The claimant allegedly made a racist comment to a colleague. A disciplinary hearing followed and found the claimant guilty of making the comment and he was dismissed. His internal appeal against the dismissal failed and he brought unfair dismissal proceedings to the Employment Tribunal. The ET found in his favour (although it was not automatic unfair dismissal), saying that the dismissal fell outside the band of reasonable responses, but more importantly they said that the respondent had failed to discharge the burden of proof, that the dismissal was fair, because they had not performed an adequate investigation. The ET also ruled against any Polkey reduction, concluding that they could not say what witnesses would have said and what conclusions would have been reached as a result, if a fair procedure had been followed. The ET could find no contributory fault against the claimant and then finally assessed compensation based on a future period of loss of 18 months.

The respondent appealed on the following grounds; 1) the burden of proof; 2) Polkey and s98(A)(2); 3) contributory fault; and 4) period of loss. The EAT agreed with the respondent that on ground 1 there was a clear error of law: in cases of unfair dismissal, the burden of proof does not shift to the employer, it is neutral. As far as the other grounds were concerned, the ET had misunderstood Polkey and s98(A)(2) of the ERA,  it had failed to decide on the balance of probabilities whether or not the claimant had committed an act of misconduct when considering contributory fault and finally it had not explained its reasons for assessing the period of loss at 18 months. On the cross-appeal, the ET agreed with the ET that the respondent had complied with the Disciplinary Dismissal Procedures, so the dismissal was not automatically unfair.

__________________

Appeal No. UKEAT/0287/10/ZT

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 23 November 2010

Before

HIS HONOUR JUDGE BIRTLES

SIR ALISTAIR GRAHAM KBE

MS G MILLS CBE

NETWORK RAIL INFRASTRUCTURE LTD (APPELLANT)

MR K MARKS (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant MR ADAM OHRINGER (of Counsel)
Instructed by:
Messrs Kennedys Solicitors
25 Fenchurch Avenue
London
EC3M 5AD

For the Respondent MR MICHAEL ROBSON (Representative)

UNFAIR DISMISSAL

Reasonableness of dismissal

S.98A(2) ERA

Claimant dismissed for gross misconduct. Employment Tribunal found unfair dismissal but (a) placed the burden of proof on the Respondent instead of applying a neutral burden of proof. It also misunderstood s.98A(2) ERA 1996; failed to make a Polkey finding; failed to make a finding on contributory fault; and failed to give any reasons for assessing the period of loss. A cross appeal on s.98A(2) ERA 1996 dismissed. Case remitted for a hearing before a fresh Employment Tribunal.

1. This is an appeal from an Employment Tribunal sitting at Bedford on 3 and 4 March 2010. The Employment Tribunal consisted of Employment Judge O'Rourke; the lay members were Mr J S Dibnah and Mr D Ross. The Employment Tribunal decided that the Claimant, Mr K Marks, was unfairly dismissed but that he was not entitled to a separate claim for seven days' pay in lieu of holiday. That part of his claim was dismissed.

1. The Respondent at the Employment Tribunal, Network Rail Infrastructure Ltd, appealed against that judgment by Notice of Appeal received at the Employment Appeal Tribunal on 14 April 2010. Subsequently there was a cross-appeal by Mr Marks which was received at the Employment Appeal Tribunal on 22 July 2010. Both the appeal and the cross-appeal were put forward to a full hearing and consolidated. The appeal and cross-appeal have been heard by us this morning.

1. The Appellant has been represented by Mr Adam Ohringer of counsel and the Respondent has been represented by Mr Michael Robson who is a lay representative. Both Mr Ohringer and Mr Robson appeared before the Employment Tribunal.

1. The Claimant, Mr Marks, was employed by the Respondent as a track charge man for approximately six years until 29 January 2009 when he was dismissed for gross misconduct. The allegation of gross misconduct was this: on 9 November 2008 it was alleged that Mr Marks had said to a Mr Liston, a black colleague that "there is only one problem with you blacks… that you breathe". Mr Liston complained to his manager and the complaint was put in writing (Appeal bundle page 54). The Claimant was suspended on 13 November 2008 (Appeal bundle page 56). The complaint was investigated by a Mr Pursgrove on behalf of the Respondent and statements were taken from potential witnesses.

1. By a letter dated 16 January 2009 the Claimant was called to a disciplinary hearing. The letter (Appeal bundle pages 76 to 77) setting out the charge against him said this:

"On Sunday 9th November 2008 you made inappropriate, racial comments towards Howard Liston which are in breach of the Equal Opportunity and Harassment Policies."

1. The letter informed the Claimant of his right to be represented and enclosed copies of the statements compiled during the investigation and a copy of the disciplinary procedure. The Claimant was warned:

"If you are found guilty of gross misconduct, you may be dismissed without notice or pay in lieu of notice."

1. The disciplinary hearing took place on 29 January 2009; the Claimant was represented by his trade union. The disciplinary manager, Mr Beckett, concluded that the allegation was well founded and summarily dismissed the Claimant. That dismissal was confirmed in writing by a letter dated 5 February 2009 (Appeal bundle pages 99 to 100). The letter advised the Claimant of his right of appeal.

1. The Claimant appealed against his dismissal by an email dated 7 February 2009 (Appeal bundle page 101). The appeal hearing took place on 30 July 2009 and the Claimant was again represented by his trade union. The appeal was heard by a Mr Griffiths who confirmed the Claimant's dismissal. The outcome of the appeal was confirmed in a letter dated 13 August 2009 (Appeal bundle page 132).

1. The Appellant concedes, for the purposes of this appeal, that the evidence it collected during the investigative, disciplinary and appeal stages was not clear cut. It may be helpful to summarise the evidence. The Respondent had the following evidence supporting the complaint: (1) Mr Liston's account as the complainant (Appeal bundle pages 54 and 57 to 59); (2) the statement from Mr Stratton who was present as a witness to the comment and corroborated Mr Liston's account (Appeal bundle pages 51 to 52 and 60 to 61); (3) the statement from Mr Cockrell, who was not a witness but confirmed that Mr Liston had complained about a racist remark on that day (Appeal bundle pages 64 to 65); (4) a statement from a Mr Mills who confirmed that there was a bad atmosphere on the day in question (Appeal bundle page 67); and (5) a statement from a Mr Dean saying he had previously heard the Claimant make racist jokes to Mr Liston (Appeal bundle page 63).

1. Against that evidence the Respondent had the following evidence disputing the substance of the complaint: (1) the allegation was denied by Mr Marks himself (Appeal bundle pages 71 to 72); (2) a Mr Thompson was present at the time the remark was alleged to have been made but heard nothing (Appeal bundle page 62); and (3) there were character references supporting the Claimant (Appeal bundle page 70 and 81-89).

1. This appears at appeal bundle pages 1-8. The reasoning of the Employment Tribunal is very unclear. We regret to say that it failed to make the required findings of fact which by law it is required to do. We again have to refer to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 Schedule 1 Rule 30(6). It says this:

"(6) Written reasons for a judgment shall include the following information -

(a) the issues which the Tribunal or Employment Judge has identified as being relevant to the claim;

(b) if some identified issues are not determined, what those issues were and why they were not determined;

(c) findings of fact relevant to the issues which have been determined;

(d) a concise statement of the applicable law;

(e) how the relevant findings of fact and applicable law have been applied in order to determine the issues; and

(f) where the judgment includes an award of compensation or a determination that one party make a payment to the other, a table showing how the amount or sum has been calculated or a description of the manner in which it has been calculated."

1. In our judgment the judgment of this Employment Tribunal does not comply with Rule 30(6)(c); that is there are inadequate findings of fact relevant to the issues which have been determined. Mr Robson argued strongly that if one read the judgment as a whole, one could find sufficient findings of fact in it to support the judgment. We regret we cannot agree. The Tribunal did correctly identify in its judgment, the issues which it had to determine both in respect of unfair dismissal (section 1) and holiday pay (section 2). It set out briefly the relevant law in section 3 and then had a very short background in section 4. It then has a separate section of evidence and facts, section 5. That is the section which we consider to be seriously deficient. It contains less than adequate findings of fact and contains much comment. The conclusions of the Tribunal are at section 6.

1. The Employment Tribunal says this:

"We find that the dismissal has been unfair for the following reasons:

6.1 Following the Burchell and the 'band of reasonable responses' tests, we do not consider that the investigation carried out by the Respondent was one that fell within the band of reasonable responses of the average employer and that therefore the Respondent has failed to pass those tests.

6.2 Section 98(4)(a) of the Employment Rights Act enjoins us to consider the size and the administrative resources of the Respondent in assessing the reasonableness of their behaviour and we find that an organisation with many thousands of employees and extensive HR support should have, and could have, conducted this procedure fairly, but they did not.

6.3 The points raised by Mr Ohringer not, already dealt with, we comment on as follows:-

* He asks us to consider the evidence of the Complainant and its corroboration by Mr Stratton. As already stated, it is not for us to determine the truth or otherwise of the allegation or any of the alleged motivations advanced by the Claimant for Mr Liston to make that allegation. We have to balance, as did the Respondent, conflicting evidence, but the burden of proof here is on the Respondent to satisfy us that the dismissal was fair and without adequate investigation, they cannot do so.

* In respect of the submission concerning Section 98(A)(2) of the Employment Rights Act, we do not find that this was an automatic unfair dismissal, as the statutory procedures were complied with.

In respect of the Polkey argument, it is impossible for this Tribunal to come to any valid conclusion on the likely outcome in this case, had a fair procedure been followed. We do not know what witnesses would have said and what conclusions would have been reached as a consequence. Therefore we made no finding in respect of Polkey*.

* As we make no finding of fault against the Claimant, we cannot determine the assertion of contributory fault."

1. The Tribunal then go on to consider remedy and refuse to order reinstatement. The judgment in respect of compensation is at paragraph 8.1. The Tribunal say this:

"8.1 We heard evidence from both the Claimant and Mr Griffiths, on behalf of the Respondent, concerning attempted mitigation by the Claimant in the interim period between dismissal and the Hearing and the likely future loss to be sustained by the Claimant in respect of his efforts to find employment in the future and also likely retirement ages for employees of Mr Marks' job description.

9. Compensation

The Respondent is ordered to pay to the Claimant, the sum of £66,465.00, as set out in the attached Schedule."

1. I should add that we were told by both Mr Ohringer and Mr Robson that following the evidence that the Tribunal heard in respect of compensation the parties were told orally at the Tribunal that the period of future loss would be one for 18 months and they were invited to agree the amount of compensation in the light of the Tribunal's judgment. They did so and it is in the form of the Schedule attached to the judgment at Appeal bundle page 8.

1. These appear at EAT bundle pages 11-19. We take each in turn.

1. Mr Ohringer submits that the burden of proof when applying section 98(4) of the Employment Rights Act 1996 to determine the fairness of the dismissal is neutral. He refers us to a number of authorities, including Maund v Penwith District Council [1984] IRLR 24. He also refers us to Post Office Counters v Heavey [1990] ICR 1 and more recently Cancer Research UK v Mr J R Harding, an unreported decision of this Tribunal on 16 October 2010.

1. The Tribunal's judgment on this point is as I have read it already. The only reference to the appropriate burden of proof is in paragraph 6.3: the first bullet point. The Tribunal say this:

"[…] but the burden of proof here is on the Respondent to satisfy us that the dismissal was fair and without adequate investigation, they cannot do so."

1. It is quite clear to us that that is an error of law. The burden of proof in respect of the fairness of the dismissal and the adequacy of the investigation is neutral. There is no burden of proof on the employer in respect of those matters. That is an error of law. Mr Ohringer referred us to the decision of the Court of Appeal in Maund v Penwith District Council [1984] ICR 143. At page 152 letters A to D Griffiths LJ said this:

"We are therefore faced with the fact that the Tribunal misdirected themselves on the burden of proof. This would not necessarily be fatal if the evidence was such that they would inevitably have arrived at the conclusion, even if they had directed themselves correctly. In such a case it would be a waste of time and money to send the decision back for reconsideration by the Tribunal. We have been urged by Mr Buxton that this is such a case. He points out that the Tribunal found that only two councillors were shown to have had personal antagonism towards the employee and on the authority of Smith v Hayle Town Council [1978] ICR 996 the Tribunal were entitled to regard such evidence as wholly insufficient to establish the reason in the minds of those two councillors as the principle reason for the dismissal. For a time I was much impressed by the view that would be a waste of time to send this case back, but when there is an error of law on the burden of proof it requires a very strong case to say that it can have had no effect on the decision."

1. There was evidence, albeit apparently not very impressive, from two other councillors of an impression that other councillors voted to get rid of the employee because of incompetence or his trade union activity. Furthermore, the Tribunal itself said:

"We have found the case one of great difficulty and we are anxious to make it clear that we have considered all the evidence which was put before us over two days."

1. In this case we have anxiously considered the effect of this misdirection. However, while we share the concern of Griffiths LJ we consider that it is only right that in this point the case be remitted to a fresh Tribunal for a full re-hearing. We do so for these reasons.

1. First, there are other grounds of appeal on which we allow this appeal. Second, it is quite clear that this Tribunal have found the issue of whether the complaint against Mr Marks was indeed justified on the evidence heard by the employer and indeed by the Tribunal. Third, it is not a case where we can confidently say that despite the error on the burden of proof the result would have been the same; that is a finding of unfair dismissal in Mr Marks' favour.

1. We can deal with these together. At paragraph 6.3, third bullet point, the Tribunal said this:

"In respect of the Polkey argument, it is impossible for this Tribunal to come to any valid conclusion on the likely outcome in this case, had a fair procedure been followed. We do not know what witnesses would have said and what conclusions would have been reached as a consequence. Therefore we made no finding in respect of Polkey."

1. In bullet point two the Tribunal said this:

"In respect of the submission concerning Section 98(A)(2) of the Employment Rights Act, we do not find that this was an automatic unfair dismissal, as the statutory procedures were complied with."

With some hesitation we think the Employment Tribunal misunderstood the effect of section 98A(2) and, as a result, failed to make necessary findings.

1. Section 98A(2) says this:

"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."

1. The Tribunal in our judgment misunderstood the effect of section 98A(2) and, therefore, failed to make a decision on this point. It did not consider whether the Respondent could fairly have dismissed the Claimant even if the correct procedures had been followed.

1. As far as the Polkey point is concerned, the law has been authoritatively stated by the then President, Elias J - now Elias LJ - in Software 2000 Ltd v Andrews [2007] ICR 825. Elias J stated that where a section 98A(2) and/or a Polkey argument has been raised by a Respondent employer, the Tribunal must consider all the material before it in considering whether the Claimant's employment would have come to an end in any event. This will involve an element of speculation but the Tribunal should not shy away from this task unless the evidence:

"[…] is so unreliable that the Tribunal may take the view that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction on the evidence can properly be made".

1. The Tribunal can then come to a number of conclusions of which the Employment Appeal Tribunal then identified. Even if there is insufficient evidence to determine that there was at least a 50% chance of the dismissal taking effect in any event there will often be evidence suggesting the dismissal might have occurred and the Tribunal should reduce the compensatory award to reflect this chance. In this case we regret to say that the brief statement by the Employment Tribunal at paragraph 6.3 bullet point three is, in our view, a clear case where the Employment Tribunal has turned away from reaching any conclusion on what is a straightforward point.

1. The evidence which I have referred to at the beginning of this judgment was all in front of the Employment Tribunal. It was a straightforward matter for the Tribunal to apply its mind to the quality of that evidence and decide whether there should be a reduction under section 98A(2) and/or Polkey. For the sake of completeness we make it clear that this point is not restricted to a redundancy situation but applies to unfair dismissal (see the observations of Lord Johnston in Fisher v California Cake & Cookie Limited [1997] IRLR 212). We, therefore, allow the appeal also on grounds 2 and 3.

1. It is clear that the Tribunal were invited by Mr Ohringer in his written and oral submissions to assess contributory fault. The Tribunal's conclusion on that is at paragraph 6.3 bullet point four where they say this:

"As we make no finding of fault against the Claimant, we cannot determine the assertion of contributory fault."

1. In our judgment it is for the Tribunal to decide on the balance of probabilities whether the Claimant has committed an act of misconduct which contributed to his dismissal. In London Ambulance Service v Small [2009] IRLR 563 Mummery LJ says this:

"I agree with the EAT that the ET was bound to make findings of fact about Mr Small's conduct for the purpose of deciding the extent to which Mr Small's conduct contributed to his dismissal (see paragraph 44 of the judgment)."

1. In our judgment, again, unfortunately the Employment Tribunal has failed to engage with this issue even though it was specifically raised by the Respondent in its closing submissions. That was also an error of law.

1. The Tribunal made a substantial compensatory award which indeed had to be capped as it had reached or gone beyond the statutory maximum. Part of that award was for future loss of earnings for 18 months. The reasoning of the Tribunal is that which I have read at paragraph 8.1; I do not propose to repeat it. There is nothing in it which either refers to the 18-month period, although we were told and accept by the parties' representatives today that the Tribunal did announce that period, and as a result of that the calculations were worked out as contained in the schedule.

1. However, there is simply nothing in paragraph 8.1, or anywhere else in the judgment - or indeed in the schedule - which explains the reasoning or reasons by which the Tribunal came to an 18-month period of future loss. Mr Robson has strenuously given us reasons why that is an appropriate award. There is much merit in what Mr Robson has said to us about this issue, but the short answer to it is that it does not appear in the Employment Tribunal's judgment and it should.

1. There is no reason which begins to comply with the guidance of the Court of Appeal in English v Emery Reimbold & Strick Ltd [2003] IRLR 710. That again is an error of law. Our conclusions on the appeal are, therefore, that the appeal must be allowed.

1. We have heard submissions from both Mr Ohringer and Mr Robson. We have been referred to the well-known decision in Sinclair Roche and Temperley v Heard & Ors [2004] IRLR 763. In this case we must direct that there be a full re-hearing of the claim by a fresh Employment Tribunal. This judgment is so flawed for the reasons we have attempted to give that we do not think it possible to remit the case to the same Tribunal to re-determine the case based on the evidence it has already heard in accordance with the judgment of this Appeal Tribunal. The only sensible and safe way to give justice to both parties is to order a re-hearing before a fresh Tribunal.

1. The cross-appeal is based upon section 98A(1) and A(2) of the Employment Rights Act 1996. Mr Robson points us to the Tribunal's conclusion on this; it is at paragraph 6.3 bullet point two of the judgment. The only reference to section 98A(2) is here. It says this:

"In respect of the submission concerning Section 98A(2) of the Employment Rights Act, we do not find that this was an automatic unfair dismissal, as the statutory procedures were complied with."

1. Now, it may well be, as I think both Mr Ohringer and Mr Robson have indicated, that the Employment Tribunal misunderstood paragraph 37 of Mr Ohringer's written submissions to it. Both he and Mr Robson had the opportunity of making oral submissions and we understand it that they both took that option. The short paragraph again suffers from the problem we have already indicated in that it is more an assertion rather than adequate reasoning. We do not find that this was an automatic unfair dismissal as the statutory procedures were complied with.

1. The answer in this case is contained in Mr Ohringer's reply to the cross-appeal. Section 98A(1) of the Employment Rights Act 1996, now repealed but applicable at the time, sets out the so-called three steps which an employer then had to comply with to make a dismissal procedurally fair. They were contained in Schedule 2 to the Employment Act 2002. It is not necessary, I think, to set out the detail of that statutory provision for the three steps. However, in this case the Tribunal did list the question of whether the DPPs had been complied with as an issue to be decided in paragraph 1 of its Reasons, so it did address its mind to the issue.

1. On the facts as contained in the bundle before us the Claimant was sent a step one letter on 16 January 2009, setting out the alleged conduct which had led the Respondent to consider disciplining or dismissing him (Appeal bundle page 58). The disciplinary hearing took place on 29 January 2009; this is recorded in paragraph 5.2 of the Tribunal's Reasons and the notes of the meeting are at pages 74-80 of the Appeal bundle. The Claimant was notified of his dismissal at the end of the disciplinary meeting and this was confirmed in writing on 5 February 2009 (Appeal bundle pages 80-81). The Claimant was informed orally and in writing of his right to appeal against the dismissal.

1. The Claimant did appeal against his dismissal and his appeal was heard on 30 July 2009. The Claimant's appeal was dismissed at the end of the meeting and this decision was confirmed in a letter dated 13 August 2009 (Appeal bundle pages 105 and 110). It is, therefore, clear that the material on which the Tribunal could make its conclusion was before it. It is clear on that material that the Respondent did comply with the three steps required by section 98A(1). The Tribunal were, therefore entitled to reach the conclusion that it did on the evidence before it.

1. For those reasons the cross-appeal is dismissed.

1. For the reasons we have endeavoured to give, the appeal is allowed on all five grounds; the cross-appeal is dismissed; the case will be remitted for a full re-hearing before a fresh Employment Tribunal.