Appeal No. EAT/392/93 

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 23 November 1994

	Before

	HIS HONOUR MR JUSTICE HOLLAND

	MR R H PHIPPS

	MRS P TURNER, OBE

NORWICH CO-OPERATIVE SOCIETY LIMITED	APPELLANTS

R D PEART	RESPONDENT

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MISS J WOODWARD
(OF COUNSEL)
Croftons
Television House
Mount Street
Manchester    M2 5FA

For the Respondent	MR D BROWN
(OF COUNSEL)
The Legal Officer
USDAW
188 Wilmslow Road
Fallowfield
Manchester    M14 6LJ

	MR JUSTICE HOLLAND:  This is an Appeal by the Respondent employers from a decision of an Industrial Tribunal, sitting at Norwich on 21 September 1992 and 19 November 1992.  It was the unanimous decision of the Tribunal that the applicant, Mr Peart, was unfairly dismissed, and did not contribute towards his dismissal.  The Tribunal then went on to assess the basic award in the sum of £2,306.25p and the compensatory award in the sum of £10,000.

	The essential facts that led up to the application to the Industrial Tribunal are as follows:

	Mr Peart was, at all material times, up to 6 February 1992, the Branch Manager of the Appellants' Witard Street Store, in Norwich.  The problem ultimately arose by reason of an inspection of that store carried on 30 January 1992 by a Mr Hutchings of the Appellants' staff.  For present purposes, we need do no more than read from paragraph 3 of the Summary Reasons, promulgated by the Industrial Tribunal on 11 January 1993, that is: 

	"Mr Hutchings undertook the inspection accompanied by Miss Pitt, who it appears had got there shortly before him.  Mr Hutchings inspected all of the main sections of the store and it would appear that Miss Pitt confined herself to looking at the fresh vegetables in the freezers.  A summary of their findings is as follows.  First, that there was some 57 items of goods on the shelves which were out of date.  Second, that there were numerous instances of the prices on the goods for sale, either being too high, which was the normal case, or occasionally too low.  On the freezer side of the business it was alleged that they found that no recording was taking place of the temperature check on the chilled food cabinets and in particular a book, which is intended for that purpose, could not be found.  Additionally, ............. they also found that the regulations were not displayed."

	On 6 February in the light of those findings, there was a disciplinary hearing which concluded that Mr Peart should be dismissed.  That finding was confirmed in writing by a letter of 7 February from the Appellants to Mr Peart.  It reads as follows:

	"...I am writing to confirm my decision taken at the disciplinary hearing held on 6th February, 1992 that you be dismissed.  You will receive payment in lieu of notice, you will also receive accrued holiday pay etc.  Arrangements will be made for you to receive these payments over the next few days.

	The reasons for your dismissal were:-

	-	following an inspection at your store 57 items of goods were found to be out of date.

	-	pricing violation where the price of goods displayed were different to the shelf edge label.

	-	temperature checks had not been recorded correctly.

	-	COSHH regulations were not displayed.

	You did not deny any of these.

	I explained that if your store had been inspected by one of the enforcing authorities the Society would have been heavily fined, not to mention the damage to the business caused through adverse publicity.

	The horrendous scale of these irregularities left me with no alternative but to dismiss you as I have no confidence whatsoever now in your management ability in running a store for this Society.

	You were told that you have a right to appeal against my decision in accordance with the Disciplinary Procedure.

	Your Trade Union representative, Mr. Scott, who attended the disciplinary hearing has been sent a copy of this letter..."

	In the event, the applicant availed himself of the Appeal procedure.  There was an Appeal Hearing on 24 February and by a letter of 27 February, he learned that that Appeal had been rejected.  In the result on 24 March, there was the application to the Industrial Tribunal.  We are now in a position to turn to this Appeal.

	The central submission made on behalf of the Appellants is that, as appears from the summary reasons, the Industrial Tribunal misdirected itself as to Law, that is, it misdirected itself as to Section 57 Employment Protection Consolidation Act 1978 and the tests that are raised by it's terms.  Section 57 so far as relevant, reads as follows:

	(1)	In determining for the purposes of this Part whether the dismissal of an employee was fair or unfair, it shall be for the employer to show-

	(a)	what was the reason (or, if there was more than one, the principal reason) for the dismissal, and

	(b)	that it was 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 that employee held.

	Subsection (2) reads so far as relevant:

	"(2)	In subsection (1)(b) the reference to a reason falling within this subsection is a reference to a reason which-

	(a)	related to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do, or
	
	(b)	related to the conduct of the employee..."	

	Section 57(3) reads:

	"..(3)	Where the employer has fulfilled the requirements of subsection (1), then,... the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend 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 that question shall be determined in accordance with equity and the substantial merits of the case....."

	Turning to the reasons, it is common ground that the critical passages for present purposes, feature in paragraphs 5 and 7, subparagraph (1).  Paragraph 5 reads:

	"...5	The tribunal accepts that the employer, and in particular, Mr Hutchings, was believing genuinely that this did not constitute a gross dereliction of duty.  Mr Peart himself accepts that he has overall responsibility for this store.  The main issue however in this case is not so much the reason for dismissal, it is more a question of whether having regard to the size and resources of the undertaking, and equity and the substantial merits of the case, the employer acted reasonably in treating what it found as a reason for dismissal given the context of how it occurred and the explanations provided by Mr Peart..."

	Paragraph 7, so far as material reads:

	"...7	For all those reasons in summary we feel that the following apply in this case:

		(i)	The employer could be said to have had a reason for finding a dismissal in the first instance.  However, given the context of what had been happening in this store and the changeover to the shift pattern and the problems with run-up to stock check, we do not feel that a fair employer would have dismissed Mr Peart.  It is our view that a competent management would have taken active steps to try and deal with the problem in concert with Mr Peart and that this would have been the positive way forward.  We also feel that it would have been right to warn him formally that it must not happen again, because we appreciate the serious implications for the company.  What we do not consider is fair in these circumstances is to have dismissed him.  We consider that that was carried out of proportion having regard to the context of the situation, the length of service of Mr Peart, his age and the fact that this was a case where there had been a breakdown in our view within management as to the proper running of this store, not just by Mr Peart but also by his superiors..."

	Averting to these findings, it is implicit, we think, but certainly not explicit, that the Industrial Tribunal made findings favourable to the employers with respect to the issues raised by Section 57 (1) and (2).  We take the view that the first sentence of paragraph 5 effectively expresses such.  We further take the view with rather more diffidence that the first sentence of paragraph 7 has a similar effect.  Although in the Notice of Appeal, the Appellants did challenge that view, that argument has realistically not been persisted in before us in the course of this Hearing.  That then means that the full attention has to focus on Section 57 (3).

	The issues raised by that Subsection, have been discussed in a number of cases.  One such case is British Leyland UK Ltd. v Swift [1981] IRLR 91.  It is a decision of the Court of Appeal with Lord Denning M.R. giving the leading judgment.  We need only to refer to one very well known passage in that judgment at 93: 

	"...	The first question that arises is whether the Industrial Tribunal applied the wrong test.  We have had considerable argument about it.  They said'...a reasonable employer would, in our opinion, have considered that a lesser penalty was appropriate'.  I do not think that that is the right test.  The correct test is: Was it reasonable for the employers to dismiss him?  If no reasonable employer would have dismissed him, then the dismissal was unfair.  But if a reasonable employer might reasonably have dismissed, then the dismissal was fair.  It must be remembered that in all these cases there is a band of reasonableness, within which one employer might reasonably take one view: another quite reasonably take a different view.  One might quite reasonably dismiss the man.  the other would quite reasonably keep him on.  Both views may be quite reasonable.  If it was quite reasonable to dismiss him, then the dismissal must be upheld as fair: even though some other employers may not have dismissed him..."

	The question for an Industrial Tribunal in these circumstances, was further and helpfully illuminated in the opening passages of the judgment another member of the Court, Lord Justice Ackner.  He said:

		"Where an employee is guilty of gross dishonesty, as the respondent was so held to have been, there is generally speaking available to the employer a number of options which he can reasonably take.  It depends entirely on the circumstances of the case whether dismissal is one of the penalties which a reasonable employer would impose.

		As have been frequently said in these cases, there may well be circumstances in which reasonable employers might react differently.  An employer might reasonably take the view, if the circumstances so justified, that his attitude must be a firm and definite one and must involve dismissal in order to deter other employees from the like conduct.  Another employer might quite reasonably on compassionate grounds treat the case as a special case..."

	Similar assistance is provided by Iceland Frozen Foods Ltd. v. Jones [1982] IRLR 439.  We need only cite from the headnote as follows:

	"...	The authorities establish that in law the correct approach for an Industrial Tribunal to adopt in answering the question posed by s.57(3) is as follows:

		(1)	the starting point should always be the words of s.57(3) themselves;

		(2)	in applying the section an Industrial Tribunal must consider the reasonableness of the employer's conduct, not simply whether they (the members of the Industrial Tribunal) consider the dismissal to be fair;

		(3)	in judging the reasonableness of the employer's conduct an Industrial Tribunal must not substitute its decision as to what was the right course to adopt for that of the employer;

		(4)	in many (though not all) cases there is band of reasonable responses to the employee's conduct within which one employer might reasonably take one view, another quite reasonably another;

		(5)	the function of the Industrial Tribunal, as an industrial jury, is to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted.  If the dismissal falls within the band the dismissal is fair: if the dismissal falls outside the band it is unfair..."

	Turning then from the Section and from the further citation of these very well known passages from the Reports, we consider the reasons promulgated in this case.  The first observation that has to be made is that in paragraph 5, the words of the subsection are not in the event fully cited.  There is a plain and not insignificant contrast between the words set out in the Reasons and the words already cited which find their place in subsection (3).  In particular, as Miss Woodward has pointed out in an address conspicuous by its skill, the citation in paragraph 5 omits the crucial "sufficient" before the word "reason" and she submits with force that the concept of "sufficient reason" is a concept which underpins the analysis of the subsection that principally stems from the judgment of Lord Denning as already cited.

	Second, and turning to paragraph 7, it is unhappily apparent that the critical sentence 	"...However, given the context of what had been happening in this store and the changeover to the shift pattern and the problems with run-up to stock check, we do not feel that a fair employer would have dismissed Mr Peart..."
does not reflect the test as promulgated in the authorities cited.  The test is not what a fair employer would have done: the test is wider; it is as set out earlier in this judgment.  Thus, pausing here, there is on the face of these Reasons, plain misdirection as to Law.

	Our next concern is whether that misdirection as to Law is sufficient to found an Appeal.  As to this, we have been properly referred first to the decision in Conlin v. United Distillers [1994] IRLR 169. We need only read the headnote:

		"...The EAT had rightly emphasized that although failure to make express reference to the terms of s.57(3) of the Employment Protection (Consolidation) Act or to the "range of reasonable responses" test may not always amount to a fatal flaw in the decision of an Industrial Tribunal: nevertheless, it is essential that it should be apparent from the tribunal's decision that the correct test has been identified and applied.  Unless the Tribunal refers to s.57(3), or at least summarises the wording, the EAT may have difficulty in concluding that the Tribunal has applied its mind to the statutory requirements.

		In the present case, there was nothing in the Industrial Tribunal's decision to indicate that the question of whether the dismissal of the employee fell within the range of responses of a reasonable employer was ever considered.  The Tribunal appeared simply to express its own opinion upon whether the dismissal was unfair..."

	Thus it is, that this Tribunal has anxiously examined the Reasons as a whole and in particular, so much of them as follows upon the sentence cited above, to see whether in the event notwithstanding the unhappy language, the Industrial Tribunal did apply its mind to the appropriate test and make findings accordingly.  It is this part of the exercise which has of necessity taken much care from this particular Tribunal, so that a fair assessment can be made.

	Initially, indeed, we thought that it might be possible to make a finding that the right test had been applied and Mr Brown on behalf of the Appellants, has drawn forceful attention to the words "out of proportion" as used in paragraph 7, submitting that that concept does suggest that the Tribunal in the event did have its eye on the appropriate ball.  But at the end of the day, we are not satisfied that this Tribunal did apply the appropriate test, that is, that it did properly direct itself as to the law, so as to define the issue that they had to resolve.  The situation in the view of this Tribunal matches that to be found in a further authority, that is Gair v. Bevan Harris Ltd. [1983] IRLR 368.  We need only refer to one paragraph in the judgment of the Lord Justice-Clerk: it is the penultimate paragraph and is on page 369:

		"...The reply by counsel for the respondents was brief but very much to the point.  He pointed out that in the case of British Leyland UK Limited v Swift the Industrial Tribunal had applied the test that 'a reasonable employer would, in our opinion, have considered that a lesser penalty was appropriate'.  That was said by Lord Denning to be the wrong test and led to his statement of the correct test.  In the instant case that was what the Industrial Tribunal had in effect said.  They thought that a lesser penalty, namely the offer of employment as an operator, would have been appropriate.  The Industrial Tribunal had concentrated on what an employer might have done and labelled that reasonable, instead of considering whether what was done was within the band of reasonableness which could embrace different disposals.  Thus, having regard to all the circumstances, while offering alternative employment might have been within the band, it could not be said that dismissal was outwith it.  The Appeal Tribunal had taken the correct approach and had arrived at a decision which could not be impugned..."

	In the judgment of this Tribunal, the Industrial Tribunal had taken a course which matched that that was under criticism in that case.  Doing the best we can to construe the language that was used, we too feel that it reflects a concentration upon what an employer might have done, so as to label that as reasonable, instead of considering whether what was done was within a band of reasonableness which could embrace different disposals.  We have taken this view reluctantly, having regard to the consequences that necessarily follow:  and because we are concerned to pay proper heed to the many authorities which indicate that the reasons of an Industrial Tribunal do not have to be expressed in legalistic language that is readily susceptible to close analysis.

	That said, the passages that inevitably have to be under examination in this case, simply in our judgment, do not reflect a proper approach to the issues raised by Section 57(3) as identified by the cases that are cited.  In the event, therefore, we allow this Appeal and we shall remit this case for re-hearing before a fresh Tribunal.

	Before we depart from this case, we allow ourselves a word of comment.  We draw attention to the delay between 19 November 1992 when the hearing concluded and 11 January 1993 when the Reasons were promulgated.  We do think it fair to comment that during that period, it would not have been difficult and indeed would have been very easy to make findings which actually reflected Section 57.  It really must be unacceptable to have the parties first and this Tribunal second, examining the Reasons to discover whether there has been a finding under Subsection (1) and (2) when it is so easy simply to refer to those Subsections and specify that findings have been made.

	Second, we would have hoped that during that period the true issues might have been identified and set down in the Reasons so that the findings of fact could be applied thereto.  Again, the end result of what happened during that period has been the inevitable delay and expense necessarily arising from this Appeal.  Yet further it has meant an anxious examination of language which on any view, is inept to deal with the issues that are raised by Subsection (3), which issues are wellknown having regard to the extent to which the cases cited above, in particular the first two, now amount to trite Law.  It is very easy for this Tribunal to be over-critical of an Industrial Tribunal, but we do feel that we are simply drawing attention to fairly minor requirements in terms of effort which failed to be fulfilled over a very significant period of time away from the immediate pressures of the hearing itself.