United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 926_94_2709

Appeal No. EAT/926/94

EAT/859/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 27 September 1995

HIS HONOUR JUDGE J HICKS QC

MR J R CROSBY

MISS A MADDOCKS OBE

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G T DESIGN LTD          APPELLANTS

MR L M RYAN          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR K JONES

(Director)

For the Respondent MR O SEGAL

(of Counsel)

Mallam Lewis

21 Beaumont Street

Oxford

OX1 2NH


 


JUDGE HICKS QC: The Appellant Company, GT Design Ltd, employed the Respondent, Mr Ryan, as a sales executive from 2 April 1991 until 27 August 1993 when he was dismissed for poor sales performance.

He applied to the Industrial Tribunal for compensation for unfair dismissal and the Tribunal, sitting in fact as a Chairman alone, found that he had been unfairly dismissed and assessed the compensation at a total of £8,967 (that I think is the compensatory award in addition to a small basic award).

The employers appealed to this Tribunal. The first group of grounds of appeal and, indeed, the ones which chiefly occupy the Notice of Appeal, really in our view amount to no more than questions of fact and amount to submissions that the Industrial Tribunal came to the wrong decision on a number of matters or gave insufficient weight to various arguments or evidence that were put before them.

It is quite clear that our jurisdiction is limited to dealing with questions of law and we are quite clear that Mr Jones, who is the Managing Director of GT Design Ltd and presented their case, has not been able to point to any error of law on the part of the Industrial Tribunal in coming to the conclusion that Mr Ryan was unfairly dismissed; for instance Mr Jones takes the phrase in paragraph 16 of the Industrial Tribunal reasons that it was for management to manage and not leave it to the commonsense of an employee, that being used in the context of the question whether Mr Ryan was aware of his own performance and of the Company's reasons for dissatisfaction with it, and in the same area Mr Jones criticises the Tribunal for, as he puts it, finding it acceptable that a salesman with Mr Ryan's experience only ever had an approximate idea of what his sales figures were.

These are plainly matters of evidence and fact and were for the Tribunal to decide, not for us, and do not point to any error of law on their part, and when they came to direct themselves as to the law, it is quite clear that they had regard to the way in which they should approach the matter and followed the appropriate course.

So we have come to the conclusion that the appeal, so far as it is against the finding of unfair dismissal, must be dismissed. But there is a quite separate point which Mr Jones did raise, although he did not devote much time to it, but which, it seems to us, is one that has to be taken more seriously. The way he put it, in response to a question from us in opening this appeal, was that accepting, as he very fairly and frankly does, the Tribunal's findings that the procedure followed by the Company was inadequate in terms of formal warnings and the like - accepting that, he said, "had we followed the right procedures Mr Ryan would still have been dismissed two months later". That is expressed in layman's terms but it fairly and squarely raises an issue which is conveniently approached by a well-known quotation from the speech of Lord Bridge in Polkey v Dayton Ltd [1988] AC 344, himself quoting from and approving the Judgment of Browne-Wilkinson J. in Sillifant v Powell Duffryn Timber Ltd [1983] IRLR 91 at p.97:

"There is no need for an `all or nothing' decision. If the industrial tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment."

In the context, it is clear that "would have been" and "would still have lost", refer to the hypothetical question: "what would have happened had the employer conducted the investigation and acted fairly both in the investigation and in what are called, conveniently, `procedural matters'".

We take the quotation from Polkey conveniently from a case which Mr Segal very helpfully drew to our attention, the case of Mr O'Dea v ISC Chemicals Ltd decided in the Court of Appeal on 28 July 1995 and, as we understand it, as yet unreported. We take it from that context because in that case the Court of Appeal went on to deal with the question whether there is, as had been suggested in the case of Steel Stockholders (Birmingham) Ltd v Kirkwood [1993] IRLR 315, a real distinction between procedural and substantial unfairness or, as it is sometimes called "substantive unfairness", such that only procedural unfairness brings into play the exercise which Browne-Wilkinson J. was describing.

In the case of O'Dea the Court of Appeal dealt with the matter in this way. They first of all quoted in the judgment of Peter Gibson, L.J., with whom the other two members of the Court of Appeal agreed, from Harvey on Industrial Relations and Employment Law D2549 with approval:

"In truth, whether unfairness is substantive or merely procedural cannot be assessed by a predetermined classification of conduct. Whether the failure was related to substance rather than procedure can only be judged in retrospect, and the criterion for so judging surely must be whether the unfairness made any difference to the outcome."

Having quoted that passage Peter Gibson, L.J., went on to say:

"In my judgment, in a case where the reason or principal reason for dismissal is redundancy but the employer acted unreasonably in some particular respect in the process of selecting the applicant for redundancy so that the dismissal was rendered unfair, it is for the industrial tribunal to decide what it is just and equitable in all the circumstances to award the applicant, having regard to the loss sustained by the applicant in so far as that loss is attributable to action by the employer .... . To a case such as the present, where the industrial tribunal are satisfied that the particular defect in what the employer did only deprived the applicant of a chance that he would have been retained in the absence of such defect, the applicability of the dictum, already cited, of Browne-Wilkinson J. and its good sense seem to me obvious. I do not regard it as helpful to characterise the defect as procedural or substantive nor in my view should the industrial tribunal be expected to do so .... ."

That, as is apparent from that quotation, was a redundancy case, but it seems to us that the principles enunciated there are equally applicable to a case such as this, where the matter is one of capability, and that therefore there was potentially a question for the Industrial Tribunal, having found unfair dismissal, to consider when assessing the compensation to be awarded whether this was a case where what Mr Ryan lost was (as it were) the certainty of definite continuation, or only what Browne-Wilkinson J., calls a chance, in view of the fact that his sales record was such that even had the employers acted perfectly properly they would, or might, have dismissed at some stage in any event.

Mr Segal, as we understand it, does not dispute that that was a matter which the Industrial Tribunal should have considered, not necessarily of course, that they should have come to the conclusion that a deduction should have been made, but that the matter should have been considered. Certainly, if he did not make that concession we take the view that that was a matter which the Industrial Tribunal should have considered.

The next question is "did they?". We fully accept and apply the well known principles that we should not examine the reasons of the Industrial Tribunals with a fine tooth-comb, or make assumptions that they have not considered matters when there is no good reason for making that assumption, but we are bound to say, looking at the reasons in this case that it does appear very strongly that the matter was not considered at all.

Mr Segal invites us to find that the Tribunal were directing their mind to this matter, or the Chairman was directing his mind to this matter, because of the terms of paragraph 18 of the reasons which read:

"18 The Tribunal concludes that his dismissal was not only procedurally defective, as it was, but was also for the reasons set out in paragraphs 15, 16 and 17 above substantially unfair."

We find ourselves quite unable to accept that that shows that the Chairman was directing his mind to this point for at least two reasons. The first is that it is not, on the face of it, anything to do with the point. Secondly, because of the place at which this falls; in the course of the reasons down to paragraph 18 the Chairman has been dealing with the issue of unfair dismissal and paragraph 18 is plainly his conclusion on that matter. He then goes on in paragraph 19 to say that after he had given his decision on that matter to the parties (with an outline of the reasons) he explained to Mr Ryan the alternatives available by way of remedy and that further evidence was then given on the issue of compensation and in paragraphs 20 to 23 the Chairman deals with the issue of compensation. So we conclude that paragraph 18 plainly, on its face, has nothing to do with the question of what is just and equitable to award by way of compensation in general, or in particular, the question whether the issue raised by Browne-Wilkinson J's remarks that we cited should be considered.

There is a further reason why this does not, in our view, help the Respondent to this appeal and that is that the only way (as we understand it) in which it can be supposed that in paragraph 18 the Chairman was directing his mind to the present issue is his use of the words "procedural" and "substantial" but it is that very distinction - the very attempt, as it were, to exclude the question by classifying it as substantial - that the Court of Appeal in O'Dea holds is wrong.

We have therefore come to the conclusion that it is not possible, giving the best interpretation and the most favourable assumptions that we can to the reasons given by the Chairman, to assume that he directed his mind to this point, and that we conclude was an error of law on his part and means that this aspect of the application, the remedy, must be remitted and to that extent the appeal allowed.

We have considered carefully whether we should remit it to the same Tribunal, that is to say to the same Chairman, or to a freshly constituted Tribunal and we take into account, of course, the saving of time and expense that would be involved in sending it back to the Chairman who has all ready dealt with the matter, but we have come to the conclusion that in the circumstances of this case, in which there was not only the original hearing, but a review by the Chairman in which he rejected the employer's case for a second time - in all those circumstances it would be appropriate to remit this to a freshly constituted Tribunal for a hearing as to remedy only.

It is, of course, a matter for the Industrial Tribunal organisation to decide how that Tribunal should be constituted, but we are sure they will take into account the question whether, in the circumstances of this case, it would be appropriate to have a full Tribunal including industrial members as well as the legal Chairman.

That disposes of the original decision of the Tribunal. There is also an appeal against the review decision, but it is, as we understand it, common ground that it raises no different issues and that our disposal of the appeal against the original decision really deals with all the issues between the parties, and in those circumstances, subject to any submissions that may be made, we think it appropriate to make no separate order on that appeal.