United Kingdom Employment Appeal Tribunal

APPEARANCES

 

EAT/0771/01/RN & EAT/0778/01/RN For the Mrs A J B Ouston t/a Ouston & Co	MR S MAJUMDAR (Of Counsel) Instructed by: Messrs Bates Wells & Braithwaite Solicitors Cheapside House 138 Cheapside London EC2V 6BB
For the Ms Catriona MacIntyre-Beon	MISS I OMAMBALA (Of Counsel) Instructed by: Messrs Thompsons Solicitors Congress House Creat Russell Street London WC1B 3LW


 


JUDGE J ALTMAN

1. This is an appeal from two decisions of the Employment Tribunal sitting at London South in what were unfortunately rather attenuated proceedings. The reason for that we do not know but everyone would recognise that it is unfortunate.
2. The first decision was heard on 2 July and 9 October 2000 and the Employment Tribunal found that the Respondent who is the Appellant unlawfully discriminated against the Applicant on the ground of her sex and unfairly dismissed her for a reason related to her pregnancy.
3. The second decision was made after hearings on 16 February 2001 and 25 April 2001. The Employment Tribunal made an award as to Remedy which was later reviewed on 10 October 2001 when a final award was made. The Appellant appeals from the finding of liability and from so much of the award of compensation as relates to injury to feelings.
4. The primary issue before the Employment Tribunal was whether the Applicant was dismissed for redundancy or for a reason related to her pregnancy. The identification of the reason for dismissal was the main task that the Employment Tribunal set themselves. It seems to us after the very helpful and careful arguments of Mr Majumdar and Miss Omambala for the parties that the findings of facts of the Employment Tribunal which were comprehensive, full and careful must be considered through their sequence.
5. The Respondent is the sole proprietor of a small business providing management services to a variety of clients. For the year ending October 1999 there was initially a projected turnover of fees of £422,000 for the coming year. In July 1998 the Respondent entered into a contract with the Institute of Health Service Management to provide training and other services for their members for which a payment was to be received of £12,000 against the cost to the Respondent of £55,000. This imposed on the Respondent a heavy burden to make up the difference and create a profit margin by soliciting fees for the work and training and advice that was to be given.
6. In August 1998 the Applicant began work and was taken on to service that particular contract. She came with a good work record in the health service industry and it is clear that an important part of her work was to be the generation of business. No minimum period of notice was agreed. She received a salary of £39,000 which was £17,000 more than the estimated costs, making the project that much more expensive to mount.
7. In early 1999 when the programme had begun the Applicant told the Respondent that she was going to have a baby at the end of the year. The Tribunal found that the Respondent 'thought nothing of it'. They found she had experience of employees going through pregnancy and remaining with her and they dismissed any suggestion that she had made adverse comments of an associated kind. That gave some background of fact finding as to the sort of approach that the Tribunal found the Respondent generally had to issues of pregnancy.
8. However, for whatever reason and probably in the end because it was not a viable project, the Applicant was unable to convert that contract into a business success as the Tribunal found. The Tribunal found that the Applicant understood that she was employed to develop other initiatives and she was aware that she was generating little in the way of new business. In November 1998 already there was a review of the accounts and the Respondent was being advised that the project was a serious cash drain on the business.
9. By April 1999, the following year, Mr Pilkington the Respondent's adviser, was suggesting that the contract was costing the business over £55,000. In the following month the advice was that it needed to generate a further £34,000 and that Mr Pilkington believed that the business was projecting what was described by the Tribunal as a "heavy and unsustainable loss".
10. The Tribunal found that at that time no doubt following on from that advice the Respondent was concerned that the Applicant was spending very little time on marketing. The parties had, the Tribunal found, holiday commitments in June and July and there was then a meeting between them on 20 July 1999 which figured importantly in the conclusions of the Tribunal. The Tribunal found as follows:

"The Respondent used this appointment as an opportunity to review the Applicant's performance. By this time Mrs Ouston knew that no profits were expected from the health sector. Nevertheless she believed that the business had potential and would develop. Mrs Ouston considered that the Respondent urgently needed the Applicant to develop, manage and generate profits from the health sector. She viewed the start up costs as an investment which would be covered by future income and she fully intended to support the Applicant in developing the business for a further year."

11. The Tribunal then went to find that the Respondent was pleased with the Applicant's work in developing a help-line and contributing to its success and gave a pay increase in recognition of it. They also found that the Respondent wished to be encouraging in her approach to the Applicant but they also found that by this time the Respondent was concerned that the Applicant was not focussing on areas of building the career consultancy part of the business, marketing their development courses and a special training consultancy in the health sector. She instructed the Applicant to focus on those areas during the coming year.
12. That appears to have been made clear in correspondence. At a later stage on 10 August the Applicant was to write to the Respondent asserting that her performance "had met all expectations as confirmed by your letter", which, the Tribunal noted, caused considerable surprise to the Respondent. But the picture found by the Tribunal as at 20 July was that the concerns of the Respondent were being translated not into a plan to terminate the Applicant's employment but into a plan as to how to improve things over the coming year with the applicant in post. That figured very largely in the submissions of the Applicant that something must have happened between then and her dismissal to change her employer's mind. The meeting then figured largely in the decision of the Tribunal.
13. The Tribunal made findings as to what happened thereafter in relation to the business. Part year accounts happened to be prepared for the personal reasons of the Respondent which were received by her on 11 August 1999. The Tribunal found that the Respondent Mrs Ouston was shocked to see that she would be earning only about £24,000 by way of profit at the end of the year. She had earned a profit of £117,000 the preceding year and could not live on £24,000. They then point out that the Respondent had found that losses had quadrupled in the year with projected fees having been halved and in paragraph 27 they made the following findings which really need to be quoted:

"Mrs Ouston was compelled to consider what she could do to increase her income. … She decided to concentrate on her core business and to endeavour to work with the larger of her existing clients … She then considered what to do about the cost of employing the Applicant; this was clearly the Respondent's main expense. She had already received the advice of Mr Pilkington. She took into account that the Applicant was not presently producing any additional income. Mrs Ouston determined, on that day, that she could not afford to support the costs of paying the Applicant to develop the health service business and fulfil the IHSM help-line. She considered that the help-line could be run between herself and Mr Green and therefore concluded that she did not need the Applicant to work part-time for that purpose. Having considered the financial circumstances of the business in the light of the accounts she decided not to continue trying to develop the health sector part of the business and to dismiss the Applicant."

14. The Tribunal then refer to the advice that over the next few days the Respondent obtained which showed that health workers were reluctant to take up the sort of courses that were on offer and they conclude that paragraph with the following finding:

"The advice she had received by the end of the month was not encouraging and did not affect her decision to end her involvement in the health sector."

The clear finding therefore of the Employment Tribunal was that by 11 August, on that day having been 'compelled' to consider the position, the Respondent had determined to dismiss the Applicant and secondly they found that by the end of August further investigation had not affected her already made decision to end involvement in the health sector, that is to conclude that contract.

15. From the following day, for about a month, or just under a month, the Applicant was away from work and revealed that she was pregnant with twins. Unfortunately that was accompanied with some ill health which was anticipated to last for two weeks after which the Applicant had pre-booked leave and as events turned out the three weeks had to be extended to four. There was substantial disability associated with the pregnancy described by the Tribunal in their decision.
16. The Tribunal found that the Applicant had not returned to work by 31 August, that she wrote confirming her intention to work on 6 September but that by the letter of 1 September the Applicant was informed that her post was not financially viable and was given the reason for dismissal which on the face of it related to redundancy. Substantial payment was made in respect of salary in lieu of notice so that in effect the dismissal was three months from 1 September 1999 in terms of payment of salary although formally terminated as at that date. In the absence of any agreement as to notice the employer had in this case elected to give three months.
17. The Tribunal found the following:

"The Applicant was naturally shocked not least because she had not been warned or consulted in advance of the decision."

18. What happened thereafter the Tribunal found was that the remaining part of this health service contract which ran for periods of twelve months was carried out by the Respondent herself with some additional help. They found in paragraph 33 that she continued investigating whether the health sector business was viable and by the end of September had both completed her enquiries and had come to the conclusion that she had misjudged the market. It seems to us that the inevitable conclusion on the basis of the facts as found by the Tribunal therefore was that in July the difficulties were intended to be coped with by means of extra effort to encourage sales, that by 11 August that had changed to require the redundancy or the dismissal of the Applicant. By the end of that month the Tribunal noted the Respondent's decision to end her involvement in the health sector and that any continuing work was intended to be done by the Respondent herself, although there was continuing investigation in the health sector business until the end of September.
19. The Tribunal then set out the legal considerations that had to be taken into account together with a helpful note of the submissions that were made of the parties. It is clear, as has been helpfully conceded by Miss Omambala, that the detriment for the purpose of sex discrimination that was argued throughout in these proceedings was the dismissal itself. The Tribunal then come to give their decision on the matter and in paragraph 43 they outlined the very serious financial implication of the losses resulting from the IHSM contract. They refer to the Respondent's evidence that the intervening factor which changed her mind after July was the realisation in August of the true financial position of the business. The Tribunal found that the profit of the overall business remained much lower than the previous year and they took into account five factors contributing to their conclusions namely the viability of the business, the giving up of the contract subject to existing commitments, the non replacement as an employee of the Applicant and that the enquiries into the viability of the business were concluded by the end of September. And the Tribunal point out on the other hand that it was the Applicant's case that the only intervening factor between July and the dismissal was her absence from work on sick leave and her pregnancy. And then the Tribunal make their final finding which is subject to the argument by Mr Majumdar:

"Mrs Ouston having been faced with the true extent of her financial difficulties shortly after this meeting had to make decisions which would protect her business and her own livelihood."

And they are then referring to the July meeting. They go on:

"We accept that she did not appreciate at the July date that her decision to continue trying to build the health sector part of the business was not a decision which the business could financially sustain."

They then go on to deal with it in an apparently qualified way. They say:

"The Tribunal accepts the evidence of Mrs Ouston to the extent that we are satisfied that there was a prevailing redundancy situation at the date the Applicant was dismissed. We find however that the reason for the dismissal of the Applicant at the date on which she was dismissed was not the prevailing redundancy situation, but the Applicant's pregnancy. We find that but for the Applicant's pregnancy she would not have been dismissed on 1 September 1999. In arriving at this decision we bear in mind that Mrs Ouston had made a commitment to pursue the business opportunities which she believed were available in the health sector. We find that Mrs Ouston, despite her disappointment at the Applicant's past performance in that regard, demonstrated in July that she considered that the Applicant was well placed by her experience of working in the health service of making a success of this new venture. We find, on the balance of probabilities, that but for the Applicant's pregnancy she would have been given some time in which to prove whether she could develop the health service side of the business successfully. We are satisfied that the Respondent's financial circumstances were such that the Applicant would not have been permitted to return and spend virtually her whole time on the IHSM help-line as before."

In the following paragraph the Tribunal when speaking of Remedy say:

"We are satisfied that the Respondent could not have sustained the costs of the Applicant for more than a few weeks after the dismissal and this would have been confirmed by receipt of the final accounts."

20. Accordingly, having analysed the consequences of the July meeting in that paragraph the Tribunal appear to have formed the judgment that at the time of dismissal without the pregnancy the Respondent would have given the Applicant some time to prove herself and that she would not have been permitted to work only on the help-line if she returned to work. However, they go on to find in effect that that would not have worked out and that as things were to work out when they looked at Remedy they made a finding of fact that the reality was the Respondent would not have sustained the costs of the Applicant for more than a few weeks.
21. That is wholly consistent on the face of it with the Tribunal's findings as to the import of the July meeting and the consequential investigations to an extent of maintaining the viability of the project and there is an echo reference to not permitting return to the help-line to the intention of the Respondent to focus the Applicant's work on the marketing side. However we find it impossible to reconcile the conclusion in that paragraph with the two-fold findings of fact of the Tribunal that by 11 August the Respondent had decided on dismissal and secondly that by the end of August the Respondent had determined to end the involvement in the health sector.
22. It seems to us inevitable that if the Tribunal were to rely, as they did, upon the fact that after 11 August the Respondent was still considering and taking advice about the future of the venture until September, that they must have been doing so upon the basis that a decision to dismiss the Applicant had not been taken and she was to be given another chance. The finding of fact that there was a decision to dismiss is, it seems to us, irreconcilable with the conclusion that the Applicant was to be given some time in which to prove whether she could develop the health service side of the business successfully.
23. In paragraph 45 the Tribunal focussed on the July meeting as being the driving force, in September, for the decision to keep the Applicant but for her pregnancy. It seems to us that thereby the Tribunal must be concluded to have overlooked their findings as to the intervening events of 11 August set out in paragraph 27 of their decision to which we have referred in some detail. In making their finding that the reason for dismissal was the Applicant's pregnancy, the Tribunal have made no reference to the change of perception of the business prospects and the need for dismissal which they themselves found to have occurred after July. It seems to us that they must be taken to have concluded that a decision had not been made as to dismissal for redundancy. It may be that the Tribunal slid into that conclusion in paragraph 45 by categorising the decision to dismiss for redundancy as being merely a 'prevailing redundancy situation'. The focus of their finding is the sentence:

"We find however that the reason for the dismissal of the Applicant at the date on which she was dismissed was not the prevailing redundancy situation, but the Applicant's pregnancy."

It may be that the narrowness of the distinction between finding the true reason for dismissal at the time of dismissal on the one hand and finding why an employer having decided to dismiss chooses a particular date upon which to dismiss on the other, is a distinction that would have been worthy of investigation in the case.

24. We are rightly reminded by Miss Omambala that, in considering whether on their own findings of fact the Tribunal came to a conclusion which is wrong in law, we should bear very much in mind the way in which this matter was approached by Mummery J as he then was in Stewart v Cleveland Guest (Engineering) Ltd [1994] IRLR 440 at page 443. The Employment Appeal Tribunal is invariably cautious before interfering with a decision of an Employment Tribunal on the grounds of what is, it seems to us, rather unfortunately described as "perversity grounds". The Tribunal has before them the witnesses. They have much more evidence than we have, not only what is said, but the way it is said, is something which Employment Tribunals are primarily equipped to deal with and it is a hopeless task to reconstruct in the atmosphere of the Employment Appeal Tribunal what happens in the Employment Tribunals.
25. Furthermore, the decision of the Employment Tribunal is not meant to be a meticulous analysis of every single piece of evidence. It is unnecessary for us to put in our own words the well rehearsed approach of the previous Employment Appeal Tribunals and other Courts to the way in which it is suggested that decisions of the Employment Tribunal should be couched. One still clings to the hope of informality and summary hearings that at one time formed the essence of Employment Tribunals. But in this particular case we are driven to the conclusion that the thinking of the employer as to her reasons for dismissal as set out and inferred in paragraph 45 are wholly at odds with the Tribunal's own findings of fact as to that very thinking in paragraph 27. It is the reason for dismissal, of course, that lies at the very heart of the case. It seems to us, on the basis of the Tribunal's own, as we say, very careful and meticulous findings of fact, that we are driven to conclude that the conclusion reached in paragraph 45 is one that no Tribunal properly directing itself on its own findings could have reached. We do not propose to pick one of the phrases suggested by Mummery J in the case to which we have referred but their conclusion is not one that could properly be made on their own findings. It is, it seems to us, a conclusion that we must regard as having been made as an error of law.
26. It is also clear to us that the Tribunal made a clear finding that this decision to dismiss was made without any information being passed to the Applicant, nor was she consulted in any way. Indeed she had been on the face of the findings of the Employment Tribunal lulled into what turned out to be a sense of false security by being set targets for the coming year. In paragraph 47 the Employment Tribunal made clear their findings of fact in relation to that.
27. The Employment Tribunal also found as a fact that there was 100% chance that even if there had been consultation in due course the Applicant would have been dismissed by 30 November 1999. In those circumstances we have come to the conclusion that this appeal must be allowed. The primary submission of both Counsels is that this matter should be remitted for a fresh hearing before a separately convened Employment Tribunal. We are however mindful of two things. The Originating Application was filed in 1999, three years ago. But not only that, the decision of the Employment Tribunal contained as we have already said very full and careful findings of fact.
28. The detriment complained of from the point of view of sex discrimination was the dismissal. It seems to us inevitable that on the basis of their findings of fact in paragraph 27 a Tribunal properly directing itself would have come to the conclusion that the reason for dismissal was redundancy. There was not an intention to keep the Applicant in employment on the basis of those findings which was transformed, on the findings of fact, by the discovery of the Applicant's pregnancy. Nor was it argued that the communication of the pregnancy accelerated the decision to dismiss so that the detriment became not the decision to dismiss but simply the acceleration.
29. In those circumstances bearing in mind for how long this case has gone on, together with the fact that there have been some three separate proceedings already before the Employment Tribunal and taking account of the detail that has been gone into already by the Employment Tribunal it seems to us that the most satisfactory way of dealing with this matter, and one we can properly can adopt on the facts as found is to substitute the finding that the reason for dismissal was redundancy. It so happens in this case that, the Tribunal having found that there was 100% chance of dismissal in any event, and having found the absence of consultation and information, all the factual ingredients are there for us to apply the law to those findings. We are able to conclude, therefore, without fear of contradiction, that on the facts as found, the Respondent was not reasonable in treating the redundancy as the reason for dismissal when the matter is viewed in the light of equity and the substantial merits of the case and even bearing in mind the size and administrative resources of the Respondent's undertaking as follows.
30. The inevitability of dismissal was well found by the Tribunal on the basis of the financial information, as was the absence of information and consultation. We note with interest that in the Remedy Hearing the Tribunal drew attention to the fact that the damage to the Applicant's confidence was because she had been under the impression before she was dismissed that she had been fully contributing to the company. That is, as it were, the characteristic reaction of the employee dismissed for redundancy in the experience of those involved in that industry. It is because the dismissal comes from outside. It does not appear to have anything to do with the conscious way in which an employee is carrying on their job. The disturbance, the enormous disturbance, that comes from redundancy dismissals can only be mitigated, experience has found, by drawing the employee in as much as possible to the thought processes of the employer in terms of passing information and consultation so the employee can have an understanding of and take part in what is happening. No doubt the absence of that in this case caused a severe blow to the Applicant which could so readily have been avoided.
31. The findings as to Remedy follow from the analysis of what would have happened if there had been proper consultation. On the face of it these proceedings are not affected by whether it was an unfair dismissal for procedural reasons or for pregnancy related reasons. And in those circumstances we find that the absence of information or consultation placed dismissal procedurally outside the range of reasonable responses of a reasonable employer clearly on the findings of facts of the Tribunal. The dismissal can be confirmed to have been unfair without the need for this case to be remitted for a further hearing.
32. As the Appeal as to remedy relates only to compensation for injury to feelings, it follows that the award of compensation remains as that found by the Employment Tribunal at the review hearing with the reduction of £8,428.85 being the compensation for injury to feelings and interest awarded. However in case we are wrong, and because we have heard full argument about it, we propose to address briefly the argument that the award of £7,500.00 for injury to feelings in this particular case was wholly excessive.
33. The Tribunal found a number of facts which gave rise to the finding that the Applicant had suffered injury to feelings following dismissal. There is no evidence that she sought or received on the face of the decision any medical help for this or that it was in any way long lasting or on the face of the Extended Reasons that it interfered with her general relationships with people or her general day to day life. But it did have an impact on the face of it in relation to her stress partially caused by dismissal which the Applicant considered to be a cause for psoriasis and it did damage her confidence in relation to her future prospects, and her disadvantage on the labour market, coming as she did from a position of being unemployed rather than employed. It appears that the Applicant had resolved on a slight change of career path.
34. The Tribunal's findings were succinct:

"The Tribunal did accept the Respondent's submission that the Applicant had not suffered any injury to her feelings arising out of the dismissal or that the Tribunal should not make an award. We accept the evidence of the Applicant and made an award of £7,500.00."

We do not have before us the evidence that was before the Tribunal and Miss Omambala rightly says that we should be slow to investigate the assessment of that award without having the evidence that the Tribunal had before them but we are also driven to conclude that it is difficult to discern from that brief statement what aspects of the injury led the Employment Tribunal to assess an award at that amount. On the face of the material set out in the Extended Reasons there does not appear to be scope for inferring any durable injury to feelings and anything in terms of the serious symptoms in the short term. We find a little difficulty in this area. We have been referred to the case of ICTS (UK) Ltd v Tchoula [2000] IRLW 643 and we do take into account the general approach to assessment there set out and the fact that for the purposes of that decision the Employment Appeal Tribunal found it helpful, as they expressed it, to divide the range of awards into two (a higher and lower grouping) and to consider whether a case fell within a higher or a lower grouping.

35. We have been referred to the JSB guidelines on Psychiatric Damage in which the moderate range of £3,000 - £10,000 was one in which this award was placed towards the top; the sort of factors to take into account being the injured person's ability to cope with life and work, (and the relevance there appears to be the coping with the need to try to get further employment) the effect on relationships with family friends and those generally (about which there appears to be nothing said specifically on the face of the decision) any reference to treatment (of which apparently there was none on the face of the decision), elements of future vulnerability and the prognosis, whether medical help has been sought, and then any particular circumstances about the relationship which has formed the background which is irrelevant to this case.
36. The sort of problems to which we refer are those that come under the moderate bracket, but where there had been what is described as a marked improvement by trial and the prognosis being good. That is to be contrasted with minor disability which abutts that bracket. The level of award will take into consideration the length of the period of disability and the extent to which daily activities and sleep were affected. Awards had been made below this bracket in case of temporary anxiety.
37. On the basis that a Tribunal's decision should enable an outsider to see the reasons upon which a conclusion was based it seems to us therefore that in the absence of any specified feature in their assessment of £7,500.00 we must look at the Tribunal's own findings of fact. Bearing in mind the difficulty of doing so, the fact that this is a matter of judgment, and one must intervene only where the award was so excessive as to constitute an error of law, we are driven to the conclusion in this case that this award does so qualify. There does seem to be an absence of day to day symptoms of the sort of seriousness which are contemplated in an award of the size given, nor is there the duration of the degree of stress and symptoms which would be required. We are satisfied that the award is excessive. It seems to us that this is a case which falls within the £2,000.00 to £3,000.00 bracket on the findings of fact of the Employment Tribunal.
38. We bear very much in mind the submissions made by Miss Omambala that Courts recognise that a person is particularly very often vulnerable when embarking upon a pregnancy at a time when a job is taken, but to an extent in the light of our judgement this is academic. The appeal will be allowed and there will be substituted a finding that the reason for dismissal was redundancy, that the dismissal was unfair, and that there will be paid compensation of £4,544.11. That includes the basic award of £220.00.