United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 603_94_0410

Appeal No. EAT/603/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 4 October 1995

Before

HIS HONOUR JUDGE J HULL QC

MRS T A MARSLAND

MRS R A VICKERS

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MRS K L YARDLEY          APPELLANT

GAULTS          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR N W COX

Free Representation Unit

49-51 Bedford Road

London

WC1R 4LR

For the Respondents MR M COLLARD

(of Counsel)

Messrs Sandoms

Solicitors

15 Station Road

South Norwood

SE25 5AH


 


JUDGE HULL QC: This is an appeal to us by Mrs Yardley, a young lady who was employed by the Respondents, Gaults, in their offices at Beckenham in Kent. Gaults are a substantial firm of Bailiffs. At the material time, they had no less than 200 employees in six or seven centres around the country, Beckenham being the centre dealing with the London work.

The work, of course, consisted essentially of collecting debts and executing court orders. It is specialist work; it is described as delicate; no doubt matters of confidence are involved and no doubt there are a good many discretionary decisions which have to be taken in executing court orders and in carrying out debt collecting, which require tact and considerable thought.

Mrs Yardley's employment began in the Computer Section on 1 October 1990 and there came a time, in 1993, when it was apparent to the Company (so they said) that it was essential to reduce the number of their employees. There was a redundancy situation. There were two main reasons for that. One was that at that date the Community Charge legislation was being, or had been, repealed and the Council Tax, which is in some ways similar to Rates, was being put in its place and that, as a matter of practice for the bailiffs, meant that there would be much less work. I do not need to go into the reasons, but it is fairly obvious if you think about it. The other reason was that they had just installed, at considerable expense, an elaborate computer system which would enable them (as it was put in one of the documents which we have read) to transfer documents directly to the screens of the computers. That was probably some sort of scanning arrangement, but again we do not need to go into that.

At any rate, for those reasons, which were accepted by the Tribunal after hearing the evidence, it was necessary to reduce numbers. Mrs Yardley was expecting a child and in May, 1993, she disclosed the fact that she was expecting a child to Mr Lee. Mr Lee was her Computer Manager. She had risen in the firm from being a mere operator to being supervisor of a small section known as the Pink Section, and her salary was about £9,500 a year.

The firm had to select people for redundancy. It was done partly by reorganisation; amalgamating in particular the roles of clerk and computer operator; and there was a question of the criteria. Adaptability and application to the task; the attitude of the employees and their suitability; those were the criteria which were adopted. They were criticised as being too vague, but the Tribunal found that they were applied fairly and that it was not unreasonable to apply those criteria.

Mrs Yardley was one of those chosen, among (I think) 11 out of the 50 at her place of work, for redundancy. An unfavourable view was taken by a Mr Sutton, whose task it was to assess her of her skills as a clerk, though as a computer operator and section leader she had apparently not caused any problems at all. When it was necessary to choose for redundancy, she was selected among other computer operators and other clerks and so she was finally made redundant on 28 May 1993.

She made her complaint on 20 August to the Industrial Tribunal. She complained of unfair dismissal and she asked for reinstatement. She put it very shortly "I was dismissed because they learned I was pregnant". That, of course, would be a quite inadmissible reason, on the face of it. "That is why I was selected for redundancy" and I think it would be legitimate to gloss that by saying "this was really a smokescreen. They did not want me. Redundancy was not the prime reason".

The Tribunal found it was a case of redundancy. They accepted the evidence as entirely genuine and they rejected the charge against the employers that the true reason was that she had become pregnant.

So up to that point, the employers were entirely successful, but it had to be conceded by the employers that they had not warned or consulted Mrs Yardley before her dismissal. Both those are important requirements. I do not think I can do better than to refer to Polkey v A E Dayton Services Ltd [1988] ICR 142. That was a case in the House of Lords; so what was said there is of the highest authority and no less so, because one of the Judges taking part was the Lord Chancellor, with whom three of the other Lords were content simply to agree, and Lord Mackay said, among other things, that consulting and warning the employee were important. He said that:

"Where there is no issue raised by sections 58 to 62 the subject matter for the tribunal's consideration is the employer's action in treating the reason as a sufficient reason for dismissing the employee. It is that action and that action only that the tribunal is required to characterise as reasonable or unreasonable. That leaves no scope for the tribunal considering whether, if the employer had acted differently, he might have dismissed the employee. It is what the employer did that is to be judged, not what he might have done. On the other hand, in judging whether what the employer did was reasonable it is right to consider what a reasonable employer would have had in mind at the time he decided to dismiss as the consequence of not consulting or not warning.

If the employer could reasonably have concluded in the light of the circumstances known to him at the time of dismissal that consultation or warning would be utterly useless he might well act reasonably even if he did not observe the provisions of the code. Failure to observe the requirement of the code relating to consultation or warning will not necessarily render a dismissal unfair. Whether in any particular case it did so is a matter for the industrial tribunal to consider in the light of the circumstances known to the employer at the time he dismissed the employee."

And he referred to the authorities and (as I say) three of the other Lords agreed with him, as indeed, did Lord Bridge, who gave the other substantial speech. Lord Bridge said, at page 162 letter H:

"... in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation. If an employer has failed to take the appropriate procedural steps in any particular case, the one question the industrial tribunal is not permitted to ask in applying the test of reasonableness posed by section 57(3) is the hypothetical question whether it would have made any difference to the outcome if the appropriate procedural steps had been taken. On the true construction of section 57(3) this question is simply irrelevant. It is quite a different matter if the tribunal is able to conclude that the employer himself, at the time of dismissal, acted reasonably in taking the view that, in the exceptional circumstances of the particular case, the procedural steps normally appropriate would have been futile, could not have altered the decision to dismiss and therefore could be dispensed with. In such a case the test of reasonableness under section 57(3) may be satisfied."

Of course, the requirement for warning and consultation is not spelled out in the statute itself, which leaves to codes and the practice of the Industrial Tribunal and the guidance in the higher courts what steps are to be taken in seeing whether the employer has acted reasonably; what steps the employer should take. Although they are not strictly propositions of law, the requirements which have been laid down very clearly, not only by the House of Lords, but in many other cases in this Employment Appeal Tribunal, and of course, in the Court of Appeal, are that in normal cases, both warning and consultation are very important.

It is only in the exceptional case, where there are special reasons on which the employer does conclude, or could reasonably conclude, that warning and consultation, which are two different things, would be completely futile, that both those matters can be dispensed with. And therefore, of course, if there is a case, as is the present one, where the employers have dispensed with those normal requirements, the Tribunal is expected to look very carefully to see first of all whether there are such exceptional circumstances and secondly, whether, having regard to those circumstances, the employer was justified in dispensing with warning, acted reasonably (to use the words of the statute) in dispensing with the warning and consultation. I will not deal with all the reasons why warning and consultation are important; they are self-evident to any good employer who thinks about it. A warning may enable an employee to take steps to mitigate any loss he may suffer; may enable him to suggest that redundancies are not necessary, or his own redundancy is unnecessary; so, of course, can consultation. There are all sorts of reasons, many of which are given in the cases, why these are very important. Redundancy may turn out to be unavoidable, but these steps are in general essential, unless there are special reasons for dispensing with them.

When we look at the decision, which is all that we have to look at in this case, we ask ourselves "looking at that decision, did this Tribunal, in fact, consider this matter properly? Did they find special reasons on the evidence?". A number of matters have been put to us, both in the Notice of Appeal and in the skeleton arguments, which essentially depend on evidence, and we do not have the evidence before us today. We are told that the division of this Tribunal before whom this appeal first came thought it unnecessary to call for the notes of evidence.

We make no comment on that, except to say that in the nature of things, we cannot judge the case on the evidence or form any view on the evidence, as to whether there is enough evidence to justify a conclusion or any evidence to justify it, or whether the decision is contrary to the evidence; those may be matters of law, but they can only be considered if we have the evidence before us and here we do not. We have to look at the decision.

What the Industrial Tribunal had to say about that is, of course, plainly set out in their decision and that is pointed out to us. They set out all the circumstances; they considered the criteria used and they thought that the criteria were fair; they considered the way they were applied; they considered that that was fair.

Above all they had to consider the question whether, indeed, the employers were acting in good faith, or whether this was something like a smokescreen to cover up dismissing this lady because of pregnancy. They found that against her. They were satisfied by the sincerity of the evidence which the employer gave. All those were matters on which they were perfectly entitled to reach a conclusion in the way that they did.

It is hardly surprising that they then dealt with matters other than the question of pregnancy, which was the Applicant's case, in a less detailed way. They said in paragraph 12 of their decision:

"12 So far as warnings were concerned the applicant was aware in April that there were likely to be redundancies although no specific warning of such was given to her. There was no consultation on the redundancy with the applicant prior to the meeting on 28 May when she was dismissed. The law does suggest that, in cases such as this, as much warning as possible should be given in order that the employee is aware of the situation and is able to make any suggestions for re-deployment."

That (with great respect to the Tribunal) is a somewhat watered down way of putting it. We would say that the law insists that there should be both warning and consultation and not only the law, but good practice insists that there should be, unless there are special reasons, exceptional circumstances in which it can be dispensed with.

Then they go on in paragraph 13:

"13 We accept the respondents' evidence that this was a very sensitive business and that the respondent was genuinely frightened of what damage could be caused to the business by any disgruntled employees. We find that this is one of the exceptional cases where the employer could reasonably have concluded at the date of dismissal that any warning or consultation would have been futile and could not have altered the decision to dismiss."

It has been suggested to us that that is, first and foremost, a perverse finding. We cannot make any such conclusion. We have not got the evidence in front of us. It is suggested that there was no, or insufficient, evidence to support it. We cannot say that.

What we must do is to ask ourselves whether this Tribunal has adequately set out what they are required to set out, and adequately dealt with this matter, which of course assumes added importance because it is the only ground which is pursued before us today, on this appeal. And one has (if I may say so) sympathy with the Tribunal which, having given its attention principally to the question which was principally before it, and quite properly done so, has dealt shortly with other matters which were essential to its decision, which were raised but which were not the principal ground which was put forward by the Applicant.

In our view, which is based upon authority, a party who reads the decision of the Tribunal must be able to say why they won, or, as the case may be, lost. The decision is not to be gone through with a fine tooth-comb to see whether any nit-picking can be done; to see whether an omission here or an unfortunate mistake there has been made, of an incidental sort.

What is necessary is to look at the decision; read it as a whole and say whether it fairly tells the Applicant (in this case) why she has been unsuccessful. Here the Tribunal merely say that the law does suggest that as much warning as possible should be given and they refer to the Respondent's evidence that this was a very sensitive business and the Respondent was genuinely frightened what damage could be done to the business by a disgruntled employee.

We are told, but again we cannot act on this because we have not seen the evidence, that one of the partners gave evidence that there had been serious damage caused on a previous occasion by a disgruntled employee.

We are all dissatisfied with the way in which this is put and the reasons which are given. It seems to us that where a Tribunal is confronted with the wholly exceptional case in which it appears to them that a dismissal is, or may be, fair, notwithstanding that there has been no consultation and no warning, the Tribunal should spell out exactly on what basis it has reached that conclusion. Probably any employer would be alarmed at the prospect that a disgruntled employee could damage his business. That must be a common experience. Most businesses have sensitive aspects. Sensitivity may be involved in various ways, and in various aspects of the business; perhaps in the sales part; perhaps in the debt-collecting part of the business; perhaps in dealing with overseas customers; there are all sorts of matters where sensitivity may arise.

We think that this Tribunal should have spelled out the grounds on which they reached the conclusion they did. They should have set out precisely what evidence they relied on, so as to show that they thought that this was not merely a business which was sensitive; not merely a business where the employers were genuinely concerned that damage might be caused; but what was exceptional. In what way did the requirements of this business, in these matters, go so far that it could justly be said that it was reasonable for the employers to conclude that it would have been quite futile to warn and consult and actually, perhaps, counter-productive.

Those matters should have been spelled out. It may be possible to draw an analogy with those cases in which the Court of Appeal has said that, where Parliament speaks of "special reasons", those special reasons are to be given expressly, whether by Magistrates or by Judges in the Crown Court. However that may be, relying on the guidance of many cases in the Court of Appeal, we think that paragraphs 12 and 13 fail to spell out, or to show that the Tribunal had adequately considered, the evidence of exceptional circumstances.

We cannot say that such exceptional circumstances did not exist, nor can we say that they did exist. Those are decisions of fact which Parliament has reserved for the "industrial jury", as courts have called the Industrial Tribunal. All we can say is that the reasons given by this Industrial Tribunal in their extended reasons are, in our view, insufficient on this very important topic and therefore all of us think that the just course to take is to remit this case. We will remit it to the Industrial Tribunal which heard it, against whom now no allegations can be persisted in of any sort discreditable to their considerations and their fairness in dealing with the matter, to ask them to make the findings on which they rely, if they continue on further consideration to rely on them, for saying that this was a case where warning and consultation could be dispensed with.

If they remain of that opinion, having considered it, and if they set out their reasons, then of course the Applicant will be able to see the exact basis on which she has failed on that issue. If, on the other hand, the Tribunal (which, as I say, we ask to reconsider this matter) reaches a different conclusion, or sets out reasons which in the Applicant's view are wholly inadequate, it may be that more will have to be heard of the matter.

That is something which we think we should say no more about because we are going to remit it to the Industrial Tribunal to reconsider it so far as necessary, to hear any further evidence, so far as they think it right, and in any event to set out reasons with reasonable fullness for their conclusion.

The appeal is allowed to that extent.