United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR C SHELDON (of Counsel) Mr P G Schofield Senior Legal Advisor EEF Broadway House Tothill Street London SW1H 9NQ
For the Respondent	Mr D Maxwell (of Counsel) Messrs Lee Crowder Solicitors 39 New Hall Street Birmingham B3 3DY


 


JUDGE D PUGSLEY: This is an appeal from a decision of an Industrial Tribunal sitting in Birmingham which found the Applicant was unfairly dismissed. We are not concerned with any appeal concerning the wrongful dismissal claim.

The facts of the case are set out by the Tribunal. They found the Applicant was employed as a managing director of VHF Engineering Ltd from about April 1973 until 18 March 1996 when the company went into receivership. The Applicant continued, subject to the overall control of the receivers, as managing director.

On 29 July 1996 the receiver accepted a bid for the company from a management team which did not include the Applicant. There was talk about his future but there was no position for him and the Tribunal made a finding, in paragraph 2.3, that

"he was dismissed for incapability with notice by a letter 9 August 1996, the effective date of termination being 31 October 1996. He was not required to work his notice."

The Tribunal set out the contentions in para 2.4 onwards and it is perhaps appropriate to read directly from the relevant portions of the judgment starting at 2.4:

"The applicant claims unfair and wrongful dismissal, alleging that he was entitled to six months notice of termination of his employment. He also contends that his dismissal was automatically unfair, pursuant to Regulation 8 (1) of the Transfer of Undertakings Regulations 1981 ("the Regulations") in that the reason for it was the transfer itself, or a reason connected with that transfer.

2.5 He also contends in the alternative that the dismissal was unfair, pursuant to Regulation 8 (2) of the Regulations and Section 98 of the Employment Rights Act 1996. ("the Act")"

The Tribunal went on to consider the wrongful dismissal case and in particular whether it was a term of his employment that he was provided with a car. It then returned to the issue of unfair dismissal:

"2.10 Much of the evidence in this case centred on the applicant's previous management of "Bearfern" Limited which the respondents maintain was unsatisfactory and a direct cause of its ultimate failure. They go further and say that, because of that, the applicant would not have been capable of fulfilling a satisfactory role under the new regime. What actually happened was that, immediately after the acquisition of Bearfern and the change of name to that of the present respondents, the applicant was suspended on full pay, and he was invited at some stage during that period to submit proposals in relation to his own position, together with supporting sales projections.

2.11 The applicant produced a document either of one page or two, depending on whose evidence is accepted, and these are to be found at pages 63 and 64 of the Merit bundle. They are scanty to say the least, but perhaps ought to have formed the basis of a discussion between all the parties with a view to seeing how the applicant would fit into the new regime.

2.12 The evidence of the respondents on this matter, which in essence covered the period 5 to 9 August 1996 and concentrated on a meeting on 9 August, was somewhat sketchy. Whilst we accept the applicant was told that the respondents business plan was essentially the re-establishment consolidation or conservation of existing core business with existing core customers, never at any time did Mr Powis or Mr Page spell out to the applicant precisely what might be required of him, in this new situation.

2.13 The applicant in document No. 63 at option C specifically makes reference to the 3 core customers Narrow Aisle, JCB and Jack Allen but there was no real dialogue and it seems to us that the respondents representatives having seen the applicants plan, which admittedly was sketchy adopted something of a closed mind to the situation, believing that somehow the applicant would return to the same old tricks as brought about the firm's downfall.

2.14 The respondents conceded at an early stage, wisely in our view, that the applicants employment with Bearfern transferred to the respondents in accordance with the Regulations. They further contend that, if we find that the applicant's dismissal was related to the transfer and thus otherwise automatically unfair, then there was an economic, technical or organisational reason behind the dismissal.

To succeed in that contention, they would have to place the reason into the category of some other substantial reason and then satisfy all the usual tests of reasonableness associated with section 98 of the Employment Rights Act 1996.

2.15 The respondents also advance a further optional plea of incapability, but again subject to the requirements of Section 98 so what in lay terms was the reason, going back to the meeting of 9 August 1996, for the applicant's dismissal?

We come then to what is the very heart and kernel of the reasoning of the Tribunal at para 2.16:

"We shall try to summarise it thus. The respondents management team, having put their own finances on the line, were very clear in their own minds that their own somewhat restrictive but safe business plan (i.e. that of resurrecting existing core business from existing customers) would have to be followed to the letter and that there was no room in it for a managing director who was perceived as a failure and whose own sales projections they believed to be wholly unrealistic and geared more to his own remuneration that the company's future."

Having made that central finding the Tribunal then go on to discuss the law in para 3:

"3. The law

Now is the reason summarised in 2.16 above capable of being a reason connected with the transfer and therefore unfair pursuant to regulation 8(1) of the Regulations. We believe it is, and so rule. But is it also capable of being an economic, organisational or technical reason within the meaning of regulation 8(2) of the Regulations?

3.2 We believe it is, so that even if we are wrong to rule the applicants dismissal automatically unfair under regulation 8(1) we could still find it was due to an economic, technical or organisational reason, thus bringing into play section 98(4) of the Act and then apply all the usual tests of reasonableness. The same tests would of course apply if we decided that the real reason was incapability.

3.3 We too particular note of the evidence of Messrs Powis and Page, and are bound to say that the treatment of the applicant who could, if properly controlled, have rendered assistance in a sales role given his previous experience both peremptory and unreasonable. We do not believe that the tests set out in section 98 (4) of the Act have been satisfied, so that even on the basis of an ETO reason or an incapability reason, we would still find the dismissal unfair."

The rest of the decision is unnecessary to read as it deals with the breach of contract and the adjournment of the question of remedy.

Employment Tribunals are a means of providing an expeditious and efficient and economical way to the resolution of dispute and anyone who has had the experience of sitting both in Civil Courts and in Employment Tribunals will know that cases, sometimes of great complexity, are dealt with speedily and economically. Nothing we say should be taken as any indication that we would wish Tribunal decisions to become even more lengthy and more prone to cite legal authorities. An over-reliance on legal authority and technicality can often lead to a sense in which lay litigants and representatives feel that they are deskilled. One of the advantages of Employment Tribunals is that a wide range of employer and employee representatives appear before them, some of whom are professionally qualified but, on balance, most are not and this has led to a considerable saving of costs and it has brought within the ambit of the legal system those who have much to contribute. There is a wisdom and a skill that is to be found other than in Chancery Lane and the Temple and that has found expression in Employment Tribunals.

Nevertheless an Employment Tribunal decision is a judicial decision and there are certain requirements that must be met. We can think of no better summation of the position than taking the well-known words of Bingham LJ in Meek v The City of Birmingham District Council (1987) IRLR 251:

"It has on a number of occasions been made plain the decision of an Industrial Tribunal is not required to be an elaborate, formalistic product of refined legal draftmanship but it must contain an outline of the story which has given rise to the complaint and a summary of the Tribunal's basic factual conclusions and a statement of the reasons which has led them to reach the conclusion which they do on those basic facts. The parties are entitled to be told why they have won or lost. There should be sufficient account of the facts and of the reasoning to enable the EAT or, on further appeal, this Court to see when any question of law arises and it is highly desirable that a decision of an Industrial Tribunal should give guidance both to employers and trade unions as to practices which should or should not be adopted.

Nothing that I have said is, as I believe, in any way inconsistent with previous authority of this subject. In Newcutt v Brain (1981) IRLR 225 Donaldson LJ, as he then was, said, at 2.2-7:

'Industrial Tribunals Reasons are not intended to include a comprehensive detailed analysis of the case either in terms of fact or in law. The reasons are then recorded and no doubt tidied up for differences between spoken and written English but their purpose remains what it has always been, which is tell the parties in broad terms why they lose or, as the case may be, win. I think it would be a thousand pities if these reasons began to be subject to a detailed analysis and appeals to be brought based on any such analysis. This, to my mind, is to mis-use the purpose for which reasons are given.'"

Bingham LJ, as he then was, went on to cite from other authorities which were of a similar tone.

Indeed, cited before us has been the somewhat older case of Archer v the Cheshire & Northwood Building Society (1976) 424, where the judgment of this Appeal Tribunal was given by Bristow J, to say this:

"We have found it really impossible from the ambiguous way in which their conclusion is expressed in paragraph 6 of their reasons to know what their answer was to 2, 3 or 4. We cannot tell whether they directed their minds to the possibility of 5 which, as far as we can understand, was a long, stark argument if possibility of 1 was rejected. In not making clear which possible reason they have accepted they have made it impossible to appreciate their reasons for reaching the paragraph 6(a) conclusive, if their conclusion is fair or unfair. That they should leave us so much in the dark is itself to go wrong in law."

He then cites the case of Norton Tool Co v Tewston (1972) IRLR 96 and Alexander Machinery & Dudley Ltd v Crabtree (1974) IRLR 56.

"If we were able to read enough between the lines of this tribunal's express decision we would be very reluctant to send the case back but we feel obliged to do so."

We have carefully read this decision, not once but several times, individually and collectively. We are much indebted to the labours of Counsel who in their skeleton arguments have articulated the issues that arise on this appeal. Mr Sheldon, whom I hope will not feel we are not giving justice to his full and fulsome skeleton argument, suggests that, in effect, the Tribunal failed to make proper or sufficient findings as to reason for the Respondent's dismissal; that they failed to give sufficient reasons for their conclusions and substituted their own views as to the ability of the Respondent and the role which that would have played in the Appellant's business.

If we may deal with ground 2(3), which has not been argued at any great length, we think there is some substance in that in paragraph 3.3 the Tribunal find that the Respondent could, 'if properly controlled' have rendered assistance in a sales role given his previous experience.. Mr Sheldon will not mind if we do not dwell on that, because that has not been at the forefront of this appeal. Although we consider substitution of the Tribunal's view is an issue there are formidable problems.

Quite simply, having read the decision, we all are aware that the Tribunal felt that the Applicant had been dealt with unfairly. But thereafter, we confess, it is rather difficult to see exactly the basis upon which they came to that view. If we go back to their summary of the factual position (in paragraph 2.16) it is to this end the Respondents management team, having put their own finances on the line, were very clear in their own minds that they wished to pursue their own somewhat restrictive but safe business plan, i.e. that of resurrecting the core business of existing customers must be followed to the letter. There was no room in the plan for a managing director who was perceived as 'a failure', whose own sales productions they believed to be wholly unrealistic and geared more towards his own remuneration that the company's future. Now that is the factual matrix - to indulge in jargon - of their finding.

They then go on in paragraph 3 to say this:

"Now is the reason summarised in 2.16 above capable of being a reason connected with the transfer and therefore unfair pursuant to regulation 8 (1) of the Regulations. We believe it is, and so rule. But is it also capable of being an economic, organisational or technical reason within the meaning of the regulation 8 (2) of the Regulations?

3.2 We believe it is, so that even if we are wrong to rule the applicants dismissal unfair under regulation 8 (1) we could still find that it was due to an economic, technical or organisational reason, thus bringing into play section 98 (4) of the Act and then apply all the usual tests of reasonableness. The same test would of course apply if we decided that the real reason was incapability."

If one were to adopt the sort of semantic, myopic consideration to words that seem to have engaged Oxford philosophers in the 1930s, or medieval theologians, one could actually find a difference because whereas in considering 8 (1) of the Regulations they say 'we believe it is and so rule, but in respect of 8 (2) they only say 'we believe it is'. The reality is, it is extremely difficult to know on what basis the Tribunal have reached their decision.

In Industrial law generally there are a host of areas where it is possible to recognise that which it is more difficult to define. Is a business sold as going concern? Is a person an employee or self-employed? These are but two of those areas.

To say something is 'capable' is not a finding as to what is the reason and in particular whether it is a reason connected with a transfer or an economic, organisational or technical reason. The Tribunal give no basis for their choice and we are not sure which of the two choices they have made although on balance it would look as though they are saying it is an 8 (1) reason. It is not pedantry to say that we are entitled to be able to see from the Tribunal what they have decided and why. We have some doubts as to what they have decided and we certainly have no basis for knowing why they have decided this was - if it be the case - an 8 (1) reason.

Before us Mr Maxwell has made gallant attempts to give the decision a coherence and clarity which unhappily it lacks. The truth is that it was necessary for the Tribunal to make findings as to what the reason was. There were three possibilities; connected with the transfer, an economic or technical or organisational reason or, the third reason being posited by the Respondents; a dismissal on grounds of incapability. To say the factual matrix could be capable of being all three does not assist at all. This is not academic. If the reason for dismissal was connected with the transfer in breach of Regulation 8 (1) then that is automatically unfair. If however it was a reason that was unfair by virtue of Section 98 (4) and an element in the issue of unfairness is that the employers went about it an unfair way then it behoves the Tribunal to consider, not as a matter of unfairness, but as a matter of compensation, whether there should be a deduction along the lines of the case of Polkey v A Drayton [1988] ICR 142.

This is not semantics. It makes a difference to the issue of remedy. We are told that the Tribunal have considered remedy and they had pursued it on the basis that this was automatically unfair under the provisions of Regulation 8 (1). We do not say in any flippant way that it is not just the Tribunal who should review what they here decided but the parties as well. We have all read the decision carefully; we have listened to the arguments of both Counsel, particularly, if one may say so, Mr Maxwell. At the end of the day we do not consider that this Tribunal has passed the fundamental Meek hurdle of producing a decision which tells the parties with sufficient clarity on what issues they have won or lost and why. In those circumstances we consider we have no alternative but to direct that the case is remitted to another Employment Tribunal, a freshly constituted Tribunal, to determine the matter.