United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 41_94_0905

Appeal No. EAT/41/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 9 May 1995

Before

HIS HONOUR JUDGE J HULL QC

MRS R CHAPMAN

MR R TODD

---

BRITISH FLOWPLANT GROUP LTD          APPELLANT

(1) BRITISH FLOWPLANT GROUP LTD

(2) MR J GRIMSHAW

(3) MR D CONNETT          RESPONDENTS

---

Transcript of Proceedings

JUDGMENT

Revised


 


---

APPEARANCES

For the Appellant MR M WEST

Personnel Consultant

Peninsula Business Services

Stamford House

361-365 Chapel Street

Manchester M3 5JY

For the Respondents MR P GRUNDY

(of Counsel)

Molesworth

3-11 Drake Street

Rochdale

Lancs. OL16 1RM


 


JUDGE HULL QC: Mr Grimshaw and Mr Connett, who are the Respondents to this appeal, were fitters employed by the Appellants, "the employers" I will call them, British Flowplant Group Ltd. Mr Grimshaw began his employment in April 1989 and Mr Connett began his employment in April 1990. There came a time when it was necessary, in the view of the Company, to reduce the strength of their force of fitters. The method adopted was a fairly familiar one. Two foremen and an officer of the Company, a manager, took certain criteria and marked those criteria and it emerged that Mr Grimshaw had 112 points, a Mr Coombes also had 112 points and Mr Connett got 105 points. The next lowest number of points was 140. Management wished to reduce the number of fitters by three, so the choice was, on those figures, really a very obvious one and although a small adjustment was made to one of the figures, it followed naturally that these two gentlemen were, on those figures, made redundant and they complained to the Industrial Tribunal that they had been unfairly selected for redundancy and they asked for compensation.

In their applications to the Industrial Tribunal they did not go into the nature of the unfairness alleged. Plainly the burden was on the employers to establish the reason for dismissal and it would then be for the Industrial Tribunal to say whether, bearing in mind various matters, the employers had acted reasonably or unreasonably, fairly or unfairly, in treating that as a reason for dismissal.

The matter came before the Industrial Tribunal sitting at Manchester under the chairmanship of Mr Heppell, with two industrial Members, on 10 November 1993.

The employers were represented by a firm which, apparently, specializes in advising people about industrial problems, perhaps mainly employers, and there was an advocate there, a Mr Sherliker and he was the advocate for the employers.

The Tribunal decided, not surprisingly in the circumstances, that the employers should begin and two representatives of the employers gave evidence in the morning. I cannot, I think, do better than refer to the decision of the Industrial Tribunal. Their reasons, given in full, are fairly short. They set out the facts to which I have referred and they said:

"During the cross-examination of Mr Harmer [one of the management witnesses] it was elicited that in addition to the 15 fitters on the day shift there were five fitters on a night shift who had the same qualifications as those on the day shift. There were also five heavy goods vehicle drivers and the majority of the fitters had heavy goods vehicle driving licences..

4. From hearing the evidence for the respondent the Tribunal accepted that a redundancy situation had existed and that the criteria adopted were reasonable but without requiring the applicants to give evidence the Tribunal decided that the dismissals were manifestly unfair because the only people who had been included in the pointing system were the 15 day fitters whereas it appeared that the five night fitters should also have been included since they did exactly the same work except that they worked at night while the 15 worked in the day time. To limit the selection to the day time workers only rendered the whole selection procedure unfair."

They went on to consider the question of compensation and they decided that as essentially an arithmetical exercise and, after making a small mistake about the maximum amount, they eventually awarded each the sum of £10,000. They found that each of the men had failed to obtain employment. One of them had been engaged in trade but it had been at a loss.

We ask ourselves, what on earth happened here? It was a case of the Tribunal apparently discovering for itself, carrying out its duty of enquiry, that there was a night shift and taking the view that the night shift should have been included in the consideration of the criteria and then going straight on to say, without more, that the dismissals were, therefore, unfair and that, so far as the statutory maximum permitted, the two dismissed men who were before them should be entitled to an indemnity in respect of consequential loss. One asks how that can be. Did the advocate, Mr Sherliker, not say at once to the Chairman, "I note the view which you have taken but I wish to be heard on the matter of compensation?" Apparently, that did not happen, he did not take any point on that. What happened was that the Chairman, we are told, turned to the two Applicants and informally asked them a few questions about their losses. Had they had any further employment, and so on. He took their answers without their being sworn and based the award on that. Apparently, the employers would have wished to ask certain questions, but the two men did not give evidence and, once again, the advocate did not say to the Tribunal, "Sir, we wish to cross-examine these witnesses. We have a number of matters to put to them, may they please be sworn".

What we are told is that Mr Sherliker was in a state of shock as a result of these findings. Nothing of this sort had been expected. He had anticipated that, he having called his evidence, the two Applicants would then give evidence and the nature of the case of unfairness would become progressively clearer and, no doubt, he would address the Tribunal on that in due course. It is, in a sense, an object lesson to advocates of the extreme difficulty of advocacy, particularly in Industrial Tribunals, where there are no pleadings, the nature of the case of unfairness does not have to be spelled out, the burden is on the employers to show the reason for dismissal; and we are told that Mr Sherliker was in a state of shock, really, as a result of this. That is to say, for forensic purposes, he did not put forward things which he thought, after a bit, he should have put forward.

The matter is elucidated to some extent by a passage to which our attention was invited. What happened was that, after a short while, that is to say about five days after the decision was promulgated on 6 December, there was an application for review on behalf of the employers and on that application, the arguments which we have heard today were put forward. There is a passage which is of importance, at page 16 of our bundle, it is the second page of the application. After setting out some of the facts (the person who wrote this was not Mr Sherliker but had spoken to Mr Sherliker), it says as follows:

"The Tribunal in giving its decision felt that because the five night shift Fitters hadn't been considered in the target group for the scoring matrix, this was a major flaw in the Respondent's redundancy procedure to make it unfair, and that that was their unanimous decision. They also went on to indicate that they felt the procedural defect was so serious, that they didn't think the `any difference test' argument would apply in these circumstances. The Chairman's comments being; `we have considered the "any difference test" but find that it does not apply - so great is the procedural flaw - we are not therefore prepared to allow any reduction to the compensatory award'. Therefore, they sent both parties out to see if they could agree a level of compensation."

There the Chairman was saying that they had applied their minds to what is, for convenience, called the "Polkey test". Clearly, they would not have heard at that stage any submissions on that point. They had decided it. They had not heard from the Applicants yet. More important, they had not heard submissions, so far as we can see, from the employers' advocate; but they had decided it. In those circumstances, it is not perhaps surprising that Mr Sherliker hardly felt able to make any useful submission and so, the discussion between the parties obviously not having borne any fruit, they made the award which they did.

We now have the appeal to us and the main point, certainly the first point of the appeal, is that here there was quite clearly an error in that the Tribunal failed to focus its mind properly and fairly to this question of the Polkey point. One can, I hope, without being disrespectful of that well-known decision, say that in every case in which unfairness is established, it behoves the Industrial Tribunal to go on and consider what is the proper measure of compensation in respect of that unfairness. Very frequently, in fact, normally, it will be the loss of employment which is complained of. By statute they must ask themselves was it contributed to by the conduct of the Applicant in any way - blameworthy conduct? They must also, of course, go on to consider, if the Applicant alleges that he has suffered a prolonged period of unemployment, how long would his employment actually have lasted and if it is a case, as it is here, of saying, well, the employer made a mistake, then it behoves the Tribunal to say, as the House of Lords in Polkey said must be done or should be done in every case, to look and see whether this unfairness led to the whole of the loss. What were the prospects that, had the employer used perfect fairness, the dismissal would still have taken place? It may be that the Tribunal will say, in any particular case after hearing all the evidence and the argument, which they should, "We think, on balance, the dismissal would still have taken place and there might have been some delay but, in substance, there would have been no difference". They may say, "We think, on balance, the dismissal would not have taken place" and they may award compensation on a basis which is something close to indemnity. On the other hand, they may say, as is envisaged particularly in Polkey v A E Dayton Services Ltd [1987] IRLR 503 and another case, Sillifant v Powell Duffryn Timber [1983] IRLR 91, they may say, "We think that it is an imponderable here. Perfect fairness might or might not have led to dismissal. We assess the chances that it would have led to dismissal at, say, 40% or 60%, or something of that sort." In those circumstances, the "what difference test" is expected to be applied.

Here, the Appellants say that because of the way in which the hearing went, they did not have a chance of addressing the Tribunal and they say, moreover, "Since the Applicants came respectively bottom and second from bottom, it really is quite fanciful to say that anybody could be quite certain that if the five fitters from the night shift had been included, one or more of them would have come so low in this test that the Applicants would, on balance of probability, not have been dismissed." That is the general nature of the suggestion.

They also complain that by reason of the informal procedure adopted by the Tribunal, they were deprived of the chance of cross-examining the Applicants with regard to their loss. We do not attach nearly so much importance to that. It seems to us that however shocked Mr Sherliker was by what had happened, he really should have said if he was not happy about the question of their continuing losses. He should have said that that was a matter he wanted the Tribunal to go into, with such assistance as he could give them, and that he wanted the Applicants called to give evidence. We do not decide the case on that basis.

To continue with the story, the application for review having been made, the Industrial Tribunal rejected that. At page 27, the Chairman says:

"In exercise of the power conferred upon me by Rule 10(3) of the Rules of Procedure ... I refuse the application for review by the respondent set out in its representative's letter ... on the grounds that it has no reasonable prospect of success.

REASONS

The application does not disclose any of the grounds for review set out in Rule 10(1), and in effect, consists of grounds for appeal against the decision of the Tribunal."

We have been referred to a decision of this Employment Appeal Tribunal, unhappily not reported in one of the series of law reports, in which the question of the duty of an Industrial Tribunal in such circumstances is set out by Mr Justice Wood who, of course, until recently was the President of this Tribunal. He and his Members, Miss Smith and Mr Young, were considering the question of the duty of the Industrial Tribunal when a Polkey point arises, as it normally will in such circumstances as the present. This Tribunal said that any Tribunal considering a compensatory award should consider the application of the Polkey principle to the issues before it and then make its findings.

That is clearly a decision to which we have to pay the greatest respect and, indeed, it accords with our own belief that when the Tribunal comes to assess compensation it must do so on the proper principles. In this case it does seem to us that something which can properly be described as a procedural mishap has taken place. Here this Tribunal returned having heard only the evidence that the employers chose to put before it and having, apparently, discovered for itself that there had been this, as they saw it, unfairness. Because they were entitled to do that, they then seem to have proceeded on the basis that they had already decided the Polkey point, quite without being addressed upon it, so far as we can see. On any view, there would be a good deal to say about that, whether it was in fact just and proper to consider those fitters on the night shift, whether there was any reason why they should not be considered and what the effect of considering them would be.

Therefore, there was this element of surprise which, we are told, caused the representative of the employers, Mr Sherliker, not to intervene. It was a mishap. When the matter was taken up with the Tribunal, so far from saying that, there having been this mishap, they thought it was a proper case where they should review [and, of course, a procedural mishap is a matter where a Tribunal should review their decision, if they think it right to do so] they decided that what was being put forward was proper grounds for appeal.

Today the appeal is resisted principally on the ground put forward by Mr Grundy, who has, if we may respectfully say so, put forward his case with great ability and economy. He says that this is a case where Kumchyk v Derby City Council [1978] ICR 1116 applies. He says that that case shows that appeals to the Employment Appeal Tribunal are appeals on points of law and, therefore, points which are not taken below are not to be taken in front of this Employment Appeal Tribunal. We of course accept the principle of that case so far as it goes and Mr Grundy goes on to say that we still have no evidence that it would have made no difference if the Tribunal had considered the five fitters on night shift.

That may be. Of course, it is not for this Tribunal to say what evidence might have been adduced had the matter been properly considered. It does not seem to us that this appeal is ruled out by the fact that the employers have not seen fit to make a deposition or an affidavit saying what evidence they might adduce. It is put forward as a matter of principle.

It does appear to all of us that this is a case where this Tribunal proceeded far too quickly to their decision. It seems to us that the proper way for this Tribunal to go, having concluded quite properly as a result of what they had heard that there had been this unfairness, was to tell the parties that they had concluded that it was unfair that the night shift had not been included in the employers' deliberations. It would then, in our view, have been appropriate for them to ask whether either of the parties wished, in the circumstances, to adduce further evidence or, in the case of the Applicants, to adduce any evidence at all. It is to be noted that the Applicants, who it is said wished to say some harsh things about the way the employers had behaved, were being shut out from doing so. At that stage the matter was by no means closed and the Tribunal might very well have decided, in due course, that applying the Polkey test, the employees were entitled to little or, perhaps, even nothing; and therefore, it behoved them to ask the employees whether they wished to add to the evidence which they had heard already. So far as the employers were concerned, even if they were quite content to leave the evidence where it was and say no more, they would be expected, in the circumstances, to say, "Well you are going to have to consider the question of quantum, and it is therefore appropriate, at this stage, to address you on the Polkey point". So far from that, the Tribunal returned having, so far as we know, heard no argument about this and announced, in the terms which I have already read, that so great was the procedural flaw that they had decided not to apply the Polkey test. They were therefore not prepared to allow any reduction to the compensatory award.

They had decided what they had not been addressed on, so far as we can see, at all. That is a matter of surprise, as it undoubtedly was to the employers, no pleading had been delivered to this effect, that the defect in the proceedings was the failure to consider the night fitters. That was not to be found in the applications. Of course, the matter had not been argued.

It does seem to us that this was a mishap. The Tribunal should, in our view, having ascertained whether either of the parties wished to take the matter further with evidence, then have proceeded to the stage of considering the proper measure of compensation. They were undoubtedly under an obligation, in our view, to consider the Polkey point, because it was part of their obligation to consider quantum. The fact that it was not taken by the unhappily shocked Mr Sherliker does not, in our view, make any difference at all and we say that in reliance on the authority of the Hepworth Refractors v Lingard case, which has been cited to us.

They did none of those things. They did not embark properly on the quantum enquiry and complaint is made of the way in which they did conduct such enquiries as they did. Again, Mr Sherliker did not raise the point. As I say, that is not the ground of our decision.

It really is, with great respect, a non sequitur; it does not logically follow that because the procedural flaw is serious, therefore it is a great breach, and it necessarily means that the employees are entitled to 100%. That may be a factor to be considered when quantum is considered but we think, all of us, that in view of the procedural mishap which occurred here, there has been an error of law by the Industrial Tribunal in the way in which they proceeded and we think that the proper course is not to remit part of the case to a new Tribunal, or anything of that sort; we think that the entire case should be returned to an Industrial Tribunal, differently constituted, so that they can consider the matter from the beginning, with such assistance as the parties, are able to give them. The question of unfairness will not in any way be limited, of course, to the question of whether the pool was large enough, whether it should have included the five; there may be others who should have been included. This newly constituted Tribunal may decide that the pool was not unfairly restricted. It is entirely a matter for the Tribunal. They will hear, no doubt, if the Applicants wish them to, the other serious allegations the Applicants apparently want to make about their employers and they will decide on all the evidence: first of all, whether there has been unfair dismissal here. Secondly, if so, what if any discount should be made on the Polkey principles. Then they will go on to consider quantum in the narrower sense of arithmetic. That is the decision of us all.