Appeal No. UKEAT/0187/11/RN
EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
At
the Tribunal
On
18 July 2011
Before
HIS
HONOUR JUDGE PETER CLARK
MR D J JENKINS OBE
MRS M V McARTHUR BA FCIPD
COMPUTERS
IN THE CITY LTD APPELLANT
MR
A AMAMIZE RESPONDENT
Transcript of Proceedings
JUDGMENT
SUMMARY
UNFAIR DISMISSAL – Polkey deduction
CONTRACT OF EMPLOYMENT – Wrongful dismissal
Dismissal permissibly found to be unfair, but Employment Tribunal
erred in its approach to the question of a Polkey deduction and
in relation to the common law claim of wrongful dismissal. Appeal allowed in
part and case remitted to same Employment Tribunal for reconsideration of Polkey
and wrongful dismissal.
HIS HONOUR JUDGE PETER
CLARK
Introduction
1.
This is the full hearing of an appeal by Computers in the City Ltd, the
Respondent before the London Central Employment Tribunal, against the Judgment
of a full Tribunal chaired by Employment Judge Woffenden, promulgated with
Reasons on 2 February 2011, upholding the Claimant, Mr Amamize’s
complaint of wrongful dismissal and unfair dismissal subject to a
75 per cent contribution finding, brought against the Respondent, his
former employer. The Tribunal awarded the Claimant compensation totalling
£3,767.44.
The facts
2.
The Respondent is a small business employing some 14 staff, providing
computer services to companies in the financial sector. The company’s
principal was Mr McHugh de Clare (“Mr McHugh”). The Claimant
commenced his employment on 4 April 2005. His job title was Sales
Manager (New Business Division); his salary was £35,000 per annum plus
commission. His terms and conditions of employment were contained in a letter
of appointment dated 1 April 2005, which he signed. They included a
standard confidentiality clause, set out at paragraph 6.9 of the Reasons,
and a restraint clause prohibiting his taking employment with any of the
company’s clients during his employment and for a period of nine months
following termination (paragraph 6.10). The contractual notice period was
one month on each side. The company’s disciplinary rules provided for summary
dismissal in the following circumstances:
“Any serious misconduct or a serious breach of the terms of your
employment; or
The commission of any fraud or dishonesty, whether or not
connected with your employment; or
The misuse or divulging of any confidential information.”
3.
In October 2009 the Claimant went on three weeks’ holiday to Nigeria, returning to work on 27 October. Another employee, Mr Martin, was absent
at the same time as the Claimant due to an eye infection. During their
absence, concerned at the level of sales activity predicted by the Claimant was
not coming to fruition, Mr McHugh, his wife and another employee, Simon
Betts, carried out some research on the internet. They discovered the
following: a company, Pi Global Partners Limited (“Pi Global”) was incorporated
in 2006. Its directors included Mr Charles Chukwedo, a housing
officer. The Claimant was described as Chairman and CEO of the company, whose
stated object was to provide local businesses with global investors. An
introduction fee of £250 to such investors was mentioned. Irvin Shillingford,
a former employee of the Respondent now believed to be working for a
competitor, was described as a principal analyst, and Mr Martin as a
business analyst for Pi Global.
4.
The Claimant’s involvement in Pi Global was first spotted by Mrs Haines,
head of the Respondent’s administration, when she received a letter from Regus,
the well-known provider of office accommodation to business and a client of the
Respondent, addressed to the Claimant at Pi Global using the Respondent’s
address. That letter contained a ‘gold card’ entitling Pi Global to the use of
Regus’ services, together with invoices directed to the Claimant at Pi Global.
A search of the Claimant’s computer revealed pictures of him with various
expensive cars, some of them bearing his personalised number-plates. There was
also a reference which he gave to a tenant and two emails to Mr Martin
apparently unrelated to the Respondent’s business but to that of Pi Global. In
evidence to the Tribunal, the Claimant claimed that he told Mr McHugh at
his initial interview that he was in the early stages of setting up a company,
later to become Pi Global, as an intermediary for other companies seeking
funding. Mr McHugh denied that any such conversation took place. The
Tribunal accepted Mr McHugh’s account (paragraph 6.6), the suggestion
being raised by the Claimant for the first time late in the Tribunal
proceedings. The Tribunal found that had the Claimant mentioned his plan it
was inherently unlikely that Mr McHugh would have employed him, given his
fear that the Respondent’s confidential information might be disclosed.
5.
Secondly, the Claimant’s name was linked with a church in Croydon, the
Holy Sabbath of Christ. That church’s leader and Most Reverend Prophet was
shown to be the Claimant. The church’s days of worship included Fridays at
7.00pm to 9.00pm, and its web page stated that holy days started the day before
from evening to evening, 4.00pm to 4.00pm. That appeared to be inconsistent
with the arrangement that the Claimant had reached with Mr McHugh allowing
him to leave early on Fridays in order to attend a synagogue in Stamford Hill, North London.
6.
Armed with this information, Mr McHugh convened a meeting with the
Claimant on his return to work on 27 October at 10.00am. The Claimant was
not informed of the purpose of the meeting and was given no advance notice that
it was a disciplinary meeting. We pause to observe that the disciplinary
process followed by Mr McHugh would not have complied with the former
statutory dismissal and disciplinary procedure. Mrs Haines attended as
note-taker. An issue arose as to whether the Claimant was told that he could
be accompanied at the meeting. The Tribunal accepted the Claimant’s case that
he was not (paragraph 6.18). We have read Mrs Haines’ note of the
meeting, broadly agreed by the Claimant and referred to, together with
Mr McHugh’s handwritten notes at paragraph 6.17 and 6.18 of
the Reasons. The meeting ended with the Claimant’s summary dismissal by
Mr McHugh. He was not offered and did not ask for a right of appeal.
Mr McHugh’s reasons for dismissal are summarised at paragraph 6.19.
The Tribunal liability decision
7.
The law relating to both wrongful and unfair dismissal is correctly set
out at paragraphs 7‑16 of the Reasons. In their conclusions, the
Tribunal found that Mr McHugh’s attitude to what he had discovered during
the Claimant’s absence in Nigeria was to, “shoot first and ask questions
later.” The Respondent’s reasons for dismissal, summarised at
paragraph 6.19 and relating to his conduct, were accepted by the
Tribunal. However, the evidence fell short of amounting to a repudiatory
breach of contract by the Claimant (paragraph 18) justifying summary
dismissal. Accordingly, the complaint of wrongful dismissal succeeded. As to
unfair dismissal, having found that the Respondent had established a
potentially fair dismissal, conduct, the Tribunal concluded that the Respondent
did not have reasonable grounds for their belief in the Claimant’s misconduct,
having failed to carry out a reasonable investigation. Further enquiry was
warranted (paragraph 19). Further, the dismissal was procedurally
unfair. Having regard to the ACAS Code of Practice in the respects identified,
also at paragraph 19, the compensatory award was increased by
25 per cent to reflect those breaches of the Code.
8.
They dealt with the Polkey v AE Dayton Services Ltd
[1987] IRLR 503 HL argument raised on behalf of the Respondent shortly at
paragraph 20. The Polkey exception, that a proper procedure
would have been utterly futile, did not apply on the facts of this case.
Further, they felt unable to say whether dismissal would have occurred (we
interpose, fairly) had a proper procedure been followed. Consequently, no Polkey
deduction was made.
9.
Finally, they considered (paragraph 21) that the Claimant was
guilty of conduct contributing to his dismissal in a number of respects. They
assessed the level of contribution at 75 per cent. There is no
challenge on appeal by either party to that assessment, nor to the calculation
of compensation that is set out at paragraph 23.
The appeal
10.
Mr Pearman advances four separate grounds of appeal on behalf of
the Respondent. The Claimant has not attended this hearing before us, but we
take into account his written submissions by way of skeleton argument lodged on
1 July 2011. Having considered those written submissions by the
Claimant and the oral submissions of Mr Pearman, our conclusions are as
follows.
Wrongful dismissal
11.
We are satisfied that the Tribunal dealt with this aspect of the claim
at paragraph 18. However, we agree with Mr Pearman that the
Tribunal’s reasoning was flawed, in that it failed to take into account the
contractual term (paragraph 6.12) providing for summary dismissal for
dishonesty whether or not connected with the Respondent’s employment. The
relationship between the Claimant and Pi Global went beyond the question of
breach of confidence. It also raised questions of the Claimant’s honesty,
first in his dealings with the Respondent. We have been taken to the
Respondent’s notes of the meeting on 27 October 2009, not rejected as
inaccurate by the Tribunal in this respect (paragraph 6.18), in which he
denied that he was working for another company. He was: Pi Global. Secondly,
the information given on Pi Global’s website about the Claimant, his business
experience and his personal wealth, was plainly dishonest and misleading to
potential clients of that company. That some of the information was obtained
post-dismissal is immaterial for the purposes of determining the wrongful
dismissal, as opposed to unfair dismissal, claim (see Boston Deep Sea Fishing v Ansell [1988] LR 39 ChD 339).
12.
Further, the Tribunal failed to take into account in this connection the
reason given by the Claimant to Mr McHugh for having Friday afternoons off
work, attending a synagogue in Stamford Hill, when he was described as the leader
and Most Reverend Prophet of the Holy Sabbath of Christ church in Croydon.
Since dishonesty is in any event a breach of the implied term of trust and
confidence, itself a repudiatory breach of his contract of employment, this
aspect of the case requires, in our judgment, reconsideration by the Employment
Tribunal.
Unfair dismissal
13.
Despite Mr Pearman’s understandable focus on the dishonesty aspect
of the case, we are not persuaded that the Tribunal fell into error at
paragraph 19 in finding the dismissal unfair, both for the procedural
failures there identified and on the substantive failure to carry out a
reasonable investigation. Nor do we consider that the Tribunal were wrong in
law in concluding that this case did not fall within the Polkey
exception (see, for example, Spink v Express Foods
[1990] IRLR 320). However, we agree also with Mr Pearman that in failing
to grapple with the Polkey question as to whether a fair
procedure including a reasonable investigation would have resulted in a fair
dismissal, if not on 27 October then shortly thereafter, expressed as a
percentage chance, the Tribunal fell into the error identified by the Court of
Appeal in Thornett v SCOPE [2007] ICR 236 (see also Gover v
Property Care Ltd [2006] ICR 1073 CA and Software 2000 Ltd v Andrews
[2007] ICR 825 EAT, Elias P). This issue also, in our judgment, should be
remitted to the Tribunal for reconsideration.
Disposal
14.
It follows that this appeal is allowed in part. The issues of wrongful
dismissal and the Polkey deduction are remitted to the same
Tribunal, if practicable, for reconsideration. The fact that those issues are
remitted is not a reason, contrary to the submissions of Mr Pearman, for
us to remit also the unfair dismissal liability question in relation to which
we have found no error of law made out.
15.
Finally, the Tribunal is reminded that if a Polkey
deduction is found to be appropriate, that deduction must first be made from
the gross calculation of loss under the compensatory award, and the
75 per cent contribution finding must then be applied to the net
post-Polkey deduction figure (see Digital Equipment Co Ltd v Clements (No 2)
[1998] IRLR 134 CA).
