United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 1319_95_1809

Appeal No. EAT/1319/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 18th September 1996

HIS HONOUR JUDGE J HICKS QC

MRS E HART

MR J A SCOULLER

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MR M AKRAM          APPELLANT

RIETER AUTOMOTIVE CARPETS LTD          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR D WICKS

(of Counsel)

Messrs Jordans

Solicitors

Neil Jordan House

Wellington Road

Dewsbury

West Yorkshire

WF13 1HL

For the Respondents MR R F ASHTON

(Solicitor)

Messrs Hacking Ashton

Solicitors

Berkeley Court

Borough Road

Newcastle-under-Lyme

ST5 1TT


 


JUDGE HICKS QC: This appeal arises out of the dismissal on 14th June 1995 by the respondent employers Reiter Automotive Carpets Limited of the applicant and appellant Mr Mohammed Akram, who was a chargehand.

There is an unchallenged finding by the Industrial Tribunal that the reason for dismissal was redundancy. The tribunal go on to to say in paragraph 8 of their reasons: "The main ground for selection and the reason why the applicant was not chosen to stay as one of the 6 remaining chargehands, was because of his absentee record. He was off sick continually from August 1993 but prior to that he had had periods when he was off sick for various reasons."

Having found dismissal for redundancy, the Industrial Tribunal correctly asked themselves whether the selection procedure was fair and was carried out with due consultation. There is an unchallenged finding by the tribunal that the proper redundancy procedure was not carried out, and that the dismissal was therefore unfair. Having made that finding, the tribunal nevertheless made no award of compensation, and Mr Akram appeals against that decision.

In addition to the history which I have already summarised, the following findings and reasons of the Industrial Tribunal are particularly material to this appeal. First in paragraph 5 they find:

"The chargehands duties were to provide work to a cell, that means bringing in carpets for conversion, operating fork-lift trucks, giving basic instruction to direct operators and progress chasing. Those were the chargehands' responsibilities and a direct operators' duties were to work on the machinery within the area and if a direct operator could work a fork-lift truck and give basic instructions, he would then be given team leader status. The chargehands were seen and they were told of the situation and they were asked if they were prepared to transfer to work as a direct operation on the shop floor with team leader status. Some of them agreed. The applicant refused a transfer to that position, although he would have had chargehand status. That was the position but they would suffer a drop of 14p per hour in wages because of the bonus scheme."

Then in paragraph 10, referring to an earlier case where the applicant had been asked to work on the shop floor and coming back to the immediate circumstances, the tribunal says:

"When he was asked on this occasion to cease to be a chargehand and was offered alternative employment, he took it that he was again being victimised."

Then, after repeating their finding that there was a redundancy situation, they go on:

"But the method of selection was on the basis that he was off on long-term sick and, as recently as 21 February when there was a meeting at which the question of doing work on the shop floor was considered, the notes having been headed `long-term sick', the applicant could easily have had the impression that he was being dismissed on the grounds of long-term sickness, when in fact he was being dismissed for redundancy."

Interpolating there, that was a clear finding not only that that was Mr Akram's impression, but that he had reasonable grounds for it. Then later in that paragraph the tribunal find:

"... that it [that is to say the offer] was suitable alternative employment. We find that it was an unreasonable refusal by the applicant not to accept that in a redundancy situation, but the matter was not gone through in the proper procedure for a redundancy situation and the applicant thought that he was being dismissed on the grounds of long-term sickness."

We take that to be a finding that the alternative employment offered was objectively suitable, and that it would have been unreasonable to refuse that offer had the applicant properly appreciated that the potential dismissal was on the grounds of redundancy and what his rights and obligations in those circumstances were. Finally, at the very end of paragraph 10, the tribunal make this important finding:

"... had it been clearly pointed out to him from the start that it was a redundancy situation, he might have been more prepared to accept the alternative employment of fork-lift truck driver."

That, in our view, is a quite clear and explicit finding that there was a chance, to use the phraseology that is common in discussing this kind of situation, that if the redundancy selection process had been properly conducted, he would have accepted the offer.

Finally in paragraph 11, the closing paragraph of their reasons, the tribunal, having repeated their finding of unfair dismissal and the ground for it, go on:

"... we have come to the decision that even if the procedure had been carried out, if he had been consulted on a redundancy basis and told it was a redundancy situation, not a sickness one, we are satisfied on the evidence it would have made no difference. Therefore although we find that the dismissal was unfair, we find that it would not have made any difference and in those circumstances, we make no award of compensation."

There is an immediate question - which of course springs off the page, as it were - in comparing that with the closing words of paragraph 10. There seem to us to be three possibilities. One is that there is simply a flat contradiction, and that the tribunal is saying two opposite and incompatible things. That faces the problem that this was an experienced Chairman, and that he should indulge in such flat contradiction within a couple of sentences does seem difficult to contemplate. A second possibility is that in paragraph 11 the reasons are dealing, when they refer to making "no difference", not with what Mr Akram's response would have been had the offer been made in circumstances where he was fully aware of the redundancy situation, but with the fact that it would have made no difference to the conclusion that he would have been one of the persons selected for dismissal on the grounds of redundancy. The third possibility, perhaps the most probable, but we do not - certainly at this stage - have to decide between them, is that the tribunal were addressing the question which they had raised at the end of paragraph 10 by the words "he might have been more prepared", and as it were resolving it on the balance of probabilities and arriving at the conclusion that although he might have been, on the balance of probabilities he would not have accepted.

Those are the relevant parts of the tribunal's reasons and their findings of fact. We proceed to deal with the appeal, and I preface that by saying that this is an appeal to which, because of the dates and without any dispute between the parties, the Employment Protection (Consolidation) Act 1978 (as amended) applied, before its replacement by the Employment Rights Act 1996, and for convenience of reference and so as not to avoid a lot of circumlocution, I shall refer to the relevant parts of the 1978 Act in the present tense as if they were still in force; for the purposes of this appeal they were in force.

An award for unfair dismissal is required by Section 72(1) of the Act to consist of:

"(a) a basic award calculated in accordance with section 73, and

(b) a compensatory award calculated in accordance with section 74."

By making no award of compensation the tribunal clearly awarded nothing under either of those heads, and the issues on the appeal are whether in relation to either or both they erred in law.

Dealing first with the basic award, Section 73(1) provides:

"(1) The amount of the basic award shall be the amount calculated in accordance with subsections (3) to (6A), subject to [various matters]"

Then the following subsections down to 6A deal with details of the calculation in various circumstances. 6B, 6C and 6D deal with a separate matter, and 7 has been repealed, but 7A is material. It provides:

" (7A) Where the tribunal finds that the complainant has unreasonably refused an offer by the employer which if accepted would have the effect of reinstating the complainant in his employment in all respects as if he had not been dismissed, the tribunal shall reduce or further reduce the amount of the basic award to such extent as it considers just and equitable having regard to that finding."

Mr Wicks for the appellant says that that ground of reducing or eliminating the basic award was not dealt with by the Industrial Tribunal, and in any event is clearly not applicable on their findings of fact.

Despite the submissions - not, we think, made with great enthusiasm - by Mr Ashton to the contrary, we agree. The reference to reinstatement requires that the offer should have the effect "of reinstating the complainant in his employment in all respects as if he had not been dismissed". That is clearly a very strict test. It is plainly a different test, an independent test, from the question whether an offer of alternative employment, which by its nature is not reinstatement in the same employment, is reasonable. From the tribunal's findings in paragraph 5 of their reasons it is quite apparent that there were at least two differences between the appellant's employment and the offer of alternative employment, namely the fact that he would have to do shop floor work and that his remuneration would be reduced. Quite apart from any change of title, those two facts in our view quite plainly mean that there was no offer of reinstatement.

The argument turned next to subsection 7B as a potentially material ground for reducing or eliminating the basic award. It provides:

" (7B) Where the tribunal considers that any conduct of the complainant before the dismissal (or, where the dismissal was with notice, before the notice was given) ... was such that it would be just and equitable to reduce or further reduce the amount of the basic award to any extent, the tribunal shall reduce or further reduce that amount accordingly."

The appeal was argued on both sides on the basis that we have to consider whether the elimination of the basic award could be justified under that subsection, if not under subsection 7A, but it appears to us, having looked at the section since the argument concluded, and having given the parties the opportunity of making further submissions if they wish, that subsection 7B did not in fact apply in this case, because subsection 7C provides:

" (7C) Subsection (7B) does not apply in a redundancy case, unless the reason for selecting the employee for dismissal was an inadmissible reason; and in that event subsection (7B) shall apply only to so much of the basic award as is payable because of subsection (6A)."

"Inadmissible reason" is a specially defined term. It is defined by subsection 6B and it refers back to Section 57A(1)(a) and (b) of the Act, which we think we need not rehearse in detail. It is sufficient to say that they involve employees who are carrying on duties connected with health and safety at work, or involved in such matters on behalf of workers or as members of a safety committee. Clearly those provisions had no application to this case, and therefore on the face of subsection 7C subsection 7B does not apply and we do not have to consider it. Since the matter arose after the conclusion of argument, and there was therefore only a very short opportunity for the advocates to consider the matter, however, we shall deal with section 7B in case both we and the parties before us have overlooked something which should have been noticed, so that 7B comes into operation.

On subsection 7B, the question is whether "the tribunal considers that any conduct of the complainant before the dismissal was such that it would be just and equitable to reduce or further reduce the amount of the basic award." The first thing to be said about that, as in the case of 7A, is that it was not dealt with by the Industrial Tribunal, so that on any view they erred in law, but as with the case of 7A, we believe that it is possible to go further than that and to conclude that had they considered the matter the tribunal could have come to only one conclusion, namely that there was no such conduct as would make it just and equitable to reduce the basic award. On that point we were referred to by Mr Wicks for the appellant to the case of Nelson v British Broadcasting Corporation [1979] IRLR 346. That was a case not on section 73(7B) or its predecessor, but on the predecessor of section 74(6), which in dealing with the compensatory award gives the tribunal power - and indeed poses a duty - to reduce the amount if the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, and then there must be a reduction by such proportion as the tribunal considers just and equitable having regard to that finding.

The relevance of Nelson v British Broadcasting Corporation is that although the precise words of the two subsections are not identical the considerations advanced by the Court of Appeal in dealing with the matter, Mr Wicks submits and we believe rightly, are equally applicable to what is now section 73(7B). As Brandon LJ points out in his judgment, there are two necessary findings before the reduction can be made. One relates to causation or contribution, which is peculiar to section 74(6) and is not referred to, at least expressly, in section 73(7B). The second is as to the justice and equity of making a reduction, which is not a matter that needs to be canvassed here. But then Brandon LJ goes on to deal with the submission before the Court of Appeal on that occasion - that there must also be a finding that the contributory conduct simply the "conduct" in our case - "was culpable or blameworthy". He accepts that submission that that also is a requirement. The important point for present purposes is to be found toward the end of paragraph 43, where he says:

"This conclusion can be arrived at in various ways. First, it can be said that the epithet `culpable' or `blameworthy' should be implied before the word `action'. Or, secondly it can be said the expression `caused or contributed' impliedly incorporates the concept of culpability or blameworthiness."

As I have said, there is no express requirement of causation in the subsection with which we are concerned. But then he goes on as follows:

"Or, thirdly, it can be said that, in any case, it could never be just or equitable to reduce a successful complainant's compensation unless the conduct on his part relied on as contributory was culpable or blameworthy. For my part, I prefer the third way of arriving at the conclusion to either the first or the second, ..."

Now that reason which Brandon LJ relies upon is independent of the question whether there is an express requirement of causation, and is therefore in our judgment just as applicable to section 73(7B) as it is to section 74(6). We therefore accept the submission that in order to have an effect under section 73(7B) the conduct in question must be culpable or blameworthy, and there is no suggestion in the decision of the tribunal here that it was; in fact the whole reasoning proceeds on the basis that in the belief that he held that he was being dismissed on the grounds of long-term sickness, and on the finding that that was not just his belief - not just a wrong headed belief - but a belief that he could have easily obtained from the conduct of the employers, then his response was not culpable or blameworthy. The tribunal make no finding that it was and no suggestion that they considered it in that light, and indeed the proper inference in our view quite plainly from their findings is that they did not consider it culpable or blameworthy. Therefore even if section 73(7B), contrary to our view of the effect of subsection 7C, did apply, we are of the view that the tribunal not only erred in law in that their refusal of a basic award does not purport to be on that ground, but that even if they had purported to reduce or eliminate the basic award on that ground their decision would be contrary to their findings of fact and therefore wrong.

That deals with the basic award, and our conclusion therefore in regard to the basic award was, not only did the tribunal err in law, but that any tribunal properly directing itself as to the law on the facts which this tribunal found must have come to the conclusion that the basic award must stand in full.

The second part of compensation required by section 72(1) is the compensatory award in accordance with section 74. Section 74(1) provides that, subject to matters which are not relevant to this appeal:

"... the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

That of course is a general provision, but its application to the facts of this case is far from being free of help from authority. We were referred to the case of Dunlop Limited v Farrell [1993] ICR 885 EAT. We were referred to it, as we understand it, and perfectly and properly, not on the basis that it is the highest authority on the point but that it conveniently summarises a line of authority which stems from the highest possible source, namely a decision of the House of Lords in the well-known case of Polkey v Dayton Services Ltd. It is convenient to start at page 891 F:

"The mere fact that a dismissal is unfair does not mean that an employee is entitled to compensation for the loss as a consequence of his being dismissed. He is only entitled to the loss sustained so far as that loss is attributable to action taken by the employer, [We interpolate that that of course is a direct allusion to the words of section 74(1)] which is why, in a case where consultation would have made no difference, the compensation is limited in the way that we have indicated. In the well known case of Polkey v. A.E. Dayton Services Ltd ... Lord Bridge of Harwich quoted with approval some dicta of Browne-Wilkinson J. in Sillifant v. Powell Duffryn Timber Ltd ... where he said:

"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, the 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"

Since the decision in Polkey v. A.E. Dayton Services Ltd it is, we think, clear from that decision, and also from later authorities including Red Bank Manufacturing Co. Ltd v Meadows ... Roa v. Civil Aviation Authority ... and KPG Computer Support Services Ltd v. Abayomi ... that there has to be a two-stage process in cases where there has to be an assessment of compensation after a failure to consult. First, the tribunal must ask itself the question: If the proper procedure had been followed and consultation had taken place would it have resulted in the employee still being retained or would it have made no difference? If the answer is reasonably clear one way or the other there is no difficulty, but in many cases, of which this is one, the answer may be uncertain. In that situation in order to give proper effect to section 74(1) of the Act of 1978 and in accordance with the passage from the judgment of Browne-Wilkinson J. in Sillifant's case ... the tribunal should as the second stage of the process make a percentage assessment of the possibility of probability of the employee being retained which must then be reflected in the award of any compensation."

It seems to us quite clear that this tribunal unfortunately, having as we read it quite clearly found that there was a chance that the employee, Mr Akram, would or might have been prepared to accept the alternative employment had the redundancy procedure been proper, then did not go on to assess that chance. In the words of Browne-Wilkinson J., we see no escape from the conclusion that by the last sentence of paragraph 10 the tribunal thought there was a doubt whether or not the employee would have been dismissed and should therefore, again quoting Browne-Wilkinson's words, have reflected that "by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment."

That brings us back to the words of paragraph 11, because it seems to us that whatever is the explanation of those words, they afford no escape from the conclusion that the tribunal erred. If there was simply a flat contradiction that itself is an error of law, although as we have said we think that perhaps that is the least likely construction. If in paragraph 11, by saying "it would have made no difference", the tribunal was simply addressing the question whether there would have been any difference to the question "who was selected", then that, while a perfectly understandable finding, would not be a proper - or indeed any - approach to what is called in the cases the "second phase" of assessing the percentage chance. If the third explanation is the right one, that the tribunal was assessing the question raised by their finding that he might have been more prepared, and were resolving it in what Browne-Wilkinson J calls an "all or nothing way", that is to say as if it were a question that had to be decided on the balance of probabilities, then that again was an error of law, because on the authorities it is quite clear that that is not what has to be done at that stage. What has to be done at that stage is to assess the chance.

We have therefore come to the conclusion that the Industrial Tribunal erred in law in that respect also, but in contrast to the situation under Section 73 in relation to the basic award it is not the case in relation to the compensatory award that we are in a position to say what the right result would have been; it is for the tribunal of fact to assess the chance and to reach a conclusion on it, and we are not in a position to say that had they done so they must have arrived at some particular answer.

We therefore allow the appeal. We shall remit the application to an Industrial Tribunal but not of course for a total rehearing de novo, because the question of unfair dismissal has been resolved and is not to be reopened. So far as the basic award is concerned, we remit with a direction that on the facts as found by the Industrial Tribunal no reduction of the basic award is justified, but as far as the compensatory award is concerned we remit it on the basis that a finding is required as to the percentage by which the compensatory award otherwise payable should be reduced by reason of the chance that had proper redundancy procedure been followed Mr Akram might still have refused the alternative employment and thereby still have been dismissed.

I have said remit to an Industrial Tribunal; that leaves over the question of what Industrial Tribunal. We have had representations as to whether that should be the same tribunal if it can be reconvened, over which we have no control, or whether in any event it should be a different tribunal. There are as always considerations on both sides, and in this case they are not particularly easy to resolve because on the one hand this tribunal has not only dealt with the matter, as we find, in error but has also had two applications for review which have been rejected, so that may make it more difficult for them to approach the matter afresh. On the other hand the disadvantages of remitting the matter to a new tribunal are also clear and would create in our view even more difficulty, because there would have to be fresh evidence if the matter went to a different tribunal, and although we have made it clear on what basis they should approach the matter, nevertheless the parties would have the opportunity of bringing evidence which they had not brought to the first hearing, when prima facie they should have presented their full cases on both sides. There will also of course be the additional time and expense involved in such a rehearing of the evidence. On balance, we have come to the conclusion that the better course is to remit to the same tribunal if it can be reconvened, and their rehearing should be on the basis of the evidence they have already heard, the facts they have already found, so far as the primary facts are concerned, and should be guided by the decision that we have reached and the reasons we are giving for it.

An application for Legal Aid taxation on behalf of the appellant is allowed.