United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 341_93_2305

Appeal No. EAT/341/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 23 May 1994

Judgment delivered on 1 July 1994

Before

THE HONOURABLE MR JUSTICE KNOX

MS S R CORBY

MR A D SCOTT

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BOULTON & PAUL LTD          APPELLANTS

MRS V ARNOLD          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR J BOWERS

(of Counsel)

Messrs Oxley & Coward

Solicitors

285-289 Glossop Road

Sheffield S10 2HB

For the Respondent MR A HOGARTH

(of Counsel)

Messrs O H Parsons

& Partners

Solicitors

Sovereign House

212-224 Shaftesbury Avenue

London WC2H 8PR


 


MR JUSTICE KNOX: The appeal before us is brought by the employer Boulton & Paul Ltd ("the Company") from a decision of the Industrial Tribunal sitting at Bury St Edmunds on the 8th and 9th of February 1993, sent to the parties on the 19th March 1993, whereby it decided that the respondent before us, Mrs V.C. Arnold, was unfairly dismissed for redundancy.

The Company's appeal was based on two submissions. The first was that an offer made to Mrs Arnold to retain her and dismiss in her place another employee, if she so elected, had the effect of preventing a finding of unfair dismissal because she had the opportunity of remaining in the Company's employment before the effective date of termination of that employment. The second submission was that the Industrial Tribunal, in proceeding, after deciding that there had been an unfair dismissal, to award compensation without any deduction in respect of the possibility that Mrs Arnold would in any event have been made redundant in the near future made an error of law in failing to address that possibility notwithstanding that the point was not specifically raised before the Industrial Tribunal at the hearing on behalf of the Company.

The essential facts were as follows. The Company had a substantial business which included a factory at Maldon engaged in making windows at which Mrs Arnold had been employed since either May or June 1987. The Industrial Tribunal decision mentions both dates but nothing turns on this. A redundancy situation arose early in 1992 and the Company on the 6th January 1992 gave notice to the recognised union U.C.A.T.T. that there was to be a redundancy programme under which 54 jobs would go at the Maldon factory, 10 from staff and 44 from the factory floor. This notification was in accordance with an agreement called in the proceedings "the Manpower Agreement" which the Company had made in August 1991 with the Union and which among other things provided an agreed procedure to be followed in case of redundancies. The Manpower Agreement was in evidence before the Industrial Tribunal and a copy of the relevant provisions was before us.

Clause 5.6 of the Manpower Agreement read as follows

"If it becomes necessary to declare redundancies, the Company, as soon as is practicable, will enter into consultation with the employees concerned and their Union representatives on the method of implementation of the redundancy programme bearing in mind the human relations aspect and the Company's requirements to maintain operational efficiency, a balanced labour force and the viability of the organisation"

Clause 5.7 so far as material read

"The Company will:

5.7.1 establish, in consultation with employees and their representatives, the order of discharge. Due consideration will be given at the first stage to proposals for voluntary redundancy ........In the event that the first stage does not result in the required reduction, the final selection stage, having regard to the need to retain skills and other abilities necessary to maintain a viable and operationally efficient workforce, will be the selection of employees by use of an assessment method applied against relevant criteria. The criteria will be performance (regular occasions of below acceptable quality and/or quantity of work), attendance (regular unapproved short-term absences and/or lateness), discipline (record of formal disciplinary actions) and length of continuous service with the Company: each of these criteria will rank equally.

Mrs Arnold was a shop steward and was therefore involved in the meetings between the Company and the Union regarding the redundancy situation.

It is not in dispute that there was what is commonly called a redundancy situation. The Company duly sought to obtain volunteers for redundancy in accordance with the Manpower Agreement quoted above but that only yielded seven volunteers for redundancy.

On 20 January 1992 there was a formal meeting between Company representatives and Union representatives at which Mrs Arnold, as one of the latter, was present. She and her colleagues were provided with a blank proforma chart upon which the results of the application of the various criteria could be filled in. At that meeting there was lengthy deliberation and ultimately agreement upon how the criteria with regard to length of service would be applied. The other criteria and their detailed application were not the subject of detailed debate or agreement. So far as lateness and absence were concerned the Industrial Tribunal found that all Mrs Arnold understood was that in the Manpower Agreement a distinction had been made between unauthorised absences and authorised absences.

When the criteria came to be applied by the Company however, the Company took each and every day of absence as an occasion counting towards the deduction of one of the ten points available in respect of each of the criteria. Mrs Arnold's absence record showed two occasions of days of absence, one of one day on the 17 June 1991 and one of three days on and after 11 December 1991. In addition her record showed her to have been absent on three occasions to visit a doctor when she was absent for half an hour, one hour and one and a half hours respectively, two one hour absences to see an optician and a dentist and a one and a half hour absence to go to hospital shortly after the three day absence sick. All the absences were approved but all of them including each day of the three day absence sick were treated as occasions on the scale operated by the Company for assessing absence. The result was that Mrs Arnold only scored three out of a possible ten under the criterion attendance although there was no unapproved short term absence or lateness in her record. The manner in which the Company operated the attendance record as against Mrs Arnold only came out at the Industrial Tribunal hearing and was not previously revealed to Mrs Arnold or her advisers.

The Industrial Tribunal found that this was a radical departure from the Manpower Agreement, a conclusion which in our view was amply justified.

The Industrial Tribunal having quoted the judgement of Browne-Wilkinson J. in Williams v. Compair Maxam Ltd. [1982] IRLR 83 found that there were not taken by the employer the necessary steps to ensure that the Union was in a position to agree on the criteria and that the Union did not agree the criteria, by which we understand the Industrial Tribunal to mean that the Union did not agree the mode of application of that particular criterion of attendance, given that the Manpower Agreement itself was clearly agreed to. It was on that basis that the Industrial Tribunal held that there was a breakdown in the programme of consultation by the employer and went on as follows in para 11 of its decision

"It is for that principle (sic) reason - having regard to the size and administrative resource of the respondent that we find that this is a case where, per se at this stage, the selection criteria is (sic) flawed for that reason, as there was a recognised union."

On the 6th February 1992, after Mrs Arnold had on 28 January 1992 initiated an appeal against her selection for redundancy and after she received a dismissal letter but before that letter took effect, the Company offered to retain her as an employee if she wished but on terms that another employee, unspecified and therefore presumably to be selected by the Company, would be dismissed in her place if she elected to be retained and not made redundant. She was told it would be necessary for her to inform the Company of her decision the next day. She declined the offer. The Industrial Tribunal said about that

"As a woman of integrity..........she quite rightly refused that offer."

She was sent a letter shortly thereafter by the Company's Personnel Director in which he said

"I appreciate that the decision you had to make was a difficult one and I would have preferred to avoid putting you in that position......"

Mr Bowers for the Company submitted that that offer of retention in employment prevented the Industrial Tribunal from finding that Mrs Arnold was unfairly dismissed because she had the opportunity given to her of staying employed. We are quite unable to accept that submission. In our view the Company was acting unfairly in putting the onus on Mrs Arnold of deciding whether she or another employee was to be selected for dismissal for redundancy. That was effectively an abrogation of the employer's responsibility of managing its business and we can see no proper basis for criticising the Industrial Tribunal's finding that she was quite right to refuse the offer thus made.

The second submission on behalf of the Company was that once the Industrial Tribunal had found an unfair dismissal on the basis of lack of consultation it was bound as a matter of law to investigate and decide whether the holding of such consultation would have made any difference to the Company's decision. That the Industrial Tribunal was not asked to make any such specific investigation and decision was accepted and it was also common ground that no such investigation was conducted by it so that it awarded a full compensatory award. We were referred to the speech of Lord Bridge in Polkey v. A.E. Dayton Services [1988] ICR 142 at 162 where he said

"Employers contesting a claim of unfair dismissal will commonly advance as their reason for dismissal one of the reasons specifically recognised as valid by section 57(2)(a), (b) and (c) of the Employment Protection (Consolidation) Act 1978. These, put shortly, are: (a) that the employee could not do his job properly; (b) that he had been guilty of misconduct; (c) that he was redundant. But an employer having prima facie grounds to dismiss for one of these reasons will in the great majority of cases not act reasonably in treating the reason as a sufficient reason for dismissal unless and until he has taken the steps, conveniently classified in most of the authorities as "procedural" which are necessary in the circumstances of the case to justify that course of action. Thus, in the case of incapacity, the employer will normally not act reasonably unless he gives the employee fair warning and an opportunity to mend his ways and show that he can do the job; in the case of misconduct, the employer will normally not act reasonably unless he investigates the complaint of misconduct fully and fairly and hears whatever the employee wishes to say in his defence or in explanation or in mitigation; in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation."

It was said that Lord Bridge had expressly mentioned consultation with employees or their representatives and adopting a fair basis on which to select for redundancy as examples of procedural steps. We of course accept this but it is to be observed that all the steps which Lord Bridge enumerates in the various different contexts of capacity, misconduct and redundancy are acts which an employer ought to take and the omission of which would constitute a procedural failure.

We also accept that the principal reason given by the Industrial Tribunal for finding an unfair dismissal was failure to consult or as they put it in para 13 of their decision failure to fully inform the Union. We are however also of the view that the Industrial Tribunal specifically found that there were two other features which constituted unfairness. First, the radical departure from the agreed procedure under the Manpower Agreement mentioned above and secondly, the treating of a half hour authorised absence to see a doctor, or other health adviser as an occasion of absence for the purpose of assessment for redundancy which the industrial members of this tribunal regard as intrinsically unfair quite apart from the fact that it constituted a radical departure from the agreed procedure. This was therefore a case where on the findings of the Industrial Tribunal not only was there a failure by the Company to do that which they ought to have done as specified in the passage quoted above from the speech of Lord Bridge but the Company also did that which they ought not to have done in adopting intrinsically unfair and different criteria from those agreed in the Manpower Agreement.

Mr Bowers also relied upon the decision of this Tribunal in Dunlop Ltd. v. Farrell [1993] I.C.R. 885 where Judge Hague said at p.892

"Since the decision in Polkey v. A.E. Dayton Services Ltd. it is, we think, clear from that decision, and also from later authorities including Red Bank Manufacturing Co.Ltd. v. Meadows [1992] ICR 204; Rao v. Civil Aviation Authority [1992] I.C.R. 503 and KPG Computer Support Services v. Abayomi (unreported), 21 December 1992, 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) of the Act of 1978 and in accordance with the passage from the judgment of Browne-Wilkinson J. in Sillifant's case [1983] I.R.L.R. 91, 96, 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 be reflected in the award of any compensation.

That decision and the ones cited therein are concerned with failure to consult and Mr Bowers directed his submission regarding what he accepted was the exceptional case where an Industrial Tribunal is under a positive duty of its own motion to consider and evaluate the possibility of a reduction in the compensatory award on the ground that a proper dismissal would have occurred in the near future in any event. The general rule is clear that an Industrial Tribunal is not under a duty to conduct a case and advance arguments on behalf of any party before it. Assuming for present purposes, and we must not be taken to be deciding whether or not it is a correct view, that there is such a positive obligation on an Industrial Tribunal where there is a dismissal which is unfair because of a failure to perform procedural acts of the sort enumerated by Lord Bridge, we do not consider that there is any such obligation where there is a dismissal which is unfair because the employer has taken positive steps which he, she or it ought not to have taken. It is one thing to take a view on what would have happened if procedural steps which should have been taken but were not taken, had been taken. It is quite another to take a view, without positive evidence being adduced on the subject, on the question what would have happened if a step, which should not have been taken but was taken, had not been taken. This latter opens up the question what other steps would in those circumstances have been taken and that needs evidence. Specifically, if a fair criterion regarding attendance had been adopted in place of the unfair criterion contrary to the terms of the Manpower Agreement, which was adopted, it is quite uncertain in the absence of evidence how other potential candidates for redundancy would have fared, to assess whether or when Mrs Arnold would have lost her job. There was no such evidence and on that basis we do not consider that the Industrial Tribunal committed an error of law in not reducing the compensatory award in favour of Mrs Arnold. Mr Bowers very properly accepted that the evidential burden of proof in such an issue lay on the employer.

We were referred to Steel Stockholders (Birmingham) Ltd. v. Kirkwood [1993] I,R.L.R.514 where the Employment Appeal Tribunal sitting in Edinburgh dismissed an appeal against a decision of an Industrial Tribunal that the employers in selecting for redundancy had created an artificially narrow pool from which to select for redundancy. Lord Coulsfield at p.517 said of the passage quoted above from the speech by Lord Bridge in Polkey v. Dayton

"It is true that Lord Bridge included the adoption of a fair basis of selection among the steps he described as procedural. We do not, however, think that by doing so he can have intended that matters such as the choice of a pool in the adoption of criteria for selection should be treated as procedural."

We would respectfully doubt whether it is for the Employment Appeal Tribunal to adopt a view that this very well known and frequently quoted passage in a leading case in the House of Lords does not in effect mean what it says. We would however point out that it is one thing to categorise the adoption of a procedure as procedural and quite another to categorise a departure from an agreed procedure in favour of an unfair procedure as a procedural step. Moreover we would gratefully adopt in that context the closing passage in Lord Coulsfield's judgement in the Steel Stockholders case where he said

"We would only add that, while we accept that it is the duty of an Industrial Tribunal to apply the Polkey principle as a rule of law binding upon them, as was held in Hepworth Refractories Ltd, supra, it is not their duty to embark upon an independent investigation of the facts and circumstances in order to see whether they can identify some other criterion of selection upon which the dismissal of the applicant might have been justified when, as was the position, we understand, in the present case, no attempt was made to ask them to do so, or to suggest what that criterion might have been."

For the above reasons this appeal will be dismissed.