United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 493_93_0111

Appeal No. EAT/493/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 1st November 1994

Before

HIS HONOUR JUDGE J BULL QC

MISS J W COLLERSON

MR P DAWSON OBE

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MR P DORAN          APPELLANT

KEY PRINT TRADE FINISHERS          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR T COWEN

Free Representation Unit

49-51 Bedford Row

LONDON WC1R 4LR

For the Respondents MR S REYNOLDS

(of Counsel)

Messrs Hill Bailey

Solicitors

Wells House

15/17 Elmfield Road

Bromley

Kent BR1 1QP


 


HIS HONOUR JUDGE BULL QC This is the appeal of Peter Doran against the decision of an Industrial Tribunal sitting at London (South) on 3rd September and 29th October 1992 when by a majority it found that he was not unfairly dismissed. Full Reasons were sent to the parties on 31st March 1993.

The facts may be summarised shortly. The Respondent's business is the assembly of magazines by folding, guillotining, collating, stitching and trimming the printed pages with which they are supplied. The Appellant was employed as a guillotine operator and later also as a van driver, from 29th April 1985 until he was dismissed on grounds of redundancy on 21st October 1991. The business was small in size: before November 1991 it employed 14 persons. Like many others it was severely affected by the recession, and despite earlier measures by the autumn of 1991, having taken advice from accountants, the partners, who themselves worked in the business, were forced to the conclusion that further cut-backs were essential and redundancies inevitable. In the guillotine section there were but two men: the Appellant who had worked for the business for 6¹/₂ years, and a Mr Hall who had been with them for 5 months. On 21st October 1992, the Appellant started his holiday and was telephoned by one of the partners to announce that he would be made redundant.

There are two questions of law for us to decide. The first is whether the Industrial Tribunal reached a perverse conclusion on the facts which it had found in deciding that the employee was offered the opportunity of consultation on 21st October and refused it. The second question is whether the Industrial Tribunal erred in law by misdirecting itself in finding that consultation beyond that which had taken place at meetings in July, August and October would in the circumstances have been futile.

In seeking to persuade us that the Industrial Tribunal reached a decision which must be characterised in law as perverse, Mr Cowan for the Appellant faces a formidable hurdle. We remind ourselves of the guidance given by Lord Donaldson MR in the well known case of Piggott Bros & Co Ltd v. Jackson [1991] IRLR 309 at 312:

"... It does not matter whether, with whatever degree of certainty, the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal was a permissible option. To answer that question in the negative in the context of employment law, the EAT will almost always have to be able to identify a finding of fact which was unsupported by any evidence or a clear self-misdirection in law by the Industrial Tribunal. If it cannot do this, it should re-examine with the greatest care its preliminary conclusion that the decision under appeal was not a permissible option and has to be characterised as "perverse"."

Mr Cowan's reasoning is based upon the following findings in the Reasons of the Industrial Tribunal. Paragraph 14 reads:

"Mr Doran started his holiday on 21 October. In the morning of that day, Mr L S Higgins telephoned him, told him he was being made redundant and asked if he wanted to come and talk about it. Mr Doran refused and Mr Higgins said he would to Mr Doran's home which he did. The Applicant then asked Mr Higgins why he had been selected rather than Mr Hall when Mr Higgins said that it was a matter of management discretion without explaining further and handed him a letter of dismissal. ... He agreed that he did not then tell the Applicant that his selection had been based on inadequate skills ... and said that consultation could have made no difference."

An analysis of those findings shows that the refusal of the Appellant related to the place at which any discussion might take place, for after the telephone conversation Mr Higgins went to the home of Mr Doran. In response to the question by the Appellant asking for the reason why he had been selected for redundancy rather than Mr Hall, the response was "that it was a matter of management discretion without explaining further". We are thus forced to the conclusion that the passage in paragraph 19, that the Appellant was offered the opportunity of consultation on 21st October and refused it is unsupported by any evidence and thus Mr Cowan's argument on this first ground succeeds.

Mr Cowan's second submission is that the employer's failure to consult rendered the dismissal unfair. The majority of the Tribunal, whilst characterising the Respondent's complete failure to inform the Appellant that they were dissatisfied with his performance as an "undoubted blunder" found that it did not. The reasoning of the Tribunal is set out in paragraphs 18 and 19:

"18 ...The majority of us find that in selecting the Applicant for redundancy, the Respondents relied on the criterion of choosing a person whom the business could most easily dispense with, given their parlous financial position and the paramount need of survival in a hostile climate. This is a subjective criterion which the courts disfavour, but it is hard to consider a rational alternative available to a small, hard-pressed business, particularly when the strengths and weaknesses of the staff are known to employers who work on the shop floor with them. That the Respondents did not let Mr Doran know that they were dissatisfied with his performance so that he was denied the opportunity of improvement was an undoubted blunder, but it is easy to understand how this could come about in a small, friendly workforce, where under-performance would have been, as it was, containable during normal times. Accordingly, the majority of us find that in the particular circumstances of this case, Mr Doran's selection for redundancy was fair and that he was fairly dismissed for that reason.

19 Mr Reynolds conceded that consultation was not adequate, although Mr Doran was offered the opportunity of consultation on 21 October and refused it. The majority of us adopt the view of Lord Bridge in Polkey v. A E Dayton [1988 ICR 142 that consultation beyond that which had taken place at the meetings in July, August and October would in the circumstances have been futile and that no suitable alternative employment was available."

The reference by the Tribunal to the well known case of Polkey v. Dayton Services Ltd [1988] AC 344 refers to the speech of Lord Bridge at 364:

"... 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 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. 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 were referred to the case of De Grasse v. Stockwell Tools Ltd [1992] IRLR 269 where Mr Justice Tucker encapsulated into his judgment the judgment of Mr Justice Wood MC in Spink v. Express Foods Group Ltd [1990] IRLR 320:

"... An Industrial Tribunal can find that a dismissal for misconduct is fair even though the employer has been guilty of procedural unfairness provided:

1. It does not mislead itself by asking the irrelevant question whether in the view of the Industrial Tribunal it would have made no difference to the outcome if the proper procedural steps had been taken - Polkey per Lord Bridge at p.508, para 28.

2. It asks itself the question whether the employer himself at the time of the dismissal in the exceptional circumstances of the case could reasonably take the view that proper procedural steps would have been futile and could have been dispensed with, to which question the Tribunal must answer "Yes" - ... .

3. It does not confuse an employer's unreasonable conduct in reaching the decision to dismiss, and the question of injustice to the employee, so as to consider in relation to questions of fairness matters relevant to the issues of remedy (ie the practical effect of procedural unfairness of the employee) - Polkey per Lord Bridge at p.508, para 30."

Mr Justice Tucker in the case of De Grasse v. Stockwell Tools Ltd held that while the size of the undertaking may affect the nature of formality of the consultation process, it could not excuse the lack of any consultation at all. However informal any such consultation might be, it should ordinarily take place. Indeed, in the case of Freud v. Bentalls Ltd [1982] IRLR 443, Mr Justice Browne-Wilkinson, as he then was said -

"Turning now to considerations of industrial relations practice, consultation (as opposed to unilateral action by the employer) is one of the foundation stones of modern industrial relations practice. The statutory Code of Practice emphasises its importance in every aspect of industrial relations. In the particular sphere of redundancy, good industrial relations practice in the ordinary case requires consultation with the redundant employee so that the employer may find out whether the needs of the business can be met in some way other than by dismissal and, if not, what other steps the employer can take to ameliorate the blow to the employee. ..."

The majority do not make a finding that the employer himself made an assessment of the position at the time of dismissal, and concluded that consultation would have been futile. It is difficult to infer from the decision of the majority what reasons there might have been for a conclusion by the Tribunal that the employer himself, at the time of dismissal, acted reasonably in taking the view which he did. The view expressed in paragraph 19 that "the majority of us adopt the view ... that consultation beyond that which had taken place in the meetings in July, August and October would in the circumstances have been futile ..." permit the argument that the majority can only have come to the conclusion that consultation would have made no difference to the outcome which of course is the one question which the Industrial Tribunal is not permitted to ask in applying the test of reasonableness posed by S.57(3). The phrase "would in the circumstances" does not accord with the principles formulated by the Lord Chancellor and Lord Bridge as Ralph Gibson LJ said in Hoover v. British Railways Board [1988] IRLR 517 at 528

(Lord Bridge) "was ... emphasising one aspect of the principle stated by Lord Mackay, 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."

Mr Reynolds drew our attention to the words of Balcombe LJ in Duffy v. Yeomans & Partners Ltd as reported in The Times for 12th July 1994:

"In my judgment, there is no warrant for the proposition that there must be a deliberate decision by the employers that consultation would be useless, with the corollary that, in the absence of evidence that such a decision was made, a finding by an industrial tribunal that a dismissal for redundancy was reasonable is necessarily wrong in law."

We gave very careful consideration to this decision in the context of the facts of this matter. However, upon the facts of the instant case it seems to us that it cannot sensibly be argued that consultation would have been futile. Had he been consulted, the Appellant might well have said "You have made no complaint to me in 6¹/₂ years over the standard of my work, but now that you have pointed it out to me I am able to remedy all the defects. In any event I have been with you for 6¹/₂ years as opposed to the 5 months of Mr Hall."

We are obliged to uphold both of the submissions made by Mr Cowan and to say that the decision of the Industrial Tribunal was wrong in law and that this appeal will be allowed. We therefore order that the order of the Industrial Tribunal dismissing the claim is set aside and we substitute for it a declaration that Mr Doran was unfairly selected for redundancy. We remit the claim to a differently constituted Industrial Tribunal to consider the assessment of compensation due.

There will be legal aid taxation of the Appellant's costs.