The Carphone Warehouse Ltd v Peart

Where an employer admits an employee’s contractual entitlement to a bonus but relies on the asserted existence of a final written warning to defeat it, the employer bears the burden of proving that warning. The description of the relevant contractual term as a precondition, exception or exclusion does not alter that result.

Ordinarily, however, an employment tribunal should decide a disputed factual issue on the evidence rather than resort readily to the burden of proof. If it cannot resolve a critical conflict after hearing the witnesses, its reasons must explain why. Reasons must identify the factual conclusion reached and enable an appellate court to understand why it was reached.

The claimant sought payment of £8,400 under a long-term incentive plan. The employer accepted that payment was due unless the claimant had a live final written warning in May 2012.

The Employment Judge upheld the contractual claim. The employer appealed, contending that the warning had been imposed following a disciplinary meeting on 4 April 2012, although its documents referred to a meeting on 11 April. The claimant maintained that the 4 April meeting was only a performance review and that no disciplinary meeting occurred.

The central issue was whether there had been a disciplinary meeting at which a final written warning was given, and whether the Employment Judge had adequately resolved that disputed issue.

1. Appeal allowed. The Employment Judge correctly placed the burden of proving the alleged final written warning on the employer. The claimant had established his entitlement to the payment subject to that issue, and the employer asserted the warning in order to defeat it. The burden did not depend on whether the relevant LTIP term was characterised as a precondition, exception or exclusion clause.

2. In the ordinary civil and employment case, a judge should decide a factual issue on the balance of probabilities from the evidence. Resort to the burden of proof should be rare. It is permissible where the evidence cannot resolve the issue, but a judge who has heard evidence about a critical meeting must explain why the conflict cannot be resolved without recourse to the burden.

3. The reasons did not make a clear finding whether the 4 April meeting was disciplinary and whether a final warning was imposed. They were also unclear whether the claim succeeded merely because the confirmation letter wrongly referred to 11 April. That date error would not itself be decisive if a warning had in substance been given on 4 April.

4. The reasons therefore failed to meet the required standard. The matter was remitted for a fresh hearing before a different Employment Judge, who was to hear the evidence afresh and was not bound by the earlier Tribunal’s findings.

• Employment Appeal Tribunal: Allowed the employer’s appeal and remitted the contractual bonus claim for a fresh hearing before a different Employment Judge.
• Employment Tribunal, Huntingdon: By a judgment dated 10 July 2013, upheld the claimant’s contract claim for £8,400 under the long-term incentive plan.