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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Vaughan & Ors v The Express Lift Co Ltd [1995] UKEAT 292_93_2802 (28 February 1995)
URL: http://www.bailii.org/uk/cases/UKEAT/1995/292_93_2802.html
Cite as: [1995] UKEAT 292_93_2802
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EAT/293/93
At the Tribunal
Before
THE HONOURABLE MR JUSTICE MUMMERY (P)
MR J H GALBRAITH CB
MRS P TURNER OBE
(2) MR D OSBORN (3) MR E EARP
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellants MR BRUCE CARR
(Of Counsel)
Messrs Rowley Ashworth
247 The Broadway
Wimbledon
London
SW19 1SE
For the Respondents MR P G SCHOFIELD
(Legal Adviser)
EEF South
Station Road
Hook
Basingstoke
Hants
RG27 9TL
MR JUSTICE MUMMERY (PRESIDENT): This is an appeal from a decision by the Industrial Tribunal held at Bedford on 17 and 18 August 1992. The Industrial Tribunal gave two separate decisions on applications for unfair dismissal which they had heard together. The full reasons in each case were notified on 23 February 1993 and are, in their material parts, similar.
In the first case, heard on 17 August, the Applicants were a Mr Osborn and Mr Earp. Respondent was The Express Lift Co Ltd. In the other case the Applicants were
Mr Vaughan, Mr Read, Mr Murray, Mr Lewis and Mr Oliver. All the claims were unsuccessful. Appeals were brought by Notices of Appeal served on 5 April 1993. On the hearing of the appeals Mr Carr appeared for Mr Read, Mr Oliver and Mr Lewis in one of the cases and for Mr Osborn on the other. The other applicants were not represented and did not attend. Mr Schofield represented The Express Lift Company Ltd.
The complaints arose out of a redundancy situation in the Northampton works of The Express Lift Co as a result of the recession. The workforce there was about nine hundred. It was decided in early October 1991 to make two hundred and fifty employees redundant. In the HR1 dated 2 October 1991 it was stated that the company proposed to choose which employees to be made redundant in accordance with the needs of the business. That formula is a reflection what had been agreed between the company and the Amalgamated Union of Engineering Workers in the collective agreement made early in 1978. In the collective agreement there was schedule containing guidelines for dealing with and consulting on surplus hourly-rated manpower situations. It was provided the following lines of guidance are intended to apply to situations where a surplus of manpower has become evident. In cases where few persons only are concerned the spirit of the guidelines will apply, but in detail the handling will be simplified.
The guidelines set out a five-stage procedure. The first stage is a meeting at which management gives representatives of the employees advance warning of the imminent situation that could lead to surplus manpower. The second stage is a later meeting when management discuss the situation in more detail, advise on the approximate number of manual workers and discuss prospects of redeployment. Stage three is notification by management to the local office of the Department of Employment. Stage four is in these terms:
"A. The management would advise the Representatives of the names of those whom they have listed to receive specific warnings that if redeployment cannot be found by a specified date then formal notice of redundancy would be given. Management will take into consideration a number of factors in preparing this list:-
(i) A requirement to retain those employees who can best contribute towards the efficiency of the Shop concerned.
(ii) Those who are passed normal retirement age and, subject to (i) those who ask for early retirement.
(iii) Where other factors are equal employees with longer service would be retained.
(iv) Part-time employees.
B As nearly simultaneously with Stage 4 A as is practicable the individuals listed would be notified by their Supervisors of their nomination. During the period of time between this notification and the date for giving formal notice, there would be adequate opportunity for consultation on individual cases where hardship might ensue, or on other relevant points needing discussion such as a part-timer who is the principal earner to a family."
There is provision relating to volunteers for redundancy. The final stage 5 is:
"Formal notice of termination of employment due to redundancy would be given, in writing, to each individual concerned."
Schedule `C' provided that those arrangements were subject to amendment in the event of new legislation or national agreements having a material effect.
On 16 October 1991 that is two weeks after the HR1 referred to, notices of dismissal were given to employees, including the Applicants. They did not in fact cease to be employed until early in 1992. What happened between October and early 1992 were a series of meetings between representatives of management and the Union, appeals by individual applicants against the decision to dismiss, both internally and externally. It is commonground that there was no individual consultation between management and the employees selected for redundancy. In the absence of individual consultation it is obviously important to look at what consultation there was with the Unions. On that aspect of the case, the Tribunal heard oral evidence over the two-day hearing and was referred to a number of documents which contained records of the meetings which took place between management and union representatives.
One recurrent theme in those meetings was the question of the criteria for selection. It is commonground that there was a redundancy selection procedure. It was reduced to writing. It said it was Strictly Private & Confidential and headed Redundancy Programme - Autumn 1991 Redundancy Selection Procedure. This document was not provided to the Union representatives until 3 December 1991, by which time the notice of dismissal had been given long before and the individuals had unsuccessfully appealed. The document in our bundle at pages 35-43 is referred to in the decision and in various parts of the oral evidence of which we have the Chairman's notes. The important parts of the document are these:
"1 OBJECTIVE
To ensure that;
1.1 the selection of those employees who are to be declared redundant is based on objective criteria
1.2 personnel who are to be retained within the business are capable of contributing to the overall increase which is required in the Company's performance."
2 SELECTION CRITERIA
Decisions on which employees are to be retained will be in accordance with the following criteria. The criteria are listed in order of precedence.
2.1 Individuals below normal retirement age.
2.2 Permanent employees who are not on temporary contracts of employment
2.3 Individuals who can best contribute towards the future efficiency of their particular occupational group and of the Department as a whole
2.4 Individuals with higher past/present performance evaluated in terms of;
(a) job skills/knowledge (b) output
(c) quality/effectiveness (d) adaptability/cooperation
2.5 Volunteers for redundancy who are not key workers whose substitution for a selected employee would not have an adverse effect on the Company
Where other factors are equal, employees with longer service will be retained."
The procedure is set out under heading 3. That provides for the names of the employees in groups to be placed in order of the selection criteria, using the paired comparisons method, which is described in more detail. It is provided under 3.7.2 that there will be a comparison of each individual with every other member of the group, one at a time and the decision is confined to answering the question:
"if only one of the pair can be retained, which one should be selected, strictly in accordance with the selection criteria?"
Scoring procedures are provided. The procedure also provides for the preparation of forms in a specified manner for each group.
The meetings, which took place and are summarised in the notes of the meetings, started on 2 October when the Union representatives were informed that selection would be based on retaining those who could best suit the needs of the business. A question was raised by a representative as to whether names would be issued after consultation was completed. The management's reply was:
"Meaningful consultation will commence immediately however as past experience has shown employees want to know if they are affected. It is therefore fair to say that after two weeks of consultation individuals who are at risk will be notified."
There was a further meeting on 4 October when the question was asked by representatives of the employees:
"What was the selection method"
The answer given was:
"to retain those who would best contribute to the needs of the business."
At a meeting on 9 October the representatives of the employees raised a question as to what level would the consultation process go in ascertaining who would be retained. That question was returned to on 17 October and was responded to as follows:
"Consultation process - this will contiue as per the agreed procedure."
At a meeting held on 6 November, Mr Blackwell, who was representing the Union, is recorded as having criticized the company for the way in which it handled the redundancy notification. To date, although the HR1 had stated two hundred and fifty employees were affected, no details had been given regarding the breakdown of this figure to actual names or departments. Also required was the actual criteria for selection and the amounts of money to be paid. Later in the same summary it was stated that Mr Blackwell suggested that the meeting should be adjourned for domestic discussion to take place on a number of items, including the selection criteria needed to be explained as the HR1 statement was not satisfactory. In reply, Mr Hood, on behalf of the employers, said that he would make the selection criteria available. However this was in line with the criteria outlined in the agreement, that is the collective agreement. The company had agreed to honour its agreement literally and this would take place. However, there were certain moves which had taken place which did not totally comply with the written word. Regrettably these could not now be undone. Then we come to 3 December when Mr Blackwell again raised the point of insufficient detail being given of the method of selection. Mr Blackwell stated specifically, in referring to the selection criteria, that the company had stated that Stage 4 of the agreement had been followed, but he complained that no copies of the selection method had been given to the representatives. It was recorded that Mr Hood, the employers' representative, believed that this action had already been completed and promised to rectify. After an adjournment Mr Hood issued a copy of the outline selection procedure covering the objective and selection criteria together with forms A, B and C. He explained that this was company documentation and therefore some of the job titles used on the forms might appear inappropriate for the works organisation. He hoped that this settled the question raised by Mr Blackwell on selection criteria, but stated again the company's need to reduce costs.
The last relevant note refers to the meeting on 20 December. The purpose of that meeting was to discuss the selection of redundant employees. Mr Blackwell asked how many of the thirty appeals against selection had been successful. Mr Hood said that he had considered all of the appeals personally and was satisfied that the criteria had been followed on all accounts. Later in the meeting Mr Blackwell said that he was concerned that the selection procedure had not been given to the shop stewards until 3 December, some two months after the initial notification had taken place. He believed that Stage 4 paragraph B of the Redundancy Agreement had not been met. Those affected had not seen their individual assessment. They had not had the ability to challenge the company decision and therefore might wish to challenge their selection on the basis that wrong information had been supplied. After an adjournment, it was stated by Mr Blackwell that they would stand adjourned on the failure to agree a reference in order for individuals to decide that they wish to challenge their selection to a final stage meeting.
Those are the basic facts which appear from the documents. The unanimous decision of the Tribunal, after considering the documents in the Respondents bundle and hearing evidence, was that each of the applications should be dismissed. The Tribunal referred to the background to the redundancy exercise. It referred to the meetings and the documents relevant to them. It is specifically referred in paragraph 4 to the procedure for selection in the documents 35-43 and said that the procedure for selection was followed in accordance with that document. Nothing was said in that part of the decision about when the document was made available to the representatives of the employers.
The Decision continued, in a rather brief manner, to consider the complaints. In paragraph 10 the Tribunal referred to Section 57 of the 1978 Act. It is accepted on the appeal that there was no mis-direction by the Tribunal on the law as to the tests of fairness and reasonableness under Section 57(3). Mr Carr on behalf of the Appellants concentrated his appeal on paragraph 11, the first of the remaining two paragraphs of the Decision. We have to say that, having regard to the importance of the case to both sides and the detailed documentation, the Industrial Tribunal gave the reasons in paragraph 11 less fully than would have been helpful to the parties and to this Tribunal. All the conclusions of the Tribunal are stated in half a dozen sentences or so in paragraph 11. I will read it in full so that the criticisms of it can be fully understood:
"Mr Blackwell did and said all he possibly could for the applicants, pointing out that there was no individual consultation and drawing our attention correctly to the Compair Maxam case. We considered all he had to say but are satisfied that at all stages the union was consulted. A failure to agree was registered but we are satisfied that that arose from the respondent's attempt to renege on the agreed procedure as to the quantum of the payments and as to the numbers and not as to the method of selection. Mr Blackwell complains that that was subjective but we do not agree. Selection was aimed dispassionately and objectively at achieving a workforce which could best contribute towards the efficiency of the workforce, length of service being considered only when all else was equal. At the end of the day we are satisfied that in each of these cases considered separately, the respondent was acting reasonably in treating the fact that the particular applicant was redundant, as a sufficient reason for dismissal."
As background to Mr Carr's submissions we refer briefly to passages in two authorities relevant to consultation. The main thrust of Mr Carr's submission was against the conclusion of the Tribunal, it was satisfied that there had been consultation with the Unions as to the method of selection.
First the well known case of Williams v Compair Maxam [1982] ICR page 157. He referred to two of the principles summarised on page 162. The principles are prefaced, and later followed, by appropriate warnings as to their status. It is made clear that these principles do not apply to all cases. They are a record of a generally accepted view in industrial relations; in cases where employees are represented by an independent union represented by the employer, reasonable employers would seek to act in accordance with them. Not all the factors might be present in every case. Circumstances might prevent one or more of them being given effect to, but, in general, lay members of that Tribunal would expect the principles to be departed from only when some good reason is shown to justify such departure. There is also the warning at the end which Mr Schofield drew to our attention, and that is that the principles are not immutable. They will not stay unaltered forever. Practices and attitudes change. The factors stated are not principles of law. They are standards of behaviour and therefore, in cases before the Appeal Tribunal, there should not be an attempt to say:
"this is an Industrial Tribunal which did not have regard to or give effect to one of these factors had misdirected itself in law."
Only in cases where a genuine case for perversity, on the grounds that the decision flies in the face of commonly accepted standards of fairness, can be made out, are these factors directly relevant. They are relevant only as showing the knowledge of industrial relations which the industrial jury is to be assumed as having brought to bear on the case they have to decide.
The principles relevant to Mr Carr's submissions are first, that the employer will consult the Union as to the best means by which the desired management result can be achieved fairly and with as little hardship to the employees as possible. In particular, the employer will seek to agree with the Union the criteria to be applied in selecting the employees to be made redundant. When a selection has been made, the employer will consult with the Union whether the selection has been made in accordance with those criteria. Next, whether or not an agreement as to the criteria to be adopted has been agreed with the Union, the employer will seek to establish criteria for selection, which, so far as possible, do not depend solely upon the opinion of the person making the selection, but can be objectively checked against such things as attendance records, efficiency at the job, experience or length of service. With those principles of good industrial practice in mind we also turn to one paragraph in the Decision in Graham v ABF Ltd [1986] IRLR page 91 where on page 92 and 93 at paragraph 20 Mr Justice Waite said this:
"Having given the matter careful consideration, we have decided that this is indeed one of those rare cases where we are persuaded that the Industrial Tribunal did come to a conclusion which (in the sense we have mentioned) offends reason. We consider that any reasonable Industrial Tribunal properly directed in law would be bound to have held that the denial to Mr Graham of an opportunity of consultation and prior warning directed to his case rendered his selection for redundancy unfair. We say that precisely because of the nebulous nature (to which reference has already been made) of the criterion that was adopted in choosing him for redundancy. The more vague, the more subjective, the test, the more powerful in our judgment becomes the need that the employee should be given an opportunity of personal consultation before he is judged by it."
There was no disagreement between Mr Carr and Mr Schofield about the principles. Subject to a timely reminder by Mr Schofield that the principles in Compair Maxam are not principles of law, which render a decision liable to be set aside for error of law simply because the principles have not been observed.
Mr Schofield, in his helpful submissions, reminded us of the facts of the case. The main points which he made in answer to the criticisms regarding consultation and selection criteria were these. He reminded us that our power is limited to appeals on points of law. In this case the Tribunal had stated in its final conclusion in paragraph 12:
"...At the end of the day we are satisfied that the employer was acting within the band of reasonable responses of a reasonable employer in treating the fact that each of these applicants was redundant as a sufficient reason for dismissal..."
He says that we cannot interfere with that decision, unless we find either a mis-direction as to the applicable law or no evidence to support a particular factual conclusion of the Tribunal or perversity. We can only set it aside on the grounds of perversity if we find that the conclusion of the Tribunal defies logic or generally accepted standards in industrial relations.
Applying these general points to the particular grounds of appeal, he reminded us of this important fact, the Tribunal saw and heard the witnesses. It heard evidence and found as a fact that the managers and supervisors were involved in the procedures. He submitted that it cannot be said that there is no evidence to support the Tribunal's finding that the selection was aimed dispassionately and objectively to achieving the result required by the collective agreement with the Union. He referred us to certain passages in the Chairman's Notes of Evidence. He submitted that there was no principle of law which would allow this Tribunal to hold that the procedure, found as a fact to have been followed, was outside the range of reasonable responses or was perverse.
As to the consultation with the Unions, he looked not only at the documents summarised, relating to the eight meetings between representatives. He referred also specifically to the evidence of Mr Button, that the Union was informed that paired comparison was to be used. There was no failure to agree over the method. There was pressure from the Union to name names. He did not accept that there were repeated requests from the Union for selection methods. The selection method, he submitted, was stated on 2 October, and repeated on 4 October and there was no disagreement about the selection procedure. He said it could not be said that there was no evidence to support the Tribunal's conclusion that at all stages the Union was consulted. There was no mis-direction of law.
As to individual consultation, he said there was no principle of law requiring individual consultation before redundancy dismissal can be fair. Mr Carr accepted that as a general principle of law. He submitted that this was not a case where consultation went by default. There was consultation with the Union. There was evidence that each case was considered at the appeal stage. He went so far as to submit, in his oral submissions, that, even if there was no consultation prior to the appeals, the appeals made good any lack of consultation previously. He emphasised that each appeal took place prior to actual dismissal. He submitted that, on the evidence, the Tribunal was entitled to come to the conclusion that the dismissals were fair. We have no power to interfere on grounds of error of law.
In summary, he said the Industrial Tribunal had considered all the evidence and the arguments, had referred to the correct statutory provisions in Section 57, had referred to the leading authority Compair Maxam and had applied the right test. He reminded us that there had been an application for review for the Industrial Tribunal and that too had been unsuccessful. Rejecting the application for review the Chairman said this:
"We allowed Mr Blackwell to say whatever he wished but at the end of the day nothing we heard led us to believe that should we set aside our decisions on a rehearing we would come to a different conclusion. For reasons already stated, we are satisfied that all 7 of these applicants were dismissed by reason of redundancy and that the employer was acting reasonably within Section 57(3) of the Act in treating that as a reason for dismissal. Mr Blackwell once more referred us at length to the Compair Maxam case which we considered at the time and which we considered again at the end of his submission. We feel it is right to add that the Compair Maxam case lays down certain requirements but they are not rules of law which have to be followed in each case. Each case depends on its own particular circumstances. At the end of the day we remain satisfied that the employer was acting in each case within the band of reasonable responses of a reasonable employer. That is why we dismiss this application. It is in the interests of justice that there be an end to litigation."
In brief, there was no mis-direction in law. There was evidence to support the findings of fact in paragraph 11. There is nothing perverse about the decision.
We recognize the force of these arguments. They are arguments that frequently succeed on appeals in this type of case. Appeals in these cases are, in our view, of almost unique difficulty. They are much less cut and dried than ordinary unfair dismissal cases. We recognize that an employer, forced by circumstances to make a large number of redundancies, is faced with difficult problems. There are the problems of selecting appropriate criteria and applying them fairly to each individual. There are problems in the extent of consultation which can in practice take place.
In this case we have been persuaded by Mr Carr that the Tribunal decision cannot safely stand. We come to the conclusion, with considerable reluctance, that this case will have to be remitted to another Industrial Tribunal for re-hearing. Our reluctance is based on the fact that the relevant events took place in the Autumn of 1991. We recognize the difficulties there will be for the Appellants, the Respondents and a new Industrial Tribunal in trying to reach a just resolution of this dispute, so long after the relevant events. It is a course, however, that we have considered anxiously. We cannot see any way of avoiding it. The reasons why we allow this appeal are these. In our view, no Industrial Tribunal could properly have come to the conclusion, on the material we have seen, that there had been consultation with the Union at all stages on the question of criteria for selection. The fact which has had the greatest affect on us is that the stages of the collective agreement were not followed through. A decision to dismiss was made on 16 October 1991. The criteria for selection, which had been applied by the company (that is the document at pages 35-43) was not provided to any individual at any time. It was not provided to the Union representatives until 3 December, that is, after a considerable number of meetings with the Union and after the individuals appeals had been unsuccessful. We accept Mr Carr's submission there was, therefore, no consultation with the Union as to the criteria to be applied for selection. We understand that the collective agreement referred to certain matters, but, in our view, the Tribunal appear, in paragraph 11 of the Decision, to have confused themselves as to the criteria for selection, on the one hand, and the aim or objective of selection and retention, on the other. The Tribunal said selection was aimed dispassionately and objectively at achieving a workforce which could best contribute towards the efficiency of the workforce. (I think the second reference to workforce must be a reference to the business in which the workforce was employed). The Tribunal appeared to have assumed that, because that was the aim, therefore the criteria applied were objective and the method or manner in which they were applied was objective. Both of those assumptions are ill-founded. The position is that the Union was in no position to be meaningfully consulted on the question of the actual criteria for selection, because they did not know what they were, until the document which the employers had been using was disclosed to them. Simply knowing that that was the aim of the exercise, is not the same as knowing the selection criteria. Simply knowing or being told that the pairing method was being used is not the same as being told what the selection criteria are.
It was clear that from the evidence that, once the selection criteria had been disclosed in the detailed document, the Union registered a failure to agree with them. It was not just a failure to agree as to the quantum of payments. We agree with Mr Carr that, even if there was consultation of a kind with the Union against the background of the collective agreement, and the limited amount of information provided to them in the course of the meetings, as recorded in the Chairman's Notes of Evidence, the extent of consultation with the Union representatives was no substitute for individual consultation before the selection was carried out. We agree with him that there were subjective aspects to the selection criteria, which, in the absence of full consultation with the Union, would increase the need for individual consultation before the selection criteria were applied. As he points out, in this case there was no individual consultation. The Appellants were not given a sight of their own scores until the hearing before the Industrial Tribunal. We agree that the failure to consult the Union or, in default of the Union, the individuals before selection was made, was a matter on which the Tribunal failed to direct itself correctly, either as a matter of law or as a matter of fact. We reluctantly come to the conclusion that the decision of the Tribunal in paragraph 11 and 12 of the Full Reasons cannot be supported. It shows a failure to appreciate the full evidence in the case and the implications of the applicable legal principles. This is one of those rare cases on which we would come to a conclusion, that this decision is one that no reasonable Tribunal could have arrived at, on a proper appreciation of the facts and the law. In those circumstances the appeal is allowed. The case is remitted to a different Industrial Tribunal for re-hearing.