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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Whitbread Plc (t/a Whitbread Berni Inns) v Flatter & Anor [1994] UKEAT 287_94_1511 (15 November 1994)
URL: http://www.bailii.org/uk/cases/UKEAT/1994/287_94_1511.html
Cite as: [1994] UKEAT 287_94_1511
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At the Tribunal
HIS HONOUR MR JUSTICE HOLLAND
MR L D COWAN
MR G H WRIGHT MBE
(2) MRS S MITTENY (3) MISS S BARRINGTON
JUDGMENT
Revised
APPEARANCES
For the Appellants MR J BOWERS
(of Counsel)
Morgan Bruce
Bradley Court
Park Place
Cardiff CF1 3DP
For Miss S Barrington MISS A HAMPTON
(of Counsel)
J H Lawrence & Co.
6 Lombard Street
Newark
Notts NG24 1XD
MR D HOLDER
(in person)
MRS B D FLATTERY and
MRS S MITTEN
(neither being present
nor represented)
MR JUSTICE HOLLAND: We are concerned with an Appeal by the employers against three decisions of an Industrial Tribunal sitting at Bristol. On 5 and 18 January 1994, Mrs Flattery was found to be unfairly dismissed by the Appellants and was awarded £895.47p by way of compensation; Mrs. Mitten was found similarly to have been unfairly dismissed and was awarded £721.06p; Miss Barrington was similarly found to have been unfairly dismissed and awarded £4,410.74p. The Tribunal similarly constituted and sitting on 25 March 1994, found that Mr Holder was unfairly dismissed on the same occasion by the same employers and then on 17 May 1994, awarded him by way of compensation £9,725. The Appeal is mounted against those decisions. Initially we have heard the argument advanced by Mr. Bowers on behalf of the Appellant directed to liability only and we have heard responses on that issue. It is with a respect to that issue that this Judgment is presently directed.
The background is a short chronology. Mrs Flattery, Mrs Mitten and Miss Barrington have respectively been in employment with the Appellant at their Star Hotel in Cheltenham. All three ladies have been in their respective employments for some substantial period of time; Mrs Flattery since 1986, Mrs Mitten since 1988 and Miss Barrington since 1990. That operation, the Star Hotel, featured Henry's Cafe Bar and a Berni Star Restaurant. It was in the Star Restaurant that the three ladies were waitresses. Mr. Holder was grill chef in that restaurant. His employment was even longer standing: he had been in this restaurant since September 1981. The current problems arise because in the course of 1993, the Appellant, confronted by a falling turnover in this restaurant, decided upon a major refurbishment, so as to convert it into what they called a brasserie. That plan was first ventilated with the staff at a meeting on 19 July 1993. There was a further meeting at which the project was discussed on 23 September 1993 and then on 27 September, a letter was prepared for delivery to each of the applicants. This letter was in identical terms and read as follows:
"As a result of the recent decision to close permanently the Star Berni Restaurant in Cheltenham, I would like to confirm that the Company is unfortunately having to make you redundant. As you know, I have met you on previous occasions and again today, at which the situation has been fully explained. We have considered whether there are any suitable vacancies at present elsewhere within the Company, but sadly no such vacancies exist. The Star Berni Restaurant will cease trading at the close of business on Saturday 2 October 1993."
True to the content of the letter, the restaurant did cease trading at the close of business on that day and from that point onwards, the four applicants were dismissed. It seems, although there are no specific findings about it, that some four weeks later the premises did re-open as a brasserie without any of the four applicants working for the Appellants in it. The matter came before the Tribunal on the respective occasions on the basis of applications which had not been completed with legal advice. In the result, and we say this without any criticism of any applicant, the terms of each application were imprecise. In the event, the Industrial Tribunal, in our judgment entirely correctly, treated each of the applications as applications made under Section 57 of the Employment Consolidation Act [1978], that is, applications for compensation for unfair dismissal. Before this Tribunal, somewhat faintly, Mr Bowers contended that in truth the applications were applications as to redundancy payment or as to the amount of a redundancy payment, that is, applications referred to in Section 97(1) of the same Act. This Tribunal is entirely satisfied that the matter appropriately proceeded under Section 57. That then leads immediately to the stages for deliberation that were required of the Industrial Tribunal. Section 57(1) so far as relevant reads:
(1) "In determining for the purposes of this Part whether the dismissal of an employee was fair or unfair, it shall be for the employer to show-
(a) what was the reason (or, if there was more than one, the principal reason)for the dismissal, and
(b) that it was a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held.
(2) In subsection (1)(b) the reference to a reason falling within this subsection is a reference to a reason which-
...(c) was that the employee was redundant..."
Thus it is, that that was the case that was presented to the Industrial Tribunal.
Turning then to the issue which arises as a matter of substance in this case; this submerges from Section 81 which again, so far as material reads:
"... (2) For the purposes of this Act an employee who is dismissed shall 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 the 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 the 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...."
Before the Industrial Tribunal, the Appellants (the employers), contended that redundancy was the appropriate label to put upon this dismissal, having regard to the terms of Section 81(2) (a). Dealing with the application of Mr. Holder, they went further and alleged that alternatively, the requirements of Section 81(2)(b) were additionally satisfied. In the event, the Industrial Tribunal found against the Appellants with respect to both paragraphs. So far as the finding with respect to Mr. Holder relating to paragraph (b) is concerned, there has been no Appeal to this Tribunal and we need not mention that aspect of the matter further. That then leaves us to focus upon paragraph (a) and as to the way in which the Industrial Tribunal tackled the issues raised by the facts of the case and the terms of that paragraph. What in the event they did was this. First, they reminded themselves of Section 81(3) which reads as follows:
"... (3) In subsection (2), "cease" means cease either permanently or temporarily and from whatsoever cause, and "diminish" has a corresponding meaning..."
Second, they continued as appears from paragraphs 9 and 10 of the Reasons which read as follows:
"... 9 There is very little authority on what is meant by ceasing to carry on that business in circumstances where there is not to be a total permanent closure. Where an employer changes the type of business which is carried on at the workplace, this may be regarded as a closure of the old business, but only if the employer has replaced the business with a new one which is completely different in nature. It seems to us quite clear that the Brasserie was not completely different in nature from the Berni Star. Certainly there were changes in the style; in the approach; changes in the menu to accommodate modern eating habits and a reduction in the prices, but it was still a restaurant which people visit to have meals. What is more it was still a middle range restaurant catering for a wide range of ages. It seems to us clear that s.81(2)(a) is not intended, when it talks of "ceasing to carry on the business" to include a situation where there is a change in the nature of the business of this limited kind.
10 They way in which it has been put by the respondents in their final submissions is unusual. They say that even if this new business was the same business, there was a closure for a period of 4 weeks and that that is a temporary closure within s.81(3). There does not seem to be any authority on this and it would be surprising if all that was needed for an employer to justify a redundancy dismissal was to close their business for a short time for refurbishment. Although the Act refers to a temporary ceasing of the business this is not intended to cover a short period of 4 weeks or so during which the premises are to be refurbished and after which the business is always intended to continue. We interpret s.81(1)(a) in conjunction with s.81(3) as being restricted to situations where the business ceases for a significant period even if there is an intention in the future to open it, but not a situation where the operation is closed temporarily for refurbishment. If that is right the respondent has failed to show an admissible reason for dismissal and the dismissals are automatically unfair..."
This Tribunal accepts that if the precise words in paragraphs 9 and 10 are subjected to close texture analysis, there are contained within the text certain passages which may be open to query as a matter of law. However, what this Tribunal reminds itself is that the essential issue for the Industrial Tribunal was this: "had these employers ceased to carry on the business for the purposes of which the relevant employee was employed by them?" That in the judgment of this Tribunal is a classic question of fact. It involves certain elements which the Tribunal will have to take into account, but in the end it is a matter for a decision as it were "in the round". The elements that we have in mind are first and foremost to identify "the business"; and second, to look at the matter to decide whether there has been a cessation, that is, a discontinuance, bearing in mind that a cessation may be permanent or it may be temporary, see Sub-Section (3). The whole matter is essentially what can be described as a jury issue to be decided upon the facts. Once one establishes that as the appropriate task for the Tribunal and then turns back to the contents of paragraphs 9 and 10, it is apparent that they have just made such a decision, setting out quite clearly and totally appropriately, the factors which have weighed with them in arriving at that conclusion. There were here, plainly, two outstanding problems for them to resolve; the first being as to what was "the business", which was an issue was foreshadowed by the letter itself, in that it distinguished the "Star Berni Restaurant" from "the Company". It became no less of an issue when the Appellants reasonably maintained, as they were entitled to do before the Tribunal, that here they were contending for a temporary cessation. That then immediately indicated that "the business" as contended for by the Appellants, was something different from the Star Berni Restaurant and something different from the Appellants themselves. Whether that contention was right or wrong, requires a perfectly normal jury decision to be made by the Tribunal on the facts and we can see no reason to suggest that particularly in paragraph 9 they did not do just that. What they did was to identify the middle range restaurant as "the business", which restaurant was continuing and therefore not "ceasing". Turning from "the business" to "ceasing", here is the second problem to be resolved: a matter for analysis on the facts as to whether the refurbishment could amount to cessation in all the prevailing circumstances. In taking this view about the issues as they presented to the Industrial Tribunal, this Tribunal has been assisted by the parallel considerations that were adumbrated by the Divisional Court in Hunter v Smith [1968] 1WLR 1865 in which the essentially factual nature of the issues was made abundantly plain in the judgments of that Court. Again, we are in no way deflected from this view and indeed encouraged in it by the decision in this Tribunal of Lewis v A Jones and Sons plc EAT/776/92 unreported and decided on 7 June 1994, which decision formed entirely on the basis that here was an issue of fact to be decided upon the full facts. In that case, the full facts led to a decision that there was a cessation of the business, but those facts were materially different from those that were found by this Industrial Tribunal. Thus, it is that this Tribunal finds itself quite unable to fault the finding of the Industrial Tribunal that they were not satisfied that there was the redundancy contended for in each instance by reference to Section 81(2)(a), so that, going back to Section 57(1) the dismissal was unfair. Another issue, however, was adumbrated before the Industrial Tribunal and has been argued before us. That issue arises in this way. Had the Industrial Tribunal had been able to find that there was a redundancy, then it would have had to consider the issue raised in such circumstances by Section 57(3). This reads as follows:
"... (3) Where the employer has fulfilled the requirements of subsection (1), then,..... the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether [in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case.]..."
The Industrial Tribunal, on the occasions on which it had to deal with these applications considered ex abundanti cautela the provisions of Section 57(3), that is, in the event that it was wrong in its finding with respect to redundancy. Having reviewed the factors that it seemed to be relevant, the Tribunal reached the view that the employers had failed to satisfy the Tribunal that, in relying on redundancy, they were acting reasonably in treating it as a basis for dismissal. Mr Bowers, again by careful analysis of the Reasons, has mounted an attack upon that finding, contending that it is imperilled by the failure of the Tribunal properly to direct itself as to the relevant factors, that is, as to the Law. For this Tribunal, the guidance that we have found helpful has come from the well known authority Williams v Compair Maxam [1982] IRLR 83, at page 87, in which this Tribunal set out the principles that should guide a Tribunal in dealing with this matter, which principles it numbered 1 to 5. For this Tribunal, the matter really is one that could be dealt with very shortly indeed. The reliance by these employers upon redundancies as a justification for dismissal, is encapsulated by the letter of 27 September, already set out in this Judgment. To this Tribunal, no reasonable Industrial Tribunal could find fair dismissal on the grounds of redundancy as achieved by that letter. It is manifest looking at that letter that it is positively misleading and it almost engineers a situation that is unreasonable in its treatment of the employees and thus for this Tribunal, the issue is capable of quick and easy resolution.
True, the Industrial Tribunal below dealt with the matter more systematically. It did so in paragraphs 12, 13, 14 and again in 16, raising various considerations. Plainly, by going into the matter in more depth and at greater length, it risked taking into account matters which by reference to authority may arguably have been immaterial, but for this Tribunal, the exercise of going through each of these matters seriatim and considering them in turn, is not one that is productive of any just result. The essence of this matter is that the position of the employers under Sub-Section (3) was virtually unarguable and all that one sees in the paragraphs that are under attack are various ways in which the Tribunal below sought in its own way to demonstrate why their position was untenable and what further acts they could and should have done. Whether it was open to the Tribunal to use the word "should" may be open to comment; that is Mr Bowers' point, but for our purposes, we see absolutely no basis to undermine their further finding, given that in any event it is unnecessary to do so having regard to our own view of the primary issue. We can do no other than dismiss so much of this Appeal as relates to liability.
We now come to the further submissions made by Mr Bowers on behalf of the Appellants, which submissions are based by way of premise upon the findings already made by this Tribunal with respect to liability. He invites us to remit to the Industrial Tribunal for reconsideration the assessments of compensation relating to all four of the individuals concerned on three grounds. He also invites us to remit one such calculation of compensation on a further ground, that is, the calculation with respect to Miss Barrington.
We can deal with the invitation very quickly; there simply is nothing in the point at all. It reflects the fact that, having lost her employment in Cheltenham and being unable find any further employment, she returned to her home, which is apparently in Newark, and thereby gave up the flat that she was renting in Cheltenham. It suggested that the saving to her of that rent is a figure that should be down to the credit of Whitbreads. One has only to say that in plain terms to realise that this is absolute nonsense. If there is any credit, it is to be set against the potential that she had for claiming the rent from Whitbreads as being a loss following from the dismissal. In fairness to Mr Bowers, the point was not pressed with vigour.
We then turn to the points relating to all four and as to these, really only two are pressed with vigour today. The first is what is being described as the Polkey v A E Dayton Services Limited point. Mr Bowers centres his submissions upon a passage in the decision of this Tribunal, reported as Wolseley Centres Ltd v. Simmons [1994] ICR 503 at page 508, and it was stated:
"... the tribunal must ask whether if the employer had followed the proper procedures and acted fairly the employee would not have been dismissed..."
In may cases, the answer will be uncertain, in which situation the Tribunal must make a percentage assessment of the likelihood of the employee being retained, which must then be reflected in the compensatory award. As to this, the problem for this Tribunal is to ascertain what in the particular circumstances in this case could conceivably be identified as "the proper procedures". We would have no difficulty in following this submission, had we and the Tribunal below been able to find that there was a redundancy, but had then found that proper procedures had not been followed so that it was unreasonable to rely upon that redundancy. Then there would have been issue which could and should have been examined by the Tribunal to make an appropriate assessment of compensation pursuant to Section 74. In the event, however, there are not any "proper procedures" that have been identified and despite pressure, Mr Bowers understandably, is not able to identify any. The position here is that we have employees who were in regular employment and who were dismissed quite wrongly, whereas if they had not been dismissed, they would have remained in the same employment and from that point onwards, the approach to the compensation seems in the Judgment of this Tribunal to be beyond any particular criticism.
One then, however, comes to his further point which has caused this Tribunal greater concern. It is apparent that, when calculating the compensation due to each of the applicants, the approach was as follows as picked up in the passage dealing with Mrs Flattery:
"...She received 6 weeks pay in lieu of notice and therefore we take her loss of earnings from 13 November 1993 to date, that is 10 weeks..."
Says Mr Bowers, the computation should have been from 2 October 1993, that is, the date on which she was dismissed; and against that computation, itself based on net income, the gross 6 weeks pay should have been set off. There then, he points out, is an apparent resultant overpayment to Mrs Flattery. As to whether he is right in principle in his submission, this Tribunal is provisionally divided; we say provisionally because we have not had the opportunity to have a full argument about it, examining such authority as there is, having regard to the time of day, yet further we are conscious that we may not have the full facts found by the Tribunal. That said, if it is any comfort to Mr Bowers, two members of the Tribunal are prepared to envisage that he may be right as a matter of principle; the third member disagrees.
We are content to put the matter in this way because the only option that would be open to us to resolve this matter would be first to have the matter remitted to the Industrial Tribunal. As to that, this Tribunal is totally unwilling to contemplate taking that course in the particular circumstances of this case, that is in a case in which the amounts of money are modest. It would be totally unfair to the applicants to have this minimal issue resolved by way of a further Hearing after yet further delay. In that regard, we take comfort from a similar approach adopted by the Tribunal in Fougere v. Phoenix Motor Co. Ltd. [1977] 1 AER, pp 237.
In summary, therefore, our position on the fourth matter is this; we are as yet unable to say that there was an error of law; although there may have been; but in any event we are totally unprepared to have further delay in this matter in sorting this issue out both factually and legally, having regard to the very modest amounts that are involved and the consequent impact upon the time and financial resources of these applicants. It seems to this Tribunal and here we speak in unity that this is a point to be raised next time that this matter ever comes before an Industrial Tribunal, if (which it is difficult to contemplate) this problem arises again. If this matter is again before a Tribunal, then there can be the proper investigation of facts and the proper submissions can be made in reliance upon authority and the matter can be resolved, and it may well be in favour of the Appellants. The advantage we see that Mr Bowers has, is that we are making quite plain that the calculation adopted in this particular case, cannot possibly constitute any authority for the future.