United Kingdom Employment Appeal Tribunal

BAILII case number: [1994] UKEAT 883_93_0211

Appeal No. EAT/883/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 2 November 1994

Before

HIS HONOUR JUDGE J HULL QC

MR D J JENKINS MBE

MR T S BATHO

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MRS B POAT          APPELLANT

HOLIDAY INN WORLDWIDE          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR P ARCHER

(Representative)

Thamesdown Law Centre

26 Victoria Road

Swindon SN1 3AW

For the Respondents MR J STOBART

(of Counsel)

Messrs Andersons

(Solicitors)

Queen's Bench Chambers

42 The Ropewalk

Nottingham NG1 5EJ


 


JUDGE J HULL QC: Mrs Poat is a lady who was employed by the well-known international firm, Holiday Inn Worldwide, as secretary to the Director of International Sales, United Kingdom. She lived at Swindon and the work was at Banbury, where Holiday Inn have their United Kingdom district office. There were various departments there. The employment began on 22 October 1990 and continued until 17 December 1992, so she did just over two years in the service of the company.

Holiday Inn, like so many other firms, was engaged in re-organization. The history is set out in the decision of the Industrial Tribunal to whom she presently complained and they set out that in June 1992 all the staff were called to a meeting, at which they were told that with the exception of Sales and Marketing which, of course, was her Department, the offices were closing. Staff would be made redundant. The staff in Sales and Marketing were informed that the Respondent was restructuring but they could not be given details, as the restructuring had not yet been completed but it was anticipated that full details would be given in September 1992. As it happened, the details were not available by then.

There was only one other secretary in addition to Mrs Poat in the Department. She left, apparently because the future of the Department was unsure, and her position was filled by temporary staff from an agency, but Mrs Poat stayed on. In due course matters came to a head on 17 December when the details were finally announced. The changes, say the Industrial Tribunal, included the consolidation of the International and District functions into one unified worldwide sales force, with headquarters at Amsterdam, Frankfurt, London, Paris and Dubai reporting directly to a new Vice-President based in Atlanta. Unhappily, Mrs Poat was unable to attend the meeting because she had been taken ill and was in hospital at the time. It was hoped that her boss, Mr Marriott, a Director, would be able to go and see her but, in fact, a letter arrived and she learned that she was to be made redundant. The position was that she would remain until 31 December, and then she would receive pay in lieu of notice.

The Tribunal go on to say:

"Under the new structure, no secretarial duties were required. Modern communication equipment was to be used but until the new structure was fully operational, a temporary secretary was hired on a day to day basis but no permanent employment could be offered to the Applicant. Mrs Cheeseman [she was Director of Compensation and Benefits - I think that probably means compensation in the transatlantic sense of pay - she gave evidence] that vacancies for the Applicant had been explored but no vacancies existed due to the economic situation which resulted in hotel staff being reduced."

The Tribunal then made their findings in paragraph 9 of their decision:

"9. On the evidence before it, the Tribunal finds that a redundancy situation existed and that the applicant was made redundant. The Tribunal then had to consider whether the Applicant's dismissal was fair. The re-structuring of the Respondent affected Africa, the Middle East and Europe and it was not completed until early December 1992. The Respondent decided to make the announcement as soon as possible in the hope that the re-structuring could take place in January 1993. The announcement was made on 17th December, but unfortunately the Applicant was in hospital at the time and was not aware of the decision until she received the letter on 18th December. The Respondent intended Mr Marriott [he was the Director] to interview the Applicant and to inform her of the decision but unfortunately the letter was received by the Applicant before Mr Marriott's visit. Clearly, there was no consultation by the Respondent with the Applicant prior to the Applicant being made redundant. In this case the Banbury office was closing, the Applicant's position ceased to exist and there were no suitable vacancies available for the Applicant."

"Under the re-structuring the number of staff was reduced and no permanent secretarial duties would be required. Taking the circumstances into consideration, the Tribunal finds that the lack of consultation with the Applicant by the Respondent would in any event have made no difference and does not in itself make the dismissal unfair. Note Lord Denning's judgement in Noble v David Gold ... The Tribunal finds the Applicant's dismissal fair and the application is dismissed."

In considering redundancies, every Tribunal will have to consider the question of consultation. It is, of course, normal for warning and consultation to take place and, as has been pointed out in many, many cases, it is really a matter of commonsense; the purposes of consultation are various. First of all, leaving aside anything else, it is courteous and humane to consult people when you are thinking of making them redundant, or have decided provisionally to make them redundant. Of course, there is the possibility that the employee may have ideas for ways in which redundancy can be avoided altogether, so far as he or she is concerned. The employee may be able to make suggestions about alternative employment, may indicate that he or she would be prepared to accept less well-paid work or work on less favourable terms, or to retrain for other work, or to go abroad, even. Or to do other things which would help the employer out in the emergency which arises. Then, of course, there are other matters which have been pointed out in other cases, such as the question of the length of notice which is appropriate and whether the employer can help the employee in some other way by finding him employment, perhaps with a quite different firm, by giving him a good reference and so forth. These are all matters which might be raised in consultation . Clearly, it will be a very bold thing for any employer to say or, indeed, any person to say, "I can dispense with consulting somebody. Nothing that person could possibly say would make me change my mind in any material way." That is a very strong thing to say.

There used to be a doctrine, if I could call it that, that it would be sufficient in such circumstances for an employer to say, "Well, I did omit consultation" or, of course, some other normal requirement of fairness, "with my employee but that does not matter because it would have made no difference. As we can see, post hoc, so to speak, looking backwards on it, I would have reached the same conclusion even if I had consulted and, therefore, you ought not to find me unfair in omitting this important matter".

That contention was given its quietus in the case of Polkey and I do not need to go to the facts which are very well known; the House of Lords considered whether that was a proper argument and held that it was not. In each case the Tribunal has to look at the employer's conduct before and in and about the dismissal and to ask whether it was reasonable which, in general, means asking whether it was fair. That has to be judged not according to the wisdom which comes from hindsight - by saying what would have been the result? - but by saying, "Was it fair for the employer, according to the matters which were known to him at the time, to omit the consultation or whatever other requirement of fairness, such as warning, would in the circumstances, be required." Polkey v A E Dayton Services Ltd [1988] ICR 142. At page 153 Lord Mackay said:

"Where there is no issue raised by sections 58 to 62 [that, of course, is this case, too] the subject matter for the tribunal's consideration is the employer's action in treating the reason as a sufficient reason for dismissing the employee. It is that action and that action only that the tribunal is required to characterise as reasonable or unreasonable. That leaves no scope for the tribunal considering whether, if the employer had acted differently, he might have dismissed the employee."

In other words, would it have made any difference? That is, says Lord Mackay, inadmissible and irrelevant.

"It is what the employer did that is to be judged, not what he might have done. On the other hand, in judging whether what the employer did was reasonable it is right to consider what a reasonable employer would have had in mind at the time he decided to dismiss as the consequence of not consulting or not warning.

If the employer could reasonably have concluded in the light of the circumstances known to him at the time of dismissal that consultation or warning would be utterly useless he might well act reasonably even if he did not observe the provisions of the code. Failure to observe the requirement of the code relating to consultation or warning will not necessarily render a dismissal unfair. Whether in any particular case it did so is a matter for the industrial tribunal to consider in the light of the circumstances known to the employer at the time he dismissed the employee."

They have to ask themselves: did the employer consider it utterly useless or, if he thought about it, would he have concluded that it was utterly useless or could he properly have so concluded?

With Lord Mackay's judgment all the other Lords, including Lord Bridge, agreed but Lord Bridge thought it right to add some observations of his own in his own speech, having agreed with Lord Mackay. He said:

"... an employer having prima facie grounds to dismiss for one of these reasons [which include redundancy] 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 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 . 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. [There, of course, he is echoing what had fallen from Lord Mackay.] 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, [which is, no doubt, a synonym for utterly useless] 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."

He referred to the judgment of Mr Justice Browne-Wilkinson, as he then was, in Sillifant v Powell Duffryn Timber Ltd which is, quite clearly, the foundation of the entire reasoning of the House of Lords in Polkey v A E Dayton.

What the Tribunal has to do is not to ask "would it have made any difference if the employer had consulted?" but say to itself, "Could the employer, in the circumstances, reasonably have concluded at the time when he reached his decision that it would be utterly futile or utterly pointless to engage in consultation?"

It is, of course, logically a fairly fine distinction between the two matters because obviously the post hoc question, as I have called it, "would it have made any difference" which, as the House of Lords says, is highly relevant to the assessment of compensation, will often be answered in the same way as the first question I have asked. Equally, logically, there is a very clear distinction because, in the one case, one must look without the wisdom of hindsight, at the situation as it was at the time of the dismissal and immediately before. In the other one, of course, one can look at matters which arise afterwards.

Now we have to ask ourselves whether this Tribunal did, in fact, observe the guidance of the House of Lords, the law as enunciated and explained by the House of Lords in Polkey. Having found that there was no consultation and no suitable vacancies available:

"Taking the circumstances into consideration, the Tribunal finds that the lack of consultation with the Applicant by the Respondent would in any event have made no difference and does not in itself make the dismissal unfair."

There they are, in terms, directing themselves to the very question which was said not merely by Lord Bridge but by the entire House of Lords, by Lord Mackay, with whom the other Lords agreed in Polkey, to be inadmissible. They say it would have made no difference and does not in itself make the dismissal unfair. They failed to ask themselves the question which the House of Lords said they must ask themselves: did the employer or, indeed, alternatively, could the employer have here reached the conclusion at the time that it would be utterly pointless and there was no point in consulting Mrs Poat.

It is, of course, true as a hypothetical matter that there may be other circumstances in which the employer is entitled to say, "I was excused from my duty of consultation". None appear to have been put forward here.

In deciding whether the absence of consultation made the dismissal unfair, the Tribunal in terms addressed themselves not to the test in Polkey but to the test which was said in Polkey to be wholly inappropriate and not to the case of Polkey itself but to a case decided eight years at least before Polkey when the law stood very differently and the authorities broadly favoured a different view. In those circumstances, it appears to us that this decision, which is a fairly short one on a fairly short matter, cannot be supported. It is the very language in which the Tribunal find that the dismissal was fair and that the lack of consultation did not make it unfair which was an application of the wrong test in law. We, of course, can interfere only in matters of law. We cannot consider questions of fact at all.

In those circumstances, we have to say that this is a decision which cannot stand. Whether another Tribunal, directing itself correctly on the law, would have reached the same conclusion or a quite different conclusion is a matter on which we cannot speculate. Whether another Tribunal or, indeed, this Tribunal, going on to consider the important question of compensation for which Mrs Poat asked, would decide in the circumstances that it would have made no difference and, therefore, her compensation is to be reduced, perhaps to the point of nothing, is again not for us to speculate.

Here we with have a decision which, as a matter of law, appears to us fatally flawed. We have considered, therefore, what to do and, subject to the submissions of Counsel, it appears to us that it would be embarrassing for this Tribunal if, indeed, it could be reconstitute, to reconsider the matter, in effect intellectually acknowledging their error and addressing their minds to the right question so that they could honestly say, "We have now cleared our minds of any error and we are addressing our minds to the correct question". We think that the right course to take is to remit the whole case to another Tribunal differently constituted, so that they can decide all the facts from the start, hearing all the evidence and applying their minds throughout, we hope, to the correct test with regard to this part of the case, as to whether the employers were acting fairly in dispensing with consultation. They will also of course decide all the other issues in connection with the complaint which is made to them.