United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 471_94_2909

Appeal No. EAT/471/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 29 September 1995

HIS HONOUR JUDGE J HICKS QC

MR P DAWSON OBE

MISS D WHITTINGHAM

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PICKERINGS LIMITED          APPELLANTS

(1) MR P ELLIOT

(2) MR J R McCARFRAE          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR J MIDDLEBURGH

(of Counsel)

Messrs Bhagwandeen & Co

331 City Road

London

EC1V 1LJ

For the Respondents MR D O'DEMPSEY

(of Counsel)

Messrs Lawford & Co

Solicitors

102-104 Sheen Road

Richmond

Surrey


 


JUDGE HICKS QC: The Respondents to this appeal, Mr Elliot and Mr McCarfrae, were Lift Engineers, who had worked for the Appellant employers for some considerable time - Mr Elliot since 1972 and Mr McCarfrae since 1979 - when they were dismissed on the ground of redundancy in 1992.

The Industrial Tribunal, on their applications, found that they had been unfairly dismissed and awarded them compensation and the employers appeal against that decision.

The first ground of appeal is that the Industrial Tribunal misdirected itself in law, and the passage in the Tribunal's reasons which is said to involve that misdirection is paragraph 5, which reads as follows:

"5. It is provided by Section 57 of the Employment Protection (Consolidation) Act 1978 that in determining whether the dismissal of an employee was fair or unfair, it shall be for the employer to show:-

(i) What was the reason for the dismissal,

(ii) That it was a reason falling within Section 57(2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held,

(iii) Where the above conditions have been fulfilled, that the employer acted reasonably in treating it as a sufficient reason for dismissing the employee, having regard to all the circumstances including the size and administrative resources of the employers undertaking, and that question shall be decided in accordance with equity and the substantial merits of the case."

What is said is that it is not "for the employer to show" (to put it in the normal terms of legal technicalities, there is no onus on the employer) so far as head (iii) of those three items is concerned, and we say at once that that is plainly right and has been so held in, among other cases, the case of Post Office (Counters) Ltd v Heavey [1990] ICR 1 which was cited to us. Mr Middleburgh, for the Appellants, submits that that being so the decision of the Industrial Tribunal is irretrievably flawed by that misdirection and must be set aside. We have to consider whether that submission is well-founded. He relied for the proposition that that was the inevitable result of the misdirection on the case of Post Office Counters to which I have just referred.

In that case, it was held by this Appeal Tribunal, allowing an appeal from the Industrial Tribunal, that the Tribunal had failed to consider the reason for the dismissal under Section 57(1) of the 1978 Act and that they ought to have found that the employer had established that the employee was dismissed for misconduct, before they considered the issue of the reasonableness of the dismissal under Section 57(3). And then follows the ruling on the present point that there was no burden of proof on either party when considering the reasonableness of a dismissal under Section 57(3) and that the Industrial Tribunal were wrong in placing the onus on the employer.

The crucial passage in the judgment of the Tribunal, as delivered by Mr Justice Wood at page 6(B) of the report, is this:

"Until the reason is found, the tribunal is unable to proceed to section 57(3) and therefore the appeal must succeed, but let us turn to consider the later submission. Mr Clark submits next that the tribunal in their reasons, in sub-paragraphs (b), (c) and (d) above, erred not only in placing the burden of proof on the employer but also in importing the notion of the criminal burden of proof. This submission is also clearly well-founded."

We conclude from that passage that the first and primary ground on which the Tribunal allowed that appeal was the failure on the part of the Tribunal to find the reason for the dismissal under Section 57(1). However, we accept that it was a further ground for allowing the appeal that the Tribunal had misdirected itself as to the burden of proof under Section 57(3), but it is plain that the misdirection there went well beyond that involved here of imputing the burden to the employer because there the Tribunal, according to the judgment of the Appeal Tribunal, imported the notion of the criminal burden of proof. Moreover, although we have not investigated the facts of that case in detail, Mr Middleburgh accepts that that was (as it were) not just an academic misdirection but one which on the facts of that case affected the outcome.

In this case we have a misdirection as to onus, but it certainly does not go to the extent of imputing any criminal burden of proof. What is more important is to ask whether it affected the outcome in any way. Rules as to onus are in a sense somewhat of a peculiar kind because the circumstances in which they can have an affect on the outcome are fairly limited. If there is no evidence whatsoever on the issue in question then it has to be decided according to the onus of proof and the party on whom the onus lies loses. That is not this case.

If the Tribunal of fact, after considering and weighing the evidence, finds itself unable to come down on one side or the other as to where the balance of probability lies, again the matter can only be resolved by the application of a rule as to onus, and as has been remarked by courts considering Section 57(3) it is somewhat of a puzzle, not yet directly addressed or resolved, what would happen in that event where there is no onus, as under Section 57(3) it is clear there is not.

A third way in which a rule as to onus may effect the validity of a decision is in a situation in which the Tribunal of fact, in reaching its conclusions, uses phrases which make it possible that it allowed a mistaken view as to onus to affect the result - as for instance under sub-section 57(3) if an Industrial Tribunal were to use such phrases as "the employer has not proved", or "the employer has not established", or "the employer has not persuaded us", of matters under Section 57(3).

Outside those three categories, rules as to onus simply do not enter into the picture. If a Tribunal of fact, on the evidence, clearly and explicitly makes findings of fact without any indication that a wrong view as to onus has been applied prima facie those are findings of fact which the Tribunal has reached on the balance of probabilities and no rule as to onus affected the matter at all.

In our view this is plainly such a case. Mr Middleburgh was not able to direct our attention to any finding of fact of the Industrial Tribunal in this case which either was, or could on any plausible argument be supposed to be, affected by the misdirection as to onus, which in a purely verbal sense it had plainly allowed itself to fall into in paragraph 5. Indeed, on the contrary, from time to time in its findings the Tribunal uses phrases which if they betray any application of onus at all seem to place it on the employee, by their use of such phrases as that they were not prepared to find that the Applicant's criticisms of the scoring were "substantiated". Of course, it was not for the employee to substantiate the matter, it was one of those facts within section 57(3) which the Tribunal was to address for itself without any onus one way or the other.

For those reasons, we have come to the conclusion that the misdirection of law in paragraph 5 of the Tribunal's reasons did not affect, and cannot conceivably have affected, its consideration and conclusions under section 57(3) of the Employment Protection (Consolidation) Act 1978 adversely to the appellant, and that it would therefore be quite wrong for us to set aside the decision on that ground.

A further ground advanced by Mr Middleburgh was that of perversity, but in our understanding that general ground really falls into two very distinct categories in the context of this case, and one of them we can dispose of very briefly because Mr Middleburgh submitted to us that there were certain findings described by him as secondary findings of fact which were perverse in the sense that they were contradictory or findings which no Tribunal acting rationally could have made. It is sufficient to say that we find nothing in those criticisms whatsoever and it is not necessary to occupy time in this judgment in going through them in detail.

But the other part of this submission does raise more serious questions and it turns on the conclusions reached by the Tribunal in sub-paragraphs 6 and 7 of paragraph 11 of their reasons. It is perhaps helpful to set the scene for these particular sub-paragraphs by saying that the general background of fact (most of which we need not go into) was that in an undoubted situation where there would need to be dismissals on the ground of redundancy, the employers put into effect a procedure for selecting the persons to be made redundant which was fairly elaborate in the sense that it required assessment under (I think) six categories. The assessment was carried out in this case by the immediate supervisor of the applicants, a Mr Kettle. The scoring in each of those categories was not simply left to his unfettered discretion, but was guided by quite detailed notes and guidelines in the case of each category and the whole process was discussed by him with his superior before it was put into operation.

The Tribunal found however, in conclusions of fact which are unimpeachable and not attacked in this appeal, that there were a number of short-comings in the way in which the employers dealt with the dismissal of the applicants, including failure to consult them adequately or at all before selecting them for redundancy, giving them the impression that there had been consultation with their trade union when that was not the case, sending them out on a further job after the initial indication that they would be made redundant in circumstances in which the employees justifiably believed that the redundancy notice had been cancelled, and then summarily dismissing them at the close of that piece of work.

As I have said, it is not suggested before us that those findings by the Tribunal, or the conclusion which they reached on the basis of those findings that the employers had not acted reasonably and fairly within sub-section 3 of section 73, can be challenged. But one of the other matters which the Tribunal naturally had to consider was the criteria for selection themselves and the way in which they were applied by Mr Kettle and, as to that, the Tribunal reached the conclusion, to which I have already referred but which I have not yet read, those in sub-paragraphs (vi) and (vii) of paragraph 11, which are as follows:

"(vi) The criteria used to select the applicants for dismissal were largely subjective and to that extent potentially unfair, but the Tribunal accepts that Mr Kettle did his best to score the applicants fairly; and we are therefore not prepared to find that the applicants criticisms of the actual scoring was substantiated by the evidence before the Tribunal.

(vii) Nonetheless, the criteria for selection adopted by the respondent was sufficiently flawed that the Tribunal cannot be satisfied that the outcome would (or might) have been the same if a proper procedure had been adopted; and it follows that we would not reduce the applicants compensation on that basis."

Mr Middleburgh submits that by reference to the documentary evidence and the notes of evidence of the oral evidence before the Tribunal this was perverse and simply not open to the Tribunal. Indeed, he puts it as high as saying that there was no evidence on which they could find that the criteria were "largely subjective and to that extent potentially unfair", or that the criteria were "flawed", and despite the submissions by Mr O'Dempsey to the contrary we have come to the conclusion that that criticism of the Tribunal's decision is justified.

We have been taken through the documents to which I have already referred, which constituted the criteria in the sense that they set out the way in which the six categories were to be assessed, the matters to be taken into account in each category and the range of markings to be assigned in different situations and it is not necessary to go through those in detail. We have been taken through them and, drawing on the experience of the members of this Tribunal with industrial experience, as well as looking at them (as it were) from the outside, they plainly are a set of criteria well within the bounds of what a reasonable and fair employer might accept and put into operation.

So far as the application of those criteria were concerned, of course there was the express finding of the Tribunal that Mr Kettle did his best to score the Applicants fairly and that cannot be and is not challenged.

The passages to which Mr O'Dempsey drew our attention in the notes of evidence were as follows. First of all in the cross-examination of Mr Brewer, who was Mr Kettle's superior; there is this sentence:

"The criterion markings were not set in stone until individuals had been told of their selection."

We do not see how that can possibly be said to be evidence that the criteria were largely subjective, unfair or flawed, or that the procedure was unfair. There is some evidence that after Mr Kettle had carried out his assessment, his markings were examined by more senior managers for reasonableness, but that seems to be an eminently proper feature of such a scheme.

Then, a little later in Mr Brewer's evidence, he says (and it is obviously being put to him in cross-examination):

"We did not produce guidance documents for the individuals. They did query the scores. They did not need guidance to do that. If you issue guidance, it can be very confusing."

And it is the case, and was found by the Tribunal, that the Applicants were not shown their scores, nor was it explained to them how the scores had been arrived at, but that, of course, is not the point to which this criticism by the Tribunal of subjective, unfair and flawed criteria is directed - it is a separate point.

Then in Mr Kettle's evidence, and again in cross-examination, he dealt with discipline, timekeeping and attendance for which he marked 5 and said:

"Their timekeeping is below average. They were occasionally off with problems with their cars. Elliot had no time off in the twelve months before redundancy, nor did McCarfrae."

That was the one instance where there was a piece of evidence which one could compare with the marking scheme (if I can call it that) actually laid down, and there are two things to be said about it.

First of all, Mr Kettle's application of the scheme was the very matter which the Tribunal did not criticise and nor is it part of the criteria themselves, it is a separate question. Secondly, for what it is worth (because as I have indicated it is not really relevant), when one compares that evidence with the marking scheme then it is within the range which that scheme allows for.

A little later in his cross-examination he deals with quality of work, and plainly it was put to him in cross-examination that in one particular instance the clients had been pleased with the job and he accepted that. He also accepted that he had received no complaints from customers about the quality of the Applicants' work, but he said that was because he always put the problems right.

Then, a little later, he dealt with adaptability and accepted that they were good average fitters, but on the head of adaptability he said that his reason for scoring them at 3 was that they learned slowly and frequently made mistakes. That, again, is plainly a matter which was to be taken into account under this head. A little later he dealt with interest and initiative, one of the other categories, and gave his reasons for the mark which he had given there.

None of that, in our view, in any way impinges on the fairness or unfairness of the criteria themselves. It is manifest that some of the criteria, as to quality of work, adaptability and so on, had some element of subjectivity in them, in the sense that they relied on the judgment of the person making the assessment in his capacity of supervisor of the employees concerned, but it is very difficult to see how that element of judgment could be avoided in the case of such matters as quality of work, adaptability and so on, and we have already dealt with our view as to the acceptability of the criteria and the whole policy of the employers in selection, as it was promulgated by them.

Then when Mr Elliot, one of the employees, gave evidence, he said:

"I cannot understand the markings. I agree that different people have different opinions. He [Mr Kettle] could have different views on our strengths and weaknesses."

Again, that goes to two points other than that which is the subject of the Tribunal's criticism in sub-paragraphs (vi) and (vii), namely the failure to explain to the Applicants and the fact that an element of judgment on Mr Kettle's part was involved.

Then, a little later, Mr Elliot criticised one particular decision to retain a person, who he says is not as good as him; that again goes to Mr Kettle's application of the scheme, and finally Mr McCarfrae, in the course of his evidence, said: "I do not think this was an honest and objective assessment", but that is a criticism of Mr Kettle, which was rejected by the Tribunal. And then he goes on to deal with his markings under particular heads and as to quality he said: "Kettle always came out to adjust and test our work. It would take up to four days to get it as he liked it". Mr McCarfrae plainly took the view that Mr Kettle was over-particular, but the evidence that it took up to four days to get things as he liked it was perfectly capable of being understood as justifying Mr Kettle's concern about the quality of work. "He would want it exactly to his liking", Mr McCarfrae said, but again, if Mr Kettle, as was found by the Tribunal, was making an honest and fair assessment to the best of his ability that in no way goes to establish that the criteria used for selection were open to criticism.

We have therefore come to the conclusion that this is one of those cases, infrequent as they may be, where there really is no evidence on which the Tribunal could have reached their conclusion that the criteria used to select the applicants were largely subjective, potentially unfair or flawed.

The next question is, what follows from that conclusion? Mr Middleburgh seeks to rely on it as a ground for setting aside the finding of unfair dismissal, but in our view that would be quite wrong. It is absolutely plain from sub-clause (vi) of the Tribunal's findings, in our view, that on the issue of unfair dismissal, although they took that view of the criteria, they did not rely upon it as one of their reasons for finding the dismissal unfair. Those reasons were amply grounded on the sorts of flaws in the conduct of the employers which I briefly outlined earlier and in our view, therefore, the error into which the Tribunal fell in finding the criteria unfair and flawed did not affect their decision on the issue of the fairness or the unfairness of the dismissal, which should therefore stand.

However, in sub-paragraph (vii) the Tribunal, in our view, equally clearly were turning from the question of fairness or unfairness of the dismissal to the question of whether they ought to consider what is commonly called the Polkey question, that is to say, in dealing with compensation, should they assess the chance that even with complete fairness and reasonableness on the part of the employer, the applicants might still have been selected for redundancy. And there we find that the conclusion of the Tribunal is unsatisfactory and unacceptable in two respects.

First of all they, in our view, asked themselves the wrong question in saying "the Tribunal cannot be satisfied that the outcome would, or might have been the same if a proper procedure had been adopted" instead of simply asking themselves the question "what was the chance that had the employers acted fairly and reasonably in the selection process, the Applicants would still have been dismissed" and secondly, because their reason for declining to address that question was their conclusion that the criteria for selection were unfair and flawed and, as we have indicated, we find that there was no evidence on which they could have reached that conclusion.

Our decision therefore is that for the reasons we have given the application should be remitted for a re-hearing of the compensation issue only, not the issue of unfair dismissal.

We have considered whether that should be to the same Tribunal or to a differently constituted one and we have come to the conclusion that, if the Tribunal can be reassembled, then the matter should be remitted to them and that, in that event, they should not hear any further evidence, but should deal with the matter on the basis of the evidence that they have already heard.

If it is impossible to reassemble that Tribunal, then of course, inevitably it will have to go to a differently constituted Tribunal. It would still only be for a compensation hearing, not for a full hearing, but with a different Tribunal we take it that inevitably they would have to hear evidence.