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Cite as: [1993] UKEAT 530_91_0704, [1993] UKEAT 530_91_704

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BAILII case number: [1993] UKEAT 530_91_0704

Appeal No. EAT/530/91

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 7th April 1993

Before

HIS HONOUR JUDGE J PEPPITT QC

MR D A C LAMBERT

MR J A SCOULLER

MR J J DUFFY APPELLANT

YEOMANS & PARTNERS LTD RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellant Mr T Kerr

(of Counsel)

Messrs Christian Fisher & Co

42 Museum Street

Bloomsbury

LONDON WC1A 1LY

For the Respondents Mr S H Moon

(Representative)

Building Employers Confederation

82 New Cavendish Street

LONDON W1M 8AD

HIS HONOUR JUDGE PEPPITT QC On 10th July 1991 the North London Industrial Tribunal decided unanimously that the Appellant, Mr Duffy had not been unfairly dismissed by his employers, Yeomans & Partners Ltd. The Tribunal further found unanimously that:

"If the Tribunal is wrong on this and the Applicant was unfairly dismissed, the Tribunal awarded nil compensation".

Mr Duffy appeals against both of these decisions.

Mr Duffy was dismissed on 30th November 1990. He had been employed by the Respondents since 1st February 1972, latterly as a foreman painter. He was, as the Tribunal found, "a good and long-serving employee". The ground for the dismissal was redundancy. The Tribunal found that a redundancy situation existed under S.81(2)(b) of the Employment Protection (Consolidation) Act 1978 and that in the circumstances outlined later in this judgment the dismissal was "within the range of reasonable responses for this employer to have dismissed the employee for the reason given".

Mr Kerr on behalf of the Appellant attacked the first part of the Tribunal's decision on three independent but related grounds. He pointed to the finding in paragraph 15 of the decision that Mr Duffy had not been consulted regarding his redundancy and submitted:

(i)that Polkey v. A E Dayton Services Ltd [1988] ICR 142 and subsequent decisions following it were authority for the proposition that a redundancy dismissal without consultation could only be fair if on grounds found to have been reasonable the employers took a deliberate decision at the time not to consult the employee. It was not sufficient for the employers to prove that in the light of the facts known to them at the time consultation would have served no useful purpose. They must apply their minds specifically to the question of consultation and only if they have done so and reasonably conclude that consultation would serve no useful purpose can the failure to consult in an extreme case be justified. There was no finding by the Tribunal that the Respondents had ever applied their minds to the question of consulting Mr Duffy about his redundancy and no evidence to support such a finding. Accordingly the Tribunal misdirected itself in deciding that this dismissal was fair.

(ii)Alternatively, said Mr Kerr, if Mr Duffy's dismissal in the absence of consultation could be justified by the Respondents proving no more than that on the facts known to them at the time consultation would have served no useful purpose, the Tribunal failed to look at the facts as known to the employers at the material time but instead substituted their own view that consultation would have made no difference to the decision to dismiss.

(iii)In the further alternative, said Mr Kerr, the circumstances of Mr Duffy's dismissal were such that no reasonable Tribunal could have come to the decision that the Respondents' failure to consult him regarding his redundancy could be justified. The first part of the Tribunal's decision was therefore perverse.

Mr Kerr's first submission was founded upon Polkey (supra). In that case an employee had been dismissed for redundancy without consultation. The Industrial Tribunal, considering itself bound by British Labour Pump Co Ltd v. Bryne [1979] ICR 347, reluctantly dismissed the employee's complaint of unfair dismissal. The test laid down in British Labour Pump was that:

"... even if, judged in the light of the circumstances known at the time of dismissal, the employer's decision was not reasonable because of some failure to follow a fair procedure yet the dismissal can be held fair if, on the facts proved before the Industrial Tribunal, the Industrial Tribunal comes to the conclusion that the employer could reasonably have decided to dismiss if he had followed a fair procedure. ..." [per Browne-Wilkinson J in Silifant v. Powell Duffryn Timber Ltd [1983] IRLR 91 at p.92.

The House of Lords, over-ruling British Labour Pump allowed the employee's appeal and remitted the case to a differently constituted Tribunal. In the course of his speech (with which all of their Lordships agreed) the Lord Chancellor considered S.57(3) of the 1978 Act and said at p.153 D-G:

"Where there is no issue raised by sections 58 - 62 the subject matter for the Tribunal's consideration is the employer's action in treating the reason as a sufficient reason for dismissing the employee. It is that action and that action only that the Tribunal is required to characterise as reasonable or unreasonable. That leaves no scope for the Tribunal considering whether, if the employer had acted differently, he might have dismissed the employee. It is what the employer did that is to be judged, not what he might have done. On the other hand, in judging whether what the employer did was reasonable it is right to consider what a reasonable employer would have had in mind at the time he decided to dismiss as the consequence of not consulting or not warning.

If the employer could reasonably have concluded in the light of the circumstances known to him at the time of dismissal that consultation or warning would be utterly useless he might well act reasonably even if he did not observe the provisions of the code. Failure to observe the requirements of the code relating to consultation or warning will not necessarily render a dismissal unfair. Whether in a particular case it did so is a matter for the Industrial Tribunal to consider in the light of the circumstances known to the employer at the time he dismissed the employee."

Of the British Labour Pump principle the Lord Chancellor said at p.161F:

"In my opinion therefore the additional reasons given by the Court of Appeal in the present case for supporting the British Labour Pump principle involve an impermissible reliance upon matters not known to the employers before the dismissal and a confusion between unreasonable conduct in reaching the conclusion to dismiss, which is a necessary ingredient of an unfair dismissal, and injustice to the employee which is not a necessary ingredient of an unfair dismissal, although its absence will be important in relating to a compensatory award."

Pausing there, we can find nothing in the above passages, or elsewhere in the Lord Chancellor's speech to suggest that an employer must actually have applied his mind to the question of consultation for its absence not to invalidate the dismissal. The Lord Chancellor seems to us to be applying a purely objective test to the employer's conduct: could a reasonable employer in the light of the facts known to him at the time have dismissed the employee without consultation? Whether the employer in such a situation applied his mind to the question of consultation and rejected it or because redundancy was so inevitable that he never considered the question of consultation seems to us to be a distinction without a material difference which the Lord Chancellor was not seeking to draw.

Some support for this approach is to be found in Sillifant v. Powell Duffryn Timber Ltd (supra) which the Lord Chancellor cited with approval. In that case Browne-Wilkinson J expressed the relevant principle in the following terms at p.97:

"... The only test of fairness of a dismissal is the reasonableness of the employer's decision to dismiss judged at the time at which the dismissal takes effect. An Industrial Tribunal is not bound to hold that any procedural failure by the employer renders the dismissal unfair: it is one of the factors to be weighed by the Industrial Tribunal in deciding whether or not the dismissal was reasonable within s.57(3). The weight to be attached to such procedural failure should depend upon the circumstances known to the employer at the time of the dismissal not on the actual consequence of such failure. ..."

The distinction between facts known to the employer at the time of the dismissal and facts not known to the employer at that time is drawn both by the Lord Chancellor and by Browne-Wilkinson J. It was a blurring of that distinction in the British Labour Pump case which led to it being over-ruled.

Mr Kerr relied upon a further passage from Polkey in support of his first submission. At p.163B Lord Bridge, having agreed with the Lord Chancellor said:

"... If an employer has failed to take the appropriate procedural steps in any particular case, the one question the industrial tribunal is not permitted to ask in applying the test of reasonableness posed by section 57(3) is the hypothetical question whether it would have made any difference to the outcome if the appropriate procedural steps had been taken. On the true construction of section 57(3) this question is simply irrelevant. It is quite a different matter if the tribunal is able to conclude that the employer himself, at the time of dismissal, acted reasonably in taking the view that, in the exceptional circumstances of the particular case, the procedural steps normally appropriate would have been futile, could not have altered the decision to dismiss and therefore could be dispensed with. In such a case the test of reasonableness under section 57(3) may be satisfied."

We do not read this passage from Lord Bridge's speech as imposing any requirement upon an employer actually to direct his mind to the question of consultation if he is to pass the S.57(3) reasonableness test. It seems to us that Lord Bridge was merely citing an employer who did so and reasonably came to the conclusion that consultation would be futile as one example of a situation in which the requirements of S.57(3) might be satisfied. This seems to have been the view of the Court of Appeal in Hooper v. British Railways Board [1988] IRLR 517 in which Ralph Gibson LJ delivered the leading judgment with which Slade LJ and Sir Roualeyn Cumming-Bruce agreed. At paragraph 60 on p.528 Ralph Gibson LJ dealing with a submission by counsel broadly to the effect of that made to us by Mr Kerr said:

"For my part, I do not consider that there is any distinction in substance between the principles formulated by Lord Mackay and that discernible in the speech of Lord Bridge. If there was any such distinction, we would have to give effect to that stated by Lord Mackay with which their Lordships all agreed. It is, I think, clear that Lord Bridge did not take the view that he was stating any different test. He was, in my judgment, emphasising one aspect of the principle stated by Lord Mackay, namely that the reasonableness of the action taken by the employer is to be judged by reference to the facts and factors known to the employer at the time of making the decision."

In Hooper v. British Railways Board (supra), another 'no consultation case' the Employment Appeal Tribunal had allowed an appeal by the employee from the decision of the Industrial Tribunal that his dismissal had been fair. In dismissing the employer's appeal from the Employment Appeal Tribunal Ralph Gibson LJ said at paragraph 62 on .528:

"... The Industrial Tribunal approached the case on the law as it was then understood to be, without considering the utility of any further consultation with Mr Hooper as it reasonably appeared to BRB at the time as contrasted with the Industrial Tribunal's view of what in probability would have happened if further consultation had taken place. ..."

It is interesting to note that Ralph Gibson LJ has also drawn the distinction between facts known to the employer a the time of the dismissal and facts not known to the employer at that time. It is this distinction which we believe lies at the heart of the decision of the House of Lords in Polkey.

Mr Kerr also referred us to Spink v. Express Foods Group [1990] IRLR 320 a decision of the Employment Appeal Tribunal. In that case an employee was dismissed on grounds of misconduct without being given the opportunity properly to answer the charges against him. The Industrial Tribunal had upheld the dismissal on the ground that the omission was procedural and it was unlikely to have made any difference to the end result. The Employment Appeal Tribunal allowed the employee's appeal on the ground, inter alia, that the Industrial Tribunal had misdirected itself by acting on the British Labour Pump principle. The passage relied upon by Mr Kerr was in paragraph 29 at p.323 where the President, Wood J, said:

"Polkey was a case of redundancy where insufficient consultation had taken place. There may be instances of redundancy where due to an immediate financial crisis no consultation is possible and where an employer may consciously accept that any such attempted consultation would be futile. It is to this type of situation that their Lordships were referring when, although finding there had been a fatal flaw in that case, they pointed out that not every flaw should be considered fatal. ..."

Once again we do not consider that the President in this passage was doing more than giving an example of 'the type of situation' in which an employer might satisfy the requirements of S.57(3) in a redundancy situation without consulting with his employee. We see no reason therefore to circumscribe the Lord Chancellor's statement of the relevant principle in Polkey by building into it a requirement that the employer must consciously decide not to consult with his employee. In our judgment the test is the purely objective one which we believe the Lord Chancellor described. We therefore unanimously reject Mr Kerr's first submission.

Mr Kerr's second submission is based on the sentence 'In such circumstances, consultation would have served no useful purpose' as it appears in paragraph 15 of the decision. That sentence, he said, reflected the view of the Tribunal and not that of the Respondents at the time of the dismissal. We have considered this submission with some care as in themselves the words are certainly capable of bearing the meaning for which Mr Kerr contends. But we have come to the unanimous conclusion that in its context the sentence must be read as descriptive of the situation as it appeared to the Respondents at the date of dismissal.

Paragraphs 12 - 15 of the decision are all concerned with facts known to the Respondents at the time when and in consequence of which Mr Duffy was dismissed. All the employees on Mr Duffy's site were made redundant in October 1990 apart from a Mr Bradshaw who was made redundant a little later and shortly before Mr Duffy. It was not possible to transfer Mr Duffy to another site. The Respondents had attempted in the past to transfer long-standing employees to a site in Baker Street but the building owner had objected. There was no other work for him to do. The Respondents had a redundancy policy which they followed in selecting Mr Duffy for redundancy. Mr Duffy had been sent home on stand-by on full pay plus a bonus on the understanding that, if any work came in, he would continue working in his employment. The Respondents had waited until the last possible moment before dismissing him. No further contracts were available. These findings were made in the light of the recession then affecting the building industry. As we have indicated all of them were known to the Respondents at the time of the dismissal. The sentence upon which Mr Kerr relies appears in paragraph 15 of the decision immediately after the last of the findings to which we have referred. In our opinion that sentence did no more than state the conclusion which the Respondents undoubtedly reached in the light of the facts so found. It was not an expression of the Tribunal's own view.

The Tribunal's own view of the lack of consultation appears in paragraph 17 of the decision. The words used in that paragraph were:

"... Consultation would have made no difference to the decision to dismiss.

The phraseology in this sentence seems to us to be apt to express the views of the Tribunal whereas the phrase "would have served no useful purpose" is more apt as an expression of the views of employers. Moreover the fact that statements to substantially the same effect appear so close together in the judgment suggest to us that the second is not mere repetition of the first. For all these reasons we reject Mr Kerr's second submission.

A majority of us also rejects Mr Kerr's third submission. The majority does not consider that the Tribunal's decision was perverse in the sense that no reasonable Tribunal could have reached it. The effect of the Respondents' failure to consult Mr Duffy in the circumstances outlined above was very much a matter of fact and degree for the Tribunal who heard the evidence and no doubt formed its own opinion of the overall situation. This is not to say that the majority would necessarily have reached the same conclusion. There is everything to be said for the fullest consultation possible in cases of redundancy normally a dismissal will be held to have been unfair without it. The Tribunal decided that this was such a case and the majority does not feel able in its appellate capacity to interfere. The minority view was that the absence of consultation was fatal to the Respondents' case. The fact that Mr Duffy was on stand-by on full pay plus bonus at the time of his dismissal would if anything have reduced his expectation of redundancy. He was nevertheless selected for redundancy by an appraisal of which he had no knowledge and which he was given no opportunity to challenge. As an employee of 17 years standing he was entitled to be consulted not only about the criteria by reference to which he was selected for redundancy but also with regard to the need for it. To have denied him that opportunity was outside the range of reasonable responses available to an employer and the Tribunal's decision to the contrary was accordingly perverse.

For these reasons this appeal will be dismissed.

In the circumstances it is not strictly necessary for us to consider Mr Kerr's appeal against the second part of the Tribunal's decision but in view of the careful arguments which he advanced to us we propose to state our views shortly upon it.

Mr Kerr submitted that in purporting to deal with the question of compensation by way of alternative to its finding that the dismissal was fair the Tribunal acted in excess of its jurisdiction. He argued that as a creature of statute the Tribunal's jurisdiction was entirely statutory. There were two statutory pre-conditions to the exercise of the Tribunal's jurisdiction to consider and rule on the issue of compensation, neither of which were met, namely:

(i)the pre-condition in S.68(2) of the 1978 Act that the Tribunal must have found that the grounds of complaint are well-founded, and

(ii)the pre-condition to be derived from sections 68(1), 68(2) and 69 of the Act that the Tribunal shall, in the case where (as here) reinstatement is claimed, consider the issue of reinstatement and/or re-engagement prior to considering the issue of compensation.

Mr Kerr submitted in the alternative that even if the Tribunal had jurisdiction to consider and rule upon the issue of compensation it was not entitled in law to purport to award nil compensation without hearing evidence and argument from the parties on the question of remedies. He told us on instructions that the Tribunal did not invite either party to call any such evidence or to make submissions on remedies. Consequently at the conclusion of the hearing before the Tribunal Mr Duffy's representative was under the impression that in the event of a finding of unfair dismissal the Tribunal would, if necessary, reconvene in order to hear evidence and argument on the question of remedies. In the circumstances the Tribunal's purported award of nil contribution was void and unsustainable in law.

Mr Moon of the Building Employers Federation on behalf of the Respondents did not invite us to reject Mr Kerr's submissions and did not contend that the Tribunal's alternative decision could be sustained. We agree. We would only add that it is in our view essential that before embarking upon a consideration of remedies the Tribunal should satisfy itself that

the parties appearing before it have been given the opportunity to call evidence and to make submissions on that issue. If that necessary step is not taken the Tribunal's decision on remedies may, as in this case, be subject to an appeal.