United Kingdom Employment Appeal Tribunal

BAILII case number: [1993] UKEAT 113_93_0906

Appeal No. EAT/113/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 9th June 1993

Before

HIS HONOUR JUDGE N HAGUE QC

MR R JACKSON

MR A D SCOTT

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DUNLOP LIMITED          APPELLANTS

MR W FARRELL          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR J MIDDLETON

Solicitor

Messrs Slater Heelis

71 Princess Street

Manchester

M2 4HL

For the Respondent MR C CARR

Trade Union Representative

Electrical & Plumbing

Industrial Union

Trade Union Centre

24 Hardman Street

Liverpool

L1 9AX


 


JUDGE N HAGUE QC: The Respondent to this appeal, Mr Farrell, was employed by the Appellants Dunlop Limited ("the Company") as an electrician at their Cambridge Street Works in Manchester until he was dismissed in September 1991. He was also a trade union convener. He made a claim for unfair dismissal first on the basis that his dismissal had been for trade union reasons, and therefore automatically unfair, and alternatively, on the ground that his dismissal was unfair within the meaning of Section 57(3) of the Employment Protection (Consolidation) Act 1978.

An Industrial Tribunal sitting at Manchester, by its decision sent to the parties on the 28th October 1992, held first that Mr Farrell had not been dismissed for trade union reasons and secondly that the reason for his dismissal was redundancy and that the Company had not acted unreasonably in treating redundancy as the reason. But the Tribunal went on to hold that there had been a failure by the Company to consult with Mr Farrell in his individual capacity which rendered his dismissal unfair. The question of the remedy for that unfair dismissal was left open and adjourned to a further hearing of the Tribunal. There was no appeal by either party from that decision. By their subsequent decision, sent to the parties on the 11th January 1993 after a further hearing, the Tribunal held first that neither re-instatement nor re-engagement was practicable. That has not been challenged. What the Tribunal did was to award Mr Farrell compensation of the statutory maximum amount and it is against that part of the decision that this appeal has been brought.

For the purposes of this appeal the background can be stated quite shortly. Due to adverse trading conditions the Company was forced, first in July 1991, to make certain redundancies. By August it had become clear that further redundancies had unfortunately become necessary and that compulsory redundancies would have to be made. There were meetings between the Company and the trade unions involved on the 18th and 20th August when it became apparent that there were no further volunteers for redundancy.

At paragraph 3(e) of their first decision the Tribunal make these findings of fact:

"(e) The applicant was present at the meetings in his union representative capacity. At no stage did the respondent speak individually to the people selected or to the applicant. There was a suggestion that there might be the possibility of deploying some of those selected to become a process worker. The Union did not regard that as a viable proposal. The applicant himself regarded it as a non-starter since the pay would be very much less and he regarded himself as a crafts person. He has never done process working in his life before.

(f) The applicant had protested about an electrician being on duty at nights on his own. This followed the introduction or the coming into force of the Electricity Regulations 1989. He had refused to work on nights and had discussed the matter and advised the other electricians similarly. Mr Stringer, the only electrician retained, was working on nights and continued to do so. The applicant had been concerned in his work with maintenance and repair work. Contractors were brought in to carry out installation work and would occasionally be involved in repair work. Mr Hartley, the Engineering Manager, is familiar with the micro-processing system now installed and in January 1991 a previous employee, Mr Brassington, was brought back as Engineering Maintenance Manager. He carries out electrical work on the shop floor in addition to his other duties. There has been an increased use of electrical contractors. These are 714s. The applicant was not asked whether, in view of his possible redundancy, he would reconsider working on nights."

It is not clear to us from paragraph (f) when the micro-processing system was installed, nor is it clear to us whether Mr Stringer had the necessary technical skills to operate it.

Paragraph 13 of the Tribunal's first decision is an important paragraph which we should read in full:

"We asked ourselves did the employer act reasonably in all the circumstances of the case in treating redundancy as the reason for dismissing the applicant. We have taken into account the circumstances in this case and make our decisions in accordance with justice and equity. We first considered whether the respondent had considered fully alternative work which might be available for the applicant, in particular whether the nightshift job which was retained should have been considered as one of the alternatives for the applicant. The incumbent on the night job, Mr Stringer, had longer services, had 30 years' experience as an electrician and had not volunteered for redundancy. He was within a few months of retiring. We consider that in those circumstances that was not an alternative which was open to be offered to the applicant and he had no call for consideration of that job. Management did not consider that it was available. They had offered the alternative of a process worker's job but this had been rejected and we find that it was reasonably rejected, since there would have been a great reduction in pay and the applicant was a craft worker and had always been so. There was, however, no discussion with the applicant in his individual capacity about any alternative arrangement which might have precluded him being dismissed."

Mr Stringer, in fact, retired between the two Tribunal hearings. It follows that at the time of Mr Farrell's dismissal Mr Stringer had a year and two or three months to go before retirement. We do not read paragraph 13 as saying more than Mr Farrell could not be employed immediately in Mr Stringer's job, that is to say there was no ground for dismissing Mr Stringer in order to create a vacancy for Mr Farrell, and the contrary has not been suggested.

In their second decision the Tribunal first of all, in paragraph 4(b) say that:

"Mr Stringer the only electrician employed on nights had retired and his work was being done temporarily by a contractor."

Then in paragraph 7 the Tribunal deal with the possibility of reinstatement they say that:

"The jobs for employees as day electricians [which Mr Farrell was one] no longer exist."

and they say that the order for reinstatement is not practicable.

In paragraph 8 they deal with the question of re-engagement. That is another important paragraph which we should read in full, it reads:

"We then considered the question of re-engagement which would be on the terms that the applicant be employed as an electrician on the night shift. This job would necessarily involve micro processing work; we accept the respondent's evidence on that. Mr Hartley is of the opinion that the applicant even with training was not capable of obtaining a sufficient level of skill in that work. We accept the respondent's evidence that to appoint someone without that experience would mean that Mr Brassington or Mr Hartley would continue to have to be called out when the need arose on the night-shift, a situation which was not acceptable to the respondent. We note what the applicant says about micro process work being a small part of the total work and that there had been no suggestion that he should be offered training. He himself accepted that without training it would have been impossible for him to do that job and that hitherto he had nothing to do with micro processors. We, therefore, conclude that with the applicant's long background in basic electrical skills and the respondent's requirement for the new appointment to have micro processing skills it is not practicable for the respondent to re-engage the applicant in that position."

Mr Middleton, who appeared on behalf of the Company, suggested that in that paragraph the Tribunal accepted that Mr Farrell would not be capable, even with training, of fulfilling the position. We do not accept that. We think that the Tribunal is merely setting out what Mr Hartley thought on the one hand and what Mr Farrell thought on the other and is not expressing a view one way or the other. Moreover, in that paragraph the Tribunal is dealing with the position as at that date, ie whether it was possible at the date of the decision of January 1993 to re-engage Mr Farrell in what had been Mr Stringer's job, and all that the paragraph is saying is that that would not be practical, because Mr Farrell would not have been able to walk straight in and do that job.

Before the Tribunal Mr Middleton submitted that it was clear on the evidence that even if there had been consultation with Mr Farrell, it was clear that consultation would have made no difference and that he would have been dismissed in any event. Mr Middleton submitted the compensation should therefore be limited to his pay for a small extra time of employment which he would have had during the period of consultation, in accordance with the case of Mining Supplies (Longwall) Limited v. Baker [1988] IRLR 417 and other cases.

The Tribunal rejected that argument and said this in paragraph 11:

"We found in our decision on the merits that it would not have been utterly useless to have consulted with the applicant `since the applicant may well have put forward proposals which would have met the Company's ongoing need and produced a different outcome from that of outright dismissal. We, therefore, find that the dismissal was unfair'. Our decision was not, therefore, based purely on procedural grounds but was that the dismissal was substantively unfair. We, therefore, do not limit the time of the loss caused by the unfair dismissal to the period of consultation which should have been held. There were alternatives to dismissing the applicant. At the time of consideration of redundancies although the applicant had previously said he was not interested in night-work he might well have accepted that rather than being dismissed. He was not given given an opportunity to discuss this and that proposal was never discussed with Mr Stringer who, nearing retirement, might well have been willing to retire early. No question of the need for micro processing skills on the night shift had been raised at that time and it was known by the respondent that Mr Stringer was approaching retirement. At the time of dismissal, and that is the relevant time for consideration of this point there may well have been a different outcome than dismissal if consultation had taken place. We consider the previous refusal of the applicant to work on nights is not relevant to what might have happened in the changed circumstances of being faced with no job. In addition we find that as an individual he was presented with a fait accompli. There was no opportunity for him to argue his corner."

In paragraph 12 the Tribunal went on to say this:

"We consider that the applicant lost his job as a result of the unfair dismissal and are unable to say that he would not be employed today but for that dismissal."

They then, as we have mentioned, went on to award him the full statutory maximum compensation.

Mr Middleton has argued before us that the Industrial Tribunal's findings, particularly in paragraph 13 of the first decision and paragraph 8 of the second decision, are inconsistent and incompatible with the conclusions in paragraph 11 of the second decision. He said that having made the findings in the earlier paragraphs there was no evidence on which the Tribunal could come to the conclusion that it did come to in paragraph 11, or (and we think this really comes to the same thing) that the only reasonable conclusion from the earlier paragraphs was that there was no prospect of continued employment. Therefore he says, the only conclusion that the Tribunal could have come to is that had there been consultation Mr Farrell would have been dismissed; so that the finding in the first sentence of paragraph 12, which we have read, is flawed and that the compensation should be limited to compensation for the loss of the consultation period.

We see the force of that submission but, in our judgment, we can not go as far as Mr Middleton would have us do. We think that there are many possibilities that might have come up had there been consultation. It is possible, to start with, that Mr Stringer, if he had had had his pension arrangements and other financial and other matters properly drawn to his attention and had been told that if he retired early one of his colleagues would not have to be dismissed, might have been persuaded to retire early. The fact that he had not volunteered at an earlier date does not seem to us by any means to preclude that possibility. Further, it may well be that at the time of the dismissal training for the micro processing system would have been unnecessary, or if it were necessary, that Mr Farrell could have been trained within a relatively short period and would have been able to obtain the necessary abilities. It may also be, as Mr Carr suggested, that there were other possibilities of redeployment on day time work of a different kind. We do not think that the earlier findings of the Tribunal preclude those possibilities. Of course it may well be that Mr Stringer would have declined to retire early, that training was necessary; that Mr Farrell would not have been able to acquire the necessary skills, that he would have to have worked nights and he would have continued to refuse to do so, that if there was a vacancy other persons would have had prior claims to the vacancy, and so on. There is simply no real evidence before us for us to come to any conclusion one way or the other on those sort of matters and it is quite impossible for us to deal with them.

What is said by the Tribunal in paragraph 12 of the second decision is that they are:

". . . unable to say that he would not be employed today but for that dismissal."

This goes no further, we think, than saying that it is not clear that he would have been dismissed. It does mean that he would definitely have been retained; it merely says that there was a chance that he would have been retained. However, the Tribunal appears then to go on to assess the compensation on the basis that he would have been retained and so the full loss arising from his dismissal is something for which he must be compensated. At all events it is clear that the Tribunal has not attempted to assess the chance of his being retained.

This is an important matter because under Section 74(1) of the 1978 Act it is provided that:

". . . the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

It is the final words, starting with "in so far as" that are critical. The mere fact that a dismissal is unfair does not mean that an employee is entitled to compensation for the loss as a consequence of his being dismissed. He is only entitled to the loss sustained in so far as that loss is attributable to action taken by the employer, which is why in a case where consultation would have made no difference the compensation is limited in the way that we have indicated. In the well known case of Polkey v. A E Dayton Services Ltd [1988] ICR 142 HL, Lord Bridge of Harwich at page 163 quoted with approval some dicta of Browne-Wilkinson J. in Sillifant v. Powell Duffryn Timber Ltd [1983] IRLR 91 where he said this:

"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."

Since the Polkey decision it is, we think, clear from that decision and also from later authorities including Redbank Manufacturing Co Ltd v. Meadows [1992] IRLR 209, Rao v. Civil Aviation Authority [1992] ICR 503 and KPG Computer Support Services Ltd v. Abayomi 303/92 not reported, that there has to be a two stage process in cases where there has to be an assessment of compensation after a failure to consult. First, the Tribunal must ask itself the question: If the proper procedure had been followed and consultation had taken place would it have resulted in the employee still being retained or would it have made no difference? If the answer is reasonably clear one way or the other there is no difficulty, but in many cases, of which this is one, the answer may be uncertain. In that situation in order to give proper effect to Section 74(1) and in accordance with the passage from the judgment of Browne-Wilkinson J. in Sillifant's case, the Tribunal should as the second stage of the process make a percentage assessment of the possibility or probability of the employee being retained which must then be reflected in the award of any compensation.

In this particular case, as in the Redbank case, the Tribunal does not appear to have performed either stage of the process, but in particular the second stage and has failed to ask itself what were the percentage possibilities. We think that the Tribunal did not carry out its function correctly in that respect. We consider that, unfortunate though it may be, there is no real alternative to remitting the case to a Tribunal to reconsider the amount of compensation in the light of this judgment. We emphasise and make it absolutely plain that that is the only matter which falls for reconsideration. Although there are disadvantages, we have come to the conclusion that in this particular case it would be appropriate for the matter to be remitted to a differently constituted Tribunal.