United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR T NEWTON (Representative) NELC Ward Jackson Chambers 37 Church Street Hartlepool TS24 7DG
For the Respondents	MR R O JONES (Solicitor) Messrs Bury & Walkers Solicitors 4 Butts Court Leeds LS1 5JS


 


MR JUSTICE BELL: This is an appeal by the Appellant, Mr Gledhill, against a decision of the Middlesborough Industrial Tribunal assessing the amount of compensation to be awarded to him following a finding of unfair dismissal against his former employer, the Respondents.

The appeal was considered at a preliminary hearing by another panel of the Employment Appeal Tribunal presided over by Judge Peter Clark on 31 October 1997 and we largely adopt Judge Clark's summary of the relevant background and analysis of the genuinely arguable points on this appeal.

The Respondent is a national cleaning company. The Appellant was employed by the Company from 16 September 1991 until his dismissal by reason of redundancy on 28 October 1996. Prior to his dismissal the Appellant held the position of Contracts Manager in charge of a large contract for cleaning British Telecom telephone kiosks in the North of England. He received a gross salary of £17,000 per annum. He had four to five Area Managers reporting to him.

Following the loss of certain major cleaning contracts the Respondent decided to abolish that layer of middle-management in the structure to which the Appellant's post belonged. He was seen on 21 October 1996 by the Operations Manager, Mr Knowles, and informed that he was one of ten people to be made redundant, although there was a possibility of his taking alternative employment as an Area Manager at a salary of £12,000 per annum gross. The Appellant was prepared to accept that alternative position provided that he received a redundancy package. That proposal was not acceptable to the Respondent.

On 28 October 1996, the effective date of termination of the contract of employment, a meeting took place between the Appellant, Mr Knowles, and Mr Khan, the Personnel Director. On that occasion the Appellant finally refused the offer of alternative employment as an Area Manager. He told the Tribunal that he was not prepared to accept a position which would involve him in serving under those he had previously managed.

However, the Tribunal found as a fact that the offer of alternative employment remained open until 23 March 1997, the day before the first Tribunal hearing.

Following his dismissal the Appellant presented an Originating Application to the Tribunal on 10 January 1997, alleging unfair dismissal and breach of contract. A liability hearing took place before the Tribunal on 24 March 1997. The Tribunal found that the dismissal was unfair for the Summary Reasons promulgated on 28 April 1997. In essence, they found that the dismissal took place with no adequate warning, no meaningful consultation and no evidence of objective criteria used for redundancy selection, nor, it followed, application of such criteria to the Appellant.

The breach of contract claim, based on a contention that the Appellant was contractually entitled to have a redundancy payment based on his service and actual salary, as opposed to the statutory maximum, failed and was subsequently dismissed. The question of remedies was adjourned in the hope that the parties could negotiate compensation "bearing in mind both that the Applicant would, more than likely, have been fairly dismissed if the proper procedure had been followed and that he had refused an offer of re-employment, albeit in a lesser position".

Presumably the parties could not reach agreement because there was a remedies hearing held on 24 May 1997, and by a decision entered in the register on 3 July 1997, the Industrial Tribunal awarded the Applicant compensation of £688 made up of up of £200 for loss of statutory rights and a further £488 representing approximately two weeks wages. Aggrieved by what he saw as the modest amount of this award Mr Gledhill appealed.

The sole point taken in the original Notice of Appeal was that the Tribunal erred in law in finding that the Appellant had failed to mitigate his loss in not accepting the offer of alternative employment made before the effective date of termination of his employment. That point failed to take account of the fact that the Tribunal expressly found that the offer of alternative employment remained open after the effective date of termination. The Tribunal was entitled to conclude, if it did conclude, that the Appellant's continuing failure to accept the alternative employment offered following his dismissal amounted to a failure to mitigate his loss for the purposes of Section 123(4) of the Employment Rights Act 1996. It followed that the original ground of appeal was misconceived.

Mr Newton, appearing on behalf of the Appellant, as he does today, accepted that analysis at the preliminary hearing, but sought to argue further points which the panel of the Employment Appeal Tribunal at the preliminary hearing found to be arguable as follows.

Firstly, in paragraph 4 of the Tribunal's Extended Reasons it considered it more likely than not that the Appellant would have been fairly dismissed had the correct procedure been followed. However, the Tribunal made no finding as to the proper "Polkey deduction", expressed in percentage terms arising out of that finding;

Secondly, and going hand in hand with the first ground, there was no calculation of the full loss, if any, subject to that deduction, arising out of the dismissal.

Thirdly, there was no express finding as to whether the Appellant failed to act reasonably to mitigate his loss in not accepting the continued offer of the lower Area Manager post after his dismissal; even if he was found to have failed to mitigate his loss, he could still have suffered a continuing partial loss comparing his pre-dismissal salary with that applicable to the Area Manager post which was barely more than two-thirds of his pre-dismissal salary.

Fourthly and alternatively, no reasons are given for the assessment of two weeks loss. The Appellant relies on the well known principles that an applicant is entitled to know how the figure of compensation was arrived at as being just and equitable in his case.

We turn to the grounds of appeal. It is convenient to take the first, second and fourth grounds together.

Mr Jones, for the Respondents, in his helpful skeleton argument adopted in his submissions today, has referred us to relevant rules and authorities as to the extent to which the reasons for, and explanation of the calculation of an award need be spelt out by the Industrial Tribunal in its written decision. In particular, he has referred us to the relevant parts of Rule 10(3) of the Industrial Tribunals (Constitution and Rules of Procedure) Regulations 1993 and he has referred us, in particular to Kearney & Trecker Marwin Limited v Varndell [1983] IRLR 335, where at page 340, paragraph 33, Eveleigh LJ approved what Sir John Donaldson had said in the Industrial Relations Court in the case of Alexander Machinery (Dudley) Ltd v Crabtree [1974] IRLR 56 as follows:

"We have already said that it is unsatisfactory and amounts to an error of law for a Tribunal simply to state the amount of compensation which is to be awarded without showing how that figure has been arrived at: see Norton Tool Co Ltd v Tewson [1972] IRLR 86. The basis of this proposition is that in the absence of reasons it is impossible to determine whether or not there has been an error of law. Failure to give reasons therefore amounts to a denial of justice and is itself an error of law."

Eveleigh LJ went on to say:

"It seems to me quite obvious that the passage is unimpeachable. It is simply stating that the Tribunal cannot announce a figure at the end of the day and no more. Where various losses may have to be compensated in an award, it is necessary to know which aspects of the claim are being dealt with, but I do not regard that passage as saying that there must be a detailed analysis of the reasons for a Tribunal's decision and, in so far as it might be thought to do so, it would be in conflict with the same judge's decision in UCATT v Brain from which I have already quoted."

We accept that, as indeed we must, and we accept that so long as the Appellant can safely infer the reason for and basis of calculation of his compensation from what the Industrial Tribunal has said, that is sufficient.

We also accept that, as Mr Jones has reminded us in his skeleton argument, the requirement set out in Section 123(1) of the Employment Rights Act 1996 that the amount of the compensatory award shall be such amount as the Tribunal considers just and equitable in all the circumstances, may enable it to paint with a broad-brush where precision is not possible, although it must still have regard to "the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer".

That takes one back, in our judgment, to some calculation of the amount of the loss. We do not see that section as entitling a tribunal to pluck a figure which seems just and equitable out of the air. At the end of the day, the Applicant must be able to see how the figure of his compensation has been arrived at. If a Tribunal is deciding for instance that the employee would have been dismissed fairly by a certain date it should say so and go on to make the appropriate calculations. If it decides that there was a real prospect of such fair dismissal it should say so, give some estimate of its view of the appropriate discount from what would otherwise be the compensation, go on to make appropriate calculations in accordance with what are often called "Polkey principles". Whether or not it condescends to a precise percentage or paints with a broader brush, it should make the basis of its calculation clear.

The only relevant particulars of the Extended Reasons, so far as we discern them, which point to the Industrial Tribunal's route to the figure of £488 compensation in addition to the £200 for loss of statutory rights, appear at the end of paragraph 4 of its Extended Reasons as follows:

"However, the Tribunal consider it more than likely that the applicant would have been fairly dismissed had the correct procedure been followed. Initially therefore the Tribunal adjourned the hearing to enable the parties to negotiate compensation being in mind the applicant's refusal of alternative employment."

And, in the last words of paragraph 7, at the very end of the Reasons as follows:

" ... they [the Tribunal] think it just and equitable that the applicant should receive £200 for loss of statutory rights and a further £488 representing approximately two weeks wages."

The Industrial Tribunal made no findings as to when the "more than likely fair dismissal after following proper procedures" would have taken place. It may be that the Industrial Tribunal had decided that Mr Gledhill would have been fairly dismissed after two weeks or approximately two weeks if proper procedures had been followed, but if that was its conclusion it did not, in our judgment say so, and we do not consider that we can safely infer that the Applicant was bound to infer that that was the reasoning behind the figure of £488 representing approximately two weeks wages.

If the Tribunal was not concluding that Mr Gledhill would have been fairly dismissed about two weeks after the date when he was dismissed, in fact, but only that there was something more than a 50 per cent prospect of fair dismissal then or at some other time, it did not make any finding which we can discern as to what prospect that was and what the consequential calculations of his compensation should be.

We turn to ground 3, which raises the issue of reasonable mitigation of Mr Gledhill's loss arising from his unfair dismissal. We can find no actual adjudication on the allegation that the Appellant/Applicant had failed to mitigate his loss. Mr Gledhill's point was that he was being offered a new post at a lower status and at a distinctly lower salary, £12,000 per annum as against £17,000, without the compensation of a redundancy package to console him. However, this does not appear to have worked to Mr Gledhill's disadvantage. At paragraphs 6 and 7 of its Extended Reasons, the Industrial Tribunal said:

"The applicant stated that he had been seeking further employment within the salary range of £12,000 to £25,000 per annum but had had no success for three reasons: his age (50), his being over qualified and his address (Northallerton) which he says is 'off the beaten track'. He said that he had prepared a business plan with a view to starting up on his own account but had not been able to proceed because of lack of capital.

For the respondent Mr Jones pointed out that the applicant had already received a redundancy payment and, since he had turned down an offer of alternative employment from the Company at a salary within the range noted above, he should receive no compensatory award. Whilst the Tribunal are sympathetic to this argument they think it just and equitable that the applicant should receive £200 for loss of statutory rights and a further £488 representing approximately two weeks wages."

Our inference from those words is that the Industrial Tribunal were sympathetic to the Company's argument that Mr Gledhill had failed to mitigate his loss, but that it did not in the end deem it fair to hold that against him in a situation where it was awarding him only £488, about two weeks wages only, in addition to £200 for loss of statutory rights. Whether we are right about that or not, we can see no good ground for concluding that the Industrial Tribunal held any failure to mitigate against Mr Gledhill in reaching its conclusion as to the proper amount of compensation. Certainly, there is no indication that the award, beyond the £200 for loss of statutory rights, was restricted to two weeks wages by reason of any failure to mitigate.

It follows that this appeal must be allowed on the grounds that the Industrial Tribunal failed to give sufficient reasons for the part of its award amounting to "a further £488 representing approximately two weeks wages", but to that extent only.

What course should we now take?

Mr Jones, in paragraph 27 of his skeleton argument, submits:

"If contrary to the Respondent's submissions the Employment Appeal Tribunal is minded to overturn the decision of the Industrial Tribunal, it is contended that instead the case should be referred back to the same Tribunal for amplification of reasons without a re-hearing. There is nothing in the Respondent's view contained in the extended reasons to suggest anything wrong with the decision or the way the hearing was conducted. It is not clear that the Tribunal's reasoning is flawed. The Extended Reasons indicate that the relevant factors were in the mind of the Tribunal when assessing the compensatory award."

Mr Jones has referred us to the case of S F Beardmore v Westinghouse Break and Signal Co Ltd [1975] IRLR 310 as an example of an occasion when the Employment Appeal Tribunal took such a course, not referring the matter back to the same Industrial Tribunal or another Industrial Tribunal for a re-hearing, but merely in effect for a supplemental decision making the reasoning leading to its ultimate award absolutely clear.

We see considerable sense in taking such a course. Indeed, Mr Newton has not really argued against it this morning. Mr Newton's only concern is that he would wish to address the Industrial Tribunal further on what he would argue is the proper approach to the ultimate finding of compensation before it drafts any supplemental reasons.

What we propose to do is to refer the matter back to the same Tribunal for a supplemental decision making the reasons for its compensatory award and the route to its final figure clear. We make it clear that it is our view that it is for the Industrial Tribunal itself and the Tribunal alone to decide whether it wishes or needs to hear any further evidence or any further submissions on behalf of either party before settling its supplemental decision. No doubt, if Mr Newton or Mr Jones for that matter chooses to write to the Tribunal urging that he be heard, the Tribunal will consider that request, but it will reach its own view on whether it would benefit from any further submissions at all. If, when the Tribunal goes through the exercise of drafting its supplemental decision and further reasons, it comes to the conclusion that on the evidence before it and its relevant findings on that evidence, another figure than £488 is the proper amount of compensation, then so be it. We are confident that we can leave this matter from now on safely in the hands of the Industrial Tribunal, assisted, we hope, by what we have said in this judgment.

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Costs

We do not make any order for costs for these reasons. Firstly, we are not finally disposing of the issue between the parties, that is how much compensation Mr Gledhill should receive. We are involving the Industrial Tribunal in taking a further step and directing it to do so. Moreover, as we hope we have made clear, we are not assuming, though it may well be so, that on reconsideration the Industrial Tribunal will reach the conclusion which it has so far reached as to the actual figure of the appropriate compensation and finally, we hope that the appeal may have been of benefit to the Industrial Tribunal, at least in explaining why we do not consider that the reasons which it gave were sufficient and with all those factors in mind we do not think this is an appropriate situation for an award of costs. In saying that we offer no opinion or not on whether either side has acted reasonably or unreasonably in respect of the correspondence which Mr Jones put before us.