Appeal No. UKEAT/0332/06/ZT

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 19 October 2006
Judgment handed down on 6 December 2006

Before
THE HOURABLE MR JUSTICE UNDERHILL
MR J MALLENDER
MS P TATLOW

YMCA TRAINING	APPELLANT

MRS A A STEWART	RESPONDENT

Transcript of Proceedings

JUDGMENT

	

	APPEARANCES

For the Appellant	Mr E D Mallett
(of Counsel)
Messrs Curwens Solicitors
Crossfield House
Gladbeck Way
Enfield 
Middlesex
EN2 7HT	
For the Respondent	Mr Stewart
(The Respondent’s husband)	

Summary
Unfair dismissal – Polkey deduction/ Automatically unfair reasons
Employment Tribunal wrong to find breaches of "step 1" and "step 2" of statutory dismissal procedure and accordingly wrong to find "automatic" unfair dismissal - Claim accordingly fails in its entirety by virtue of s. 98A (2) because Tribunal had made 60% "Polkey deduction" - Kelly-Madden applied

Observations on importance of focusing on the literal requirements of the statutory procedures and not imposing overlay based on "ordinary" unfair dismissal concepts or requirements of contractual procedure - Obiter observations on meaning of "after the meeting" in para. 2 (4) of step 2

THE HONOURABLE MR JUSTICE UNDERHILL

1.	The Appellant company, YMCA Training Ltd, provides training programmes designed to assist young people in securing employment.  The Respondent, Mrs Stewart, was employed by the Appellant as a training adviser working at its Centres in Maidstone and Dartford between September 2003 and her dismissal on 20 September 2005.  The circumstances leading to her dismissal can be summarised as follows:

(1)	On 8 September 2005 a more junior colleague of Mrs Stewart, a Miss Brackley, contacted Mrs. Coutts, who was both her and Mrs Stewart’s line manager, making various allegations about her conduct.  Although there were some general allegations, the most serious and specific was that she had falsified the training records of three trainees, to whom we will refer simply as Stephen, Daniel and Jason.  The three of them had been sent on 7 September on a day placement at a hardware store called Wilkinsons in Dartford, but Ms Povey, the manager with whom Mrs Stewart had principally been dealing, had phoned to complain that they were being uncooperative, and they had come back to the Centre by mid-morning.  The Appellant’s procedures required employers to sign paperwork indicating that the trainees had completed the placement.  According to Miss Brackley, Wilkinsons had – unsurprisingly in the circumstances - not provided any such signatures; but she said that Mrs Stewart had told her that she would sign the forms herself, in order to conceal what had occurred, and warned her not to tell anyone else.  

(2)	Mrs Coutts asked Miss Brackley to send her copies of the documents with the forged signatures.  Miss Brackley took photocopies of the documents for two of the trainees – Daniel and Jason – and sent them to Mrs Coutts by fax, under cover of a note saying that the third - Stephen - had not handed in his paperwork.  The documents consisted of an “employer’s contract”, a “participant induction” sheet and a timesheet.  The documents could perfectly properly be, and were, to some extent pre-completed at the Centre, but the induction sheet and timesheet had necessarily to be completed and signed by the employer after the induction and the day’s work had been performed.  In the case of both Daniel and Jason, both those sheets bore (illegible) signatures on the lines provided for the employer: Miss Brackley’s allegation was that these signatures had been forged by Mrs Stewart.

(3)	On the basis of that information, Mrs Coutts drafted a letter to Mrs Stewart asking her to attend an investigatory meeting.  She spoke to her on the telephone on the evening of 8 September at about 4.30pm, and read her the letter.  She told her that she was suspended and that she should leave the office forthwith. 

(4)	Mrs Coutts’ letter of 8 September, which was received by Mrs Stewart the following day, was in the following terms:

Re: Invitation to attend an Investigatory Meeting on Monday 12 September  

I should be grateful if you would attend a meeting to investigate concerns that I have in relation to your job performance. 

The meeting will take place at 2.00pm on Monday 12 September at Maidstone.  I will be accompanied by Louise Wildon-Jones. 

You may bring a work colleague or trade union official with you to support you and take notes on your behalf. 

I will be discussing the following items:

	-	Use of company time and resources for personal job search 

	-	Not following rules and regulations laid down within the centres

	-	Not following reasonable request from colleagues and management

-	Not participating within centre activities and being observed with your feet on the desk and sleeping on the job

	-	Signing documentation in place of the employer and providing 	inaccurate information regarding placements.

I enclose a witness statement which I will be asking you about during the meeting. 

I confirm that you will remain suspended from work on full pay pending this meeting. You have been suspended as I feel that the concerns that I have are extremely serious. I feel that it would be inappropriate for you to continue working until I am satisfied with your involvement in this matter. 

You should not contact any student, employers, external agencies or any other member of staff without my authorisation while you are suspended from work. Any breach of this instruction will be treated as an act of gross misconduct. 

You should be aware that I may have to consider the termination of your employment with YMCA Training. 

Please contact the area office to confirm your attendance at the meeting. 

(5)	As the letter indicated, a witness statement was enclosed.  This was a two-page witness statement from Miss Brackley setting out in some detail what she said happened about the handling of the three trainees.  As regards the falsification of the documents, it said:

“Adriana then said to me I am going to sign the employer participant contracts to say they have been there but don’t tell Maggie or management as you will get a bollocking and you will get a bollocking for sending three people to the one placement.  … I will not be cover up [sic] or want to have anything to do with forgery being done by another work colleague when it is dealing with an employer that has people on basic skills on long term placement or forgery towards the Job Centre.” 
	
(6)	The investigatory meeting duly took place on 12 September 2005.  A fairly full note was kept (though the Tribunal found that it was not entirely complete).  Mrs Stewart tabled a letter rebutting the allegations against her.  There was a discussion of all the charges raised in Mrs Coutts’ letter.  As regards the alleged falsification, the photocopies supplied by Miss Brackley were produced to Mrs Stewart.  She denied having forged the employer’s signature.  She said that Mrs Coutts should contact Wilkinsons for their evidence as to who signed the forms in question.  The Appellant was not able to produce the originals from which Miss Brackley had taken the copies: they were not found on the file where they should have been.  (There appears to have been a suspicion that it was Mrs. Stewart who had removed the originals, on the evening of 8 September following her phone conversation with Mrs Coutts; and the position was further confused by Mrs Stewart herself producing some original documents at the meeting, though as we understand it these were in fact the documents relating to Stephen, which Mrs Stewart had received from him and had never filed in the first place.)  

(7)	Following the meeting Mrs Coutts, as asked, spoke by telephone to a manager at Wilkinsons, who (according to her record of the conversation) “confirmed that he had not signed or kept any contracts or timesheets for the three clients, nor had his colleague or anybody else at Wilkinsons”.  She did not however send copies of the documents in order to see whether the signatures were recognised. 

(8)	On an unspecified date thereafter Mrs Coutts asked Mrs Stewart to attend a disciplinary meeting on 20 September 2005.  The request was made on the telephone.  Nothing was put in writing to Mrs Stewart prior to the meeting, nor was she given any information about the results of Mrs Coutts’ further enquiries with Wilkinsons. 

(9)	The disciplinary meeting duly took place on 20 September.  Again, a full note was kept.  Mrs Coutts started the meeting by saying that its purpose was “to conclude the investigation” and “to convey her decision with regard to disciplinary action”.  She proceeded to give a fairly full account of her view of the facts, including her conversation with Wilkinsons, culminating in the statement that:

“…  All of the above led her to believe that [Mrs Stewart] was not being honest and she had great concerns over honesty and performance and did not have any option but to terminate [her] appointment with immediate effect for gross misconduct.”

She then proceeded to deal with the formalities relating to the dismissal and explain Mrs Stewart’s right of appeal.  Mrs Stewart was asked at the end if she had any questions: she had none.  Although Mrs Stewart did interject at one point during Mrs Coutts’ account, the meeting was plainly in substance the announcement of a decision already made rather than an opportunity for discussion.

(10)	A formal dismissal letter was sent on 28 September 2005.  It confirmed that Mrs Stewart was being dismissed primarily because Mrs Coutts believed that she had forged the employer’s signatures on Daniel’s and Jason’s documents, although there was reference also to her poor performance in other respects.

(11)	Mrs Stewart appealed to the Regional Director, but her appeal was unsuccessful.

2.	Mrs Stewart brought proceedings for unfair dismissal and wrongful dismissal. There was also a claim for arrears of holiday pay.  Her application was heard over two days by an Employment Tribunal sitting at Ashford.  Although initially evidence was confined to the issue of liability, when it became clear that the Tribunal would have to reserve its decision on that issue, it decided to use the remaining portion of the afternoon of the second day to take evidence on the question of remedy in case that should be material (though as to this see para. 30 below).
3.	The Tribunal’s decision was promulgated on 30 March 2006.  It can be summarised as follows:
(a)	The Tribunal found that Mrs Stewart had been “automatically” unfairly dismissed, by virtue of s. 98A (1) of the Employment Rights Acts 1996 – i.e. that the Appellant had failed to comply with the minimum requirements of the statutory disciplinary and dismissal procedure.  It is clear from its comments at various points in the judgment (see in particular para. 64) that the Tribunal was critical of the Appellant’s procedures in a way which under the law as it stood prior to the Employment Act 2002 would probably have led to a finding of unfair dismissal.  In particular, it did not believe that the enquiries made with Wilkinsons were adequate, and it believed that at the meeting of 20 September Mrs Stewart should have been given an opportunity to deal with the case which Mrs Coutts was then putting forward rather than simply being presented with a final decision.  However, the Tribunal’s decision was not made on the basis of “ordinary” unfair dismissal (and indeed any such finding would have been precluded by s. 98A (2): see para. 24 below). 
(b)	It decided that there should be a “Polkey reduction” of 60%: that finding meant that the Tribunal believed that it was more likely than not that Mrs Stewart would have been (fairly) dismissed if the Appellant had followed a proper procedure.  
(c)	It declined to make any finding of “contributory fault” pursuant to s. 123 (6) of the 1996 Act.
(d)	It assessed Mrs Stewart’s loss at £7,992, incorporating an element of £4,852 in respect of loss of pension rights (but excluding “notice pay”, which was awarded separately – see (e) below).  That amount fell to be reduced by 60% because of the Polkey reduction; but the Tribunal then applied a 10% uplift under s. 31 (3) of the 2002 Act.  The total compensatory award as a result was £5,421.68.  The basic award was £1,120. 
(e)	The Tribunal held that Mrs Stewart had been wrongfully dismissed and awarded £1,060.20 by way of damages (described as “notice pay”). 
(f)	The claim for holiday pay was dismissed.

4.	In this appeal the Appellant appeals against the finding of unfair dismissal and also against the Tribunal’s failure to find “contributory fault” and/or to make a Polkey reduction of 100%; Mrs Stewart cross-appeals against the Polkey reduction; and both parties appeal against the assessment of compensation.  As before the Tribunal, the Appellant was represented by Mr. Mallett of counsel and Mrs Stewart by her husband.  Mr Stewart put his wife’s case clearly and well, and in such a way that we do not believe that she has been under any disadvantage by not having legal representation.  

5.	We will consider those issues under the following heads:
(A)	Unfair dismissal
(B)	The Polkey reduction
(C)	Contributory fault
(D)	Wrongful dismissal
(E)	Quantum

(A)	UNFAIR DISMISSAL
6.	Unfortunately on this issue we are not unanimous.  We give at paras. 7-17 below the view of the Chairman and Mr. Mallender: Ms. Tatlow’s dissenting view appears at para. 18.  

7.	We should start by setting out the provisions of Chapter 1 of Schedule 2 to the 2002 Act.  They are as follows:
Step 1: statement of grounds for action and invitation to meeting

1.	(1)     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. 
(2)     The employer must send the 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.  (1)     The meeting must take place before action is taken, except in the case where the disciplinary action consists of suspension. 
 (2)     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(1) the ground or grounds given in it, and 
(b)     the employee has had a reasonable opportunity to consider his response to that information.
(3)     The employee must take all reasonable steps to attend the meeting. 
(4)     After the meeting, the employer must inform the employee of his decision and notify him of the right to appeal against the decision if he is not satisfied with it.

We should also note that para. 13 (2) of Schedule 2 provides that meetings “must be conducted in a manner that enables both employer and employee to explain their cases”.

8.	The Tribunal’s reasons for holding that the Appellant had failed to comply with the statutory procedure are set out in paras. 60-64 of its Judgment as follows:

“60.	The Tribunal concluded that steps 1 and 2 of the Dismissal and Disciplinary Procedures set out in Schedule 2 of the Employment Act 2002 had not been completed.
61.	Step 1 provides that:
(1)	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. 
(2)	The employer must send the statement or a copy of it to the employee and invite the employee to attend a meeting to discuss the matter.”
62.	Whilst a letter was sent to the Claimant inviting her to an investigatory meeting to cover a range of matters, no letter was sent to her before the disciplinary meeting and therefore she was unaware of the particular matter (the alleged falsification) which Mrs Coutts was considering might lead to her dismissal.
63.	Step 2 of the Dismissal and Disciplinary Procedures provided that “the meeting” must take place before the action is taken. It goes on to say that the meeting must not take place unless the employee has been informed of the basis for including  in the statement under step 1 the grounds for the statement and the employee has had a reasonable opportunity to consider his response to that information. Step 2 also provides that the employer must inform the employee of the decision “after the meeting”. The Tribunal concludes that neither the provision nor the spirit of the provision has been met in this case. At the disciplinary meeting, the Claimant had not been informed of the outcome of the investigation and therefore did not know the basis for the statement (as there was not a statement leading to the disciplinary meeting) or the grounds for it. She was not given a reasonable opportunity to consider her response to that information because she was unaware of the subject matter of the disciplinary meeting. Lastly, the decision was reported to the Claimant during the course of the disciplinary meeting and had clearly been made before the start of that meeting.
64.	For all those reasons, the Tribunal finds that the dismissal was automatically unfair as there had been a failure by the Respondent to complete the formal statutory procedure.”  

9.	We consider first the finding (at paras. 61-62) that there had been a breach of the requirements of step 1.  In our view this is unsustainable.  The Appellant’s letter of 8 September 2005 plainly sets out Mrs Stewart’s “alleged conduct … which [led Mrs Coutts] to contemplate dismissing or taking disciplinary action against [her]”, i.e. what para. 2 (2) (a) refers to as the “grounds” for the contemplated action.  (It does so only in headline terms, but it is clear from Alexander v. Brigden Enterprises Ltd [2006] ICR 1277 that that is sufficient for the purpose of step 1.)  The Tribunal seems to have thought that this letter had to be disregarded because it was sent prior to the “investigatory” meeting of 12 September and no further letter was sent prior to the “disciplinary” meeting of 20 September.  But it is crucial in cases of this kind for tribunals not to be distracted by the fact that the parties may have been following an internal procedure with more elaborate requirements and different terminology from those required by the statute: it is necessary to look beneath the parties’ own labels and focus on whether the substantive requirements of the statute, which are in simple and non-technical terms, were or were not in fact met.  In this case there was a letter containing the necessary statement of the alleged conduct and there was an invitation to a meeting to discuss the matter.  That is all that was required, and it is beside the point how the letter and the meeting may have fitted in to the Appellant’s own procedure.  The only possible conclusion on the undisputed facts was that the requirements of step 1 were met.  

10.	We should also say in this connection that we are puzzled by the Tribunal’s statement that Mrs Stewart was, prior (we take it) to the disciplinary meeting, "unaware of the particular matter (the alleged falsification) which Mrs Coutts was considering might lead to her dismissal”.  The alleged falsification was expressly referred to in the letter of 8 September – being the final bullet, namely “signing documentation in place of the employer and providing inaccurate information regarding placements” – and amplified in Miss Brackley’s witness statement; and it was fully discussed at the investigatory meeting.  We believe that the point which the Tribunal may have been intending to make was that Mrs Stewart was not told in advance of the meeting of 20 September which of the five points raised in the letter of 8 September were still live.  That may be right, but it does not mean that the Appellant had not complied with the requirements of the statutory procedure.

11.	We turn to whether there was compliance with step 2.  Again, it is important to focus purely on the words of the statute.  The first question must be when Mrs Stewart was informed of “the basis” for the grounds of the contemplated action, as required by para. 2 (2) (a).  As is made clear in Alexander (above), the “basis” for an allegation does not mean all the detailed evidence that may be relied on but, rather, a sufficiently detailed statement of the case against him to enable him properly to put his side of the story: see para. 39 of the judgment in Alexander, at p. 1288.  In our view Mrs Stewart was plainly given such a statement in the form of Miss Brackley’s witness statement.  It does not of course matter that the requirements both of para. 1 (1) and of para. 2 (2) (a) were addressed in the same letter (or letter and enclosure).  The statutory procedure permits the employer to present his case in two stages – stating the “grounds” first (para. 1 (1)), and supplying the “basis” for them later (though in good time before the meeting) - but it does not oblige him to do so, and no doubt it will be common for employers to do what the Appellant did here and state both the grounds for the contemplated action and the basis of those grounds at the same time.  The only material of substance that was not supplied to Mrs. Stewart was copies of the documents on which she was said to have forged the signatures: they were not provided until the meeting of 12 September.  But she did not need to see the documents in order to put her case - namely that she did not sign them and that, if they were indeed signed, it must have been someone at Wilkinsons who signed them. 

12.	The meeting of 12 September took place three days after Mrs Stewart received the letter of 8 September 2005.  At the meeting she tabled her response to the allegations (see para. 1 (6) above) and there was a substantial discussion of them.  We can see no basis for any suggestion, nor has any been made, that she had not had a reasonable opportunity to consider her response.  

13.	Once that point is reached, the conclusion necessarily follows that the Appellant had complied with the requirements of step 2.  There had been a meeting attended by Mrs Stewart, as required by paras. 2 (1) and 2 (3) – namely the “investigatory” meeting of 12 September – and Mrs Stewart had had the information required by para. 2 (2) (a) prior to that meeting and been given a sufficient opportunity to respond to that information, as required by para. 2 (2) (b).  After that meeting – namely at the meeting of 20 September (as confirmed by the letter of 25 September) – she had been notified of the decision and of her right of appeal, as required by para. 2 (4).

14.	The Tribunal’s conclusion to the contrary appears to be based on treating the second – “disciplinary” - meeting of 20 September as “the step 2 meeting” and thus ignoring the earlier – “investigatory” – meeting of 12 September.  In so far as that approach may have been influenced by a view of what was required by the Appellant’s own procedure, we repeat the point made in para. 5 above: that procedure is (as such) irrelevant for the purpose of s. 98A (1), and all that matters is whether the steps required by the statute were complied with.  But the point which appears principally to have troubled the Tribunal was that Mrs Stewart had not prior to the meeting of 20 September been told the result of Mrs Coutts’ enquiries with Wilkinsons.  That criticism would only be relevant to the consideration of “automatic” unfair dismissal if the information in question was required to be communicated to Mrs Stewart as part of the “basis” for the grounds of contemplated dismissal under para. 2 (2) (a).  We do not believe that it was.  It will commonly be the case that the step 2 meeting may throw up a need for some further investigation (or indeed highlight a point which should have been investigated earlier): part of the point of giving the employee the opportunity to respond to the employer’s case is, precisely, to allow him to identify such points.  That is indeed what happened in this case: Mrs Stewart said (in substance) “I didn’t sign these documents – if you ask Wilkinsons, they will confirm that they did”.  If the employer then (as he generally should do) goes away and makes the further investigations, that does not impose any further obligation on him under the statutory procedure.  The statutory obligation on him is to give details of the grounds for the allegation(s) in his original step 1 letter: there is no express obligation, and none should be implied, to provide further information or evidence which may accrue in the course of his investigations thereafter, however important it may be in the interests of fairness that the employee should be made aware of the information and his response sought.  Likewise, there is no obligation to convene a second meeting to consider such after-acquired information.  

15.	Such a literalist approach may seem counter-intuitive to tribunals which have been used to considering broader questions of substantive fairness: there may well be cases where fairness will require that material discovered in the course of an investigation is put to the employee for his response or that a further meeting be held.  But the essential point that has to be borne in mind is that the statutory procedures are no more than a minimum.  Complying with them will not necessarily mean that the employer escapes liability for unfair dismissal: it does no more than get him over the first hurdle, and there may (depending on the case) be other steps that he is obliged to take.  All that such compliance means is that he will not be liable for “automatic” unfair dismissal, which – quite deliberately and as a matter of policy – is intended only to be available where the employer has failed to conduct even the most rudimentary procedure.  That is why references such as that made by the Tribunal here (see para. 63) to “the spirit of [step 2]” may be dangerous.  The temptation to bring in by the back door the full panoply of “ordinary” unfair dismissal when interpreting and applying the requirements of Chapter 1 of Schedule 2 to the 2002 Act must be resisted.  Thus, while Mrs. Coutts’ omission to put to Mrs Stewart what she had been told by Wilkinsons might – we need not say whether it necessarily would – have justified a finding of “ordinary” unfair dismissal, it does not justify the finding of “automatic” unfair dismissal on the basis of which the Tribunal held the Appellant liable. 

16.	On that basis we need not consider the Tribunal’s further point that the meeting of 20 September was not “step 2 compliant” because Mrs Coutts announced her decision at the meeting rather than “after” it.  However, we heard argument on the point and, since these provisions are still novel, it may be useful if we state our view.  In our judgment it is inherent in the requirements of step 2 (and specifically paras. 2 (1) and (4)), taken with para. 13 (2) of Schedule 2, that the employer should not announce any decision (or – still less – take any action) until the employee has had the opportunity to put his case at the meeting.  Thus, on the facts of the present case, if the Appellant had had to rely on the meeting of 20 September as “the step 2 meeting” the Tribunal would have been right to hold that it did not comply with the statutory requirements, because – see para. 1 (9) above – no such opportunity was given to Mrs Stewart: all that happened at the meeting was that Mrs. Coutts announced her decision.  But if such an opportunity is given, then the fact that the employer announces his decision at some later stage during the meeting itself, rather than concluding the meeting and waiting a day or an hour before doing so, does not mean that he has failed to comply.  Such a conclusion would be artificial and absurd.  It is not required by the language of sub-para. (4): it is perfectly good English, even if not logically pure, to use “after” in the sense of “at the end of”.  

17.	Having examined the issue above with some minuteness, it is worthwhile to step back and look at it in the round.  In the present case the Appellant on the face of it went through the essential procedural steps.  Mrs Stewart was sent a reasonably detailed statement of the case against her.  There was then a meeting at which she had, and took, the opportunity to state her case in response.  She was then informed of the decision and given the right to appeal.  In our view it would not be right if an employer who had acted as the Appellant did here were found liable not for “ordinary” unfair dismissal – that is another matter – but for “automatic” unfair dismissal, which is intended for employers who fail to come up to even the minimum standards required and which attracts liability for the penal “uplift” provided for by s. 31 (3).  

18.	The foregoing is, as we have said, the view of the majority.  Ms. Tatlow’s opinion is as follows.  She draws attention to the very explicit description in the letter of 8 September of the meeting to which Mrs. Stewart was being invited as "investigatory" and as being intended to "investigate concerns".  In her view that language conveys that the meeting was intended simply to investigate whether there was a case to answer and that, if as a result of this investigatory meeting, the employer found that any ‘concerns’ should be translated into allegations, these would be notified to the employee and considered at a disciplinary meeting at which the employee would have the chance to deploy her full response in respect of any allegations notified and the employer would consider penalty.  The inclusion of an investigatory meeting is common HR practice, and the Appellant was plainly intending to follow such a course (even if, in the end, it failed properly to do so).  In Ms Tatlow’s view an invitation to an investigatory meeting of that kind cannot fairly constitute the invitation required at step (1), nor can such a meeting satisfy the requirements of step (2) under the statutory procedures.  She is concerned that employees should not be invited to a meeting on the basis that it is investigatory only and then discover, after the event, that it was in fact being treated as the definitive step ( 2) disciplinary meeting.  If that is right, then the meeting of 12 September did not satisfy the statutory requirements; and the meeting of 20 September could not do so either since, as the Tribunal found (and as we all agree), Mrs. Stewart was given no opportunity at that meeting to present her case.  The Tribunal also found that no letter was sent after the investigatory meeting of 12 September and prior to the meeting of 20 September to notify Mrs. Stewart of the allegations to be answered and Ms Tatlow concurs with the Tribunal’s view that in these circumstances, the requirements of step (1) were also not fulfilled.  

19.	The majority understand Ms. Tatlow’s view, but they believe that it goes beyond the statutory language, which requires only that there be a meeting "to discuss the matter", at which the employee has the chance to explain his or her case.  They fully accept that if an employee were prejudiced in some way by a meeting which had been billed as "investigatory" being in fact treated as final, that might well make the dismissal unfair (subject to s. 98A (2)) - but it would nevertheless not be "automatically" unfair.
 
20.	Other things being equal, the result of our quashing the decision of the Tribunal on the issue of unfair dismissal contrary to s. 98A (1) would be that the case fell to be remitted to it (or to another Tribunal) in order to decide whether the dismissal was fair in accordance with s. 98.  That, however, is subject to the effect of  s. 98A (2): see para. 24 below.  

(B)	THE POLKEY REDUCTION
21.	The Tribunal explained its finding on the Polkey issue at para. 66 of the Judgment, as follows:
“66.	A reasonable investigation would have shown that Ms Povey had signed one form.  The remaining five signatures may have remained a mystery (although there is a chance that another manager may have confirmed that he/she signed).  A reasonable investigation is likely to have confirmed that the original paperwork had disappeared in suspicious circumstances at or around the time that the Claimant had been suspended (according to Miss Brackley).  A reasonable investigation would have included speaking to other colleagues who Miss Brackley reported had been present during the conversations, about the Claimant’s conduct in respect of the three learners whose documentation was the focus of the dismissal.  This may have shed some light on the situation.  As it was, the Respondent put a significant amount of weight on what Miss Brackley said, against what the Claimant, a longer-serving employee, said.  Having carried out a reasonable investigation, a reasonable employer would have completed the process by following the statutory disciplinary procedure properly.  The Claimant would have had an opportunity to state her case knowing the specifics of the allegations against her, and having had time to prepare herself.  Weighing up all of these factors, and given that Mrs Coutts appeared to accept that Miss Brackley was a credible witness, the Tribunal concluded that there was a 60% chance that, had a fair procedure been followed, the Claimant would have been dismissed.”

The reference to Ms Povey’s signature at the beginning of that passage is to the fact that she had signed the “employer contract” in Daniel’s case.  That was confirmed by an endorsement from her which Mr Stewart (following the dismissal) asked her to sign on a copy of the contract.  Mr Stewart also obtained from Jason a short letter stating that a manager at Wilkinsons (“a man as far as I could see”) had signed “the paperwork”.  Both these documents were before the Tribunal: there appeared at one point to be a question as to whether the Tribunal had ruled them inadmissible because they were disclosed late, but we are satisfied that they were in fact taken into account.

22.	We can see no error of law in the assessment made by the Tribunal.  The principal point made by Mr Stewart on Mrs Stewart’s behalf was that if a proper investigation had been carried out the Appellant would have obtained (at least) the evidence from Ms Povey and from Jason referred to above.  But Ms Povey’s signature to the contract (in only one of the cases) was not one of the signatures that principally mattered: the crucial signatures were those on the participant induction sheet and the timesheet which purported – untruthfully - to certify that the trainees had completed the day’s programme, and these were clearly not signed by her.  And although if Jason had given the Appellant a statement in similar terms to that obtained by Mr Stewart it would certainly have had to be considered, it would not have been conclusive: a view would have had to be taken as to his reliability, and it is also noteworthy that the statement does not state which “paperwork” had been signed.  Against any such evidence would have had to be weighed the inherent improbability of any manager signing the timesheets or the participant induction sheets given the fact (which was not in issue) that the trainees had been disruptive and had been sent away after an hour or two, the express statement of Mrs Coutts’ informant that none of the forms had been signed and the relative credibility of Miss Brackley and Mrs Stewart.  In those circumstances the Tribunal was fully entitled to conclude that it was more likely than not that even after a full and fair procedure the Appellant would have believed Miss Brackley’s allegations.  

23.	Mr Stewart also argued that the Tribunal’s finding on the Polkey issue was inconsistent with its refusal to find contributory fault and its finding of wrongful dismissal.  We consider the Tribunal’s findings in these respects under heads (C) and (D) below: as there appears, they are in fact unsatisfactory in their reasoning.  But even if they were correct, there is no inconsistency of the kind asserted by Mr Stewart.  The exercises in question are different from the Polkey exercise.  They depend on the decision which the Tribunal itself makes on the evidence which it is adduced before it, while the Polkey exercise is concerned with what the employer would (reasonably) have done on the evidence which it would reasonably have had.  Even if the evidence in question were in fact the same, it would have been entirely possible for the Tribunal to say “we (on balance) do not believe that the case is proved; but views could reasonably differ, and we think it likely that the employers would have found the case proved”.

24.	In the circumstances of this case, the importance of the Tribunal’s decision on this issue goes beyond the question of remedy.  S. 98A (2) of the 1996 Act provides that:

“Subject to subsection (1), failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of section 98(4)(a) as by itself making the employer's action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure.” 

It is now established that that provision is not to be interpreted narrowly.  “Failure to follow a procedure” embraces any step which the employer ought to have taken before deciding to dismiss the employee: see Alexander (above), at para. 57 (p. 1292), as confirmed in Kelly-Madden v. Manor Surgery (not yet reported – UKEAT/0105/06).   In the present case the Tribunal’s finding as set out in para. 21 above means that the Appellant has shown, on the balance of probabilities, that if it had followed a fair procedure Mrs Stewart would have been dismissed.  Since there is here no question that Mrs Stewart’s dismissal was for an admissible reason, and the only issue is thus the reasonableness of that dismissal, to be determined in accordance with s. 98 (4), the effect of s-s. (2) is that any claim for “ordinary” unfair dismissal must fail.  In those circumstances, the appeal on “automatic” unfair dismissal having succeeded, the case does not fall to be remitted and Mrs Stewart’s claim for unfair dismissal falls to be dismissed in its entirety.  This may perhaps seem a harsh result; but it was Parliament’s plain intention in enacting s. 98A (2) to deny any remedy in cases where the employer has been able to show that whatever inadequacies there may have been in his procedures made no difference to the result.  That is what the Appellant has shown here.

(C)	CONTRIBUTORY FAULT
25.	In the light of our conclusion above, the issue of contributory fault does not arise; but we should nevertheless deal with it briefly.  The totality of the Tribunal’s consideration of the issue is at para. 68 of the Judgment, which is in the following terms: 

“With regard to contributory fault, the Tribunal were satisfied that no deduction should be made because there was no compelling evidence on which we could base a finding that the Claimant had caused or contributed to the dismissal.”

26.	On its face, that appears to be a finding that the Appellant had failed to prove its case under s. 123 (6).  If so, it is, with respect to the Tribunal, inadequately reasoned.  There was plainly evidence implicating Mrs Stewart – namely that of Miss Brackley, who gave evidence to the Tribunal, arguably supported by the implausibility of Wilkinsons signing the paperwork when the trainees had in fact been sent home.  It was open to the Tribunal to reject that evidence, but if it was going to do so, at least some analysis and explanation was necessary.  It need not have been elaborate but a bald statement of the kind in fact made was on any view insufficient.  In fact, we rather suspect that the Tribunal did not in fact conceive itself to be making a definitive finding on the issue.  The language of para. 68, and in particular the reference to the evidence not being “compelling”, tends to suggest that it believed that a finding under s. 123 (6) was only necessary in a clear case and that, because the evidence here was – as a result of the inadequacy of the Appellant’s enquiries – equivocal, no finding should be made.  That suspicion is increased by the fact that this was the approach explicitly taken by the Tribunal on the wrongful dismissal claim, which required a decision on essentially the same issue (cf. paras. 27-28 below).  But whether that is right or not, this part of the Judgment seems to us to fall foul of the principle that a party must be given an adequate explanation of why it has lost on any given issue.

(D)	WRONGFUL DISMISSAL
27.	The wrongful dismissal claim is not affected by our decision that the unfair dismissal claim must be dismissed.  The Tribunal dealt with it as follows:

“69.	The Tribunal has to decide whether or not the Claimant repudiated the contract of employment by carrying out the alleged misconduct.
70.	In the absence of a reasonable investigation the Tribunal is not satisfied that there is sufficient evidence to support a finding that the Claimant did carry out the alleged misconduct.”

28.	This reasoning cannot stand, for two distinct reasons.  First, it is inadequate.  As discussed in para. 26 above in relation to the contributory fault issue, while it was perfectly open to the Tribunal to find that the Appellant had not proved its case, some reasoning was required, in however summary terms.  Secondly, and substantively, the question whether the Appellant had carried out a sufficient investigation was, on this aspect, irrelevant: the only issue was whether the Appellant had proved its case by the evidence adduced before the Tribunal.
29.	Accordingly, we see no alternative to remitting this issue for reconsideration by the Tribunal.  It will not be necessary for it to hear any further evidence, though given the passage of time it is likely to wish to give the parties the opportunity to make brief further submissions.  Its task will be to consider the evidence which it has already received and decide whether, on the balance of probabilities, the Appellant has proved that Mrs Stewart was guilty of misconduct such as to justify summary dismissal.  Even this limited exercise is likely to involve the parties in some cost and effort that they might reasonably wish to avoid.  They should certainly consider whether there is any chance of agreeing a compromise.

(E)	QUANTUM
30.	The issue of the quantum of any award for unfair dismissal does not arise in view of our decision on liability.  We would only record that both parties were agreed that the way in which the Tribunal had dealt with the issue was unfair.  Although, as noted at para. 2 above, it had started, on the afternoon of the second day, to hear evidence on quantum, both Mr Mallett and Mr Stewart tell us that it soon transpired that the exercise could not fairly proceed because the relevant documents (including, but not limited to, those on pension loss) were not before the Tribunal, and that the Tribunal in fact acknowledged this and agreed that if in the event it found for Mrs Stewart on liability there would have to be a further hearing to consider remedy.  Both were therefore extremely surprised to find the Tribunal ignoring that agreed way forward and deciding remedy issues in its Judgment – though the consequent errors of which they each complained were of course different. If we had dismissed the appeal on liability we should have had to allow it as regards quantum.