United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr M Williams (of Counsel) Instructed by: Messrs Harding Evans Solicitors Queens Chambers 2 North Street Newport South Wales NP20 1TE
For the Respondent	Mr R Samuel (of Counsel) Instructed by: Birmingham T U C Centre For The Unemployed 448 Stratford Road Sparkhill Birmingham B11 4AE


 


SUMMARY

Redundancy – Suitable alternative employment

Tribunal correct in concluding that had proper consultation taken place employee likely to remain employed in alternative role.


 


HIS HONOUR JUDGE ANSELL

1. This is the hearing of a full appeal from a remedies decision of a Birmingham Tribunal held in March. The decision was given in reasons dated 29 March 2007 awarding compensation for automatic unfair dismissal following Mr Wright's redundancy from Stanco. At the heart of the decision was a finding by the Tribunal that had proper procedures been followed it was likely that Mr Wright would in fact have stayed employed as an electrician with Stanco at a salary of £24,500 per annum effectively for the rest of his working life. Compensation was calculated on that basis in addition to which a 13 week period said to be a period during which proper consultation would have taken place was awarded. There was also a statutory uplift under section 31 of the Employment Act 2002.
2. At the outset we deal with three minor matters - the Notice of Appeal suggested that proper account had not been taken of a payment that was said to represent a notice period of the £2727.50. It seems to be accepted now that that was in fact taken into account in the calculation. Secondly, it is conceded that if we do not interfere with the Tribunal's main conclusion in relation to future employment two small amounts for loss of statutory industrial rights and retraining were properly awarded since there was a finding by the Tribunal that because of the unfairness in the manner of the dismissal Mr Wright could not be expected to go back and work for these employers and therefore had to both retrain. Finally as regards loss of statutory rights before us Mr Williams has really conceded that there is no substantial appeal on those matters.
3. We should refer briefly to the earlier liability finding following a Tribunal hearing in 2006 reasons being given on 10 January 2007. We note that there has been no appeal against that finding that Mr Wright was unfairly dismissed. He had been employed by Stanco from 4 August 1997 initially as an electrical chargehand. He had prior to that time been working with them for some six years on a self employed basis involved with Stanco's business in designing and building of exhibition venue stands. He became an electrical foreman in the year 2000 and he was one of two foremen. Mr Paul O'Neill was the director of the electrical division.
4. There was an employment incident in 2003 involving a dental appointment as a result of which Mr Wright was dismissed for having failed to return to work on time the incident being treated as one of gross misconduct. However, following an appeal he was re-employed although there was an issue in the case and a finding by the Tribunal that there was not continuous employment and therefore for that somewhat technical reason the current employment as we have stated only started when he was re-employed on 4 August 2003. There were certainly one or more employment incidents about time keeping after that time but the substantive events with which we are concerned occurred in March 2006 when at an operational board meeting which was said to have lasted as far as this part of the meeting was concerned for no more than 5-10 minutes, it was proposed that the role of electrical foreman had become redundant giving an increased role to the contract managers. It was agreed to without any further discussion which meant that Mr Ryan and Mr Wright were to be made redundant and that was really done in quite a cruel and unpleasant way suddenly without warning and without any consultation. Mr Wright was, according to the Tribunal, asked to leave immediately clearing his desk, handing in his mobile phone and keys and left, somewhat smacking of employment life of what it used to be 30 or 40 years ago, when one hoped that we had moved away from that at this time.
5. An offer was made of continuing as a sub-contract basis electrician on an "as needed" basis. Mr Ryan in fact took up that offer but Mr Wright had lost confidence in the company and was not prepared to work for them. The Tribunal seem to have little difficultly in coming to the decision that this was an automatically unfair dismissal both in terms of both breach of the statutory procedures and indeed also because of the complete absence of any consultation. They treated the effective date of dismissal as 27 March 2006. They formed the view that it was likely that he would have continued in employment in a lower position and at paragraph 6.16 of the liability decision they said this:

"Without proper consultation, consideration or alternative employment dismissal was neither a necessary nor likely outcome. The Tribunal finds that dismissal would not have been the outcome had there been proper and fair procedures."

and then again it is repeated towards the end of the Tribunal decision at paragraph 6.26:

"The claimant would not have been dismissed had a fair procedure been followed, that is with warning, consultation and the consideration of alternative employment within the company. The employer did not act reasonably in treating the redundancy as a sufficient reason for dismissal."

That decision was not appealed and the Tribunal applied those conclusions in the remedy decision. Having repeated the facts of the case they accepted the fact that Mr Wright, having lost confidence in the company, declined to seek sub-contract work for them and the Tribunal then reviewed out what attempts he had made to find other employment, partially successful, as a self employed electrician.

6. The Tribunal accepted the overall evidence that the Respondent had to remove a tier of management. They also accepted that they were not willing to make Mr Wright a contract manager which was primarily a desk based and customer liaison role and they found the unfairness in the fact that the dismissal was without warning or consultation. The Tribunal concluded that there was no immediate need to move to dismissal and took the view that there could have been a period of consultation which they described to the end of the busy season which was the end of June during which time he would have continued on his earnings and during that time Mr Wright, they said, would have been able to consider his options both in working on the open market, although that presented difficulties in terms of his limited experience in other areas, and also in continuing in alternative employment with his employers. They took the view that had there been fair and proper consultation Mr Wright would have had confidence in the company, would be willing to remain in their employment and take sub-contract work from them. The Tribunal went on to form the view that although there were no longer electricians under contract as opposed to sub-contract, the circumstances of Mr Wright with his history of being an employed electrician meant there was a possibility that he would have been kept on as an employed electrician.
7. The Tribunal then considered loss of earnings. The Respondents, although not accepting the proposition had through their witness Mr O'Neill, indicated that where the Tribunal minded to consider continuing employment as an electrician they would have considered the salary of £18,000 was appropriate. The Tribunal rejected this. They assessed a figure of £24,500 based on two circumstances, one being the fact that that was the level of salary he was receiving prior to his promotion as a foreman and secondly as the Tribunal put it by reference to their industrial knowledge and documentation of comparables that had apparently been put in front of them and also reference to positions of electricians in the "sixteenth edition".
8. The substantial complaint made by Mr Williams is that the Tribunal had embarked into a sea of speculation navigating choppy waters when they were not entitled so to do. In particular the two substantial complaints in the Notice of Appeal are firstly that the Tribunal were in error in finding that the company ought to have created a new position of employment for Mr Wright, a less well paid role as an electrician or a chargehand, when the company had in fact given up employing electricians directly. Secondly the Tribunal have substituted their own decision as to whether or not the company should have retained Mr Wright in order to avoid redundancy. As far as speculation by Tribunals is concerned this area of law has been the subject of a number of recent cases but helpful guidance can now be found in the recent Court of Appeal decision Scope v Thornett [2007] IRLR 155, Pill LJ giving the judgment of the court and criticising the EAT decision said this at paragraph 36:

"The EAT appear to regard the presence of a need to speculate as disqualifying an employment tribunal from carrying out its statutory duty to assess what is just and equitable by way of compensatory award. Any assessment of a future loss, including one that the employment will continue indefinitely, is by way of prediction and inevitably involves a speculative element. Judges and tribunals are very familiar with making predictions based on the evidence they have heard. The tribunal's statutory duty may involve making such predictions and tribunals cannot be expected, or even allowed, to opt out of that duty because their task is a difficult one and may involve speculation."

9. The point is strongly made by Mr Samuel in this case that particularly in a case of this nature where the nature of dismissal had involved both the complete absence of statutory procedure and a complete absence of consultation surrounding the redundancy it was almost inevitable that the Tribunal had to set themselves up as the industrial jury and for a view as to what would have occurred if a fair procedure had taken place. He argued that there was clearly a duty that was imposed on the Tribunal in this case where the employers had decided for whatever reason that they would not embark on that process at all and took what perhaps they regarded as the easy way thereby avoiding their statutory and employment obligations. For our part we think the Tribunal would have been at fault had they not embarked on that process of trying to assess what would have happened if Mr O'Neill had consulted with Mr Wright and indeed Mr Ryan and discussed matters with them over a period of weeks as the Tribunal found should have happened.
10. The next criticism is a specific one relating to the 13 week period of consultation. Mr Williams argued that there was a conflict on the face of the decision between the award of the 13 week period which was essentially awarded as a period to allow Mr Williams to come to terms with what was happening and to readjust to the possibility of becoming a sub-contractor whether for Stanco or other companies. He argued that there was a conflict between allowing that period and then going on to making a finding that at the end of the 13 week period Mr Williams would have remained as an employee with Stanco. Indeed he goes on to contend that by the end of the 13 weeks the possibility of staying at Stanco may well have disappeared and therefore the only appropriate period would be the 13 weeks followed by whatever comparison would be made between his new employment and what he might have earned with Stanco if he had accepted the job as a casual electrician. We do not see any conflict between those two periods. Indeed we should add that we are not entirely certain as to whether this point was raised in the Notice of Appeal but giving Mr Williams the benefit of the doubt as far as that is concerned as we read the Tribunal decision they awarded the 13 week period to allow Mr Williams either to organise his life away from Stanco or alternatively to discuss matters with them and to see whether future employment plans within the company could be arranged and we see nothing inconsistent with the award of that 13 week period set against an addition amount in respect of future employment within the company.
11. What about the finding as to the creation of a new job for Mr Wright within the company? The suggestion from the Appellant is that first of all this is an interference by the Tribunal in the employer's reasonable decision as to whether or not it should retain employees in order to avoid redundancies. Reference was made by Mr Williams to the authority James W Cook v Tipper [1990] IRLR 386 where at paragraph 49 of that decision Neill LJ said this:

"In my judgment it is not open to the Court to investigate the commercial and economic reasons which prompted the closure."

Mr Samuel makes the point that this is not a case where the Tribunal was seeking to interfere with the basic decision as to the removal of the level of foremen. The Tribunal made it clear that they do not in any way criticise that basic decision. It is the implementation of that decision and the failure to carry out proper consultation which is the subject of criticism whilst the Tribunal were entitled to investigate we accept Mr Samuel's point there is a clear distinction to be drawn between the reasons for the closure or the reasons for the level of workforce and what is to happen to those subject to that decision thereafter.

12. As to the creation of a new job Mr Williams takes us to Merseyside v Taylor [1975] IRLR 60. This was an unfair dismissal case involving incapacity and issues of reasonableness were being considered in that case. The EAT under O'Connor J said this at paragraph 25:

"It cannot be right that, in such circumstances, an employer can be called upon by the law to create a special job for an employee however long-serving he may have been. On the other hand, each case must depend upon its own facts."

That authority was considered in the later case of Garricks v Nolan [1980] IRLR 259 when Slynn.J, as he then was, gave the judgment of the court. Having cited that particular passage from O'Connor LJ's decision he went on to say this:

"Employers cannot be expected to go through unreasonable limits in seeking to accommodate someone who is not able to carry out his job to the full extent. What is reasonable is very largely a question of fact and degree for the Industrial Tribunal."

In essence therefore as in many of these cases it is for us to say whether or not the Employment Tribunal have gone beyond that ambit of fact and degree which is always essentially a matter for them.

13. It seems to us that based on the material in front of them the Tribunal were entitled to look at the possibilities open to the company in terms of Mr Wright staying on with them. They had in mind that the company had originally employed electricians directly and although Mr O'Neill in his statement was not in favour of the proposition at the end of the day he did give an indication in terms of salary in relation to that possible position. It is right to say that the Tribunal rejected that lower figure which was calculated on the basis at the rate of £12.00 per hour discounted to £9.00 per hour. There was an error in the Tribunal's findings of £5.29 when they said it had been calculated with regards to the lowest of three rates and in fact it may well be that it was calculated by the middle rate. We have indicated already however that the Tribunal were minded to adopt the higher level of £24,500 taking the view that apart from the gap in 2003 Mr Wright had been with the company for some time. They took the view that he was more senior to Mr Ryan and indeed it was a question of whether or not Mr Ryan or Mr Wright would be the one to be retained. They took the view that Mr Wright was a more senior and more experienced foreman and in paragraph 5.34 they said this:

"By demoting Mr Wright, to electrician or electrical chargehand, the company could have retained his services in house with little additional cost (if any) over that incurred by subcontracting the chargehand role and electrical work."

This came after they had compared rates for employed electricians with the sixteenth edition and advertised posts.

14. The Tribunal had to consider whether on the balance of probabilities it was likely that Mr Wright would find a job within the company. The Tribunal concluded that would have occurred and as far as we are concerned it was at the end of the day a matter of fact for them. They heard from Mr O'Neill, they heard from Mr Wright himself and took the view that what they were proposing was not entering into a sea of speculation but in fact was a realistic proposal set against what they knew about this company. We do not accept the criticisms that Mr Williams has made that the Tribunal has exceeded their authority. The authorities made it quite clear that they have to embark on this process and we find nothing wrong in the manner in which they have gone about it. Equally they were reminded of Mr Wright's age and his experience and the number of years that he had been connected with this company and again we accept the Tribunal were entitled on the facts before them to come to the view that he would indeed have continued in employment with them on the basis that they set out in their calculations.
15. Finally there was an issue raised as far as Polkey is concerned in the Notice of Appeal and the submissions. For our part we have had great difficulty in understanding about what point is actually being raised as indeed I think Mr Williams has had as well. The Tribunal took the view that although the redundancy was justified on the facts it was not a fair dismissal and went on to find that even with proper consultation it was not likely that there would have been a dismissal because of the real possibility of re-employment. It seems to us therefore that Polkey does not arise in those circumstances. We believe that deals with all the points of the live issues that have been raised in the case unless there is anything else that counsel wants us to deal with.