United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 475_95_0602

Appeal No. EAT/475/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 6 February 1996

Before

THE HONOURABLE MR JUSTICE TUCKER

MRS R CHAPMAN

MISS A MADDOCKS OBE

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BPC SECURITY DOCUMENTS (LEEDS) LTD          APPELLANTS

(1) MR B ARMITAGE

(2) MR S BROADHEAD          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR PETER OLDHAM

(of Counsel)

Messrs Hammond Suddards

2 Park Lane

Leeds LS3 1ES

For the Respondents MS INGRID SIMLER

(of Counsel)

Messrs Kershaws

160 Brompton Road

Knightsbridge

London SW3 1RP


 


MR JUSTICE TUCKER: This is an employer's appeal against the decision of an Industrial Tribunal sitting at Leeds on two days in November 1994 and on 17 February 1995. There were three Applicants complaining of unfair dismissal in a redundancy situation. The unanimous decision of the Tribunal was that one of these, Mr G K Johnson, was not unfairly dismissed but that the other two, Mr S C Broadhead and Mr B Armitage, were unfairly dismissed by the Appellants.

The background to the proceedings can be taken from paragraphs 3-6 of the Tribunal's decision. The Respondents to the application, the Appellants before us, are BPC Security Documents (Leeds) Ltd. They are one of 14 companies in a group of companies. They carry on business as manufacturers of specialized stationary.

The Applicants, Mr Johnson and Mr Broadhead, joined the Appellants in 1973 and Mr Armitage 10 years' later.

In 1993 the Appellants began to lose money. They had to declare redundancies. In November of that year there were five compulsory redundancies. On 21 January 1994 the decision was taken to declare 29 redundancies but after negotiations and following a number of volunteers, there remained a reduced need to declare five compulsory redundancies.

As the Tribunal said in paragraph 6 of their decision:

"The real issues in the case are focused on the fairness of the selection process. From the outset the respondents proposed to base their selection for redundancy on an evaluation of the skills of the employees needed, rather than on the basis of `last in first out' (LIFO), or any similar method of selection. The applicants submit that a document drawn up in 1974, known as `the blue book', amounted to an agreed procedure."

This was drawn up after a good deal of negotiation. It was called "A Scheme for Protection of Employees" and the Tribunal set out its material terms, in particular, paragraph 9 of that book, head "Selection of Redundancy Employees", sub-paragraph (b) being the critical passage. It says this:

"The selection of redundancy employees within each category will be determined in accordance with the length of continuous service in the establishment concerned, ie last in first out, but this general rule may be subjection to variation in consultation with the unions concerned."

In paragraph 7 of their decision, the Tribunal say this:

"In 1974, `last in first out' was no doubt a fair and sensible way of selecting for redundancy. The tribunal accepts the evidence, led on behalf of the respondent, that with the advance of technology, `last in first out' became less and less appropriate, and there was a real business need to focus on skills rather than on length of service. However, there was no attempt by the respondent to negotiate a revised agreement, perhaps because redundancies were rare."

Mr Oldham, on behalf of the Appellants, criticises that last sentence as being a perverse finding in that he submits there was no evidence to support it.

Another finding of the Tribunal at paragraph 9 has attracted the same criticism. Mr Oldham complains that the finding that the Appellants never attempted to negotiate the agreement on any new basis was also perverse and suggests that the Appellants forced their decision on the Union and never attempted to obtain the Union's views upon it.

At paragraph 10 the Tribunal went on to make another disputed finding that the blue book and in particular paragraph 9 contained therein amounted to an agreed procedure. This expression is taken from s.59(1)(b) of the Employment Protection (Consolidation) Act 1978, which section was in force at the time of these dismissals. The Tribunal found that the two employees were selected for dismissal in contravention of the agreed procedure relating to redundancy and there were no special reasons for justifying a departure from that procedure in their cases.

The first ground of this appeal is that the blue book was not an agreed procedure. It being submitted, in reliance on the judgment of Mr Justice Hutchinson in Suflex Ltd v Thomas and others [1987] IRLR 435 that that term has contractual overtones. But there is nothing in the statute or in any of the decided places to suggest, eg, that the agreed procedure must be signed or that it has to be contractually binding, which the Appellants submit are features significantly missing from the blue book.

In our opinion, the agreed procedure does not have to possess these formal characteristics. It is sufficient if its terms are known to both parties, ie, employers and employees or their unions, and that both parties have agreed to them, either expressly or impliedly, perhaps by their conduct over the years. The agreement does not necessarily lapse or cease to have effect if, on some other and earlier occasion, the parties agree to vary it or do not seek to apply it.

The procedure contained in the blue book had been in existence since 1974, ie, nearly 20 years at the time we are concerned with. It had never been withdrawn or revoked by the Appellants. This appears from the fact that when their divisional personnel director, Mr Watts, answered the question in form HR1:

"Is there an agreement with the union on redundancy?"

He put down:

"The blue book."

He thereby acknowledged that there was an agreement with the union and that it was contained in that book. Had that not been the case, Mr Watts could have said so in answer to the question.

It is clear from parts of the evidence and the documents which have been put before us that the Appellants concede that there was some agreement contained in the blue book, though they seek to limit its effect to questions of calculating the cash terms of any compensatory payments.

Mr Oldham submits that the question whether there was an agreed procedure, is a question of law, which he can argue before us. Ms Simler, on behalf of the Respondents, submits that it is a question of fact which cannot be raised before us, since there was evidence to support the finding. In our opinion, it is a mixed question of law and fact. There was sufficient evidence to enable the Tribunal to make findings of fact on the matter and in so far as it was a question of law, in our opinion the Tribunal came to a correct decision. We think that in all the circumstances of this case that they were correct in finding that the blue book was an agreed procedure. As we have sought to make clear, it does not, in our opinion, affect the existence of the underlying agreement if, on previous occasions, the unions have not sought to rely upon it. If the Appellants no longer wished the agreement in the blue book to remain in force. They could have taken steps to withdraw the book and to make it plain that they were bringing the agreement to an end. It may well be that in the light of today's more competitive business environment, the retention of skills may well become of paramount importance and it would be understandable if an employer might wish to renegotiate the procedures which were formally adopted. But that must be properly and clearly done.

The second ground of appeal is that even if there was an agreed procedure, there were special reasons to justify a departure from it and that the Tribunal's findings to the contrary were perverse. The matters submitted by the Appellants as constituting special reasons were the consultations and negotiations which they claim they had with the union prior to declaring the redundancies and also the fact that the principle of LIFO had been departed from on previous occasions without dissent.

In order to succeed on this ground, the Appellants have to show either that there was no evidence to support the Tribunal's findings or that these findings were ones which no reasonable Tribunal properly directing itself could reach. But in our opinion there was evidence upon which the Tribunal could reach such a decision. It was contained in the oral evidence which they heard and in particular in the documents which were before them and which we have been shown, relating to discussions between the employers and the unions in a series of meetings in early 1994.

The Appellants' case is that this evidence shows that there were consultations or opportunities for consultation, about the application of the skills matrix and that it was a perverse decision to say that there was insufficient consultation.

We disagree with the Appellants' submissions because in our opinion what took place at those meetings were not consultations. There were, in our opinion, no discussions or negotiations about the selection criteria to be adopted. The principle matter discussed was whether there need be any redundancies at all. On the question whether these were consultations or not, two examples will suffice. One at page 41 of the bundle, where Mr Evers explained that:

"... there would be no working foreman in future, and all personnel would report direct to the Shift Manager and be fully flexible with the Assistants. Mr Place [the union representative] said, `I know where you are coming from but there is still specialist skills required, and the key is flexibility'. ... Mr Evers once again stated that the company could not continue as at present, and unless changes were made the company would sink fast. Mr Evers asked the personnel attending the meeting what other suggestions they might have to save money."

There is nothing there to indicate, to our mind, that there was any discussion about the selection process. I return to the document:

"No answers were forthcoming, and Mr Evers went on to state the only way to build the company and to save the company, was with the right people and the right attitudes, and therefore any redundancies would be chosen on a skills analysis basis and the best people would be kept."

At page 43 of the bundle:

"Mr Evers explained in great detail that the `Blue Book' should be used for calculation only and was not used for the position of choosing redundancies."

To our mind Ms Simler is right in submitting that Mr Evers was there putting a stop to any discussion. He was certainly not inviting any further discussion.

The third ground of appeal related to the Tribunal's finding that Mr Johnson was fairly dismissed. It is submitted for reasons which we find difficult to follow that that finding was inconsistent with the Tribunal's findings in relation to the other two Applicants and that there was a failure of reasoning which vitiates the whole of the Tribunal's decision-making process. It is further suggested that there has been here an error of law, which was so much at the heart of that decision-making process that it cannot be certain that if such an error had not occurred, the remaining part of the decision would be the same.

But in our opinion there were distinctions between the case of Mr Johnson, on the one hand, and the cases of the other two Applicants on the other. In paragraph 13 of their decision, it seems to us, the Tribunal set out those distinctions. They say that:

"Mr Johnson, along with all the other employees, was assessed in accordance with the skills matrix. He had rather a low score, and he understandably felt aggrieved by that."

It does seem that a number of employees were assessed in accordance with that matrix. It does not necessarily follow, and it did not follow in Mr Johnson's case, that the selection for redundancy was in every case based on that assessment and this is what the Tribunal found in this passage:

"But the Tribunal finds that his selection was not on the basis of a low score on the matrix. He was selected because his job had in effect disappeared. We find that his selection was not in breach of the agreed procedure."

And the matter is clarified when we look at the notes of evidence taken by the Chairman at page 36, in the evidence of Mr Evers when he was cross-examined and said this:

"Johnson was not dismissed on skills analysis but because there was no work for guillotiners."

In the light of these conclusions, we do not think it necessary to go on to consider the question whether the dismissals were also unfair under the provisions of s.57(3) of the Act. The only remaining ground of appeal in this connection being that the Tribunal did not set out their reasons for saying, as they did in paragraph 16, that there were a number of well-found criticisms of the skills analysis. Suffice it to say that we are satisfied the Tribunal did give sufficient reasons to show why they reached there decision.

In these circumstances, this appeal is dismissed.