United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ROBERT KELLAR (of Counsel) Instructed by: Messrs Bennett Griffin Solicitors Seal Lane Chambers 11 Sea Lane Ferring West Sussex BN12 4DR
For the Respondent	MR DAVID L REES (Representative) First Assist Group Ltd Jasmine House Kingston Street Chinnor Oxon OX39 4NL


 


SUMMARY

Unfair Dismissal

Employment Tribunal reached a decision which was (a) not supported by the evidence (b) was not properly reasoned according to Meek v City of Birmingham District Council [1987] IRLR 250 Duty of an employer when offering suitable alternative employment to provide financial information considered: Modern Injection Moulds Ltd v Price [1976] IRLR 172

HIS HONOUR JUDGE BIRTLES

Introduction

1. This is an appeal by Mr Martin Fisher from the decision of an Employment Tribunal sitting at Brighton on 12 October 2004 which dismissed his claim for unfair dismissal. The Chairman was Mr R Barrowclough. The members were Miss M L Potts and Mr B S Walter.

The Material Facts

2. The material facts are short and set out in 1-4 of the Employment Tribunal's decision as follows:-

"1. The relevant facts are that the Claimant was employed by the Respondents as a New Business Manager from 26th February 2001 until his dismissal on 30th April 2004.The Respondent's business was in the provision of hire purchase facilities to individual consumers on the purchase of cars and motor vehicles; and, to a lesser extent, the provision of finance in the commercial leasing of a wide range of plant, equipment, and machinery. The business operated from premises in Steyning, West Sussex, with a total of approximately 17 employees, of whom between three and seven were in the team headed by the Claimant as New Business Manager.

2. The Respondent was one company within a group of which the ultimate parent company was Lenlyn Holdings plc. The group operates in 13 countries worldwide, and had approximately 600 employees in the UK at the relevant period in 2004, of whom about 20 or 30 would be managerial status (like the Claimant) or above.

3. In the early part of 2004, Hoopoe Investments Ltd (the Respondents' 100% holding company and itself a subsidiary of Lenlyn Holdings plc) was investigating the possibility of a merger with a local competing company called Southern Finance Ltd. That Company operated a similar business to the Respondents, albeit it concentrated entirely on the provision of finance to individual customers in the purchase of cars, and did not deal with commercial leasing contracts.

4. In the event, and as is not disputed, the projected merger of the two businesses did not go ahead. Rather, Lenlyn Holdings plc bought the entire shareholding of Southern Finance Ltd, which it thereafter operated, and the Respondents ceased trading and were wound up, writing no new business and having collected all outstanding debts. It is not contended that there was any transfer of any of the Respondents' assets, customers, business, or of the undertaking as a whole to Southern Finance Ltd. The Respondent' staff (including the Claimant) had been kept informed of the progress of the discussions and of the decision to close the Respondents, communicated in early April 2004".

The Issues

3. The Tribunal record in paragraph 5 of its decision that the Claimant's Counsel accepted that a redundancy situation had arisen at the end of April 2004 and that the reason for the Claimant's decision was redundancy. The Tribunal went on to put the relevant issues between the parties in the following way:-

"The issues for the determination of the Tribunal on this application concerned whether or not the Respondents had adopted a fair redundancy procedure; and secondly, whether it did enough to investigate the possibilities of offering the Claimant alternative employment within the group. The factual issues which, it was accepted, were determinative of the success or failure of the Claimant's application were as follows:-

(a) Did the Respondents take appropriate and sufficient steps to bring the possibilities of appropriate alternative employment to the notice of the Claimant?

(b) Was the Claimant in fact promised (as he alleged) by the Respondent's Managing Director, Mr Mike Bossom, that his position was safe; in the sense that he would either be offered a new and appropriate job with Southern Finance Ltd or, alternatively, retain his existing role with the Respondents?."

The Employment Tribunal's Conclusions

4. On the first issue the Employment Tribunal concluded that the Respondents did take all appropriate steps to notify the Claimant of possible alternative employment within the group and said this:-

"We accept the evidence of the Respondent's witnesses (Miss Pratt and Mr Bossom) and where the evidence conflicts with that of the Claimant, whose evidence we found to be generally unsatisfactorily overall, we prefer their account. The Respondent's evidence is supported by the contemporaneous documentation and in particular the letter sent by the Claimant on 14 and 23 April 2004 (pages 20 and 21/22 in the Exhibit A1); although it is regrettable that no notes of the important meetings with the Claimant on the 19 and 21 April were kept. We accept that the Respondents acted appropriately in notifying the Claimant of the Sales Account Manager vacancy with the Southern Finance Ltd; and that, in the complete absence of any expression of interest by the Claimant in that role, whether orally or in writing, it was not incumbent upon them to make further enquiries concerning the vacancy. Accordingly, we conclude that the Respondent s discharged the obligation on them to investigate and bring to the Claimant's attention suitable potential alternative employment".-

Decision paragraph 6

5. On the second issue the Employment Tribunal decided that no such promises or offers as were alleged by the Claimant were in fact made by Mr Bossom to the Claimant for the following reasons:-

"Whilst we found Mr Bossom's evidence concerning his discussions with the Claimant to give rise to some concern, the crucial and in our view determinative point is that, (as was accepted on his behalf), at no stage did the Claimant make mention of these alleged promises or offers, either in the meeting on 21st April 2004, of which Miss Pratt was present; or indeed throughout the period leading up until 30th April; either orally or writing, and either to Miss Pratt, the group's Human Resources Manager or to Mr Pooley, Mr Bossom's superior, whether informally or as the subject matter of a formal appeal. It seems to us inconceivable that, had such offers been made, the Claimant would not have raised them in some shape or form either before or after his dismissal. Overall, we are satisfied by and prefer the Respondents' account; and find that they adopted a fair redundancy procedure."

Decision paragraph 7

The Notice of Appeal

6. The Notice of Appeal raises three separate grounds of appeal and is supported by the skeleton arguments and oral submissions made by Mr Robert Kellar and Mr David L Rees We take each grounds of appeal in turn.

Ground One

7. This ground of appeal asserts that the Employment Tribunal clearly misdirected itself as to the evidence on reaching a conclusion on whether the Applicant had been promised alternative employment prior to the dismissal for redundancy. In other words it misdirected itself as to the evidence. We have just set out in our judgment the Employment Tribunal's reasoning in paragraph 7 of its decision. It is clear from the passage cited it preferred the evidence of the Respondent's witnesses to that of the Claimant on this issue. It did so for two reasons. The first was that there was a concession by the Claimant's Counsel (Mr Kellar) that at no stage did the Claimant make mention of any offer on a promise made to him at any of the meetings in April 2004 to any of the relevant employees of the Respondent and second, if such a promise or offer had been made then he would inevitably have raised it with one or other of them.
8. Unfortunately the two reasons given by the Employment Tribunal for preferring the Respondent's evidence against that of the Claimant are both fallacious. At the hearing of the appeal Mr Kellar told us (and it was not challenged) that he did not make any such concession. We accept that. Second, there was clear evidence before the Employment Tribunal that the Claimant had in fact raised the promise made by Mr Bossom at a meeting with Ms Gillian Pratt, the Respondents Head of Personnel and Ms Suzy Brown, the Respondent's Personnel Manager on 27 April 2004 at a meeting at the Respondent's head office in Piccadilly. The minute of that meeting makes that quite clear: Employment Appeal Tribunal bundle page 58. In the light of the note of the meeting (which was before the Employment Tribunal) not only would Mr Kellar not have made such a concession but there was clear evidence to the contrary. In those circumstances the reasons given by the Employment Tribunal for preferring the evidence of the Respondent's witnesses are fallacious and amount to an error of law.

Ground Two

9. The second ground of appeal is that the Employment Tribunal misdirected itself in law in relation to the duty of an employer to provide sufficient information as to suitable alternative employment prior to dismissal for redundancy. The reasoning of the Employment Tribunal is found in paragraph 6 of its decision which we have set out above.
10. Mr Kellar cited the well known decision of Modern Injection Moulds Ltd v Price [1976] IRLR 172 and copies of that decision were given to the Employment Tribunal. At paragraph 15 Mr Justice Phillips said this:-

"The law is quite clear. The case was one which fell to be determined in accordance with the provisions of paragraph 6(8) of the First Schedule to the Trade Union and Labour Relations Act 1974 because this was not a case which fell within sub paragraph (7) of paragraph 6. In those circumstances in the position which obtained there was an obligation on the employers to do their best before actually dismissing him on the ground of redundancy (albeit there was a redundancy situation) to find him suitable alternative employment within the company. That statement of law is taken from the decision of the National Industrial Relations Court in Vokes v Bear [1973] IRLR 363 [1974] ICR 1. We adopt the statement of the law in that case, which in our view is correct. In our judgment it can be said that inasmuch as there is this obligation on the part of the employers to try to find suitable alternative employment within the firm, it must follow that if they are in position pursuant to their obligation to make an offer to the employee of suitable alternative employment they must give him sufficient information on the basis of which the employee can make a realistic decision whether to take a new job. It will of course depend upon the circumstances in every case, how much information, and information upon what subjects must be given. Normally at all events and certainly in this case it is necessary for the employer to inform the employee of the financial prospects of the new job. The test must always be (it has to be looked at from the point of the employee) has he been given sufficient information upon which he can make a realistic decision whether to take the job and stay, or whether to reject it and leave?"

11. Mr Kellar submits that the undisputed evidence before the Employment Tribunal was that the Claimant had, prior to his dismissal, been a New Business Manager managing a team of three sales managers (effectively finance salesmen). At one stage in his career seven members of the Respondent's sales team reported to him. It was common ground that his take home salary had been approximately £40,000 per annum prior to his dismissal. It was also common ground that prior to his dismissal that the Claimant was offered alternative employment as a "field based" Sales Account Manager and that the evidence before the Employment Tribunal was that none of the written correspondence between the parties referred to the financial prospects for the alternative job. It was accepted in cross-examination on behalf of the Respondent that although the Claimant may have been told that the sales job would include a basic salary plus commission, he was not given details as to the financial prospects of the job. Within one month of the Claimant's dismissal the job that had been offered to the Claimant was advertised with an annual salary of £40,000 (basic salary plus commission). There was no evidence that this figure had ever been given to the Claimant. The Claimant's submission to the Employment Tribunal was that if he had been told that the offer of alternative employment had similar financial prospects as his original position he would have seriously considered it if not accepted it. In other words it was a failure to apply the reasoning of Mr Justice Phillips in the Modern Injection Moulds Ltd case.
12. However, the Employment Tribunal made no reference in its decision to the Modern Injection Moulds Ltd case or to the principles contained in the judgment of Mr Justice Phillips.

The Employment Tribunal limited itself to the brief passage in paragraph 6 of its decision which we have set out above.

13. Mr Kellar attacks paragraph 6 of the Tribunal's decision on the grounds that the Employment Tribunal failed to apply Modern Injection Moulds Ltd to the facts of this case on two grounds. First, that if it had applied those principles then it would have inevitably come to the conclusion that the Claimant had been unfairly dismissed on the grounds that he had been given wholly inadequate information on the financial prospects of the sales job prior to his dismissal and that if he had been given such information he would either have given serious consideration to the job by expressing an interest in it or have accepted it. Second the Employment Tribunal erred in law in distinguishing the Modern Injection Moulds Ltd case on the basis that the Claimant had not asked for financial information about the sales job when he had been told of its existence.
14. Mr Rees for the Respondent submitted that Modern Injection Moulds Ltd is irrelevant to this case as no offer of alternative employment was made to the Claimant and any offer would have to be the responsibility of the company making the offer which in this case would have been Southern Finance Ltd not the Respondent. The Respondent's only obligation in law was to enquire about job opportunities elsewhere including Southern Finance Ltd and if there were such vacancies to make these known to the Claimant and assist him to explore those job opportunities with the other company if he so wished. It would then be a matter for Southern Finance Ltd to decide whether they wished to make an offer to the Claimant and if so on what terms.
15. We find Mr Rees's submission disingenuous because (as the Tribunal makes clear) the Respondent was one company within a group of which the ultimate parent company was Lenlyn Holdings Plc. Lenlyn Holdings Plc bought the entire shareholding of Southern Finance Ltd which it thereafter operated and the Respondent ceased trading and were wound up, writing no business and having collected all outside debts. The Respondent's holding company therefore had total control over job vacancies within Southern Finance Ltd.
16. While we are concerned the Employment Tribunals lack of reasoning (see Ground three) we do not think as a matter of law that narrowly construed Modern Injection Moulds Ltd case applies to the present case. As is clear from the facts of that case Mr Price was offered a specific post of foreman rather than manager with reduced functions and payment on an hourly or daily basis rather than a weekly wage. In those circumstances it is hardly surprising that the Employment Appeal Tribunal reached the decision that it did. In the present case there is no specific offer of a job merely a list of potential alternative jobs: see Respondent's letter to Claimant 14 April 2004 and 23 April 2004: Employment Appeal Tribunal bundle pages 55-57 as well as the minutes of the redundancy consultation meeting on 27 April 2004: Employment Appeal Tribunal bundle pages 58-59.
17. However, in our judgment good industrial practice has moved on since Modern Injection Moulds Ltd. The case was decided on 30 April 1976 some 29 years ago. In our judgment the law should be that where there are one or more possibilities of suitable alternative employment available to an employee who is to be made redundant then the employer should normally inform the employee of the financial prospects of those positions. We note that it may not be practicable to provide such information because the financial prospects of a particular position may not yet have been determined. Furthermore, a failure by an employee to indicate an interest in a particular position and/or to request further information (including financial information) is a factor which the Employment Tribunal may wish to take into account in reducing an award under Sections 112 (3) and 123 (6) of the Employment Relations Act 1996.
18. In this case there was clearly one position, the position of "field based" Sales Account Manager, which could readily be seen to constitute suitable alternative employment. The Claimant was made redundant on 30 April 2004 and the position of "field based" Sales Managers in different parts of the country was advertised on 26 May 2004 with salary/benefits of £40,000 (basic salary plus commission) plus a car and other benefits. That is a clear indication that the Respondent either had that information available to it when referring the Claimant to those vacancies (we emphasise the plural) or it could easily have found out what the potential financial prospects of those positions offered by Southern Finance Ltd were to be. No evidence was produced to the Employment Tribunal to explain why no information about the financial prospects of those positions was unavailable in April 2004. For these reasons we think the Employment Tribunal was in error.

Ground Three

19. The third ground of appeal is that the Employment Tribunal failed to give adequate reasons as required by Meek v City of Birmingham District Council [1987] IRLR 250.The principles of that case are well known and do not require repeating in this judgment. Mr Kellar made various submissions about the failure of the Employment Tribunal to make sufficient findings of fact, identify the central matters on which the Claimant was disbelieved and the reasons for disbelieving him in the light of the matters canvassed above. Mr Rees submitted that the decisions were clear on its face and the Claimant clearly knew why he had lost. In the course of argument we drew the attention of Mr Kellar and Mr Rees to Rule 30(6) of Schedule 1 the Employment Tribunal's (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861). Mr Kellar submitted that this decision failed to comply with Rule 30(6). Mr Rees submitted that the decision complied with the new Rule 30(6).
20. While the new Rule 30 (6) does not supersede Meek in our judgment it is clear that for an Employment Tribunal decision to be Meek compliant it must comply with Rule 30(6) of the 2004 Regulations. In our judgment the very helpful provisions of Rule 30(6) spell out in clear terms what an Employment Tribunal is required to do in order to make its decision Meek compliant. An Employment Tribunal which complies fully and properly with Rule 30(6) can be assured that its decision (in the absence of bias or incompetence) will be found to be Meek compliant. We therefore use this decision to urge all Employment Tribunals throughout the country to ensure that their decisions closely follow the requirements of Rule 30(6). In our judgment this Employment Tribunal clearly failed to pass that test and therefore made an error of law.

Conclusion

21. It follows that for the reasons given this appeal must be allowed and the case remitted for rehearing to a fresh Employment Tribunal. We are not able to make appropriate findings of fact ourselves as we have not seen any notes of evidence. Furthermore, in the light of our comprehensive rejection of the Employment Tribunal's reasoning we do not think it appropriate to remit this case to the same Tribunal.