The appellant NHS trust appealed against an employment tribunal's decision that the respondent former employee (E) had been unfairly dismissed, and against the amount of compensation awarded. E, aged 58, had been employed by the trust as a health care assistant. She was invited to a disciplinary hearing after an investigation concluded that she had made racist comments to colleagues. The letter inviting E enclosed a copy of the trust's disciplinary policy, but did not state that her dismissal was being contemplated. The disciplinary hearing commenced in May 2008, but was adjourned. A second letter was later sent to E inviting her to the resumed hearing, which warned that the hearing could end in her dismissal. The disciplinary panel subsequently found the allegations against E proved and she was dismissed. Although the tribunal acknowledged that a Step 1 letter had been provided to E before the conclusion of the disciplinary hearing, it found that the trust had not expressly warned her of the risk of dismissal before its commencement. It therefore concluded that the trust had breached Step 1 of the statutory dismissal procedure set out in the Employment Act 2002 Sch.2 para.1 and that that breach rendered E's dismissal automatically unfair under the Employment Rights Act 1996 s.98A(1). The tribunal made a compensatory award of £54,146, which included future loss of earnings until E's retirement date and an uplift of 30 per cent. The trust submitted that the tribunal had erred in law by (1) finding that it had failed to comply with Step 1 of the statutory dismissal procedure and that E's dismissal was therefore automatically unfair; (2) applying an uplift of 30 per cent to the compensation awarded, and the decision to do so was perverse; (3) failing to give reasons for its decision to award compensation for loss of earnings until retirement, or alternatively failing to make any finding of fact as to E's fitness for work.

HELD: (1) The tribunal had not erred in concluding that the first letter did not constitute a Step 1 letter as it did not expressly contain the required warning that the trust was contemplating E's dismissal, Alexander v Bridgen Enterprises Ltd (2006) ICR 1277 EAT applied. The inclusion of the disciplinary policy with the letter did not imply that dismissal would be considered, Homeserve Emergency Services Ltd v Dixon Unreported June 27, 2007 EAT and Zimmer Ltd v Brezan Unreported October 24, 2008 EAT not applied. Although the second letter did contain the warning, the first part of the Step 2 meeting had already taken place before it was sent. The facts were distinguishable from a situation where an employer, who had not provided the information required under the statutory procedure before convening a Step 2 meeting, restarted the process by providing the necessary information before starting a meeting afresh. The hearing in the instant case was resumed; it was not restarted. Accordingly, the tribunal had not erred in holding that the trust was in breach of the statutory dismissal procedure by holding a Step 2 meeting before the information complying with Step 1 had been provided to E, and had therefore not erred in holding that E's dismissal was automatically unfair under s.98A(1) of the 1996 Act, Smith Knight Fay Ltd v McCoy Unreported March 5, 2009 EAT and YMCA Training v Stewart (2007) IRLR 185 EAT considered. (2) An uplift of more than 10 per cent could be awarded under s.31(3) of the 2002 Act if the tribunal considered it just and equitable. In the instant case, the closest the tribunal came to giving a reason for the 30 per cent uplift was when it stated that the trust had failed to send a Step 1 letter before the disciplinary hearing "on which we make the award below". The tribunal therefore clearly erred in failing to give any reasons for making the uplift it did. Furthermore, although the tribunal had not erred in awarding an uplift under s.31(3), the uplift awarded was perversely high in the circumstances. The omission that led to the finding of non-compliance with Step 1 was not deliberate and was one that the trust sought to rectify when it realised its mistake, Aptuit (Edinburgh) Ltd v Kennedy Unreported July 4, 2007 EAT (SC) considered. Accordingly, the decision to award an uplift of more than 10 per cent was perverse. An uplift of 10 per cent was substituted for the 30 per cent uplift originally awarded. (3) The tribunal gave no reasons for making a compensatory award based on loss of earnings until E's retirement date. However, from the answers given in response to questions referred under the Burns/Barke procedure, it appeared that the tribunal based its decision on its view of the general difficulties older people faced in obtaining employment and not on evidence or knowledge of local conditions or requirements for health care assistants. Therefore the observations made in Bentwood Bros (Manchester) Ltd v Shepherd (2003) EWCA Civ 380, (2003) ICR 1000 about the reluctance of appellate courts to interfere with tribunal decisions that had been based on local knowledge and experience were not applicable, Bentwood distinguished. The tribunal further failed to make findings as to E's medical ability to perform any work or the availability of suitable work. Accordingly, the compensatory award was set aside and the claim for an award was remitted for reconsideration to a differently constituted tribunal. An uplift of 10 per cent was to be applied to any such award.

Appeal allowed in part.

Counsel for the appellant: Andrew Midgley.