United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 176_95_0610

Appeal No. EAT/176/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 6 October 1995

Before

HIS HONOUR JUDGE J HICKS QC

DR D GRIEVES CBE

MR G H WRIGHT MBE

---

WITHAM WELD (a firm)          APPELLANTS

MRS JUNE HEDLEY          RESPONDENT

---

Transcript of Proceedings

JUDGMENT

Revised


 


---

APPEARANCES

For the Appellants MR P J HAWTHORNE

Solicitor

Messrs Witham Weld

70 St George's Square

London

SW1V 3RD

For the Respondent Mr M Ford

(of Counsel)

Messrs Hudson Freeman Berg

94 Gloucester Place

London

W1H 4EE


 


JUDGE HICKS QC: Mrs Hedley, the Respondent to this appeal, was employed as a secretary by the Appellants, a firm of solicitors. Of five such secretaries she was the second senior in length of service. Each secretary worked for at least three fee-earners.

The employers decided that they needed to reduce the number of secretaries to four as a means of cutting costs. It is not disputed that they were entitled to make that decision and that as a result there was a redundancy situation. The need then arose to select the secretary to be dismissed as redundant. The employers decided to select in such a way as to "keep staff changes and reorganisation in other staff's typing arrangements to a minimum" (Notice of Appearance). On that basis Mrs Hedley was selected because one of the fee-earners for whom she worked was leaving and the other two, who were part-time consultants, were further reducing their hours. At that stage there had been no consultation. There was then a meeting between a partner, the office manager and Mrs Hedley at which Mrs Hedley was told that she would probably be made redundant. She pointed out her seniority and said she felt that she had been selected for personal reasons. She was told that she could consult further with the office manager or the partners but did not do so, as she considered it a waste of time - in her view the employers' mind was made up. The Industrial Tribunal, in finding that there had been no "real consultation" with her, said that "this did appear to be the case".

A fortnight later the employers sent Mrs Hedley a dismissal letter, terminating her employment on three months' notice. She complained to the Industrial Tribunal of unfair dismissal and the tribunal found in her favour and granted her application for compensation. The employers appeal.

The Appellants' first submission was that since the "principal plank" of Mrs Hedley's complaint was her allegation that she had been selected for personal reasons, and since the tribunal accepted the office manager's denial of that allegation, it was "fundamentally inconsistent" with that acceptance to find that she was unfairly dismissed. That is an elementary non sequitur. The tribunal gave their reasons for their decision and the decision can be set aside only if those reasons are unsustainable in law; it is irrelevant that they declined to accept allegations which might have founded further reasons for the same conclusion.

Next it was alleged that the tribunal erred in law in failing to apply section 57 of the Employment Protection (Consolidation) Act 1978. That bald allegation fails on the simple basis that in paragraph 9 of their reasons the tribunal refer to that section and make, step by step, the findings appropriate under each sub-section. This complaint was, however, supplemented by more specific submissions about the tribunal's approach to the issues arising under section 57(3), in particular, and we accordingly set out the text of the material parts of that sub-section before turning to those submissions:

"57(3) ... the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case."

Mr Hawthorne, for the Appellants, first drew attention to Buchanan v Tilcon Ltd [1983] IRLR 417. In that case the Industrial Tribunal, in finding a dismissal for redundancy unfair, had held that it was necessary for the employer to prove the accuracy of the information on which it had acted, for example (in relation to absenteeism) by producing the original attendance records not only of the applicant but of other employees who had not been dismissed. The Employment Appeal Tribunal not surprisingly allowed the employer's appeal, and the Court of Session dismissed the employee's appeal. Mr Hawthorne relied on the following passage in the headnote:

"Where a dismissal on grounds of redundancy survives the tests set out in s.59 of the Employment Protection (Consolidation) Act, ie that it was not in contravention of an agreed procedure or customary arrangement, in most cases it will be extremely difficult for a Tribunal to hold that in dismissing a particular individual his employers acted unreasonable (Atkinson v George Lindsay & Co). Where an employee's only complaint is that he was unfairly selected for redundancy and no other complaints are made, all the employers have to prove is that their method of selection was fair in general terms and that it was applied reasonably in the case of that employee."

Mr Hawthorne submitted that the Industrial Tribunal here should have followed the first part of that passage and found it "extremely difficult" to hold that the employers acted unreasonably. We do not see how a general phrase of that kind can be determinative of a particular case; the tribunal has to decide the issue of reasonableness, as set out in the statute and explained in the authorities, by reference to the facts which it finds. The second part of the passage must now be read with the qualification that there is no longer any onus of proof on the employer under section 57(3), and it should also be noted that the headnote does not reproduce the introduction in the judgment at page 418 to the words paraphrased:

"In the event the appellant, apart from throwing out the suggestion that he might have been victimised because of dislike, merely expressed his concern that others, with even less seniority than he and employed in the same work (labouring) had been kept on. In this situation where no other complaints were made by the appellant all that the respondents had to do ... "

That makes the statement one of very limited scope but in any event, so far as it is of general application it does not advance matters here because whether the method of selection was fair and whether it was applied reasonably were among the very questions at issue.

The next submission was that the tribunal failed to have regard, as required by section 57(3), to the size and administrative resources of the employers. The short answer to this point is that the tribunal, in paragraph 2 of their reasons, expressly referred to the employers as a "small" firm and made detailed findings as to the numbers and categories of partners and staff. There is no reason whatever for assuming that, having done so, they then disregarded those matters in considering the issue whether the employers acted reasonably.

The Appellants then, referring to the tribunal's assertion of the need to show that "an appropriate pool for potential redundancy had been identified and those within it consulted", submitted that there was no such requirement in section 57(3). It is true that the sub-section does not itself descend to such detail, but that an exercise of the kind described by the tribunal is normally a necessary part of any fair process of selection is well established by a number of authorities, from Polkey v A E Dayton Services Ltd [1988] ICR 142 in the House of Lords downwards. That being a normal element of a fair procedure it was for the Industrial Tribunal to assess whether there was any justification for the undoubted failure to follow it here, and the tribunal dealt with that as follows:

"6 APPLICATION OF SUCH MATTERS BY THE EMPLOYEE

In the Tribunal's view, having identified the pool as the five secretaries, the Respondent should have involved all five in the consultation process to seek views on the best solution to the problem of which of the five should be selected. As one member pointed out, it might have been that a secretary would have offered to take voluntary redundancy and indeed one secretary was stated to be 62 years old."

We see no error of law in the tribunal's conclusion on this point. The very passage from the judgment in De Grasse v Stockwell Tools Ltd [1992] IRLR 269 relied on by Mr Hawthorne in support of his "size and resources" point reads:

"In our judgment while the size of the undertaking may affect the nature or formality of the consultation process, it cannot excuse the lack of any consultation at all. However informal the consultation may be, it should ordinarily take place. [p.270, para 12]."

The next criticism of the Industrial Tribunal concerns their application of the requirement that selection be on the basis of "objectively set criteria .... objectively applied" (a requirement not itself challenged, as we understand it). The employers contended that their choice and application of criteria met this requirement, and that the choice was a matter for them, not for the tribunal.

The tribunal dealt with that aspect in this way, the first of the extracts below following immediately after that from paragraph 6 already quoted:

"6 ... In fact there was no consultation with the pool, and no consideration or discussion with those within it of what the criteria should be. Instead, the Respondents named as the criteria that which caused least disruption to everyone including themselves and the Applicant on this basis was the only member of the pool and thus the self evident candidate for redundancy.

7 ...

8 The simplistic and only criteria for selection adopted by the Respondent as stated in its IT3 and set out in paragraph 2 above and its failure to involve the other potential candidates at all really amounted to there being a pool of one and no other selection was possible. The objectivity required by the law was not and could not be achieved."

In our view it is clear that the tribunal are not there substituting their own choice of criteria for that of the employer - no alternative criterion or group of alternatives is in fact suggested - or saying that the criterion chosen by the employer could not in any circumstances have been properly chosen, but are judging that in the circumstances of this case, and in particular the absence of prior consultation, it had the defects which they identify. We consider that that was a judgment open to them on the facts and discloses no error of law which would entitle us to interfere.

Finally it was submitted that the Industrial Tribunal's conclusion that there was no real consultation with Mrs Hedley herself conflicted with the tribunal's own findings of fact as to what happened at the relevant meeting. We have already summarised the relevant passages from the tribunal's reasons in our recital of the history and need say only that there is nothing in this criticism.

We therefore find no error of law in the Industrial Tribunal's decision that Mrs Hedley was unfairly dismissed and accordingly dismiss the appeal against that decision.

The employers also appeal against the assessment of compensation, and that appeal falls into two distinct parts. We shall deal first with criticisms of the Industrial Tribunal's computation of Mrs Hedley's loss and then turn to the complaint that the tribunal failed to take into account the possibility that had the employers used a correct procedure Mrs Hedley might still have been dismissed (the "Polkey point").

The first point made about the computation turns on an alleged inconsistency between Mrs Hedley's evidence that she was out of work for over twelve weeks before the hearing and a recoupment notice subsequently received by the employers from the Department of Employment which is said to show total unemployment benefit equivalent to less than four weeks' entitlement. This ground of appeal must fail for a number of reasons. It is not raised in the Notice of Appeal. It was not a matter of which the tribunal knew or could have known, so they cannot have been in error in failing to take it into account. If raised it would have been a point going only to Mrs Hedley's credit as a witness, which was entirely a matter for the tribunal. We are not in a position to assess whether it even has any plausibility evidentially, since there has been no opportunity to investigate the alleged discrepancy or to consider possible explanations.

The next attack on the tribunal's assessment of loss arises out of the fact that Mrs Hedley left by agreement with the employers before the expiration of their notice in order to take up other employment. The tribunal comment, in our view unimpeachably, that she "had therefore sought correctly to mitigate her loss". The tribunal then accept her evidence that in the event that post was not suitable and lasted only four weeks, and hold that that did not bar further compensation. They add that "the Applicant would after all, if offered alternative employment, have been entitled to a four weeks trial period", apparently a reference to section 84 of the 1978 Act, dealing with the effect of renewal or re-engagement by the same employer under a new contract.

Mr Hawthorne submitted that the tribunal erroneously applied section 84, but it is clear to us that they did no such thing; they simply referred to the trial period by way of analogy in support of their finding, implicit in the words "not suitable", that Mrs Hedley acted reasonably in giving up her new post. The submission was that the tribunal should have found that that was a "novus actus interveniens" and that Mrs Hedley's subsequent losses were caused by her voluntary departure from the new post, not by her unfair dismissal by the Appellants. In our view they were under no such compulsion. As Mr Hawthorne rightly pointed out section 74(4) applies and incorporates the common law rules as to mitigation. Under those rules loss saved by successful efforts to mitigate is irrecoverable, as is loss which could have been saved by reasonable steps which in the event the claimant failed to take, but conversely a claimant who does take reasonable steps, as Mrs Hedley was found to have done, is entitled to recover resulting loss. A fortiori a reasonable but unsuccessful attempt to mitigate does not cut the chain between the wrongdoing and loss which on ordinary principles of causation flowed from it. It was for the tribunal to find what that loss was and they did so. We therefore reject this ground of appeal.

A further submission arising out of Mrs Hedley's brief subsequent job is that the fact that she obtained it speedily was inconsistent with the Industrial Tribunal's finding that she was likely to be unemployed for a year. That is simply an attempt to appeal on an issue of pure fact and fails for that reason.

Finally it was alleged that the tribunal failed to give the employers any opportunity to adduce evidence as to the state of the job market. There had, however, been no direction that this was to be a hearing on liability only. The employers, themselves a firm of solicitors and professionally represented, should have come prepared to deal with the issue of compensation. In oral submissions to us it was further alleged that there was no opportunity for cross-examination of Mrs Hedley on this point, but in further discussion it appeared that the true nature of Mr Hawthorne's case was that Mrs Beale, who was appearing for the employers, was not experienced in this type of hearing, and that the hearing on compensation was somewhat "rushed" in circumstances in which the Appellants were "shaken" by the result on liability, as a result of which there was no attempt to cross-examine. There is nothing in any of this to justify any imputation against the conduct of the hearing by the tribunal, and this ground also fails.

That brings us back to the Polkey point. The tribunal's reasons do not refer to this but the Appellants, without objection from the respondent, put in evidence an affidavit from Mrs Beale, sworn in County Court proceedings in support of an application to stay enforcement of the compensatory award. Having dealt with the finding of unfair dismissal Mrs Beale turns in paragraph 6 of her affidavit to compensation, and after some comments on the tribunal's calculations she sets out lengthy extracts from her notes, including a summary of evidence from Mrs Hedley on compensation issues. The notes continue: "The Tribunal then adjourned further for them to consider the question of compensation .... " and, a little later, "We were then called back .... ". There follows a summary of what seems to have been a brief oral statement by the chairman of the decision on compensation, and the extract from Mrs Beale's notes concludes:

"[I] then asked whether they had taken any account of the possibility that she could have been dismissed for redundancy fairly and they said no, that it was our problem for not having done the dismissal fairly."

A statement of the law on this subject can conveniently start from the adoption by Lord Bridge in Polkey v Dayton at page 163H of the following extract from the judgment of Browne-Wilkinson J in Sillifant v Powell Duffryn Timber Ltd [1983] IRLR 91:

"There is no need for an `all or nothing' decision. If the Industrial 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."

On the face of it the Industrial Tribunal's reason for not considering this possibility - that "it was [the employers'] problem for not having done the dismissal fairly" - is no justification. Mr Ford, for the employers, sought to dispel that conclusion in a number of ways. He first pointed to a passage in Lord Bridge's speech in Polkey at page 163F:

"... if the Industrial Tribunal, in considering whether the employer who has omitted to take the appropriate procedural steps acted reasonably or unreasonably in treating his reason as a sufficient reason for dismissal, poses for itself the hypothetical question whether the result would have been any different if the appropriate procedural steps had been taken, it can only answer that question on a balance of probabilities. ..."

It is plain, however, in the context, that Lord Bridge is not there stating what the tribunal can and should do in relation to the issue of compensation but what it should not do on the issue of liability because, as he has pointed out in the preceding sentence, it "tends to distort the operation of the employment protection legislation".

Next, Mr Ford submitted that this was a case to which the decision in Boulton & Paul Ltd v Arnold [1994] IRLR 532 applies. That was a redundancy case in which there was a selection procedure agreed between the employer and the union involving four criteria, of -which one was attendance. Under "attendance" the procedure required a distinction between approved and unapproved absence. In applying that procedure, however, the employer ignored that distinction. The Industrial Tribunal found the applicant's dismissal unfair for (inter alia) that reason and awarded compensation without considering the Polkey point. The Employment Appeal Tribunal dismissed an appeal. The following passages, in particular, embody the point which Mr Ford wishes to make:

"15 The second submission on behalf of the company was that once the Industrial Tribunal had found an unfair dismissal on the basis of lack of consultation it was bound as a matter of law to investigate and decide whether the holding of such consultation would have made any difference to the company's decision. That the Industrial Tribunal was not asked to make any such specific investigation and decision was accepted and it was also common ground that no such investigation was conducted by it so that it awarded a full compensatory award. ...

17 We ... accept that the principal reason given by the Industrial Tribunal for finding an unfair dismissal was failure to consult, or as they put it in paragraph 13 of their decision, failure to fully inform the union. We are, however, also of the view that the Industrial Tribunal specifically found that there were two other features which constituted unfairness. First, the radical departure from the agreed procedure under the manpower agreement mentioned above; and secondly, the treating of a half-hour authorised absence to see a doctor, or other health adviser as an occasion of absence for the purpose of assessment for redundancy which the industrial members of this tribunal regard as intrinsically unfair, quite apart from the fact that it constituted a radical departure from the agreed procedure. This was therefore a case where on the findings of the Industrial Tribunal not only was there a failure by the company to do that which they ought to have done as specified in the passage quoted above from the speech of Lord Bridge but the company also did that which they ought not to have done in adopting intrinsically unfair and different criteria from those agreed in the manpower agreement.

19 ... The general rule is clear that an Industrial Tribunal is not under a duty to conduct a case and advance arguments on behalf of any party before it. Assuming for present purposes, and we must not be taken to be deciding whether or not it is a correct view, that there is such a positive obligation on an Industrial Tribunal where there is a dismissal which is unfair because of a failure to perform procedural acts of the sort enumerated by Lord Bridge, we do not consider that there is any such obligation where there is a dismissal which is unfair because the employer has taken positive steps which he, she or it ought not to have taken. It is one thing to take a view on what would have happened if procedural steps which should have been taken but were not taken, had been taken. It is quite another to take a view, without positive evidence being adduced on the subject, on the question what would have happened if a step, which should not have been taken but was taken, had not been taken. This latter opens up the question what other steps would in those circumstances have been taken and that needs evidence. ..."

Those passages are in our view distinguishable in two ways from the present case. In the first place they concern whether a tribunal is under a duty to raise the point in question of its own volition. Here the employers raised it. It is true that they did not do so until after the tribunal had considered and orally announced their decision on compensation, which was culpably late, but the tribunal were still in session and their order had not been entered, so they were not functus officio. Moreover the tribunal's reason for disregarding the point was not its lateness but their view as to its merits. The second ground for distinction is that the decision in Boulton & Paul turns on the employer's having taken unfair "positive steps". We do not find the distinction between positive and negative unfairness altogether easy to understand, but it seems plain that the tribunal here treated the employers' default as negative, summarising it in paragraph 9 of their reasons as "failure .... to consult and to adopt objective selection criteria", and we do not see why we should set aside that classification.

Thirdly, Mr Ford submitted that the tribunal should not have considered a Polkey deduction because to allow the employers to put up a hypothetical fair procedure would invite the advancing of a false case, tailored to the situation. In our view that cannot be a valid objection, because if it were it could always be raised and would therefore negate the principle. Moreover Industrial Tribunals are in our view perfectly capable of viewing with healthy scepticism evidence "tailored" to produce a result convenient to the employer's interests.

Finally Mr Ford submitted that the onus was on the employer to adduce evidence and that these employers failed to do so. That, however, is simply a quotation from the headnote in Boulton & Paul, which we have already distinguished. There was no application by the employers here to adduce further evidence when raising the point before the Industrial Tribunal, which could and should, in our view, have considered and decided it on the evidence as it stood.

We have therefore come to the conclusion that the Industrial Tribunal erred in law in refusing to consider the Polkey point.

There was also in the Notice of Appeal a ground alleging bias on the part of the Industrial Tribunal, but Mr Hawthorne very properly withdrew it in the course of his submissions and we therefore need say nothing about it.

In the result we allow the appeal to the extent only of remitting the application for consideration of the question whether any, and if so what, deduction should be made from the compensatory award to reflect the possibility that had the employers acted fairly and reasonably in selecting a secretary for dismissal Mrs Hedley would nevertheless have been dismissed. We do not consider that there should be any further evidence on the subject if that can be avoided and we therefore direct that if the same tribunal can be reassembled the remission should be to them.

Note to Judge Hicks

Please indicate which sections of the enclosed reports are to be typed.

I have left gaps in the draft for this.

Thank you.

Iris Pain