United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR R A SMITH (Consultant)
For the Respondent	MR S ASNELINE (Employment Law Adviser)


 


JUDGE BYRT QC: This is an appeal against the decision of the Industrial Tribunal sitting in Manchester on 30 January 1996, when they unanimously decided that the Applicant, now the Respondent in this appeal, was unfairly dismissed by reason of constructive dismissal.

The facts can be stated quite shortly: the Appellant company was in a difficult trading position in the summer of 1995. Sales were down and management had to take certain unpalatable decisions. On 14 August 1995 the Managing Director held a meeting of all the workforce (seventeen in number) save the Respondent. The Respondent did not attend because at that time he was on holiday and it was stated by him and accepted by the Tribunal that he had only been notified of the holding of the meeting at some time between 3.30 -4.10p.m. on the day of the meeting. The Industrial Tribunal expressly came to the finding that they did not criticise the Respondent for not downing everything on his holiday and repairing to the employer's premises in order to attend the meeting.

At the meeting the employers put forward two options for solving their economic problems. One involved four redundancies but would result in an alteration of the shift pattern, or eight redundancies in which case the current shift pattern would be maintained. The workforce that attended, all 17 of them, very rapidly accepted the first of those proposals which involved the minimum redundancies. The Respondent learned of the decision, taken by his fellow employees and by the company, when he attended to carry out his shift that evening at 7.00 p.m. He disagreed with the decision. It involved a substantial loss of pay and a move to unsocial hours, and accordingly he decided forthwith to apply for the position of one of the voluntary redundancies.

The Tribunal found that the Respondent's opposition to the new proposals was adamant and that he maintained that position right through until the eventual dismissal and termination of his employment. On that evening he telephoned Mr Burn, the factory manager, saying that he wanted to accept redundancy. The Industrial Tribunal came to the conclusion that he expected that he would in fact get that. On 16 August there was a meeting between the Respondent and Mr Oakes, the manager, in which questions of severance pay, payable to him in the event of him being made redundant, were discussed. He was asked to sign a document which the Industrial Tribunal thought was oddly worded. It stated that whoever signed it indicated that they wished to have their employment terminated with effect from 21 August, that is, on the following Monday, and were accepting the severance terms "as agreed today", that is the day of the meeting. The Industrial Tribunal found that probably the Respondent did not understand the full implications of that document because he happened to be dyslexic. Nonetheless he signed the letter. Again the Industrial Tribunal found that he had clear in his mind that he was going to get a redundancy payment.

On 17 August all the volunteers for redundancy, I believe there were eight of them out of a workforce of eighteen, received letters indicating which of them were to be declared redundant, as according to the new scheme of things there were only going to be four redundancies. The Respondent received his letter and he learnt from it he was not going to be made redundant. The letter concluded by saying that in the circumstances therefore it was expected he report to start the new shift pattern the following Monday, 21 August. On receipt of that letter the Respondent was considerably distressed as he was left only with the option which he, in the Tribunal's view, had found unattractive from the start.

On 18 August he managed to secure a meeting with Mr Oakes. He attended with another of the people whose application for redundancy had been rejected, a Mr Morrisey. It was a stormy meeting and the two employees demanded an explanation as to why the redundancy applications they had made had not been followed through as they had expected. Mr Oakes apparently made little or no contribution during that discussion. He says he had no opportunity to explain. It was followed up by a letter of the same date in which he told the Respondent he had not been made redundant because he was the most experienced chargehand in the company and they were going to be short of experience if he did not stay on.

The Industrial Tribunal found that whilst the Respondent may have suppressed his objections to the new terms whilst redundancy was on the cards, he was now voicing, in the clearest terms, his objections to the new proposals. They summed up their views by saying the Respondent was left only with the clearest of orders, namely that he was to attend on 21st and conform to the new arrangements that had been agreed.

The Tribunal, thereafter, following its decision that the employers had unilaterally imposed fresh conditions upon the Respondent, went on to consider whether those new terms went to the root of the contract. They took into account the fact that there was a substantial loss of pay, that there had been changed hours of work which were unsociable, and came to the conclusion that they did. Thereafter they came to the conclusion that indeed the Respondent had been constructively dismissed within the terms of Section 55(2)(c) of the Employment Protection (Consolidation) Act. That is a conclusion which the Appellants to this appeal do not challenge. The Tribunal went on in paragraph 12 to conclude that that dismissal was unfair, and it is that conclusion which the employers have challenged.

The Industrial Tribunal went on to consider questions of compensation. I shall return to that at a later stage. The Industrial Tribunal went on in paragraph 14 to consider one other matter which had been advanced in argument by the employers before them, to the effect that this was in fact a fair dismissal on the basis that the reason for it had been some other substantial reason within the meaning of Section 57(1) of the Act. The Tribunal went on to say that, as a result of the absence of a procedure which would be necessary to make such a dismissal fair, they were prohibited from considering that particular submission. Accordingly we are not prepared on that account to alter their finding that the dismissal had been unfair.

The Appellant's case has been argued fully and comprehensively by Mr Smith on behalf of the employers. He began by accepting that the employee had been constructively dismissed but he then says that everything thereafter which the Industrial Tribunal concluded was at fault. It is said first that they failed to direct themselves as to the law to apply, and as a result came to certain conclusions which, standing on their own, might seem surprising. This placed the Appellants, their advisers, and indeed as he submitted this Tribunal too, in a difficult position, because the Tribunal below failed to state the reasons for those conclusions, so that each of those other parties might test their approach to the problem.

Mr Smith submitted that when considering the relevant questions which should follow a finding of constructive dismissal one has to go straight to Section 57 and consider the terms of that section, and if you do not, then the Industrial Tribunal gets itself into problems. He submits that that is exactly what the Tribunal fail to do in this case.

The first consideration of the Tribunal under S.57 is to make a finding about the reason for dismissal. That is made plain by Section 57(1)(a). Was it a reason falling under sub-section (2) which primarily relate to the circumstances of the employee, or was it some other substantial reason such as to justify the dismissal of this particular employee? Mr Smith put it that they had to find whether there was a potentially reasonable reason in this particular case for dismissal. There is a problem here and I feel it right that I should mention it because we addressed the matter during the course of argument, that is that the employer's Notice of Appearance seems to rely solely upon the issue as to whether the employee resigned or not.

At the hearing, the employers advanced a submission based upon the reason for dismissal being some other substantial reason. It is quite plain that the Industrial Tribunal permitted them to argue that point and indeed as I have already indicated, made a finding in respect of it, and certainly they make no complaint that this was a departure from the Notice of Appearance. The nearest that the Industrial Tribunal came to a finding of fact about this particular submission is contained in paragraph 14 of the decision:

"... The Tribunal would accept, for the purposes of that argument, that it may well have been the case that circumstances which might have led to that conclusion [namely the dismissal had been for some other substantial reason] existed in this case but the Tribunal also find that in this regard the lack of procedure which would have been necessary to make such a dismissal a fair dismissal leads us to the conclusion that we cannot entertain that submission which does not, therefore alter our overall decision that this was an unfair dismissal."

Mr Smith submits that the Tribunal's failure to find that this was the reason for dismissal amounts to perversity. He points to the fact that on 21 August the employers were in an intolerable position as a result of the employee's intransigence. It would be inconceivable that on that date they could have accepted back the employee on the old terms of contract, when the rest of the work force remaining in employment had accepted the new. We heard his submission to the effect that effectively the Industrial Tribunal in their reasons made no express finding as to what the reason for dismissal were. He then goes on to say that without any reason being found, it is impossible for the Tribunal to say whether the employers had a reasonable belief in the existence of that reason or indeed to come to a finding that the employers had acted reasonably in treating it as a sufficient reason for dismissal.

The sole finding, as Mr Smith pointed out, is contained in paragraph 12, where the Tribunal stated their finding in these terms:

"We find therefore that the Respondent constructively dismissed the applicant and that such dismissal was unfair in all the circumstances."

That was as far as they took the reason for dismissal and it is all that they stated about whether the reason for dismissal and the dismissal itself was fair or unfair.

There is no indication before coming to that finding that the Tribunal had directed themselves to what was necessary to be found under Section 57(3). They do not spell out any reason for their finding that the dismissal was unfair. It is clear, however, that they came to their finding of unfairness in that particular paragraph before they went on to consider in paragraph 14 the substantive submission that had been made by the employers; to the effect that the reason for dismissal was some other substantial reason. They dismissed the idea that they should consider this particular submission as justifiable or fair reason because of lack of procedure. But again, as Mr Smith points out, the Tribunal does not specify what they meant by lack of procedure. Accordingly, the Appellants submit that, overall, this Tribunal cannot be satisfied that the Industrial Tribunal applied the right tests and indeed submits the probabilities are that the Industrial Tribunal approached the matter in the wrong way and without the relevant sections in mind.

Turning to the question on compensation, Mr Smith directed us to Section 74(1) of the Act which states that compensation should be based upon what the Industrial Tribunal considers to be just and equitable in all the circumstances. In this particular case, the Industrial Tribunal awarded the employee forty-nine weeks pay at the old rate, that is twenty-three weeks up to the date of the Industrial Tribunal hearing, and twenty-six weeks afterwards. Mr Smith complains that the Industrial Tribunal do not state the factors they took into account in declining to make any reduction in this particular award, and indeed he submits that the presumption is that, as the Industrial Tribunal made no deductions at all, it had obviously presumed that, if he had not been dismissed, the employee would have continued his employment for the Appellants for the forty-nine weeks for which they compensated him, and would have done so under the old terms, so far as pay at least. He says that when one bears in mind that the remainder of the workforce had accepted new terms of employment, this would have given rise to a wholly unacceptable industrial position. He furthermore says that this is a curious conclusion for the Tribunal to have come to, bearing in mind that the employee had indeed asked for redundancy. Furthermore, he says, the employee's advocate, in front of the Industrial Tribunal, had only asked for a basic award and compensation for loss of statutory rights, he had not sought a compensatory award. Accordingly, in making one, the Industrial Tribunal had exercised his submission. Once more it was submitted, that overall it is difficult to say, from the reasons given in the findings of the Industrial Tribunal, just what was taken into account in making this compensation award, and what factors led the Industrial Tribunal to make no reductions.

Mr Asuline on behalf of the employee made submissions to the following effect: he said that it was self-evident from reading the Tribunal's reasons why his client had been dismissed, as also was the unfairness of that dismissal. Basically it was that he had had imposed upon him new terms and conditions of contract without his consent being secured. He accepted that having found constructive dismissal the Industrial Tribunal had then to turn to a consideration of those matters raised by Section 57 of the Act. He submitted it was implicit and quite plain that the Tribunal took into account all the relevant factors that they had to take into account under Section 57(1) and 57(3), and ultimately, he says, they came to the conclusion that the company's economic plight was insufficient to justify the dismissal. In that way he sought to uphold and maintain the findings of unfair dismissal.

So far as compensation is concerned, he suggested that the argument advanced by Mr Smith, was one which had not been raised before the Industrial Tribunal. As a result, he said, according to the authority of Kumchyk v Derby City Council [1978] ICR 1117, they should be debarred from raising it now.

The findings of this Tribunal on this latter point first; bearing in mind that the Respondent's advocate had not requested a compensatory award, and the fact that the Industrial Tribunal despite that, had gone ahead and made one, makes it difficult for us to uphold the compensation awarded by the Industrial Tribunal. As for the fact that the Appellants are debarred from raising this point at this particular stage, not having argued it in the Tribunal below, one has to take into account the fact that it is vouched for in Harvey that it is for the Tribunal of its own motion to determine what would have been the case, had the Respondent not been dismissed unfairly, or alternatively, had any defects in the procedure leading to dismissal being cured and corrected. Accordingly, we are satisfied that this was a matter which essentially was within the province of the Industrial Tribunal to have dealt with of its own motion. We do not accept what Mr Asunline says about this, but accept Mr Smith's submission.

Coming to the substantive issue as to whether there is sufficient findings by the Industrial Tribunal to say why the dismissal was fair or unfair, we have to say that we do not share Mr Asunline confidence that the Tribunal had directed its mind to Section 57(1) or sub-section (3). We are satisfied that if they did, they insufficiently stated the factors that they took into account in considering each of the items that they are required to take into account under those two sub-sections. Accordingly we accept Mr Smith's submissions that the only way that this matter can be satisfactorily dealt with, is for this case to go back to a new Tribunal for a hearing de novo. We should say, however, that whilst, of course, it is entirely a matter for the new Tribunal to decide how it orders it procedures, we do point out that, at this particular stage, the employers have conceded that there has been a constructive dismissal. It would therefore seem that the principle point (though I refrain from saying the only point) that has to be considered by the new Industrial Tribunal is what follows from its finding of constructive dismissal, what the reason was for the dismissal, was that reason one which the employers reasonably believed and whether it reasonably justified the decision to dismiss.

So far as compensation is concerned, if they find that the employee was unfairly dismissed, they should take into account any submission made by the employee's advocate to the effect that he is claiming only a basic award and loss of statutory rights; but thereafter they should consider the various factors that are required to be taken into account under the overall requirement that the award should be such as is just and equitable, and in the process of doing that, they have to take into account what would have been the position had the employers approached the dismissal fairly and equitably. If they decide to make no reductions, they should make plain why they are not doing so.

We accept that the Industrial Tribunal in stating its reasons does not have to set them all out as if theirs was a detailed High Court judgment. But, at the end of the day, they are required by authority to state sufficient reasons to enable the party that loses to see why he has lost and to enable his advisors and thereafter the reviewing tribunal to check out that the Tribunal below have approached the issues in an appropriate manner. In all the circumstances we direct that this case goes back to a new tribunal to be heard afresh, and in doing so we allow the appeal.