United Kingdom Employment Appeal Tribunal

BAILII case number: [1993] UKEAT 177_93_1611

Appeal No. EAT/177/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 16th November 1993

Judgment delivered on 13th December 1993

Before

HIS HONOUR JUDGE B HARGROVE OBE QC

Ms M EXLEY

MRS P TURNER OBE

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FRAME IT          APPELLANTS

MRS F BROWN          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MISS D HOLLIMAN

(of Counsel)

Messrs Howes Percival

Oxford House

Cliftonville

NORTHAMPTON

NN1 5PN

For the Respondent MR JOHN ANTELL

Free Representation Unit

49-51 Bedford Row

LONDON WC1R 4LR


 


HIS HONOUR JUDGE HARGROVE OBE QC By a Decision of 27th January 1993 the Industrial Tribunal held that the Respondent had been unfairly dismissed and she was awarded £8,384 compensation. The Appellant claims that the Tribunal misdirected itself by not finding that the Respondent was dismissed by reason of redundancy. In general terms it appears that Mr Ralley had purchased the employing company in March 1991 and was endeavouring to cut costs and lower the substantial loss which was being incurred. He decided that the Respondent's post should be split three ways between himself and two other employees. He offered the Respondent another post but at a substantially reduced salary and this was refused. The Respondent was then dismissed with the date of termination of her employment being 25th July 1992.

The significant passage in the Reasons of the Tribunal appears at paragraphs 21 and 22 which read:

"21. Having considered the evidence and the contentions of the parties in this matter, the first question which we have to be satisfied on was whether or not the respondents had shown that the reason for dismissal fell within Section 57(2) of the Employment Protection (Consolidation) Act 1978. If we were satisfied that there was a genuine redundancy then that would be a reason within that sub-section. However, we reminded ourselves of the section which deals with redundancy which is section 81(2). We now set out the relevant words.

"(2) For the purposes of this act an employee who is dismissed should be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to -

(a) the fact that his employer has ceased, or intends to cease, to carry on business for the purposes of which the employee was employed by him, or has ceased, or intends to cease, to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where he was so employed, have ceased or diminished or are expected to cease or diminish."

22. In this particular case the work which was carried out by the applicant has not, on the evidence before us, ceased or diminished. It is the same work which has merely been re-allocated between three people. Moreover, insofar as the number of employees is concerned in the company generally, that has remained virtually the same. We have unanimously come to the conclusion, therefore, that the overall requirements for work and employees in this case has not changed and we are not satisfied that the dismissal of the applicant was for redundancy as has been pleaded. As it does not fall within that description we find that the applicant was unfairly dismissed."

The "requirements of the business test" and the "jobs" test

The first two grounds of appeal can be considered together under the above heading. They were -

"1. The Industrial Tribunal erred in law in finding that there was no redundancy "on the grounds that the work of the applicant had not ceased or diminished, but merely been re-allocated" and in so finding did not apply the proper question to the matter as set out in S.81(2)(b) of the EP(C)A, that is whether the requirements of the business for employees to carry out work of a particular kind had ceased or diminished.

2. The Tribunal erred in law in finding that there was no redundancy as "the number of employees ... in the company generally ... has remained virtually the same and in so finding did not apply the proper question to the matter as set out in S.81(2)(b) of the EP(C)A, that is whether the requirements of the business for employees to carry out work of a particular kind had ceased or diminished."

It is said that in approaching the question of redundancy there are two possible interpretations on the Act. The first is to look at the overall requirements of the business. If the business still requires the activity which was performed with the employee then there is no redundancy. Here, the Tribunal appears to have considered that since the same work was being done by different individuals the business still required that activity and therefore no redundancy existed.

The second interpretation and that which is alleged by the Appellant to be the correct one asks whether the job still exists. If not, then there is a redundancy. If applied here the post occupied by Mrs Brown has ceased. The Appellant contends that the proper approach is set forth in Carry All Motors Ltd v. Pennington [1980] IRLR 445. The Headnote reads -

"The Industrial Tribunal had erred in holding that the appellants had failed to show that dismissal of the respondent transport clerk following a decision to merge his job with that of depot manager was for reasons of redundancy and that accordingly the dismissal was unfair. The Industrial Tribunal had wrongly held that because the work in question was still there and being done solely by the other employee, the requirements of the appellants' business for employees to carry out work of the particular kind that the respondent was employed to do had not ceased or diminished within the meaning of S.81(2)(b) of the Employment Protection (Consolidation) Act and that the reason for the respondent's dismissal was reorganisation and not redundancy.

If an employer decides in good faith that the work carried out by two employees can be carried out by one of them and therefore dismisses the other, that dismissal is on grounds of redundancy. The decision of the National Industrial Relations Court to that effect in Sutton v Revlon Overseas Corporation Ltd was not wrongly decided and was still binding. Contrary to the arguments advanced on the respondent's behalf, that decision was not impliedly overruled by the Court of Appeal in Johnson and Dutton v. Nottinghamshire Combined Police Authority and Lesney Products Ltd v. Nolan and others. In both those cases, the material reorganisation of the work did not involve any reduction in the number of employees required to perform the relevant task."

This can be contrasted with the Divisional Court decision in North Riding Garages Ltd v. Butterwick [1967] 2 QB 56 where a long-term employee had been asked to take on additional responsibility. He lacked efficiency in these new duties. A new sales manager was appointed and the employee dismissed. The Industrial Tribunal held that because the need for an employee of the "old-type" represented by the respondent had disappeared there was a redundancy. The Divisional Court allowed the appeal against the Industrial Tribunal's findings and held at p.64:

"We think the Tribunal has fallen into error by applying the wrong test in that they have not looked at the overall requirements of the business but at the allocation of duties between the individuals. It is irrelevant that the duties of the new manager are not identical with the duties formerly undertaken by the respondent if the overall requirements of the business are unchanged."

The Appellant has maintained before us that the Butterwick case is not an authority for the "overall requirements of the business" test, but we are satisfied that the contrary is the case.

In Johnson v. Nottingham Combined Police Authority [1974] ICR 170, Lord Denning M.R. held after reviewing a number of cases dealing with alterations in attributes of a task as constituting redundancy -

"If those cases were correctly decided they would support Mr Bowyer's contention. But they were decided in the early days. And I do not think they can survive the decisions of the National Industrial Court in Scotland in Blakeley v. Chemetron Ltd [1972] ITR 224 and in England in Chapman v. Goolvean and Rostowrack China Clay Co Ltd [1973] ICR 50 affirmed by this Court in 1973 ICR 310. It is settled by those cases that an employer is entitled to reorganise his business so as to improve its efficiency and in so doing to propose to his staff a change in the terms and conditions of their employment: and to dispense of their services if they do not agree. Such a change does not automatically give the staff a right to redundancy payments. It only does so if the change in the terms and conditions is due to a redundancy situation. The question in every case is: Was the change due to a redundancy situation or not? If the change is due to redundancy he is entitled to a redundancy payment. If it is not due to it, he is not. Viewed as a whole the Johnson case is asserting that the overall requirements of the business test should be applied but the changes may be so radical that it can amount to redundancy."

In Murphy v. Epsom College [1985] ICR 80 the Industrial Tribunal by a majority took the view that the dismissal of a plumber was due to redundancy. Sir Denys Buckley held at p.92:

"In my judgment the facts found by the Industrial Tribunal afforded ample justification for the majority view that the dismissal was due to redundancy in the second plumbing post, that is resulting from the introduction to the staff of a heating engineer to carry out work of one particular kind, which was distinct from general plumbing and the consequent reduction of the employer's requirement for plumbers to carry out work of another kind namely, plumbing."

In our view the Murphy case was reasserting the "overall needs of the business" test. It has been represented to us forcibly that the jobs test is closer to the original words of the statute. It is simpler, it can also be conceded that such a test requires less judicial investigation. The job test however has severe disadvantages. It would hamper any reorganisation or reallocation of duties within a business enterprise. In some cases it will place a penalty upon efficient reorganisation. In the ultimate analysis it could provide a further impediment to employment itself. We are of the view that the Tribunal was entitled to apply the test which they did and, bearing in mind that each case or reorganisation is very much one on its own facts, we are of the view that there is nothing in the first grounds of appeal.

Perversity

The Appellant claims that the findings of the Tribunal were perverse in at least one respect. It is said that such perversity can be shown on a mathematical basis and attention is drawn to the following passage in the Reasons:

"19 With regard to the number of employees, we were told that from the 105 when Mr Rally bought the company, there are now about 106 employees today but on the other hand there are now two extra shops. He also told us that he made two other people redundant, but they were offered alternative positions. Additionally he decided to cut costs by cutting working hours of a number of employees. He also reduced the London allowance which had been paid in the past."

It is claimed that owing to the expansion of the number of shops there must have been a change in the overall need for employees since, pro rata, to the number of shops the number had declined. Attractive as this argument is at first sight, it is misconceived. The position in relation to the requirements of the business for the management work such as that which the Respondent provided had, if anything, increased with the increase in the number of shops. In our view the conclusion reached was one which the Tribunal was entitled to find upon the facts before them.

Dismissal for some other substantial reason

This aspect of the appeal is put as follows in ground 4:

"The Tribunal erred in law or were perverse in, having heard and accepted the evidence relating to the restructuring which was fully ventilated and which the Applicant had opportunity to deal with, failing to look behind the label place on these facts by the unrepresented Respondent and considering whether the reason was some other substantial reason."

As we apprehend it, it appears to be contended that either the Tribunal was bound to raise with the Appellant the possibility of the further defence of "some other special reason" because, inter alia, the Appellant was unrepresented. This was asserted even though the claim there was some other substantial reason had never been put forward in any pleading. The second aspect of the contention appears to be that the Tribunal should have taken the point in their decision. The latter point presents no difficulty. Unless a Tribunal has pointed out the issues to the parties before relying on it in the decision, it would be manifestly unjust to the party against whose interest the point is taken since he would have had no opportunity to deal with it, no chance to point out errors in the reasoning or even, in extreme cases, no possibility of calling further evidence.

The question whether the point should have been raised assumes that on the face of the evidence given there was some other substantial reason shown. Whether such reasons as existed here could be described as substantial is open to question. However, the main thrust of the argument is that the informality of proceedings makes it inappropriate for the employer to be tied to the title by which he chooses to call his defence. In Nelson v. BBC [1977] ICR 649, the Employment Appeal Tribunal was held to have fallen into error by finding "some other substantial reason" on an appeal from the decision of an Industrial Tribunal. The case therefore is closer to the first limb of the Appellant's argument on this point, but the observations are of general interest. At p.658 where Roskill L.J. criticised the approach of Phillips J. who had described the substitution of other substantial reasons for one of redundancy as a technical matter. He states:

"... Secondly, with all respect to the judge, I do not regard that as a very technical point. It is a completely different ground upon which an employer can justify dismissing an employee without paying compensation under the current legislation. What the Employment Appeal Tribunal did here was to look at facts which had been found in an altogether different context, namely, the context of paragraph 6(8), made after a finding of redundancy under paragraph 6(2), and then treat those findings as if they could properly be applied to an unpleaded defence by the corporation, never raised before the Industrial Tribunal, with no findings of fact by that Tribunal directed towards it, to support dismissal under paragraph 6(1).

With respect, I cannot think that that is right. It may well be (I am expressing no view at all) that if, as the facts emerged there had been a defence pleaded under paragraph 6(1), it could have been made good. I do not know. But it seems to me to be wrong to look at facts found in dealing with a submission under paragraph 6(8) and then apply them as if they had been found in relation to a defence under paragraph 6(1). Mr Walker urged us to say that for all practical purposes the same point would cover both paragraphs. I agree that there may be an overlap. But it is of the essence of the structure of this Schedule as amended by the Act of 1974 that an employer not only has to make good the specific grounds either under paragraph 6(1) or (2), but also has to show that, having made good whichever of those grounds be relevant, it is not inequitable for him to act upon them and dismiss the employee. It is that fact which seems to me to show that those two paragraphs are cumulative and one cannot apply facts found in relation to paragraph 6(8) to a possible but unpleaded defence under paragraph 6(1) and then treat them as applicable to that latter sub-paragraph. It may be that if an application to amend the defence had been made before the Industrial Tribunal different considerations would have arisen. Then their findings of fact would, one hopes, have been directed as to that amended defence. But no such application was made; and, as Mr Nelson says, the only point that they had to consider was the question of redundancy."

It is worthy of note that no hint was raised either before the Court of Appeal or the Employment Appeal Tribunal of the conduct of the Industrial Tribunal in not suggesting to the parties who were before the Tribunal that the issue of some other substantial reason should be considered. It is said that the Nelson case can be distinguished from the present case because a redundancy alone was relied on while in the present case the employer simply putting forward that the Respondent's job disappeared owing to reconstruction and financial restraints. Moreover it is said that here the Appellant is not represented. We do not consider that those distinctions can properly be made. Either there was a duty in law for the Tribunal to alert the parties of the possibility that this issue could be raised or there is not. The type of representation in front of the Tribunal or the nature of the pleadings they have to consider cannot affect such a duty if it exists.

Further light is cast upon this area by Murphy v. Epsom College [1983] ICR 715 at 722:

"... The difficulty in the case has arisen from the fact that before the industrial tribunal the employers never sought to justify the dismissal on the grounds that it was for "some other substantial reason." Such case was not pleaded by the employers, nor was it argued. At the hearing before the industrial tribunal the point was not ventilated at all nor was any suggestion made by the industrial tribunal that they might be going to decide the matter on that ground.

Our initial reaction was that the failure at the hearing to bring out the fact that the reason for dismissal could be classified as "some other substantial reason" did not vitiate the decision. The function of the industrial tribunal was to find the employers' actual reason: the actual reason having been found it was, as the industrial tribunal considered, merely a matter of classification as to whether it was called redundancy or some other substantial reason. Provided that it was one or the other of the two, it was a potentially fair reason for dismissal. However, Mr Kelly, for the employee, has referred us to the decision of the Court of Appeal in Nelson v. British Broadcasting Corporation [1977] ICR 649. ... Mr Kelly submits that that decision shows that it was not open to the industrial tribunal in this case to rely on the reason for dismissal being "some other substantial reason" since the point had never been pleaded nor had his client ever had an opportunity to deal with a case made on that basis.

Although there are plain distinctions between the Nelson case and the present case in that, in the Nelson case, the industrial tribunal as the tribunal of fact had not found that there was "some other substantial reason" (the only finding to that effect being by the appeal tribunal) in our judgment it does not have a bearing on this case. In Gorman v. London Computer Training Centre Ltd [1978] ICR 394, this appeal tribunal held that it was not necessary to "plead" some other substantial reason in the full technical sense of the word. However, in our judgment, in the light of the Nelson case it is probably necessary that the matter should be expressly ventilated in the industrial tribunal before it reaches a decision on the matter so that the parties can have a full and proper opportunity to deploy their case on the matter. Natural justice requires that the party should not have a case decided against him on a ground on which he has not had an opportunity to be heard."

Again, there is no indication there of a duty upon the Tribunal to raise the issue of its own accord before the parties. The closest analogy to that which is urged by the Appellant here is the duty of a judge in a criminal case to put before the jury defences which are plain upon the evidence but which have not been referred to by counsel for the defence.

We are of the view that unless the matter is raised at the time of the hearing it cannot be raised thereafter in justifying a different approach to evidence already given. Indeed, the burden of proof would necessitate that. While it has been the custom of courts of all types to afford assistance to litigants in person it has to be remembered that the procedure is still adversarial. There is no duty in strict law (criminal cases apart) for a judge to enter the arena on behalf of either of the parties. To do so could well destroy any appearance of justice being done. It is not the duty of a court to pursue on behalf of a party every aspect of every possible defence. It could only occur in cases where there is clarity and certainty of the evidence so as to raise the issue. No such clarity and certainty existed here and the Tribunal were entitled to accept the reason as put forward by the Appellant in his pleadings and in his evidence.

For these reasons this appeal is dismissed.