United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 323_95_0612

Appeal No. EAT/323/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 20th October 1995

Judgment delivered on 6th December 1995

Before

HIS HONOUR JUDGE J HICKS Q.C.

MR R H PHIPPS

MR N D WILLIS

---

G C COOK AND 22 OTHERS          APPELLANTS

A P PRECISION HYDRAULICS LTD          RESPONDENTS

---

Transcript of Proceedings

JUDGMENT

Revised


 


---

APPEARANCES

For the Appellant MR B CARR

(of Counsel

R Howard

Messrs Rowley Ashworth

Solicitors

247 The Broadway

Wimbledon

London SW19 1SE

For the Respondents MR C BEAR

(of Counsel)

N Chronias

EEF

Broadway House

Tothill Street

London SW1H 9UQ


 


JUDGE HICKS: Section 59(1) of the Employment Protection (Consolidation) Act 1978 applies to situations in which an employee has been dismissed as redundant, but the redundancy applied equally to one or more others holding similar positions who have not been dismissed. In such a situation there is accordingly a group, consisting of the dismissed employee and those others, which is larger than the reduction required and from which a selection must be made. Such a group is commonly described as a "pool" and in this judgment we shall use the word in that sense. The subsection provides that where there is such a pool the dismissal is unfair if :

"(b) .... the employee was selected for dismissal in contravention of a customary arrangement or agreed procedure relating to redundancy and there were no special reasons justifying a departure from that arrangement or procedure in the case of the employee ...."

The Respondent employer in this case faced such a situation. It manufactures undercarriages and flying controls for aircraft at Speke, Liverpool, and before the round of redundancies in question had about 500 employees. In early January 1994, as a result of a deteriorating trading situation, it decided that it had some 90 redundancies. There were then a number of meetings between management and unions. Those in question in the present case were with the unions representing hourly-paid workers. There was disagreement as to the criteria to be applied in selecting the necessary number. The unions maintained that there was an existing agreed procedure or customary arrangement for selection, applied in earlier rounds of redundancies, namely "last in, first out". The employer disagreed and wished to apply a selection process including other criteria as well. That dispute was not resolved and the employer applied its own criteria, resulting (in the relevant "pool") in the dismissal of 26 of the Applicants in the present proceedings, of whom 23 are Appellants in the appeal before us. Their application to the Industrial Tribunal for compensation for unfair dismissal was dismissed for reasons which we must examine in more detail later, but which included findings that there was no agreed procedure and that insofar as there was a customary arrangement it had never resulted in an actual dismissal of anyone. There is no challenge to the former of those two findings.

This appeal raises the question of law how far, in order to be within section 59(1)(b), a customary arrangement must provide for, or have resulted in, actual dismissals.

The Appellants' initial stance, as expressed in their skeleton argument, was that the Industrial Tribunal erred in stating, as they did, that the arrangement must relate to selection for dismissal; it need only be one "relating to redundancy". The Respondent's initial position was to defend the tribunal's decision that since, in the series of earlier redundancy situations canvassed, it had never been necessary to dismiss anyone there could not have been any customary arrangement in the sense required by the section.

In the course of argument both parties shifted their ground. Mr Carr, for the Appellants, accepted that the implicit sanction of dismissal in the last resort is necessary to bring the arrangement within section 59(1)(b). We agree. The dismissal cannot be "in contravention of" the arrangement unless the scope of the arrangement covers selection for dismissal. Mr Bear, for the Respondent, for his part accepted that no dismissal need actually have resulted. Again we agree. The required scope must be the same for "customary arrangements" as for "agreed procedures" and plainly the latter will qualify if they cover selection for dismissal even if there have been no dismissals under them.

In the light of those concessions and our concurrence with them we see no difficulty of principle in construing the section in this respect. In order to be within section 59(1)(b) an arrangement must cover selection for dismissal, but whether it does so is a question of fact. The application of that general proposition to specific circumstances has to take account of the breadth of the term "arrangement". It may vary from written or oral exchanges which are close to formal agreements to cases turning solely on past practice. At the former extreme, the question whether the arrangement covers selection for dismissal is likely to turn on the terms of the exchanges; at the latter, instances of actual dismissal are likely to be decisive but their absence not necessarily so - inferences can be drawn, if appropriate, from events falling short of actual dismissal.

In assessing what inferences are properly to be drawn from past practice falling short of dismissal each case must turn on its own evidence, but the following considerations are likely to be germane:

(1) Section 59(1)(b) applies only if there is a redundancy situation affecting a "pool", in the sense defined above.

(2) Attempts to obtain voluntary redundancies from among the entire pool or from any sub-group larger than the reduction required are unlikely to amount to "selection" for the purposes of the statutory provision.

(3) In the absence of such attempts, or should they fail to produce enough volunteers, there will have to be selection by the employer of the necessary number of identified persons to leave the pool.

(4) Even if it is sought, in the first instance, to achieve that by measures short of dismissal it is likely to be the understanding that the persons so selected are those who, if no other disposal is available and accepted, will be dismissed.

There are at least three reasons why that should be so. In the first place, if the criteria used in the initial selection are those judged by the employer to be appropriate there will usually be no justification for changing them. Secondly, available modes of leaving the pool, short of dismissal, are unlikely to be intrinsically attractive to the selected employees and are therefore unlikely to be accepted without the implicit sanction of dismissal as the alternative. Thirdly, there will usually be widespread knowledge of the redundancy situation and of the stage reached in dealing with it, and since any attempt to change would entail dismissing someone not initially selected it would be difficult to defend and likely to meet fierce opposition.

That being our approach in the absence of authority, is there anything in the cases cited to us which requires or persuades us to alter it?

Mr Carr relied on McDowell v Eastern Road Services Ltd [1981] IRLR 482. In that case there was an agreed procedure which provided for consultation with the unions, selection for dismissal on a "last in, first out" basis and substitution of volunteers in certain circumstances. The applicants alleged departure from that procedure by lack of appropriate union consultation and failure to pursue adequately the possibility of obtaining volunteers. There was no allegation of departure from the agreed method of selection. (There was also an issue whether, even if not automatically unfair under section 59, the dismissal was unfair on the general criteria prescribed by section 57.) The Industrial Tribunal had dismissed the application and the Employment Appeal Tribunal dismissed an appeal. In delivering its judgment May J said that on the assumption that the alleged breaches of the agreed procedure occurred the appeal tribunal accepted the employer's submission that on its proper construction section 59 (then comprising only what is now subsection (1)), and in particular the words in sub-paragraph (b), apply only to the actual selection of the relevant employees for that particular redundancy, and held that the section applies only "where the actual selection of the relevant employee has itself been in contravention of an agreed redundancy procedure". There are later references to "[choosing] an employee to be redundant" and to the "selection of the person to be made redundant".

Mr Bear referred us to Rogers v Vosper Thorneycroft (UK) Ltd [1989] ICR 384. There had been a practice there of asking for volunteers and selecting for redundancy only those who volunteered. As a result the composition of the workforce became unbalanced and in order to rectify this imbalance the employer on the occasion in question selected the applicants and others for dismissal by criteria of its own, framed in such a way as to leave a balanced work force. The Industrial Tribunal dismissed the complaints of unfair dismissal and the Employment Appeal Tribunal and the Court of Appeal dismissed appeals. The judgment of May LJ, with whom Croom-Johnson and Woolf LJJ agreed, includes the following passages:

" The industrial tribunal, upheld by the Employment Appeal Tribunal in a judgment delivered on 4 February 1988, while holding that there was a customary arrangement in a wide sense, went on to say that that customary arrangement was not one within section 59(b) of the Act: it may have related to redundancy but these employees were not selected for dismissal in contravention of that customary arrangement. As an industrial tribunal put it: "There is, therefore, evidence that the customary arrangement was not an exhaustive one, but a preliminary step on the question of selection." And a little later: "If the arrangement was as we find it to be, that is a sort of halfway house restricting the area of selection as a first stage ..." It then went on to deal with the questions of special reasons."

(Page 386G)

" The issue is the question of the construction of the relevant words in section 59 of the Act. It can be put in this way: Does the customary arrangement have to relate directly to the actual selection of an employee for redundancy? Or alternatively, is it within section 59 of the Act if in effect it merely throws up a pool of employees from whom selection can be made?"(Page 387B)

" In my opinion the approach which we adopted in McDowell's case remains the correct one. I take the view that the industrial tribunal and the appeal tribunal adopted a wholly proper and correct approach in law to the facts and circumstances of this particular case and I would accordingly dismiss the appeal."(Page 388D)

We see nothing in either of these authorities inconsistent with our own conclusions as expressed above; they are both concerned primarily with the necessity for selection in order to come within section 59(1)(b), and with what amounts to selection for that purpose, rather than to answer the question "Selection for what?", which was not there in dispute.

We therefore turn to the question whether the Industrial Tribunal applied the right test. The relevant passages from their reasons read as follows:

"9. ... the procedure or arrangement must relate to selection for dismissal and not any other aspect of the employer's behaviour, such as calling for volunteers, identifying the pool from which selection will be made etc."

"11. ... There had, indeed , been a number of previous "redundancy situations". On each occasion the Company had called for volunteers and where there were insufficient had offered redeployment to that number of employees in the relevant group which would make up the shortfall. It had been identified those to whom such redeployment would be offered by means of length of service. On each occasion, those offers of redeployment had been accepted, so that it had not been necessary to dismiss anyone.

12. In short, length of service had been used as a means of determining those to whom redeployment would be offered but had never been used to select a single employee for dismissal. Accordingly, there had never been any customary arrangement to that effect."

In our view the tribunal misdirected itself in law. The references to selection "for dismissal" in paragraphs 9 and 12 would be unexceptionable if understood and applied in the sense which we have explained above, but it seems plain to us that the criterion actually applied was solely the one expressed by the words "so that it had not been necessary to dismiss anyone" in paragraph 11. The tribunal did not consider the question whether there had been on each earlier occasion a selection which amounted to selection for dismissal, albeit that ultimate step was avoided.

The appeal must therefore be allowed and the application remitted, but we have to consider the questions to whom and on what points. There are five areas to be considered. In logical order the first is whether there was any customary arrangement at all. The second is what, if there was such an arrangement, were its criteria for selection. The third is the question whether on the true construction of section 59(1)(b), as we have held it to be, selection under any such arrangement was selection for dismissal. The fourth is whether the selection of the Appellants was in contravention of any such arrangement. The fifth is whether, if all the earlier questions are answered in favour of the Applicants, there were special reasons justifying the departure.

It is plain that on the unchallenged findings of the tribunal the selection criterion, if there was a customary arrangement complying in all other respects, was "length of service", meaning "last in, first out", and that it was contravened. The second and fourth points need not therefore be referred. On the other hand the tribunal expressly refrained from reaching a decision on the fifth, the special reasons issue, so it must be referred to be dealt with if it arises. That leaves the first and third.

On the third issue we have reached the conclusion that on the primary facts found by the Industrial Tribunal any properly directed tribunal must have come to the conclusion that the selection made on the earlier occasions referred to in paragraph 11 of the reasons was selection for dismissal, in the sense which we have explained. There are no findings to set against the matters developed in item (4) of our numbered considerations; on the contrary the phrase "so that it had not been necessary to dismiss anyone" support the inference that but for the acceptance of redeployment dismissal of the persons selected would have followed. We do not therefore consider it necessary to remit that issue.

Issue one is the most problematical. Mr Carr submits that it is clear from paragraph 11 of the reasons that a customary arrangement is being found; otherwise, he says, the Industrial Tribunal would have taken the "shorter route" of dismissing the application on that ground. We are not sure that that would necessarily have been shorter but it can be said, as we have already indicated, that logically it comes first. That, however, is of little weight, for any court or tribunal is entitled to dispose of the dispute before it by adopting any reasoning which justifies the decision, without canvassing other means (even if logically prior) of doing so. Mr Bear, indeed, submits that the tribunal did not need to decide whether a custom had been established because of taking what he calls their "short cut". We have come to the conclusion that in the absence of an explicit finding on the point it is not right for that decision to be made by us and that this point must therefore be for the Industrial Tribunal.

The application is therefore remitted for the purposes only of finding (i) whether there was a customary arrangement at all, in the sense explained above, and (ii) whether, if there was, there were special reasons justifying a departure from it. We consider that the remission should be to the same tribunal, if it can be reassembled, and that it should decide the issues remitted on the basis of the evidence already heard.