Appeal No. EAT/0044/03 DA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 21 May 2003

Before
HIS HONOUR JUDGE BIRTLES
MISS A GALLICO
MR S M SPRINGER MBE

MISS Z E BARRATT	APPELLANT

HELEN HUGHES & IAN STOBIE t/a COLONIA OF BAILGATE	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR TIMOTHY WALKER
(Solicitor)
Instructed by:
Messrs Page Nelson Solicitors
5 Lindum Road
Lincoln LN2 1NX	
For the Respondent	MS RACHEL TONEY
(of Counsel)
Instructed by:
Messrs Hindmarch Banks Solicitors
The Bearings
Bowbridge Road
Newark
Nottinghamshire NG24 4BZ	

HIS HONOUR JUDGE BIRTLES

1	This is an appeal from the decision of an Employment Tribunal sitting at Lincoln on 4 November 2002.  The decision was entered on the register and sent to the parties on 27 November 2002.  The Chairman was Mr J S Walker.

2	The Employment Tribunal unanimously decided, first, that the Appellant, Miss Barratt was not unfairly dismissed by the Respondents and therefore dismissed her complaint of unfair dismissal.  Second, that there was a breach of contract in a failure to give notice or pay in lieu of notice and that sum was agreed as being £1,050.  There is no appeal against the second part of the Employment Tribunal’s decision.

3	The material facts are set out in the Extended Reasons of the Employment Tribunal, running from paragraph 6 through to paragraph 17.  They are incorporated in this judgment and they are the facts found by the Tribunal.  We do not seek to go behind them.  

4	Suffice it to say that Miss Barratt was employed from 1982 through to the date of her dismissal.  Originally she was employed by a Mr David and Mrs Sylvia Hughes in a business called Colonia of Bailgate in Lincoln.  This was originally a restaurant.  At some later date the restaurant closed and the premises re-opened as a china and gift shop.  Miss Barratt, having originally worked in the restaurant, continued to work for Mr and Mrs Hughes as an assistant in the shop.  In addition she did other things such as picture framing and cleaning the stock.  The Tribunal found that Miss Barratt had a good relationship with both Mr and Mrs Hughes.  There was no written contract of employment, but the contractual details do not concern us in this appeal.

5	Mrs Hughes sadly died in December 2001 and Mr Hughes died on 5 April 2002.  After Mrs Hughes’ death, Miss Barratt carried on working in the shop and indeed moved into the flat upstairs.  After Mr Hughes’ death Miss Hughes inherited the responsibilities of the business.  The shop was initially closed but then it was decided to re-open the shop.  That was done on 10 June 2002.  There had been a conversation between Miss Hughes and Miss Barratt about Miss Barratt continuing in employment and the idea was that Miss Barratt would now continue in employment as a home help for Miss Hughes carrying out household duties, so that Miss Hughes could operate the shop.

6	On Wednesday 26 June 2002 Miss Hughes found an envelope underneath the shop door addressed to her.  It contained a letter from Miss Barratt’s sister.  Miss Barratt and her sister were estranged.  The letter expressed condolences to Miss Hughes and informed her that Miss Barratt and the late Mr Hughes had had an affair.  Miss Hughes was upset by the allegation and her partner, Mr Stobie, told Miss Barratt not to come to work that day.

7	A meeting was arranged for the following morning, 27 June 2002.  Before that meeting Miss Hughes, who had been sorting out her parents’ personal property, came across some audio tapes which apparently belonged to Mrs Hughes.  She played one of them and found that it contained material that she believed was corroborative of the allegation made in the letter.  Neither that tape nor a transcript was provided to Miss Barratt, nor to the Employment Tribunal.

8	When Miss Barratt came into work on 27 June 2002 she had a conversation with Miss Hughes.  Mr Stobie was also present.  The Tribunal found the following facts at paragraph 15 of its Decision:

15	“She [that is, Miss Barratt] was asked if she had had an affair with the late Mr Hughes.  She denied that.  It is fair to say the letter and the tape were not shown to her nor was she given any opportunity to see them or listen to the tape although she was told about them.  There was then a conversation between the two ladies about whether or not Miss Barratt would resign with a reference or whether she would be dismissed without a reference.  Mrs Hindmarch [I interpose, the solicitor for the Respondents] very fairly accepted that what transpired between them did amount to a dismissal.  It is clear to us that Miss Hughes had made up her mind from the outset that she was going to dismiss Miss Barratt.  Miss Barratt did not work again for Miss Hughes and Mr Stobie.”

9	The Tribunal then went on to set out the law in paragraphs 18-23 of its decision and referred to the well-known decision of British Home Stores v Burchell [1978] IRLR 379.  The Tribunal in paragraph 22 of its decision said that although this case was not a misconduct dismissal case it thought that that law was a good analogy and referred to Burchell.  We agree.

10	The Tribunal then set out its conclusions in paragraphs 24-28 of the decision.  Paragraph 24 says this:

24	“As will be seen this is an unusual case.  Crucial to our view about the fairness of the dismissal is our finding that the nature of the employment changed from that of shop assistant with, perhaps some peripheral domestic commitment, to that of primarily a domestic commitment and personal relationship between Miss Barratt and Miss Hughes.  We also bear in mind that if an affair did exist between Miss Barratt and Mr Hughes that, of course, is something that would have been entirely consensual and not to be criticised as adverse conduct here.  However, we also bear in mind that this was a time of great stress and shock for Miss Hughes.  Whilst that is not a matter that can be taken into account when looking at the reason under section 98 (1) (b) we, nevertheless, do regard it as part of the circumstances to which we may have regard under section 98 (4)
25	Although no disciplinary procedures of the normal sort by way of investigation and disciplinary hearing were carried out in this case we have no doubt that if they had been the outcome would have been the same.  The nature of the job had become such that the personal relationship of trust and confidence between Miss Barratt and Miss Hughes which must exist in the domestic environment could not exist in the light of the belief to which Miss Hughes came following the receipt of that letter and finding the tape.  In our view, it was the belief in the affair (an act of Miss Barratt) rather than the letter (an act of her sister) which was some other substantial reason for Miss Hughes to dismiss Miss Barratt.
26	That might not have been the case (although we do not express a definitive view) if the nature of the job had not changed but remained the same as it had been before Miss Hughes’ arrival.
27	Accordingly, in the unusual circumstances of this case, we do find that the dismissal o Miss Barratt was within the range of reasonable responses of a reasonable employer and accordingly not unfair.
[28]	We accept the evidence of Miss Hughes that after the dismissal of Miss Barratt the domestic help continued and other staff were employed.  Accordingly, we find that Miss Barratt was not redundant.”

11	Before us today Mr Walker appeared for the Appellant and Ms Toney for the Respondent.  Essentially Mr Walker made two submissions.  First, he argued that it was not open on the facts of this case for the Employment Tribunal to find that the reason for the dismissal was some other substantial reason.  Second, he argued that, even if it was, then there was a failure to properly apply Burchell and therefore the dismissal was unfair when looking at section 98 (4) of the Employment Rights Act 1996.  Ms Toney resisted both of those propositions.

12	The relevant legislation is section 98 of the 1996 Act.  Section 98 (1) says this:

(1)	“In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show –
(a)	the reason (or, if more than one, the principal reason) for the dismissal, and
(b)	that it is either 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 the employee held.”

Section 98 (4) provides:

(4)	“Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) –
(a)	depends 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
(b)	shall be determined in accordance with equity and the substantial merits of the case.”

13	An appeal to this Tribunal lies only on a point of law.  We take each of Mr Walker’s points in turn.  First, whether the reason given by the employer in this case was capable in law of being some other substantial reason, as defined by section 98 (1) (b).  The Tribunal found, at paragraph 25, that it was Miss Hughes’s: 

“…belief in the affair (an act of Miss Barratt) rather than the letter (an act of her sister) which was some other substantial reason for Miss Hughes to dismiss Miss Barratt.”

14	Mr Walker argues that the affair being consensual had taken place while Miss Barratt was employed by Mr Hughes and Mrs Hughes.  Therefore, by the time the business was transferred to Miss Hughes this was history and it could not amount therefore to some other substantial reason causing a breakdown in trust and confidence between this employer and this employee.

15	We reject that submission.  It is not, in our view, for this Tribunal to seek to constrain Employment Tribunals from looking at the wording of section 98 (1) (b) and the facts of the particular case in front of it.  It is clear to us that the Employment Tribunal here looked carefully at the evidence, then at the fact that the job relationship had changed, that Miss Barratt was now to be primarily domestic help looking after Miss Hughes and her partner, so that Miss Hughes and her husband could concentrate on the shop.  Miss Hughes had been deeply distressed by the discovery of the alleged affair.  In the light of the Employment Tribunal’s finding at paragraph 25 we think there is no error of law here.

16	The second ground of appeal relates to the procedure followed in this case.  We think that on the facts of this case the Employment Tribunal were quite right to use the analogy of British Home Stores v Burchell.  That is a well-known test.  In Burchell Mr Justice Arnold said this:
“What the Tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the grounds of the misconduct in question (usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time.  That is really stating shortly and compendiously what is in fact more than one element.  First of all, there must be established by the employer the fact of that belief; that the employer did believe it.  Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief.  And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds, at any rate at the final stage at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case.  It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further.”
17	In our view, although the Employment Tribunal correctly referred to Burchell as appropriate on the facts of this case, it did not follow through the three Burchell tests: see paragraphs 14 and 25 of the Decision.  Furthermore, the Employment Tribunal also conflated the case of Burchell with the well-known case of Polkey: see paragraph 25 of the Decision.

18	So far as Burchell is concerned, we have referred ourselves and the advocates to the recent decision of the Court of Appeal in Sainsbury's Supermarkets Ltd v Hitt [2003] IRLR 23, where the Court of Appeal made clear that the objective standards of the reasonable employer must be applied to all aspects of the question whether an employee was fairly and reasonably dismissed.  The Iceland Frozen Foods v Jones test does not just apply to the act of dismissal, but also to the three limbs of the Burchell test.

19	In this case, it is clear from the Employment Tribunal’s decision that:

(1)	There was a failure to show the letter from Miss Barratt’s sister to her.  There was the opportunity to do that.

(2)	There was a failure to play the one tape which Miss Hughes had listened to.  However distressing the tape may have been for Miss Hughes, it could have been played to Miss Barratt by her partner, Mr Stobie.  It is not suggested that anywhere in the Employment Tribunal’s decision that it was impossible to play that tape to Miss Barratt.

(3)	Miss Barratt should have been given the opportunity to comment or explain the letter and the tape.  We know from the Tribunal’s decision that there was bad blood between Miss Barratt and her sister.  It is perfectly possible, for example, that the letter was written with a malicious intent and untrue.
20	For those reasons, we find that the employer in this case, Miss Hughes, failed on the second and third limbs of Burchell and we are fortified in that view by the Tribunal’s finding of fact at paragraph 15 of its decision:

15	“It is clear to us that Miss Hughes had made up her mind from the outset that she was going to dismiss Miss Barratt.”

21	We have been told by Ms Toney that Miss Hughes did attempt to track down the writer of the letter but was unable to do so in the time available and, second, that she spoke to a friend of either Mr or Mrs Hughes who apparently confirmed that Miss Barratt had had an affair with Mr Hughes.  However, that is not referred to in the Employment Tribunal Decision and appears to have played no part whatsoever in their reasoning.  We therefore discount it for the purposes of this judgment.

22	In our view, a reasonable employer would have shown the letter to Miss Barratt and ask her to comment.  A reasonable employer would have played the tape to her and asked her to comment.  It may well be that the result would not have been the same, but that is not a matter that goes, in our judgment, to the reasonableness of the procedure followed in this case; it goes to compensation.  That is why we say that the Tribunal conflated Burchell and Polkey.

23	For those reasons we allow the appeal on the ground that there was no unfair dismissal in this case.  We do not feel it necessary to send the case back to a fresh Employment Tribunal so far as liability is concerned.  We are able on the evidence to substitute a finding that Miss Barratt was unfairly dismissed.

24	Subject to any representations made by the legal representatives, we propose to remit this case to a fresh Employment Tribunal to determine compensation.
[Discussion]

25	We will substitute our decision for one of unfair dismissal and order that the Respondent pay the Appellant the sum of £4,487.50.

[Discussion]

26	We refuse leave to appeal.