Hughes v The Coupers Partnership Ltd

An appeal on perversity succeeds only where an overwhelming case shows that no reasonable Employment Tribunal, properly appreciating the evidence and law, could have reached its decision. The Employment Appeal Tribunal must not conduct a rehearing of factual disputes or take an over-critical approach to tribunal reasons.

Where a contract is lawful when made, illegal performance makes it unenforceable only if the employee knows the facts making the performance unlawful and actively participates in it. An agreed scheme to obtain payment through false expense claims, coupled with non-declaration for tax, may satisfy that requirement.

The claimant, a commercial director, was dismissed for gross misconduct after claiming mileage expenses for journeys he had not made. He contended that a 2002 oral variation of his contract entitled him to use false mileage claims as a monthly substitute for the withdrawn company car benefit.

The Employment Tribunal sitting in Manchester dismissed his claims by a judgment dated 27 August 2015. It preferred the managing director’s evidence that the agreed replacement was a £7,000 salary increase and genuine business mileage at 40 pence per mile. It also held, alternatively, that the claimant’s alleged agreement would have been tainted by illegality.

The claimant appealed on alleged illegality, taxable benefits, unfair-dismissal procedure, the ACAS Code, holiday pay, contractual payments and perversity. The central issue was whether the Tribunal had made an error of law or reached perverse factual conclusions.

1. Appeal dismissed. The Employment Tribunal was entitled to prefer the managing director’s evidence about the 2002 variation. There was no overwhelming basis for treating its findings as perverse. The claimant’s arguments about remuneration, office work, long-standing payments, the HMRC dispensation and later correspondence did not require a contrary finding.

2. An appeal on perversity has a strictly limited role. It cannot be used to reargue conflicts of evidence or to invite the Employment Appeal Tribunal to make its own factual findings. Tribunal reasons must be sufficient to explain the conclusion, but need not address every factual dispute or argument.

3. The illegality issue did not strictly arise once the factual finding on the agreement was upheld. In any event, the claimant’s proposed monthly payments were a personal benefit, not car expenses incurred wholly, exclusively and necessarily in performing employment duties under section 336 of the Income Tax (Earnings and Pension) Act 2003. The Tribunal was entitled to conclude that an agreement to claim fictitious mileage, and the claimant’s active participation in that arrangement and non-declaration of sums received, rendered the alleged agreement unenforceable.

4. The Tribunal had applied the Burchell principles. Its assessment of the employer’s belief, investigation, procedure and the range of reasonable responses was an evaluative factual exercise and disclosed no error of law. Paragraph 6 of the ACAS Code did not prohibit the managing director from conducting the disciplinary hearing; it concerned separation of the investigator and disciplinary decision-maker. The employer had also offered the claimant an appeal hearing, which he did not attend.

5. The Tribunal was entitled to find that no holiday-pay claim had been properly raised and that the performance-related payments had been varied to payments conditional on profitability.

• Employment Appeal Tribunal: dismissed the claimant’s appeal.
• Employment Tribunal sitting in Manchester: by a judgment dated 27 August 2015, dismissed the claimant’s claims.