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Appeal No. UKEAT/0017/10/RN

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 3 September 2010

Judgment handed down on 26 October 2010

Before

HIS HONOUR JUDGE ANSELL

MR M CLANCY

MR J MALLENDER

(1) WHITELOCK & STORR

(2) MR D LECCACORVI

(3) MR A BLOOM (APPELLANTS)

MR K N KHAN (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellants
MR ANGUS WITHINGTON (of Counsel)
Instructed by:
Messrs Whitelock & Storr Solicitors
4 Bloomsbury Square
London
WC1A 2RL

For the Respondent
MR DALE MARTIN (of Counsel)
Instructed by:
Messrs KK Solicitors
The Clubhouse
16 Kenver Avenue
London
N12 0PG

Tribunal failed to apply guidance in Kuzel v Roche Products Ltd [2008] IRLR 530 in failing to consider employer's reason for dismissal namely misconduct before considering employee's allegation of protected disclosure dismissal.

1. This has been the hearing of an appeal from a decision of a London (Central) Tribunal chaired by Employment Judge Etherington who, following a hearing in August 2009, in a decision sent to the parties on 24 October 2009, held that Mr Khan, who had formerly worked for the Appellants as a solicitor, had been unfairly dismissed, having made protected disclosures pursuant to section 103A ERA 1996, and also because of a breach of statutory procedure under section 98A, in that the employers failed to warn the employee when inviting him to a disciplinary hearing that the outcome could be dismissal. In the alternative, the Employment Tribunal held that the dismissal was unfair in that the alleged gross misconduct was said to be wholly misconceived, and further, the process involved in the dismissal was said to be unfair, particularly because of the lack of proper investigation. Save in relation to the findings in connection with the unfair process, all the Tribunal's conclusions are challenged on appeal. Leave for this hearing was given at a preliminary hearing on 9 March 2010, Wilkie J presiding.

1. The facts can be taken from the Tribunal's decision. The Appellants are a firm of solicitors in private practice that carry out predominantly public-funded criminal defence work under the terms of a general criminal contract. In particular, the firm participates in the duty solicitor scheme, participating in the court and out-of-hours duty solicitor rota, being awarded slots in accordance with the number of duty solicitors they employ and who are on a particular rota. The Respondent was taken on in a full-time permanent position as a duty solicitor in the criminal department on 5 June 2006, his employment lasting until summary dismissal on 24 November 2008. His initial annual salary was £37,000, together with 50 per cent of all fees generated by out of hours police station work. He was also to be paid a bonus, namely 20 per cent of fees received in excess of £100,000 per annum. His contract of employment provided at clause 16:

"You will not during your employment be engaged, concerned or interested in any other business or undertaking whatsoever."

1. The contract also contained a disciplinary and grievance procedure.

1. For the financial year ending May 2008, the Respondent was entitled to a bonus of £17,335.90 and £5,000 was paid on account of that sum in March 2008. The Appellants experienced cash flow problems at that time, and the Respondent did agree to accept payments of the bonus by instalments over a period of two or three months. There was no precise clarity as to how those payments were to be paid, although the Respondent expected instalments to commence in June 2008, but they did not do so. At a meeting on 17 July, Mr Leccacorvi, one of the partners, confirmed that instalments would commence in July and the bonus would be paid in full by September, although nothing was paid in July. There was a dispute whether at the July meeting there had been any discussion about the conditions in which the Respondent was working, and also a complaint by him that Ms X, a trainee solicitor, was receiving insufficient training in areas of law other than crime. The Tribunal was satisfied on balance that, at the very least, the Respondent raised questions about conditions.

1. At a further meeting on 19 August, Mr Bloom, the other partner, informed the Respondent that the Appellants would be unable to pay more than £1,000 towards the outstanding bonus, blaming continuing financial problems. On 20 August, the Respondent replied to Mr Bloom, sending a letter in which he advised that unless the matter was resolved in the next couple of months, he would have no option but to consider taking action regarding non-payment, which amounted to a fundamental breach of contract.

1. In giving evidence before the Tribunal, Mr Bloom, who had heard the Respondent's appeal against dismissal, said that had he felt the Respondent would have been a valuable member of the firm, he would have suggested they draw a line under things - but he knew the Respondent was going. Mr Bloom also commented that in all the years he had worked in the firm, he had never received a letter of that type from an employee.

1. The Respondent still remained concerned that Ms X had not received training in two other areas of law other than crime, which was required under her training contract, and on 25 September, having only received a further £1,500 on account of his outstanding bonus, the Respondent sent an email seeking to instigate a grievance procedure, identifying the general bad treatment of fee earners, causing lack of trust between employer and employee in the ability of the firm to honour its obligations under the contract. The Respondent added that he would not be in a position to renew his duty solicitor slots with the firm until matters were resolved. He also sent a letter before action regarding the outstanding bonus of £10,855.90, indicating that unless he received payment in full by October 2008, he would seek recovery through the courts.

1. On 8 October 2008, the Respondent met Mr Leccacorvi and Mr Goddard, the practice manager, who were investigating his grievance. The Respondent outlined a number of aspects of his grievance concerning the physical state of the premises in which they had been asked to work, his concerns about the possible breach of training regulations in relation to Ms X and again the failure to pay his bonus within a reasonable time. The Respondent repeated that he was unwilling to consent to the Appellants using his duty solicitor slots until the issues were addressed. He told the Appellants that November was the time to sign for new duty solicitor slots beginning in January, and he did not intend to sign for them until being paid in full, warning that if they sought to dismiss him, he would then claim constructive dismissal. At the end of this meeting, Mr Leccacorvi gave the Respondent a cheque for the outstanding bonus.

1. By letter dated 29 October 2008, Mr Leccacorvi rejected the Respondent's grievances in relation to the poor state of the property and the issues concerning Ms X. He expressed the hope that the Respondent would exercise a little more forbearance, given the cash flow difficulties facing the Appellants. Mr Leccacorvi stated that he could not understand how failing to renew the duty solicitor status could be a way of mitigating the Respondent's loss (which the Respondent had advanced) but felt rather that it would amplify that loss. He expressed the hope that since the bonus had been paid, the duty solicitor status was no longer an issue.

1. On 10 November, the Respondent submitted an appeal against the outcome of the grievance. Unbeknown to the Appellants, on 11 November the Respondent signed the relevant duty solicitor form, which was submitted by another firm of solicitors, Stuart Miller & Company, applying for the Respondent to join a different duty solicitor scheme with effect from January 2009, not one in substitution for the scheme of which the Respondent was already a member.

1. On 12 November, the Appellants wrote to the Respondent inviting him to a meeting with Mr Bloom to discuss his representations on appeal, and on the same day, a second letter to the Respondent gave him notice of a disciplinary meeting to follow on from the grievance appeal hearing on 14 November. Amongst the allegations of misconduct alleged in the letter were that letterheads had been found on the Appellants' computer system identifying a firm called KK Solicitors, located at the Respondent's home address, and his letter to the Appellants of 10 November advising him that he was not intending to confer the benefits of his duty solicitor slots on 2 January to the firm. There were also other allegations in relation to persistent and repeated lateness and general bad time-keeping over a period of many months, and in particular, a failure to attend a hearing at court on 28 May, and a failure to attend a client held in custody on 16 July.

1. The letter of 12 November indicated that at the meeting, the question of disciplinary action against the Respondent in accordance with the firm's disciplinary procedure would be considered with regard to the items listed, but did not say in terms that the Appellants were contemplating dismissing him. The Respondent replied to the allegations in a letter of 14 November 2008, and asserted that the disciplinary procedure had been instigated by the firm in an attempt to intimidate and bully him as a consequence of the grievances that he had raised.

1. On 14 November, the grievance was considered at a meeting by Mr Bloom, the meeting lasting at most ten minutes. This was followed by the disciplinary meeting, at which the Respondent denied that he was setting up a rival firm of solicitors, but did inform the Appellants that he would be leaving their firm and would not be answering questions as to whether or not he had signed to transfer the duty solicitor slots, though he confirmed that he had not signed them over on his own behalf.

1. On 24 November, the Appellants wrote to the Respondent, firstly rejecting his grievances and then notifying him of the outcome of the disciplinary proceedings. The Appellants denied that there was any relationship between the lodging of the grievance and the decision to instigate disciplinary matters, said by the Tribunal to be a difference of two days, and repeated that the Appellants had discovered the letter on the computer system and therefore found that he had used the firm's resources either to set up a rival firm or take steps towards that end, which they found to be gross misconduct. They also found gross misconduct in that the Respondent refused to confer the benefit of his duty solicitor slots on the firm and refused to answer questions regarding the proposed transfer of them, which left Mr Leccacorvi in no doubt that the Respondent had conferred the benefit of those duties from January 2009 to another firm. Again, they considered this to be gross misconduct, being a breach of his employment contract term to serve the firm faithfully. The letter also found that the Respondent had failed to attend a court hearing, that he had accepted that he was persistently late and that there had been some unauthorised absences.

1. The dismissal was therefore stated to be on the grounds that the Respondent had used the Appellants' facilities in an endeavour to set up a rival firm, because of his unwillingness to confirm duty solicitor slots or deal with them by transfer elsewhere, a failure to attend a court hearing and persistent unauthorised absences. Mr Bloom conducted the appeal on 10 December. It is not necessary for us at this stage to deal with the matter in detail, but the Tribunal in paragraph 43 sets out a number of shortcomings in relation to Mr Bloom's actions and the appeal hearing.

1. We turn to the Tribunal's conclusions and the grounds of appeal.

1. The Tribunal found that the non-payment of the bonus and the equivocation that followed led the Respondent to raise both orally and in writing concerns he had in relation to health and safety issues, namely the working conditions, the failure to pay bonuses both to him and other employees and their failure to deal with proper training for a trainee solicitor. The Tribunal noted that:

"The written manifestation of those concerns was submitted by the Claimant to his employers on 10 November 2008 - two days later they responded not with answers but with notification of disciplinary proceedings. That notification levelled a number of accusations at the Claimant, notice of which he had never before been given."

1. The Tribunal was satisfied that the Respondent had made a number of protected disclosures, which were made in good faith to the Appellants, and the Tribunal concluded as follows:

"The Tribunal has no doubt that the indignation and fear of possible bankruptcy carried through into the Respondents' reaction to the protected disclosures dealing as they did with the same material as had his earlier communications. We were reinforced in our conclusion considering the circumstances by which the Respondents came to discipline and then dismiss the Claimant. We identify below some of our misgivings, noting that this catalogue of hitherto unnoticed alleged failures was sent to the Claimant only 2 days after he had submitted his written disclosures. Suffice it to say that the Respondents' evidence left the Tribunal in no doubt that the reason for the Claimant's dismissal was that he had made the protected disclosures"

1. In that paragraph, the Tribunal used the term "misgivings" in relation to the allegations of misconduct, and they were set out in more detail in paragraphs 57 and 58 as follows:

"Even were the Tribunal to be wrong in its conclusion that the Respondents had automatically unfairly dismissed the Claimant on the two grounds mentioned then the Tribunal was satisfied that they had in any event unfairly dismissed him. The whole process by which his dismissal was brought about was defective. There had been no proper investigation of the grounds upon which they purported to find gross dismissal. The existence of the one document (at page 107 of the bundle) on their computer was in the Tribunal's view without further investigation wholly inadequate to demonstrate that the Claimant had been utilising the firm's computers to set up his business or was running his business from their offices. If either of those contentions had been true, there must have been much other recoverable material on the Respondents' computer system. Only one document – which apart from its address dealt with a case then being handled by the Respondent firm and retained by them and could not, to be effective, in anyone's wildest imagination have been sent out on any letterhead but the Respondents – was found. This did not in the Tribunal's view go anywhere near establishing the case they were seeking to make, nor even raising a reasonable suspicion. There were a variety of ways in which the document could have been created. The least likely explanation was that adopted by the Respondents. There was no evidence supporting the conclusion they reached.

The further ground upon which the Respondent sought to dismiss the Claimant – gross misconduct found in his transfer of slots – seems to the Tribunal to be completely misconceived. We are of course reliant upon the evidence we had presented to us by the parties and it was clear that the Claimant thought he was entitled to transfer slots and the Respondents seemed to agree. The Tribunal asked for a copy of the regulations under which the duty solicitor arrangements are configured and our interpretation of them is to the contrary of the views expressed by the parties. We were not provided with the overriding unified contract (crime) (which may have been of assistance) but it is quite clear on the documents we had that the scheme invests the duty solicitor's slots with the CDS supplier and not with the duty solicitor. Nothing in those arrangements makes any provision whatsoever for a solicitor to carry the slots with him or her to a new firm. Of course notice has to be given to the existing employer of the fact that a lawyer is to leave their employ because they need to have an opportunity to fill those retained slots with other advocates which may be from their existing staff or by bringing in an agent. But there is nothing in the documents provided to the Tribunal that indicate a solicitor is entitled to transfer those slots for their personal benefit. We doubt they can even be transferred with the CDS holder's consent. The Claimant's belief that he had done so and that by submitting a form CDS 12 he was doing so is incorrect. Accordingly, the Tribunal considered that the endeavour by the first Respondent to dismiss the Claimant on the basis that he had transferred those slots or had endeavoured to do so was wholly misconceived, a misconception shared it seems by the Respondents and the Claimant."

1. Before considering the Tribunal's approach to protected disclosure, Mr Withington, on behalf of the Appellants, criticised the Tribunal's approach in paragraph 58 and their analysis of the duty solicitor scheme regulations, from which they concluded that a solicitor could not transfer his slots from one firm "for their personal benefit".

1. Firstly, Mr Withington contended that the case had never been argued on the basis that the Respondent was seeking to transfer the slots for his personal benefit, but rather to transfer them for the benefit of another firm that he was either going to set up or join. Secondly, before the Tribunal, both parties had advanced the case on the basis that the Respondent could transfer his duty solicitor scheme slots to another firm. As it turns out, that particular concession may not be technically correct since, as was explained to us, the slots belong to the Appellants for so long as the Respondent continues to be employed by them, and indeed, may continue for some months until the rota comes to an end, even after a solicitor departs. The way in which the scheme was presented to us (which we were told was the same as that which was presented to the Tribunal) was that twice a year, in November and May, duty solicitor rotas are drawn up, giving slots to particular firms in proportion to the number of participating solicitors each firm employs. The rota will run for six months from January or July. The Appellants' complaint was that the Respondent, whilst still employed by them, and without their knowledge, allowed his name to be included in a November application on behalf of another firm. It is contended that the Appellants only found out the true position once the qualifying date in November had passed, and it was therefore too late to include a new or replacement name in their November allocation. The result would be that the Appellants, for the period from January to July, would receive proportionately fewer duty solicitor slots on the scheme.

1. Mr Martin, on behalf of Respondent, argued that by 14 November, the cut-off date, the Appellants knew that the Respondent was considering a move to another firm because of the grievances that he had articulated and that, accordingly, the Appellants could have taken the necessary action. Mr Withington responded that there was a finding by the Tribunal that at the meeting on 14 November, the Respondent was refusing to say whether he had transferred his slots. By that time, although the bonus had been paid, the Respondent was still threatening constructive dismissal and there was no suggestion of a voluntary resignation on his part.

1. Mr Withington argued that the Tribunal's analysis in paragraph 58 was irrelevant, since there appeared to be a shared belief that the Respondent was able to transfer his slots, and therefore to suggest (as the Tribunal did) that the attempts by the Appellants to dismiss the Respondent on the basis that he had transferred the slots or had endeavoured to do so was wholly misconceived, was indeed a misconception on the part of the Tribunal. We agree with that approach. It seems to us that the essential test was whether the Appellants had reasonable grounds to believe that the Respondent was guilty of misconduct by transferring or seeking to transfer the slots away from the Appellants. We should add that Mr Withington also complained that the Tribunal did not give the parties any indication or notice that it was intending to make the findings set out in paragraph 58 so as to enable submissions to be made in relation to it.

1. As to the protected disclosure issue, Mr Withington's main complaint is that the Tribunal considered this aspect as the reason or principal reason for dismissal, it having been raised by the Respondent without any or any proper consideration of the reason being advanced by the Appellants as employers, namely gross misconduct, and he contended that the Tribunal should have firstly considered the reason for dismissal being advanced by the employers. He referred us to the decision in Kuzel v Roche Products Limited [2008] IRLR 530, where the Court of Appeal sought to give guidance in relation to the issue of competing reasons for dismissal, such as protected disclosure and misconduct. Mummery LJ set out the position at paragraphs 56 to 60:

"I turn from those general comments to the special provisions in Part X of the 1996 Act about who has to show the reason or principal reason for the dismissal. There is specific provision requiring the employer to show the reason or principal reason for dismissal. The employer knows better than anyone else in the world why he dismissed the complainant. Thus, it was clearly for Roche to show that it had a reason for the dismissal of Dr Kuzel; that the reason was, as it asserted, a potentially fair one, in this case either misconduct or some other substantial reason; and to show that it was not some other reason. When Dr Kuzel contested the reasons put forward by Roche, there was no burden on her to disprove them, let alone positively prove a different reason.

**

I agree that when an employee positively asserts that there was a different and inadmissible reason for his dismissal, he must produce some evidence supporting the positive case, such as making protected disclosures. This does not mean, however, that, in order to succeed in an unfair dismissal claim, the employee has to discharge the burden of proving that the dismissal was for that different reason. It is sufficient for the employee to challenge the evidence produced by the employer to show the reason advanced by him for the dismissal and to produce some evidence of a different reason.

Having heard the evidence of both sides relating to the reason for dismissal it will then be for the ET to consider the evidence as a whole and to make findings of primary fact on the basis of direct evidence or by reasonable inferences from primary facts established by the evidence or not contested in the evidence.

The ET must then decide what was the reason or principal reason for the dismissal of the claimant on the basis that it was for the employer to show what the reason was. If the employer does not show to the satisfaction of the ET that the reason was what he asserted it was, it is open to the ET to find that the reason was what the employee asserted it was. But it is not correct to say, either as a matter of law or logic, that the ET must find that, if the reason was not that asserted by the employer, then it must have been for the reason asserted by the employee. That may often be the outcome in practice, but it is not necessarily so.

As it is a matter of fact, the identification of the reason or principal reason turns on direct evidence and permissible inferences from it. It may be open to the tribunal to find that, on a consideration of all the evidence in the particular case, the true reason for dismissal was not that advanced by either side. In brief, an employer may fail in its case of fair dismissal for an admissible reason, but that does not mean that the employer fails in disputing the case advanced by the employee on the basis of an automatically unfair dismissal on the basis of a different reason."

1. Accordingly, Mr Withington submitted that in light of this guidance, and on the basis that the Respondent had produced some evidence supporting a case for protected disclosure dismissal, they should have then considered the Appellants' reason for dismissal and either accepted it or rejected it before moving on to considering the protected disclosure issue as put forward by the Respondent in more detail. He argued that simply dismissing the employer's case on the basis of "misgivings" and because of a dismissal letter being sent two days after the grievance letter (although many of the grievances had been raised orally previously) was an impermissible way of dealing with the employer's case.

1. Mr Martin argued that paragraph 55 did satisfy the Kuzel guidance. He submitted that it would be illogical for a tribunal to consider the two reasons for dismissal in isolation. He suggested that the Tribunal were entitled, as they did, to regard the misconduct allegations as bogus, coming only two days after the Respondent had submitted his written grievances, and that accordingly they were entitled to take the robust view that they did in paragraph 55.

1. It seems to us, however, that the Tribunal were obliged to consider firstly the potentially fair reason being advanced by the Appellants, since the primary burden was on them, before it was required to move on to consider the alternative reasons for dismissal, including particularly that being advanced by the Respondent. Further, insofar as paragraph 55 was an attempt to deal with the employer's reason, it relied on their misgivings concerning the employer's case, and as we have already indicated, in paragraph 58 they sought, in our view, to impose their own views on the workings of the duty solicitor slots rather than considering what was in the mind of the Appellants. The question that the Tribunal should have asked in relation to misconduct (and which, in our view, they failed to do) was whether these employers had a reasonable belief that whilst employed by them, the Respondent had acted to their detriment or attempted to do so in relation to duty solicitor slots and/or the setting up of another firm in breach of his duty of trust and confidence to his employers. If they did have that belief, was that the reason for dismissal, which clearly had to be balanced against the suggestion from the Respondent that it was a "put-up job" in response to his grievance complaint.

1. Further, Mr Withington contended that the Tribunal failed to deal with two important matters in relation to the gross misconduct: firstly, that Mr Leccacorvi was only aware of the letterheading on the IT system on 11 November 2008, and having paid the bonus and believing that other complaints were no longer an issue, it was only on receiving the letter dated 10 November that he was still aware that the Respondent still intended to transfer the slots away.

1. Finally, on the issue of misconduct, Mr Withington also criticised the Tribunal's approach in paragraph 59:

"We should also say in regard to this ground that the Claimant in the midst of the dispute gave the first Respondents more than adequate notice of his intention to attempt to transfer the slots. They were put in a position to take appropriate action in the light of the governing regulations. That they did not do so is a matter for them. The Claimant cannot be prevented from resigning simply because it would have an adverse effect upon the Respondents in terms of the filling of those slots after he had gone."

1. We have difficulty in understanding that paragraph, firstly because although there had certainly been discussions about the Respondent transferring his slots, at the meeting on 14 November the Respondent was evasive as to whether or not he had actually done so, and throughout that meeting, he indicated that he would be leaving. There had been no resignation, and indeed, up to that time, constructive dismissal had been threatened.

1. Mr Martin has sought to explain the meaning of this paragraph by reference to a submission which he made to the Tribunal, although they do not appear to have directly dealt with the point in their decision. He submitted to them that the Appellants could not seek to rely on any wrongdoing on the Respondent's part relating to the transfer of the slots, or indeed, the purported setting up of another firm, given the Appellants' anterior repudiatory behaviour in relation to the non-payment of the bonus and the failure to deal with the numerous complaints that he had raised. He had cited to the Tribunal RDF Media Group PLC v Clements [2008] IRLR 207, a decision of Bernard Livesey QC, sitting as a Deputy High Court Judge. In that case, Mr Clements, 16 months into a 3-year service agreement, gave notice of termination of his employment in order to take up employment with a competitor, in breach of restrictive covenants. RDF intended to hold Mr Clements to his covenants for the full period and intended to put him on gardening leave during his notice period. In a media brief which followed, the managing director of RDF's subsidiary briefed the press about Mr Clements in terms which were poisonous, untrue and highly damaging to his reputation. Mr Livesey QC dealt with the proposition in this way at paragraphs 138 to 140:

"In these circumstances the question arises whether Mr Clements can rely on the breach of the implied obligation which I have prima facie accepted in paragraph 132 above.

The question is not easy to resolve. I have been referred to some authority and ordinary contractual principles do not seem to provide a clear answer. The breach by Mr Clements preceded the breach by RDF; RDF was not at the time aware of the breach and so the contract continued in force, although RDF clearly did not affirm it. Had RDF known of Mr Clements' breach prior to its briefing of the Sunday Herald it would have accepted it as a repudiation of the contract and the representations to Mr Ken Symon would not have been a breach of its implied obligation. Mr Casey argues that the proper analysis is that the contract did indeed continue, it was terminated by Mr Clements accepting RDF's repudiatory breach; the anterior breach by Mr Clements is not forgiven and forgotten, it remains but sounds only in damages. Where, as here, damages is not the essence of either party's claim for relief, I do not accept that such a result is either a satisfactory or equitable solution.

In these circumstances I am inclined to accept the formulation of Mr Croxford who argues, on the basis of the authority of Bremer Vulcan Schiffbau Und Maschinenfabrik v South India Shipping Corp [1981] AC 909 at 986B-D, 987G, Paal Wilson v Partenreederei Hannah Blumenthal [1983] 1AC 854 at 909C-D, that where as here the defendant is himself in repudiatory breach of a mutual obligation he is not entitled to accept any repudiation by RDF by reason of his own breaches."

1. Mr Martin also referred to a decision subsequent to the Tribunal's decision, Aberdeen City Council v McNeill [2010] IRLR 374, where at paragraph 99, Lady Smith, giving the judgment of the EAT in Scotland, said this:

"As in any contract of employment, one of the essential terms of the claimant's contract was the implied term that neither would, without reasonable and proper cause, act in a manner calculated and likely to destroy or seriously damage the relationship of trust and confidence between employer and employee (Malik v BCCI SA [1997] IRLR 462 HL; Huggins v Micrel Semiconductor (UK) Ltd [2004] ALL ER (D) 07 (Sep) paragraph 31). It follows that if the claimant was, at the time he resigned, in breach of that implied term, he was in repudiatory breach and not entitled to terminate the contract on the basis that the respondents had themselves breached that implied term."

1. In reply, Mr Withington took us to what might be regarded as the more traditional view set out in the case of Wilf Gilbert (Staffs) Limited v Mr P Bunn UKEAT/0547/07, where HHJ Burke QC at paragraph 40 said this:

"We will address these three points in reverse order. The effect of the passages at paragraphs 140 and 141 of Mr Livesey QC's judgment is, as we see it, not that for which Mr Gilbert contends. It is that, if one party is himself in repudiatory breach of a mutual contractual obligation, he is not entitled to accept the other party's subsequent conduct as amounting to an acceptable repudiation. There is, in our judgment, no principle that a party to a contract, who is himself in repudiatory breach of that contact (and we will for the purposes of this discussion assume that refusing to work on the occasional Monday was a fundamental breach although there must be some doubt as to whether that assumption is supportable) which breach has not been accepted, cannot assert that the other party has also committed a breach of contract and seek a remedy in respect of it. In any event Mr Bunn was not seeking a remedy for breach of contract but asserting his right to money due under a contract which was still in existence throughout the suspension period."

1. As far as this case is concerned, we are faced with a number of problems in relation to this issue: firstly, the ET did not deal with the issue clearly on the basis that they did not find the Respondent to be in breach.

1. Further, although the Tribunal were clearly critical of a number of aspects of the Appellants' behaviour, they made no findings as to whether or not the Appellants were in fundamental breach of contract, or indeed, whether the Respondent had affirmed that breach by continuing to work for the Appellants and to participate in their duty solicitor rotas.

1. It will be apparent from the comments that we have made above that we intend to set aside the Tribunal's findings in relation to a protected disclosure dismissal under section 103A, save that the Tribunal's findings that there were protected disclosures made in good faith should stand. We also intend to set aside the alternative finding of unfair dismissal under section 94. On that basis, it seems to us that the Respondent will be able to argue before the Tribunal the RDF issue. Two further matters require our attention. The Appellants seek to set aside the automatic unfair dismissal finding under section 98A. The Tribunal dealt with this issue at paragraph 56:

"The parties agreed that the statutory disciplinary procedure was applicable. The Tribunal finds in the light of the authorities that the Respondents were in breach of that disciplinary procedure, not having warned the Claimant when inviting him to a disciplinary hearing that the outcome could be his dismissal. Accordingly on this ground also the Respondents unfairly dismissed the Claimant."

1. Mr Withington complained that the Tribunal's decision would appear to suggest that the dismissal was unfair, as the step one letter did not contain a warning that dismissal was a possibility. Mr Withington submitted firstly that the Tribunal did not indicate which authorities it had applied. The procedure is to be found in schedule 2, part 1, chapter 1 of the Employment Act 2002. The relevant provision is as follows:

"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."

1. In Alexander v Brigden [2006] at paragraphs 34 and 38, Elias J, giving the judgment of the court said this:

"34. First, the purpose of these statutory procedures is to seek to prevent the matter going to an employment tribunal if possible by providing the opportunity for differences to be resolved internally at an earlier stage: see the observations in the Canary Wharf case, paragraph 24. Hence the reason why these procedures apply at the stage when the dismissals are still only proposed and before they have taken effect. However, to achieve that purpose the information to be provided must be at least sufficient to enable the employee to give a considered and informed response to the proposed decision to dismiss.

38. Taking these considerations into account, in our view, the proper analysis of the employer's obligation is as follows. At the first step the employer merely has to set out in writing the grounds which lead him to contemplate dismissing the employee, together with an invitation to attend a meeting. At that stage, in our view, the statement need do no more than state the issue in broad terms. 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. In a conduct case this will be identifying the nature of the misconduct in issue, such as fighting, insubordination or dishonesty. In other cases it may require no more than specifying, for example, that it is lack of capability or redundancy. That is consistent, we think, with the approach which this Tribunal has adopted in relation to grievance procedures in the Canary Wharf and other cases. Of course, most employers will say more than this brief statement of grounds, but compliance with the statutory minimum procedure is in our view met by a limited written statement of that nature."

1. In Homeserve Emergency Services Limited v Mr R S Dixon UKEAT/0127/07, HHJ Peter Clark, giving the EAT judgment, whilst accepting the Alexander decision, went on to say this in relation to the facts of that particular case at paragraph 13 and 14.

"13. However, we have considered the alternative submission by Mr Hignett which is that it is implicit in the letter of 24 April calling the Claimant to a formal disciplinary meeting to consider a charge of breach of contractual obligations, that is conducting private business using company property, that the employer, here, is contemplating dismissal or other disciplinary action.

14. We accept that submission on the particular facts of this case. Indeed it is interesting that the Claimant, albeit he represents himself, identifies the purpose of step 1 in his Respondent's Answer as a letter informing employees of the allegation against them and that disciplinary procedures are being instituted as a result of the allegations. That, in our judgment, is precisely what the letter of 24 April did. Accordingly, in our view, the Tribunal was wrong in law to find that the Respondent had failed to comply with step 1 simply because the letter did not state that dismissal was a possible outcome."

1. The position was further complicated by a further EAT decision, Zimmer Limited v Brezan UKEAT/0294, where HHJ Burke QC said this at paragraph 23:

"Unless the employee is enabled to understand from the Step 1 letter that he is at risk of dismissal, in our judgment the purpose of the Step 1 letter in a dismissal case cannot be properly achieved. The employee is plainly entitled to have some idea what type of sanction is in the mind of the employer or, at least, in a dismissal case, that dismissal is in the mind of the employer, so that he knows the potential extent of what it is that he may be facing when, armed with the information given to him by the Step 1 letter, he goes to the Step 2 meeting."

1. However, later in the decision, in seeking to deal with the Homeserve decision, HHJ Burke said this at paragraph 25:

"We accept that on the facts of a particular case it is open to a tribunal to consider that the Step 1 letter, and information provided with it, can be regarded, in the individual circumstances of the case before them, as sufficient to communicate the risk to the employee of dismissal, albeit the letter itself does not expressly say that."

1. Mr Withington submitted that dismissal as a possibility was implicit from the letter of 12 November that the Appellants sent to the Respondent. It made reference to the firm's disciplinary procedure and he submitted that the nature of the allegations were such that it was obvious, even though not expressly stated, that dismissal was a likely consequence. Indeed, he points to the Respondent's letter dated 14 November 2008 in response to the letter inviting him to the disciplinary hearing stated that it was his view that:

"You are fabricating complaints to eventually dismiss me."

1. Mr Martin responds that whilst the Tribunal decision may not have dealt in detail with the authorities, the point was fully argued in closing submissions before the Tribunal, where he invited the court to follow the guidance in Alexander and further submitted that although Homeserve and Zimmer contemplated the possibility that in a particular case it could be said that the letter, together with the nature of the allegations and other information provided, made it clear to the employee that dismissal was a possibility, that this was not the situation in the instant case. Apart from the letter, no other information was provided and the letter itself made no reference to gross misconduct.

1. We do not agree. It seems to us that the first three allegations in the letter, namely the issue relating to letterheads, duty solicitor slots and the requirement for the handing over of the practice certificate were all matters alleged that had the potential to cause either loss to the firm, or in the case of the letterheads, suggested that the Respondent was setting up his own practice in competition. Those were very grave allegations and it seems to us that it was implicit from that letter that dismissal was a possibility, even though not expressly stated. At the very least, it seems to us that that is a question which the Tribunal should have asked themselves, in the light of the authorities that both counsel had placed before them, and accordingly, the rehearing should also deal again with this issue.

1. Finally, the issue of the counterclaim, dealt with by the Tribunal in paragraph 61.

"61. "Counterclaim" – The Respondents claim for losses consequent upon the transfer of the slots to another firm. As there is no contract claim in this matter this issue would be for consideration at the hearing as to compensation, in so far as relevant. However we feel it can only help if we express our opinion that for the reasons indicated above – namely that there was no transfer of slots – the Tribunal finds that there was no loss."

Although not set out in detail, the claim related to the Appellants' losses for the period January to July, caused by the Respondent's alleged failure to inform them of precisely what was happening regarding his duty solicitor participation, with the result that they were too late in arranging cover or an alternative member of the scheme for the next rota period, so that as a result they received fewer duty solicitor slots, and therefore less work. Mr Withington argued that the Tribunal were in error, particularly as the Tribunal had recognised and accepted jurisdiction for the counterclaim at the CMD, and at the introduction to the decision, the Tribunal recorded that the Respondent had a breach of contract claim for three months' notice pay, and the counterclaim was for the losses which the Appellants say stemmed from, "The reassignment of duty solicitor slots". Mr Martin responded that the counterclaim fell away on the basis that there were no findings as to breach of contract or misconduct, but in the light of our decision above in relation to the misconduct issue, a rehearing will also have to revisit the counterclaim.

1. We have considered whether the rehearing can take place before the existing Tribunal or a fresh tribunal. This Tribunal have clearly taken quite a robust view of some of the actions of both Mr Leccacorvi, and in particular Mr Bloom, in dealing with these matters and their view about their behaviour clearly influenced the decision, particularly in relation to the protected disclosure issue. Regrettably, therefore we are of the view that this matter should be looked at by a fresh Tribunal, but as we have indicated above, it should not be a complete rehearing but limited to the issues and findings successfully appealed. We would therefore invite both counsel to draft the terms of remission to the fresh Tribunal in the light of the guidance that we have already given.