Appeal No. EATS/0041/02

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH EH3 7HF

	At the Tribunal
	On 26 February 2003

 
Before
THE HONOURABLE LORD JOHNSTON
MR A G McQUAKER
DR W M SPEIRS

 

STOLT OFFSHORE LTD	APPELLANTS

 

 
CAMERON FRASER	RESPONDENT

 
 
Transcript of Proceedings
 
JUDGMENT

 

 

 

 

 

	APPEARANCES

 

For the Appellants	Mr S Saluja, Solicitor
Of-
Messrs Paull & Williamsons
Solicitors
New Investment House
214 Union Street
ABERDEEN   AB10 1QY

 

For the Respondent 

 

 

 

Mr F H Lefevre, Solicitor
Of-
Quantum Claims
Employment Division
70 Carden Place
Queens Cross
ABERDEEN   AB10 1UP

 

LORD JOHNSTON:
 
1.	This appeal is focussed on a short but sharp point, which based the decision of the majority of the Employment Tribunal in favour of the employee.
 
2.	The background to the matter is that the respondent was employed on a series of fixed term contracts by the appellants, extending to one year.  The first one ran for the currency of 1999.  The second one for the year 2000 and, at the time of dismissal, a third one was running in relation to the year 2001.  As frequently happens, in fact, formal contracts were not signed and sealed until well into the relevant periods but nevertheless they were in force. 
 
3.	As a consequence of certain conduct by the employee in November 1999 he was issued with a final written warning which was confirmed by letter dated 24 January 2000.  It was stated to be in force for 24 months.  Subsequently, consequent upon further misconduct by the employee almost a year later, he was dismissed against the background of the existence of the final written warning, still it was maintained, being in force.
 
4.	No issue was taken as so far as we can see as to the fairness of the procedures adopted by the appellants with regard to the way the matter was handled nor with regard to the issue of the original written warning.
 
5.	Against that background the relevant part of the Tribunal’s decision is as follows:-
 
“This issue, however, was more complex when we came to consider the contractual position, for Stolt had decided that the final written warning should last for 24 months and while there is no legal provision governing the length of time a disciplinary warning should remain on an employee’s file, in this particular case the 24 months duration of the warning had to be considered in the context of Stolt’s practice of issuing fixed term 12 monthly Contracts to their employees. We were considerably exercised by this issue and at the end of the day, after much deliberation, the Tribunal was divided (the Chairman dissenting).
 
It was the 1999 Contract (R7) which governed the contractual position between the parties when Mr Fraser was issued with the final written warning on 24 January 2000 as it was not until 11 April 2000 that the 2000 Contract came into force.  The majority considered that it was contradictory to put in place a 24 month warning when the Contract of Employment was only due to last 12 months.  It was nonsensical.  The majority were of the view that while contractually Stolt had a discretion to issue a Final Written Warning with a 24 months duration, if the final warning was to remain in place it was incumbent upon Stolt, as a reasonable employer, to specifically draw Mr Fraser’s attention to this when they gave him a new Contract in 2000.  However, as they did not do so, the Final Written Warning did not apply to the new Contract and  it was not reasonable for them to have regard to the Final Written Warning when Mr Fraser was disciplined in 2001.  They did not consider that these were the actings of a reasonable employer and accordingly as they should not have had regard to the final written warning the dismissal was unfair. 
 
The Chairman, however, took a different view.  With a degree of hesitation, he was persuaded, having regard to the terms of Stolt’s Disciplinary Rules and Procedures that they did have a discretion to issue a Final Written Warning, “beyond the norm” (as their Solicitor put it) by having regard to Paragraph 1.3 (R11/3), 2.4 (R11/8) and, in particular, 2.6(R11/10) of the Disciplinary Policy, Rules and Procedures which applied at the time.   While the Tribunal as a whole, had considerable sympathy for any Stolt employee who had to tackle all of the documentation which was accurately described by the applicant’s Solicitor as a “maze,” the Chairman was mindful that Mr Fraser, was advised in writing, that the Final Written Warning would last for 24 months and he did not Appeal against that decision.  Moreover, he had been employed by Stolt for a number of years and he was aware that early each year, if not on 1 January each year, he would be issued with a new Contract of Employment.  Having regard to the seriousness of Mr Fraser’s misconduct the Chairman did not consider it unreasonable for Stolt to issue the Final Written Warning with a 24 months duration and having regard to Mr Fraser’s knowledge of the procedures which Stolt followed the Chairman took a different view from the two members.  In his view, it was reasonable for Stolt to take the view that the Final Written Warning would continue for the full 24 months period and it was not unreasonable of them not to advise Mr Fraser that the Warning was still in force when they entered into the 2000 Contract with him. The Chairman considered that it was reasonable for Stolt to proceed on the basis that the Final Written Warning would remain in place and that Mr Fraser would be aware of this, for after all although he was issued with annual Contracts and Mr Fraser’s position was that he had continuity of employment with Stolt back to September 1997.  The Chairman considered, therefore, that it was reasonable for Stolt to take account of the Final Written Warning and when Mr Fraser’s subsequent misconduct was considered, that dismissal was a reasonable sanction. 
 
However, it is the majority view which prevails and as that view was that it was unreasonable for Stolt to have regard to the Final Written Warning it follows that the decision to dismiss Mr Fraser did not fall within the band of reasonable responses which a reasonable employer might have adopted and accordingly his dismissal was unfair.  Indeed, it was accepted by the applicant’s Solicitor that it was necessary for Stolt to be able to have regard to the Final Written Warning to render the dismissal fair.”
 
6.	Mr Saluja, appearing for the appellants, in essence, adopted the reasoning of the Chairman in the minority.  He submitted that it was perfectly competent against the background of the contractual documents for the employer to issue a warning to last for 24 months, that is to say, longer than the fixed term of 12 months and, as we understand it, no issue was taken in this respect with that position by Mr Lefevre, appearing on behalf of the respondent.  
 
7.	Mr Saluja went on to submit that against the background that there was no assertion of unfairness in respect of the circumstances surrounding the dismissal as a matter of fact, the majority had misdirected themselves by relying upon the fact that the renewal contract did not contain a restatement of the 24 month warning and furthermore they thought it was “nonsensical” that a 12 month contract should carry a 24 month warning.  The substance of their position was that the employer was required to bring Mr Fraser’s attention to this when they gave him his new contract.  Mr Saluja said there was nothing incongruous about this situation, contrary to the views of the majority, and, in certain circumstances, to take the view that a 24 month warning which was competently issued could not apply beyond the 12 month period, would make a nonsense of an attempt by the employer to impose a disciplinary procedure on the employee.  He further submitted that having regard to the terms of section 95 of the Employment Rights Act 1996 which in effect declare a failure to renew of fixed term contract as a dismissal the employee would gain an advantage, if there was a renewal.  Looking at the matter broadly in terms of section 98(4) as the Tribunal was required to do, a proper view of fairness would entitle the employer to continue the warning in operation without bringing it specifically to the notice of the employee on the creation or entering upon the new contract.
 
8.	Mr Lefevre’s position was that the majority were entitled to take the view they did of the contractual position but in any event his basic position was that if we considered the majority misdirected themselves there would require to be a fresh hearing.
 
9.	We were referred to the following authorities, namely, Stein v Associated Dairies Ltd [1982] IRLR 447, Auguste Noel Ltd v Curtis [1990] IRLR 326, Donald Cook & Son Ltd v J C Carter [1977] IRLR 88, Sainsbury’s Supermarkets Ltd v Hitt [2003] IRLR 23, Bevan Ashford v Malin [1995] IRLR 360 and a decision of this Tribunal, Eamonn Rankin v Bernard Smith EAT/233/02 (unreported).
 
10.	We consider there is no inconsistency as a matter of law with the existence of a 12 month contract of a fixed term and the issuing of a warning to last for a period longer than that provided there is power in the original contractual documents to make such an order.  No one disputes in this case that the company had a discretion so to do.  Given that position, the only question is whether the renewal contract had to make a reference to the existing and continuing warning before it could continue to be effective and we consider this position goes too far.  We consider the effect of section 95 which is designed primarily to protect an employee has the secondary result of entitling the employer to assume that when he does renew the contract it contains aspects of the previous contract which are still relevant, without having the need to do so in express terms.  Thus we consider, that applying the broad test of an employer responding reasonably to the conduct of the employee that the Tribunal should have taken into account the continuing existence of the 24 month warning at the material time.
 
11.	In these circumstances we consider that the Tribunal Chairman, in the minority, came to the correct decision.  It remains to decide what should be done.  Having looked at the matter against the uncontested facts and considering the real issue is one of law, we are satisfied that the only conclusion that could reasonably be drawn is the one that favours that position.
 
12.	In these circumstances we will allow this appeal, make a finding that the dismissal effected by the employer was fair and quash the decision of the Employment Tribunal.