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Cite as: [1994] UKEAT 515_92_706, [1994] UKEAT 515_92_0706

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BAILII case number: [1994] UKEAT 515_92_0706

Appeal No. EAT/515/92

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 7 June 1994

Before

HIS HONOUR JUDGE J HULL QC

MRS M L BOYLE

MISS C HOLROYD

(1) MR S BOAL

(2) MR J LANGLEY APPELANTS

GULLICK DOBSON LTD RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellants Robin Thompson & Partners

Bainbridge House

Bainbridge Street

London WC1A 1HT

For the Respondents Engineering Employers'

Federation

Broadway House

Tothill Street

London SW1H 9NQ

JUDGE HULL QC: This is an appeal to us by Mr Boal and Mr Langley from the decision of the Industrial Tribunal sitting at Manchester on 23 March and 18 May 1992 under the chairmanship of Mr Simpson with his two industrial members.

Mr Boal and Mr Langley were both long-serving employees of Gullick Dobson, the Respondents before the Industrial Tribunal. Mr Boal is a gentleman who is now aged 44. He was first employed by Gullick Dobson in 1978. Mr Langley is a gentleman who is now aged 59 and he was first employed by Gullick Dobson as long ago as 1965. They were employed as service engineers. We understand that the primary business of Gullick Dobson is the manufacture and maintenance of machinery in coal-mines. Accordingly, with the contraction of the coal-mining industry in this country, of course, their part of the industry, the manufacture of these machines and their maintenance, also diminished. These two gentlemen were not employed at the headquarters at Wigan but they, each in their different area, went out with other skilled employees to service the machinery and keep it running and carry out other tasks, we understand, in connection with the machinery.

Over recent years, the decline in the industry and with it the decline in the business of Gullick Dobson has been quite dramatic and numbers had been reduced by something of the order of half at the time that I am speaking of. I should say that Gullick Dobson are not confined in any way to work in this country. Their engineers travelled abroad from time to time and their business was evidently carried on in or led to exports to foreign countries, I think India was mentioned. That was the situation.

There came a time at the end of 1990 or the beginning of 1991 when a decision had to be taken to part with no fewer than 98 employees - a substantial number. The usual notice was given and it then, of course, became necessary to hold consultations and to decide how the redundancies should take place. Of course, consultations would include deciding whether any redundancies could be avoided. I do not want to go into all the details, although we were taken through a good deal of the detail because, in fact, this appeal is now narrowed down to what is really a very small but important point.

In January there were interviews with various of those proposed to be made redundant. They had been chosen by a process which is fairly familiar. There was a list of criteria, such as their productivity in terms of work, the skill with which they did their work, the quality of the work, their attendance and various matters of that sort, punctuality, sickness, absence and so forth. These matters were assessed. The way in which it was done was that the manager responsible directly for each man would mark his character from the lowest, which was "fair", up to the highest - there were four categories - up to "excellent". His work would then be checked by two other managers to try to ensure that it was done fairly and propery and then marks would be allotted to these various qualities. That was done at director level. The managers who had classified the individuals who were candidates for redundancy, if I can call them that, did not know what weighting was to be given in terms of marks but the director did and it was accepted, and is still accepted, that the exercise of marking was carried out bona fide in the interests of the company. Needless to say, the company, in the middle of this disaster or near disaster, as these redundancies must have seemed to many people, was anxious to preserve its labour force as well as it could and, of course, if possible, improve the quality of its labour force, a perfectly legitimate exercise when redundancy has to be considered and, therefore, to part with the members of the workforce who were thought to be weakest.

Of course, all this comes from the findings of the Tribunal, which are not challenged. The process of selection was that the pool, in each case, or the group from whom those who were to be made redundant were selected, was based on the operational teams for each area, the outside activities were divided into areas. Each area was treated as a separate pool and within that pool each person was assessed in the way that I have mentioned, according to various criteria and after those had been checked marks were allotted and then there were interviews with those who had the lowest marks and, therefore, selected on the face of it for redundancy and details of those interviews were given to the Industrial Tribunal in due course.

These two employees were each seen by one or more managers and they were each told that if they wished to raise any questions they could do so or if they wished to say anything about the matter they could do so.

One of them, at least, and possibly both, raised the question of other employees who were not being made redundant, potential competitors for redundancy, so to speak. Certainly one of them was told expressly that the position of these potential candidates would be looked at, at least two of them were named - they were not given details of them. They were not given details of the marking, which had been done or the assessments which had been done in respect of those other employees and it is from that that the point of this appeal arises.

In due course, both these appellants were confirmed as men who were to be made redundant. One of them elected to appeal and on his appeal he again canvassed these matters, but that did not affect the result. So they both were dismissed for redundancy on 1 February 1991 and on terms which are not the subject of this appeal at all.

They applied to the Industrial Tribunal complaining that they had been unfairly dismissed. That was on 12 April and I have given the dates already. The next year the Industrial Tribunal embarked on the inquiry. It appears to have been a thorough hearing. We have seen the notes of evidence. The employers called three witnesses, managers who gave evidence about a great many of these matters and referred to documents. There is a very substantial bundle of documents, supplemented by another bundle of documents, and we have been through most, if not all, of those and certainly we have privately read all that has been put in front of us.

The Industrial Tribunal found that the complaints of unfair dismissal which were made were not to be upheld. They considered the criteria which are laid down in the cases. I do not need to go through the celebrated authorities - they have been cited to us again - in which this Tribunal and the Court of Appeal have endeavoured to give guidance to Industrial Tribunals and to employers about what is required when redundancies are in contemplation. Amongst the things that are required, of course, are a fair selection of those for redundancy, fair dealing with the employees, consultations with them. There must be fair criteria. They may be very simple, such as last-in first-out. They may be, as in this case, much more complex. They must be rational and they should, of course, be fairly applied as the employers see it. So it is a task for the employers, not for anybody else, in the first instance to proceed fairly and justly and, of course, with proper regard for their own interest as well as for that of their employees. All that is well known.

Having reached the initial decision, they must on the way consult the employees concerned to see whether there are matters which they have overlooked and whether the employee, in particular, can contribute anything by pointing out mistakes or misapprehensions or make suggestions about how it may be possible to move sideways into other jobs. It may be possible to avoid the redundancy in various ways. All this is, I am afraid, almost too commonplace and accepted to need stating.

Now here the complaint and the substance of this appeal can be put very shortly. Mr McMullen QC, who appeared for both the appellants, put it like this when the case was before us on 7 June and he was opening it. He said that the complaint is that in the consultation with Mr Langley and Mr Boal they were not furnished with essential detail. It was important that they should each know how many points or marks they have and how many their fellows have, to enable them to answer the question: Why me?

He said that although the Industrial Tribunal had, on the face of it, considered all such matters as selection, the pool for selection and the consultation process and had decided in favour of the employers on all these matters, this was a fatal flaw. The Industrial Tribunal should have held, indeed, was bound to hold, that consultation which omitted these details, if they were asked for, was inadequate consultation, unfair to the employees. For how could the employees challenge the correctness of the decision of the employers if they did not know about their rivals for redundancy, did not know their marks, did not have an opportunity to go through those rivals' names and say, "Well, here I should be preferred to ..." Then they should be able to refer not merely to those, of course, who were being made redundant, but to those who were possible candidates for redundancy, not merely correcting mistakes that the employers might have in mind concerning themselves but correcting all the mistakes, if they were able to, concerning other employees. The net result of this exercise, if it were gone into in this particular case, is that not only the pool of the 98 who had been selected for redundancy but many others might be affected and that the employers might, at the instance of one or other or both of these two applicants, say, "Yes, we now realise, having looked into all this, that marks have been wrongly allotted in the case of perhaps 40 cases. Some of these are going to escape from redundancy altogether and we now incorporate another 20 candidates" and so forth.

As we thought to ourselves about this proposition of Mr McMullen's, we put some questions to him and his answers are recorded by me, as follows. He said:

"If allegations are made by employees in this position about others, then those allegations must be investigated. I have spoken of the sort of allegations they might be. Thus, say, 150 out of 250 proposed redundant employees, suppose they each made allegations against some of the others, all of these would have to be investigated and the merit list would change continually throughout the process."

Then he gave illustrations of how that would work. Needless to say, any man who found himself made redundant as a result of this exercise would then have to have an opportunity himself to enquire and to make representations. With the sort of numbers which I have referred to, which after all are not unrealistic in terms of industrial experience, sometimes redundancies run in thousands rather than hundreds, one can envisage the exercise taking an enormously long and, indeed, indefinite time, because no sooner would some join the list for redundancy and others leave it, than fresh parties would become interested in this exercise and fresh errors would or might be discovered by further analysis.

It is said that this is a process which the employer was bound to engage in if he was to be described as fair. Further, it is said that when the Industrial Tribunal found that a process which omitted this was fair, that decision was self-evidently perverse. I put it at greater length and perhaps with less eloquence than Mr McMullen did but that is, putting it as shortly as I can, the proposition which was advanced to us on 7 June and which was supported today by Mr Segal, who has appeared in Mr McMullen's absence to continue the conduct of the case for the applicants.

Mr. Chronias, for the respondents, simply relies upon the grounds given by the Industrial Tribunal. He complains that the Industrial Tribunal does not deal expressly with these matters and put the case very shortly. He says if you look at paragraph 13 of their decision they conclude as follows:

"Having considered all the evidence, the Tribunal has concluded that the respondent did act fairly and reasonably. The respondent undertook a detailed exercise to determine the appropriate employees to be selected. The criteria applied, the method of marking and the weighting were all such as could have been adopted by a reasonable employer in the circumstances. The method and degree of consultation were again within the band of actions that could have been used by a reasonable employer. Taking into account all the circumstances and whilst recognising that in an ideal world the respondent could have improved on its procedures, the Tribunal has concluded that the selection of the applicants for redundancy was fair. Accordingly the applications are dismissed."

That, said Mr Segal today and Mr McMullen said much the same, is quite inadequate. They should have dealt with this matter. You can look at the papers and see that Mr Langley wanted to be told about rivals. They were entitled, says Dr Segal, to have this matter considered and, as I say, not only should the Tribunal have considered it but if they had considered it, only one verdict was possible, that was, that the employers had been unfair, so that the decision of the Tribunal was perverse.

We have considered this submission as carefully as we can. It is not supported directly by any authority whatever. Indeed, it is rather hard to see how authority for such a sweeping proposition of law could be found. The duty is upon the employer to act reasonably and in accordance with section 57(3). Over the years, in decisions which are now frequently 10, 15 or 20 years old and, therefore, have to be read in the light of changing industrial circumstances, eminent judges sitting in this Tribunal, in the Court of Appeal and the House of Lords, have laid down guidelines which are intended to assist employers and industrial tribunals and, of course, this Tribunal, in considering the question of fairness and reasonableness under section 57(3). As has also been said repeatedly, what the Tribunal have first and foremost to do, is to look at the wording of section 57 of the Act and then, of course, apply their commonsense and knowledge as an industrial jury and where they think it right to do so, seek guidance from decisions of superior courts, perhaps if only as a checklist and see whether, having considered it all in the round, they are of opinion that the employer has acted reasonably in treating the reason provided for dismissal as justifying dismissal.

When one goes through these cases and considers them, as we have, with the assistance of Counsel, one must remind oneself always that it is one question that has to be asked: is section 57(3) complied with? Or, to put it another way, has the employer acted reasonably? The guidelines may be very useful but, overwhelmingly, what is important is that the Industrial Tribunals should look fairly and squarely at the conduct of the employers as illuminated by the evidence given. In addition to the guidelines and, perhaps, much more important, they must ask themselves, "Was this manager sincere and honest in the way that he applied the marking? Was he guilty of favouritism? Do we think he has given his evidence honestly?" These questions, in most cases, will be far more important than the questions raised by the guidelines, although I am not for one moment suggesting that the guidelines should be overlooked.

Looking at it like that, this suggestion by Mr McMullen, to me at any rate advanced for the first time and, I think, for my colleagues, the first time, is that the consultation with the employee involves furnishing the employee with all the material, virtually, on which the employer has acted, so that the employee can say to the employer, "I think you have made a mistake here, I have been through this list, I have considered over the past week or so all 98 redundancies [or, of course, it might be far more]. I have prepared a schedule showing possible errors and I have prepared a list of men who I say, marking it as best I can, should be put above me in the list of redundancy". Is that something which could possibly be commended to an employer? Something which he should do? We all, however reluctantly, say it is conceivable that there might be circumstances and it would be for an Industrial Tribunal to say so, in which in some very limited class of case it would be thought desirable or even, perhaps, necessary, to take the employee into the confidence of the employer, to that extent. But to say that in general such an operation is necessary seems to us to be wholly misconceived. The duty upon the employer is to carry out this operation fairly himself. Not merely could he not carry it out fairly if this suggestion were seriously adopted, he could not carry it out at all. It would be, it appears to us, to abandon all commonsense and it would lead to an intolerably protracted and utterly impracticable process. When the matter, if it did, came before the Industrial Tribunal - we think it would make more applications than it would ever resolve - would the employer be allowed to say, "Well, I agree that the result of this exercise is a dog's breakfast but it was arrived at after many hands had made light work of it and over six months 98 employees have all contributed to this process. I cannot support it logically but then, after all, it was largely out of my hands. It was in the hands of the employees. They all had a say." It does seem, with great respect, impossible to say that where there is a substantial number of redundancies any employer could be expected to allow one after another to consider all the criteria and carry out a revision of the marking exercise.

Again, talking about what is practicable and sensible, this would involve, in most if not all cases, divulging to each employee many, many confidential matters and would be utterly destructive of morale in the workforce and in management. Reports perhaps which were thought always to have been confidential, would have to be shown to all the employees so that they could join in this exercise.

All we say and all we need to say is that, having regard to these considerations, whatever might be considered desirable and proper in another case, we cannot possibly support the contention that in this case or in any case that we can readily imagine, it can be said to be perverse or wrong in law for a Tribunal to reject a contention of this sort. Certainly we say that in this case we cannot find any legitimate criticism of the decision of this Tribunal in arriving, after all the evidence was shown to it, at the conclusion that these two dismissals were fair.

Therefore, for these reasons we find no error of law. In that case we have no jurisdiction, of course, to make any order whatever, except that the appeal should be dismissed and we do so order. That is, I need hardly say, the judgment of us all.