Employment Cases Update

McCann v Clydebank College UKEATS/0061/09/BI

Date published: 04/08/2010

Appeal against ET's decision to dismiss a claim of unfair dismissal. The claimant was dismissed for doing remunerative work in his own business, without his employer’s consent, in a period when he was off sick and in respect of which he was receiving sick pay. The EAT held that the ET was entitled, in the circumstances of the case, to hold that the dismissal was fair.

Appeal No. UKEATS/0061/09/BI

EMPLOYMENT APPEAL TRIBUNAL
56 MELVILLE STREET, EDINBURGH, EH3 7HF

At the Tribunal
On 17 June 2010

Before
THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT)
MR M SIBBALD
MRS A HIBBERD

MR KENNETH MCCANN (APPELLANT)

CLYDEBANK COLLEGE (RESPONDENT)

Transcript of Proceedings

JUDGMENT

APPEARANCES

For the Appellant MR HAROLD JOSEPH (Solicitor)
Harold W Joseph
Solicitors & Notary Public
54 Carlton Place
Glasgow
G5 9TW

For the Respondent MR ANDREW BROWN (Solicitor)
Messrs Anderson Strathern LLP
1 Rutland Court
Edinburgh
EH3 8EY

SUMMARY

UNFAIR DISMISSAL – Reasonableness of dismissal

Employee dismissed for doing remunerative work in his own business, without his employer’s consent, in a period when he was off sick and in respect of which he was receiving sick pay – Tribunal held to have been entitled to conclude that dismissal for that reason was, in the particular circumstances of the case, fair. 

THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT)

INTRODUCTION

1. This is an appeal against the decision of an Employment Tribunal sitting at Glasgow chaired by Employment Judge Young dismissing the Appellant’s claim of unfair dismissal.  The claim was heard over ten days in two tranches, in November 2008 and March 2009.  The Judgment and written Reasons were entered in the register and sent to the parties on 27 August 2009.  The delay of over five months in producing the Tribunal’s decision is not alluded to, still less explained, in the Reasons.  That is not good practice.  It is well-established that decisions of employment tribunals should normally be promulgated within three and a half months of the end of the hearing: sometimes that is simply not possible, but in such cases some express acknowledgement is appropriate.  However, there is no reason whatever to suppose that the delay in itself gave rise to any injustice; and it is fair to say that the Reasons, which run to no fewer than 57 pages and are impressively full and careful, must have taken a lot of time to draft. 

2. The Appellant was represented before us by Mr Harold Joseph, solicitor, and the Respondent by Mr Andrew Brown, solicitor, of Anderson Strathern.  Mr Joseph also appeared in the Employment Tribunal: the Respondent was at that stage represented by counsel. 

THE FACTS

3. The Tribunal’s factual findings are very detailed, but for present purposes they can be sufficiently summarised as follows.

4. The Appellant is an automotive engineer.  From 8 March 2000 until his dismissal with effect from 4 July 2007 he was employed part-time by the Respondent as a college lecturer in motor engineering.  The statement of his terms and conditions of employment which was before the Tribunal (to which we will for convenience refer simply as “the contract”) provided that he was obliged to work 26¼ hours per week, of which normally a maximum of 18 hours would be by way of “class contact”.  Of the remaining 8¼ hours, 3½ were categorised as “discretionary time” and did not have to be worked at the college.  The contract did not identify the specific days or hours within which the class-contact or the non-class-contact time (apart from discretionary time) had to be worked.  The Tribunal held that it was within the discretion of the Respondent how the Appellant’s work should be timetabled.  The timetabling depended on different “cycles”.  There was a dispute before the Tribunal as to the cycle which applied to the Appellant at the material time.  On this issue, the Tribunal accepted the Appellant’s submission that he was on “cycle 1”, under which all his class contact time would be on Monday, Tuesday or Wednesday.  

5. The Appellant was the owner of a garage called the Western Test Centre in Drumchapel, in which he worked when he was not at the college.  He was obliged under the contract to obtain the Respondent’s approval for any such outside work.  He had not done so, but his interest in the garage, and the fact that he worked there, was common knowledge among his colleagues.  For the purpose of the issues on this appeal, nothing turns on his failure to make formal disclosure. 

6. There were in the second half of 2006 a number of incidents involving the Appellant which gave rise to disputes between himself and colleagues or managers, and in particular his manager Jeffrey Kearns and his Head of Centre, Pat Lowrie.  The Appellant lodged grievances against both Mr Kearns and Mr Lowrie.  He also raised health and safety concerns about the way that work was done at the college.

7. From 2 October until 18 December 2006 the Appellant was off work on account of illness.  The medical certificates produced by his GP said that he was unfit to work as a result of “stress and hypertension”.  Throughout that period he was in receipt of sick pay.  Para. 15.3 of the contract provided that he was entitled to sick pay for “qualifying days”.  These are defined, in the case of part-time lecturers, as “the days in the week on which the lecturer was actually time-tabled to work”.  Arguably, that language does not fit very well with obligations defined in the way which we have set out above, but it was interpreted as entitling him to payment for his full 26¼ contracted hours. 

8. The Respondent came to suspect that during the period of the Appellant’s sickness absence in November and December 2006 he had been working at the Western Test Centre during hours when he would normally have been obliged to be at the college.  This was believed to be inconsistent with his receipt of sick pay.  Inquiry agents were instructed to investigate.  They carried out surveillance both at the Appellant’s home and at the garage in the week 11-15 December.  They produced a DVD which showed him attending at the garage on each of 12-15 December (i.e. Tuesday to Friday of that week).  (They also produced a DVD covering his home but this was not used by the Respondent and is of no relevance for present purposes.)  The DVD showed attendances at the garage on both the Thursday and the Friday, with unequivocal involvement in working activities (at least on the Friday); but the attendances on the Tuesday and Wednesday were much shorter and the DVD did not unequivocally show him doing any work, although he was wearing what looked like working clothes.

9. On 21 December 2006 the Appellant was suspended.  Disciplinary procedures ensued.  There was a formal investigation conducted by a Mr Redman, followed by disciplinary charges and a hearing before the Depute Principal of the College, Mr Paterson.  At the hearing the Claimant took various points, among them that he was entitled to attend the garage at any time during the week as long as he was not working for financial gain, which he said he was not: see Reasons paras. 136-139.  He had in the course of the prior investigation offered Mr Redman a number of explanations for his presence at the garage, i.e. other than that he was doing remunerative work.  Those explanations struck Mr Paterson as inconsistent and unconvincing.  At para. 258 of the Reasons the Tribunal said this:

“The Tribunal considered that Mr Redman had sought to investigate matters thoroughly with the claimant.  He had carried out a number of interviews before meeting with the claimant to obtain his position.  At that time the claimant was not able to give a clear and coherent account of his movements in and around the garage premises in the period in question.  He knew that he had been suspended because of an allegation that he had been working on the premises.  He was aware that he was to be interviewed in this connection.  His approach seemed to be to say as little as possible and admit nothing by way of being in and around the garage premises but dispute that he could be seen on the DVD footage, that there was any clear image of him and that the circumstances of his attendance might be entirely innocent for example to collect wood shavings, remove silage from the yard and attend to dogs in the yard to the rear.  The Tribunal considered that there was force in the submission made by Mr Cunningham that the lack of coherent account by the claimant as to his movements in the period was indicative of an individual seeking to hide something rather than exonerate himself from any wrongdoing and this weighed with Mr Redman.” 

10. On 4 July the Appellant was dismissed for gross misconduct.  Although there was a second charge, the relevant misconduct for present purposes was defined as “working for financial gain while drawing sick pay from the College”.  The decision letter stated:

“Claiming College sick pay while off work due to claimed ill-health and yet working for gain while doing so is a fraud on the College.”

He appealed.  As regards the charge with which we are concerned, the appeal was rejected.  The appeal panel decision, dated 8 November 2007, said:

“[By] working in the premises as evidenced by the DVD (which clearly showed Mr McCann engaged in activity in a workshop and outside) Mr McCann was contributing towards the profitability or viability of the business by carrying out work-related business there.  He should not therefore have been claiming sick pay from the College.  He did not make any approach to the College to indicate that whilst he was not fit to attend college and carry out his lecturing duties he was fit to carry on work in his own private business.”

THE CASE BEFORE THE TRIBUNAL

11. The Respondent’s case was that the evidence of the DVD clearly entitled the original decision-taker and the appeal panel to reach the conclusion that the Appellant had been working at the garage on the four days in question; that that was inconsistent with his receipt of sick pay; and that it constituted sufficiently serious misconduct to justify dismissal.  It should be noted that the Respondent did not contend that the fact that the Appellant was well enough to work at the garage meant that he must have been well enough to work at the college.  This was therefore, not, presented as a “malingering” case.  Rather, the Respondent’s case was that, even if he was too ill to come in to work at the college, it was wrong for him to claim sick pay for his periods of absence if he was in fact, without its knowledge or consent, doing remunerative work elsewhere.  Thus it was recognised, correctly, that an illness which may disable an employee from performing his particular contractual duties may not disable him from doing other kinds of work: medical conditions caused by work-related stress are one instance of this common-sense proposition, although other examples can easily be posited. 

12. As for the Appellant, he accepted, as he had in the course of the disciplinary process, that he had attended the garage on the days in question.  His case, as recorded at paras. 207-226 of the Reasons, can for the purpose of this appeal be sufficiently summarised under four heads:

(1) Since the nature of the illness was work-related stress, there was no inconsistency in his being unfit to attend work at the college but being fit to work at the garage.  (This point, however, was a response to a case which was not being made: see para. 11 above.)

(2) He was entitled to work at the garage on the Thursday afternoon and the Friday because he was not contractually obliged (on the cycle that he was then working) to work on Fridays and his non-class hours (excluding discretionary time) could be worked on a Thursday morning.  It followed that he had received no sick pay in respect of the Thursday afternoon or the Friday in question.  Alternatively, if the Tribunal found otherwise (which in the event it did not), he nevertheless honestly and genuinely believed that to be the case, with the result that no finding of dishonesty should be made. 

(3) As regards the rest of the week, the evidence of the DVD was incapable of supporting the conclusion that he was working.  It did not show any attendance at the garage on the Monday, and the attendances on the Tuesday and the Wednesday were at best equivocal.

(4) The fairness of the dismissal as a whole was vitiated because there had been no sufficient case shown to justify carrying out surveillance, with the result that it constituted a breach of his rights under art. 8 of the European Convention of Human Rights. 

THE TRIBUNAL’S REASONS 

13. The “Conclusions” section of the Reasons begins, at paras. 227-237, with an unexceptionable statement of the relevant law.  (We should, however, note in passing that the Tribunal falls into the common error of reciting the effect of British Home Stores Ltd. v Burchell [1980] ICR 303n without correcting for the fact that the burden of proof on the issue of reasonableness is no longer on the employer: see, among many other cases to the same effect, Boys and Girls Society v McDonald [1997] ICR 693.  But that error, being in the Appellant’s favour, has no relevance for the purpose of this appeal.)

14. At paras. 238-254 the Tribunal considered the reason for the dismissal.  It considered and rejected a submission on the part of the Appellant that the reason relied on by the Respondent – that is, his doing remunerative work at the garage while drawing sick pay – was not the true reason.  Since there is no appeal against its conclusion on this aspect we need not summarise its reasoning.  However, as part of its consideration of the admissibility of that reason, the Tribunal considered at paras. 242-248 the Appellant’s submission referred to above that the use of surveillance constituted a breach of his rights under art. 8.  It appears to have been common ground that if that were established the dismissal would be unfair; and since there is no issue as to that before us we will proceed on that basis.  The Tribunal directed itself, in accordance with the decision of this Tribunal (Lord Johnston presiding) in McGowan v Scottish Water (EATS/0006/04), that the question of whether there was a breach of art. 8 depended on whether the use of surveillance was disproportionate.  At para. 247 it considered that question and decided it in the Respondent’s favour.  Accordingly it concluded, at para. 248, that the DVD evidence was admissible. 

15. The Tribunal thus concluded that the Respondent had shown an admissible reason for the dismissal of the Appellant.  At paras. 255-260 it considered the reasonableness of the investigation and reached a conclusion in the Respondent’s favour.  Since, again, there is no appeal as regards this aspect, we need not summarise its reasoning: it was, however, in this context that it made the finding that we set out at para. 9 above.  At para. 260 it noted that no objection had been taken to the procedures followed at either the original disciplinary hearing or before the appeal panel.

16. At paras. 260-282 the Tribunal considered the reasonableness of the findings made by the Respondent, on the basis of the DVD evidence, as to the Appellant’s conduct.  Various points need to be noted.  It makes sense to take them in a slightly different order from that adopted in the Reasons.  At paras. 264-268 it considered what hours the Appellant was “timetabled” to work, so as to be under a contractual obligation to be at the college.  It accepted, as we have already noted, the Appellant’s case that at the relevant time his timetabled hours for class contact fell on Monday, Tuesday and Wednesday.  On that basis, it turned at para. 269 to consider the Appellant’s submission that Thursday afternoons and Friday fell outside his contractual working time – or, to put it another way, that he did not receive sick pay in respect of that day and a half.  It implicitly accepted that; and it noted that the DVD evidence was less cogent in respect of the Tuesday and the Wednesday than in respect of the Thursday and the Friday.  However, it held that the Respondent had been entitled to take the view that that did not reflect any deliberate choice on the part of the Appellant to distinguish between hours in respect of which he was receiving sick pay and those in respect of which he was not: see Reasons paras. 272-275.  The Appellant’s original stance had been that he had been entitled to be at the garage at any time because he had not been working.  But that was inconsistent with the position now being taken which sought to distinguish between different periods.  The Tribunal also concluded, at paras. 276-279, that the Respondent was entitled to conclude that the Appellant had indeed been working on the Tuesday and the Wednesday as well as on the Thursday and Friday.  It pointed out that that meant that the distinction relied on by him between Monday to Wednesday (or Thursday mid-day) on the one hand and Thursday (or Thursday afternoon) and Friday on the other would not avail him in any event.  Those findings are of course findings of fact, with which this Tribunal could not interfere unless they were shown to be perverse. 

17. At paras. 280-282 the Tribunal considered the Appellant’s submission that, whether his analysis of his working obligations was right or wrong, it was genuinely held and there had accordingly been no dishonesty in his conduct.  Consistently with its earlier finding, it held that the Respondent had been entitled to take the view that the Appellant had not been acting in good faith.  It had already held that the Respondent had been entitled to reject the Appellant’s contention that he had been intending to observe a distinction between different parts of the week in the time when he worked at the garage.  It also referred to the “lack of candour” which he had shown in the course of the investigation process: see para. 15 above.  In this connection it said, at para. 281:

“The solution for the claimant in these circumstances was to have gone to the respondents and asked if it was permissible to work in his garage while absent from work with the respondents through ill health.  That would have enabled the respondent to consider if that was appropriate or not, and in particular whether payment of sick pay should continue in that period.  The claimant did not do this and the Tribunal considered he was reckless in this respect.”

18. At paras. 261-263 the Tribunal considered whether it was reasonable to treat the Appellant’s conduct in working at the garage while in receipt of sick pay as misconduct.  It acknowledged, at para. 263, “that the claimant could not be expected to stay at home while absent from work”.  It commented:

“No doubt a reasonable employer would not take any objection to a man off with stress tending to his own garden, shopping or carrying out such activities.  The crucial difference here of course is whether the claimant was engaged in an occupation for financial gain whilst claiming sick pay and the Tribunal considered a reasonable employer would regard that as an act of misconduct.”

It concluded that it was reasonable to make no distinction between the case where an employee receives wages in respect of the period in question and where, as in the case before it, he was the owner of the business in question and would get the benefit of any work done in the shape of his interest in the profit: see paras. 261-262. 

19. Finally, at para. 284, the Tribunal considered whether the misconduct shown was sufficiently grave to justify dismissal.  It said:

“In this case the Tribunal also considered that the response of the respondents, albeit that the claimant had been in their employ for some time, was one which came within the band of reasonable responses of a reasonable employer.  There was no real dispute on that aspect of matters.  The dispute was whether it could reasonably be concluded that the Claimant was working whilst in receipt of sick pay.”

The last two sentences should not be read too literally.  It is of course clear that the Appellant had argued that, even if he was taken to have been working on all four days, that did not constitute misconduct - or in any event serious misconduct – since he was not being directly paid for that work: see para. 12 above.  The Tribunal’s point is that the Appellant had in practice accepted that if he were wrong on that point dismissal was a reasonable response.

THE APPEAL

20. A Notice of Appeal was lodged on 6 October 2009.  It was rejected by Lady Smith on the sift.  On 17 November a fresh Notice of Appeal was lodged under rule 3 (8) of the Employment Appeal Tribunal Rules 1993.  The appeal as so re-pleaded was permitted to proceed.  Three grounds of appeal were pleaded, which we consider in turn.

GROUND 1

21. This ground is based entirely on what are said to be differences between the terms of the contract which was considered by the Tribunal and those of a subsequent document dated 6 December 2005.  Insofar as we understand the point being made, we cannot see that it in any way undermines the reasoning on the basis of which the Tribunal decided the case.  But Mr Brown submitted that the point was not open to the Appellant in any event since the second document had not been put before the Tribunal and no grounds had been advanced justifying the admission of fresh evidence.  Mr Joseph accepted that the document in question had not been put before the Tribunal and did not seek to persuade us that it should nevertheless be admitted.  Accordingly this ground of appeal cannot proceed. 

GROUND 2

22. This reads as follows:

“On the total number of hours the appellant [was] required to work is specified in R4 [i.e. the contract].  R4 does not give any terms or conditions relating to when the appellant was expected to work those hours.  The respondents argued that the contract was a flexible one.  That was not stipulated in R4.  R4 contravenes s. 1 (4) (c) of the Employment Rights Act 1996.  The contract was not sufficiently specific that the appellant could be called upon to work on a Thursday or Friday and dismissal in such circumstances is unfair.  Reference is made to Murphy v Nissan Motor Manufacturing [UK] Ltd, a judgment of the employment tribunal sitting at Newcastle-upon-Tyne on 11 July 2006 Case No. 2511366/04.

23. It is convenient first to consider this paragraph without reference to the decision of the Newcastle Employment Tribunal in Nissan which is there referred to.  The contention that the Appellant could not, on the cycle which he was then working, be required to work on Thursdays or Fridays is unexceptionable: it was indeed accepted by the Tribunal (see para. 16 above).  But we cannot see how it follows that “dismissal in such circumstances is unfair”; nor was this elucidated by Mr Joseph in his oral submissions.  As we have pointed out, the Tribunal held that the Respondent was entitled to find (a) that the Appellant was not himself at the time observing any such distinction as he subsequently advanced, and (b), in any event, that he was working on the Tuesday and the Wednesday as well as the Thursday and Friday: see, again, para. 16 above.  This was a matter of judgment for the Tribunal, of an essentially factual character, with which this Tribunal could not interfere unless it was shown to be perverse: no such case is advanced or would, it seems to us, be arguable. 

24. We turn to the decision in Nissan.  In that case the claimant was also off work because of work-related stress and was in receipt of sick pay.  He was found to have carried out various miscellaneous pieces of work, namely: putting up some railings for a friend, without charge; doing “various jobs for the family”; and laying turf for a neighbour.  On the tribunal’s findings it is unclear whether he did the latter two jobs on a paying basis.  He was dismissed for, to put it broadly, working while off sick.  In a thoughtful and thorough judgment given by Employment Judge Garnon the tribunal discussed several points relating to the entitlement or otherwise of an employee to work during a period of sickness absence and while drawing sick pay.  It found the Claimant’s dismissal to have been unfair.  Its conclusions can, broadly, be expressed under three heads:

(1) None of the decision-takers at Nissan had focused on precisely what it was about the claimant’s conduct which was objectionable, and the reason eventually relied on at the hearing, namely that he had been in breach of an “implied rule” that employees should not work while in receipt of company sick pay, was not the actual reason for dismissal.

(2) It cannot be objectionable, as such, for an employee who is genuinely off sick to do unpaid “work” during his absence of a kind which he remains able to do. 

(3) As regards paid work, the Tribunal observed that if Nissan had had a clear and published policy that employees who wished to undertake remunerative work while in receipt of sick pay should seek its consent first it might have been reasonable to dismiss the claimant for undertaking such work without first obtaining its consent; but there was no such policy in place.

25. As we understand his oral submissions before us, Mr Joseph sought to rely on the third of those points as establishing that in the absence of such a policy the dismissal of an employee for undertaking remunerative work in a period for which he was receiving sick pay was necessarily unfair.  That is not what is pleaded in ground 2, where Nissan is apparently referred to only as supporting the pleaded point which we have discussed above about the uncertainty over which days the Appellant could be obliged to work.  It is also unclear whether any such argument was advanced before the Tribunal.  If para. 284 of the Reasons accurately records the position (subject to the gloss at para. 19 above) – and Mr Joseph did not suggest that it did not – the case proceeded below on the basis that if the Appellant had indeed, contrary to his case, worked at the garage during hours in respect of which he was receiving sick pay and ought to be treated as having received a financial benefit for that work, then dismissal was a reasonable sanction.  On that basis it would not be right to allow him to run a different case now. 

26. However, we are prepared, in case there has been any misunderstanding, to consider the substantive point.  We do not think that the tribunal in Nissan intended to advance the wide general proposition suggested by Mr Joseph; and if it did we respectfully think it was wrong.  The question whether it constitutes misconduct, or in any event misconduct justifying dismissal, for an employee to claim, or accept, sick pay for a period in which, without his employer’s knowledge or consent, he has in fact done remunerative work does not seem to us to admit of a yes-or-no answer applicable in every case.  We did not receive much help from the advocates as to the correct analysis of such a situation, and the point may need to be more fully considered in a case in which it unequivocally arises for decision; but our present view can be summarised as follows.  In the typical case (there are some exceptions) where an employee is contractually required to work for his employer in a particular period he is obliged to do so on an exclusive basis: he cannot undertake work for someone else in the same time.  In principle, we do not see that that default position is altered where the employee is unable through sickness to work in the period in question.  True, the employer cannot require his actual labour during that period, and to that extent he loses nothing if the employee uses the time to do other work for which he remains fit.  Nevertheless, he is continuing to pay for that time, notwithstanding that he is receiving no return in the form of the employee’s labour; and in our view he has a legitimate interest in prohibiting its use for other remunerative work, for at least two reasons.  First, the other work undertaken may, depending on the particular facts, hinder the employee’s prospects of a speedy recovery.  Secondly, and more generally, the basis on which sick pay is paid is that the employee has lost the opportunity to earn; and if that assumption is falsified, because the employee is in fact able to earn, it seems to us that the employer ought to be entitled to trade his consent to the employee taking the work in question for some acceptable accommodation as regards the payment of sick pay.  In a clear-cut case we think that it would be well understood by employees that they could not legitimately expect to exploit their illness by being paid twice for the same period and that to do so might constitute serious misconduct.  However, not all cases are clear-cut.  Where there is room for ambiguity or innocent misunderstanding it may well be unreasonable for an employer to dismiss an employee for undertaking paid work during a period of sickness absence.  We can well understand why the tribunal in Nissan regarded the case before it as such a case.  But each case must depend on its own facts.  The Tribunal in the present case believed that the Respondent was entitled to regard the Appellant as acting in bad faith by not raising the issue, and by not coming clean when the issue was raised with him.

27. In those circumstances, even if the point advanced by Mr Joseph should be permitted to be taken, we can see no error of law in the Tribunal’s conclusion.

28. Mr Joseph accepted that the pleaded reference to s. 1 (4) (c) of the 1996 Act was “parenthetical”.  We would go further and say that it was irrelevant: insofar as the Appellant has any point on the failure of the contract to specify his precise hours, the point would be equally good whether there was a breach of this section or not.  But in any event, as he further conceded, no point on these provisions was taken before the Tribunal.

GROUND 3

29.  This reads:

“It is a corollary of the previous paragraph that if the appellant could not reasonably have ascertained with reference to his written contract that he could be called upon to work on Thursday pm or Friday, instruction of covert surveillance was a contravention of art. 8 of the Human Rights Act.  The appellant was not contracted to work on Thursday pm or Friday on a fair interpretation of his contract.”

30. For the reasons which we have already given, the Tribunal’s reasoning did not depend on any finding that the Appellant was contractually obliged to work on Thursday afternoon or Friday.  Mr Joseph sought in his oral submissions to advance a wider challenge to the Tribunal’s conclusion on the art. 8 issue.  But no such challenge was pleaded; and in any event we can see nothing wrong in the Tribunal’s conclusions at paras. 247-8, to which we refer at para. 14 above. 

CONCLUSION

31. This appeal is accordingly dismissed.