NSM Music Ltd v McArdle UKEAT/0516/09/RN

Appeal by respondent against a decision that the claimant was unfairly dismissed, and that the claimant should be awarded compensation for loss of earnings while he re-trained as a teacher. The claimant cross-appealed, claiming that his dismissal should have been found to be automatically unfair and that his compensation should have been uplifted. Cross appeal failed. Appeal allowed on the compensation issue only and remitted to the same Tribunal.


Appeal No. UKEAT/0516/09/RN



At the Tribunal

On 7 April 2010







Transcript of Proceedings



For the Appellant

Instructed by:
SFS Legal Solicitors
Barkby House
Barkby Road

For the Respondent

Instructed by:
Cohen Cramer Solicitors
St George House
40 Great George Street




Only issue on which we allowed the appeal was whether the Employment Tribunal had erred in law in concluding the Claimant could be compensated for electing to train as a teacher. The Employment Tribunal failed to make sufficient findings of fact as to whether this was a realistic mitigation of loss or was this a decision to make a career change.

  1. This is an appeal and cross appeal from the decision of the Leeds Employment Tribunal dated 7 September 2009. We have had the benefit of representation of a very high order. We do not think Mr Sugarman or Mr Sawtell quite appreciate the extent to which we are grateful for the way in which this case has been conducted. The employer has appealed and the employee has cross appealed.
  1. The Claimant was employed by the Respondent. The Respondent company was concerned in manufacturing and supplying jukeboxes to operators and bar owners. A customer of the Respondent employer was a public house called the "Dog and Parrott". The Claimant in this case got up a mock disc and put it in rather insulting terms, so instead of the public house being referred to as the "Dog and Parrott", it was referred to in a rather tasteless way as the "Dog and Wanker".
  1. Now the Tribunal considered all these matters at length and they were severely critical of the way in which the employers acted. They said, and their reasons are set out in copious detail, that the Respondent company misleadingly said to the Claimant that the disc on which this offensive word had been used had in fact been sent to the public house. The Employment Tribunal went on to make various findings about how the matter was dealt with in a series of findings of fact which are set out in para. 4 onwards of the decision.
  1. The Employment Tribunal made a finding that the Respondent company did not have an honest belief that the Claimant had committed an act of misconduct. The Chief Executive made the decision to dismiss even though he had not been present at the disciplinary hearing and the Tribunal accepted Mr Sugarman's submission that Mr Agabeg and/or Dr Sanghera had come to the view that they were going to dismiss the Claimant before the disciplinary hearing was held. In cross examination Mr Agabeg was reduced to stating the reason for dismissal was the Claimant had written offending words on the disc. The Claimant's explanation was that the disc was never intended to be sent to a customer. The Claimant has cross appealed on the basis that the statutory disciplinary procedure was not complied with in view of the finding of fact that the employer had decided to dismiss him before the disciplinary hearing. It is said there was no compliance because looking at the statutory wording, the whole point and purpose of this statutory procedure was to prevent an employer taking action without giving an employee a chance to be heard. It is said that cannot happen when the decision to dismiss has already been taken.
  1. Although not absolutely binding, we see absolutely no reason at all to depart from the reasoning set out in the Scottish Employment Appeal Tribunal decision by Lady Smith in the case of Fitness Solutions Scotland Ltd v David Park UKEATS/0032/09/BI. In that case the Honourable Lady Smith at para. 33 makes it clear that whether a disciplinary procedure is a sham, in the sense that the decision had already been taken, is not a relevant consideration in considering whether the dismissal procedures have complied with the statutory provisions set out in Part 1 of the 2002 Act. Such a finding of fact would be highly relevant in considering whether the dismissal is fair or unfair. We accept the submission made by Mr Sawtell, on behalf of the employer, that the statutory provisions are concerned with the procedural form not with mindset of the employer. As is noted in para. 32 of the judgment in Fitness Solutions Scotland Ltd there is a clear distinction to be drawn between deciding to do something and acting to implement such a decision. An unimplemented decision has by definition subsumed within it the possibility of revocation. Fitness Solutions followed the EAT decision of Smith Knight Foy Ltd v McCoy UKEAT/0245/08 which had held that "action taken" refers to the dismissal itself in the statutory dismissal procedure. In this case we dismiss the employee's cross appeal. We can find no error of law in the way in which the Employment Tribunal approached this matter.
**The Appellant's Grounds of Appeal**
  1. What has been argued on behalf of the Appellant is that the Tribunal at paragraph 22 having set out the various issues that there were, said that the dismissal was unfair under the provisions of s98(4) of the 1996 Act. The Tribunal considered whether the provisions of s98A(2) of the 1996 Act applied and decided there were so many elements of unfairness in the Respondent's approach to the matter, they had not been shown as deciding to dismiss the Claimant if they had followed the proper procedure. That conclusion could have been expanded. It was somewhat elliptical but despite the persuasive argument of the solicitor appearing for the Appellant we are bound to say at the end of the day, we consider that it was open on the evidence for the Employment Tribunal to make that decision.
  1. The Tribunal said at paragraph 23 for similar reasons that the principle laid down in Polkey v AE Dayton Services [1988] AC 344 could not be applied. Now, that is too short a statement. The position is that if the Respondent employer proves that the employee would have been dismissed if there had been a fair and proper procedure, then there is no unfair dismissal under s98A(2) of the 1996 Act. However, it is open for a Tribunal to make a deduction where, although it was not probable that he would have been dismissed nevertheless, there was a percentage chance of a dismissal. If there is a 51% chance on the balance of probabilities an employee would have been dismissed, then the provisions of s98A(2) are engaged, but the Polkey principle can still apply for a smaller chance of dismissal.
  1. It is argued on behalf of the Appellant that the Tribunal made a finding that the reduction should be of the nature of a third because what the Claimant did was to place this disc, a serial number on the disc, put paperwork, and these steps were only referable if it was going to be sent out. He wrote the words "Dog and Wanker" on it, and the person to whom it was a recipient, Mrs Sagoo, was new to the job and had a backlog of work. It would have been sensible if the Claimant, the Tribunal said, had told Mrs Sagoo that the disc was not for dispatch, and if he had borne in mind the importance of the customer, the fact that the customer was awkward and the fact the disc could be used by the customer. The Tribunal found that these actions constituted cavalier and foolish conduct on behalf of the Claimant and reduced the compensatory award to reflect that by a third.
  1. The Appellant's argument is if you are reducing it by a third, it ought to have been considered whether there was a chance of that conduct raising a realistic chance there could have been a fair dismissal. We found this argument persuasive. What Mr Sugarman on behalf of the Claimant said was this: it is perfectly proper to make a compensation award which is reduced by the reason of contributory fault on the facts as found by the Employment Tribunal as the employer has not here crossed the threshold of showing that the employer could fairly have dismissed. Where that is the case it is submitted there is no need to make a Polkey analysis. The Tribunal do not set it out as well as could be but that could be said of many decisions.
  1. In essence the Respondent's argument is that this is not a case in which the Employment Tribunal can be criticised for not engaging in the speculative what might have been Polkey exercise. It is contended that the way in which the Claimant was dismissed was so fundamentally flawed that the Polkey argument had no application because the Employment Tribunal had made the following findings of fact:-

(a) That the real reason for the dismissal was not that alleged.

(b) That there was no honest belief in the reason alleged, let alone a reasonable belief.

(c) That the decision to dismiss was made before finding out the Claimant's account in any disciplinary procedure and the decision was made by someone who was not there to listen to the evidence.

(d) It is implicit in the Employment Tribunal's decision that on the basis of what the employer believed about the employee's misconduct no reasonable employer would have dismissed an employee for a tasteless joke which had not gone beyond the confines of the workplace.

We have been referred to evidence given which did not surface in the decision that the offending phrase had gained a certain currency within the workplace without incurring managerial censure. We do not consider that any criticism can be made of the Tribunal's decision to reduce the compensation they did on the basis that the Claimant by his own behaviour contributed to his own dismissal. However, we consider on the basis of the findings of fact made by the Employment Tribunal it was open to them to feel that the Polkey exercise was not necessary.

  1. The only matter on which we do allow an appeal is on the basis of the award of compensation. Now we have looked at this with care, but we have if I may say so, brought what we hope is a measure of robustness to this and it is this. We do not consider the Tribunal has approached this in a way that clearly delineates the steps they have taken in reaching the conclusion. We can see the finishing post, we cannot see the route that they took.
  1. They found on these facts that after his dismissal the Claimant began working for the Lofthouse Gate Working Men's Club on a temporary basis. He applied for a permanent position but was unsuccessful and he stopped working for that organisation on 26 September 2008. He then looked for alternative work without success. On or about 26 October 2008 he began a one year BA Honours course in Performing Arts which would lead to a degree enabling him to study on a PGCE course in order to become a teacher. The Tribunal found and decided the Claimant made reasonable attempts to mitigate his loss and his decision to return to full time education was reasonable in all the circumstances. The Tribunal found, as an aside that, the Claimant would receive full pay of a teacher with effect from 1 September 2011.
  1. In view of his reasonable attempts to mitigate his losses the Tribunal decided it was just and equitable that the Respondent should be ordered to pay compensation in respect of the Claimant's future losses and they therefore went on to assess his loss. We are not saying the Tribunal could not reach that decision. There may be circumstances in which the Tribunal can reach that decision, but we are concerned that the notes of evidence refer to the Claimant saying, that at one stage he did not want to pursue any further IT qualifications, and at another stage he had decided to become a teacher because there was always going to be teachers. If you are an unemployed miner from Barnsley, a trawlerman from Grimsby or a potter from Stoke-on-Trent, there may come a time when quite simply the only way you are going to get employment is to retrain. But on these findings of fact, this Claimant was only out of work for less than four weeks – 26 September to 22 October.
  1. There was no finding of fact by the Tribunal as to how much he had looked about for other employment; there was no overall finding of fact as to the level of unemployment in that particular area with the skills he had; there was no finding of fact as to how long he would have been or that they would have expected him to be before he found a job at or about the same level, be it six months, 12 months or even up to 2 years. It is just this – the Tribunal found that aside the Claimant made reasonable attempts to mitigate his loss and the decision to return to full time education was reasonable in all the circumstances.
  1. We do not think that this sets out with a particularity required. Whether or not the decision to retrain as a teacher was based on the realistic assessment of the job market with people of his skills, or whether this is a comparatively young man at the age of 28 or thereabouts, deciding he wanted to try a new career, we do think on this issue of causation the Tribunal should have made further findings of fact along the course that we have indicated. We think there is considerable force in what Mr Sugarman says, that if the Notice of Appeal had been more focused then there could have been an application under the Burns-Barke procedure for the Employment Tribunal to have expanded their reasons, but on that issue, and on that issue alone, we send the case back to the same Tribunal; we consider the circumstances are such that it should be heard by them to consider again the issue of compensation and the length.
  1. We do urge the parties to, if one may say so gently, have a degree of proportion about this. This is a matter which we would like to think they could make some attempts to resolve, through alternative dispute resolution and the like, so the position is we do not disturb the finding that the Claimant was unfairly dismissed. We do not disturb the finding that he contributed to that to the extent set out as far as his compensatory award, but we do remit the matter on that sole issue as to the same Tribunal to reconsider the issue of the compensatory award, in particular their decision that he should be compensated for the length of time he took to train and qualify as a teacher.

Published: 28/07/2010 09:33

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