Industrial Tribunals Northern Ireland Decisions

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URL: http://www.bailii.org/nie/cases/NIIT/2009/1114_08IT.html
Cite as: [2009] NIIT 1114_8IT, [2009] NIIT 1114_08IT

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THE INDUSTRIAL TRIBUNALS

CASE REF: 1114/08

CLAIMANT: John Hill

RESPONDENT: Moffett & Sons Ltd T/A Balmoral Furniture

DECISION

The unanimous decision of the tribunal is that the claimant was unfairly dismissed, that the remedies sought, namely, of reinstatement or re-engagement be refused and that the claimant be awarded a total of £2,090.48.

Constitution of Tribunal:

Chairman: Mr Palmer

Members: Mr Black

Mr Lysk

Appearances:

The claimant appeared in person and represented himself.

The respondent was represented by Miss Best, Barrister-at-Law, instructed by Comerton & Hill, Solicitors.

Evidence and documents

1. Evidence was given on behalf of the respondent by Mr Stephen Shaw, their Production Director, and Mr Thomas James Doak, their Administration Manager. The claimant gave evidence on his own behalf. A number of documents were provided and we have had regard only to those to which we were referred during the hearing.

Submissions

2. Submissions were made by both parties and we have taken these into account in reaching our conclusions.

The claimant’s claim and remedies sought

3. The claimant alleged that he was unfairly dismissed and sought reinstatement/ re-engagement.

Reason for dismissal

4. The respondent alleged that the reason for the claimant’s dismissal was redundancy.

The Tribunal’s approach

5. We shall consider whether the respondent has shown that the claimant was dismissed because of redundancy. It will be noted below, at Article 130 of the Employment Rights (Northern Ireland) Order 1996 (the Order of 1996), that redundancy is a potentially fair reason for dismissal. Article 174 of the Order of 1996 defines redundancy. If we find that the respondent has satisfied us that redundancy was the reason for the dismissal we shall, if necessary, turn to the fairness provision of the Order of 1996, namely, Article 130(4). However, if the respondent has failed to follow the statutory dismissal procedures the dismissal is automatically unfair. The provisions relating to automatic unfair dismissal are contained in Article 130A of the Order of 1996. The relevant parts of the provisions of the Order of 1996 referred to are set out below:-

Article 174(1) (b) (i) and 174 (5) of the Order of 1996 (redundancy)

(i)

For the purposes of this Order an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to –

“(b) the fact that the requirements of that business—

(i) for employees to carry out work of a particular kind,

[has] ceased or diminished or [is] expected to cease or diminish.”

(5)

In paragraph (1) ‘cease’ and ‘diminish’ mean cease and diminish either permanently or temporarily and for whatever reason.

Article 130 (1) and 2(c) of the Order of 1996

(1)

In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show –

“(a) the reason (or, if more than one, the principal reason) for the dismissal, and

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

(2)

A reason falls within this paragraph if it –

Article 130 (4) and (6) of the Order of 1996

(4)

Where the employer has fulfilled the requirements of paragraph (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reasons shown by the employer) –

“(a) depends 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

(b) shall be determined in accordance with equity and the substantial merits of the case.”

(6)

Paragraph (4) is subject to Articles 130A to …

Article 130A, referred to in Article 130(6) immediately above, is the provision relating to automatic unfair dismissal and, insofar as relevant, is set out below.

Article 130A (1) and (2) of the Order of 1996

10.

(1)

An employee who is dismissed shall be regarded for the purposes of this Part [the Part referred to deals with unfair dismissal] as unfairly dismissed if –

“(a) one of the procedures set out in Part I of Schedule 1 to the Employment (Northern Ireland) Order 2003 (dismissal and disciplinary procedures) applies in relation to the dismissal,

(b) the procedure has not been completed, and

(c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.”

(2)

Subject to paragraph (1), failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of Article 130(4)(a) as by itself making the employer's action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure.

The facts

11. The claimant commenced employment with the respondent on 24 July 2002 and his contract came to an end on 20 June 2008, in the circumstances later described.

12. The respondent is engaged in the manufacture of furniture and bedding. They also buy in furniture for resale.

13. A decision was made in early June 2008, by Mr Shaw, Mr Laurence Moffett, Managing Director, and Mr Denis Guiler, Company Secretary and Accountant, that the respondent should shed employees. This decision was based on the economic climate at the time and company sales figures, which showed a drop in sales of approximately 15%.

14. At the time the decision was made the respondent had 141 employees and it was decided that 16 would be made redundant. The claimant turned out to be one of the 16.

15. We are satisfied that a situation had arisen where the respondent reasonably concluded that action had to be taken in the form of making redundancies in its workforce.

16. Organisationally, the structure of the respondent’s manufacturing process is broken up into various departments. These are:-

1. the Machine Shop (where timber is processed);

2. the Spray Shop (where the spraying of furniture takes place);

3. the Cabinet Shop (where furniture is assembled);

4. Dispatch and Stores (in which goods are stored and from which goods are dispatched);

5. Tubular (where tubular furniture is made);

6. Bedding (where bedding and mattresses are manufactured); and

7. the Upholstery Shop.

17. It was decided, in our view reasonably, that each department, other than the Upholstery Shop, would form a separate pool. The Upholstery Shop, which is a highly skilled area, was fully employed. No redundancies were anticipated, nor made, there.

18. The claimant was employed in the Tubular Department as a Powder Coater. Mr Shaw spoke to the supervisor of that department, Mr Morton, about what skills employees in that department possessed. The reason for this exercise was to establish which employees there had the skills necessary for the respondent to move forward from the position that it was in. As a result of the discussion with Mr Morton, Mr Shaw, we think reasonably, broke down the skills into three categories. The top skill was welding; the next was general metal work and a final category, into which the claimant fell.

19. As a result of his discussions with Mr Morton, Mr Shaw concluded, not unreasonably, that powder coating could be carried out by the welders and general metal workers. Powder coating is not a skill that requires lengthy training.

20. The first the claimant knew about the prospect of redundancy was when he was called to the office on Friday 13 June 2008 at 1.20 pm, which was 10 minutes before finishing time. There the claimant was told by Mr Shaw, who was accompanied by Mr McKibben, the Office Manager, who had been invited to sit in on the redundancy meetings taking place that day, that he was being dismissed by reason of redundancy, due to a reduction in work. He was handed a letter which stated:-

“Due to a general reduction in work we have had to look at our workforce and regret that we need to reduce the personnel in various departments throughout the factory.”

21. The letter referred to above also stated:-

“We regret that we must give you notice that your employment with us will be terminated on Friday 20 June. However, we do not require you to work your notice period; so, you will be paid one week in lieu of notice together with any outstanding holiday pay.”

The claimant was eventually paid his full redundancy pay and notice pay. It appears that he was paid more in respect of these than was commensurate with his service. The claimant’s contract of employment ended on 20 June 2008.

22. The claimant stated that he carried out functions other than powder coating. We are satisfied that the other tasks that he carried out were insufficient to upgrade him into a higher category. Although the claimant had experience in doing other work, he was not qualified in those areas. He did not carry out welding at any stage of his employment.

23. The claimant claimed that he had had run-ins with Mr Shaw and that this could have accounted for him being chosen for redundancy. Mr Shaw stoutly denied that anything other than legitimate matters had influenced the decision to dismiss the claimant on the ground of redundancy. We are satisfied that, on the balance of probabilities, only relevant matters were taken into account when the decision was taken to make the claimant redundant.

24. The claimant alleged that he had made it known to the respondent that should an opportunity arise for re-employment he would be available. He further alleged that the respondent had undertaken to contact him in the event of a suitable vacancy arising and did not do so. The respondent denied, through Mr Shaw, that such a promise was made. We are satisfied that, on the balance of probabilities, no undertaking was given by the respondent as alleged.

25. Prior to being made redundant, the claimant was not warned that there could be possible redundancies. He was not consulted. He was not given an opportunity to comment on how it was proposed to go about selection.

26. The statutory dismissal procedures contained in Schedule 1 to the Employment (Northern Ireland) Order 2003 (the Order of 2003) applied in the circumstances outlined. The procedures were not initiated by the respondent. No reason was put forward for this failure; nor was a reason put forward for not consulting with the claimant about the redundancy situation.

27. It is clear that there was a total insensitivity to procedures and a blatant disregard of them.

28. However, we are satisfied that there was a redundancy situation; indeed the claimant accepted that this was so. We are also satisfied that the claimant’s dismissal was on the ground of redundancy.

29. Article 126 of the Order of 1996, read with Article 140(1) of that Order, confers the statutory right on an employee with the claimant’s service not to be unfairly dismissed.

30. For ease of reference, we again set out Article 130A (1) of the Order of 1996:-

“130A.-(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if –

(a) one of the procedures set out in Part 1 of Schedule 1 to the Employment (Northern Ireland) Order 2003 (dismissal and disciplinary procedures) applies in relation to the dismissal,

(b) the procedure has not been completed, and

(c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.”

31. The respondent ignored these procedures. We find that the claimant was automatically unfairly dismissed as there was a failure by the respondent to follow the procedures set out.

32. In the circumstances we do not have to consider ‘ordinary’ unfair dismissal.

33. For ease of reference, we again set out Article 130 (2) of the Order of 1996:-

“(2) Subject to paragraph (1), failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of Article 130 (4) (a) as by itself making the employer’s action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure.”

34. Miss Best made a submission in relation to this provision. In a nutshell, she submitted that if we find that the claimant would have been dismissed in any event, that is even if the procedures contained in Article 130A(1) had been followed, then her client could be absolved: the dismissal could be fair. It seems clear to us, from Alexander v Bridgen Enterprises Ltd [2006] IRLR 422, that paragraph (2) of Article 130A refers to a breach of a procedure beyond those referred to in Article 130A(1). We, therefore, reject Miss Best’s contention.

Reinstatement/re-engagement

35. The claimant seeks the remedy of reinstatement and in the alternative re-engagement and reconfirmed this during the course of the hearing.

36. We were not referred to any authorities on these remedies.

37. Our powers to make such orders are contained in Article 147 of the Order of 1996. Article 147 of that Order provides:-

“147 An order under this Article may be –

(a) an order for reinstatement (in accordance with Article 148),

(b) an order for re-engagement (in accordance with Article 149),

as the tribunal may decide.”

38. Article 150, paragraphs (1), (2) and (3) of the Order of 1996 provide:-

“150.—(1) In exercising its discretion under Article 147 the tribunal shall first consider whether to make an order for reinstatement and in so doing shall take into account –

(a) whether the complainant wishes to be reinstated,

(b) whether it is practicable for the employer to comply with an order for reinstatement, and

(c) where the complainant caused or contributed to some extent to the dismissal, whether it would be just to order his reinstatement.

(2) If the tribunal decides not to make an order for reinstatement it shall then consider whether to make an order for re-engagement and, if so, on what terms

In so doing the tribunal shall take into account –

(a) any wish expressed by the complainant as to the nature of the order to be made,

(b) whether it is practicable for the employer (or a successor or an associated employer) to comply with an order for re-engagement, and

(c) where the complainant caused or contributed to some extent to the dismissal, whether it would be just to order his re-engagement and (if so) on what terms.”

39. The claimant did not contribute to his dismissal. The only matter, therefore, that we have to consider is the issue of practicability (see 150(1)(b) and 150(3)(b) above). We are conscious that ours is a Stage 1 consideration and determination of that matter. In the event of an order being made, practicability may have to be considered again, namely, at Stage 2 (see Article 151 of the Order of 1996). It is put this way in Harvey on Industrial Relations and Employment Law (Harvey) at D1 [2380] of Volume 1:-

“The issue of practicability arises at two stages. First, the tribunal must consider the issue at the stage when it makes the order. Second, if an employer fails to comply with the order it must again consider the issue because it is expressly provided that the tribunal must consider whether it was practicable to comply with the order.”

40. In our approach to practicability we take account of the comments on the authorities cited, and also the passages from authorities that are set out, at paragraphs D1 2380 to D1 2797 of Volume 1 of Harvey.

41. Mr Shaw gave evidence on 18 December 2008 with regard to reinstatement and re-engagement. He told us that, for the current accounting period (from 1 April 2008 to 31 March 2009), it is anticipated that the respondent will make a potential loss in the region of £219K. He produced accounts based on sales and outlays upon which he based this view. He stated that if the claimant is reinstated the costs in the Tubular Department will be increased and thus this department would be less efficient at a time when the respondent is attempting to increase the efficiency of each operative in the company. When asked whether the claimant could be assigned to another department he stated that as the respondent is suffering from a drop in sales they are ‘potentially looking at’ further redundancies. His evidence was that as far as re-engagement is concerned and taking account of the claimant’s skills there is nowhere to place him. There are simply no positions for him. With regard to reinstatement and re-engagement and the impact on the business, Mr Shaw stated that the respondent could not afford to take on further costs where redundancies are likely to occur when the November 2008 accounts are available.

42. On 12 January 2009 Mr Doak produced an extract from the respondent’s Profit & Loss account for the eight months up to 30 November 2008, which showed an actual loss up to that date of £202,512. His evidence was that the respondent is losing approximately £100K every four months and that the loss for the current accounting period is likely to be £300K. Mr Doak considered, on the basis of the figures, that there may have to be further redundancies.

43. We accept the evidence of Mr Shaw and Mr Doak. We accept Mr Doak’s figure of £300K in relation to the indications in the up-to-date accounts.

44. We consider that if an Order of Reinstatement were made the claimant would be underemployed (as would others in the Tubular Department) and we further consider that to make such an order would place an unjustified burden on the respondent in light of the current position with regard to sales and losses. We, therefore, refuse that remedy.

45. We accept Mr Shaw’s evidence that there is no available position for the claimant to occupy. This and taking account of the drop in sales and the financial position of the company and also the possibility of redundancies we refuse the remedy of re-engagement.

Compensatory award

Polkey

46. At paragraph 58 of Alexander v Bridgen Enterprises Ltd [2006] IRLR 422 the President of the EAT stated:-

“Polkey has now only limited application. First, it is still relevant where the statutory procedures have been infringed so that the dismissal is automatically unfair.”

Consideration of the compensatory award

47. Having considered our findings, we are of the view that, in the circumstances, the claimant would have been dismissed even if the statutory procedures had been applied. We consider that there is a 100% chance that he would have been dismissed in any event. We, therefore, do not make any award under this head except the limited one below.

48. We determine that had the statutory procedures been followed the claimant would have been employed for a further four weeks during which period he would have earned wages. We, therefore, consider that he is entitled to 4 weeks @ £198.00 per week, which amounts to £792.

49. Article 17 (3) of the Order of 2003, insofar as relevant, provides:-

“If … it appears to the industrial tribunal that –

(a) the claim to which the proceedings relate concerns a matter to which one of the statutory procedures applies,

(b) the statutory procedure was not completed before the proceedings were begun, and

(c) the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer to comply with a requirement of the procedure;

it shall … increase any award which it makes to the employee by 10% and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount, but not so as to make a total increase of more than 50%.”

50. The breach in this case was not a technical one. We think that it was a blatant disregard of the statutory procedure applicable. That being so, we consider, in the circumstances, that it would be just and equitable to award the maximum uplift, namely, 50%. The compensatory award is therefore increased to £1,188.

51. Miss Best invited us to reduce any compensatory award that we might make by the amount by which the claimant was overpaid by way of redundancy payment. The respondent miscalculated, by 1.5 weeks, the number of years to which the claimant was entitled on redundancy. She referred us to Article 157 of the Order of 1996 and submitted that it would be just and equitable to do so. The overpayment was not a voluntary one, but was made by mistake. We do not know whether it could be recovered by proceedings elsewhere. In the circumstances we decline Miss Best’s invitation.

Basic award

52. We note that Article 17(3) of the Order of 2003 refers to an increase in ‘any award’. We also note that in Davis v Farnborough College of Technology [2008] IRLR 14 (EAT) that there was a reduction in the compensatory award of 100% and that a basic award was made and uplifted. At paragraph 14 Mr Justice Burton stated:-

“The result is in this particular case there would be a nil award, as agreed between the parties, by way of compensation, because the result would have been the same after the appeal. As far as the basic award it is equally common ground that we must and should make a basic award, which we do, and we are invited by both sides in such a situation, rather than remit calculation of uplift to a tribunal, to decide the matter ourselves.”

53. The claimant was dismissed for redundancy and therefore any payment due and received in this respect is offset against the basic award. In this instance we shall offset the amount to which the claimant was entitled, namely, 7.5 weeks.

54. The claimant was dismissed on 20 June 2008. His date of birth is 18 December 1956. His gross wage was £240.66 per week. The uplift is 50%. Our calculation of the basic award (which we award) is as follows:-

7.5 weeks @ £240.66 £1,804.95

Uplift (50%) £ 902.48

Sub-total £2,707.43

Less 7.5 weeks

Redundancy £1,804.95

Total basic award £ 902.48

55. The total of the compensatory award and the basic award is £2,090.48.

56. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

57. The claimant received Jobseekers Allowance, a benefit to which the Employment Protection (Recoupment of Jobseeker’s Allowance and Income Support) Regulations (Northern Ireland) 1996 (the Regulations) apply.

58. The attached Recoupment Notice forms part of this decision.

Chairman:

Date and place of hearing: 18 December 2008; 12 – 13 January 2009, Belfast

Date decision recorded in register and issued to parties:

11.