United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A HUNTER (of Counsel) Messrs Hammond Suddards Solicitors Moor House 119 London Wall London EC2Y 5ET
For the Respondents	MR A CHOUDHURY (of Counsel) Messrs Denton Hall Solicitors Five Chancery Lane Clifford's Inn London EC4A 1BU


 


JUDGE PETER CLARK: This is an appeal by the applicant, Ms Speller, before the London (North) Industrial Tribunal sitting on 30th September 1996, against that tribunal's decision to dismiss her complaint of unfair dismissal against her former employer, Golden Rose Communications Plc, the respondent. Extended reasons for that decision are dated 21st October 1996.

The respondent is a small company which at all relevant times operated a radio station, Jazz FM, broadcasting jazz music. In July 1995 it set up a talk station, VIVA, aimed mainly at women listeners. In all, the respondent employed about 65 people.

The appellant joined the respondent on 1st February 1993 and following promotion was employed as a Promotions and Sponsorship Executive in Jazz FM. In July 1995 VIVA was set up and in October 1995 Mr Wheatly was appointed Chief Executive of the respondent. In November 1995 the appellant accepted the post of Marketing Manager in VIVA. At the same time Nicola Young was given the title of Marketing Manager in Jazz FM.

Both Jazz FM and VIVA were commercial radio stations, heavily dependent on advertising and sponsorship revenue.

Unfortunately the audience figures for VIVA went into decline, mainly due to problems in signal strength which meant that 40% of the potential audience of 9 million people within the Central and East London area could not pick up the station. The listening figures seriously affected advertising revenue, and after Christmas 1995 no further advertising revenue was taken.

In December 1995 Mr Wheatly considered that he had two options; close VIVA, which would have an adverse effect on Jazz FM and advertising agency support, or run a skeleton service so as to preserve the existing licence with reduced staff levels. After Christmas he decided on the latter course. That would involve redundancies. He identified the post of Marketing Manager at VIVA to go. He reached that conclusion in consultation with Jeannie Bergin, Group Director of Programming and Marketing, at a time when the appellant was on holiday in Australia. Some consultation took place with other members of staff towards the end of the week 15th-19th January 1996.

On 22nd January 1996 the appellant returned from Australia and went in to work that morning. She noticed that fewer staff were in the studio then when she had left. At 10 a.m. she was called into Mr Wheatly's office. He told her that he would have to make her redundant. The meeting lasted less than 30 minutes. At no time did Mr Wheatly offer her the opportunity to work part-time or take a reduction in salary, or take alternative employment.

The following day the appellant wrote to Mr Wheatly complaining that her dismissal was both statutorily and morally unfair. In particular, she claimed that she had longer service than Nicola Young, who should have been dismissed in her place.

It was Mr Wheatly's evidence, accepted by the tribunal, that prior to the appellant's dismissal he had considered the position of Ms Young. Although both the appellant and Ms Young held the same title, Marketing Manager, in VIVA and Jazz FM respectively, it was thought that Ms Young had greater administrative and production skills necessary for the Jazz FM job than did the appellant. The VIVA job required greater creativity which was perceived as the appellant's strength.

In cross-examination Mr Wheatly accepted that, in the absence of a laid down redundancy procedure, an employer should create a pool for selection for redundancy; warn those in the pool of impending redundancies; consult with them over the redundancies; and have fair objective selection criteria.

He acknowledged that this was seen as a case of redundancy lying where it fell; that the appellant received no warning of potential redundancy, nor was she consulted prior to the decision to dismiss her being taken. However, it was the respondent's case that there was no alternative position for the appellant; that a comparison had been made between her and Ms Young, and that warning and consultation would have been utterly useless and in the commercial circumstances which arose the normal redundancy procedures could properly be dispensed with.

The tribunal accepted the respondent's case. Having reminded themselves of the well-known observations of Lord Mackay LC and Lord Bridge in Polkey v A E Dayton Services Ltd [1987] IRLR 503 about cases where consultation or warning would be utterly useless or futile; it expressed its conclusions at paragraph 18 of the reasons thus:

"FAIRNESS OF THE DISMISSAL

18 The Tribunal was satisfied that the selection pool was limited to the Applicant. Any consultation prior to the decision to select would therefore by unnecessary. The reason for dismissal was clearly redundancy. The only issue was whether there should have been a consultation at the time of the meeting on 22 January 1996. As the only alternative that the Applicant put forward for some time was that she should have been put into the post currently held by Nicola Young, such consultation would clearly have been unnecessary. That exercise of considering whether there was alternative employment available to her had been carried out by Mr Wheatly. The Respondent had a dire situation to deal with namely a radio station which was unable to transmit and therefore unable to obtain funding to pay for its operation. The Tribunal was satisfied that these were exceptional circumstances. The commercial radio world is a very small world. It was known that there was signal difficulties for Viva but the extent of the problem had hitherto been kept within the company and not made known to the staff to avoid any adverse impact on Jazz FM. In order for the Respondent to avoid there being ramifications for Jazz FM it took the commercial decision that it should not consult or make the impending redundancies widely known prior to their taking effect. It is clear from the memo of 12 March 1996 that the appropriate factors were taken into consideration regarding alternative employment for Ms Speller. None was available. The Tribunal was satisfied that although it was unfortunate that on the day of her return to the United Kingdom from Australia Ms Speller was told that she was to be made redundant, it was not unfair within the meaning of section 98 of the Employment Rights Act 1996."

The Appeal

It is right to record that experienced Counsel who appeared before us also appeared below. There was no dispute as to the relevant legal principles to be applied. Nevertheless, Mr Hunter submits that the tribunal misdirected itself in law; alternatively reached a perverse conclusion, under three heads.

(1) The selection pool

It is submitted that the tribunal misdirected itself in finding that the appellant was "self-selected" for redundancy; that she was in a pool of only one. That was the approach of Mr Whitely. The question is whether a reasonable employer could take that approach, rather than to take a pool involving both Jazz FM and VIVA staff. Alternatively he argues that the tribunal failed to make proper findings on this part of the exercise. See Meek v City of Birmingham District Council [1987] IRLR 250. In the further alternative, if the tribunal did find that the pool of one was reasonable in the circumstances, that conclusion was perverse.

On this aspect of the appeal we prefer the submissions of Mr Choudhury. It seems to us that the tribunal were not applying an inflexible rule that where there are two businesses operated by the same employer, a selection pool will only contain those employees in the part in which the redundancies fall. There was evidence, accepted by the tribunal, that the respondent had made a comparison between the appellant and Ms Young for the post of Marketing Director in Jazz FM and reasonably concluded that Ms Young was better suited for that post. It was not unreasonable, on the facts of this case, for redundancy to lie where it fell in the case of the VIVA Marketing Manager post. That was a permissible option open to the tribunal. Sufficient reasons for that finding are, in our judgment, given. The conclusion was not perverse.

(2) Warning of impending redundancy

We accept, as was pointed out in Rowell v Hubbard [1995] IRLR 195, that a distinction is to be drawn between warning of impending redundancies and consultation about an individual's selection for redundancy. The distinction was significant in that case, where the Industrial Tribunal had erroneously concluded that a warning of impending redundancy obviated the need for consultation. That is not this case. Here the respondent accepted that there had been neither warning to nor consultation with the appellant. The real question for this tribunal was whether this was an exceptional case in which the normal procedural steps of warning and consultation could be dispensed with.

(3) Consultation

In our view this is the key to this appeal.

Mr Hunter accepts that the tribunal correctly stated the test in paragraph 17 of their reasons, but contends that they then failed to properly apply it. He breaks down their findings in paragraph 18 into two parts. First, the finding that consultation was unnecessary; secondly the finding that exceptional circumstances existed.

As to the first, he submits that the tribunal fell into error by asking itself what would the appellant have said if consulted, which in effect applied the "no difference" test expressly overruled in Polkey, rather than to ask whether a reasonable employer would have concluded that consultation was futile on the basis of what was known at the time of dismissal.

Secondly, he argues that on the facts of this case, "exceptional circumstances" did not arise, relying on the decisions of the Employment Appeal Tribunal in Freud v Bentalls [1983] ICR 77 and Heron v City-Link Nottingham [1993] IRLR 372.

Alternatively he contends that, absent a patent misdirection, the conclusion reached by the tribunal was perverse.

We have found this the most closely fought point in the appeal. For the respondent, Mr Choudhury submits that having correctly directed itself as to the law, the tribunal was at pains not to fall into the trap of applying the "no difference test". (cf. Poat v Holiday Inn Worldwide (EAT/883/93) 2nd November 1994. IDS Brief 537/March 1995). The Industrial Tribunal was entitled to find, on the facts, that exceptional circumstances existed. VIVA advertising revenue had ceased in the New Year. The situation was dire. It is not permissible to elevate the factual questions arising in Freud and Heron to the status of guideline reasoning binding on Industrial Tribunals. The effect of Mr Hunter's submissions is, ultimately, to drive tribunals to apply an automatic rule that no consultation will mean unfair dismissal. There is no licence for such an approach in the statute; room for exceptions to the general rule that lack of warning and consultation will render a dismissal unfair is expressly allowed for in Polkey. In short, says Mr Choudhury, there is no misapplication by the tribunal of its correct self-direction; nor can the decision be characterised as perverse. He accepts that a different tribunal might reach a different conclusion on the facts of this case, but that is not a ground for allowing the appeal.

In our judgment Mr Choudhury's submissions are to preferred. We are not satisfied that the tribunal departed from the test which it set itself, nor are we able to say that the overall conclusion reached by the tribunal, although perhaps a fortunate one for the respondent, is perverse.

It follows that we are unable to discern any error of law in this tribunal's decision; and accordingly, the appeal must be dismissed.