McAdie v Royal Bank of Scotland

In a reserved decision promulgated on 15 February 2006, and after a hearing lasting three days (with a fourth spent considering its decision in chambers), the Employment Tribunal sitting at Ashford in Kent (the Tribunal) ruled that Mrs. Suzanne McAdie (the claimant before it and the appellant in this court) had been unfairly dismissed by her former employer, the Royal Bank of Scotland (the Bank). At the same time, the Tribunal reduced the compensation payable to the appellant by 50% pursuant to the decision of the House of Lords in Polkey v A.E. Dayton Services Limited [1988] AC 344 and dismissed her parallel claim based on sex discrimination. It fixed a remedy hearing for 4 April 2006 at which it awarded the appellant the sum of £53,083.75 by way of compensation for unfair dismissal.

The Bank appealed to the Employment Appeal Tribunal (the EAT) which heard its appeal, in a constitution comprising Underhill J, Mr. D Evans CBE and Mr. M Worthington, on 5 October 2006. In a reserved judgment, delivered on 29 November 2006, the EAT allowed the Bank’s appeal and dismissed the appellant’s claim. She now appeals to this court, permission having been given on paper by Sir Henry Brooke on 25 January 2007. At no stage, either in the EAT or in this court has the appellant sought to resurrect her claim for sex discrimination, nor are we in this appeal concerned with the amount awarded to the appellant by the Tribunal on 4 April 2006.

The general question raised by the appeal relates to the circumstances in which an employer can fairly dismiss an employee on the ground of that employee’s “incapability for performing work of the kind which he was employed by the employer to do” (a potentially fair reason within section 98(1) and (2)(a) of the Employment Rights Act 1996 (ERA 1996)) when the employer’s conduct has either caused, or materially contributed towards the employee’s incapability.

This is a question on which there is divergent authority in the EAT, and in giving the appellant permission to appeal, Sir Henry Brooke commented that it seemed to him appropriate for this court to consider the earlier EAT authorities.

There is no dispute about the right not to be unfairly dismissed contained in ERA 1996, section 94(1). The position is governed by the relevant parts of ERA 1996, section 98, under the hearing Fairness, which read as follows:

In the instant case, it is common ground that the reason for the appellant’s dismissal was “capability” within ERA 1996, section 98(2)(a) and (3)(a).

I take the facts largely from the Tribunal’s findings, which have not been the subject of any criticism, either in the EAT or in this court.

The appellant was born on 20 October 1964. She left school at 17 and went to work on 6 September 1983 for the National Westminster Bank (Nat West). Her employment was transferred to the Bank when it took over Nat West. She was thus continuously employed from 6 September 1983 to the date of her dismissal, which occurred on 22 December 2004 and took effect on 16 March 2005. Over the course of her employment she had, in the Tribunal’s phrase “moved through the ranks” and had been a valued employee. In 1995, she was in the position of Assistant Corporate Manager based in Croydon in South London. That was, the Tribunal found, a senior post. She had responsibility for some 45 members of staff, and was responsible for borrowings of up to £80 million. She also acted as the Personal Assistant to the Corporate Manager.

In 1995, the appellant was treated for breast cancer, and decided to opt for what was known as the Bank’s “Option to Change” package. This involved a part-time post with less stress attached to it. The Tribunal found that the appellant was concerned that stress could be a trigger for cancer, and that she wanted to take all possible steps to remove unnecessary stress from her life.

The upshot was that the appellant moved to a post at the Bank’s branch at Bromley in Kent as a customer service officer working 14 hours a week. In 1998, she moved into retail banking. In 2000 / 2001 she had a period of maternity leave.

On her return to work, a Mr. O’Shaughnessy became her manager. The appellant was concerned to learn on her return from maternity leave that Mr. O’Shaughnessy had reduced her assessment grade, and she submitted a grievance to the Bank. That grievance was upheld, and the Grade 3 awarded by Mr. O’Shaughnessy was increased to Grade 4, although the grievance officer did not accept that the appellant had been marked down by Mr. O’Shaughnessy because she had been on maternity leave.

In June 2003, Mr. O’Shaughnessy became the director of commercial banking in Bromley. In the following months, Mr. O’Shaughnessy identified staffing problems at the Bank’s Swanley branch where one senior member of staff was leaving, and another was about to commence maternity leave. Mr. O’Shaughnessy then canvassed with the appellant a transfer from Bromley to Swanley. The appellant was reluctant to move. She lived in Eltham, and had created careful child care arrangements around the fact that she worked in Bromley. She also suspected that she was being asked to move because of the previous grievance she had raised against Mr. O’Shaughnessy On this point, the Tribunal made the following finding of fact:-

It is also perhaps worth pointing out that it was a term of the appellant’s employment that she could be asked to transfer her place of work to an alternative office within a reasonable travelling distance of her existing workplace. It does not appear to have been suggested in the hearing before the Tribunal that Swanley was not within a reasonable travelling distance from Bromley.

On 3 July 2003, the appellant sent Mr. O’Shaughnessy an Email in which she gave a number of reasons why she wished to remain in Bromley. These included “the stress or upset of being forced to move to another office”. She said she that might consider resigning from the bank. Should she do so, her reason would be the transfer to Swanley. She also registered her concern that Mr. O’Shaughnessy had contacted the managers of the Croydon office and the retail office in Bromley to discuss her “releasibility”, and thereby to ensure that neither offered her a post which prevented her move to Swanley. The Tribunal thought it unlikely that Mr. O’Shaughnessy had behaved in this way, but accepted that it remained a matter of concern for the appellant.

The Tribunal also found that on3 July Mr. O’Shaughnessy had a conversation with the appellant, in which the latter explained her previous medical history to him. He was thus aware from that point that the appellant wished to avoid stress, but did not alter his decision to transfer the appellant to Swanley. He also sent a copy of the appellant’s Email to his manager, Mr. Geerts, warning him that he was likely to get a complaint from the appellant.

On 4 July, the appellant did indeed send an Email to Mr. Geerts complaining about the situation. He arranged to meet the appellant on 17 July 2003. In the meantime, the appellant began to work in Swanley on 10 July 2003.

The appellant told the Tribunal that the meeting with Mr. Geerts on 17 July had been both “open and positive”. She left feeling she had been able to raise all her points. However, she was not sent a note of the meeting until 18 August. The appellant was dissatisfied with the note, which had been taken by a Ms Jones. The appellant took the view that there were a number of omissions in respect of matters which had been discussed at the meeting. In her evidence to the Tribunal, Ms Jones accepted that there were indeed omissions, but that the note had not been intended as a verbatim account of the meeting.

The Tribunal’s finding was that the matters omitted from the note of the meeting on 17 July 2003, and the Bank’s subsequent failure to tackle them, lay at the heart of the case. The Tribunal made the following finding on this point:

Having discussed the matter with the appellant on the telephone, Ms Jones then referred it to Mr. Geerts. The latter then spoke to the appellant on the telephone. There was a dispute between the appellant and Mr. Geerts about the content of that telephone call. The Tribunal made the following findings of fact about it: -

Following the telephone call, Mr. Geerts asked Mr. O’Shaughnessy to consider bringing forward the appellant’s return to Bromley. Mr. O’Shaughnessy was willing to do so immediately, but Mr Geerts suggested her return should be delayed until 1 November. The Tribunal found that he did so “in order to stamp his authority on the situation, particularly in view of his opinion that (the appellant) was used to getting her own way”. The Tribunal also found that this approach was characteristic of his approach to the appellant during their telephone call.

On 4 September 2003, Mr. O’Shaughnessy spoke to the appellant about her return to Bromley. Her reaction was significant. The Tribunal found on this point:-

On 9 September 2003, Mr. Geerts wrote to the appellant apologising for the delay in getting the notes of the meeting on 17 July to her and asking for her comments on the matters she said had been omitted. He also explained that he had asked Mr. O’Shaughnessy to discuss the transfer back to Bromley with her. This, of course, Mr. O’Shaughnessy had already done.

In the event, the appellant was signed off sick from 10 September 2003, and did not therefore return to work. What happened was that she wrote to Mr. Geerts on 17 September setting out the points she asserted were missing from the notes. She also made a reference to the telephone conversation on 4 September, saying: “I am extremely upset and concerned at the tenor of our conversation on 4 September and found you manner to be extremely intimidating and bullying”. She received no reply to that letter, and sent a reminder on 15 October.

Mr Geerts replied on 20 October. He stated that it was not his intention to be intimidating and bullying and did not believe he had been. The Tribunal found, however, that the tone of his letter illustrated that “Mr Geerts was still frustrated at the situation”.

The appellant submitted her first grievance to the Bank on 6 November 2003. It was not well handled. Mr. Geerts did not reply until 1 December, and the Tribunal expressed its concern that “such a large organisation as the (Bank) with a Human Resources Department would countenance such a delay in dealing with a formal grievance letter”.

The essence of the appellant’s grievance was her complaint about the transfer to Swanley and her belief that she had been displaced by a member of staff from Croydon. She also complained about Mr. Geerts’ conduct on the telephone and about the minutes of the meeting of 17 July.

The person initially identified as hearing the grievance turned out to be junior to Mr. Geerts and eventually the Managing Director of Commercial Banking South, Mr. James May, referred it to a Ms Magson, who was the Regional Director for another region. The manner in which Ms Magson dealt with the appellant’s grievance was also not satisfactory. She dismissed the bulk of the appellant’s complaints, but accepted that there needed to be an apology to the appellant about the delays in responding to the appellant’s correspondence. The Tribunal held that it was not clear to it why that part of the grievance could not have been upheld.

Ms Magson wanted to get the appellant back to work. However, the appellant now explained that because of the way she felt, she was unable to go to Bromley to shop and could not contemplate returning to work there:- see paragraph 42 of the Tribunal’s reasons.

On 23 February 2004, Mr. Geerts wrote to the appellant apologising for his delays in dealing with the appellant’s letters. However, the appellant was not satisfied and took her grievance to the next stage. This was considered by Mr. May.

On 22 April 2004, Mr. May wrote to the appellant with his decision not to uphold the grievance. The Tribunal recorded its findings in this regard in paragraphs 46 to 48 of the judgment:

Mr May went on to offer the (appellant) a return to work at either Bromley, Croydon or Swanley or another location outside of commercial banking if she wished. Mr May assured the (appellant) that she was a valued member of staff. The (appellant) told the Tribunal that she accepted that Mr May had done his best to get her back to work. It was her view that, by then, it was too late and her health had been affected. (my emphasis)

The appellant remained dissatisfied, and took her complaint to Stage 3 of the grievance procedure. The Bank took the view that there was not enough new evidence for the matter to go to stage 3, although the grievance was considered by a Ms Tordoff, another senior official of the Bank. Nothing, however, came from Ms Tordoff’s investigation, and on 19 July 2004, the Bank sent a letter to the appellant inviting her to a “long-term sickness absence meeting on 4 August 2004”. Following the collection and consideration of medical reports on the appellant, she was eventually dismissed at a meeting called by the Bank on 22 December 2004. The letter of dismissal, written by Mr. May on 23 December is in our papers: it rejected the appellant’s claims about the manner in which she had been treated, and asserted that the grievance procedure had been properly implemented. Mr. May also stressed that he had:-

The appellant unsuccessfully appealed against her dismissal. That appeal was heard by Mr. Hunter, to whom reference has already been made.

The appellant was seen by her general practitioner, the Bank’s Occupational Health and Safety Consultant and an Occupational Health Physician (Dr Harvey). The Tribunal’s findings in relation to the appellant’s health were as follows:-

The Tribunal expressed its conclusions on the issue of unfair dismissal in paragraphs 81 to 88 of its reasons, which I propose to set out in full:-

The Bank appealed to the EAT. Its principal ground of appeal was that the Tribunal had erred in law by asking itself the wrong question in paragraph 87 of its reasons. It should have asked itself: “Having contributed to the illness, what would a reasonable employer do in these circumstances, particularly given the evidence that Mrs. McAdie (at that point the respondent to the Bank’s appeal) was not going back to work in any circumstances?” The consequence, it was argued, was that where an employer had caused the condition for which the employee was dismissed, the employer could never fairly dismiss the employee.

Having set out the facts and the Tribunal’s conclusions, the EAT examined the three decisions of previous constitutions of the EAT in which an employer had dismissed an employee on account of ill-health or incapacity for which the employer had been wholly or partly responsible. These were: (1) London Fire and Civil Defence Authority v Betty [1994] IRLR 384 (Betty); (2) Edwards v Governors of Hanson School [2001] IRLR 132 (Edwards); and (3)Frewin v Consignia Limited (unreported EAT / 0981 / 02) (Frewin).

In relation to those authorities, the EAT commented in the following terms:-

The EAT thus proceeded on the basis that the Tribunal had not erred in principle in being prepared to take into account the fact (as it found) that the Bank was responsible, and culpably so, for the appellant’s ill-health. The EAT went on, however, to add the following observations: -

The EAT then considered the question of what would have happened had the Tribunal not misdirected itself: -

I have cited at length from the EAT’s judgment because I find myself both in complete agreement with it and, at the same time, reluctant to add to it. For the appellant, Mr. Christopher Over was, in my judgment, placed in an impossible position. He was constrained to argue that because of its behaviour and its responsibility for the appellant’s condition, the Bank, as a matter of law, was simply unable fairly to dismiss the appellant. Any dismissal on these facts, Mr. Over argued, would have been, and was, unfair.

In my judgment, that argument is plainly unsustainable, both on the authorities and for the reasons given by the EAT. The EAT was plainly right, for the reasons it gave, to find that the Tribunal had misdirected itself in law in paragraph 87 of its reasons.

Mr Over was constrained to accept, in argument, that it was possible on the authorities for an employer who had negligently been responsible for personal injuries suffered by an employee in the course of his employment nonetheless subsequently to dismiss the same employee on the ground of capability without rendering the employer liable to a claim for unfair dismissal. Given that the reason for the dismissal in the instant case – an indefinite incapability on the part of the appellant to do her job – and given that the manner in which the appellant was dismissed was procedurally fair – Mr. Over was quite unable to provide a rationale which distinguished the appellant’s case from the case of the employee who had been dismissed following an industrial accident which had rendered that employee incapable of continuing in his employment.

Mr. Over’s other principal difficulty seemed to me to stem from the facts as found by the Tribunal. The appellant had made it crystal clear that – no matter what anybody said or did – she was not coming back to work for the Bank – see; (1) the terms of the dismissal letter set out at paragraph 31 above; (2) paragraph 48 of the Tribunal’s reasons set out at paragraph 30 above; and (3) the terms of the medical evidence which the Tribunal summarised in paragraphs 63 of its reasons (see paragraph 33 of this judgment). It might have been different if the appellant’s case had been that she was willing to try again – but, plainly, she was not. In my judgment, therefore, Mr. Over had no answer to the question: “what was the Bank to do in these circumstances?” save to fall back on the mantra that the Bank’s behaviour had been so poor, and its responsibility for the appellant’s condition so total that there were no circumstances in which it could, fairly, dismiss the appellant. As I have already indicated, that proposition is, in my judgment, simply untenable.

Mr. Over sought to attack the EAT’s analysis of the three authorities identified in its judgment by submitting that in finding; (1) that Betty remained good law, and; (2) that by holding that much of what Morison J had said in that case was “important and plainly correct” the EAT had misdirected itself, since the ratio decidendi of Betty was that an Employment Tribunal should not investigate the cause of an employee’s incapacity which had led to that employee’s dismissal. By relying on Betty, he argued, the EAT had wrongly criticised the Tribunal for focusing on what had happened in the past, and on whether or not the Bank’s past behaviour was reasonable. By wrongly relying on Betty the EAT had also failed to make the distinction between a culpable act in the past and a continuing and culpable course of behaviour running right through the grievance and dismissal process.

In short, Mr. Over submitted, this was a case in which the EAT had misdirected itself on the authorities. This was, accordingly, one of those cases in which the employer’s conduct, and its responsibility for its employee’s incapability for performing her work was such as render its subsequent dismissal of its employee unfair.

In my judgment, the EAT did not misdirect itself on the authorities. I have taken the opportunity afforded by the period over which this judgment has been reserved to re-read both the three cases identified by the EAT and the EAT’s analysis of them. Having done so, I not only agree with the EAT’s analysis of the authorities, but find myself unable either to add to, or improve on it.

In my judgment, the EAT’s analysis is a wholly accurate summary of the effect of the three cases to which it refers, and should henceforth be followed by both Employment Tribunals and the EAT itself. Like the EAT we do not think it necessary to consider the further example, suggested by Bell J in Edwards of a case where the employer maliciously injures the claimant. No doubt if such a case arises, it will fall to be considered on its facts and in the light of the judgment of the EAT in the instant case. It is sufficient, I think, to say that on the facts of this case, the Bank’s culpability in bringing about the appellant’s incapability is plainly not a basis upon which it can be said that her dismissal was unfair.

In giving permission to appeal, Sir Henry Brooke, as I have already stated, commented that it would be appropriate for this court to consider the earlier EAT authorities referred to in the judgment of the EAT in this case. In the event, however, having done so, I do not think it either necessary or appropriate for this court to do anything other than express its agreement with the EAT’s analysis.

For all these reasons, I would, accordingly, dismiss this appeal.

I agree.

I also agree.