England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT of Appeal (Civil Division)
on Appeal from the Employment Appeal Tribunal

		Royal Courts of Justice
		14th May 1984.

THE MASTER OF THE ROLLS: This is an appeal by Mr. Dobie from a majority decision of the Employment Appeal Tribunal which itself affirmed the unanimous decision of the Industrial Tribunal sitting in Liverpool that he had not been unfairly dismissed.

The basic facts were as follows. Mr. Dobie was employed by Burns International Security Services (UK) Limited, the well known security company, as a senior security officer at Liverpool Airport. Liverpool Airport itself is a municipal airport owned and controlled by the Morseyside County Council.

Under the contract between Burns and the airport authority it was provided that:

"The Contract shall be terminated at any time for failure to provide the standard of service required by Merseyside County Council. No compensation shall be paid for such termination." And that:

"Merseyside County Council reserves to itself the right to approve, or otherwise the employment or continued employment of any member of the Company at the Airport."

Friction arose between Mr. Dobie and the chief security officer, who was an employee of the county council. There were two incidents, the details of which do not matter for the purposes of this judgment. I am entirely prepared to assume that they arose through no fault of Mr. Dobie. The Merseyside Council said that he must be withdrawn from service at the Liverpool Airport. That created a problem because, although Burns are a national organisation, it appears that there was no other comparable work in the area. In those circumstances, Burns decided to offer him an alternative but lower paid job in the neighbourhood but not at the airport.

As a matter of law - and it is not disputed - that offer of alternative employment at a lower wage in a different place amounted to a dismissal, although of course it would have been open to Mr. Dobie to have accepted that as a variation of his employment and he could have negotiated whatever terms he could have obtained from the firm. However, that was a dismissal, and the sole issue before the industrial tribunal was whether that was an unfair dismissal giving rise to a right to compensation under section 54 of the Employment Protection (Consolidation) Act 1978.

In answering that question, the industrial tribunal had to follow the well known procedure which is laid down by section 57, as amended. Section 57(1) provides that:

"In determining for the purposes of this Part, whether the dismissal of an employee was fair or unfair, it shall be for the employer to show -

(a) what was the reason (or, if there was more than one, the principal reason) for the dismissal, and

(b) that it was a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."

It is common ground that the reason for the dismissal was that the Merseyside County Council were refusing to allow Mr. Dobie to continue to work on the airport and that Burns had no other directly comparable employment to which they could switch Mr. Dobie following that refusal. That was the reason. They next had to consider whether it was a reason which complied with section 57(l)(b). It was not a reason which fell within subsection (2). Most cases do fall within subsection (2). They relate, for example, to the capability or qualification of the employee or to the conduct of the employee and so on. This was an unusual case in which the employer was contending that this was "some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."

In fairness to the industrial tribunal, let me say at once that I think this is a difficult statutory provision in the absence of rather careful study. I say that for this reason: certainly a layman might think that if the reason for the dismissal was substantial and of such a kind as to justify the dismissal of an employee holding the position which that employee held, that would be the end of the matter. Clearly the dismissal had been justified; it could not have been unfair.

The tribunal did not directly fall into that error, but certainly it was in the nature of an elephant trap which was awaiting them. Let me therefore spend just one moment in explaining how I construe that paragraph. I construe it as requiring the tribunal to consider the reason established by the employer and to decide whether it falls within the category of reasons which could justify the dismissal of an employee - not that employee, but an employee - holding the position which that employee held. Thus different types of reason could justify the dismissal of the office boy from those which could justify the dismissal of the managing director.

The industrial tribunal - not very surprisingly, I think - came to the conclusion that the pressure being exerted by the Merseyside County Council could have justified the dismissal of Mr. Dobie. But they then directed themselves as follows.

They said:

"This is a case in which it is, perhaps, necessary to stress at this early stage what the functions of this Tribunal are; what it can do and what it must not attempt to do. The test which the Tribunal has to apply is, in the words of the Statute, whether the employer acted reasonably, and Section 57(3) of the Act ... clearly directs the Tribunal to focus its attention on the conduct of the employer and not on whether the employee suffered any injustice; and the question has to be answered by reference to the circumstances known to the employer at the time of dismissal."

I then therefore turn to see what section 57(3) says. Section 57(3), which has been amended by the 1980 Act, reads as follows:

"Where the employer has fulfilled the requirements of subsection (1), then, subject to sections 58 to 62, the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case."

On the face of it it is an astonishing proposition that in determining that question, namely whether the employer acted reasonably or unreasonably in treating the reason as a sufficient reason for dismissing the employee, in determining that question in accordance with equity and the substantial merits of the case, one should have no regard to any injustice suffered by any employee; and, indeed, the Employment Appeal Tribunal has held that that is a misdirection. But, in fairness to the tribunal, let it be said that there is House of Lords authority upon which they were entitled to base themselves. Let me now refer to that authority to explain why, in my judgment, they were in error.

That authority is the well known case of W. Devis & Sons Ltd. v. Atkins (1977) Appeal Cases 931. The leading judgment, with which all the other learned Law Lords agreed, was given by Viscount Dilhorne. At page 952 of the report he said:

"Reverting now to paragraph 6(8)" - which was the then equivalent to the current section 57(3); there are differences, but they are immaterial for present purposes - "it is to be observed that the paragraph does not require the tribunal to consider whether the complainant in fact suffered any injustice by being dismissed. If it had, then I see no reason to suppose that evidence subsequently discovered of the complainant's misconduct would not have been relevant to that question and admissible."

Therein, in the second sentence which I have read, lies the clue to what Davis v. Atkins was about. It was about those cases - which have bedevilled the N.I.R.C., the Industrial Tribunal and the Employment Appeal Tribunal - where an employer dismisses an employee on facts known to him and then subsequent facts emerged which showed that he had dismissed him on false facts. Devis v. Atkins says that in deciding whether the employer acted reasonably or unreasonably in dismissing the employee, and in deciding whether it was a fair or unfair dismissal, you do not have regard in terms of answering those questions to subsequent information coming to the knowledge of the employer which shows, ex post facto, that the employee has suffered an injustice by being dismissed.

There is a similar case in the E.A.T. It is Sillifant v. Powell Duffryn Timber Ltd. (1983) Industrial Relations Law Reports 91, which again deals with ex post facto information, and again says that injustice to an employee shown ex post facto is not a matter which can be taken into account in deciding whether the employer acted fairly or unfairly.

So I agree with the E.A.T. that the industrial tribunal misdirected themselves when they adverted to section 57(3) in those terms. In deciding whether the employer acted reasonably or unreasonably, a very important factor of which he has to take account, on the facts known to him at that time, is whether there will or will not be injustice to the employee and the extent of that injustice. For example, he will clearly have to take account of the length of time during which the employee has been employed by him, the satisfactoriness or otherwise of the employee's service, the difficulties which may face the employee in obtaining other employment, and matters of that sort. None of these is decisive, but they are all matters of which he has to take account and they are all matters which affect the justice or injustice to the employee of being dismissed.

The E.A.T. held, as I say, that that amounted to a misdirection. They then went on to consider what they should do about it. They say this:

"If the injustice to an employee should be considered as a matter of equity and substantial merits" - contrary to what the tribunal had held - "one then has to go back and ask the question: what would a reasonable employer have done? We are unanimously of the opinion that no reasonable employer would in the circumstances of this case have dismissed this man out of hand. Indeed, the facts of this case support that proposition for these employers did not dismiss him out of hand. They recognised that there was an obligation to avoid dismissal in the full sense and to see whether or not they could find him alternative employment. Thus it seems to us that at the end the industrial tribunal, having gone off the rails as we find they did, got back on to the rails and considered the offer of alternative employment. Individually each of us would have said that the offer of alternative employment was inadequate and each one was surprised at the industrial tribunal's conclusion. The offer was totally lacking in precision and it was for some job in the area at a lower salary. But can we say that the industrial tribunal were wholly unreasonable in concluding that the offer, such as it was, should have been accepted? We all feel that this man has suffered an injustice and is deserving of compensation, but the majority of us cannot bring ourselves to say that the industrial tribunal were wholly unreasonable in their assessment of the alternative employment offer. We would like to interfere but in view of the strict limits imposed upon us by the Court of Appeal conclude that we should not. On the other hand Mrs. Lancaster" - who was the dissenter - "considers that the industrial tribunal were so wholly wrong that the decision in the legal sense was 'perverse'. It is her opinion that because the tribunal misdirected themselves in failing to apply fully and properly the obligation to test a reasonable employer's obligation in the context of equity and the substantial merits of the case they equally failed to apply the same approach when considering the offer of alternative employment. In her opinion a reasonable employer would, first, have made a specific offer; second, would have discussed such an offer in detail including whether or not in due course he could have been brought back to his proper pay either there or in yet another job elsewhere."

She is further doubtful whether the state of unemployment in Merseyside was so much an important factor and queries whether or not the reasonable employer test can be cut down to mean a reasonable employer in Merseyside:

"Asking herself the question 'What would any reasonable industrial tribunal have decided was incumbent upon every reasonable employer?' she rinds herself driven to but one answer which is the exactly opposite conclusion to that reached by the industrial tribunal. She would therefore have allowed the appeal whereas the majority with great reluctance feel compelled to dismiss it."

With the greatest possible respect to the members of the Employment Appeal Tribunal, in my judgment they all erred in law in different directions in that passage.

Let me, first of all, deal with the long but unspecified line of Court of Appeal cases - and I make no complaint that they did not specify them. We all know that this court has said over and over again that both we and the E.A.T. are courts whose jurisdiction is limited to appeals on law; and what those decisions say is that neither the E.A.T. nor this court can interfere on the basis that they would have reached a different conclusion on the issue of reasonableness, because that is an issue of fact. All that this court or the E.A.T. can do is to consider whether there has been an error of law. They may reach the conclusion that there has been an error of law on one of two alternative bases. The first basis is that the tribunal has given itself a direction on law and it is wrong - that is this case. The alternative basis -which is almost a Wednesbury basis - is that no reasonable tribunal could have reached that conclusion on the evidence and, since all industrial tribunals are ex hypothesi reasonable tribunals, it must follow that, although we cannot detect what it is, there has been a misdirection in law.

Once you detect that there has been a misdirection, and particularly that there has been an express misdirection of law, the next question to be asked is not whether the conclusion of the tribunal is plainly wrong, but whether it is plainly and unarguably right notwithstanding that misdirection. It is only if it is plainly and unarguably right notwithstanding the misdirection that the decision can stand. If the conclusion was wrong or might have been wrong, then it is for an appellate tribunal to remit the case to the only tribunal which is charged with making findings of fact. Mrs. Lancaster did not have to go to the length of saying that the tribunal's findings were perverse, and the majority were wrong in thinking that they were prevented from sending the matter back on the basis that another tribunal, to wit themselves, would have reached a different conclusion. All three of them were obliged, in my judgment, to remit the matter to the tribunal notwithstanding that this is a very stale case, having been heard by the tribunal in 1981.

For those reasons I would reverse the decision of the Employment Appeal Tribunal, and I would remit this case to the industrial tribunal, hoping that no such hearing will be necessary because it is quite clear that the employers here have always been sympathetic to Mr. Dobie. It is clear that the E.A.T., in varying degrees, were sympathetic or very highly sympathetic to Mr. Dobie. So there is certainly a basis for settlement. On the other hand, I would hope that Mr. Dobie will be reasonable, bearing in mind the time which has elapsed and the fact that everybody has done their very best to uphold his point of view but lave met with certain obstacles, namely difficulties in interpreting the law.

I would allow the appeal.

LORD JUSTICE SLADE: I agree. The only slight doubt which I have felt is whether it could be said that the industrial tribunal had not misdirected itself in law in the crucially important passage from its decision which my Lord the Master of the Rolls has read. I wondered at one stage whether, on a benevolent reading of that passage, it might be said that the tribunal was not necessarily ruling out consideration of unfairness to the employee in the employer's conduct, in formulating for itself the relevant tost, bearing in mind that in saying that attention had to be focused "on the conduct of the employee and not on whether the employee suffered any injustice", it seemed to be closely echoing words from the speech of Viscount Dilhorne in W. Devis & Sons Ltd. v. Atkins (1977) Appeal Cases at page 952F. Nevertheless, the words of Viscount Dilhorne on which it relied - if it did rely on them, because it did not expressly refer to his speech - were spoken in a special context, as my Lord has explained, and I am satisfied that they cannot justify the general direction which the tribunal presented to itself on the facts of the present case.

The justice or otherwise to the employee in the employer's conduct is plainly a matter which has to be taken into account in view of the express wording of section 57(3) of the Act of 1978, as amended. From this misdirection it seems to me inevitably to follow that, for the reasons given by my Lord, the case will have to be remitted to an industrial tribunal.

For these reasons and the further reasons given by my Lord I too would allow this appeal.

LORD JUSTICE PARKER: I agree and have nothing to add.

(Order: Appeal allowed with costs. Legal aid taxation of appellant's costs. Remitted to a different industrial tribunal).