1. In this Judgment I refer to the parties as the Claimant and Respondent, as below. This is the Full Hearing of the Respondent's appeal against a Judgment of the Employment Tribunal sitting at Reading (Employment Judge Gumbiti-Zimuto, sitting with members Mr Morley and Mr Gregory over nine days during February and March 2016; "the ET"), sent to the parties on 15 April 2016. Representation before the ET was as it has been before me.

1. By that Judgment the ET, relevantly, upheld the Claimant's claim of unfair dismissal for the purposes of section 98 of the Employment Rights Act 1996 ("ERA"), albeit finding that he had contributed to his dismissal by 10 per cent, and rejecting his complaint of wrongful dismissal. I should also mention that the ET further rejected the Claimant's claim of having been unfairly dismissed or subjected to detriment on grounds of protected disclosure. Those claims no longer concern me, but they were obviously a major focus of the case before the ET.

1. The Respondent (an acronym for South Oxfordshire Leisure Ltd) is a registered charity operating leisure facilities in the public and private sectors. The Claimant originally commenced his employment as a Deputy Managing Director, Head of Business, and Company Secretary on 1 April 2004. In April 2010 he became the Managing Director. As such, the Claimant reported to the Respondent's Board of volunteer Trustees, the Chair of which was, at the relevant time, Mr Booker. None of the Trustees at the time of the events leading to the Claimant's dismissal had been in place when he commenced his employment.

1. Up to September 2014 the Claimant had been highly regarded by the Respondent's Trustees. During a Board meeting that month, however, the Claimant was asked about a matter that was the subject of an ongoing dispute between the Respondent and the Vale of White Horse District Council, to which he objected, considering he was treated unfairly given the of the questions asked of him. The Claimant's reaction to the September Board meeting - treated as a grievance - triggered a series of without prejudice discussions, held with a view to agreeing the terms for the termination of his employment. In the event, no agreement was reached, but the discussions form a relevant part of the background to his eventual dismissal. Indeed, it was during the course of discussions between the Claimant and Mr Booker that, on 10 November 2014, the Claimant was suspended whilst "various matters were considered and procedures put in place". The intention, the ET found, was to suspend the Claimant from work while disciplinary and grievance procedures took place; the disciplinary issues then arising relating to the Claimant's response in the discussions post-dating the September 2014 Board meeting.

1. Prior to the Claimant's suspension, one of the Respondent's Trustees, Mr Robinson, had sent an email to Mr Booker stating that he fully supported "the direction of travel being undertaken". In his evidence to the ET, Mr Robinson said that referred to information that had been provided to the Board to the effect that there was a breakdown in the relationship with the Claimant; he did not accept there was an automatic assumption that the Board should get rid of the Claimant. In any event, an independent consultant was used to investigate the Claimant's grievance, which was rejected; that decision was communicated to the Claimant on 23 December 2014 and he then appealed. At the same time, it appears the Board considered that the initial disciplinary charges it had sought to pursue against the Claimant were withdrawn. Notwithstanding that, however, the Claimant's suspension was continued.

1. During the Claimant's suspension another employee, Mrs Wright, was charged with taking up certain of his responsibilities. Subsequently, on 17 December 2014 she was asked by Mr Booker - in Mr Robinson's presence - to draft a letter of dismissal to the Claimant on the basis that there had been a breakdown in trust and confidence, albeit that Mr Booker said it was in fact a request made in the context of discussion about restructuring. Also during the suspension, members of the Board became more involved in the management of the Respondent. That was particularly true of Mr Robinson, who reported to other Trustees his concerns arising from three projects in which he was involved: that the Claimant had potentially misrepresented financial information, had caused a difficult relationship with the Vale of White Horse District Council, and had presented a defamatory report to the Charity Commissioners.

1. In January 2015, it was determined that the Claimant should face disciplinary proceedings in respect of seven charges arising from the matters identified by Mr Robinson.

1. Returning to the without prejudice discussions between the Claimant and the Respondent, earlier in January 2015 the Claimant had provided a copy of a document that he said was his contract of employment, intending to rely on this in the negotiations. This was in fact an altered and false contract and the ET concluded it was more likely than not that the Claimant was responsible for this falsification. Significantly, the document included material changes from the original contract of employment, for example in respect of the Claimant's notice period, which had been increased from three to fourteen months.

1. Having been presented with this document purporting to be the Claimant's contract of employment and after an investigation carried out by an external IT consultant, the Respondent's Trustees determined that the Claimant should face an additional, eighth disciplinary charge, as communicated to him by an amended version of the disciplinary letter. Mr Robinson carried out the subsequent disciplinary hearing and found the case against the Claimant had been made out. Specifically, he found that charges 1, 3, 4 and 8 were established and amounted to gross misconduct for which the Claimant would be summarily dismissed, a decision communicated by letter of 2 March 2015.

1. The Claimant appealed against that decision, and his appeal was heard on 27 March 2015 by another Trustee, Mr Hampson. The ET observed:

"55. … Mr Hampson was the member of the board who had the least involvement in events leading up to the claimant's dismissal. Mr Hampson had however been involved in discussions as a trustee about various matters which had led to the claimant's disciplinary proceedings.

56. Mr Hampson's approach to the appeal was to treat it as an opportunity for the claimant to explain why he thought the decision to dismiss him was wrong and to refute the allegations. Mr Hampson was not going to open a new investigation."

Mr Hampson concluded the appeal should be rejected and confirmed the decision to dismiss.

1. After the dismissal process, the Respondent further discovered unauthorised pension payments the Claimant had made to himself, contrary to an earlier agreement he had made with Mr Booker. The ET did not accept the Claimant's explanation for those payments and found he had received some £15,860.50 to which he was not entitled. It also uncovered further information relating to payments made for services provided by a company owned by the Claimant and his wife, which gave rise to issues of conflict of interest, in respect of which there was no evidence of the approval of the Claimant's activities by anyone within the Respondent.

1. Having reminded itself that the reason for dismissal was the "set of facts known to the employer or beliefs held by him which cause him to dismiss the employee", the ET observed that Mr Robinson had reached his decision aware of the background and having already been involved with the earlier investigations into the Claimant's role:

"99. Offstage, there were discussions taking place on a 'without prejudice' basis, the purpose of which was to try and agree a termination of the claimant's employment. Mr Robinson went into the disciplinary proceedings in January 2015 fully aware of these matters.

100. The Tribunal is satisfied that before the dismissal, the members of the board were considering the removal of the claimant from his role as managing director, albeit at this stage by agreement. Following the claimant's suspension, Mr Robinson took an active role in the management of the respondent's organisation, attending the office once a week. Mr Robinson began looking into the respondent's finances in more detail and carried out what he described as three projects. As a result of carrying out these projects, Mr Robinson became sufficiently concerned about the respondent's finances to report his findings to the board. All three projects were matters which informed Mr Robinson's decision to dismiss the claimant.

101. Mr Robinson found all the disciplinary allegations against the claimant proved and, in respect of some of the matters, considered that they were sufficiently serious to warrant the claimant's dismissal. These matters were what Mr Robinson genuinely believed amounted to misconduct by the claimant and the reason he dismissed the claimant. The Tribunal is satisfied that the reason for the claimant's dismissal related to his conduct."

1. In relation to the first, third, fourth and eighth charges that Mr Robinson had found to be proved against the Claimant, the ET concluded that there were reasonable grounds for those findings. The eighth charge, of course, related to the falsification of the Claimant's contract.

1. The ET turned to the reasonableness of the investigation. It was concerned about Mr Robinson's prior involvement, specifically:

"103. The Tribunal are troubled by the fact that when Mr Robinson took greater interest in the day to day running of the respondent he carried out the three projects at a time when there was a "direction of travel" heading for possible dismissal of the claimant.

104. The three projects inform the disciplinary charges which the claimant faced. The investigation into the matters under consideration at the disciplinary hearing was in large part carried out by Mr Robinson. At the time that Mr Robinson carried out these investigations, he had already been involved in a meeting where he, together with Mr Booker, requested a letter of dismissal of the claimant. Mr Robinson had expressed agreement with a "direction of travel" that was leading potentially to the claimant's dismissal if agreement for a severance package was not reached with the claimant."

1. Noting the guidance provided by the ACAS Code on Disciplinary and Grievance Procedures 2015 ("the ACAS Code") that "In misconduct cases where practicable different people should carry out the investigation and disciplinary hearing", the ET observed that it would have been practicable for the Respondent to have asked another Trustee to carry out the disciplinary hearing or to utilise the services of an independent consultant as it had for the Claimant's grievance. It was satisfied the Respondent had acted in breach of the ACAS Code.

1. The ET returned to the question of the fairness of the investigation and concluded:

"106. The conclusion of the Tribunal is that this was not a reasonable investigation. It gives the impression of being orchestrated to seek and find a basis on which the claimant could be dismissed once it had emerged that no severance package was being agreed by the claimant with the respondent. In the circumstances, we consider that such an approach to a disciplinary investigation is outside the range of what we would expect of a reasonable employer. In the circumstances, we find the claimant's dismissal was unfair."

1. It did not consider this unfairness was rectified by the appeal process:

"107. We have considered whether the appeal that was conducted by Mr Hampson was capable of curing the defects which we find in relation to the dismissal and our conclusion is that it would not have been possible to cure the substantive defects which occurred in the process up to dismissal without the matter being restarted by somebody entirely independent. In the circumstances, we are of the view that the processes followed by the respondent were not capable of curing the procedural defects that we have found."

1. On the Claimant's claim of wrongful dismissal, the ET concluded that the Claimant had indeed been guilty of gross misconduct in relation to allegation 8, the falsification of his contract. Specifically, the ET rejected the Claimant's account as untruthful and concluded that the evidence showed he had altered the content of the contract in order to use it to his advantage in the negotiations with the Respondent:

"109. … This conduct the respondent found to have been proven and amounting to gross misconduct. The view of the Tribunal is that the claimant's conduct was blameworthy and that it contributed to the reasons for his dismissal."

1. In addition, although the Respondent did not know of it at the time of the dismissal, the payments that the Claimant had made to himself to which he was not entitled - which I take to be a reference to the pension payments - also amounted to a repudiatory breach of contract. The ET concluded that the Claimant's complaint of wrongful dismissal was not well founded and should be dismissed. It further went on to uphold the Respondent's counterclaim against the Claimant in respect of the pension payments.

1. Turning to the question of any deduction in respect of any award on the unfair dismissal claim, the ET considered this question under the headings of contribution and Polkey v A E Dayton Services Ltd [1988] ICR 142 HL as follows:

"109. The Tribunal finds that in manipulating the contract, he provided to the respondent, the claimant had contributed to his dismissal. The claimant has never provided the Tribunal with an explanation for why he presented to the respondent a contract which even on his own account (which we do not accept) he cannot be confident was his own contract of employment. The claimant's evidence on the contract was such that it leads the Tribunal to conclude that the claimant knew that he was presenting a false document to the respondent. We reject as untruthful the claimant's evidence that he presented the contract simply because it was the document he was provided with in November 2014 soon after his suspension. On balance, the Tribunal consider that the evidence shows that the claimant altered the content of the contract in order to use it to his advantage in the negotiations with the respondent. This conduct the respondent found to have been proven and amounting to gross misconduct. The view of the Tribunal is that the claimant's conduct was blameworthy and that it contributed to the reasons for his dismissal.

110. We are satisfied on balance that the claimant did do the matters which are alleged by the respondent. We have concluded that the level of contribution in respect of this is not significant because the respondent was set upon a course to find a reason for the claimant's dismissal by the time the contract was produced by the claimant. Even if the eighth charge was not present we consider that the claimant would have been dismissed. We therefore assess the level of contribution at the low level of 10% because the respondent had set upon a course to dismiss the claimant.

111. We have considered whether this is a case where we can arrive at a Polkey reduction. We have concluded that it is not. The respondent was looking for a way to end the claimant's employment by a compromise agreement or otherwise. Mr Robinson and all the board were of the view that the direction of travel included termination of the claimant's employment.

112. We are not satisfied that a fair process would necessarily have led to the claimant's dismissal or, if so, what chance it would be. For us to make this assessment, it would involve implanting on the part of the board a neutral state of mind which it did not hold. In the circumstances, we do not consider that it is appropriate to conclude that the claimant's case is one which requires a Polkey reduction to be made."

1. The Respondent appeals against the ET's conclusions in the Claimant's favour. It first contends that the ET erred in law in conflating separate findings of gross misconduct, specifically the Respondent's findings on allegation 8 (false contract), when Mr Robinson had not been involved in the investigation, with the other findings of gross misconduct, in which to some extent he had. Secondly, it argues that error fed into the conclusion that there had been a breach of the ACAS Code in respect of allegation 8. Third, and more generally, the Respondent says the ET erred in failing to properly direct itself to consider the discrete aspects of the disciplinary findings that had been made. Had it done so, it would have held that the investigation that it criticised (and found rendered the dismissal unfair) had not led to the finding of gross misconduct in respect of allegation 8. Fourth, on the question of contribution, the Respondent submitted that, having itself found that the Claimant had committed a separate act of gross misconduct in respect of the false contract such as to justify his summary dismissal, the ET ought properly to have found that he had contributed to his dismissal by 100 per cent. Alternatively, the decision to make only a 10 per cent reduction under this head was perverse. Fifthly, in respect of the ET's determination that there should be no reduction under Polkey, the Respondent contended that it had similarly erred in law and/or reached a perverse conclusion. The Claimant resists the appeal, essentially relying on the reasoning provided by the ET.

1. The starting point is section 98 ERA, which provides, relevantly, as follows:

"(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 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."

1. It was for the Respondent to discharge the burden of proving the reason for the Claimant's dismissal and that it was a reason that was capable of being fair for the purposes of section 98(1) and (2). As the ET observed, the reason for the dismissal is to be determined as the set of facts known to the employer or beliefs held by it that caused it to dismiss the employee (per Cairns LJ in Abernethy v Mott, Hay & Anderson [1974] ICR 323 CA).

1. In a conduct dismissal case the ET is assisted by determining the statutory question of fairness having regard to the well-known standards laid down by Arnold J in giving judgment for the EAT in British Home Stores Ltd v Burchell [1980] ICR 303. When applying the Burchell guidance, the ET's role is to review the employer's decision, not to put itself in the position of the employer (Davies v Sandwell MBC , and this is so when considering the investigation and process carried out by the employer as much as the sanction applied (see per Mummery LJ in Sainsbury's Supermarkets Ltd v Hitt.

1. Specifically, on the reasonableness of an investigation, the ACAS Code provides:

"6. In misconduct cases, where practicable, different people should carry out the investigation and disciplinary hearing."

1. As the ACAS Code acknowledges, the involvement of separate people for the investigation and disciplinary stages might not always be possible, and it is not necessarily unfair for the same individual to carry out both (Slater v Leicestershire Health Authority [1989] IRLR 16 CA; Sartor v P&O European Ferries (Felixstowe) Ltd [1992] IRLR 271 CA).

1. Where an ET properly carries out its role in assessing the fairness or otherwise of a dismissal, it is not for the EAT to substitute its view in that regard; specifically, I remind myself of the guidance provided by Elias J, as he then was, in ASLEF v Brady [2006] IRLR 576 EAT:

"55. … The EAT must respect the factual findings of the employment tribunal and should not strain to identify an error merely because it is unhappy with any factual conclusions; it should not 'use a fine tooth comb' to subject the reasons of the employment tribunal to unrealistically detailed scrutiny so as to find artificial defects; it is not necessary for the tribunal to make findings on all matters of dispute before them nor to recount all the evidence, so that it cannot be assumed that the EAT sees all the evidence; and infelicities or even legal inaccuracies in particular sentences in the decision will not render the decision itself defective if the tribunal has essentially properly directed itself on the relevant law."

1. As for the question of any reductions in compensation for unfair dismissal, section 122(2) ERA provides, in respect of the basic award, as follows:

"Where the tribunal considers that any conduct of the complainant before the dismissal … was such that it would be just and equitable to reduce or further reduce the amount of the basic award to any extent, the tribunal shall reduce or further reduce that amount accordingly."

1. As for the compensatory award, section 123, relevantly, provides:

"(1) Subject to the provisions of this section … the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.

…

(6) Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding."

1. In making any Polkey reduction (relevant to the assessment to be made under section 123(1), guidance has been laid down by the EAT, Elias J (as he then was) presiding, in the case of Software 2000 Ltd v Andrews and Ors [2007] ICR 825:

"53. The question is not whether the tribunal can predict with confidence all that would have occurred; rather it is whether it can make any assessment with sufficient confidence about what is likely to have happened, using its common sense, experience and sense of justice. It may not be able to complete the jigsaw but may have sufficient pieces for some conclusions to be drawn as to how the picture would have developed. For example, there may be insufficient evidence, or it may be too unreliable, to enable a tribunal to say with any precision whether an employee would, on the balance of probabilities, have been dismissed, and yet sufficient evidence for the tribunal to conclude that on any view there must have been some realistic chance that he would have been. Some assessment must be made of that risk when calculating the compensation even though it will be a difficult and to some extent speculative exercise.

*

Summary*

54. The following principles emerge from these cases. (1) In assessing compensation the task of the tribunal is to assess the loss flowing from the dismissal, using its common sense, experience and sense of justice. In the normal case that requires it to assess for how long the employee would have been employed but for the dismissal. (2) If the employer seeks to contend that the employee would or might have ceased to be employed in any event had fair procedures been followed, or alternatively would not have continued in employment indefinitely, it is for him to adduce any relevant evidence on which he wishes to rely. However, the tribunal must have regard to all the evidence when making that assessment, including any evidence from the employee himself. (He might, for example, have given evidence that he had intended to retire in the near future.) (3) However, there will be circumstances where the nature of the evidence which the employer wishes to adduce, or on which he seeks to rely, 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 based on that evidence can properly be made. (4) Whether that is the position is a matter of impression and judgment for the tribunal. But in reaching that decision the tribunal must direct itself properly. It must recognise that it should have regard to any material and reliable evidence which might assist it in fixing just compensation, even if there are limits to the extent to which it can confidently predict what might have been; and it must appreciate that a degree of uncertainty is an inevitable feature of the exercise. The mere fact that an element of speculation is involved is not a reason for refusing to have regard to the evidence. (5) An appellate court must be wary about interfering with the tribunal's assessment that the exercise is too speculative. However, it must interfere if the tribunal has not directed itself properly and has taken too narrow a view of its role. … (7) Having considered the evidence, the tribunal may determine: (a) that if fair procedures had been complied with, the employer has satisfied it - the onus being firmly on the employer - that on the balance of probabilities the dismissal would have occurred when it did in any event: the dismissal is then fair by virtue of section 98A(2); (b) that there was a chance of dismissal but less than 50%, in which case compensation should be reduced accordingly; (c) that employment would have continued but only for a limited fixed period. The evidence demonstrating that may be wholly unrelated to the circumstances relating to the dismissal itself, as in O'Donoghue v Redcar and Cleveland Borough Council [2001] IRLR 615; (d) that employment would have continued indefinitely. However, this last finding should be reached only where the evidence that it might have been terminated earlier is so scant that it can effectively be ignored."

1. On the question of contributory fault, section 123(6) requires an ET to consider the conduct of the employee. The guidance offered by HHJ Peter Clark in the case of Optikinetics Ltd v Whooley [1999] ICR 984 EAT is helpful in this regard, specifically:

"(1) Before making any finding of contribution the employee must be found guilty of culpable or blameworthy conduct. The inquiry is directed solely to his conduct and not that of the employer or others.

(2) For the purposes of section 123(6) the employee's conduct must be known to the employer at the time of the dismissal … and have been a cause of the dismissal.

(3) Once blameworthy conduct causing, in whole or in part, the dismissal has been found, the tribunal must reduce the compensatory award by such proportion as it considers just and equitable. …

(4) A finding of contribution under section 122(2) does not require a finding that the conduct is causatively linked to the dismissal. … The wording … grants to the employment tribunal a wide discretion as to whether to make any, and if so what, reduction in the basic award on the grounds of the employer's conduct.

(5) … it is now clear that different proportionate reductions are permissible in relation to the basic and compensatory awards …

(6) The appellate courts will rarely interfere with the employment tribunal's assessment of the percentage reduction for contribution …" (Page 989A-E)

1. More generally, in [Steen v ASP Packaging Ltd ]()[2014] ICR 56 EAT Langstaff J provided the following guidance when applying sections 122 and 123 ERA:

"11. The application of those sections to any question of compensation arising from a finding of unfair dismissal requires a tribunal to address the following: (1) it must identify the conduct which is said to give rise to possible contributory fault; (2) having identified that it must ask whether that conduct is blameworthy.

12. It should be noted in answering this second question that in unfair dismissal cases the focus of a tribunal on questions of liability is on the employer's behaviour, centrally its reasons for dismissal. It does not matter if the employer dismissed an employee for something which the employee did not actually do, so long as the employer genuinely thought that he had done so. But the inquiry in respect of contributory fault is a different one. The question is not what the employer did. The focus is on what the employee did. It is not on the employer's assessment of how wrongful that act was; the answer depends on what the employee actually did or failed to do, which is a matter of fact for the employment tribunal to establish and which, once established, it is for the employment tribunal to evaluate. The tribunal is not constrained in the least when doing so by the employer's view of wrongfulness of the conduct. It is the tribunal's view alone which matters.

13. (3) The tribunal must ask for the purposes of section 123(6) if the conduct which it has identified and which it considers blameworthy caused or contributed to the dismissal to any extent. If it did not do so to any extent, there can be no reduction on the footing of section 123(6), no matter how blameworthy in other respects the tribunal might think the conduct to have been. If it did cause or contribute to the dismissal to any extent, then the tribunal moves to the next question, (4).

14. This, question (4), is to what extent the award should be reduced and to what extent it is just and equitable to reduce it. A separate question arises in respect of section 122 where the tribunal has to ask whether it is just and equitable to reduce the amount of the basic award to any extent. It is very likely, but not inevitable, that what a tribunal concludes is a just and equitable basis for the reduction of the compensatory award will also have the same or a similar effect in respect of the basic award, but it does not have to do so."

1. I again remind myself that the ET will be best placed to make these assessments and the EAT should be slow to interfere (see for example the guidance given in Hollier v Plysu Ltd [1983] IRLR 260 CA at page 263 and Yate Foundry Ltd v Walters [1984] ICR 445 EAT). More generally, I further bear in mind that where a perversity appeal is pursued there is a high threshold; parties seeking to make good that contention on appeal must be able to show that the ET's decision was almost certainly wrong (see Yeboah v Crofton .