West Hertfordshire Hospitals NHS Trust v Evans UKEAT/0398/09/SM

Appeal by respondent against 1) a ruling that the claimant had been automatically unfairly dismissed; 2) application of a 30% uplift to the compensation awarded; and 3) an award for loss of earnings until retirement. Appeal allowed in part: uplift reduced to 10%, and compensatory award to be decided before a differently constituted Tribunal. Automatic unfair dismissal upheld.

The claimant was accused of making racist comments to other employees and invited to a disciplinary hearing to discuss the complaints. The letter inviting her to the meeting did not mention that, if the allegations were proved, the claimant could be dismissed. The meeting was convened, but adjourned, and a second letter inviting the claimant to the re-convened meeting included the warning of dismissal. The claimant was subsequently dismissed. The Employment Tribunal found that the dismissal was automatically unfair because Step 1 of the now repealed disciplinary procedures had not been complied with. They also made a compensatory award which included future loss of earnings until retirement (the claimant was nearly 60 at the time of the hearing) and an uplift of 30%, although they did not give their reasons. The respondents argued that even though the first letter did not inform the claimant that her dismissal was being contemplated, they had enclosed a copy of their Disciplinary Policy containing a clause that indicated dismissal as an option if racial comments were proved. In relation to the uplift applied and the award to retirement, the respondent also claimed that the ET had erred by failing to give their reasons.

The EAT upheld the Tribunal’s ruling on the issue of automatic unfair dismissal: the ET did not err in holding that the first letter did not constitute a Step 1 letter since it neither expressly nor by implication contained a warning that the claimant might be dismissed, and the respondent was in breach of the statutory dismissal procedures by holding a Step 2 meeting before the information complying with Step1 had been provided to the claimant. The Tribunal did not err in awarding an uplift but it was perversely high. Finally, the Tribunal failed to give adequate reasons for basing the compensatory award on loss of earnings until retirement and failed to make findings on the medical ability of the claimant to perform any work up to the age of retirement.

_____________________

Appeal No. UKEAT/0398/09/SM

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 11 June 2010

Judgment handed down on 19 August 2010

Before

THE HONOURABLE MRS JUSTICE SLADE DBE

MR D EVANS CBE

MR S YEBOAH

WEST HERTFORDSHIRE HOSPITALS NHS TRUST (APPELLANT)

MRS A EVANS (RESPONDENT)

JUDGMENT

**APPEARANCES**

For the Appellant

MR ANDREW MIDGLEY (of Counsel) Instructed by: Messrs Capsticks Solicitors LLP 77-83 Upper Richmond Road London SW15 2TT

For the Respondent

MS ASMA NIZAMI (Free Representation Unit)

**SUMMARY**

STATUTORY DISCIPLINE AND GRIEVANCE PROCEDURES

Whether infringed

Impact on compensation

UNFAIR DISMISSAL

Compensation

Mitigation of loss

The principal issues in the appeal concerned the now repealed statutory dismissal procedure in Employment Act 2002 Schedule 2 Part 1 Chapter 1.

The Employment Tribunal did not err in holding that the employer was in breach of the statutory dismissal procedure by failing to warn the employee of the possibility that the disciplinary hearing could result in her dismissal in accordance with Step 1 and Alexander v Brigden Enterprises Ltd [2006] IRLR 422. The giving of such a warning before a reconvened hearing did not cure the defect as the hearing was not restarted after the necessary information had been given. YMCA Training v Stewart [2007] IRLR 185 considered.

The decision of the Employment Tribunal to award an uplift of 30% in the compensatory award was perverse.

The Employment Tribunal failed to make any findings as to the medical ability of the employee to work after her dismissal or as to the availability of suitable work for her. The award of compensation until retirement date was not based on findings of fact.

Compensatory award and 30% uplift set aside. Claim for compensatory award remitted to a different Employment Tribunal for rehearing. 10% uplift to be applied to any compensatory award.

**THE HONOURABLE MRS JUSTICE SLADE**
  1. West Hertfordshire Hospitals NHS Trust ('the Trust') appeals from the judgment of the Employment Tribunal ('ET') entered in the Register on 30 June 2009 ('the judgment') following a hearing which took place on 9 April 2009. The ET found that the Claimant, Mrs Evans, had been unfairly dismissed and awarded her £54,146. Grounds 1 and 2 of the Appeal concern the now repealed statutory disciplinary procedure formerly in Schedule 2, Part 1, Chapter 1 of the Employment Act 2002 ('EA 2002') and consequential finding of 'automatic' unfair dismissal under Employment Rights Act 1996 ('ERA') section 98A(1) and percentage uplift to a compensatory award in the event of its breach. References in this judgment to the statutory dismissal procedure are to the Standard Procedure set out in Schedule 2 Part 1 Chapter 1.
**The Grounds of Appeal**
  1. We refused an application made at the start of the hearing for leave to add a ground of appeal to contend that the ET had erred in failing to inform the parties that they may have been concerned about a breach of the statutory dismissal procedure by the Trust.
  1. The Grounds of Appeal are as follows:

1) The ET erred in law in finding that the Trust had failed to comply with paragraph 1 of the statutory dismissal procedure and that the dismissal of Mrs Evans was automatically unfair pursuant to section 98A(1) of ERA;

2) The ET erred in law in applying an uplift of 30% to the compensation awarded in the circumstances of the case and the decision to do so was perverse.

3) The ET erred in law in that they failed to give reasons for their decision to award compensation for loss of earnings until retirement, alternatively failed to make any finding of fact as to whether Mrs Evans had made reasonable attempts to mitigate her loss, in particular whether she was fit enough to work or apply to work. Alternatively the decision to award compensation until her retirement date was perverse.

Mr Midgley for the Trust withdrew a contention in the grounds of appeal that the ET had erred in failing to make a finding of contributory fault by Mrs Evans.

**Summary Facts**
  1. The relevant facts may be briefly summarised as follows.
  1. Mrs Evans who was born on 26 November 1950 was employed by the Trust from 12 December 1995 until her dismissal on 9 June 2008 as a Health Care Assistant ('HCA'). At the time of the events leading to her dismissal she worked on the Croxley Ward of Watford General Hospital.
  1. A complaint was made that on 5 September 2007 Mrs Evans had a disagreement with another HCA and had said to her, 'you blacks should go back to Africa'. Shortly after this incident one of the nurses, Floriano Bagaiosan (known to his colleagues as Ian), said that several other staff, including himself, had witnessed negative remarks of a racist nature being made by Mrs Evans. These and the original allegation were investigated.
  1. Mrs Evans and those making the allegations were invited to an investigation meeting. The investigation was concluded in April 2008 and the report of the investigation ('the report') concluded that Mrs Evans had made racist comments to colleagues at work on a number of occasions. One of the three recommendations made in the report was for a disciplinary meeting to consider the allegations against Mrs Evans.
  1. By letter dated 11 May 2008 Mrs Evans was asked to attend a formal disciplinary hearing on 19 May 2008 at which the allegation that:

"you made racist remarks whilst at work regarding your colleagues"

would be considered. Mrs Evans was informed that the person who conducted the investigation would call four witnesses and was told that she could bring a representative to the hearing. The Trust's Disciplinary Policy and the Investigation Report were enclosed.

  1. A disciplinary hearing was held on Monday 19 May 2008. The disciplinary panel heard from four witnesses who had provided statements making allegations. Mrs Evans read a prepared statement and also produced a letter from a relative of a patient and an email. The panel noted that other members of staff had made statements during the investigation but had not been called to the hearing. In addition there were a number of members of staff who had been working on the night shift at the time of the incident of 5 September 2007 but whose evidence had not been heard. The disciplinary hearing was adjourned as the panel wished to call further witnesses.
  1. By letter dated 23 May 2008 the Trust invited Mrs Evans to the resumed disciplinary hearing fixed for 9 June 2009. They informed Mrs Evans:

"Following the Disciplinary Hearing held on Monday 19th May 2008, it was decided that the panel wished to call further witnesses, namely Wendy Ogle, Bagaoisan Floriano (Ian), Gabrielle Ridler, Francine Henry-Adams and Gail Mwase. Therefore the Disciplinary Hearing was adjourned and the second part of the hearing will reconvene on:

Date: Monday 9th June 2008

Time: 09:00

Venue: HR Meeting Room, Ground Floor, Admin Block, Watford General Hospital.

Francine Henry-Adams and Bagaoisan Floriano have since provided statements in relation to this investigation and copies of these are enclosed for your information and will form part of the management case presented on 9th June 2008.

Please be aware the hearing will be held in line with the Trust Disciplinary Policy and Procedure. As previously indicated this is a serious allegation that could be construed to be gross misconduct and if substantiated a possible outcome of this hearing could be your dismissal.

Please be advised you are welcome to bring a friend, colleague or trade union representative not acting in a legal capacity to this meeting if you wish."

Thus the letter of 23 May 2008 warned Mrs Evans that the disciplinary hearing could end in her dismissal.

  1. At the reconvened disciplinary hearing on 9 June 2008 Mrs Evans had a union representative. The panel considered a statement from Ian and heard evidence from seven witnesses. Four of these gave evidence that they had heard Mrs Evans make racist comments and some said that she had told them about racist comments which she had made. Mrs Evans was invited to reopen her case and comment on each new point made. The Trust and Mrs Evans were asked to sum up their cases.
  1. After considering the matter at the conclusion of the disciplinary hearing, the panel on 9 June 2008 informed Mrs Evans of their decision. They found the allegations against her 'were proven' and considered that dismissal was the appropriate sanction because 'these were openly and obviously malicious racist comments'. In a letter of 11 June 2008 the Trust set out the decision in full and confirmed the outcome.
  1. An appeal was heard over four days, two in August and two in September 2008.
  1. On 27 August 2008 Mrs Evans lodged a claim for unfair dismissal.
  1. Following the conclusion of the appeal hearing on 19 September 2008 the appeal by Mrs Evans was dismissed.
  1. The ET heard Mrs Evans' claim on 9 April 2009. In her original Schedule of Loss Mrs Evans had stated that she had been unable to work since dismissal and that she could provide supporting evidence for this. She said that she had been assessed for incapacity benefit. It appears that Mrs Evans gave no evidence of any attempt by her to find alternative work of any kind whether full or part time. At the conclusion of the hearing the ET directed Mrs Evans to provide a revised Schedule of Loss together with supporting documentation.
  1. In her revised Schedule sent on 17 April 2009, Mrs Evans stated she was:

"…unable to work and receiving incapacity benefit up to retirement",

and claimed loss of earnings from the date of her dismissal to the date on which she would have retired, 26 November 2010. Mrs Evans also claimed an:

"…uplift for breach of disciplinary and statutory dismissal procedure… uplift requested"

  1. In support of her claim for loss of earnings until retirement Mrs Evans provided a medical report prepared in assessing her claim for incapacity benefit. She had referred to this document but not produced it at the hearing before the ET. The report dated 2 December 2008 is based on a medical examination on 7 November 2008 assessing incapacity for work for the purposes of her claim for incapacity benefit. The doctor writing the report records under the heading 'expected change':

"I advise the claimant's condition should improve significantly within 12 months."

  1. In a letter to the ET dated 21 April 2009, solicitors for the Trust commented on the revised Schedule of Loss submitted by Mrs Evans. Amongst the points made on behalf of the Trust were that:

1) Mrs Evans had failed to mitigate her loss. She had accepted in evidence that she had made no attempt to find alternative work even on a part time basis;

2) There was no evidence to support Mrs Evans' claim that she was unable to work due to illness or that she would remain unable to work until her retirement date of 26 November 2010;

3) No breach of the statutory dismissal procedures had ever been alleged or identified by Mrs Evans and no breach was put to the Trust in the course of the hearing. Accordingly it was submitted that no uplift could properly be applied.

  1. The ET sent its judgment to the parties on 30 June 2009. They held that the Trust had been in breach of the statutory dismissal procedure set out in EA 2002 and that the dismissal of Mrs Evans was automatically unfair. They held at paragraph 7:

"Specifically, they did not send the claimant a "step one letter" before the disciplinary hearing. They realised this between the adjournment of the first part of the hearing and the resumption of the hearing. The respondents admit that they knew that they had left out any warning in the first letter (convening the hearing) that the meeting which she was being asked to attend might end in her dismissal. The second letter inviting her [to] the reconvened hearing on 9 June 2008 (and written to her on 23 May 2008) did contain that warning. However, the various steps set out in the Employment Act 2002 as steps in a disciplinary procedure are exactly that – steps. The statutory requirements are that specific things that must be done in a specific order. A difference in order is a non compliance with the Act. This renders the dismissal an automatically unfair dismissal. On which we make the award below."

  1. If the ET had not found the dismissal of Mrs Evans to be 'automatically' unfair they would have found it unfair for the reasons set out in paragraph 8 of the judgment.
  1. The ET made a compensatory award which included future loss of earnings until the date Mrs Evans will attain the age of 60, the date she would have had to retire had she remained employed by the Trust. No reasons were given in the ET judgment for making an award until retirement. The ET also made an 'Employment Act uplift' of 30% to the compensatory award.
**After the judgment of the ET**
  1. By order of 22 September 2009 His Honour Judge Ansell referred certain questions to the ET under the Burns/Barke procedure. In response to a point material to this appeal the Secretary of Employment Tribunals wrote on 30 October 2009:

"In answer to the questions raised by HH [Judge] Ansell in his order of 17 September 2009, the Employment Judge says as follows:-

"(i) The tribunal considered it very unlikely that the claimant would obtain work before reaching the female retirement age of 60. She was some 58 years and 4 months old at the time of the Hearing. We considered that her age would be a disadvantage to her in looking for further work. Whilst it is regrettable that age disadvantages people it still does so, in spite of legislation to deal with this; indeed the legislation would not be needed if the difficulty was not present.""

**The Relevant Statutory Provisions**
  1. The provisions relating to the statutory dismissal procedure applicable in this case and which are set out below have been repealed as from 6 April 2009 subject to transitional provisions and savings.
  1. Employment Rights Act 1996:

"98A(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if—

(a) one of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 (dismissal and disciplinary procedures) applies in relation to the dismissal,

(b) the procedure has not been completed, and

(c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.

118(1) Where a tribunal makes an award of compensation for unfair dismissal under section 112(4) or 117(3)(a) the award shall consist of—

(a) a basic award (calculated in accordance with sections 119 to 122 and 126), and

(b) a compensatory award (calculated in accordance with sections 123, 124).

123(1) Subject to the provisions of this section and sections 124, 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.

(4) In ascertaining the loss referred to in subsection (1) the tribunal shall apply the same rule concerning the duty of a person to mitigate his loss as applies to damages recoverable under the common law of England and Wales or (as the case may be) Scotland.

124A Where an award of compensation for unfair dismissal falls to be—

(a) reduced or increased under section 31 of the Employment Act 2002 (non-completion of statutory procedures), ..

the adjustment shall be in the amount awarded under section 118(1)(b) and shall be applied immediately before any reduction under section 123(6) or (7)."

Employment Act 2002 provides:

"31(3) If, in the case of proceedings to which this section applies, it appears to the employment tribunal that—

(a) the claim to which the proceedings relate concerns a matter to which one of the statutory procedures applies,

(b) the statutory procedure was not completed before the proceedings were begun, and

(c) the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer to comply with a requirement of the procedure,

it must, subject to subsection (4), increase any award which it makes to the employee by 10 per cent and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount, but not so as to make a total increase of more than 50 per cent.

(4) The duty under subsection (2) or (3) to make a reduction or increase of 10 per cent does not apply if there are exceptional circumstances which would make a reduction or increase of that percentage unjust or inequitable, in which case the tribunal may make no reduction or increase or a reduction or increase of such lesser percentage as it considers just and equitable in all the circumstances.

SCHEDULE 2

STATUTORY DISPUTE RESOLUTION PROCEDURES

PART 1

DISMISSAL AND DISCIPLINARY PROCEDURES

CHAPTER 1

STANDARD PROCEDURE

*

Step 1: statement of grounds for action and invitation to meeting*

1(1) The employer must set out in writing the employee's alleged conduct or characteristics, or other circumstances, which lead him to contemplate dismissing or taking disciplinary action against the employee.

(2) The employer must send the statement or a copy of it to the employee and invite the employee to attend a meeting to discuss the matter.

*

Step 2: meeting*

2(1) The meeting must take place before action is taken, except in the case where the disciplinary action consists of suspension.

(2) The meeting must not take place unless—

(a)the employer has informed the employee what the basis was for including in the statement under paragraph 1(1) the ground or grounds given in it, and

(b)the employee has had a reasonable opportunity to consider his response to that information.

(3) The employee must take all reasonable steps to attend the meeting.

(4) After the meeting, the employer must inform the employee of his decision and notify him of the right to appeal against the decision if he is not satisfied with it."

**Grounds of Appeal: Ground 1**
  1. Mr Midgley for the Trust contended that the ET erred in law in finding that it had failed to comply with Step 1 of the statutory dismissal procedure ('Step 1') and that the dismissal of Mrs Evans was therefore automatically unfair pursuant to ERA section 98A(1).
  1. It was submitted on behalf of the Trust that the letter of 1 May 2008 satisfied the requirements of Step 1. The ET erred in holding that the letter of 1 May 2008 did not contain a warning that the allegations against Mrs Evans could be viewed as gross misconduct and if proved could result in her dismissal. Mr Midgley relied upon Homeserve Emergency Services Ltd v Dixon [2007] UKEAT/0127/07 and Zimmerman v Brezan [2008] UKEAT/0294/08 to contend that a tribunal should have regard to other evidence in addition to a Step 1 letter in determining whether the warning of risk of dismissal referred to in Alexander v Bridgen Enterprises Ltd [2006] IRLR 442 was implicit in such a letter or was to be understood from information provided with such a letter.
  1. Mr Midgley contended that the ET erred in failing to take into account the fact that the Trust's Disciplinary Policy was included in the letter of 1 May 2008 and that the notes of a disciplinary investigation interview with Mrs Evans on 25 January 2008 confirmed that by that date she had received the Disciplinary Policy document. If the ET had paid proper regard to such evidence it would have decided that a warning of risk of dismissal following a disciplinary hearing was to be inferred from the letter of 1 May 2008. The Disciplinary Policy document made it clear that the allegation that Mrs Evans had made racist remarks whilst at work regarding her colleagues was to be regarded as a breach of the Trust's Equal Opportunities Policy. This was gross misconduct which could lead to summary dismissal.
  1. Mr Midgley contended that even if the letter of 1 May 2008 did not comply with the requirement of Step 1, the letter of 23 May 2008 inviting Mrs Evans to the adjourned disciplinary hearing on 9 June 2008 did so. The later letter expressly warned of the risk of dismissal. Reliance was placed on Smith Knight Fay Ltd v McCoy [2009] UKEAT/0245/08 to contend that because the letter of 23 May 2008 was sent before dismissal it satisfied the requirements of Step 1. The Trust appreciated that their earlier letter of 1 May 2008 was deficient in that it omitted a reference to the possibility that Mrs Evans may be dismissed. The later letter rectified the position and the observations at paragraph 33 of Smith Knight Fay are directly applicable. In that case the EAT held:

"If we are correct in our view that "before action is taken" means "before the contemplated dismissal or disciplinary sanction takes place" then it must follow that an employer who holds a meeting with an employee at which he informs him that he is to be made redundant may, whether because he has himself appreciated or has obtained advice that he has thus far failed to comply with the Step 1 requirements or that the meeting did not comply with the Step 2 requirements or by accident or fluke, before the dismissal or disciplinary action occurs retrieve the position by acting so as to comply with Step 1 and Step 2 by an appropriate letter and an appropriate meeting. If the employee has been dismissed or subjected to disciplinary sanction before the employer's attempt to retrieve the position occurs, the attempted retrieval will of course be of no effect; if not it may be effective."

  1. Ms Nizami for Mrs Evans submitted that it is clear from paragraph 28 of Alexander v Bridgen that at Step 1 an employee must be warned of the possibility of dismissal. In this case there was no evidence that Mrs Evans knew before the Step 2 meeting of 19 May 2008 that she was at risk of dismissal. The letter of 18 December 2007 calling Mrs Evans to the investigation meeting of 25 January 2008 did not warn of this risk neither did the notes of that meeting refer to such a warning being given. The letter of 1 May 2008 which enclosed the Disciplinary Policy and Procedure did not draw attention to any particular section. The document is twenty pages long. The letter did not explain that making racist remarks would be regarded as gross misconduct.
  1. Ms Nizami distinguished Homeserve on the basis that it can be seen from paragraph 16 of the judgment in that case that the facts were stark. The claimant and his colleague were caught in the act of using company property for their private business. They admitted the offence. In the circumstances the conclusion of the EAT that it was implicit in a letter calling the employee to a disciplinary meeting that dismissal would be considered was understandable. As was clear from paragraph 14 of Homeserve this was a decision on the facts of the case.
  1. It was contended for Mrs Evans that the finding in Smith Knight Fay that late compliance with Step 1 can be compliance was a finding made on the facts in that case. Further, Ms Nizami drew attention to the prohibition on a Step 2 meeting taking place until the information required by paragraph 1(1) of Step 1 has been provided to the employee. Ms Nizami relied on Ms V Bowen v Millbank Estate Management Organisation [2007] UKEAT/0032/07 in which the EAT held at paragraph 15 that:

"… the effect of Regulation 12 of the Dispute Resolution Regulations 2004 is to operate a guillotine at each stage of the three steps."

Ms Nizami contended that if there is a breach of one stage of the statutory procedure a consequent dismissal is automatically unfair under ERA section 98A(1).

**Grounds of Appeal: Ground 2**
  1. Mr Midgley for the Trust contended that the ET erred in applying an uplift of 30% to the compensatory award in the circumstances of the case. The ET failed to have regard to the guidance of the EAT in McKindless Group v McCloughlin [2008] UKEAT/0010/08 and Aptuit (Edinburgh) Ltd v Kennedy UKEATS/0057/06. Since the ET found that a Step 1 letter, that of 1 May 2008, had been sent prior to the reconvened disciplinary hearing on 9 June 2008, Mr Midgley contended that it was not just or equitable to award an increase in the compensatory award of 30%. Mr Midgley acknowledged that in the circumstances of this case the ET had to award some uplift.
  1. It was said on behalf of the Trust that the ET failed to state the basis for its decision to award an uplift of 30% to the compensatory award. The decision in this regard was not Meek compliant (Meek v City of Birmingham District Council [1987] IRLR 250).
  1. In light of the finding of the ET that a Step 1 letter had been provided to Mrs Evans before the conclusion of the disciplinary hearing it was contended that the decision of the ET to award an uplift of 30% was perverse.
  1. Ms Nizami realistically recognised that the ET gave no reason for its award of a 30% uplift in the compensatory award. At paragraph 7 the ET set out its findings of breach of the statutory dismissal procedure on the basis of which it made its award. Ms Nizami rightly acknowledged that there was no way of knowing what evidence the ET took into account in awarding the 30% uplift but she contended that reading the judgment as a whole it is clear why the uplift was made.
**Grounds of Appeal: Ground 3**
  1. On behalf of the Trust Mr Midgley contended that the ET erred in basing the compensatory award on loss of earnings until Mrs Evans' retirement date. The ET failed to make any finding as to whether Mrs Evans was fit enough to work whether full or part-time. This was of particular importance since Mrs Evans did not seek to argue that she had not been able to secure employment, rather she said that she was too ill to do so.
  1. Further Mr Midgley contended that the decision to base the compensatory award on loss of earnings until Mrs Evans' retirement date was not Meek compliant as the Trust cannot ascertain the reason for such an award. Whilst he recognised the high hurdle to be overcome by an appellant alleging perversity, Mr Midgley contended that the decision of the ET to base compensation awarded to Mrs Evans on loss of earnings until her retirement was perverse.
  1. Ms Nizami acknowledged that the medical report of 2 December 2008, prepared for the purpose of assessing Mrs Evans' entitlement to incapacity benefit and relied upon by her in her claim for a compensatory award, anticipated that her condition would improve within twelve months. She relied upon the judgment of the Court of Appeal in Brentwood Brothers (Manchester) Ltd v Shepherd [2003] IRLR 364 to contend that the EAT should not interfere with the assessment of loss made by the ET. In Brentwood the Court of Appeal held at paragraph 11:

"This court, like the Appeal Tribunal, will interfere with such assessments with reluctance, given that the tribunal as the industrial jury can be expected to make broad brush amendments which reflect the tribunal's local knowledge and experience."

**Discussion***Ground 1*
  1. Schedule 2 of EA 2002 provides that a Stage 2 meeting must not take place unless the employer has informed the employee what the basis was for including in the statement under paragraph 1(1) (the Stage I statement) the ground or grounds given in it. The Stage I statement must set out in writing the employee's alleged conduct which lead the employer to contemplate dismissing the employee. The obligation on the employer at Stage I was summarised by Elias P (as he then was) in the EAT in Alexander v Bridgen. At paragraph 38 the EAT held:

"We agree with Mr Barnett that at step one the employee simply needs to be told that he is at risk of dismissal and why."

The EAT in Homeserve stated that they did not propose to depart from the statement of the law at paragraph 38 of Alexander v Bridgen. However the risk of dismissal may be implicit in a Step 1 letter having regard to the surrounding circumstances.

  1. The EAT in Smith Knight Fay held at paragraph 31 that the Step 1 letter should be provided to the employee before the Step 2 meeting 'although it need not be if paragraph 2(2)(a) is otherwise complied with'. As Underhill P held in the YMCA Training v Stewart [2007] IRLR 185 at paragraph 11:

"It does not of course matter that the requirements of both para 1(1) and para 2(2)(a) were addressed in the same letter (or letter and enclosure). The statutory procedure permits the employer to present his case in two stages – stating the 'grounds' first (para 1(1)), and supplying the 'basis' for them later (though in good time before the meeting) – but it does not oblige him to do so…"

Underhill P made it clear that the information required by paragraphs 1(1) and 2(2)(a) of the statutory procedure has to be provided before a Step 2 meeting is held.

  1. Whilst the EAT in Smith Knight Fay held at paragraph 33 that an omission to carry out Steps 1 and 2 could be cured before 'action is taken' meaning 'before the contemplated dismissal or disciplinary sanction takes place' by complying with Step 1 and Step 2, the EAT did not hold that a Step 2 meeting could be held before Step 1 has been complied with.
  1. The letter of 1 May 2008 did not inform Mrs Evans that her dismissal was being contemplated. In our judgment the inclusion of the Disciplinary Policy with the letter did not lead to the implication that such action would be under consideration. The letter notified Mrs Evans that the allegation she faced was that she made racist remarks whilst at work regarding her colleagues. Although the Disciplinary Policy was enclosed in the letter of 1 May 2008 the Trust did not draw the attention of Mrs Evans to any particular passage in it, nor was she informed that the allegation was to be treated as one of gross misconduct which could lead to her dismissal. The notes of the investigation meeting of 25 January 2008 do no more than support the uncontested assertion that Mrs Evans had previously been provided with the Disciplinary Policy.
  1. In our judgment the ET did not err in concluding that the letter of 1 May 2008 did not contain a warning that the Trust was contemplating the dismissal of Mrs Evans. Since it neither did so expressly or by implication from the circumstances, the ET did not err in holding that it did not constitute a Stage 1 letter.
  1. The letter of 23 May 2008, sent after the Trust realised that their earlier letter did not contain a warning of dismissal, did contain such a warning. However the first part of the Stage 2 meeting had already taken place before the letter of 23 May 2008 was sent out. In our judgment these facts are distinguishable from a situation in which an employer who has not provided the information required by paragraphs 1(1) and 2(2)(a) of the statutory procedure before convening a Stage 2 meeting re-starts the process by providing the necessary information before starting a meeting afresh.
  1. In this case in our judgment the ET did not err in holding that the Stage 1 letter had been sent after the first day of the Stage 2 meeting. The meeting did not re-start on 9 June 2008. It resumed. It is clear from the ET3 that the Trust regarded the meeting of 9 June 2008 as a continuation of the hearing which has started on 19 May 2008. They wrote:

"The disciplinary hearing was convened on 19th May 2008 and concluded on 9th June 2008."

The ET did not err in holding that the Trust were in breach of the statutory dismissal procedure by holding a Stage 2 meeting before the information complying with Stage 1 had been provided to Mrs Evans.

*Ground 2*
  1. As was fairly acknowledged by Ms Nizami the ET failed to give any reasons for making a 30% uplift to the compensatory award. It clearly erred in failing to do so.
  1. An ET may award an uplift of more than 10% under section 31(3) EA 2002 if it considers it just and equitable in all the circumstances to do so. The closest the ET came to giving a reason for their award of an uplift of 30% was at the end of paragraph 7 in which they state that the Trust had failed to send a Step 1 letter before the disciplinary hearing 'on which we make the award below'.
  1. In Aptuit the EAT observed at paragraph 47:

"…any uplift between 10% and 50% is discretionary and must be justified as being just and equitable in all the circumstances. Further, it is plain, in our view, that the circumstances in question are those surrounding the failure to complete the statutory procedure."

An appellant alleging perversity must surmount a high hurdle. In this case when the Trust appreciated that their Step 1 letter did not contain an express warning that the disciplinary hearing my lead to dismissal they tried to rectify the omission. They sent a further letter stating that dismissal may be an outcome of the hearing which was to resume on 9 June. The omission which led to the finding of non compliance with Step 1 was not deliberate and which the Trust sought to rectify when it realised their mistake. The correction was made before the conclusion of the Step 2 meeting. In our judgment in the circumstances of this case, the decision to award an uplift above the minimum 10% for failure to warn of the risk of dismissal which the Trust sought to rectify before the resumed disciplinary hearing, was perverse.

  1. Rightly Mr Midgley did not pursue the contention that to award any uplift would have been an error. In our judgment the ET did not err in awarding an uplift under EA 2002 section 31(3). In order not to do so they would have had to reach the conclusion that as provided in section 31(4) there were exceptional circumstances rendering an increase of 10% or any uplift unjust or inequitable. Whilst the uplift awarded was perversely high, the ET did not err in holding that the Trust was in breach of the statutory dismissal procedure. It did not err in failing to hold that no uplift or an uplift of less than 10% should be awarded.
*Ground 3*
  1. The judgment of the ET gave no reasons for making a compensatory award based on loss of earnings until Mrs Evans' retirement date. The Employment Judge in response to questions raised by HH Judge Ansell under the Burns/Barke procedure stated:

"(i) The tribunal considered it very unlikely that the claimant would obtain work before reaching the female retirement age of 60. She was some 58 years and 4 months old at the time of the Hearing. We considered that her age would be a disadvantage to her in looking for further work. Whilst it is regrettable that age disadvantages people it still does so, in spite of legislation to deal with this, indeed legislation would not be needed if the difficulty were not present."

It appears that the ET based their decision to award Mrs Evans compensation for loss of earnings until retirement on their view of the general difficulties older people face in obtaining employment and not on evidence or knowledge of local conditions or requirements for health care assistants in hospitals, nursing homes or in the private care sector. Thus the observations of the Court of Appeal in paragraph 11 of the judgment in Bentwood Brothers about the reluctance of appellate courts to interfere with the decisions of Tribunals which are based on their local knowledge and experience do not apply in this case.

  1. Pursuant to directions given by the ET, at the conclusion of the hearing on 9 April 2009, by letter dated 17 April 2009 Mrs Evans set out her claim for compensation and enclosed a medical report on which she relied. She wrote:

"5) S Evans is 58 and currently on Incapacity benefit as such it is unlikely she will be able to return to any work before retirement on health grounds, and would have great difficulty having been dismissed."

Mrs Evans did not adduce any evidence about the demand for health care assistants in her locality but relied on her age, medical incapacity and the fact that she had been dismissed. By letter of 21 April 2009, solicitors for the Trust submitted that Mrs Evans had failed to mitigate her loss. It was stated that Mrs Evans accepted in evidence that she had made no attempt to find alternative work, even on a part-time basis. As explained above, in our judgment the reason given by the ET for basing a compensatory award on loss of earnings until retirement, their view that generally it is difficult for people approaching retirement age to obtain employment, does not support their conclusion.

  1. The ET failed to make findings on the medical evidence of incapacity upon which Mrs Evans based her claim. They failed to make a finding on the effect of the advice in the medical report following examination of Mrs Evans on 7 November 2008 that:

"I advise the claimant's condition should improve significantly within 12 months.

The customer's level of disability would be expected to improve with time and appropriate treatment."

  1. In our judgment the ET failed to give any or adequate reasons for its decision to award Mrs Evans compensation based on loss of earnings until retirement. It failed to make necessary findings as to her medical ability to do some work or as to the availability of work she would be capable of doing whether full time or part time.
**Conclusion**
  1. 1) The ET did not err in deciding that the Trust was in breach of the statutory disciplinary procedure by failing to comply with EA 2002 Schedule 2 Chapter 1 Step 1 paragraph 1(1) before holding a Step 2 meeting. The ET therefore did not err in holding that the dismissal of Mrs Evans was unfair by reason of the now repealed ERA section 98A(1).

2) The decision to award an uplift of more than 10% was perverse. A decision to award an uplift of 10% is therefore substituted for the uplift of 30%, which is set aside.

3) The ET failed to give adequate reasons for basing the compensatory award on loss of earnings until retirement. It failed to make any findings as to the medical ability of Mrs Evans to perform any work or as to the availability of any suitable work whether full of part time. The compensatory award is set aside. The claim for a compensatory award is remitted for reconsideration. Having considered the submissions on behalf of the parties, remission is to be to a differently constituted ET, which will hear evidence and argument. A 10% uplift will be applied to any compensatory award made.

  1. The appeal is therefore allowed to the extent that the 30% uplift to the compensatory award is set aside and one of 10% substituted. The compensatory award set aside. The claim for a compensatory award is remitted for rehearing to a differently constituted Employment Tribunal. An uplift of 10% is to be applied to any such award.

Published: 20/08/2010 09:52

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