conduct and the surrounding facts, but also any mitigating personal circumstances affecting the employee concerned. An employee who admits that conduct proved is unacceptable and accepts advice and help to avoid a repetition may be regarded differently from one who refuses to accept responsibility for his actions, argues with management or makes unfounded suggestions that his fellow employees have conspired to accuse him falsely (Paul v East Surrey District Health Authority [1995] IRLR 305).

Was the dismissal unfair?
There was ample evidence on which the EJ could find that Thames Water had been content in the past to rely on the Claimant's skill, knowledge and experience and not to object to his entering sewers without breathing apparatus if he thought it appropriate. That finding inevitably involved the implication that management were aware of what was going on - there was evidence that for many years this practice had been condoned.

No special rule applies when assessing the reasonableness of a dismissal where the alleged misconduct involves a breach of health and safety requirements. There was no evidence that anyone in management made it clear to the Claimant, whether by means of a formal training course or even a one-to-one discussion, that (whatever past practice may have been) in future, the failure to wear breathing apparatus in sewers on any occasion would be treated as an offence justifying dismissal.

Practice point: It is therefore worth noting by way of comment that when introducing new policies and practices, employers not only need to convey the specific policy or procedural requirements, but also clearly highlight the potential consequences of not following them.

The EJ found that no reasonable employer would have dismissed the Claimant in the circumstances. This was a conclusion he was entitled to reach. He made no error of law and the EAT should not have interfered. The fact that the Claimant was an employee of 34 years' service with a clean disciplinary record was a factor the EJ was fully entitled to take into account: it would have been extraordinary if he had not done so.

On the disparity point, findings of fact by the EJ included:

(a) Mr Andrews was in overall charge on the day at the sewer;

(b) he allowed the Claimant and his colleague to enter the sewer twice without a winch being on site and without breathing apparatus;

(c) Mr Andrews was only charged with misconduct, not gross misconduct, which avoided the possibility of his dismissal;

(d) Mr Andrews was interviewed prior to the disciplinary hearings while the Claimant was not; and

(e) Mr Andrews was given a written warning whereas the Claimant was dismissed.

On those facts the EJ was entitled to find that this was not an appropriate case for disparity in treatment and that the dismissal was also unfair on this ground. Bean LJ commented that he had rarely seen such an "obvious case of unjustified disparity".

The CA allowed the appeal, set aside the order of the EAT and restored the decision of the EJ that the Claimant's dismissal was unfair subject to a finding of 40% contributory conduct.

ET wrong to substitute its own views
Was an ET correct to find that dismissal of a care worker for abusing a mentally ill service user was unfair? No, said the EAT in [Black Country Partnership NHS Foundation Trust v Herlock-Green]() UKEAT/0035/15/DM.

The Claimant was employed as a Clinical Support Worker at a facility for adults with mental health difficulties. She was alleged to have taunted and humiliated a service user. An issue arose as to her union representation at the disciplinary hearing but the employer had previously rescheduled the hearing and the Claimant was advised that it would go ahead in her absence if she did not attend. The hearing proceeded in her absence and she was dismissed after being found guilty of gross misconduct.

The ET found that employer had established its reason for dismissing the claimant (her conduct), but said that the dismissal was unfair because the Respondent had failed to apply  BHS v Burchell [1980] ICR 303 in respect of:

* the level of its belief in the misconduct alleged; and * the Respondent's reliance upon the witnesses' evidence which founded the employer's belief in the Claimant's guilt.

The ET also expressed the view that where dismissal was likely to have a profound effect on the employee such as the loss of their livelihood, an employer must perform the disciplinary investigation with extra care (Salford Royal NHS Foundation Trust v Roldan .

Employer's appeal
The employer appealed firstly on the basis that although the ET had given itself a correct self-direction on Burchell, it had failed to apply it, apparently substituting its view for that of the reasonable employer, and/or simply failing to adequately explain its reasoning.

Secondly, the employer contended that the ET had substituted its own view of the evidence considered by the employer without asking whether the Respondent's acceptance of the evidence fell within the range of reasonable responses.

And finally, whilst the ET had had in mind the guidance laid down in Salford Royal NHS Foundation Trust v Roldan [2010] IRLR 721, it had in fact not criticised the employer's investigation and provided no basis for concluding that it had not met the standards laid down in Roldan.

Was the dismissal fair?
The reason for dismissal (as found by the ET) was the Claimant's conduct. The ET was then obliged to consider - applying a neutral burden of proof - the question of the fairness of the dismissal for that reason (section 98(4)). In so doing, it would need to ask whether the Respondent had reasonable grounds for its belief and whether those were based on a reasonable investigation (Burchell).

In carrying out that assessment, however, it would not be for the ET to reach its own view (London Ambulance Service NHS Trust v Small [2009] EWCA Civ 220); its job was to apply the range of reasonable responses test: did the Respondent's decisions fall within the band of reasonable responses of the reasonable employer in those circumstances (Iceland Frozen Foods Ltd v Jones [1982] IRLR 439, EAT)?

However, the ET had reached its own conclusions as to the evidence even though it had not heard from the witnesses concerned and had substituted its own view for that of the employer. It had also failed to apply the range of reasonable responses test in not addressing whether or not the decision to proceed with the re-scheduled disciplinary hearing in the Claimant's absence was within the range of reasonable responses. Further, the ET had not identified what failings there were at the initial dismissal stage and whether those were remedied by the appeal, nor explained why any such failings had not been remedied by the appeal.

Accordingly, the ET's decision could not stand and the case was remitted for a fresh hearing before a new ET.

**Internal appeals
*Did an internal appeal cure deficiencies in the original disciplinary process? Possibly, said the EAT in [Biggin Hill Airport Ltd v Derwich ]()*UKEAT/0043/15/DM, although an ET would need to decide.

The Claimant suggested that her friend, a Ms King, should apply for a supervisory position at Biggin Hill airport. Miss King was successful and before taking up her new post she took the step of "unfriending" the Claimant and her colleagues on Facebook. That did not go down well with the Claimant and some of her colleagues and the Claimant and four of her colleagues raised a complaint about Ms King's appointment. The Managing Director rejected that collective grievance and wrote to the Claimant and other members of staff informing them of that fact and also that he was aware that some staff members had been cold-shouldering Ms King because she had "unfriended" them on Facebook and that a "Witch" image had been placed on Ms King's computer as a screensaver.

The MD then interviewed Ms King, the Claimant and three other members of staff. His inquiries discovered that the previous evening the Claimant and other members of staff had used Google to search for images using the terms "Witch", "middle finger", "one finger death punch", "up her arse" and "up your crack". The MD also learned that a recently appointed security officer had told the Claimant's line manager that she had observed the Claimant and her colleagues making obscene gestures towards Ms King behind her back.

The Claimant was suspended pending a disciplinary hearing. After the disciplinary hearing (but before making any disciplinary decision), various interviews were carried out by the hearing manager with staff members. But the results of those interviews were not disclosed to the Claimant before she was sent a letter summarily dismissing her for gross misconduct.
The Claimant pursued an internal appeal. By the time of the appeal, the Claimant had been given copies of all witness statements taken during the investigation which had not previously been disclosed to her. The appeal was dismissed and various claims, including unfair dismissal, were made to an ET.

The EJ directed himself to various well-known authorities on the section 98(4) fairness question, including Taylor v OCS Group Ltd [2006] IRLR 613. That case disapproved of the distinction between an internal appeal by way of re-hearing (which may cure a procedural defect at the initial dismissal stage) and a review (which did not). The question is one of fact for the ET - did the appeal cure any earlier procedural deficiencies?

The EJ found the dismissal unfair, expressing various concerns in relation to the original disciplinary hearing:

* the "charges" alleged against the Claimant (save in respect of one matter) were not specific. They did not identify precisely what it was alleged the Claimant had done or omitted to do; * similarly, no reference was made to "gross misconduct" or the terms of the disciplinary procedure relied on for such a charge; * the Claimant was not provided in advance of the hearing with copies of the various interviews or other documents relied on by the Respondent; * the Claimant had little time to prepare her case and, in the absence of copies of the relevant evidence, no opportunity to prepare evidence in rebuttal; * the employer carried out further investigations following the hearing of which the Claimant had no notice or knowledge or opportunity to rebut.

The employer appealed to the EAT, principally contending that the EJ had failed to deal with the effect of the internal appeal.

Effect of appeal
The EAT agreed that the effect of the internal appeal might have been to cure those deficiencies because:-

* even if the charges were not made plain to the Claimant before the hearing, she was well aware of them by the time of the appeal because they were clearly articulated in the dismissal letter; * the suspension letter contained a copy of the disciplinary procedure, which included offences said to amount to gross misconduct; * all notes of interview including those not provided before the original hearing were provided to the Claimant some six days before the appeal hearing; * by the time of that appeal hearing the Claimant had had sufficient time to prepare her case; * the Claimant had full knowledge of the employer's further investigations by the time of the appeal.

Accordingly, the employer had made out its principal ground of appeal. Therefore the EJ's conclusion that the dismissal was unfair could not stand. The question of unfair dismissal was therefore remitted for hearing by a fresh ET. The new ET could reconsider questions of fairness, contribution, Polkey and remedy in the light of its findings.

In both the Herlock-Green and Derwich cases, there were successful applications for costs in terms of the EAT fees paid (there was an initial fee of £400 followed by a hearing fee of £1,200 in each case). Costs (not exceeding the amount of any fee paid by the appellant) may be awarded against a respondent pursuant to Rule 34(2A) of the EAT Rules 1993 where an appeal is allowed (in full or in part).

In Herlock-Green the EAT commented that "it is not an unreasonable expectation that the successful party will recover these fees" (see also the observations in Look Ahead Housing and Care Ltd v Chetty and Anor . But the EAT did not have clear information as to the Claimant's means. The best evidence was her ET statement, where she spoke of her difficulties in mitigating her loss and finding alternative work. On the other hand, she paid for representation below and before the EAT. The Judge noted that the Respondent did not seek (either in advance of lodging the appeal or before incurring the hearing fee) to warn the Claimant of the risk of such an application or to ask her to provide a statement of means for the EAT to take into account. The Claimant was therefore ordered to pay £400 towards the Respondent's costs incurred by way of EAT fees.

In Derwich the EAT pointed to the fact that the appeal was resisted after the Claimant had legal advice but still pursued the matter to a hearing. However, with a net income of £900 per month and essential outgoings of £818 per month, there was a limited order of £400 in respect of the initial fee and £600 in relation to the EAT hearing - a total of £1,000, payable at the rate of £50 per month.

Practice point: It seems to be becoming increasingly normal for successful EAT appellants to get an order for their fees in the EAT. But to stand the best chance of achieving an order, the ground needs to be laid warning of the risk of such an application (if appropriate to do so) and asking for a statement of means to be provided for the EAT to take into account.

Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator. His blog on new employment legislation can be found here.

Published: 06/08/2015 16:48

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