United Kingdom Employment Appeal Tribunal

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URL: http://www.bailii.org/uk/cases/UKEAT/1977/64_77_1107.html
Cite as: [1977] IRLR 297, [1978] ICR 70, [1977] UKEAT 64_77_1107

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JISCBAILII_CASE_EMPLOYMENT

		BAILII case number: [1977] UKEAT 64_77_1107
		Appeal No. UKEAT/64/77

EMPLOYMENT APPEAL TRIBUNAL

	At the Tribunal
	On 11 July 1977
	Judgment delivered on 11 July 1977

Before

The Hon. Mr. Justice Phillips (P)
Mr. R. V. Cooper
Mr. R. Thomas

BRITISH UNITED SHOE MACHINERY CO. LTD APPELLANT

CLARKE RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised.

APPEARANCES

For the Appellant	Mr. A. IRVINE instructed by Messrs. Harvey and Ingrain, 20 New Walk, Leicester.
For the Respondent	Mr. R. TEDD instructed by Messrs. Denham, Foxon & Watchorn, 16 New Street, Leicester

MR. JUSTICE PHILLIPS: Mr. Clarke, who is well qualified as an engineer, had been employed for a number of years by the British United Shoe Machinery Co. Ltd., latterly as head of the Diversification Project Section of the Research Department, when, in the autumn of 1975, he was declared redundant and given notice. The notice did not expire until the 30th April 1976, and so far as the circumstances immediately attending his redundancy were concerned - severance pay, etc. - he was treated reasonably enough, His complaint related to the manner in which he had "been declared redundant and the failure by his employers to make reasonable efforts to find him alternative employment. There was never any doubt that he was redundant, and he received the appropriate redundancy payment.

An Industrial Tribunal sitting in Leicester on 25th October and 2nd November 1976, by a decision entered on the 6th January 1977, found that he had been unfairly dismissed. The application was then adjourned "for the parties to consider the implications of the decision and if necessary for the matter to be re-listed for argument on compensation." From that decision the employers have appealed.

During the course of the hearing counsel for Mr. Clarke, in the light of the evidence which had been given, conceded that he had been fairly selected to be made redundant from three men for whom only two positions could be found. This concession did not involve the acceptance of the proposition that it was necessary to make that choice, and Mr. Clarke's case was (inter alia) that had the employers gone about matters differently the problems confronting them could have been dealt with differently and without the need for this choice arising.

During the course of the argument upon the appeal our attention was directed to most of the authorities bearing on the question of the circumstances in which dismissal for redundancy can be said to be unfair. It appears from Jackson v. General Accident Fire & Life Assurance Co. Ltd. [1976] I.R.L.R. 338, and it is indeed common knowledge, that the approach to the problem in Scotland has become somewhat different from that which it is in England and Wales, and that in England and Wales industrial tribunals tend somewhat more readily than they do in Scotland to find unfair dismissal established in such cases. In Lifeguard, Assurance Ltd v. J. J. Zadrozny [1977] I.R.L.R. 56 we stressed the care which industrial tribunals ought to exercise once redundancy has been established before going on to find that the dismissal was unfair, especially where the unfairness is alleged to consist of a failure unrelated to selection. Once it is established that the claimant was' dismissed for redundancy, and that he was not unfairly selected, the industrial tribunal needs to scrutinise critically the complaint that the dismissal was unfair on some other ground. Of course, we do not mean that such cases cannot be and are not properly established, but it is essential to see that the relevant evidence is there to justify the conclusion and to guard against the temptation into which some industrial tribunals have undoubtedly fallen in-the past of making a finding of unfair dismissal in such cases as a means of "topping up" what they may consider sometimes to be an inadequate redundancy payment.

Nothing that we have said is intended to diminish the importance which is properly to be attached to the need for consultation on the part of employers. This is plainly provided for by the Code of Practice and by Section 99 of the Employment Protection Act 1975, and the Employment Appeal Tribunal in P. W. Kelly v. Upholstery and Cabinet Works 'Amesbury Limited [1977] I.R.L.R. 91 has stressed the need for proper consultation; and failure in this respect may now lead to the making of a protective award (Section 101, Employment Protection Act 1975).. Similarly the Employment Appeal Tribunal has consistently followed the decision of the National Industrial Relations Court in Vokes Ltd. v. Bear [1974] I.C.R. 2 to the effect that employers when dismissing an employee for redundancy ought to make reasonable efforts to find him other employment. It is perhaps worth stressing that in determining whether the employer has discharged that obligation the standard to be applied is that of the reasonable employer, and that industrial tribunals ought to avoid demanding some unreal or Elysian standard. Upon the hearing of the appeal Mr. Irvine, for the employers, reserved, in case the appeal should go further, the question whether Vokes Ltd. v. Bear was rightly decided. Assuming a case in which the industrial tribunal has found that there was a lack of consultation, or a failure to make reasonable efforts to find the employee other employment, it is still necessary to consider what would have been the likely result had that been done which ought to have been done. Gases occur not infrequently where industrial tribunals, having rightly said there was a failure in one of these respects by the employer, make somewhat unreal and optimistic assumptions as to what would have happened had that been done.

In some cases it will happen that the Industrial Tribunal reaches the conclusion that had everything been done which ought to have been done it would not have made the slightest difference so far as the claimant before them was concerned. That is to say, that whatever had been done, he would still have been dismissed and no other employment would have been found. What in those circumstances is the correct order for the Industrial Tribunal to make? Should it say that the case is not one of unfair dismissal, or should it say that although the dismissal was unfair the compensation to be awarded is nil? In our judgment in those circumstances either course is open to the Industrial Tribunal, and it may (we do not say that it is obliged to) say that the dismissal was not unfair: see Lowndes v. Specialist Heavy Engineering Limited [1977] I.O.R. 1 (not a case of redundancy, but the same principle applies; though, in a case of lack of capacity, etc., great care ought to be taken before saying that a warning would have . been of no value) and Clarkson International Tours Limited v. Short [1973] I.C.R. 191. Or, it may say that although the dismissal was unfair the case is one for nil compensation; in which case it should state its reasons. The answer depends on what view the Industrial Tribunal forms when applying its mind to paragraph 6(8) of the First Schedule to the Trade Union and Labour Relations Act 1974. The confusion which sometimes exists about this question is made worse by a tendency to isolate one factor (such as, for example, that consultation would have done no good) rather than to consider all the facts and all the circumstances at the same time when applying paragraph 6(8). In such a case where the Industrial Tribunal finds that the dismissal was unfair it will be necessary for it to proceed to assess compensation, and for that purpose to make some estimate of what would have been the likely outcome had that been done which ought to have been done. It is often a difficult question, but one which the Industrial Tribunal-in its capacity as an industrial jury is well suited to answer, and in respect of which it will not go wrong if it remembers that what it is trying to do is to assess the loss suffered by the claimant, and not to punish the employer for his failure in industrial relations.

Turning to the facts, and the submissions made upon them, we can deal with the matter fairly shortly. The facts themselves, which are extensive, are set out fully and clearly in the Decision of the Industrial Tribunal, and no purpose would be served by summarising them for the purpose of this judgment. The Industrial Tribunal found:

(1) That Mr. Clarke had "been fairly selected from amongst the
three men for whom two jobs were available (a finding, as
we have explained, not now challenged on behalf of Mr. Clarke);

(2) that there had been a failure of consultation as required
by the Code of Practice and good industrial relations, and

(3) that the employers had not done all that they ought to have
done to try to find Mr. Clarke further employment.

Mr. Irvine submitted that the only reasonable conclusion which could have been reached upon the evidence was contrary to these findings, and that the employers, had done all that was necessary by way of consultation and made all the efforts to find other employment for Mr. Clarke which were reasonable and necessary. We reject this submission. Without going into detail, it is important to emphasise that the redundancy for which Mr. Clarke was selected was only one of a very large number of redundancies consequent upon a substantial reorganisation made necessary as the result of retrenchment. It is here that it seems to us that there may have been some confusion in the argument upon the hearing of the appeal as to what in the circumstances was meant by "consultation". Once it was decided to make the changes along the lines decided by higher management without any reference to Mr. Clarke (a decision which involved abolishing his section of the research department) it may well be that consultation was pointless or even that all that was necessary was done. But the complaint made on behalf of Mr. Clarke was that he was never consulted about the overall plan which as a senior employee directly involved he should have been. The plan was handed down as a fait accompli. Looking, .at the matter in this way, it seems to us that there was certainly evidence justifying the conclusion here on the part of the employers - consultation, that is, about the overall plan, not merely about selection from the particular section. That might have proved unnecessary.

The failure found by the Industrial Tribunal on the part of the employers to take reasonable steps to find Mr. Clarke other employment is one which some of us regard with less enthusiasm as tending towards perfectionism, and approaching a departure from the standard to be required which is the proper behaviour of the reasonable employer. Some of us, on the other hand, agree entirely with the view of the Industrial Tribunal that there was a plain failure by the employers in this respect. But we are all agreed in concluding that the decision of the Industrial Tribunal in this respect was one which was open to them upon-the evidence and cannot be challenged on appeal as being either perverse or arrived at as a result of misdirection.

Where it does seem to us that the Industrial Tribunal is open to some criticism is in its failure (expressly, at all events) to apply its mind to the question: what would have been the result had there been consultation of the kind which they have found there should have been, or efforts of the kind which they found there should have been to provide Mr. Clarke with other employment? Would it have made any difference? Or are these steps which should have been taken, but which in the result would not have done Mr. Clarke any good? Mr. Tedd for the respondent submitted that a close reading of the Decision of the Industrial Tribunal makes it clear that, although they do not so express it, they must have found that had these things been done they would have yielded some useful result to Mr. Clarke. It may be so, but we do not think that we can read the Decision with any confidence in this sense. Thus it seems to us to be necessary to proceed on the footing that this is a matter in respect of which there is no finding by the Industrial Tribunal.

It follows from the form of Order made at the conclusion of the hearing before the Industrial Tribunal, the parties not having come to any agreement, that the case will have to be remitted to them in any event. It further follows from what we have said earlier in this judgment that if the Industrial Tribunal were to determine that even had the employers acted as they should, no benefit would have been gained by Mr. Clarke, it would be open to them (according to the view which they formed under paragraph 6(8)) to find that he had not been unfairly dismissed. Or, it would be open to them to find that although he had been unfairly dismissed he .had suffered no loss, and was therefore entitled to no compensation. If they did not find either of those things, but were satisfied that had the employers acted as they should it was -likely that Mr. Clarke would not have been dismissed, or that he would have obtained other employment, they will have to assess the likelihood of that happening. Having made that assessment the Industrial Tribunal would be able to assess the compensation to which he would accordingly be entitled. We do not think it is possible to say anything further of use on this aspect of the matter, except to urge the Industrial Tribunal to be practical in its approach and to avoid (which we are sure that in any event it will do) flights of fancy in evaluating the probable consequences.

The Order is: that the Order of the Industrial Tribunal be set aside; that the case be remitted to the same Industrial Tribunal; that upon the resumed hearing it be open to the parties to call any further evidence including that of witnesses already called bearing on the matters in issue.

P. A. Haswell, 9 Strickland Close, Leeds, LS17 8JY VERBATIM REPORTER AND TAPE TRANSCRIBER

United Kingdom Employment Appeal Tribunal

BRITISH UNITED SHOE MACHINERY CO. LTD APPELLANT CLARKE RESPONDENT

BRITISH UNITED SHOE MACHINERY CO. LTD APPELLANT

CLARKE RESPONDENT