United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 1039_93_2605

Appeal No. EAT/1039/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 26th May 1995

Before

HIS HONOUR JUDGE SMITH Q.C.

MR L D COWAN

MISS A MADDOCKS OBE

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MR H B LAMBERT T/A A L LAMBERT & CO          APPELLANT

MRS S RIGBY          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR T GRACE

(of Counsel)

Messrs Steggles & Mather

Solicitors

Park House

Lower Bridge Street

Chester

CH1 1RS

For the Respondents MR G PRICE ROWLANDS

(of Counsel)

Messrs Mark Rigby & Co

Solicitors

55a Hough Lane

Leyland

Lancashire

PR5 1SA


 


JUDGE SMITH Q.C.: This is an appeal by Mr Lambert trading as A L Lambert & Co against a decision of an Industrial Tribunal sitting at Manchester on 1st June 1993, that he unfairly dismissed the applicant before the Industrial Tribunal, the respondent before us Mrs Rigby. The dismissal was found to be on the grounds of redundancy and was held by the Industrial Tribunal to be unfair because of a failure on the part of the appellant to consult with Mrs Rigby about the impending redundancy situation. It is common ground that there was such a failure to consult.

Two points were taken on the appeal.

1. It was submitted that the Industrial Tribunal had misapplied Section 57(3) of the 1978 Act by substituting its own view as to what was the right course to adopt for that of the employer instead of deciding whether the admitted failure to consult was or was not within the band of reasonable responses of a reasonable employer in the circumstances existing at the time of the dismissal.
2. That the decision to find the dismissal unfair was perverse, in the sense that it was one that no reasonable Tribunal could have reached. That was the alternative second submission.

It was submitted by Counsel for the respondent, with regard to the first point, looking at the Industrial Tribunal's decision in a common sense way, and construing it in the light of the facts found by the Industrial Tribunal, it was submitted that it was quite clear they were correctly applying Section 57(3) to the facts which they had found and were finding that the failure to consult was not within the band of reasonable responses of a reasonable employer in all the circumstances.

With regard to the second submission, it was submitted by the respondent that there was ample evidence and justification for the Industrial Tribunals finding that the dismissal was unfair and, far from being perverse, it was an entirely reasonable finding in the circumstances. Those were the conflicting submissions.

The factual circumstances are fully set out in the reasons given by the Industrial Tribunal for its decision. Reference can be made to the full reasons for those matters in detail.

In outline Mr Lambert was the proprietor of a small insurance broking business, consisting as regards staff of Mr Lambert himself, the respondent, Mrs Rigby, and a typist. The respondent, having been employed to manage the general side of the business with effect from 12th June 1990 at a salary eventually of £10,600.00 per annum in gross figures. The typist was paid £6,000.00 per annum.

No doubt due to the effects of the recession, certainly, on the findings of the Industrial Tribunal, by early 1992 at the latest, the business was losing clients and in difficulties. By August 1992 there was an overdraft at the bank of £23,000.00. Importantly, in our judgment, the Industrial Tribunal found as a fact that by the end of May 1992 Mr Lambert had been advised to cut his overheads and of course that inevitably meant cutting labour costs by dismissing either Mrs Rigby or the typist. In addition, and again importantly, in our judgment, the Industrial Tribunal found as a fact that when the respondent became pregnant in June 1992 she informed the appellant Mr Lambert promptly of this fact. Finally, and again importantly, the Industrial Tribunal also found as a fact that the respondent would have been prepared to do her own job and the typist's job and to accept a cut in salary.

The Industrial Tribunal having found that the reason for dismissal was, in fact, the potentially fair reason of redundancy, then went on to consider and the application of Section 57(3) to the circumstances of this particular case, which provision they set out in full in paragraph 10 of their decision.

They then made their findings under Section 57(3) in paragraph 11 in these terms:

"We find that the dismissal was unfair under Section 57(3) of the Act because Mr Lambert failed to consult with the applicant and we do not think the circumstances precluded this. He failed to warn her that redundancy might be a possibility and did not discuss alternatives with her. Even though these may have involved a reduction in pay or part-time working the applicant might have accepted."

We repeat that it is common ground that there was in fact no consultation and that there was in fact no warning given.

Criticism is levelled at the expression within that paragraph:

"... we do not think the circumstances precluded this."[ By which is meant, consultation]

In our judgment, it is important first of all to point out what is obvious in the field of industrial relations law, namely that it is only in exceptional circumstances that a failure to consult is capable of amounting to reasonable conduct on the part of an employer. This is clear from the decision of Polkey itself. We bear in mind of course, what the President Wood J. said in Spink v Express Foods Group Ltd [1990] IRLR 320, that there can be such cases. However, in the usual course, individual consultation is nearly always a necessary pre-requisite to a fair dismissal particularly for redundancy. Nevertheless, we of course accept and endorse fully that the Industrial Tribunal must apply the correct test. We further accept that the correct approach to Section 57(3) is to be found in Iceland Frozen Foods v Jones [1983] ICR 17, page 24 at G where Browne-Wilkinson J very clearly and helpfully set out the principles to be followed by an Industrial Tribunal in their approach to Section 57(3). Including of course, the following:-

"... an industrial tribunal must consider the reasonableness of the employer's conduct, not simply whether they (the members of the industrial tribunal) consider the dismissal to be fair; (3) in judging the reasonableness of the employer's conduct an industrial tribunal must not substitute its decision as to what was the right course to adopt for that of the employer; (4) in many, though not all, cases there is a band of reasonable responses to the employee's conduct within which one employer might reasonably take one view, another quite reasonably take another; ..."

Those are amongst the very important factors that are set out by Browne-Wilkinson J.

However, we also consider it to be very important indeed that Industrial Tribunals decisions on these matters, such as the way in which they apply Section 57(3) of the 1978 Act should not be subjected to over-rigorous and over-technical linguistic scrutiny. What is important is to take a common sense and straightforward approach by way of interpretation of what the Industrial Tribunal meant in all the circumstances. Applying that approach to paragraph 11 of the present decision, we are unanimously of the view that, looked at in this way, it is plain that the Industrial Tribunal was in fact applying the correct test namely whether Mr Lambert had acted outwith the band of reasonable responses of an employer in the circumstances in which he found himself and that the Industrial Tribunal were concluding that he had.

The Industrial Tribunal were finding and expressing, in shorthand terms, in our judgment, that the circumstances in which Mr Lambert found himself as an employer should not have precluded a reasonable employer from consulting, from giving earlier warning of redundancy, and from discussing alternatives with the employee concerned.

It is important to realise, in our judgment, that whilst an Industrial Tribunal certainly must not substitute its own decision as the right course to adopt for that of the employer, it must on the other hand, decide whether that particular employer's response to any given situation was or was not within the band of reasonable responses of an employer in such circumstances. That is what Parliament requires the Industrial Tribunal to do under Section 57(3) of the 1978 Act. In our judgment, that is exactly what the Industrial Tribunal were doing here in paragraph 11. And accordingly we are satisfied that they correctly applied the Polkey and Iceland tests which we have referred to above.

Finally, we should say that we totally reject the alternative submission that was presented to us by Counsel for the appellant, that even if it could be said that the Industrial Tribunal applied the correct approach (which we emphatically say that it can.) Their decision was perverse or one which no reasonable Tribunal could have arrived at. In our judgment there was ample evidence before the Industrial Tribunal which fully justified their finding that not to consult was outside the band of reasonable responses by the appellant in the circumstances of this particular case. We cannot help but feel that the real grounds for this appeal were those relating to compensation, which had been put right by the Industrial Tribunal to the extent necessary on review, and did not need to be pursued before us today.

Accordingly, for the reasons which we have given, we dismiss the appeal.