United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR DANIEL TATTON-BROWN (of Counsel) Instructed by: Virgin Media (Legal Affairs Dept.) Media House Bartley Wood Business Park Hook Hampshire RG27 5UP
For the Respondent	MR WILLIAM BURROWS (Solicitor) Messrs Canter Levin & Berg Solicitors 1 Temple Square 24 Dale Street Liverpool Merseyside L2 5RU


 


SUMMARY

UNFAIR DISMISSAL: Polkey deduction

JURISDICTIONAL POINTS: 2002 Act and pre-action Requirements

"Automatic" unfair dismissal for redundancy by reason of non-compliance with statutory procedure – Jobs found to have genuinely disappeared, but employer found to have made no proper attempt to find alternative employment - Issue whether Claimants would have found/accepted alternative employment even if the employer had acted fairly - Tribunal declined to consider making "Polkey" deduction on basis of the inadequacy of the evidence and awarded an uplift of 40%

On the Polkey issue, held that Tribunal not entitled to decline to consider making a deduction – Software 2000 v Andrews [2007] ICR 825 considered – Discussion of burden of proof in alternative employment cases

On the uplift issue, held that the Tribunal had failed to assess the culpability of the non-compliance and had approached the issue too mechanistically - McKindless Group v. McLaughlin [2008] IRLR 678 applied


 


THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT)

INTRODUCTION

1. This is an appeal from the Judgment of an Employment Tribunal sitting at Southampton, chaired by Employment Judge Scott, over four days in January 2008. Judgment was reserved and was not in fact sent to the parties until four months later, on 2 May 2008. The Tribunal found that the Claimants had been unfairly dismissed, but the present appeal is concerned only with the issue of remedy.
2. The background can be sufficiently summarised as follows:

(1) The Claimants, who are the respondents to this appeal, were employed by the appellant company, to which we will refer as "the company", as salesmen in the so-called "re-sell" market for telecommunications services. Together they comprised what was known as the "switchless reseller" team. Their manager was a Mr King. The market was a specialised one, and the Claimants were well remunerated: the gross salaries of both were over £60,000 per year, but they also enjoyed substantial bonus/commission opportunities. They were based at Hook in Hampshire. The business in which the Claimants were employed had until recently been known as NTL Telewest, but it was at all material times part of the Virgin group (though there are no findings as to the details of the various corporate structures).

(2) On February 2 2007 the company took the decision to get out of the re-sell market because it was not commercially viable. That meant that the Claimants were liable to be dismissed for redundancy unless they could be found other suitable work within the company. They were formally told that they were "at risk", and each attended an "at risk meeting" with Mr King and an HR Manager, Mrs Holland, on February 14. At that meeting they were told that their employments would terminate on May 14 unless they had found other jobs in the company in the meantime. Very shortly after the meeting, or possibly at the end of it, they were given letters confirming the position. In the course of the meeting they were given assurances of help in trying to find employment within the company; but the Tribunal found that those promises were empty and that the company in fact did nothing to help.

(3) Both Claimants appealed against the decision to treat them as "at risk" (which amounted to a provisional dismissal). The appeals were heard on 15 March 2007, and by letters dated 29 March they were rejected.

(4) The Claimants did not find other employment within the company, and their dismissals duly took effect on 15 May 2007.

(5) The company wrongly but genuinely believed that the Claimants' redundancies were part of a number of dismissals in respect of which the duty under s. 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 applied, with the result that it was unnecessary to go through the statutory dismissal procedure prescribed by the Employment Act 2002: see reg. 4 (1) (b) of the Employment Act 2002 (Dispute Resolution) Regulations 2004. Accordingly, the process which it followed did not satisfy the requirements of the procedure in that, although there was a meeting at which the intention to dismiss the Claimants was discussed (and an appeal), the company did not send the Claimants prior to the meeting a statement setting out the circumstances which led it to contemplate dismissing them as required under "step one": see para. 1 of Part 1 of Schedule 2 to the 2002 Act.

3. The company accepted at or before the start of the hearing before the Tribunal that, although it claimed to have an admissible reason for dismissing the Claimants (namely redundancy) and, as a matter of substance, to have acted fairly, the dismissals were nevertheless unfair by virtue of s. 98A (1) of the Employment Rights Act 1996 because it had failed to comply with the statutory dismissal procedure (see para. 2(5) above). That meant that there was in fact no dispute about liability: unfair dismissal is unfair dismissal whether it is established by reference to s. 98 or s. 98A. But the Claimants were nevertheless anxious to establish that their dismissals were substantively unfair. It was their case that the alleged redundancy situation was a sham and that they had been dismissed because Mr Seddington had previously lodged a grievance against Mr King, alleging bullying and harassment, and Mr Eland had supported him at a grievance hearing only a week previously. (They had indeed initially alleged "automatic" unfair dismissal by reference to s. 104 of the 1996 Act, but that claim was withdrawn at the start of the hearing.) Trying to prove that case was, we suspect, important to them as a matter of justice (as they perceived it) even though it was no longer relevant to the question of liability; but the issue was also potentially highly material to compensation, since if the dismissal was unfair only for procedural reasons Polkey considerations, as discussed below, would come into play. Para. 6 of the Tribunal's Reasons reads:

"It was determined at the commencement of the hearing, by agreement with the parties, that this hearing would be limited to the issue of liability subject to the tribunal also determining, as appropriate, whether there should be a reduction in compensation on Polkey principles and/or whether there should be an uplift of compensation pursuant to Section 31 Employment Act 2002."

The reference to "the issue of liability" is strictly inaccurate, since there was no longer such an issue; and the two remedy issues which the Tribunal identified as, so to speak, additional were in fact the only issues falling for determination. That may be more than a mere slip: we return to this aspect below. (We should also add that we were told that it was only at the end of the evidence – rather than, as the Tribunal records, at the commencement of the hearing – that it was explicitly agreed that the Tribunal should decide the Polkey and s. 31 issues.)

4. The Tribunal held that the Claimants had "wholly failed to substantiate" their allegations that the redundancy situation was bogus or that there was any conspiracy to get rid of them because of their criticisms of Mr King: see paras. 24 and 25 of the Reasons. It held, at para. 25, that:

"… the Respondent has shown that the decision to run down the Reseller business was genuine and based on bona fide commercial factors. The Respondent was justified in distributing the outstanding work to other employees and has shown that there was a diminution in the requirements of the business for employees to carry out work of the particular kind which the claimants were doing."

5. The Tribunal was also, however, extremely critical of the company's handling of the redundancy situation which it held existed. It set out its criticisms over eleven sub-paragraphs at para. 28 of the Reasons. We need not reproduce them here in full. The essential points were:

(a) that there was no meaningful consultation of any kind;

(b) that neither Mr King nor Mrs Holland made any attempt to help to find the Claimants alternative jobs within the company it described their attitude as not only "indifferent and uncaring" but as one of "calculated disengagement" (para. 28.9), and also as "wilful" (para. 30) (though it is not entirely clear whether those highly-coloured phrases were actually meant to connote a deliberate decision on the part of Mr King and Mrs Holland not to help the Claimants - other findings, e.g. at para. 28.6, suggest not);

(c) that the Claimants were given no instructions or advice about how to find out about and apply for internal vacancies;

(d) that the Claimants were not sent a weekly vacancy list which as a matter of ordinary procedure should have been distributed to all employees who were at risk of redundancy; and

(e) that Mr Eland in particular had had one or more opportunities for internal redeployment blocked as a result of the animosity of, in particular, a Mr Cunningham, who believed (wrongly) that Mr Eland was planning to disclose confidential information to a competitor.

The Tribunal observed that those failures would have rendered the dismissal unfair by reference to s. 98 of the 1996 Act irrespective of the application of s. 98A (1).

6. Against that background, the Tribunal dealt with the two issues as to remedy as follows:

"31. The Tribunal has been asked by the Respondent to consider whether there should be a reduction in the compensatory award under the "Polkey" principle on the basis that if the Respondent had followed a fair procedure the Claimants might have been fairly dismissed. It finds itself unable to come to any such conclusion. The Respondent has failed to advance any persuasive evidence upon which the Tribunal could do so. In view of the multiple failures by the Respondent which have been identified, to embark on an exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction can properly be made.

32. Section 31 Employment Act 2002 provides for the adjustment of awards in cases where there has been non-completion of a statutory procedure. Pursuant to Section 31(3) the Tribunal finds that the non-completion of the statutory dismissal and disciplinary procedure is wholly attributable to failure by the Respondent to comply with Steps 1 and 2 of that procedure. Step 3 of the procedure, relating to appeals, was complied with. Accordingly, the Tribunal considers it just and equitable for the compensatory award to the Claimants to be increased by 40%."

7. The company in its Notice of Appeal challenges both those conclusions. We consider them in turn.

THE POLKEY ISSUE

8. The reason given by the Tribunal for not being prepared to make any "Polkey deduction" was that the company had failed to advance any persuasive evidence showing that the Claimants might have been dismissed if the company had acted fairly. What precisely that means needs to be unpicked. Taking it step-by-step:

(1) The company had, on the Tribunal's own findings, shown that the Claimants were redundant – that is, that the jobs which they had been employed to do had disappeared. Thus, whatever else might have happened, they would still unquestionably have lost those jobs. The situation is in that respect quite different from that in other typical "Polkey situations", such as cases of unfair selection for redundancy or unfair disciplinary procedures.

(2) Accordingly, the real question on the Polkey issue was whether, if the company had acted fairly, the Claimants would have found (or been found), and would have accepted, alternative employment in the business (or perhaps in the wider Virgin group). It was also in principle for consideration whether such employment would have been on equally favourable terms as to remuneration: if the Claimants had accepted alternative employment on less good terms (that being all that was available), they would still have suffered loss, and that would in principle have had to be taken into account in assessing compensation.

(3) The Tribunal's conclusion thus was, in effect, that the company had failed to establish that there was any substantial chance that, even if it had acted fairly, the Claimants might not have found and taken alternative employment with it on equally good terms – or, to put it the other way round (and subject to the question of the burden of proof which we discuss below), that it was a practical certainty that the Claimants would have found (or been found), and would have accepted, such employment.

9. Mr Tatton-Brown submitted that that was an unsustainable conclusion – or in any event, if potentially sustainable, insufficiently reasoned - in the light of the evidence and the submissions advanced. The relevant evidence and submissions before the Tribunal can be summarised as follows:

(1) Both Claimants in their witness statements dealt with the question of alternative employment only briefly, and in the context of the unfairness of the company's procedures rather than of what loss they had suffered. All that Mr Seddington said was this, which was in connection with his unsuccessful appeal:

"The main concern that I had was that I was not found alternative employment within the Company even though there were clearly opportunities and jobs available in NTL Telewest as well as the parent company Virgin. Virgin, as everyone knows, is one of the biggest companies in the world and the fact that there was no suitable alternative employment or any alternative employment for me is simply ridiculous."

He went on to make clear that his real case was that he should have kept his original job because the company had not really got out of the re-sell market; but that is of course inconsistent with the Tribunal's finding. Mr Eland in his witness statement also dealt with the question of alternative employment in connection with the unsuccessful appeal rather than in connection with compensation as such. He said that he had made it clear at the appeal that he wanted to stay and that there were roles that he could have done. In particular, he said this:

"There were plenty of vacancies in retail at the time and there have been many since my departure. A sales manager in the North West told me he would have "loved to have taken me into his team, but was not allowed to because of politics and John Cunningham and Andy Marshall would not allow it". He had a senior position in his team that was available at the time."

That is rather more specific than Mr Seddington's evidence; but even so the passage gives no indication of what the job in the North West was and does not state that he would in fact have been interested in taking it. Neither Claimant was asked in his oral evidence, either by their own Counsel or in cross-examination (or indeed by the Tribunal), to amplify those very general statements. They did both say that at the appeal hearing they had said that they were interested in staying with the company. It was acknowledged in the company's evidence that they had said so, and that was expressly accepted by the Tribunal (see Reasons para. 19); but that does not advance the argument as to specifics.

(2) There were in the bundle before the Tribunal lists of job vacancies, being the selfsame lists which the company should have sent to the Claimants (see para. 5 (d) above). The vacancies listed were from all over the country, and many or most of them were plainly unsuitable for the Claimants. No-one asked them whether there were any specific jobs on those lists – or of which they were aware from other sources – which they would have been interested in accepting.

(3) Mr. Tatton-Brown did however cross-examine the Claimants on the question whether they were interested in alternative employment with the company at all. It was common ground that, notwithstanding the company's failure to send them the vacancy lists in hard copy, the Claimants had been told in the "at risk" letters which they were given on 14^th February how to access those lists on the company's intranet. Mr Tatton-Brown put it to Mr Seddington that he had made no attempt to do so. He accepted that that was so but said that he thought that it was pointless because Mr King would not support any application that he made for a new job. Mr Tatton-Brown put it to him that that was no more than an assumption. It does not seem that precisely the same point was put to Mr Eland, whose witness statement clearly suggested that he was at least interested in a job with the company. But there was no evidence that he had made a serious attempt to examine the job vacancies on the intranet. It was clear from e-mails which were in the bundle that he had expressed an interest in a job in India but had been hindered in following it up by technical problems accessing the intranet from home (he was on garden leave at the time). But Mr Tatton-Brown established with him (a) that the technical problem in question had been short-lived and (b) that the job in India would not in fact have been of interest to him in any event.

(4) There appears to have been no treatment of the issue of the availability of alternative employment in the witness statements or oral evidence of the company's witnesses.

(5) Mr Tatton-Brown submitted to the Employment Tribunal that any compensation otherwise payable to the Claimants should be discounted for the chance – which indeed he submitted was a certainty – that even if the company had acted fairly they would have been dismissed. He relied not only on the evidence outlined above but also on the fact that both Claimants believed – albeit wrongly – that they had been victims of a conspiracy and that, as he submitted, they were accordingly hardly likely to wish to remain in the company's employment.

(For aspects of that summary we are dependent on what we were told by Mr Tatton-Brown: we were not given any notes of the oral evidence and apparently there were no written closing submissions. But Mr Burrows did not suggest that his account was inaccurate in any way.)

10. It is not entirely clear why the issue of alternative employment was so lightly explored in the evidence. At the time of preparation of witness statements neither party seems to have thought ahead to the issue of compensation. In the course of the hearing both the parties and the Tribunal seem to have continued to focus on the "liability" issue – see para. 3 above – though, as noted, some aspects of the Polkey question were covered in cross-examination. We got the impression, however, that there may also have been tactical considerations in play, with each representative judging that further exploration of what jobs might have been available might do more harm than good: Mr Burrows told us in terms that he had it in mind throughout the hearing that there was very little evidence on this issue and that he believed that that would entitle the Tribunal to decline to make any findings.
11. On the basis of the evidence and submissions set out above, we do not believe that it was open to the Tribunal to deal with the Polkey issue in the summary way that it did. In our view the evidence raised, to put it no higher, an arguable case that the Claimants would indeed not have remained in the company's employment even if all reasonable efforts had been made to find them alternative employment. The Claimants' inaction – particularly but not only that of Mr Seddington – raised a real question as to whether they were really interested in staying with the company. The submission that they might not have accepted alternative employment even if it had been found for them needed to be addressed and – unless it was rejected in its entirety – an assessment of the chances had to be made. The judgments involved would no doubt have been the more difficult because of the failure of either party to produce or elicit evidence as to specifically what jobs were in fact potentially available. We discuss below (though in the event we do not find it necessary decide) whose fault it was that the evidence on that aspect was so unsatisfactory; but, even if the Tribunal was entitled to proceed on the basis of the Claimants' vague assertions that there were plenty of jobs that they could have done, the issue raised by the company still required to be addressed. There was sufficient evidence to raise a real question whether it was in truth a practical certainty that the Claimants would have been found, and would have accepted, alternative employment.
12. Mr Burrows submitted that the Tribunal could be treated as having made a positive finding, based on preferring the Claimant's evidence to the company's, that but for the company's unhelpfulness and, in the case of Mr Eland, obstructiveness, the Claimants would have found alternative employment. But that is clearly not the approach taken by the Tribunal at para. 31 of the Reasons. In his skeleton argument and oral submissions Mr Burrows emphasised how badly the Tribunal had found that the company behaved and submitted that they had been very unimpressed by Mrs Holland's evidence. No doubt that is true, but it does not engage with the crucial question of what would have happened if they had behaved better. He emphasised that the absence of evidence on the question of alternative employment was a product of the company's failure to consult properly at the time. That point may also be being alluded to in para. 31 of the Reasons; but it attracts the same answer. The Tribunal is not relieved of its obligation to consider the Polkey question – so far as the evidence allowed – simply because the company's failures were egregious. Mr Burrows also sought to characterise the company's case as an attempt to go behind the Tribunal's findings of fact; but the crucial point here is that the Tribunal declined to make any findings.
13. It seems clear that the Tribunal believed that the course which it took was justified by the authorities. The reference to the "exercise of seeking to reconstruct what might have been" being "so riddled with uncertainty that no sensible prediction can properly be made" is a direct quote from the judgment of Elias P in Software 2000 Ltd v Andrews [2007] ICR 825. In that case this Tribunal reviewed, and sought to reconcile, a number of previous authorities including the decisions of the Inner House of the Court of Session in King v Eaton Ltd (no. 2) [1998] IRLR 686 and of the Court of Appeal in Scope v Thornett [2007] ICR 236. In King v Eaton the Inner House had appeared, at least on one reading, to permit tribunals to avoid undertaking a Polkey exercise wherever that would involve a degree of "speculation" about future events (see, in particular, the judgment of Lord Prosser at paras. 19 and 22). In Scope v Thornett, however, the Court of Appeal emphasised that all judgments as to the future involve speculation and cautioned against tribunals too readily declining to carry out an assessment which was necessary in the interest of justice simply because the relevant evidence was incomplete or uncertain. Elias P sought to summarise the relevant principles at para. 54 of his judgment in Software 2000 under seven heads, as follows:

"(1) In assessing compensation the task of the tribunal is to assess the loss flowing from the dismissal, using its common sense, experience and sense of justice. In the normal case that requires it to assess for how long the employee would have been employed but for the dismissal.

(2) If the employer seeks to contend that the employee would or might have ceased to be employed in any event had fair procedures been followed, or alternatively would not have continued in employment indefinitely, it is for him to adduce any relevant evidence on which he wishes to rely. However, the tribunal must have regard to all the evidence when making that assessment, including any evidence from the employee himself. (He might, for example, have given evidence that he had intended to retire in the near future.)

(3) However, there will be circumstances where the nature of the evidence which the employer wishes to adduce, or on which he seeks to rely, is so unreliable that the tribunal may take the view that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction based on that evidence can properly be made.

(4) Whether that is the position is a matter of impression and judgment for the tribunal. But in reaching that decision the tribunal must direct itself properly. It must recognise that it should have regard to any material and reliable evidence which might assist it in fixing just compensation, even if there are limits to the extent to which it can confidently predict what might have been; and it must appreciate that a degree of uncertainty is an inevitable feature of the exercise. The mere fact that an element of speculation is involved is not a reason for refusing to have regard to the evidence.

(5) An appellate court must be wary about interfering with the tribunal's assessment that the exercise is too speculative. However, it must interfere if the tribunal has not directed itself properly and has taken too narrow a view of its role.

(6) The section 98A(2) and Polkey  exercises run in parallel and will often involve consideration of the same evidence, but they must not be conflated. It follows that even if a tribunal considers that some of the evidence or potential evidence to be too speculative to form any sensible view as to whether dismissal would have occurred on the balance of probabilities, it must nevertheless take into account any evidence on which it considers it can properly rely and from which it could in principle conclude that the employment may have come to an end when it did, or alternatively would not have continued indefinitely.

(7) Having considered the evidence, the tribunal may determine: (a) that if fair procedures had been complied with, the employer has satisfied it-the onus being firmly on the employer-that on the balance of probabilities the dismissal would have occurred when it did in any event: the dismissal is then fair by virtue of section 98A(2); (b) that there was a chance of dismissal but less than 50%, in which case compensation should be reduced accordingly; (c) that employment would have continued but only for a limited fixed period. The evidence demonstrating that may be wholly unrelated to the circumstances relating to the dismissal itself, as in O'Donoghue v Redcar and Cleveland Borough Council [2001] IRLR 615; (d) that employment would have continued indefinitely. However, this last finding should be reached only where the evidence that it might have been terminated earlier is so scant that it can effectively be ignored."

14. The passage echoed by the Tribunal in para. 31 of the Reasons appears under head (3), where Elias P acknowledges the possibility of a finding of the kind made in King v Eaton. But for the reasons given above (and even bearing in mind the injunctions to appellate self-restraint at the beginning of heads (4) and (5), of which Mr Burrows reminded us) we do not accept that the Tribunal was entitled to treat the present case as being one where no sensible assessment of the prospects could be made. Rather, the relevant observation in Elias P's summary seems to us to be that at head (7) (d): once the evidence is sufficient to put in play the question whether the employment would have terminated in any event, it will be a rare case where that possibility can be effectively ignored.
15. But it may be worth going a little further. The way that the Tribunal expressed its conclusion was that the company had "failed to advance" evidence on the basis of which it could conclude that the Claimants might have been dismissed anyway. That is on any view not quite the right way to put it since, as Elias P points out in Software 2000 (see head (2)), the relevant evidence might include, or consist of, evidence adduced by the employee. But more significant is the fact that the Tribunal regarded the burden of proof as being on the company. That approach would be reasonable in a case, such as King v Eaton, of unfair selection for redundancy (or of a procedurally unfair dismissal for misconduct): in such a case the question is what the employer himself would have done if a fair process had been followed, and it is appropriate that the burden of showing that he would, or might, have dismissed anyway should be on him. But, as we have already observed (see para. 9 (1) above), this case is not of that kind: the issue which determines loss is whether the Claimants would have found, and accepted, alternative employment. As to that, we do not think that the burden can be regarded as being at all points on the employer. The burden may indeed be on him to raise the issue (if the employee has not) – that is, to assert that there was no suitable employment that the employee could or would have taken – and he will also have to provide appropriate evidential support for that assertion: the basic facts about alternative employment will be within his knowledge and not – at least not always or not completely – within the employee's. But if he raises a prima facie case to that effect, it must, it seems to us, be for the employee to say what job, or kind of job, he believes was available and to give evidence to the effect that he would taken such a job: that, after all, is something which is primarily within his knowledge. To the extent that any uncertainty about the position is the result of the absence of evidence which the burden was on the employee to supply, then it would be unfair for that uncertainty to be deployed against the employer.
16. In the particular circumstances of the present case, it is not easy to judge whether the burden had shifted. Details of the available jobs had been put before the Tribunal, and it would have been very easy for the Claimants to flesh out the vague generalities in their witness statements by identifying particular jobs on those lists which they said that they would have been interested in. But it may be arguable that the company had itself not done enough to put the issue in play and that Mr Burrows was entitled not to address it unless and until Mr Tatton-Brown did. We are not well placed to make the relevant judgment in the absence of a full picture of precisely how the hearing went, and since we can decide the appeal on the basis set out above we prefer to express no concluded view. But what the case illustrates is that reliance on the burden of proof in borderline cases is inherently unsatisfactory. In the field of compensation in particular, there may often be uncertainty as to precisely who has to prove what, and in what degree of detail, before the burden shifts to the other party. Parties would be well-advised to make clear well in advance of any hearing what their case is on any point of importance, irrespective of the burden of proof, and to be prepared to adduce appropriate evidence (and if necessary seek appropriate disclosure). It is not right that tribunals should have to consider the issue on the basis of inadequate evidence – or, in an extreme case, decline to decide it at all - because the parties have failed to anticipate it or because each has thought that the burden was on the other.
17. It follows that the case must be remitted to the Employment Tribunal in order to carry out an assessment of what the chances in fact were that either Claimant would, if the company had acted fairly, have obtained suitable alternative employment within it (and also, if it arises, the question of whether, to the extent that they would or might have obtained such employment, they might nevertheless have suffered a reduction in earnings). It will plainly save costs and be more convenient if that exercise were undertaken by the same Tribunal: it could do so as part of the issues to be determined in the remedies hearing which is in any event necessary. Mr Tatton-Brown submitted that the Tribunal might be tempted subconsciously to reach the same decision as it did first time round; but there is nothing in its conduct of the hearing – which was even-handed and involved criticism of both parties – to suggest that there is any real risk of that. We see no reason why the parties should be limited to the evidence already given. Although the Tribunal may wish to prevent them revisiting specific points which were already the subject of evidence, we believe that it is likely to be assisted in arriving at a fair outcome if the parties have the opportunity to fill any evidential gaps left at the previous hearing. It may be that an early case management discussion is desirable in order to achieve clarity as to the way forward.

THE UPLIFT ISSUE

18. S. 31 (3) of the 2002 Act provides as follows:

(3) If, in the case of proceedings to which this section applies, it appears to the employment tribunal that –

(a) the claim to which the proceedings relate concerns a matter to which one of the statutory procedures applies,

(b) the statutory procedure was not completed before the proceedings were begun, and

(c) the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer to comply with a requirement of the procedure,

it must, subject to subsection (4), increase any award which it makes to the employee by 10% and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount, but not so as to make a total increase of more than 50%

(4) The duty under subsection … (3) to make [an] … increase of 10% does not apply if there are exceptional circumstances which would make a reduction or increase of that percentage unjust or inequitable, in which case the tribunal may make no reduction or increase or a reduction or increase of such lesser percentage as it considers just and equitable in all the circumstances.

19. It followed from the company's admission that the Claimants' dismissals had been unfair by reason of s. 98A that the Tribunal was obliged, in the absence of exceptional circumstances, to apply an uplift to their awards of at least 10% and, if it thought just and equitable, of up to 50%. As noted above, it chose to award an uplift of 40%. It was held by this Tribunal in McKindless Group v McLaughlin [2008] IRLR 678 that in a case where the tribunal chooses to award more than the minimum 10% it must explain why it has done so: see the judgment of Lady Smith at para. 15. That goes rather further than the decision in Home Office v Khan UKEAT/0257/07, which said only that it would be good practice for such reasons to be given (para. 40); but we agree that the way that it is put in McKindless is correct. The reasoning at para. 32 of the Reasons – set out at para. 6 above - is very shortly expressed, but it appears that the Tribunal chose 40% on the straightforward basis that the company had failed to carry out two of the three steps required under the statutory procedure – i.e. steps 1 and 2 - and that it was accordingly appropriate to take a figure approximately two-thirds of the way up the available scale.
20. That reasoning appears to us to be flawed in two (related) respects:-

- First, it is clear that a (if not the) primary factor requiring to be taken into account in exercising the discretion under s. 31 (3) is how culpable the failure to employ the statutory procedures was: see para. 14 of the judgment of Lady Smith in McKindless and the passage from the judgment of Judge Burke QC in CEX Ltd v Lewis UKEAT/0013/07 there set out. The Tribunal did not expressly consider culpability at all. In some circumstances the failure to employ the statutory procedures might speak for itself, but that was not the case here. It was accepted by the Tribunal that the reason why the statutory procedure was not employed was that the company believed that the situation fell within the scope of the exception in reg. 4 (1) (b) of the 2004 Regulations: see para. 2 (5) above. That belief was wrong, and may have been careless; but it is not the same as a reckless or wilful disregard of its statutory obligations, and there is no assessment in the Reasons of how culpable it was.

- Secondly, the Tribunal's approach – at least as it explains it - is inappropriately mechanistic. Although the statutory procedure was undoubtedly not complied with, the substantial elements required by it were all in fact present: each Claimant received a letter explaining that it was proposed to dismiss him for redundancy; there was a meeting to discuss the position (i.e. the meeting on 14^th February); and there was an appeal. The problem was that the letter and the meeting came in the wrong order. We do not suggest that that means that the breach was merely technical: an important part of the statutory procedure is that the employee shall know before the meeting what the proposal is and the basis for it. Nevertheless, it is not really a fair representation of the position to say that two-thirds of the procedure was not complied with.

On the face of it, it is hard to see how the factors relied on by the Tribunal could justify an uplift near the top of the available scale.

21. Mr Burrows submitted that it was unduly restrictive to seek the Tribunal's reasoning only in para. 32 of the Reasons and that it could reasonably be inferred that it took into account the entirety of the criticisms of the company's conduct which we have summarised at para. 5 above. But we do not think that that is clear: on the contrary, we read para. 32 as intended to state, albeit very shortly, the entirety of the Tribunal's reasoning. (And if Mr Burrows' submission were correct, he might well be out of the frying-pan into the fire, since in Aptuit (Edinburgh) Ltd v Kennedy UKEATS/0057/06 it was held that under s. 31 (3) a tribunal should have regard only to the circumstances relating to the non-observance of the statutory procedures and should not use the uplift as a way of marking its disapproval of the employer's conduct on unrelated matters: some at least of the Tribunal's criticisms might be regarded as being of that description.)
22. Mr Tatton-Brown also submitted that the Tribunal should have regard to the fact that if the same percentage were applied in the case of each Claimant the resulting figures would be very different, since Mr Eland had – as was apparently already known – found a job with a new employer, so that any compensatory award would be small, whereas Mr. Seddington had not. We do not accept that. There may be exceptional cases where the size of the award to which an uplift is to be applied is a relevant factor in deciding its amount, but in the ordinary case that should not be necessary: see Abbey National plc v Chagger [2009] IRLR 86, at para 135.
23. We accordingly believe that the issue of the uplift too must be remitted to the Tribunal for reconsideration in accordance with the approach discussed above. Again, we see no reason why that task cannot be performed by the same Tribunal.