Appeal No: UKEAT/0127/07/CEA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 27 June 2007

Before
HIS HONOUR JUDGE PETER CLARK
MR I EZEKIEL
MR D BLEIMAN

HOMESERVE EMERGENCY SERVICES LIMITED	APPELLANT

MR R S DIXON	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR R HIGNETT
(of Counsel)
Instructed by:
Messrs Hatch Brenner Solicitors
4 Theatre Street
Norwich
NR2 1QY	
For the Respondent	MR R S DIXON
In Person	

SUMMARY
UNFAIR DISMISSAL

Procedural Fairness/Automatically unfair dismissal
Contributory Fault
Automatically unfair dismissal (ERA. s.98A (1). Whether step 1 and step 2 DDP complied with. Basic award; contribution; Minimum award under s.120.

HIS HONOUR JUDGE PETER CLARK

1.	This is an appeal by Homeserve Emergency Services Ltd, the Respondent before the Manchester Employment Tribunal, chaired by Mr J N A Sheratt against that Tribunal’s judgement, registered with reasons on 21 December 2006 following a hearing on 1 December, upholding the Claimant, Mr Dixon’s complaint of automatically unfair dismissal contrary to section 98A(1) of the Employment Rights Act 1996 (ERA) and the award of four weeks pay by way of a minimum basic award.  We shall describe the parties as they appeared below.  

The facts
2.	The Claimant was employed by the Respondent from July 1999 until his dismissal on 2 May 2006.  He was then aged 51 years.  His job title was Chief Service Engineer.  

3.	It seems that he purchased a door from the Respondent.  Quite probably he then arranged with a work colleague, Mr Parker, to fit that door to the home of Mr Parker’s neighbour.  On the night of 21 April 2006 the Claimant drove his works van to the location of the job and stayed with Mr Parker overnight.  It was a company rule that employees should not use company vehicles other than from home to work or on the Company’s business.  Whilst the Claimant and Mr Parker were fitting the door on the following morning, they were seen by Mr Graham Pye, their manager, who had seen one of the Company’s vehicles out on the road and discovered that it should not have been in the area.  Mr Pye approached the two men and challenged them and it was his evidence at the internal disciplinary hearing and before the Employment Tribunal, that both men admitted they were fitting at the door as a ‘foreigner’ (the vernacular for private work within Homeserve).  

4.	Both employees were then suspended and on 24 April 2006 the Manchester branch manager, Mr Sharp, wrote to the two men.  The letter to the Claimant read as follows: 
	“Dear Ray, 
Re Suspension/Disciplinary Hearing.
Following our discussion, I write to confirm you are suspended on full pay and invited to attend a formal disciplinary meeting to be held on Tuesday 2nd May 2006.  The meeting will be presided over by myself and Graham Pye will present the facts in respect of the following allegations: - breach of contractual obligations, namely conducting private business using company property.  The meeting will take place at 10.00am at the Manchester Branch.  You have the right to have a friend or colleague with you at this meeting providing they are a Homeserve Employee or a Trade Union representative”.  

5.	The disciplinary hearing took place separately in relation to each man, on 2 May, before a manager, Mr Harold Wilson.  Having considered what each had to say and the Claimant admitted that he was, “Doing a foreigner using Homeserve tools and equipment”, or at any rate Homeserve equipment, he said the tools were his own, Mr Halverson decided to dismiss both men and they were then summarily dismissed for gross misconduct.  They were informed by the letter of dismissal that they had a right of appeal.  The Claimant entered an appeal which was duly heard by Mr Gowland, the Regional Manager, on 30 May.  Having considered the matter, Mr Gowland dismissed the Claimant’s appeal on 2 June.

The Tribunal Decision
6.	First, so far as ordinary unfair dismissal was concerned - that is, dismissal for a potentially fair reason of conduct under section 98 ERA - the Tribunal concluded that the Respondent could reasonably come to the conclusion that the Claimant was guilty of the misconduct alleged and that dismissal fell within the band of reasonable responses.  Accordingly the Claimant’s ordinary unfair dismissal claim failed.  

7.	However, we are told by Mr Hignett that during closing submissions, the point not having been raised earlier by the Claimant or by the Tribunal, the Chairman raised with Mr Hignett a possible breach of section 98A(1) ERA - that is automatically unfair dismissal - for failure to complete the statutory dismissal and disciplinary procedure.  As to that, the Tribunal found, first, that the Respondent was in breach of step 1 of the procedure, in that the letter of 24 April failed to state that dismissal was a possible outcome.  Secondly, they found, at paragraph 10 of their reasons that the Respondent was also in breach of step 2 in that the Claimant was not given sufficient detail to enable him to put his side of the story properly.  They referred to the judgement of Elias P in Alexander v Brigden Enterprises Ltd [2006] IRLR 422 and further concluded that in the present case the Claimant was provided with nothing beyond the letter of invitation, until the case against him was presented at the disciplinary meeting.  

8.	Having found the dismissal automatically unfair under section 98A(1) they went on to consider compensation.  They held that the Claimant had contributed to his dismissal to the extent of 100%, so that no compensatory award would be made.  However, in relation to the basic award, they ordered the Respondent to pay the minimum basic award of four weeks pay limited to a maximum of £290, that is, a total of £1,160.  Their reasoning is contained at paragraph 14 where they say this, 

	“Counsel for the respondents submitted that the Tribunal should consider reducing the basic award under section 122(2) of the Employment Rights Act 1996.  In our judgement the more appropriate sub-section dealing with the basic award, made under the provisions following the failure to follow the standard procedures, is sub-section 3(a) and the Tribunal does not consider it just and equitable to reduce the minimum basic award, having regard to the nature of the award, in respect of the failure of the Respondent to follow the statutory procedures”. 

The appeal
9.	Mr Hignett represents the Respondent as he did below.  The Claimant has not attended for understandable economic reasons, but relies on his form ET1 before the Employment Tribunal, and his Respondent’s Answer in these appeal proceedings.  In that Answer he said this, 
	“I appeal against Homeserve Note of Appeal because the disciplinary letter dated 24 April 2006 failed to comply with step one.  The purpose of step one letter is to inform employees of the allegation against them and that disciplinary procedures are being instituted as a result of the allegations.  In my judgement Homeserve do not have a case”. 

10.	We begin with the relevant statutory provisions.  Section 98(a), headed: 
Procedural Fairness, provides: 
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.  

11.	Schedule 2, part 1, of the 2002 Act provides, so far as is material, step 1(i), 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; ii) the employer must send a 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(i) the meeting must take place before action is taken except in a case where the disciplinary action consists of suspension, and 2(ii) 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(i) the ground or grounds given in it, and b), the employee has had a reasonable opportunity to consider his response to that information.  

12.	We shall turn to the provisions relating to the basic award later in this judgement.  We deal first with the finding of automatically unfair dismissal under section 98A(1).  It is convenient to deal with the two steps of the DDP in turn.  Step 1: Mr Hignett submits, first, that on its wording step 1 does not require the employer to state that he is contemplating dismissal or some other disciplinary sanction.  The difficulty with that submission is a passage in the judgment of the President in Alexander, paragraph 38, where he said this: 

	“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 that state the issue in broad terms. We agree with Mr Barnett that at step 1 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.”

We do not propose to depart from that statement of the law contained in Alexander.  

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 judgement, 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.  

Step 2
15.	The hearing in this case preceded judgement being given on behalf of the EAT by Underhill J in YMCA v Stewart [2007] IRLR 185.  At paragraph 11 of that judgement, Underhill J made clear that although the statutory procedure refers to step 1 and step 2, it is not a requirement that the step 2 events should follow the step 1 letter.  It seems to us that the matters set out in step 1 may precede or come at the same time as, or post date, the step 1 letter.  Thus when, in paragraph 10 of their reasons, the Tribunal note that the Claimant was provided with nothing beyond the letter of invitation until the case against him was presented at the disciplinary meeting, it seems to us that they fell into error in considering that something must take place between the step 1 letter and the disciplinary hearing.  

16.	The facts of this case are stark.  The Claimant and his colleague were caught in the act by their manager, Mr Pye.  He did not pass on by, but challenged them at the time.  They effectively admitted the offence there and then.  Thus when one returns to the step 1 letter, the reference to Mr Pye presenting the facts in respect of the allegation against the Claimant immediately told the Claimant of the event which had led to the disciplinary meeting.  
17.	There is a further point taken by Mr Hignett which we consider has considerable force.  The Tribunal, at paragraph 10, appear to have found that the Claimant was not given sufficient detail to enable him to put his side of the case properly.  We have searched within the papers before us, for any hint of a complaint by the complainant that he was not adequately prepared when he attended the meeting on 2 May.  There is none.  Mr Hignett tells us that no evidence to that effect was led before the Employment Tribunal and it is noticeable that in his Respondent’s Answer, whereas the Claimant seeks to support the Tribunal’s finding in relation to step 1 of the procedure, he makes no separate submission in support of the finding in relation to step 2.  

18.	It therefore seems to us, on this additional ground, that the Tribunal fell into error in the sense identified by Lord Donaldson MR in Piggott Bros v Jackson [1992] ICR 85, page 92D.  That is, they made a material finding of fact wholly unsupported by evidence.  For these reasons we are persuaded by Mr Hignett that the Tribunal fell into error in respect of their findings both in relation to step 1 and step 2 of the DDP.  It follows, in those circumstances, that the appeal succeeds and the finding of automatically unfair dismissal, under section 98A(1) goes.  Since the Tribunal found under section 98 dismissal was fair, it follows that we shall dismiss the claim of unfair dismissal.  

Basic Award
19.		It also follows that it is not strictly necessary for us to decide this limb of the appeal.  However, we make the following comments.  Section 118(1)(a) ERA provides that where a Tribunal makes an award of compensation for unfair dismissal, the award shall consist of, (a) a basic award calculated in accordance with sections 119 to 122 and 126.  Applying the ready reckoner in section 119, the Claimant was employed by the Respondent for six years.  All of that service was given over the age of 41 and consequently on the face of it he is entitled to nine weeks pay at the then statutory maximum, by way of a basic award.  That starting position may be reduced, in particular under section 122(2), where the Tribunal considers that any conduct of the complainant before the dismissal was such that it just and equitable to reduce or further reduce the amount of the basic award to any extent.  The Tribunal shall reduce or further reduce that amount accordingly.  

20.	Looking at paragraph 40 and at the Tribunal’s reasons, they do not make it clear whether, having started at nine weeks pay under section 119, they then reduce that to zero, under section 122(2).  What they have focused on is section 120 which as far as material provides by section 120(1)(a) that where an employee is regarded as unfairly dismissed under section 98A(1) then he shall receive not less than four weeks pay by way of a basic award.  That provision would only apply if the Tribunal had extinguished the section 119 award by virtue of section 122(2).  

21.	However, the Tribunal found that the relevant provision was section 122(3)(a) which provides: 
“Where the complainant has been awarded any amount in respect of the dismissal, under a designated dismissal procedures agreement, the Tribunal shall reduce or further reduce the amount of the basic award to such extent as it considers just and equitable having regard to that award.”

We are mystified as to why the Tribunal has referred to that provision, there being no question here of any award under a designated dismissal procedures agreement.  We accept Mr Hignett’s submission that the question, given that section 122(2) does not apply to the minimum award under section 120, see Ingram v Bristol St Parts (UKEAT/0601/06/CEA) 23 April 2007, Elias P presiding, paragraph 33, that the relevant provision is section 1201(b) which provides that an Employment Tribunal shall not be required by sub-section 1(a) to increase the amount of an award if it considers that the increase would result in injustice to the employer.”  

22.	As in the case of Ingram, had we upheld the finding of automatically unfair dismissal under section 98(a)1, we would have remitted the question under section 120(1)(b), to the same Tribunal, for determination.  That is the question, as to whether the minimum four weeks pay award, under section 120, would result in injustice to the employer.  However, since we have upheld the appeal on liability there is no need to order remission for that purpose.