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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> KPG Computer Support Services Ltd v Abayomi [1992] UKEAT 303_92_2112 (21 December 1992)
URL: http://www.bailii.org/uk/cases/UKEAT/1992/303_92_2112.html
Cite as: [1992] UKEAT 303_92_2112
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At the Tribunal
Before
HIS HONOUR JUDGE J HICKS QC
MS S CORBY
MR K HACK JP
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellants MR NIGEL GIFFIN
(OF COUNSEL)
Messrs Wright Son & Pepper
9 Grays Inn Square
London WC1R 5JF
For the Respondent MR M PARDOE
(OF COUNSEL)
Free Representation Unit
Grays Inn Square
London WC1
JUDGE HICKS QC: This is an appeal by the employers KPG Computer Support Services Ltd against the assessment of compensation by the Industrial Tribunal on the Application for Unfair Dismissal by the Applicant, the Respondent to the appeal, Angela Abayomi. Since there is no appeal against the finding of unfair dismissal I need not rehearse the facts in full, but some of the facts should be summarised insofar as they bear on the subject - matter of the appeal.
Mrs Abayomi was employed by the Appellants as administration manager. She had under her a Mrs Hamer as word processing supervisor, four word processing operators and two receptionists. The employers faced a reduction in their business activity and a need for economies and a Mr Taylor joined them at the beginning of June 1991 with, it would seem, the specific responsibility of achieving such savings, and among other measures he concluded that in order to cut costs the company should effectively disband Mrs Abayomi's department, in the sense that there would be a much reduced administrative staff and in particular that the word processing department, which was a substantial part of her responsibilities, should be dispersed, any word processing being done in particular operating departments. There were clearly going to be on that basis some redundancies; a job description was prepared for the remaining administrative post and Mr Taylor decided - after consultation with the managing director, but the finding of the Industrial Tribunal is that it was Mr Taylor who made the effective decision - that Mrs Hamer should be appointed to that post and Mrs Abayomi dismissed.
The Tribunal found, on grounds that are not challenged, that the method by which it was decided that it would be Mrs Abayomi in particular who would be dismissed was unfair. It is apparent implicitly on the face of the Reasons and explicitly by reference to the Notes of Evidence that one of the possibilities that the employers did not consider, but should have considered, was the appointment of Mrs Abayomi to the post in fact taken by Mrs Hamer, which was a post at a salary of £15,950 gross, the same as Mrs Hamer had been getting in her old job, substantially less than the £21,000 odd per annum gross which Mrs Abayomi had been receiving.
Mrs Abayomi said in her evidence that she was never offered such a job (and there is no dispute about that) and she said:
"I would have taken the other jobs even if it meant a drop in salary"
In those circumstances the findings of the Tribunal are briefly stated in paras 7, 8 and 9 of their Full Reasons as follows:
"We find that the reason for the dismissal was a redundancy within Section 57(2) of the Employment Protection (Consolidation) Act 1978 [there is no cross-appeal by Mrs Abayomi about that] but the dismissal was unfair having regard to that reason because the employer acted unreasonably in the manner that they selected the applicant for redundancy. [There is no appeal by the Appellants about that.]
The respondents have argued that even if there had been proper procedures followed that there should be reduction in the compensation because even if they had consulted with the applicant she would have still been made redundant. We do not accept that submission as we find that if there had been proper investigation and inquiries it is possible that Mrs Abayomi would not have been redundant or could have found alternative employment within the company.
We award compensation as follows..."
They grant no basic award, because it had already been received, and they calculate the loss of wages down to the date of the hearing at a rate of £280.61 net per week, and it is not in dispute that that would be the rate corresponding to Mrs Abayomi's pre-dismissal salary, and they use the same rate for a further six months. They give credit for £420 for money earned and find that she had reasonably mitigated her loss in obtaining part-time employment at £60 per week. In fact they do not set out in full the calculation of the future loss because they limited it to such a figure as would produce the maximum allowable compensation award of £10,000. We have been told (and I do not think it is in dispute) that the actual calculation of future loss on the basis which they were using, that is to say £280.61 per week less £60 she was actually earning, would have produced a figure of £5,735.86 for that part of the calculation instead of the £4,246.46 used purely on the basis of topping the compensation up to the maximum that could be awarded.
On those findings the Notice of Appeal raises in paragraph 6 three grounds upon which it is alleged that the Tribunal erred in law. I will come back to ground 1. Ground 2 states:
"The Tribunal failed to deal at all with the argument which had been addressed to it that the Respondent had not fulfilled her duty to mitigate her loss"
I need say no more about that than that we are not satisfied that any case has been made out of error in law on the part of a Tribunal in relation to that. It is apparent that they had evidence from Mrs Abayomi as to the efforts she had made and the extent to which they had been successful. So far as the Notes of Evidence go it does not appear that there was an express submission about mitigation. We are prepared to accept that there was a submission but we are quite clear that this Tribunal, although it does not deal with the matter expressly by way of a specific finding, would have had that in mind in reaching its conclusion and cannot be criticised for not spelling it out in detail.
Ground 3 attacks the six month period used in the calculation for the loss of future earnings on the ground that there was undisputed evidence from the Respondent herself that she hoped that her current part-time work could develop into full-time work within two to three months. Again we can deal with this shortly. We see no reason for supposing that the Tribunal erred in law in this respect. In the current state of the economy and of employment generally the fact that Mrs Abayomi might have hoped, as indeed she said, that what she was doing would develop into a full-time job, the Tribunal was perfectly entitled to disregard that for the purpose of their assessment, especially as the overall period they took of six months may well have reflected that element, since otherwise it might have been argued that it was rather short. We do not think there is anything in either of those two grounds.
But the first ground which is advanced is that:
"The Tribunal declined to make any reduction in the award to take account of the possibility that a fair procedure would still have led to the Respondent being dismissed. Although the Tribunal held that it was possible that the Respondent would have been retained as an employee, that finding ought to have led to an appropriate percentage reduction in the award in accordance with the strength of that possibility. The Tribunal does not appear to have applied its mind to the question of a percentage reduction as opposed to an "all or nothing" test and [it is added in brackets although it is really a distinct ground of appeal] (nor did the Tribunal consider what the Respondent would have earned in any alternative employment)."
It is argued that that is a misdirection and we were referred to the three authorities which deal with this situation. First is the well known case of Polkey v A E Dayton Services Ltd [1988] ICR 142 and in particular the passage in the speech of Lord Bridge at page 163 D. The substantive decision in Polkey was that in considering whether an employee has been unfairly dismissed for redundancy it is not open to a Tribunal to find a dismissal was fair simply because they conclude that had a fair procedure been followed nevertheless there would still have been a dismissal. That is not a matter that goes to the issue of fairness or unfairness. Then, having dealt with that, which disposed of the Appeal itself, Lord Bridge went on to deal with a matter which had been raised (it rather seems by him) during argument, along the general lines that if nevertheless the question of what would have happened had fair procedures been followed is relevant to compensation and might result in compensation being nil, is this not a purely academic and futile point? - and he deals with that question in this final passage of his speech in these words:
"If it is held that taking the appropriate steps which the employer failed to take before dismissing the employee would not have affected the outcome, this will often lead to the result that the employee, though unfairly dismissed, will recover no compensation or, in the case of redundancy, no compensation in excess of his redundancy payment. ...But in spite of this the application of the so-called British Labour Pump principle [that is to say the principle rejected by the House of Lords that in that case it is open to the Tribunal to find that the dismissal was fair] tends to distort the operation of the employment protection legislation in two important ways. First, as was pointed out by Browne-Wilkinson J. in Sillifant's case, if the industrial tribunal, in considering whether the employer who has omitted to take the appropriate procedural steps acted reasonably or unreasonably in treating his reason as a sufficient reason for dismissal, poses for itself the hypothetical question whether the result would have been any different if the appropriate procedural steps had been taken, it can only answer that question on a balance of probabilities. Accordingly, applying the British Labour Pump principle, if the answer is that it probably would have made no difference, the employee's unfair dismissal claim fails. But if the likely effect of taking the appropriate procedural steps is only considered, as it should be, at the stage of assessing compensation, the position is quite different. In that situation, as Browne-Wilkinson J. put in Sillifant's case:
"There is no need for an "all or nothing" decision. If the industrial tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment.""
It is quite clear that applying that principle it is necessary for the Industrial Tribunal to ask itself, having found the unfair dismissal: but what is the chance that had the employer acted fairly the employee would nevertheless had been dismissed? In the case of RAO v Civil Aviation Authority [1992] IRLR 203 it was held that since one of the grounds for reducing compensation may be the contributory conduct of the employee, and that may result in a percentage reduction, it is still right for the Tribunal to assess separately the other potential percentage reduction indicated in Polkey, that is to say the chance that on a fair procedure the employee would still have been dismissed.
The third case which bears most directly upon the present case is the case of Red Bank Manufacturing Co Ltd v Meadows [1992] IRLR 209. I interpolate, in fairness to the Industrial Tribunal, that both of these decisions, RAO and Red Bank were reported and indeed I think decided after this Industrial Tribunal had dealt with the present case, so there is no question of any criticism of the Industrial Tribunal for not paying attention to the reports themselves; nevertheless those cases are germane to the process which should be followed in assessing compensation in such circumstances.
In Red Bank Manufacturing the facts state:
"Mr Meadows, was dismissed on grounds of redundancy after 32 years' service with the appellant company. An Industrial Tribunal found the dismissal unfair because the employers had failed to consult with the employee before dismissing him. In assessing the amount of compensation to be awarded, the Tribunal based their calculations on the difference between Mr Meadows' actual earnings since dismissal and what he would have received in the job from which he had been dismissed. [I interpolate that that is what was done here also.]
The employers appealed against the sum awarded on the following grounds. First, even if a fair procedure had been followed, no job would have been found for Mr Meadows and, therefore, the award should have been nil, or there should at least have been a percentage reduction to reflect the chance that the outcome would have been the same. Secondly, since Mr Meadows's old job had disappeared through redundancy, his loss of earnings could at most have been the difference between his actual earnings in his new job and what he would have earned in any job he might have been offered by the appellants, and accepted."
That submission was in substance accepted by the Employment Appeal Tribunal and their Judgment, beginning at para 9, says:
"The Tribunal expressly dealt with the specific questions of the respondent's duty to mitigate his loss and with his solicitor's argument for an open-ended loss.
However, it seems to us that since the decision in Polkey it is necessary for a Tribunal when calculating the amount to be awarded for compensation to ask itself this two-stage question: If the proper procedure had been followed, and if consultation had taken place, would it have resulted in an offer of employment? This was the question to which the Tribunal did address themselves in the earlier hearing, and to which they gave the answer that it might have done so. What the Tribunal failed to do, and what in our view they should have done, was to go on to consider first what that employment would have been, and second what wage would have been paid in respect of it."
Applying that to the circumstances of this case it seems to us unfortunate (and clearly it arose in the absence of any citation to the Industrial Tribunal of any authority which would have helped them as to the precise way in which they should approach the matter) that they did not in the event apply the two-stage process required by Red Bank; at least certainly not to the extent of assessing the respective percentage possibilities of each event. The crucial sentence is:
"We do not accept that submission [that is to say the submission that if fair procedures had been followed the Applicant would still have been made redundant] as we find that if there had been proper investigation and inquiries it is possible that Mrs Abayomi would not have been redundant or could have been found alternative employment within the company."
It was of course, as we understand it, open to the Industrial Tribunal to find (as on the face of it by those words they did find) that one of the possibilities, if a fair procedure had been followed, would have been that Mrs Abayomi would have not been made redundant at all, by which we take it they mean would actually and literally have been kept on in the same job at the same salary, but they do not give any assessment of what they think the likelihood of that would have been in terms of percentages or fractions, or in any other way, and without that it is impossible to know what weighting, what percentage, what chance, should have been given to that possibility, which alone would have automatically resulted in the full award which they calculated.
They equally on the face of it have found that one of the possibilities was that she would be found alternative employment within the company, but again they do not give the chance of that happening. (We take it from the words "We do not accept that submission" that the Tribunal put at nil the chance of the third possibility that there would have been a fair dismissal). Therefore they did not proceed at all to the second stage indicated in Red Bank, that is to say evaluating what such alternative employment would have been worth to Mrs Abayomi, and we have come to the conclusion that for that reason, and that reason alone, it is necessary to remit this application so that that process can proceed. We say no more than that it should proceed in accordance with the principles set out in the Red Bank case, but we for our own part do not consider that that necessarily ties the Industrial Tribunal down to one particular detailed method of calculation; for instance we do not for ourselves think it necessary for an Industrial Tribunal to consider separately every possible post that might have been offered to Mrs Abayomi, with the salary of each, and to assess the percentage chances of each being offered to her or of any one of them being accepted by her. Nor, to take an illustration particularly relevant on the facts of this case, do we think it necessary for the Tribunal to consider only the possibility that had the job taken by Mrs Hamer been offered to Mrs Abayomi it would necessarily have been accepted by her on precisely the same terms as it was accepted by Mrs Hamer. Mrs Hamer not unnaturally, having been offered a new post but at the same salary as her old one, accepted it. It would be, we think, within the bounds of the powers of an Industrial Tribunal, exercising its experience, to consider whether had the same post been offered to Mrs Abayomi, who had been considerably senior and paid considerably more, there might not have been some process of negotiation which would have resulted in some slightly different result, and possibly a significantly more advantageous one to Mrs Abayomi than Mrs Hamer accepted. Those are matters of fact for the Industrial Tribunal and we are not by our decision, allowing this appeal and remitting it, tying their hands on matters of fact.
With however broad a brush each part of the exercise is approached, we agree with the decision in Red Bank that the two stages are separate, that is to say first the stage of assessing what are the respective chances that there would have been (i) a fair dismissal for redundancy (here nil), or (ii) retention in post, or (iii) the offer and acceptance of alternative employment, and then the second stage of assessing the value of such an offer and acceptance of alternative employment if the chances of that are more than nil, as they are here. Those two stages do need to be separately addressed and explained, however briefly and summarily.
We accordingly allow the appeal and remit the matter to the Industrial Tribunal for that assessment to be made. The matter should be remitted if practicable to the same Industrial Tribunal if it can be reconstituted, and we make it plain that the assessment of compensation is to be on the basis of their existing findings, first that there was a dismissal for redundancy which was unfair for the reasons they found, secondly, that the period used for the calculation of compensation is not disturbed by us, and thirdly that the sum for which credit was given by way of mitigation is not disturbed by us.