United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR R A CAREK (Representative)
For the Respondent	MR S CHEVES (of Counsel) Instructed by: Messrs Machins Solicitors Victoria Street Luton Bedfordshire LU1 2BS


 


SUMMARY

UNFAIR DISMISSAL

Automatically unfair reasons

Polkey deduction

The Tribunal were correct in reducing compensation by 100% in an automatic unfair dismissal where the breaches of procedure would have made no difference to the decision to dismiss for redundancy.

HIS HONOUR JUDGE ANSELL

Introduction

1. This has been the hearing of an appeal from a decision of a Bedford Tribunal who heard this case in March of this year over two days and gave reasons on 28 March. The Tribunal's finding was that in terms of traditional unfair dismissal that claim was dismissed and there was a fair dismissal by reason of redundancy. The Tribunal found that there was an unfair dismissal arising out of the failure to comply with the statutory dismissal procedures, so-called automatic unfair dismissal.
2. As a result of that finding, the Tribunal increased the basic award as they were obliged to do under Section 210 of the Employment Rights Act to the minimum of four week's pay. The Claimant had already received a redundancy payment equal to three weeks and therefore they awarded that further week.
3. In terms of compensation for automatic dismissal, that award was reduced completely, in other words by 100 per cent.
4. The Notice of Appeal on which HHJ Serota QC gave leave in June of this year through the sift procedure simply challenged that finding of 100 per cent. However, in written submissions and, indeed, oral submissions before us today, Mr Carek, who appeared below as well, sought to attempt to challenge the basis of the Tribunal's Decision in relation to unfair dismissal to which we will return below.
5. We did point out that it is a rule of this Court that, generally, we can only deal with those matters which are set down in the Notice of Appeal although we did hear him briefly on the wider submissions.

The Facts

6. The facts of the case we take from the Tribunal's Decision. The employer is a well-known and very large provider of retail information systems and the Claimant had been employed as a senior installation engineer commencing on 4 January 2005 and, generally, he had received good appraisals during his work. In March 2007 there was a necessity for two engineers to be made redundant. There was no challenge to that redundancy decision and Mr Goodin was notified of that fact on 7 March and thereafter there was consultation.
7. The main decision was taken by Mr Harper on the basis of a matrix scoring system, the details of which were explained to the Tribunal and are set out in their Decision. The outcome of the overall scoring was that two engineers were at the bottom with 11 points, one of which was Mr Goodin, three with 11.5, one with 12, two with 12.5, one with 13 and two with 13.5. The Tribunal noted it was not indicated in evidence why half points were allotted.
8. The decision, therefore, was that the lowest two with 11 points were the unsuccessful candidates and were the two to be made redundant. There was the hope that Mr Goodin would obtain an alternative employment as a field service engineer in Birmingham but in fact that position eventually was no longer available and he was therefore dismissed. The letter confirming it was sent on 20 April.
9. At no stage was Mr Goodin ever given the precise scoring or what the others had received and in a letter that he sent some weeks later alleging unfair selection and unfair treatment he had in due course added a request for the selection criteria and the scoring methods.
10. The Tribunal were, in general, obliged to consider unfair dismissal under the normal provisions, s98(4), which requires that

"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 he determined in accordance with equity and the substantial merits of the case.

11. That provision is now subject to s98A(2) which provides that the

"failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of section 98(4)(a) as by itself making the employer's action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure."

12. The Tribunal, in their Decision, considered the possibility that the process adopted by the Respondents was defective in two areas. One was Mr Harper asking other managers, known as HIPs, which employees were the least dispensable because that question involved a subjective response and also the issue of checking of factual information, particularly with regard to the skills possessed by individuals. The Tribunal, in conclusion, were satisfied that the marking that Mr Harper adopted was fair and they found that the employers had indeed adopted a proper and structured approach.
13. The key criticism of the process was the failure to provide Mr Goodin with the scoring and that was dealt with at paragraph 5.18 and 5.19, in this way:

"5.18 The meeting was Mr Goodin's opportunity [for Mr Goodin] to say why he should not be selected for redundancy. The question is whether he had reasonable opportunity to make comment or challenge the selection. The Respondents say that it was enough that they knew that he was in the bottom two, therefore he knew his score was at the lowest end and he could have easily have asked why his scores were not higher.

5.19 The Tribunal reflected that this is a case were [sic] narrow differentiations were being made between a group of individuals, all of whom were good performers and skilled. The scores were tight. Half a point would have made a difference. It might be important to know in this context whether a score of 3 or 3.5 had been awarded, for example, for skills. Not knowing how scores were arrived at would make it difficult to challenge. Mr Harper accepted in evidence that in this case the exercise of marking was complex. The criteria which were agreed with the engineers was very broadly based. Mr Harper had to break it down into a number of factors in order to apply them sensibly and, indeed, fairly. In those circumstances the Tribunal found that no reasonable employer would have not given the scores and some explanation."

14. In those circumstances the Tribunal found the dismissal was "unfair". They then go on to consider the provisions of s.98A(2).
15. We consider it would have been preferable if the Tribunal had used the expression "potentially unfair" rather than "unfair" because the way that the interaction of these two sections works is that s98(4), if satisfied, sets up the potential for unfairness, but if it is unfairness based on procedural defects the Tribunal then have to go on to decide on the balance of probabilities whether, if those defects had been remedied, dismissal would or would not have occurred.
16. The Tribunal did, indeed, go on to do that and found that for two reasons they were satisfied that the Respondents had shown that had a fair procedure been followed they would have still dismissed the Claimant.
17. Firstly, there was Mr Goodin's own evidence that he would probably not have put forward any challenge to his scores if he had been given them on 13 April. The second, and regarded by the Tribunal as more substantial, was that as a result of their investigations of the scoring system and the way that Mr Harper had applied it, they found nothing in any way to criticise that process or, as they put it, to show it had been tainted by error or bad faith and they noted that the Claimant was not able to point to any mistake in that process.
18. As a result they found, on the balance of probabilities, that had the fair procedure been followed, in other words had scores been given, then dismissal still would have taken place.
19. They did go on, however, to find that there was a breach of the statutory dismissal procedures. In terms of step 1, there was no letter calling the final meeting at which Mr Goodin was informed that he was to be dismissed and the failure of step 2, which was a failure to state the grounds for their being led to consider dismissal, those grounds being the precise scores awarded or the ranking of Mr Goodin in the list of engineers. They found that the step 2 statement needed to include not only the score but also some indication of the way the score was arrived at.
20. As we have indicated above, because of that automatic unfair finding they had to award the basic four weeks which is what they did. But they then went on to say that because of the findings they made in relation to the probability of a fair dismissal in the event the procedure had not properly been completed, they were going to reduce any compensation by 100 per cent.
21. In terms of the Grounds of Appeal, Mr Carek has attempted to revive an issue which has been canvassed before this Court certainly in the last couple of years, namely whether s98A(2) in relation to a failure by an employer to follow a procedure had to relate to either a failure to follow the statutory procedure or a written procedure set out by an employer or could be taken to cover procedural steps in their wider context. This issue has involved this Court in a number of decisions over the last two years and differing views between the judges of this Court.

The Legislation

22. However, we are satisfied the position has now been laid to rest as a result of clear guidance from the President in the case particularly of Kelly-Madden v Manor Surgery [2007] IRLR 17. That followed his earlier Decision of Alexander v Brigden Enterprises Ltd [2006] ILR 422 where at paragraph 58 the President said this:

"It follows that we agree with the submissions of Mr Barnett on this point. Polkey now has only limited application. First, it is still relevant where the statutory procedures have been infringed so that the dismissal is automatically unfair. In the light of our conclusions on the first point, it is therefore relevant here. Second, although we have heard no argument on this point, it seems to us that even where the statutory procedures are complied with but the dismissal is unfair under s.98(4), Polkey will still apply where on the balance of probabilities the employee would not have been dismissed even had a fair procedure been complied with, but where there is a chance that he might have been. (That chance would of course have to be less than 50% otherwise s.98A(2) would bite and the dismissal would be fair.) The compensation would in those circumstances have to be reduced accordingly."

23. Then, in Kelly v Madden [2007] ICR 203 the headnote makes it clear that the reference to the word "procedure" in 98A(2) was without limitation and not qualified by referring to procedure which the employer had adopted or habitually used. The use of the phrase by itself simply recognised that even if the employer could show that the employee would still have been dismissed had proper procedures been applied, it did not mean that the dismissal would always be fair since it might be unfair quite independently of procedural defects and that the Tribunal had been entitled to find that even had procedures been properly complied with, that the result would have been the same accordingly, applying section 98A(2) that finding that the dismissal was fair had to be upheld.
24. At paragraph 49, Elias J said this:

"In our view the section is broader in its effect. Whenever a Tribunal is minded to find that the dismissal is unfair for procedural reasons alone, it is open to the employer to show that compliance would, on the balance of probabilities, have made no difference."

25. We are satisfied, therefore, that the Tribunal were entitled, quite clearly, to come to the view as regards general unfair dismissal that although there was a potential for unfairness under Section 98(4) arising from the failure to give the scores, the Tribunal found, on the balance of probabilities, that the dismissal was not unfair and because it would not have made in the overall context any difference to their decision.
26. That leaves, therefore, the issue of automatic unfairness and for consideration of what compensation, if any, would have followed if the Tribunal made a finding that the dismissal was not unfair under the s98 traditional grounds. We are told by both Advocates in this case they are not aware of any previous Decision by this Court which gives any clear guidance as to amounts that would be awarded in those circumstances.
27. One approach might be simply for the Court to consider what extra period of employment would have taken place in order for the statutory procedures or normal procedures to have been properly complied with. A possibility in this case is that if the employee had queried the scores, it might have led Mr Harper to have gone back and to carry out a re-marking exercise and thereby caused a prolongation of the redundancy process and, therefore, an extension of the employment period.
28. Of course, the Tribunal had already marked some small extension by the fact that they awarded the four week period as they were obliged to do so under the provisions of s120.
29. Another view in terms of the potential for compensation was advanced in theory by Mr Cheves when he argued that the compensation could be considered on the normal basis under the normal provisions but would involve a reduction at least of 50 per cent because of the provisions of s98A(2). The Tribunal, having already found there was a better than even chance that dismissal would have occurred and less than 100 per cent. In other words, the range for the compensation would involve a reduction of somewhere between 50 and 100 per cent. However, s98A(2) is only applicable to s98 unfairness not automatic unfair dismissal.
30. However, he argues that on the facts as found by this Tribunal, the Tribunal could not consider awarding something within that range for the two reasons that they set out. Firstly, that the employee indicated (and this is their finding) that having been given the scores he would probably have not put forward any challenge to that scoring system. Secondly, they found nothing in their inquiries to show that the marking system was in any way flawed.
31. Mr Carek has argued that it was wrong of the Tribunal to accept at face value what Mr Goodin said. Until an employee is actually faced with the scores and realises that there is only half a point difference, the Tribunal should not have taken it at face value an answer from him that he probably would not have put forward any challenge.
32. This, however, was the secondary reason that the Tribunal adopted. Their primary reason was the fact that their own inquiries did not reveal any defect whatsoever in the scoring system. It seems to us that this is a finding by the Tribunal which obviously cannot be challenged before us and is unfortunately fatal to the success of this appeal because it seems to us that faced with that finding, and bearing in mind that issues of Polkey and levels of compensation are areas that this Court is loathe to interfere with because it is very much a matter of discretion for the industrial jury to fix percentages, we cannot identify any error in the Tribunal's approach.
33. It might seem harsh in one view that where there has been a breach of procedures that is not to be marked by the award of any compensation. That, of course, is not strictly true because the increase in the basic award is meant, as it were, as a basic marking of that breach.

Conclusion

34. Faced with the findings in paragraph 5.2(2) we are satisfied that the Tribunal were entitled to take the view they did in terms of the complete reduction of compensatory award and, therefore, we do not propose to interfere with that Decision.