United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR T LINDEN (of Counsel) Messrs Dibb Lupton Broomhead Solicitors 125 London Wall London EC2Y 5AE
For the Respondent	MR J N GALBRAITH-MARTEN (of Counsel) Messrs Russell Jones & Walker Solicitors 324 Gray's Inn Road London WC1X 8DH


 


JUDGE JOHN BYRT QC: This is an appeal from a decision of the Employment Tribunal sitting in Ashford, Kent. That decision was promulgated on 4 June 1996, and by it, the Tribunal held that the Applicant, now the Respondent, had not been dismissed by reason of redundancy. He had been dismissed because he had taken part in the activities of an independent trade union at an appropriate time. Accordingly, the Tribunal found the dismissal to be unfair: Section 152 (1) (b) Trade Union and Labour Relations (Consolidation) Act 1992. The employers now appeal.

The material facts, as found by the Tribunal, are as follows:

The Appellants are a College of Further Education; and the Respondent, a full-time teacher there of Economics and Politics. When he came to the College in 1987, he joined the Union, NATFHE. By 1993, he had become Chairman of the local branch.

That same year, 1993, the governance of the College passed from the local authority to the Board of Governors. A chief executive was appointed, a Mr Hollands. The staff were required to enter into new contracts, one provision of which required them to work longer hours. The management of the College was to be reorganised with the result that a number of the senior employees were to be made redundant. Both the new contracts and the reorganisation ran into stiff opposition from the Union, and the Respondent, as the local branch Chairman, played a leading role in organising it. Matters rumbled on until March 1995 when the Union local branch passed a vote of "no confidence" in Mr Hollands, the Chief Executive. The dispute featured in the local newspapers and television. As it became public, enrolments fell, and a serious financial situation developed.

In the following November, Mr Hollands announced there would have to be redundancies amongst the teaching staff. Once more, the Union local branch passed a vote of "no confidence" in Senior Management and the Governing Body. The Respondent called for an independent enquiry into the affairs of the College, published an aggressive leaflet seeking the support of other unions, organised a petition and published a newsletter under his name, inflaming the situation as opportunity arose.

None of the above prevented the cutback in staff. The Appellants set up their procedures for the selection of candidates for redundancy. Criteria were discussed with the Union, and some of their suggestions accepted. Though the ultimate details were not actually agreed with the Union, no one has criticised the criteria applied.

The names of those people at risk were placed in separate pools for selection, the pools being based on the type of subject being taught. In the pool relating to the teachers of Economics, Politics and Business Studies, there were just two names, namely those of a Miss Weber and the Respondent. From those two, one had to be selected for redundancy.

On 23 February 1996, the Respondent was notified that he had scored the lower total of the two under the assessment process, and accordingly had been selected for redundancy. He was invited to make representations about that assessment, and he did. His score was adjusted but not sufficiently to enable him to overtake Miss Weber. On 29 March, he was sent a notice of dismissal, indicating that his employment would terminate on 31 August. The Respondent appealed that decision but was unsuccessful.

No one has criticised those procedures. The Employment Tribunal expressly stated that there was no evidence to suggest that the scoring system was deliberately designed to oust the Respondent.

Following the despatch of the notice of dismissal, the parties had further consultation meetings and attempts were made to find the Respondent alternative employment. Later, that Summer, Miss Lawrence, Head of the Respondent's department drew up a provisional timetable for the 1996/97 academic year. She provided full working hours for herself and Miss Weber, and this still left over 16 hours teaching for another teacher who could be the Respondent, but to justify keeping on the Respondent, 21 hours teaching per week had to be found, and so another 5 hours were needed from elsewhere. It happened that there was at least another 5 hours available in the HND Business Studies Pathway / Route Leader Course, and there was another 8 hours in the course for Media Studies for which there was no teacher cover.

The Respondent was not offered the 16 hours available in his own section. He applied for the advertised hours in the Business Studies course, but was told that the advertisement had been placed by mistake; the hours were not available after all. With the support of his team leader, Miss Egan, he applied to take up the hours said to be available for teaching Media Studies but the Head of Department responsible for the latter, would not allow those hours to be offered to him. He said those 8 hours had to be absorbed by the full-time staff who still had hours left. However, immediately before the start of the term in September, an inexperienced former student, later found to be unsuitable, was taken on to teach those unallocated hours.

On that narrative, the Employment Tribunal found facts which indicate they accepted there was a genuine redundancy situation at the College that March, and in the Respondent's department as elsewhere. However, when considering their ultimate decision, they focussed their attention on 31 August 1996, the expiry date of the dismissal notice, and asked themselves what, at that date, was the Appellants' reason for dismissal. They recalled the evidence of the employers' own witnesses to the effect that if the 21 hours teaching time could have been found, the Respondent would not have been dismissed. They found he was able to teach both the HND Business Studies Pathway / Route Leader course and the Media Studies, and that accordingly there was more than sufficient hours to provide the Respondent with the 21 hours necessary to give him a full-time contract. They therefore found that he was not redundant, that the Appellants' stated reason for dismiss was not their true reason, and in the circumstances the dismissal was unfair. They then went on to consider whether he was dismissed because of his trade union activities. They rejected the Appellants' explanations why the Respondent was not offered the extra hours and drew the inference that he was dismissed because of those activities.

The Appellants' case has been argued by Mr Linden. He submitted that, on the facts of this case, the act of dismissal happened in reality when the Appellants gave the Respondent notice on 29 March 1996, and that that was the date upon which the Tribunal should, for the most part, have focussed when considering the reason for dismissal. Had they done so, he says, they would inevitably have concluded that redundancy was the reason because the need for a lecturer in Economics, Politics and Business Studies had diminished. He further submitted that the work which thereafter became available was a composite of studies which, if offered to the Respondent, would have amounted to the offer of a new contract instead of evidence disproving redundancy. Whilst he accepted that the Appellants' refusal to offer the Respondent the additional hours might have consequences under other sections of the Trade Union and Labour Relations (Consolidation) Act 1992, he submitted that had the Tribunal come to a proper finding that redundancy was the reason for dismissal, they would have realised that Section 152 of that Act had no applicability.

Mr Linden further submitted that the Tribunal fell into error in focussing exclusively on the situation as it existed on 31 August. They were entitled to attach such weight as they thought fit to what happened after the giving of notice on 29 March but only for the purpose of assessing whether the reason advanced for dismissal was as shown or whether the Appellants acted reasonably in treating that reason as sufficient to justify dismissal. What they could not in any event do was find inferentially a reason for dismissal which could not have been in existence when notice was given. That was what they had done when they had found that the additional hours brought to an end the redundancy situation and the reason for his dismissal to be his trade union activities.

Mr Galbraith-Marten, for the Respondent, began his submissions by outlining a common-sense appreciation of the facts found by the Tribunal. He conceded that, initially, the Appellants may have been justified in giving the Respondent notice for their stated reason of dismissal, namely redundancy but, he said, they had the opportunity of withdrawing that notice before it expired when the Respondent applied for the work which became available and he was well capable of doing. The Appellants chose not to offer him that work for a reason they never truthfully disclosed to the Respondent or the Tribunal, and accordingly the latter were entitled, in the absence of a truthful explanation to infer that the Appellants' real reason was the Respondent's trade union activities. On these facts, he submitted the Tribunal came to the right decision, and the EAT should not seek to fault their common-sense assessment by tooth combing their reasons for an error of law.

Further, he submitted that the Tribunal's decision was constant with statute law and legal authority. He referred to Section 139 of the Employment Rights Act 1996 which required the test for redundancy to be applied on dismissal. Section 95 (1) of that same Act defines "dismissal" as taking place when the actual termination of the contract of employment occurs. In this case, that moment occurred on 31 August. He accepted that when a dismissal is by notice, the employer's reason has to be determined both by reference to the reason for giving the notice to terminate and by reference to the reason when dismissal occurs. As a matter of evidence, that involves considering the reasons throughout the notice period: see Stacey v Bobcok Power Ltd [1986] IRLR 3 and Parkinson v March Consulting Ltd [1997] IRLR 308. On this basis, Mr Galbraith-Marten submitted the Tribunal were entitled to find as they did that the Appellants' reason for dismissal was not redundancy. Having so found, they were entitled to apply Section 152 of the 1992 Act.

In the alternative, he submitted that, once the additional hours became available, it was unreasonable for the Appellants to treat redundancy in March as a sufficient reason for dismissal.

How do we find?

Paragraph 14 of the extended reasons says:

"14. ... The first point for consideration is therefore whether or not the Applicant was redundant at the effective date of termination, namely 31 August 1996."

Our first consideration must be to ask whether the Tribunal were right in law to make their assessment as at 31 August 1996. The statutory provisions to which they referred seem to make the moment of dismissal the point at which they have to make their judgment but those statutory provisions have been the subject of interpretation by case law, and it is to that which we now turn.

In Stacey v Babcock Power Ltd (supra), the EAT considered what might properly be taken into account on the application of Section 57 (3) of the Employment Protection (Consolidation) Act 1978. Mr Stacey was served with notice of redundancy by his employers who anticipated their Company would soon be running into financial difficulties and job losses. Days before Mr Stacey's notice expired, the employer unexpectedly landed a new contract which meant more work for everybody. However, instead of withdrawing Mr Stacey's notice, they engaged new staff and allowed his contract to terminate at the expiry of his notice. In considering whether the employee had been unfairly dismissed within the terms of Section 57 (3), the EAT held that it was necessary to take account of what happened throughout the whole process of dismissal, initiated by the giving of notice and completed by its expiry. In the result, the EAT held that the employers had acted unfairly in failing to offer the employee fresh employment when it became available during the notice period.

In giving the judgment of the EAT, Waite J, as he then was, reviewed the decisions in two cases which seemed to fix the giving of the notice of dismissal as the moment of dismissal so as to preclude all considerations of events which occurred during the period of notice. The first was Abernethy v Mott, Hay and Anderson [1974] ICR 323 in which Lord Denning MR said at page 329:

"The employer has .... to 'show' the reasons for the dismissal. ... It must be a reason in existence at the time when he [the employee] is given notice."

This passage was quoted by Viscount Dilhorne without disapproval in the case of W. Devis & Sons Ltd v Atkins [1977] IRLR 314, a case in which the interval of time between the giving of notice and the termination of the contract of employment was at the most 24 hours. In commenting on those authorities in Stacey (supra), Waite J, said at page 234 E:

".... it does appear to us, on a careful reading of the passages in question, that their minds were not really directed to any issue involving a distinction between the notice date on the one hand and the effective termination date on the other, and it would be wrong to interpret their language so literally as to read into their words an intention to lay down the date of the notice as being an arbitrary cut-off point applicable to every case regardless of the length of notice given.

So we are not, in our judgment, constrained by authority to depart from the view we have formed in this case, based upon its merits and upon what we believe to be the proper construction of the Act of 1978."

The principle that the Tribunal is bound to have regard to events occurring during the period of notice was endorsed by the judgment of the EAT, delivered by Mummery J, President, as he then was, in the case of Parkinson (supra) when he said that the principle involved would apply to the issues arising equally under both Section 57 (1) and Section 57 (3). It was also endorsed again, this time by the Court of Appeal in the case of Alboni v Ind Coope Retail Ltd (Judgment handed down on 15 October 1997) to which we will refer a little later. In the meantime, consideration needs to be given to the judgments of the Court of Appeal in Parkinson (supra).

In the latter case, Evans LJ, gave the lead judgment with which Butler-Sloss LJ simply concurred, and from which Sir Iain Glidewell dissented. Mr Parkinson, the employee, was the financial controller of a company which was doing none too well. Management decided there was a need for a restructuring of the financial side of the team and that this would probably require the applicant's position to be replaced by a financial director. He was given 6 months notice on 9 September with an expiry date on 30 April next. On 5 October, the managing director wrote to him saying "While the extent of this reorganisation has yet to be determined, one option would be the appointment of a financial director, thus rendering the position of financial controller redundant". On 20 October, the board decided in principle to seek an outsider as financial director. At the hearing, the employers claimed their reason for dismissal was "some other substantial reason". They submitted that although the nature of the reorganisation had not yet been decided upon by 9 September, it certainly had been by the date of Mr Parkinson's dismissal six months later, and this was an admissible reason within the meaning of Section 57 (1).

The Court of Appeal decided that "the reason" had to be one which existed when both notice was given and at the termination of the contract. Since the reason relied on by the employers in Parkinson's case, related to a reorganisation which, at the date of notice, had not yet been decided upon, it could not amount in law to a reason justifying dismissal, and therefore there had to be a finding that the dismissal was unfair.

The justification of this position is set out in the judgment of Evans LJ: at paragraph 13, he says:

"I should note at this stage that the Act makes two assumptions, which to my mind are clear. The first is ... . Secondly, the Act assumes that in cases where notice is given, the reason why notice is given continues to be the reason for the dismissal when the notice takes effect The same reason will apply at both stages and throughout the notice period. This is apparent from s. 55 (3), and it is consistent in my view with ss. 53 and 67 (4)."

Later, at paragraph 27, he says:

"When the employment is terminated by reason of a notice given in accordance with the terms of the contract of employment, then in my judgment the employer's reason for dismissal has to be determined, not only by reference to his reason when the dismissal occurs but also by reference to his reason for giving the prior notice to terminate."

If there were any doubt as to what is meant in each instance by the phrase "by reference to ...", what is said in paragraph 13 makes clear in our view that an admissible reason for dismissal has to remain constant throughout the process of dismissal, beginning with the moment of notice and ending with termination, and for all the period in between. Whether the reason is genuinely retained throughout is a matter for evidence.

At paragraph 29, the learned Lord Justice continues:

"This conclusion is consistent both with Lord Denning's dictum in Abernethy and with the judgment of the EAT (Waite J) in Stacey, accepting as I do that the latter was primarily concerned with the question of fairness or unfairness under subsection (3) ..."

At paragraph 30, he says:

"If, therefore, 'the reason for the dismissal' found by the tribunal ... cannot have been the reason why the notice was given on 9 September, then in my judgment the tribunal erred in law in holding that that was the reason, or the only reason, for the dismissal for the purposes of s.57 (1)."

At paragraph 36, he concludes:

"I therefore would hold that s.57(1) requires a finding which embraces the employer's reasons for the dismissal at the time when notice to dismiss was given, this being a case where the valid termination of the employment depended upon a valid prior notice."

We have recited the last two passages at length because, taken literally, they might seem to be somewhat inconsistent with what had been said earlier in paragraph 27. We are, however, satisfied that there is no such inconsistency; on the contrary, the conclusions underline what is said in the latter paragraph, and it is an error of law if the Tribunal finds the reason for dismissal applies either at the giving of the notice or at the termination of his employment only.

The case of Parkinson was followed by the Court of Appeal decision in Alboni. In giving the leading judgment of the Court, Simon Brown LJ commented on both Parkinson and Stacey. With reference to Stacey, he said:

" ... there it was held (I content myself with a quotation from the head note) ...

'... when considering whether an employee had been unfairly dismissed within the meaning of s.57(3) ... it was necessary to take account of the whole process of dismissal initiated by the giving of notice and completed by its expiry rather than regarding the giving of the notice of dismissal as fixing the moment of dismissal and precluding consideration of events which occurred during the notice period' ... ."

He approved that as a statement of the law when he went on in the same passage to say:

"It seems to me impossible to regard that case, as Mr Cottle for the employee urges us to do, as confined either to redundancy dismissals or to changes in circumstances redounding to the benefit of the employee. The matter seems to me, moreover, put beyond doubt by Parkinson v March Consulting Ltd. There it was held that the employers' reason for the dismissal for the purposes of section 57 (1) has to be determined both by reference to the reason for giving the notice to terminate and by reference to the reason when the dismissal occurs; that as a matter of evidence that involves considering the reasons throughout the notice period; and that although 'dismissal' means determination of the employee's actual employment, a dismissal cannot be for a justified reason without reference to the notice itself. .... For present purposes, however, it seems to make it entirely clear that the Industrial Tribunal in the present case were not merely entitled, but were bound to have regard to events between notice and dismissal, both for section 57(1) purposes and also, indeed to my mind, a fortiori, for section 57(3) purposes ..."

In the first part of that passage, Simon Brown LJ endorses what Evans LJ said in paragraph 27 of Parkinson. In its last part, he makes clear that, in his judgment, the principle enunciated in Stacey applied equally for the purposes of section 57 (1) and (3) and was consistent with what was said in the aforementioned paragraph 27.

Before applying that law to the facts of the present case, it is right to observe that the guidance afforded in Parkinson and Alboni was not available to help the Tribunal when they decided liability in this case. Though Parkinson was decided in December 1996, it did not appear in the Law Reports until a month after the evidence had been given and submissions made in April 1997. The judgment in Alboni was handed down, some six months later.

The Tribunal's conclusions on the redundancy issue in the present case are set out in paragraphs 14, 26, 27 and 28 of the extended reasons:

"14. ... The first point for consideration is therefore whether or not the Applicant [now the Respondent] was redundant at the effective date of termination, namely 31 August 1996.

26. In the light of the above findings, it follows that, on or before the effective date of termination there were more than sufficient hours to provide the Applicant with 21 hours of contact time, thereby giving him a full-time contact.

27. We find that the Applicant was not redundant because the Respondent's [now the Appellants] need for employees of the type of the Applicant at the date of dismissal had not diminished.

28. It follows that the Respondent's reason for dismissal, namely redundancy, was not a true reason and in the circumstances the dismissal is therefore unfair."

Having regard to the terms of the judgments in Parkinson and Alboni, it is clear that the Tribunal erred in making only one assessment of the reason for dismissal, that being that which they made on 31 August. They should have made a finding as to what was the employers' reason for dismissal on 29 March when notice was given, and then traced its retention or otherwise during the months in between. Having regard to their findings of fact about the Appellants' financial troubles and the need to cut back on their expenditure on teaching staff as detailed in Mrs Taylor's evidence, having regard to their approval of each step of the redundancy procedures, and to Mr Galbraith-Marten's concession that a redundancy situation existed, the high probability is that had they had the guidance on offer in these recent authorities, they would have found the Appellants' reason for dismissal at the time notice was given to be redundancy.

If the Tribunal had made a finding of redundancy at that time, what would or should the Tribunal's findings have been as to the impact of the additional hours which became available in the Summer of 1996? The first finding about which the Tribunal should have been clear is the particular kind of work the Respondent was employed to do. Was he employed to teach Politics, Economics and Business Studies, or was he employed to teach any subject the Appellants asked of him and he was capable of teaching? If the former, then the programme for 1996/7 only made available 16 hours in his subjects, and this would represent a diminution in the particular kind of work he was employed to do. If the latter, then it would seem to be the case, as the Tribunal found, that there was no diminution in the Appellants' need for the Respondent to teach, once the additional hours were found. The distinction is crucial.

But this raises another issue. In finding that the Respondent was not redundant, was the Tribunal saying that the discovery of the additional hours rendered the Appellants' original belief that the Respondent was redundant a mistaken belief, one which with a little forethought and earlier planning of the programme before the redundancies were declared, could have been avoided? Or were the Tribunal, in effect, saying that this was a Stacey situation in which the dismissal was unfair by reason of the application of Section 98 (4)?

Mr Linden's analysis raised a number of the above issues, focussing as he did in particular on the consequences of the additional hours becoming available. But were they raised at the hearing below? Probably not. The extended reasons contain no comment or findings to suggest they were. However, Mr Galbraith-Marten has not taken the point, and we think it would be wrong for us to act on our surmise.

It could be said that all the issues above discussed were matters which fell to the Appellants to prove. The burden rested upon them to prove the reason for dismissal at all stages, and it is clear from the Tribunal's findings that they failed to discharge that burden.

We however take the view that, though the facts of this case are comparably simple, the legal issues involved are quite complex. Their complexity has become apparent as a result of their scrutiny in Stacey which does not seem to have been cited to the Tribunal, and more particularly in the recent cases of Parkinson and Alboni. We think it is clear that the full range of those issues were not in the minds of either advocate who appeared before the Tribunal below or of the Tribunal itself. We therefore do not think it would be right or proper to leave this case to be decided simply on the basis of a burden of proof.

We are satisfied that the Tribunal erred in law in considering the issue of redundancy solely on the basis of the position appertaining on 31 August 1996. On the guidance which is now available, there should be findings as to the Appellants' reasons for giving the Respondent his notice of dismissal, and as to the significance of what happened in between that date and 31 August. What was the impact of the extra hours being discovered? What was the particular kind of work the Respondent was employed to teach? Had the Appellants' requirements for a teacher of that particular kind of work diminished? Did that remain the case notwithstanding the discovery of the additional hours? In the result, was the Appellants' reason for dismissal as at 31 August the same as it had been on 29 March? Is the Tribunal finding for or against the Appellants under Section 98 (1) or Section 98 (4) of the Employment Rights Act? Having made those findings, in what context is the Trade Union and Labour Relations Act 1992 relevant?

In our judgment, in order to ascertain the answers to those necessary questions, we consider that the appeal must be allowed with a direction that the case be remitted for a rehearing before a differently constituted Tribunal. That is our order.