HIS
HONOUR JUDGE DAVID RICHARDSON
1.
This is an appeal by Mr Douglas
Cartwright (“the Claimant”) against a judgment of the Employment Tribunal in Bristol (Employment Judge Carstairs presiding) dated 27 May 2011. By its judgment the
Tribunal awarded the Claimant compensation for unfair dismissal in the sum of
£1,827.14. The Claimant says this award was made upon wrong legal principles
and was in consequence insufficient. There is a cross appeal by Kings College
London (“the Respondent”), arguing that no award was justified at all.
2.
These proceedings have already been on
one occasion to the Court of Appeal: [2010] EWCA Civ 1146. The Claimant’s
claim for unfair dismissal was heard in 2008 at the London South Employment
Tribunal (Employment Judge Hall-Smith presiding) (“the Hall-Smith Tribunal”)
and dismissed by a judgment dated 30 December 2008. His appeal was dismissed
by the Appeal Tribunal on 24 June 2009. His further appeal to the Court of
Appeal was, however, allowed on 27 October 2010. The Court of Appeal held that
the Claimant was unfairly dismissed and remitted the question of remedy. It
was this question which the Employment Tribunal in Bristol (“the Carstairs
Tribunal”) determined by the judgment which is under appeal.
The background facts
3.
Full accounts of the background facts can
be found in the reasons of the Hall-Smith Tribunal and in the judgment of Rimer
LJ in the Court of Appeal: a summary will suffice for the purposes of this
appeal.
4.
The Claimant was employed by the Respondent with effect from 4 October
2000. By 2005 he was a permanent employee – a Non-Clinical Teaching Fellow in
the Department of Physiotherapy at the School of Biomedical and Health
Sciences. His particular interest was biomechanics. He taught a certificate
course in rehabilitation engineering.
5.
There came a time when the Respondent decided to run down the
certificate course and replace it with a graduate diploma in rehabilitation
engineering for the year 2007-2008. In the end, however, there was a lack of
student interest in the proposed new diploma; it was cancelled. By June 2007
the cancellation of the diploma was under consideration; and at a meeting on 12
June attended by the Claimant the question of the Claimant’s post possibly
becoming redundant was raised. The Claimant himself recognised, in an email on
2 July, that he had “effectively been told his job was at risk”.
6.
There followed a meeting on 6 July and a letter dated 9 July. The issue
of redundancy was raised; redeployment and voluntary severance were
discussed. The Hall-Smith Tribunal expressly found that by the time of the
meeting the Claimant knew that his job was at risk.
7.
On 6 August there was a further meeting, called by the Respondent “an
individual consultation meeting”, at which the Claimant was told that the
Respondent would seek redeployment, but if this was not secured his contract of
employment would terminate on 31 January 2008. It was agreed that voluntary
severance would be explored and redeployment opportunities considered. These
matters were confirmed in writing by the Respondent in a letter to the Claimant
dated 15 August.
8.
During the autumn of 2008 there were
indeed discussions about possible severance payments, and the Claimant applied
unsuccessfully for an alternative post. Further letters, dated 5 October and
31 October confirmed that his employment would cease on 31 January in the
absence of redeployment. Eventually on 19 December 2008 he was given notice to
expire on 31 January 2008. The Claimant, although afforded an opportunity to
do so, did not appeal; his employment terminated accordingly; and he received
an enhanced redundancy payment in the sum of £23,513.
The findings of the Hall-SmithTribunal
and the Court of Appeal
9.
(1) The Hall-Smith Tribunal found that
the Claimant was genuinely dismissed for redundancy: see paragraph 59 of its
reasons. He appealed against this finding. His appeal on this ground was
unsuccessful: see Rimer LJ at paragraphs 77-81. He concluded that the
Tribunal’s finding – that the Claimant was dismissed by reason of redundancy, a
potentially fair reason for dismissal – was “unimpeachable”.
10.
(2) The Hall-Smith Tribunal found that
the Respondent’s decision to dismiss him on this ground was fair (that is to
say, that it acted reasonably within the terms of section 98(4) of the Employment
Rights Act 1996): see in particular paragraphs 60, 62 and 63 of its reasons:
–
“60. We conclude that the Respondent acted reasonably throughout
the process, and when he resumed full-time work in September 2007 he was
provided with stop gap work to undertake until the termination of the
Certificate in January 2008. There was insufficient work for the Claimant to
undertake following the termination of the Certificate.
62. We conclude that the Respondent acted reasonably throughout
the entire process. The Claimant was aware as early as July 2007 that his job
was at risk and the reasons for it. There were subsequent meetings with the
Respondent and the Claimant accepted that the question of redundancy was raised
at the meeting with Dr Kitchen and Mr Newton on 9 August 2007.
63. The Respondent assisted the Claimant in his search for
alternative employment. The Claimant’s approach to redeployment was not
particularly proactive having regard to the fact that he was late in replying
for the position of Education Mentor and did not take up Dr Kitchen’s offer of
assistance by asking her colleagues whether the Claimant could shadow them. We
noted that the Claimant later failed to appeal against his dismissal.”
11.
The Claimant appealed against this
conclusion: see paragraphs 83 to 98 of the judgment of Rimer LJ. He argued in
particular that the Tribunal did not give proper consideration to factors
relevant to section 98(4) and did not follow a reasonable procedure. His
appeal on these grounds was unsuccessful. The reasoning of the Tribunal in
respect of section 98(4) was upheld.
12.
(3) The Hall-Smith Tribunal found that
the Respondent had complied with step one of the standard dismissal and
disciplinary procedure set out in Schedule 2, Part 1, Chapter 2 of the Employment
Act 2002. On this ground alone the Court of Appeal allowed the appeal,
substituted a finding of unfair dismissal and remitted the matter to the
Employment Tribunal for consideration of remedy.
Statutory provisions
13.
The right not to be unfairly dismissed is
conferred by the provisions of Part X of the Employment Rights Act 1996.
At the relevant time these provisions contained amendments added by the Employment
Act 2002 which have subsequently been repealed by the Employment Act
2008 but which remain applicable to this case.
14.
Section 98(1) provides that it is for the
employer to establish the principal reason for dismissal and that it is of a
kind specified in section 98(2) (or some other substantial reason). Section
98(2) specifies redundancy. Section 98(4) provides that where the employer has
fulfilled the requirements of section 98(1): –
“The determination of the question whether the dismissal is fair
or unfair (having regard to the reason shown by the employer) –
(a) depends on whether in the
circumstances (including the size and administrative resources of the
employer’s undertaking) the employer acted reasonably or unreasonably in
treating it as a sufficient reason for dismissing the employee, and
(b) shall be determined in accordance
with equity and the substantial merits of the case.”
15.
Section 98(4) was, however, expressed to
be subject to section 98A: see section 98(6)(a). This section provided as
follows: –
“98A Procedural fairness
(1) An employee who is dismissed shall be regarded for the
purposes of this Part as unfairly dismissed if -
(a) one of the procedures set out in
Part 1 of Schedule 2 to the Employment Act 2002 (dismissal and disciplinary
procedures) applies in relation to the dismissal,
(b) the procedure has not been
completed, and
(c) the non-completion of the
procedure is wholly or mainly attributable to failure by the employer to comply
with its requirements.”
16.
For the purposes of this case the
relevant procedure under the Employment Act 2002 was the Standard
Procedure set out in Schedule 2.
“Step 1: statement of grounds for action and invitation to
meeting
1. (1) The employer must set out in writing the employee’s
alleged conduct or characteristics, or other circumstances, which lead him to
contemplate dismissing or taking disciplinary action against the employee.
(2) The employer must send the statement or a copy of it to the
employee and invite the employee to attend a meeting to discuss the matter.
Step 2: meeting
2. (1) The meeting must take place before action is taken,
except in the case where the disciplinary action consists of suspension.
(2) The meeting must not take place unless –
(a) the employer has informed the
employee what the basis was for including in the statement under paragraph 1(1)
the ground or grounds given in it, and
(b) the employee has had a reasonable
opportunity to consider his response to that information.
(3) The employee must take all reasonable steps to attend the
meeting.
(4) After the meeting, the employer must inform the employee of
his decision and notify him of the right to appeal against the decision if he
is not satisfied with it.
Step 3: appeal
3. (1) If the employee does wish to appeal, he must inform the
employer.
(2) If the employee informs the employer of his wish to appeal,
the employer must invite him to attend a further meeting.
(3) The employee must take all reasonable steps to attend the
meeting.
(4) The appeal meeting need not take place before the dismissal
or disciplinary action takes effect.
(5) After the appeal meeting, the employer must inform the
employee of his final decision.”
17.
It was the failure to comply with Step 1
of this procedure which underlay the Court of Appeal’s finding of unfair
dismissal.
18.
On remission the Tribunal was required to
apply provisions within Part X governing remedies. It was first required to
consider orders for re-instatement and re-engagement. Failing such an order,
it was then required to consider compensation.
19.
Section 123 governs the making of a
compensatory award. The key provision is section 123(1):
“123 Compensatory award
(1) Subject to the provisions of this section and sections 124,
124A and 126, the amount of the compensatory award shall be such amount as the
tribunal considers just and equitable in all the circumstances having regard to
the loss sustained by the complainant in consequence of the dismissal in so far
as that loss is attributable to action taken by the employer.”
20.
In order to deal with a subsidiary
argument put forward by the Claimant it is convenient also to set out, in their
form as relevant to this case, sections 123(7) and 124A(1) of the 1996 Act and
section 31(3) of the Employment Act 2002
“123(7) If the amount of any payment made by the employer to the
employee on the ground that the dismissal was by reason of redundancy (whether
in pursuance of Part XI or otherwise) exceeds the amount of the basic award
which would be payable but for section 122(4), that excess goes to reduce the
amount of the compensatory award.
124A Adjustments under the Employment Act 2002
Where an award for compensation for unfair dismissal falls to be
–
(a) reduced or increased under
section 31 of the Employment Act 2002, or
(b) increased under section 38 of
that Act (failure to give statement of employment particulars),
the adjustment shall be in the amount awarded under section
118(1)(b) and shall be applied immediately before any reduction under section
123(6) or (7).
31(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 per cent 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 per cent.”
The reasons of the Carstairs Tribunal
21.
At the remedies hearing the Claimant
sought re-instatement and re-engagement with compensation as an alternative.
22.
As to compensation, the Claimant gave
evidence on his own behalf and argued that if Kings had not dismissed him
unfairly his employment would have continued for at least 15 months; there was
plenty of ad hoc work for him to do and no problem over funding; if necessary
he would have taken a career break; he would have become eligible for
consideration for early retirement; he would have made suggestions such as
these if he had been given a proper statutory dismissal procedure; and
dismissal would have been avoided. On the other hand the Respondent’s witness
Professor Kitchen gave evidence that following the statutory procedure would
have made no difference; and Mr Coghlan submitted that the Respondent could
have complied with Step 1 by modifying a letter sent in August 2007.
23.
As to the facts, the Tribunal said:
“3.3 Because the facts were set out in the original Tribunal
decision and were left largely untouched by the Court of Appeal except
regarding the Step 1 letter, the Tribunal has not had to make its own findings
of fact as to what happened except in respect one matter.
3.4 The Tribunal noted and accepted Professor Kitchen’s evidence
that the Claimant’s former position no longer existed and that she was not
aware of the availability of any suitable employment in any other department of
the Respondent.”
24.
The Tribunal decided not to order
re-instatement or re-engagement, and there is no appeal from that decision.
25.
The Tribunal’s essential reasoning on the
question of compensation appears in paragraphs 6.5 to 6.7.
“6.5 So far as compensation is concerned, it was clear from the
Court of appeal decision that the dismissal was otherwise fair. The Tribunal
was satisfied, on the basis that the Tribunal findings were not disturbed
except in respect of the Step 1 letter, that the Claimant would have been
dismissed even if a Step 1 letter had been sent to him.
6.6 The Tribunal had regard to the guidance provided in Polkey
v A E Dayton Services Ltd [1988] ICR 142 HL. The Tribunal considered what
would have happened when the Respondent’s Human Resources Department realised
that the letter, which was relied on most persuasively in the Court of Appeal
which was sent in August, was insufficient or inadequate and should have been
followed by a Step 1 letter after the error was realised. The Tribunal
concluded that it would have taken the department a further two weeks to send
that letter off, having regard to the need to discuss the matter with Professor
Kitchen before it was drafted.
6.7 Accordingly the Tribunal was satisfied that this would have
added to the Claimant’s length of service but only by a further period of two
weeks. For that reason the Tribunal awards the Claimant two weeks’ pay.”
26.
There were two other components to the
Tribunal’s award. One was an uplift of 20% under section 31(3) of the Employment
Act 2002 for failure to comply with the standard dismissal and disciplinary
procedure. The other was a conventional sum to compensate for loss of
employment rights.
The Claimant’s submissions
27.
The Claimant’s first submission was that
the Tribunal erroneously looked back to, and concentrated upon, events in
August 2007. He drew attention to section 98A(1) of the 1996 Act. The
Tribunal should have identified that the unfairness took place on 31 January
2008 – viz, his dismissal at a time when the statutory dismissal and
disciplinary procedure had not been complied with. Therefore the Tribunal
should have asked – what would have happened if the dismissal which took place
on 31 January 2008 had not occurred? At that stage the Respondent had yet to
comply with Step 1, let alone Steps 2 and 3.
28.
The Claimant further submits that the Tribunal did not apply guidance in
the cases which relate to the Polkey principle. He referred to Polkey v
AE Dayton Services Ltd [1987] IRLR 503 itself; and to Eaton v
King (No 2) [1998] IRLR 686, Gover v Property Care Ltd
UKEAT/0458/05, Software 2000 Ltd v Andrews [2007] IRLR 568, Zimmer
Ltd v Brezan UKEAT/0294/08 and Johnson v Rollerworld
UKEAT/0237/10. We drew the parties’ attention to Mining Supplies
(Longwall) Ltd v Baker [1988] ICR 676. The Claimant submitted that
this case was distinguishable on the facts, since there was no split hearing
and dismissal was not certain.
29.
Building on this line of cases, the Claimant submitted that the Tribunal
made its finding even though no proper evidence was called by the Respondent to
show it would have had a valid reason for a dismissal subsequent to 31 January,
still less that the dismissal would have been fair. This, he submitted, was an
error of law.
30.
He further submitted that the Carstairs Tribunal was in error in placing
reliance on the findings of the Hall-Smith Tribunal. That Tribunal had not
considered the Polkey question; it had made no findings as to
what would have happened if the dismissal had not taken place on 31 January.
Reliance on the findings of the Hall-Smith Tribunal by the Carstairs Tribunal
(see paragraph 6.5 of its reasons) was, he submitted, perverse. In the absence
of such evidence he submitted that the Tribunal was bound to hold that there
should be no Polkey reduction. The Tribunal lacked the reliable
evidential basis upon which to assess any chance.
31.
The Claimant criticised the Tribunal’s approach in paragraph 6.6 of its
reasons: why should the Tribunal suppose that the HR Department would have
realised in August that its letter was insufficient or inadequate? He
submitted that the finding of the Tribunal that his employment would have
lasted just 2 weeks longer was perverse or insufficiently reasoned. He
submitted that the Respondent would have had to adopt its own internal
dismissal procedure (a point which he had not taken at the first hearing and
which the Court of Appeal declined to allow him to take). He submitted that
there was no proper factual basis for making any deduction.
32.
On the question of compensation, the Claimant submitted that the
Tribunal should have applied the uplift under section 31(3) of the 2002 Act
before deducting the payment he had received from the Respondent. He referred
us to section 124A(1) of the 1996 Act (as it then stood) and to MacCulloch
v ICI UKEAT/0275/09.
33.
The Claimant finally submitted that the Appeal Tribunal could substitute
its own assessment of the compensatory award because it was plain beyond
argument that his loss exceeded the statutory cap, which at the relevant time
was £60,600. He explained his method of calculating pension loss.
34.
We invited Mr Coghlan to address us as to
the significance of the cross-appeal. He told us that the Respondent sought to
pursue it only if the appeal was to be allowed.
Discussion and conclusions
35.
We have already quoted the key statutory
provision – section 123(1) of the Employment Rights Act 1996. The task
of the Tribunal when assessing a compensatory award is to assess “such amount
as the tribunal considers just and equitable having regard to the loss
sustained by the complainant in consequence of the dismissal in so far as that
loss is attributable to action taken by the employer”. This is a broad test,
requiring and enabling the Tribunal to do practical justice between the
parties.
36.
The Claimant’s dismissal was found to be
unfair only because the Respondent failed to comply with the statutory
dismissal procedure applicable under the Employment Act 2002. This is a
recent provision; but ever since the right not to be unfairly dismissed came to
the statute book there have been cases where a dismissal has been found to be
unfair on grounds of a procedural nature. Failure to follow a proper
consultation procedure before dismissing an employee for redundancy has been
one such ground.
37.
The guidance in Polkey v A E Dayton Services to which the Tribunal referred in paragraph 6.6 has been
discussed and applied in numerous cases. The principles were summarised by
Elias P in Software 2000 v Andrews at para 54:
“1. The following principles emerge from these cases:
(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 s.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
s.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 the O'Donoghue case.
(d) 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.”
38.
As Elias P observed, it is open to an
employer to contend that an employee would or might have ceased to be employed
in any event if fair procedures had been adopted. In this way section 123(1)
enables tribunals to do practical justice between the parties.
39.
As Software 2000 shows, one option for a Tribunal is to
award loss for a fixed period. In particular, if a Tribunal is persuaded that
if fair procedures had been adopted the employee would have been dismissed in
any event, but somewhat later than the actual date of dismissal, then the
compensatory award ought to reflect the additional period for which the employee
would have been employed.
40.
Shortly after the decision in Polkey, the Appeal Tribunal
held as much in Mining Supplies (Longwall) Ltd v Baker.
41.
In that case the employee was chosen for redundancy on 31 October and
dismissed with effect from 7 November; there had been consultation with the
unions, but the dismissal was held to be unfair for want of individual
consultation. The Tribunal allowed 6 weeks, commencing with the date of
dismissal. The Appeal Tribunal disagreed with the Tribunal in two respects.
Firstly, it held that the Tribunal ought to have started any period from 31
October, not from the date of dismissal. Secondly, it held that two weeks was
the appropriate period. On the facts this meant that the date of dismissal
would have been one week later. The whole period of consultation could not
reasonably have taken place within the period prior to the date of dismissal;
therefore a week’s compensation was due.
42.
Giving the judgment, Wood P said: -
“Where lack of consultation in redundancy renders the dismissal
unfair, the question of loss may well depend on whether the period of
consultation which is missing could reasonably and should have taken place
within the period prior to the date of dismissal.”
43.
As Mining Supplies shows,
the Tribunal is not required by section 123(1) to assume that an employer could
only have remedied any procedural deficiency on or after the date of
dismissal. The Tribunal’s task is to do substantial justice. Where an
employer has acted hastily, so that the period prior to dismissal allowed no
time at all for the requirements of procedural fairness, then a Tribunal may
well add the whole period required to the date of dismissal. Where an employer
has allowed time for procedures, but failed in some technical way which was
capable of remedy wholly or partly within that time, the Tribunal is not
required by law to add anything. Everything therefore depends on the facts of
the case in question.
44.
We therefore reject the Claimant’s argument that the Carstairs Tribunal
was bound to start with the date of dismissal. The Carstairs Tribunal was
entitled to hold that in substance any failure to comply with Step 1 took place
in the summer of 2007. By that time, as the Hall-Smith Tribunal found, the
Claimant had effectively been told that his job was at risk; and his
redundancy, together with possibilities for severance payment and redeployment
were under discussion. We see no error of law in the Tribunal’s approach.
45.
We turn to the Claimant’s argument that the Carstairs Tribunal has
failed to apply the guidance in Polkey v AE Dayton Services and
subsequent cases.
46.
In our judgment the Carstairs Tribunal, in its finding within paragraph
6.6, was applying the principles in Polkey without committing any
error of law. It was essentially asking itself whether if the statutory
procedure had been followed the Claimant would or might have been dismissed in
any event. It concluded that the only difference would have been to the date
of dismissal. In reaching this conclusion it was entitled in law to build on
the findings of the Hall-Smith Tribunal as it did in paragraph 6.5; there was
no sufficient reason for re-opening its findings in any respect; it had a sound
factual basis in those findings for the conclusion which it reached; its
conclusion cannot be described as perverse; and its reasoning, while brief,
when assessed against the background of the Hall-Smith Tribunal findings as
upheld by the Court of Appeal, was sufficient to meet the required standard.
47.
In our judgment, indeed, it is plain that the failure to serve a Step 1
letter did not lead to any greater loss which it was just and equitable for the
Respondent to pay. The Claimant, on the Hall-Smith Tribunal’s findings, knew
that his employment was at risk. He knew the grounds upon which the Respondent
was contemplating the termination of his employment. There were meetings at
which he had every opportunity to make representations; there was consideration
of redeployment and severance terms; and he was offered, but did not take up,
an opportunity to appeal.
48.
In these circumstances we do not need to address the points which the
Claimant made to us concerning pension loss. As to section 131(3), the
Employment Tribunal applied the uplift to the award correctly. It applied the
uplift to the compensatory award, as required by section 118(1)(b), and did not
make a reduction under section 123(7), so section 124A(1) was of no
significance.
49.
Concluding as we do that the Carstairs
Tribunal made no error of law, we dismiss the appeal; and since, in these
circumstances, the cross appeal is no longer pursued it will also be dismissed.