United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR JAMES LADDIE (of Counsel) Instructed by: EEF Broadway House Tothill Street London SW1H 9NQ
For the Respondent	MR T WARNOCK (the Respondent in Person)


 


HIS HONOUR JUDGE J McMULLEN QC

1. This case is about unfair dismissal arising out of redundancies. The judgment represents the views of all three members who previously read the relevant papers. We will refer to the parties as Applicant and Respondent.

Introduction

2. It is an appeal by the Respondent in those proceedings against a decision of an Employment Tribunal sitting at Bury St. Edmunds, Chairman Mr B G Mitchell, registered with Extended Reasons on 20 November 2002. The Applicant represented himself there and here. The Respondent was represented there by a solicitor and today by Mr James Laddie of Counsel.
3. The Applicant claimed that he had been unfairly selected for redundancy and was unfairly dismissed. The Respondent contended he was dismissed for redundancy or for some other substantial reason constituting a business re-organisation; and not on the grounds of age; and that he was dismissed because of a restriction imposed by the Respondent's regulator, about which we will say more. It is argued that if the dismissal were unfair the Applicant should receive no compensation.

The Issues

4. The essential issues were not defined by the Employment Tribunal but they were to determine the reason for and the fairness of the dismissal and to award compensation or other remedy if the dismissal were unfair.
5. The Tribunal decided that the reason for dismissal was redundancy and it was unfair. It awarded the Applicant £45,306.46. The Respondent appeals against that decision.
6. The Applicant cross-appealed on a point which was not pursued relating to compensation.
7. Directions sending this appeal to a full hearing were given in chambers by me.

The Legislation

8. The relevant provisions of the legislation are the Employment Rights Act 1996, section 98 (1), (2) and (4):

98 (1) "In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show-

(a) the reason (or, if more than one, the principal reason) for the dismissal, and

(b) that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2) A reason falls within this subsection if it-

(a) relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

(b) relates to the conduct of the employee,

(c) is that the employee was redundant, or

(d) is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.

…

(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)-

(a) depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case."

9. Sadly, the Tribunal did not direct itself expressly by reference to the relevant statute or what we hold to be the leading authority which is Polkey v A E Dayton Services Ltd [1988] ICR 142.

The Facts

10. The Respondent is engaged in the maintenance of commercial and military aircraft. It maintains an airfield and premises and has on its staff 10 air traffic controllers. Because of the worldwide difficulties in aviation following the murders in New York City and Washington DC on 11 September 2001 the business of the Respondent went into a decline so that redundancies were declared in the Engineering Department involving about 150 staff, carried out between December 2001 and March 2002.
11. The Applicant was employed from 29 November 1982 until he was dismissed on short notice on 31 December 2001. He was a highly-qualified Air Traffic Controller with considerable experience and was paid £50,000 a year.
12. During May 2001 he suffered some neurological disorder and was off work for a period of time. Air traffic controllers are required by the Civil Aviation Authority (the Regulator) to be certificated fit to carry out their duties. According to the standards operated publicly by the CAA, a person who has had a particular difficulty may have a restriction imposed upon him or her. This is called a proximity restriction. It applies:

"[w]here the medical certificate requires another suitably qualified controller to be in the close proximity and able to take over in an orderly fashion in the unlikely event that the individual should feel faint or unwell."

13. In a document which was not available to the Respondent at the time, but the gist of it was common ground, the CAA Policy was as follows:

""Close proximity" should mean "certainly in the same room, if not actually by the side of the individual concerned." This means that another controller holding the appropriate ratings/certificate of competence, must be available in the same room for immediate take over and would rule out someone being down stairs in the tower if the aerodrome controller had a proximity endorsement, or, any monitoring by CCTV or similar means."

The Regulator imposed such a requirement upon the certification of the Applicant upon his return to work in October 2001.

14. On 18 December 2001 the Respondent informed the Applicant orally that he was to be made redundant and it was confirmed in writing on 20 December, taking effect on 31 December. On 6 March 2002 the Applicant applied to the CAA and on 18 March 2002 the CAA responded indicating that the restriction for a year, taking effect from October 2001 would be changed so that on 29 May 2002 the CAA confirmed that since 12 months had elapsed from the Applicant's last period of neurological difficulty the restriction would be removed forthwith.
15. The approach of the Applicant was followed by the Regulator responding on 18 March 2002 as follows:

"We do not think it unreasonable that the proximity endorsement should be provisionally in place for one year from the time of your last neurological problems. This would mean that we could review the limitation from April this year assuming that you have remained free from any neurological difficulties.

Can I therefore ask you to write to us sometime next month along with a letter from your General Practitioner confirming that this has been the case and I am very hopeful that I will be able to lift your proximity endorsement forthwith."

As we have indicated, those steps were taken.

16. The Applicant issued these proceedings on 13 March 2002.
17. The Tribunal found that the Respondent failed to provide any form of procedure for handling the Applicant's redundancy or his selection. There is a detailed and sophisticated procedure in operation at the Respondent which was not followed. It was the Respondent's view that because of the very unusual circumstances attracting to the Applicant's case (that is, the proximity requirement), there would be no need to operate the consultation which was in place for all of the other employees who were facing redundancy. In the Applicant's case, redundancy was a great surprise since in previous redundancy situations the air traffic controllers had been immune. Thus no thought was given by the Respondent to treating the Applicant within the extant procedure.
18. The Tribunal found that a reasonable employer would not jettison its own policy without any process of discussion or communication. There are strong findings by about the way in which this redundancy was handled in the Applicant's case.
19. The Tribunal met on 12 September 2002 and at the end of the hearing, having heard submissions, decided in favour of the Applicant, adjourning to 4 November 2002 for the purposes of remedy. Thus in its Extended Reasons there is a somewhat historical approach since it reminds itself that it had already decided the issue of liability.
20. The essential finding by the Tribunal is as follows.

8 "…redundancy was the reason for dismissal but…the absence of consultation and the failure to follow the Company's own procedure rendered the dismissal unfair and accordingly adjourned the matter…for consideration of remedy."

Thus there could have been no doubt at the date of the remedy hearing that the parties' minds were focused on the principal issue of compensation as it became.

21. It will also be recalled that the Respondent in its Notice of Appearance had contended that there should be no compensation at all. As Mr Laddie, who appears before us today and in respect of whose argument we are very grateful, acknowledges, the Tribunal was considering Polkey, (above) for at paragraph 11 we see this:

11 "The Respondents' solicitor urges us therefore to conclude that carrying out the selection process in the way set out in the procedure and which we deemed necessary for the Company to follow, would have meant that the Applicant would in any event have lost his job."

The Tribunal did not cite Polkey expressly.

22. The Tribunal set out the respective contentions of the Respondent and the Applicant about whether there was a redundancy situation which touched the Applicant and whether it was fair to dismiss him. The matrix which was in place in respect of all other employees concerning their redundancy selection was not used for the Applicant. It was reconstructed for the purposes of the remedy hearing. Working that through, the Respondent applied the matrix and came to the conclusion on the allocation of points that the Applicant scored lowest. Thus it was that the Respondent was able to make an argument on Polkey principles if not expressly on the Polkey judgment.
23. The Tribunal dealt with that argument by analysing the matrix which had been put before it during the adjournment. In particular, one category of points is awarded for versatility. Because the Applicant had a proximity restriction he scored low on that factor and thus the argument of the Respondent was that he would have been dismissed in any event. We will say more about this approach when we come to our conclusions.
24. The Tribunal essentially found that the Respondents dealt with the matter as if it were a capability dismissal but approached it under a redundancy process (see paragraph 13). It went on to say this:

13 "The difficulty is that any substantial investigation of the Applicant's position in consultation with him would, over the course of a few weeks, have in all probability yielded the information that the Applicant was able to be reinstated to work alone with effect from 29 May. In those circumstances we do not consider that the Respondents would, with knowledge that the Applicant could be working alone satisfactorily from 29 May, have properly brought the Applicant's employment to an end on the basis of his long-term inability to carry out the job without another controller in proximity."

25. Thus it was in terms accepting the argument advanced by the Applicant (see Reasons paragraph 10) and rejecting the argument advanced by the Respondent (see paragraph 9), for the Respondent had contended that the Applicant would in any event have lost his job. It then went on to do the calculations and awarded the sum which we have cited above. We are told, however, that no set off was made in respect of a period of three months' money in lieu of notice which had been calculated at gross rather than net pay, the difference between the two being £5,207.65.

The Respondent's Case

26. The Respondent submitted that the Employment Tribunal had erred in law and that this was an exceptional case falling within the circumstances encompassed by some other substantial reason. Only the Applicant could be redundant because he needed to work in a team of four, not three, when the Respondent was seeking to reduce from ten to nine the number of air traffic controllers and to deploy them onto shifts consistent with that. Because of the restriction upon him, he was to be made redundant. He was not, in any sense, versatile.
27. The Tribunal had failed to record the contention of the Respondent to that effect and that it would be strongly arguable that consultation, had it taken place, would have been futile because of the restriction. Further, the decision was perverse as in the contemplation of both of the parties at the time of the dismissal the restriction would be in place until October 2002. There is no finding that the Respondent, even if it had known about the CAA's change of position, would have not dismissed the Applicant at the time that it did. The calculation of the compensation should take account of the gross pay and be reduced to net pay in respect of what is described as an ex gratia payment.

The Applicant's Case

28. The Applicant sought to argue before us that the substance of the restriction was incorrect and that there was in fact no requirement which precluded his working in the way that he had previously done. This was argued principally as a matter of fact.
29. The Tribunal had reached its conclusion and had properly awarded compensation. No substantive arguments were raised in opposition to the claim that the Tribunal had failed to make an appropriate set off.

The Legal Principles

30. The legal principles appear to arise from the following authorities:

(1) An employer should normally comply with a contractual procedure regulating the circumstances of dismissal, but if it does not do so it does not automatically follow that such failure renders the dismissal unfair: see Westminster City Council v Cabaj [1996] IRLR 399.

(2) It is a denial of natural justice, or a failure to provide a fair hearing, for an Employment Tribunal to give inadequate reasons for a decision: see Meek v City of Birmingham District Council [1987] IRLR 250 and High Table v Horst [1997] IRLR 513. Thus a failure to make a finding or give reasons for a particular decision will render the decision invalid.

(3) A Tribunal considering the effect of the Polkey principles (see below) should consider what was or ought to have been in the mind of the relevant employer at the time of the dismissal: see Post Office v Burkett (14 May 2003, unreported, CA).

(4) In Polkey it was indicated by Lord Bridge that in the assessment of compensation following the failure to adopt a fair procedure an 'all or nothing' approach is not required, but a percentage figure should be attached to assessing that question.

(5) When calculating compensation, any money paid in lieu of notice at gross pay should be brought into account in the same way as an ex gratia payment in respect of the figure over and above net pay: see MBS Ltd v Calo [1983] IRLR 189.

Our Conclusions

31. We reject the arguments of the Respondent except in respect of the Calo point, upon which we hold Mr Laddie is correct; and we will allow the appeal to that extent. Otherwise, the appeal is dismissed.
32. In our judgment, the reasons of the Employment Tribunal fall below the standard of a modern Employment Tribunal in its approach to setting out the legislation and the relevant applicable law. However, whilst not excusing that, we do not find that it breached the principles in Meek, for there are sufficient findings for us to determine its reasoning.
33. On the principal dispute between the Respondent and the Applicant it is clear that the Tribunal rejected the Respondent's case; that is, that because of the proximity restriction it was unnecessary to go through the redundancy procedure for there would have been a dismissal in any event.
34. Further, it was open to the Employment Tribunal to assess the possibility of a dismissal occurring in any event. True it is that the Tribunal does not use numbers in assessing the chance, but it does so in words. As a matter of logic, Mr Laddie is correct when he says that in rejecting the Respondent's contention, made originally in the Notice of Appearance, that the compensation should be reduced to nil since he would certainly have lost his job, the Employment Tribunal would accept that it was 100% certain that he would keep his job.
35. Nevertheless, the Tribunal has set out in the passage that we have cited above its very firm finding that had the consultation procedure run for a few weeks the Regulator would have been contacted. By the use of the words "in all probability", the Tribunal means 100%. The Regulator would have concluded that the Applicant should not have been precluded from work. As its letter makes clear, by March it had changed its position and indeed it allowed the Applicant to be unrestricted from a year after his neurological event.
36. That is not a process of speculation, but is the Tribunal assessing probabilities and it uses words rather than numbers to express the concept of certainty. In our judgment the Tribunal cannot be faulted in its factual decision, both that consultation would have led to the regulator indicating an earlier unrestricted date and in holding that this employer would not properly have dismissed its employee in the light of that information. Since those are matters of fact they are not open to us to reassess at this level.
37. As to the contention that the Tribunal substituted its judgment in its approach to the factors in the matrix, we hold that while at first sight it appears that the Tribunal is looking for itself at the allocation of points, in reality it is simply responding to the Respondent's case which had been made after the first day of the hearing upon the figures and upon the application of the matrix.
38. In those circumstances, again the Tribunal is simply assessing and reconstructing what would have occurred had a proper procedure taken place. Since versatility is affected by the Applicant's restriction, once it becomes clear that in the process of consultation it would be known that the restriction will be removed, versatility should improve; and thus we see no fault in the Tribunal's approach to its analysis of the matrix.
39. As we have indicated, it did err in failing to set off the figure which we are told is £5,207.67 and we accept Mr Laddie's submission upon that point.
40. We would like to thank both Mr Warnock for his restrained presentation to us today and Mr Laddie for his careful Skeleton Argument. This appeal is allowed in part and the compensation is reduced by £5,207.60.