United Kingdom Employment Appeal Tribunal

BAILII case number: [1993] UKEAT 347_93_0311

Appeal No. EAT/347/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 3 November 1993

Before

THE HONOURABLE LORD COULSFIELD

MR K HACK

MRS T MARSLAND

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KDG MOBREY LTD          APPELLANTS

MR H THOMAS          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR J SWIFT

(OF COUNSEL)

Engineering Employers

Federation

Broadway House

Tothill Street

London SW1H 9NQ

For the Respondent MR N SMITH

(SOLICITOR)

Smith Gadd & Co

Chessington House

26 Worthing Road

Horsham

W Sussex RH12 1SL


 


LORD COULSFIELD: This is an appeal from a decision of an Industrial Tribunal sitting at Reading under the Chairmanship of Mr V K Leese. On 7 July 1992 the Industrial Tribunal held that the Respondent had been unfairly dismissed by the Appellants. At that stage, the Industrial Tribunal left the parties to discuss the proper amount of compensation but agreement was not reached and by a decision dated 4 March 1993 the Industrial Tribunal awarded the sum of £5,617.04.

The Appellant employers do not appeal against the finding that the dismissal was unfair but only against the award of compensation. It is however necessary to say something about the circumstances leading to the dismissal in order to understand the arguments relating to the question of compensation.

The Respondent was employed by the Appellants as a driver and packer from 18 February 1985, until he was dismissed on the ground of redundancy with effect from 31 January 1992. At the time of his dismissal, he was off sick and was waiting for an operation. The Appellants had a redundancy policy which included various terms in relation to the selection of persons to be made redundant, one of which was the application of a "matrix" by which a point score for each of the persons who were considered could be calculated.

In December 1991 the Appellants came to the view that 60 redundancies would be required. The Industrial Tribunal accepted that there was a redundancy situation, and that the decision to dismiss the Respondent, in particular, was one made on the ground of redundancy. There was a meeting on 24 January 1991 at which the selection of the Respondent for redundancy was made. One of the matters considered at that meeting was the application of the matrix, which brought out the Respondent as having the lowest point score of the relevant group.

The Respondent was, as we have said, off sick at the time but he attended a meeting with the Appellants on 27 January at which the position was explained to him and he was told that he could appeal. On 29 January the Respondent received notice that the operation for which he was waiting could be carried out, and he telephoned the Appellants to inform them that, because of this, he could not attend the proposed appeal. We need not go into the precise circumstances of that telephone call. In brief, the message was treated by the Appellants as an intimation that he did not intend to proceed with his appeal. In consequence, he was never in fact given the opportunity to present any case or argument at an appeal.

When the Industrial Tribunal came to consider the question whether the dismissal had been fair in the circumstances of this case they noted, at paragraph 24 of the reasons for their first decision, that there had been no consultation with the Respondent. They continue:

"Insofar as other employees were concerned who had been at work on 20 January, they had been notified and warned on that day and they had a further seven days or more before those who were to be made redundant were made redundant. It seems, therefore, that they were not prejudiced if they were amongst those of that group selected."

and at paragraph 25:

"In the case of Mr Thomas, however, it is a different matter. He was first told by letter on 24 January that he was at risk. He immediately rang in and a mutually agreed date was fixed for the meeting on the following Monday. However, on the afternoon of Friday 24 January, the selection criteria was applied and the applicant was selected for redundancy. In evidence Miss Lusted [a representative of the employers] attempted to say that even on the morning of 27 January when she and Mr Barber saw the applicant, he was only still "at risk". We do not accept that. We find that the decision had been taken on the Friday afternoon."

The Industrial Tribunal go on to refer to the circumstances of the appeal, to point out that no attempt was made by the employers to try to re-arrange the appeal and to certain correspondence which took place thereafter. They express the view that it was for the employers to clarify the whole situation, which they failed to do. On that basis the Industrial Tribunal conclude that the dismissal was unfair.

Before going further, we should also refer to part of the statement of reasons for the decision on the amount of the award. In the second paragraph of that decision, the Industrial Tribunal state:

"Having heard argument by both sides, we do not accept the respondent's contention that compensation should be limited to a period of seven days as we do not accept the arguments which were put forth in support of such a contention. We have already set out the reasons why we felt that the applicant was unfairly dismissed. In order to make the matter clear we felt that a reasonable employer should have gone much further than the matrix in this case. Had there been consultation the applicant might well have been able to provide information which the employer did not know about. Moreover as there was no enquiry whatever in to what he could have done, he was not given the opportunity to make suggestions of other possibilities within his skills."

It is we think important to draw attention to four material points in the decision of the Industrial Tribunal. In the first place, the Industrial Tribunal have found, in our view, that there was no consultation whatever with the Respondent. The reason for that view is that, as the Industrial Tribunal have clearly found, the decision to make him redundant was taken on 24 January and was from that point on an established decision. Any meetings thereafter cannot therefore be regarded as amounting to consultation before a decision to render a person redundant. Secondly, the Industrial Tribunal have held that there was no appeal and that the employers bore a responsibility in that respect. Thirdly, the Industrial Tribunal have, in our view, expressed clear criticism of the process of selection and the basis of selection. It was suggested in argument that all that the Industrial Tribunal had found in relation to consultation was that an opportunity to provide information about alternative skills or alternative employment had not been given. We do not think that is a fair reading of paragraph 2 of the decision on quantum. It seems to us that the Industrial Tribunal have clearly found that the basis for selection employed in the use of the matrix was itself inadequate. Fourthly, there is no finding that the Respondent would have been dismissed notwithstanding any consultations which might have taken place.

In the light of the facts found by the Tribunal we proceed to consider the arguments advanced on behalf of the Appellant. The first two of those arguments can be taken together; they are that the Industrial Tribunal erred in law in failing to apply properly the principles laid down in the decision in Polkey v A E Dayton Services Limited [1988] ICR 142 and Mining Supplies (Longwall) Limited v Baker [1988] ICR 676 or that, if they did have regard to those principles, their conclusion was perverse.

In the development of those arguments it was submitted, on the basis of what Lord Bridge said in Polkey, that, when considering the question of compensation, the Industrial Tribunal must consider what difference consultation would have made to the decision which was taken; and, on the basis of Mining Supplies, that if the Tribunal is certain that the outcome would have remained the same, it should make no compensatory award or make an award which only represents loss during the period which should have been available for consultation.

So far those submissions are in accordance with the expressions of opinion in the cases referred to but the nub of the Appellants' submission comes with the further development based upon the observations of Tucker J. in Red Bank Manufacturing Ltd v Meadows [1992] IRLR 209. In that case Tucker J. said, at page 210:

"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."

It was submitted that the Industrial Tribunal in the present case should have spelt out and expressly answered the questions indicated by Tucker J. and assessed, on that basis, what loss would follow.

We should however observe that the Red Bank case was a case in which it was established, as indeed it was in Polkey and the Mining Supplies cases, that dismissal would have followed in any event. The furthest that the Industrial Tribunal went in the Red Bank case, in dealing with the question of consultation, was to say, as appears in paragraph 6 of the decision, that had there been consultation or discussion prior to dismissal, the employers' reluctance to consider the Applicant for a junior position might have been dispelled, but that this was not a matter upon which it was open to the Industrial Tribunal to speculate. They made that observation in the context of the question whether consultation would, in the circumstances of that case, have been useless. In the present case, in our view, the circumstances are different. The Industrial Tribunal in the present case rejected the suggestion that dismissal was inevitable for the Respondent and pointed out that the present Respondent was not given the opportunity to make suggestions which might have affected his employment. Looking at their statement of reasons as a whole, it seems to us that the Industrial Tribunal have not failed to consider the proper questions and that it was not necessary for them expressly to spell them out as Tucker J. did, in the Red Bank case. What the Industrial Tribunal in the present case have done is to note the arguments that compensation should be limited to a period of 7 days, which was itself of course an argument advanced on the basis of the Polkey decision and to attempt to assess broadly the fair compensation to the Respondent in the whole circumstances. In our view that approach does not disclose any error of law. As regards the question of perversity, for the same reasons we think that it was open to the Industrial Tribunal to follow the course that it did and that their decision cannot be criticised on that ground.

The third ground upon which the Appellants sought to overturn the decision of the Industrial Tribunal was that, in any event, the Industrial Tribunal should have reduced its award of compensation to Mr Thomas to take into account the possibility that he would have been fairly dismissed on grounds of ill-health before the date of the decision to award compensation. The basis for that argument is that the Respondent had been absent from work since the middle of November 1991 and that at the time of the hearing in March 1993 he was still unfit for work. In our view that argument, which was not put in that form before the Industrial Tribunal, raises new material and it also raises a highly speculative question. Whether or not the Respondent might have been fairly dismissed on the ground of prolonged ill-health is a question which could be of some difficulty. The question is, in any event certainly one of fact and since it was not raised before the Industrial Tribunal it does not seem to us that this constitutes a ground on which we could properly interfere with the decision of that body.

The fourth argument has given us greater difficulty. In assessing the amount of compensation the Industrial Tribunal noted the wages which the Respondent would have received between 31 January 1992 and 7 July 1992 which, at an agreed weekly figure, amounted to £2,588.04. They deducted payment in lieu of notice and holiday money which left them with a sum of £2,588.04. They then went on to consider future loss upon which their decision was as follows:

"With regard to future loss of wages, we took the view that had we been sitting to estimate future losses on 7 July, we would have been thinking in terms in this case of between at least 26 weeks and a maximum of 52 weeks. We noted today that the applicant had been unemployed and drawing sickness benefit from the time of his dismissal until today although it is hoped that in the near future he may well be able to work again. Doing the best that we can to be fair to both parties, we have come to the conclusion that we should add a further 34 weeks at £115.10 per week which gives a total of £3,913.40. To this we add £100 for loss of statutory industrial rights making a total under this heading of £4,013.40."

The Appellants' argument was that, on the facts which were before the Tribunal, the Respondent, in terms of the sick pay scheme included in the relevant contract, would have received his full salary for a period of 16 weeks and half salary for a further 16 weeks. It was submitted that it is the duty of an Industrial Tribunal in assessing the loss following from a dismissal to apply its mind on a correct legal basis to the true amount of that loss and to make an assessment upon the basis of all the facts before it and that in the present case on those facts the loss must inevitably have been limited to the periods of full pay and half pay on sick leave to which we have referred.

This argument was not advanced to the Industrial Tribunal, at least in that form, and it was only added by an amendment to the Notice of Appeal which we allowed at the start of the hearing on the basis that since intimation of the argument had been given some time previously, no prejudice was suffered by the Respondent in allowing the argument to be heard and there was no lack of notice.

For the Respondent the submission was that the Industrial Tribunal had been asked to take into account not only the immediate loss flowing from the dismissal in the sense of loss of wages for a period of weeks or months immediately following the dismissal, but also the impact of the dismissal upon his employment position in general, in that as, at the time of the dismissal, he was a man of 59, his chances of obtaining any future employment would be very much reduced and that this was a factor for which he was entitled to compensation.

As we have said, we found some difficulty in dealing with this part of the argument. It is of course correct that an Industrial Tribunal must approach its decision on a correct basis in law and that it must apply its own mind to the proper considerations in assessing an award of compensation, whether or not these are specifically drawn to its attention. On the other hand an Industrial Tribunal is placed in a position of some difficulty when parties represented before it fail to draw its attention to arguments to which it is clearly in their interests to refer, and, in the present case, it seems to be clear that before the Industrial Tribunal the focus of the Appellants' argument was upon limiting the award to a very short period, equivalent to a short consultation period, rather than upon the issue which is now raised. In addition there is the principle that a decision of an Industrial Tribunal on a question of compensation should not lightly be interfered with by this Tribunal.

Looking at the whole matter, however, we have come to the conclusion that, while the Industrial Tribunal, in making the award that they did, may well have been looking to the long term and wider consequences upon the Respondent, they have not said so. It is certainly the case that had they done so and said expressly that they had done so, their decision could not have been interfered with, even if the amount which they thought appropriate was one which we would have regarded as high, but within the limits of extravagance. We have, however, come to the conclusion that, if that was the basis upon which the Industrial Tribunal proceeded, then they have not adequately explained their manner of proceeding in the Statement of Reasons which is before us; and that in this respect there is a significant failure to make the grounds of decision clear. In these circumstances our decision is that the appeal should be allowed to the effect only of remitting the case to the same Industrial Tribunal in order to enable it to reconsider the proper amount of the financial award.