United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 577_93_1305

Appeal No. EAT/577/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 13th May 1994

Judgment delivered on 7th July 1994

Before

HIS HONOUR JUDGE J PEPPITT QC

MR R H PHIPPS

MR D A C LAMBERT

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BIRTLEY TOWN COUNCIL          APPELLANTS

MR H CROWE          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR P CAPE

(Of Counsel)

Mr R M Kelly

Solicitor

Gateshead MBC

Civil Centre

Regent Street

Gateshead NE8 1HH

For the Respondent MR J BOWER

(Of Counsel)

Ms C Cleve

Legal Officer

GMB

22/24 Worple Road

Wimbledon

LONDON SW19 4DD


 


HIS HONOUR JUDGE PEPPITT QC This is an appeal from a decision of the Newcastle-upon-Tyne Industrial Tribunal sent to the parties on 17th June 1993. The Tribunal held that the Respondent had been unfairly dismissed and was entitled to compensation in the sum of £13,175. The basis of the decision was that the Respondent had been dismissed for redundancy without proper consultation.

The Respondent was employed by the Appellants as their Town Clerk under a written agreement dated 25th October 1982. His weekly hours of work were increased from 22 to 28 in April 1983 and from 28 to 37 in December 1990. At the date of his dismissal on 6th November 1992 his gross annual salary was £20,555.

At the commencement of the Respondent's employment his only fellow-employees were a part-time clerical assistant, a part-time groundsman and a part-time cleaner. But by 1991 the Appellants had taken on some 12 extra staff to run their sports centre at Birtley.

In 1991 the Appellants commissioned a report from the Gateshead Metropolitan Borough Council to assist them in the formulation of a policy for compulsory competitive tendering in the operation of the sports centre. That report included, amongst other things, a recommendation for the introduction of computerisation into some of the Appellants' clerical functions and a consequential reduction in the Respondent's weekly hours of work. The Respondent was invited to consider the GMBC report and to incorporate any comments which he might have in a written paper. This the Respondent did.

On 4th August 1992 the Appellants having considered the GMBC report and the Respondent's paper resolved:

(a) that the Council accepts the report from the Director of Personnel and Management Services of the GMBC;

(b) that with immediate effect the working hours of the Town Clerk Post C1 be reduced to 28 per week.

After further discussion the Appellants passed an additional resolution -

"that the Chairman, the Vice-Chairman and the Leader of the Council be empowered to negotiate with the Town Clerk and his advisors on behalf of the Council and also to take legal advice to safeguard the Council in this situation".

The Respondent, who was then aged 58, was understandably concerned about the Appellants' resolutions which would have significantly reduced not only his salary but also his contractual entitlement to a gratuity upon the termination of his employment or his earlier death. He therefore consulted solicitors.

On 26th August 1992 the Respondent and his solicitor met with Councillors Gaffney Elliott and Lewis on behalf of the Appellants. Mr Spafford, a solicitor, and a Mr Hills of the GMBC's Legal and Personnel Department were also present. Of this meeting the Industrial Tribunal found:

"... within 10/15 minutes it had been made apparent to (the respondent) that there was no basis on which his employment would continue other than on a reduction of hours. No firm proposals were put to the (respondent) as to the financial implications or the various options which were open to him ... ."

At this stage the Respondent and his solicitor withdrew from the meeting. When they returned after some 10 minutes

"the (respondent's) solicitors, after referring to the (Appellants') unilateral attempts to reduce the (respondent's) hours of work indicated that if he was given 10 weeks' notice and his gratuity based on his present hours of 37 he would accept the position. ..."

The Tribunal further found that in making this offer the Respondent's solicitors:

"... made it clear and it was accepted by the (appellants') witnesses that his proposal was being made without prejudice ... ."

After a short retirement the Appellants' representatives "confirmed their acceptance on behalf of the Respondent".

The Tribunal's account of the meeting ended as follows:

"Unfortunately there was no written note signed by the parties confirming what had been agreed and it was left to Mr Hills to prepare a letter to be written by Councillor Gaffney on behalf of the Respondent confirming the situation. ..."

Councillor Gaffney's letter was dated 27th August. The relevant parts were as follows:

"I am writing to confirm the outcome of our meeting held yesterday at the Civic Centre, Gateshead. It was mutually agreed, on your suggestion, that your employment as Town Clerk to Birtley Town Council will terminate on Friday 6th November 1992.

You will remain on your present hours of work, 37 hours per week, until you leave. On the termination of your employment you will be entitled, in accordance with your contract of employment to a gratuity payment which will be 10 x 1/6 of your salary at the date of termination. You will not be entitled to receive any other payment or compensation other than salary up to 6th November 1992.

Could you please confirm your acceptance of the terms of this letter in writing as soon as possible."

On receipt of this letter both the Respondent and his solicitor wrote to the Appellants making it plain that in their view this was not what had been agreed orally at the meeting. Stated shortly the area of disagreement, as the Respondent and his solicitor saw the position, was as follows:

(i) There was no question of a mutual termination of the Respondent's contract of employment. On the contrary the Respondent had no wish for his contract to be terminated.

(ii) The proposal made at the meeting related solely to the terms of a dismissal notice, should the Respondents choose to serve one and in particular:

(iii) There was no question of the Respondent forgoing any rights he may have to claim other payments or compensation.

The Tribunal's finding upon this dispute was in paragraph 4 of its decision:

"Although Mr Hills had drafted the letter of 27th August 1992 in good faith it did not reflect the understanding of the (respondent) and his solicitor as to what had been agreed and in consequence the Tribunal are bound to conclude that there was no agreement to terminate and certainly not a `mutual' agreement as suggested in the letter of 27th August 1992."

It is this finding which formed the basis of the Appellants' first ground of attack upon the Tribunal's decision.

Mr Cape on their behalf argued that it was inconsistent with the finding in paragraph 2(f) that the Appellants had accepted the proposal made by the Respondent's solicitor. What the Tribunal should have done, he argued, was to construe the agreement reached at the meeting on 26th August in the light of the intentions of the parties manifested by their words and conduct. By failing to do so the Tribunal deprived themselves of the opportunity to consider whether, viewed objectively, Councillor Gaffney's letter of 27th August accurately represented what had been agreed.

There seems to us to be two answers to this submission. Firstly, we cannot have regard to the Tribunal's finding in paragraph 2(f) of the decision in complete disregard of the finding in paragraph 4. We must look at the totality of the decision in order to determine precisely what the Tribunal found. When we do so, it is not difficult to ascertain what the Tribunal had in mind. The Appellants purported to accept what they wrongly believed the Respondent had offered. There was thus no meeting of minds and so no agreement. This is a finding which in our judgment the Tribunal was entitled to make on the evidence before it and accordingly we cannot interfere.

But even if Mr Cape's submission is well-founded, we cannot see how the Appellants can take advantage of it. If the oral exchange at the meeting on 26th August can be said to have resulted in a concluded agreement by no canon of construction could that agreement be said to have been in the terms of Councillor's Gaffney's letter of 27th August, and to be fair Mr Cape did not seriously suggest that it could. Nevertheless, throughout the subsequent exchanges the Appellants continued to assert that agreement had been reached in the terms of that letter and maintained that stance even after these proceedings had been instituted [see Mr Kelly's letter to the Regional Office of the Industrial Tribunal dated 4th November 1992]. In the circumstances we reject Mr Cape's first submission.

The Appellants next attack the Tribunal's finding that the dismissal was unfair. The Tribunal found that the Respondent was dismissed on 6th November 1992 and that the reason for the dismissal was redundancy. The unfairness consisted in the Appellants' failure properly to consult the Respondent which the Tribunal found in the following terms:

"Having carefully considered the facts the Tribunal were unanimous in their view that bearing in mind the complete lack of any meaningful negotiation and the fait accompli situation in which the applicant found himself at the meeting of 26th August 1992 where no attempt was made to put to him the various alternatives, there could be no doubt that the applicant's dismissal was unfair."

Mr Cape argued that the Respondent was in fact consulted about the GMBC's proposals by the Appellants' invitation that he should prepare a paper containing his own comments. That paper was considered before the resolutions of the 4th August 1992 were passed. The Appellants did not act unfairly by adhering to their decision to reduce the Respondent's hours of work. That was a stance which they were entitled to maintain. Furthermore, said Mr Cape, the Appellants were prepared to negotiate with the Respondent at the meeting on 26th August and only ceased doing so when, after only 10/15 minutes they accepted a proposal from the Respondent which they believed had resolved the matter. In these circumstances, said Mr Cape, the Tribunal's finding of inadequate consultation was perverse.

Even if we had been sympathetic to this submission we would have found it difficult if not impossible to evaluate it without a sight of the Chairman's Notes of evidence. For only with the aid of such notes would we be able to consider the totality of the evidence upon which the Tribunal's finding was based. But even without them we are satisfied that there was evidence before the Tribunal which justified the finding. The Respondent was not present during the deliberations which led to the passing of the resolutions of 4th August. The first of those resolutions provided for a significant reduction in the Respondent's hours of work forthwith. At the meeting on 26th August it was clear after the first 10/15 minutes that there was no basis on which the Respondent's employment could continue otherwise than on a reduction of his hours. No firm proposals were put to him as to the financial implications or the various options which were open to him. It was the Respondent who made the proposal which brought the meeting to an end. If the Appellants were waiting for the Respondent to make the first move they were not justified in doing so for it was they who had arbitrarily reduced the Respondent's hours of work to a significant extent. Even Mr Hill had his reservations about the course which the Appellants adopted and expressed to the Tribunal his view that they would have been better advised merely to `record' the GMBC's proposals until they had been discussed with the Respondent. It seems to us that in the light of these findings there was abundant evidence upon which the Tribunal could reasonably have reached their conclusion of unfairness.

Mr Cape's final submission related to compensation and is based upon the speech of Lord Bridge in Polkey v. A E Dayton Services Ltd [1988] ICR 142. He argued that in assessing the amount of compensation to award to the Respondent the Tribunal should have, but did not, take into account the possibility that the Respondent might have lost his employment in any event even if the proper consultation procedure had been adopted. This is the so-called `Polkey deduction'.

Mr Cape referred us to S.74(1) of the 1978 Act and to the well-known dictum of Browne-Wilkinson J in Sillifant v. Powell Dyffryn Timber Ltd [1983] IRLR 91 at p.96 which Lord Bridge cited with approval in Polkey (supra) at p.96:

"There is no need for an all-or-nothing decision. If the Tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment."

Mr Bowers, for the Respondent, citing Bristol Ltd v. Roberts [1993] IRLR 481, sought to answer this submission by arguing that the burden of establishing that compensation should be reduced by reference to the `Polkey deduction' lay upon the employer. No argument that such a deduction should be made had been addressed to the Tribunal and accordingly the Tribunal were not bound to consider it.

Mr Cape's reply was that Mr Spafford, who represented the Appellants before the Tribunal did not address the question of compensation at all because he believed he would be given an opportunity to do so after the Tribunal had announced its decision on liability. In the event the Tribunal announced its decision upon both liability and compensation upon its return after retirement.

The written reasons followed some two months later. Both Mr Spafford and Mr Morgan of APEX who appeared at the Tribunal for the Respondent were present before us and it was thus possible for the parties to reach a substantial measure of agreement as to what then occurred. The agreed position was as follows:

(1) There was no suggestion by the parties or the Tribunal that the hearing was concerned only with liability.

(2) In the course of his evidence the Respondent gave some indication of the level of his loss and the length of a period of sickness which he suffered after the termination of his employment.

(3) Mr Spafford addressed the Tribunal but made no submissions on remedy and did not refer to the Polkey reduction.

(4) After hearing the parties' submissions the Tribunal retired. Upon their return the Chairman announced merely that they found the dismissal unfair.

(5) The Chairman then dealt with compensation broadly in the terms appearing in paragraph 15 of the Decision.

(6) Mr Spafford did not then seek a further opportunity to address the Tribunal on remedy.

In addition to the above, Mr Morgan's recollection was that he made a passing recollection to the question of remedy in his closing address. Mr Spafford had no recollection of this.

Mr Bowers submitted that it was Mr Spafford's duty to seek an opportunity to address the Tribunal upon remedy as soon as he became aware that remedy was to form part of the Tribunal's oral decision. His failure to do so required us to exercise our discretion against hearing Mr Cape on the subject now. Alternatively, said Mr Bowers, the Appellants' proper remedy in these circumstances would have been to apply for a review of the decision under paragraph 10 of Schedule 1 to the Industrial Tribunal (Rules of Procedure) Regulations 1985 which were in force at the relevant time. Mr Cape's reply was that the bare announcement by the Chairman that the Tribunal had found the dismissal to be unfair did not indicate sufficient of the Tribunal's decision to enable Mr Spafford to consider whether or not an argument for a Polkey deduction would be appropriate. As to the suggestion that the matter would be dealt with by an application for review Mr Cape did not disagree but he submitted that the Appellants' failure to seek a review of the decision did not prevent them from arguing the point on appeal.

We elicited from Mr Cape and Mr Bowers, both of whom have considerable experience in appearing before Industrial Tribunals their views as to the general practice of Tribunals where both liability and compensation are in issue. Mr Cape told us that in his experience of the North East of England it was the almost invariable practice of Tribunals to invite the parties to address them on remedy after the decision on liability was announced unless the question of remedy had been addressed in the parties' closing speeches. Mr Bowers could not go so far but accepted that in his experience this was the ordinary practice.

In these circumstances, we have come to the conclusion that we should remit the case to the same Tribunal to enable the Appellants to advance any argument they might on the question of the Polkey reduction. We have come to the conclusion that Mr Spafford was genuinely under the impression that he would have an opportunity to advance this argument after the Tribunal had made its decision on liability and that the general practice of Tribunals, at least in North East England, provided some warrant for that impression. But in so ordering we would wish to make plain that our decision is based upon the facts of this case and should not be regarded as creating any precedent setting out criteria for the remission of other cases where no argument upon remedy has been addressed to the Tribunal. We also wish to make plain that we remit the case for argument on remedy only. Neither party will be entitled to call further evidence before the Tribunal.

We must also make it plain that we express no view upon the merits of the argument which the Appellants seek to advance. Indeed, Mr Bowers argued strongly that the flaws which the Tribunal found in the Appellants' actions prior to the dismissal were substantive rather than procedural and as such were not susceptible of a Polkey reduction. [ See Stockholders (Birmingham) Ltd v. Kirkwood [1993] IRLR 515. Without the Chairman's notes we were not able to express a view on this submission but it is no doubt one which will be addressed to the Tribunal in due course.

Finally, by paragraph 6 of the Notice of Appeal the Appellants seek a reduction of £100 in the compensation awarded by the Tribunal on the grounds that the total award exceeded by this sum the Tribunal's then statutory limit. The Respondent accepted that this was so by letter to the Tribunal dated 7th February 1994 which was copied to the Respondents. The amount of the award will accordingly be reduced by this sum.

To this extent therefore the appeal is allowed.