United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR L MORRISON (Solicitor) Messrs Goodman Derrick 90 Fetter Lane London EC4A 1EQ


 


MR JUSTICE MORISON (PRESIDENT): This case is to determine whether or not there is an arguable point of law in an appeal which the employers wish to make against a unanimous decision of an Industrial Tribunal held at Liverpool on 3 May 1996.

In our judgment this is a very clear case of an unfair dismissal. The Tribunal were unanimously of the view that the employee had been unfairly dismissed by his employers, in the circumstances that they there set out.

In brief, the employee's relevant employment was from 1 June 1992 until 29 September 1995. Latterly he was the Works Manager of British Rail's Ditton Sleeper Treatment Works in Widnes. That business was transferred to an organisation called Phoenix Timber, which was part of the PTG Pre-Treatment Services Group. Mr Piercy as Manager was interested in the possibility of putting together a management buy-out, but he also met the representative from Phoenix Timber who told him that he was interested in the purchase.

The transferee's manager discussed the role that he saw the Applicant playing in the new organisation. He said that his firm would only buy the Ditton works if he [the Applicant] were retained as the person in charge. He guaranteed the Applicant's continued employment at the same level of management at least. As a result the employee did not proceed with the possibility of a management buy-out, but instead set about assisting Phoenix Timber in identifying any staff reductions which they could put into place. Accordingly at their request he compiled a report on manning levels and on 20 July presented it at a meeting. Phoenix had said that they wanted to reduce manning levels and British Rail had asked him for a realistic report. He was assured by Phoenix that his report was accepted and would be put into effect. There was no mention made of the possibility that he himself would be made redundant or that there was any question as to the survivability of the manager's post.

On 1 September 1995 the transfer was effected and Phoenix became the owners of the Ditton works. On 6 September, 5 days later, they wrote saying that the Applicant's position might be redundant. They had decided to run the Ditton works without a General Manager, but they did not tell him so until he was irrevocably in their employment. As a result of their conduct he had thus forfeited the right to participate in British Rail's scheme, which had been introduced in order to slim down the works, so as to make it attractive to Phoenix. He was written a letter recording the decision that he was going to be made redundant, indicating that they would now wish to enter into consultation with him as was their statutory obligation.

The Tribunal in paragraph 6 of their Decision reminded themselves that they should not substitute their own judgement for that of the employers. They addressed their minds to the question as to whether this dismissal was automatically unfair by virtue of the Transfer of Undertakings Regulations paragraph 8(2). They concluded that because they were satisfied that the position was genuinely surplus to requirements, that some other reason had been established. We, for our part, would not wish to make any comment on the correctness of that part of their decision in the circumstances.

Treating that judgment as correct, they then went on to consider whether the dismissal was fair or unfair within the meaning of Section 57(3) of the 1978 Act, which has now been replaced by Section 121 of the Employment Rights Act 1996. The Industrial Tribunal in their decision concluded as follows:

"7. The respondents broke their guarantee to the applicant of continued employment: that guarantee was effective in calling off his own bid for the Ditton Works. They used his efforts during the negotiations for the transfer. When they decided not to honour their guarantee, they did not tell him so and thereby prevented him from repairing his position. Equity was strongly on his side and against them. They did not consult him in any way that we recognised; and we did not trust their claim that they tried to redeploy him. They decided that he was to go and then tried to make their actions look good. The applicant is clearly a person of high management ability. Had he received the justice of reasonable consultation we could not see a prudent employer parting company with him, or not being persuaded by him to retain him at Ditton."

It seems to us that there may be occasions in which an employer has effectively disentitled himself from fairly dismissing an employee by reason of redundancy. In other words there may be circumstances in which it would not be fair to reorganise a business so as to make redundant a person who had been promised that he would be retained in a particular position. Paragraph 7 of the decision continues:

"Further, had the efforts to redeploy been wholehearted, we did not accept that they would have been fruitless. We accepted the applicant's evidence. We did not accept what the respondents said to their own advantage. There was no evidence that convinced us that a properly conducted redundancy procedure might still have resulted in the applicant's dismissal. We decided that there should be no discount on the ground that the correction of defects in the procedure might have made no difference to the outcome."

Effectively, the Notice of Appeal in this case alleges perversity. We for our part consider that such a contention is, to be blunt, hopeless on the findings made by the Industrial Tribunal in this case. They were entitled to disbelieve the employers as indeed they did. They were entitled to conclude that the attempts at consultation were a mere facade. They were entitled to conclude that there should be no, what is called, Polkey reduction in the award.

Those were all matters falling within the margin of appreciation allocated to Industrial Tribunals. We are here to deal with points of law. We are not persuaded that any point of law has been shown during the course of the argument conducted on behalf of the employers. As I said at the outset, this is a very bad case, in our judgment, of an unfair dismissal of an employee, and I would expect the employers in these circumstances to set about compensating him for the losses which he no doubt has sustained.