Mr C Constandinou and Mr T Kakkoufa v Supadance International Ltd and Others: 3200222/2016 and 3200230/2016
EMPLOYMENT TRIBUNALS
Case No 3200222/2016, 3200230/2016
Between
Mr C Constandinou and Mr T KakkoufaClaimantSupadance International Ltd and OthersRespondent
Before
Employment Judge RussellMr N Caiden (instructed by Counsel) for claimantMr C Bourne (instructed by Counsel) for respondentDate 21 November 2017
JUDGMENT
[1]The Claimants claims of direct age discrimination succeed.[2]The Claimants were unfairly dismissed.[3]The claim for holiday pay is dismissed upon withdrawal.
REASONS
[1]The parties to this claim are Mr Constandinou and Mr Kakkoufa. The claim is brought against three Respondents the company which employed them Supadance International Limited, Mrs Free and Mr Free.[2]We heard evidence from the Claimants and on their behalf from Mr N Constandinou, the first Claimant’s son. For the Respondents we heard evidence from Mrs Free, the Managing Director, Mr Free, the Chairman, Mr Antoniou, General Manager, Ms Dobinson, the Company Secretary, Ms A Thompson and Mr Ishmael Rifat and Mr Joe Sherret, the Accountant we were provided with an agreed bundle of documents sand read those pages to which we were taken in the course of evidence.
Findings of Fact
[3]The Respondents is a family established business that specialises in the production and sale for specialist ballroom dancing shoes. It has a factory in the UK, the shop in the UK and has distribution worldwide. Before April 2015 it employed 41 members of staff. The Claimants were long standing employees with 25 and 21 years service respectively. By the relevant time these proceedings Mr Constandinou was the production manager and Mr Kakkoufa was the manager in charge of the closing room. During staff absences both Claimants could cover by working the respective machines. They were also undertaking some additional tasks as well as management and cover for example Mr Constandinou was attaching heels and back moulding and Mr Kakkoufa also provided quality and production support. Each of the other one workers in the factory were highly specialist in their own specific part of the shoe making process. Over the years leading up to April 2015 there was increasing pressure on the company financially from overseas firms competing at a cheaper prices. We will refer extensible to annual accounts and other financial figures and we found very helpful the summary provided by Mr Shearer which staff he sets out with progressive downturn in business for example in the year ending December 2011 sales were £3,911,768 these had gradually declined in the year ending December 2014 a figure of £3,293,798. Over that period of time wages and salaries had remained orderly stable but approximately £1,100,000 or thereabouts.[4]We accept therefore that there was a genuine downward trend and we also accept the Respondent’s evidence that the trend of production had moved from large numbers of pairs of shoes on standard orders two lots of smaller individualised orders. As such the number of pairs of shoes being produced by the factory had significantly reduced.[5]By April 2015 the profitability of the company had to be addressed. It is anticipated that redundancies would be necessary Mr Antoniou was aware of the seriousness of the situation. There was a meeting that took place at Mr Constandinou’s house, we do not consider it necessary to resolve the dispute as to who set up the meeting save to say that all who attended were content to do so. There is a dispute as to whether the meeting was for the three managers to come up with named subject to approval by Mr & Mrs Free or whether Mr & Mrs Free wanted to dismiss the Claimant and that this was the manager’s attempt to come up with an alternative. The meeting was recorded albeit without the knowledge of Mr Antonio and we were referred extensively to the transcript of the recording. We took into account that the recording was clearly contemporaneous and that at the time of the discussion there was a good relationship between Mr Antonio and the two Claimants and that is reflected in the way that those present spoke openly to each other about their knowledge beliefs and fears as to what was happening with the company. Mr Antoniou suggests now that some of his comments made within the meeting were a product of stress and attempt to protect his own position rather than an accurate reflection of what he believed and indeed had been told by Mr & Mrs Free. We do not accept that that is reflected in the content of the transcript at a very long meeting. Indeed there is recognition on both sides in that meeting that Mr Antoniou owns role repairing machines was important and that he was therefore in a rather different position. Whilst Mr Antoniou suggested in his statement that the inaccurate content in the meeting was to protect his own position and did not reflect the views of Mr & Mrs Free. In cross-examination he accepted that most of what he had said was accurate. On balance and having regard to the evidence which we have heard we think that it is an accurate reflection that the intentions of Mr & Mrs Free at that time in April 2015. We find that Mr Antoniou was speaking candidly and that he felt that he was among friends and it was an accurate reflection of what he thought was the position at the time directly taken from his conversations with Mr & Mrs Free.[6]In the meeting Mr Antoniou was not simply sending out the Claimants for voluntary redundancy as has been suggested. If so the relationship between the men was such that we consider he would have asked question explicitly and right at the outset. Indeed we considered it significant to look at the way in which the meeting in fact open which you can see from page 233 in the bundle. Right from the very outset Mr Antoniou volunteers without being prompted that they were being attacked because they were high earners when Mr Kakkoufa asked for clarification Mr Antoniou confirmed that at that point it was the Claimants although he was sure that good things had not been said about him either. Mr Antoniou was not tricked or entrapped into making such a comment. He volunteered it. we note also from the very outset of the transcript at 234 Mr Antoniou volunteers that it was the Claimants who were being discussed about or being talked by Mr & Mrs Free as the first two names on the list for redundancy. Read overall we consider that the transcript of the conversation reads more as Mr Antoniou sharing information that the Frees were looking to dismiss the Claimants and Mr Antoniou was trying to come up with alternative to protect the Claimants whom he regarded he tells us as brothers. Inevitably in a case of this sort both counsels took us to particular passages in the transcript which they said supported their case. We considered it necessary however to regard the contents of the transcript more broadly and to place particular comments within context. Having done so we consider that the transcript of the conversation supports the Respondent’s case that the production was down that costs were up and there was need to make savings. We note that that situation was not disputed by the Claimants at the time in the conversation. They have done so in the course of this hearing which we do not believed that they would have allowed comments to go unchallenged during the discussions had they not really believed as Mr Antoniou said that production was indeed down. We also considered that the transcript supports the Claimant’s case that it was Mr & Mrs Free who were making these decisions. There are numerous references to Mr Free’s role throughout the course of this lengthy transcript and we simply identify two specific points. One is at page 265 which made clear by Mr Antoniou that it is Mr Free who is calculating what is to be done. Indeed he has asked whether it is him i.e. Mr Free or Mrs Free and Mr Antoniou say its quite clearly that it is Mr Free albeit Mrs Free being put forward as he describes the front woman.[7]We also had regard some pages later to Mr Antoniou characterisation of the relationship between the Frees. The bottom of page on whom discussed their intentions for the business Mr Antoniou says well he sort of left it, the responsibility more to her he sought of has the final decision but he let her have all the headache. We understand that to mean and indeed we find that whilst Mrs Free was responsible for more of the day-today decision making and operations it was Mr Free as the Chairman who had the ultimate say and that he was very heavily involved in the decision to make redundancies. Accordingly we find that Mr & Mrs Free were joint decision makers this was not simply a decision of Mrs Free as has been suggested.[8]There are a number of passages or comments within the transcript which relate to age. They are relatively few when looking by contrast at the references to financial difficulty and production downturn. When they are made they are relevant to Mr Antoniou’s explanation as to why the Claimants are being targeted and we find that read fairly they are not simply an expression of Mr Antoniou’s view but they are comments being made by him from his knowledge of Mr & Mrs Free’s own reason for acting. This is made clear at page 243 when he is expressly asked what is their thinking behind identifying these two individuals. In the context of the conversation there involved we find is very clearly Mr & Mrs Free. The response is where is because your dad’s already a pensioner that we find is evidence of the Free’s view at the time.[9]Similarly later in the transcript at page 289 having identified a number of other workers to be put forward for the potential redundancy Mr Antoniou says “the other thing as well when we put these five people forward we think they are not going to turn around and say why aren’t you sacking the older ones”. He goes on to say “if they are looking at the future another five or ten years in front really is the older ones that goes”. When it was put in re-examination to Mr Antoniou when he was asked who they were there was a pause whilst Mr Antoniou considered his response and he replied that it was probably Mr & Mrs Free. We find that it was indeed Mr & Mrs Free the inference of that part of the conversation again clearly a reference we find to the reaction of Mr & Mrs Free to a list of proposals which did not include the Claimant. It is an indicative of a belief or a view that look into the future the older members of staff are those who should not be retained. In any event between the three managers in the course of the conversation alternative names were proposed and agreed to be put forward as candidates for redundancy. We were given a list at page 182 of those candidates and of their age. Mr Caiden submitted to us that we could draw an inference from the fact that of the factory workers involved they were over the age of 56. Indeed we were taken to a list of the remaining factory workers and we heard evidence as statistical impact of these redundancies on the workforce. We were asked for an inference from the statistic as to discrimination but we decline to do so on that particular point not least as these were not on our finding names advanced by Mr & Mrs Free but by Mr Antoniou and the two Claimants themselves. Therefore we consider that it provides no insight and permits no reasonable inference as to the decision making process and the reason of the Frees.[10]On 12 May 2015 there was a meeting between at the very least Mr Antoniou and Mr Shearer the Company Accountant to discuss the current account and the financial position of the company further. The Respondent’s case is that the meeting was attended also by both Claimants and that they were provided with the summary of accounts which was discussed at the meeting. Mr Antoniou’s evidence and that of Mr Shearer is that both Claimants were present. The Claimants case by contrast is that they attended no such meeting and had not seen the financial summary until the morning of this hearing when it was produced. In resolving the dispute we had regard to a letter written by the Respondent’s solicitors in December 2015 a date file closer in time to the disputed meeting. The explanation in that letter is that financial information was discussed with Mr Antoniou with the instruction to inform the Claimants of the details that these discussions took place at the accountants officers and these include a meeting on or around 15 May 2015. It does not suggest that there was any meeting attended by the Claimant themselves with the accountant. We accept and find that this was not put to the witnesses it was a matter that arose in the course of submissions and both counsel sought to deal with it. Nevertheless we consider that it is evidence which tends to support that account given by the Claimants and we prefer and finds that they were not present. We are not for the avoidance of doubt finding that either Mr Shearer or Mr Antoniou were lying. We find that the meeting was a long time ago and it is possible that the memories of those involved have become confused and have quite simply mixed up another meeting which took place in 2014 at the Supadance shop concerning sales of shoes. We do however find that the Claimants were not present at the meeting with Mr Shearer.[11]In 2015 due to the pile of the state of the company’s finances three monthly account figures were provided to Mrs Free. The Respondent we found had made significant attempts to make other savings, for example with Mr Free foregoing his salary and cashing in his pension in part to pay the earlier redundancy payments. Further savings however were desired by Mr & Mrs Free to secure the company’s financial situation. Indeed Mr Antoniou had predicted in the April 2015 discussion with the Claimants that it is likely that further redundancies would be required. We find that this was in part due to the continuing financial difficulties and in part due to an ongoing belief of both Mr & Mrs Free that the Claimants were very expensive employees.[12]On 25 May 2015 Mr Neo Constandinou was in the car with Mr Antoniou and provided evidence of a discussion which he says took place between the two. In the course of that Mr Constandinou’s evidence was that Mr Antoniou compared the factory’s workforce to a football team and said old workers like old football players need to leave so that it could bring in new blood otherwise the team would not be efficient. He also said that the Claimant’s earned too much money.[13]We find Mr Constandinou on this point to be a credible and reliable witness. When questioned further about this discussion he gave additional detail which we considered was given spontaneously and supported the reliability of his evidence. We also take into account that the comments are consistent with the views voice by Mr Antoniou in the April 2015 discussions with regard to look into the future and we find that it shows an ongoing thought process on the part of Mr & Mrs Free and the Respondent generally as to the possibility of the Claimants redundancies. We take into account that this conversation took place only a month after the initial redundancy where any benefit of those savings had not necessarily yet been seen in the accounts if anything there had been an additional financial burden of redundancy. There was a meeting with Mr Shearer attended by Mrs Free and quite possibly Mrs Donaldson and Mr Antoniou with a view to arranging a meeting with the bank the aim of turning an overdraft facility into a loan. It is worth noting that the extent of the Respondent’s financial difficulties was that the overdraft facility was for £100,000. To that date the actual overdraft stood at £200,000. The date of the meeting with Mr Shearer is not clear but on balance we find that it was well before the actual meeting with the bank manager on 19 August and possibly looking at Ms Donaldson’s evidence as early as late July.[14]We find that in part that on 3 August 2015 Mr Free sent an email to Ms Donaldson asking about the possible redundancy package which would be payable to Mr Constandinou were he to be made redundant. There was some evidence given by Mr Free in regard to this email when put to him that it was inconsistent with his case that he had no involvement in the decision. He suggested that he was merely time to obtain details of a voluntary redundancy package which Mrs Free had said was unaffordable. We did not find that explanation at all credible. He does not ask the details for a voluntary redundancy package and indeed the package which was calculated is statutory redundancy only. We find that the manner in which Mr Free gave his evidence on that point was not credible, was not reliable and was designed to minimise the extent of his involvement in the decision making process.[15]It is consistent with our findings that the Claimants’ redundancies was still a matter in the mind of the Frees even after April 2015 and was not a matter which had arisen urgently in the middle of August 2015. It was clear from Mrs Free’s evidence that the Respondent made the decision to go to the bank. It was not a question of the bank requiring them to act for example by calling in the overdraft facility nor is there any credible evidence that the bank required the Respondent to take certain steps before it would meet in order to discuss alone. Rather we find that Mr & Mrs Free thought themselves it was more likely that they would get the loan and indeed it will be financially prudent to address the issue of costs and savings. To take that initiative before meeting with the bank manager. This is in our view sensible but it is not a case where urgent action was required by the bank. Mrs Free’s evidence that there was no redundancy procedure because the bank did not or would not agree to meet with them unless the business plan was produced is neither credible nor reliable. We find that the decision to reduce costs came from the Respondent and was not demanded by the bank. There is no evidence that Mr & Mrs Free took advice from their external support and advisers with regard to proper process and we find that the decision was taken by Mr & Mrs Free to dismiss the Claimant principally as they were on the highest salary and therefore would generate greater saving and following that primary decision that they were as managers no longer required or at least their absence could be tolerated. They did not consider asking around their workforce whether others would volunteer for redundancy. They did not consider the position of Mr Antoniou. They did not consider the reduction of pay or hours for the Claimants which both say that they would have been prepared to accept. There had been some attempts to cut overtime and we find that the overtime which was still being performed was necessary and not relevant to the Claimants work for example cleaning. There was also reference to the continued payment of bonuses which we consider and find that these were in reality payments for piece work and again were not valid to the Claimant’s case. There was no consideration of the pool selection or scoring as there had been in previous redundancies some years earlier.[16]Mr Caiden on behalf of the Claimants drew our attention to a comment by Mrs Free in her witness statement at paragraph 24. With regard to this earlier redundancy exercise in which she referred to seeking volunteers for redundancy in the following terms.[17]Having devised the point system she says I followed all the advisory redundancy procedures and we jointly identified several workers who were willing to retire from Supadance. We accept Mr Caiden submission that it is possible to draw an inference from the use of the word retire in that paragraph to indicate even if subconsciously the view of Mrs Free and we find by extension Mr Free in identifying in redundancy situations those workers perhaps was shorter futures at the company. There was no consideration of alternatives from the Claimants dismissal for example with regard to other administrative costs which could be saved. The Claimants were invited to a meeting on 18 August 2015 in which they were informed that they were being made redundant. Again that meeting was recorded and there is a transcript. There was not prior warning to the Claimants that they were at risk of redundancy for less that they were to be dismissed by reason of it at that meeting. The transcript makes clear that both Mr Free and Mrs Free are actively involved in the decision making process and that is consistent with our earlier findings. The dismissal letters had already been prepared and indeed were dated the day before on 17 August 2015 were contained in seal envelope and handed to the Claimant at the meeting. At the meeting there was a lengthy explanation by the Frees as to the financial reasons for dismissal which supports our finding that the Respondent was seeking proactively to address the financial situation and not responding to an urgent requirement from the bank. The Claimant’s dismissal was the quickest way to get money down.[18]On the seventh page of a sixteen page transcript Mr Free makes a reference to pension and again we heard much evidence and submission on that point. Not least Mr Bourne tempting to persuade it but the comment should be seen in context and the genuine response to a question by Mr Kokkoufa. We did therefore look at the transcript as a whole and it is a matter of note that the Claimant’s input in the meeting was very small indeed put pages on end we have the Frees explaining the financial situation of the business. The relevant pension comment therefore is in response to some of the few points being made by the Claimant expressing their desire to know on what they should live and what money they will now receive. It is in that context that Mr Free said can you get a pension now. Whilst Mr Bourne as I said tends to explain that this was only a response to a general question we prefer Mr Caiden’s submission that it was indicative that Mr Free’s consideration that as older workers there were other means of income at the Claimant’s disposal. Given what we have found about the April 2015 discussion and the fact that Mr Antoniou’s comments reflected the Frees views supports our conclusion that the ability of the Claimants to access pension was a factor in the minds of Mr & Mrs Free this is a matter that is because of their age. It is a minor point and alone we would not have found it particularly weighty. Nevertheless it is part of the overall factual matrix. During the course of the redundancy meeting there was some discussion of possible alternative employment elsewhere this was clear that this was simply a possibility. It is as I say there was remarkably little involvement of the Claimants in the meeting with no real consideration of their circumstances or possible alternatives could costs savings. It was clear to put this in the binocular that it was a done deal that the Frees spending the majority of the meeting justifying themselves and the problems in their business.[19]The meeting took place at the bank on 19 August 2015. There was no business plan in writing. In fact we find that there was no business plan at all beyond Mrs Free orally informing the bank manager that they had dismissed two employees in order to save salary of £100,000 per annum. A loan was intended repayable over a five year period. The Claimants worked out their 12 weeks period leaving in November 2015. Throughout this time there was no consultation or consideration of alternatives. There was some talk of a possible return on a day rate basis but that did not happen and was not explored. Whilst this will be a matter for remedy it appears to be linked to the souring of the relationship between the Claimants and the Respondents.[20]We heard submissions as to the credibility and the reliability of the evidence we heard from both the Claimant and the Respondent. We take into account that this was a relatively small firm working together over a long period of time in a manner which was akin to a family business. Delegations by the Claimants are very historic indeed decades ago and we find that they are borne out of a sense that being ill treated and disloyally by Mr & Mrs Free given their previous lengthy service. It is not surprising perhaps in the circumstances it is supported by the readiness of Mr Antoniou to indulge in similar criticisms and comments in the April 2015 meeting and we find that it does not adversely affect the credibility or reliability. However nor do we think that it is cogent or reliable evidence that bad character by Mr Free and we can draw no inference from allegations which are relatively few in number and are clearly very stale indeed. We also note the Respondent’s readiness to criticise the Claimants performance. For example Mrs Free in her paragraph 30 and Mr Free in his oral evidence. Again that is perhaps indicative of the emotion and the sense of betrayal on both sides of the room and we draw no adverse inference against the Respondent’s evidence purely on the basis of those allegations. Similarly the time that Mrs Free expressed herself perhaps in a slightly exaggerated way for example the Ukraine losses we find were a genuine attempt to convey to us the serious nature of the financial problems facing the Respondent which are borne out broadly speaking by the financial evidence even if rather exaggerated by Mrs Free and we did not attach any great weight to those points either.[21]We were directed by both counsel to relevant legal authorities to be considered in the course of reaching our conclusions I am not going to set them out now orally because you have done it already in writing both of you but there was no real dispute between counsels as to legal principles to be applied and this was broadly agreed as is often the case in discrimination cases that this conclusion and the application of legal principles would largely depend upon the findings of fact which we have made.[22]We deal first of all therefore with the unfair dismissal case and we find and conclude that there was a redundancy situation. This is primarily a costs saving exercise but it caused the Respondent to conclude that it no longer required employees to do work of a particular kind namely the Claimant’s managerial jobs. That was the principle reason for dismissal albeit not the sole reason which we shall return to in due course.[23]We considered Section 98(4) and whether the dismissal was fair in all of the circumstances of the case. No procedure was followed in this case, the Claimants were not put at risk formally there was no consultation, no consideration of alternatives as we have said and we have not accepted the urgency point relied upon by the Respondents. Nor do we accept that either Mr or Mrs Free turn their minds in any sense to alternatives at the time. Some alternatives may have been possible for example seeking voluntary redundancies or alternative costs cutting measures and we do no consider that it was for any reasonable employer in those circumstances could have concluded that consultation was futile as such the Polkey liability exception we find is not made out the dismissal was unfair.[24]We were asked to consider Polkey in relation to remedy. In particular how long it would have taken to follow a fair procedure and whether the Claimants could and would have been dismissed at the end of it. We find that the period for the at risk warning and consultation would not have taken very long given the size of the employer. We also took into account the limited number of realistic alternative options. The biggest delay we find would have been a reasonable time for other workers in the factory to consider whether they wished to volunteer for redundancy and we do not consider that it would have been reasonable or within the range of reasonable requirements for there to be mandatory or compulsory bumping given the circumstances of play here. Overall we consider that it would have taken no more than two weeks to canvass the other workers to see whether they would volunteer for redundancy and the decision to be made by Mr & Mrs Free within a week thereafter. In other words we consider that the fair procedure could have been completed within a three week period. As to the possible outcome and the effect of a proper fair procedure we took into account the extent of a financial problems that the Respondent the genuine need that they had to save money and the specialist nature of the work undertaken by the remaining workforce. The lack of need for that level of management the possibility that if others had been asked to volunteer for redundancy or possibly for the Claimants to consider job sharing lower wages or different work whether or not the Claimants would have remained.[25]We take into account also the fact that in the 12 weeks notice period neither Respondent nor Claimants alike considered any such alternatives largely as this was seen as a foregone conclusion. For all of those reasons we do not consider this is a case in which a 100% Polkey reduction would be appropriate because there is a chance the consultation would have made a difference but realistically the Tribunal considers that the likelihood of continued employment was low even without the factors of age to which I now turn.[26]We have found that the decision makers were both Mr & Mrs Free that shared input and as such this was not a Reynold’s case. We applied the Talbot guidance and we looked at the overall picture and we drew the inferences from the primary fact namely the comments by Mr Antoniou in April 2015 and May 2015 Mr Free pension remark in August 2015 and Mrs Free’s evidenced suggesting that she regarded previous redundancies as retirements the fact that previous redundancies had offered the possibility of voluntary redundancy to the workforce and also the manner of the dismissal. This is not simply a case where the manner of dismissal was unreasonable but it was also contrary to the earlier exercise where a fair procedure had been followed and therefore we did consider that it permitted us safely to draw the inference that age was a consideration in the Claimants’ selection. Whether on the reason why approach or alternatively looking at the Claimant’s younger selves as their hypothetical comparators. We conclude that if the Claimants had been younger there would have been more consideration of ways in which they could have been returned. Whilst age is not the principle reason or even a secondary substantial primary reason it was a significant reason while alternatives which may displace other members of staff were not considered. In other words even if age did not make the difference as Mr Bourne put it in submission it made a significant difference. It is possible or even likely that even without the factors or considerations with regard to age the Claimants would still have been dismissed and that is a matter to be considered in remedy rather than liability but we find and conclude overall that in this case the Claimants age was a material and significant factor they were not to be retained within the company. As such the claim of age discrimination succeeds also. The holiday pay claims were dismissed upon withdrawal at the outset and I should say for the avoidance of doubt the claim succeeds against all three Respondents in respect of discrimination and against the First Respondent only in respect of unfair dismissal. CG EMPLOYMENT TRIBUNALS Claimants:(1) Mr C Constandinou(2) Mr T Kakkoufa Respondents: (1) Supadance International Limited (2) Mrs M Free(3) Mr D Free Heard at: East London Hearing Centre On: 22 January 2018 Before: Employment Judge Russell Members: Ms V Nikolaidou Ms J Owen Representation Claimants: Mr N Caiden (Counsel) Respondents: Mr C Bourne QC (Counsel) JUDGMENT having been sent to the parties on 30 January 2018 and reasons having been requested in accordance with Rule 62(3) of the Rules of Procedure 2013.
Findings of Fact
[1]The Claimants were employed by the Respondent until their dismissals in November 2015. The matter came before this Tribunal on 7 to 11 August 2017 and the Claimants claims of direct age discrimination and unfair dismissal each succeeded. A claim for holiday pay was dismissed upon withdrawal. Full reasons were given.[2]In the Liability Judgment, the Tribunal accepted that in or about April 2015 there was a discussion in which Mr John Antoniou, on the instructions of Mr and Mrs Free, discussed with the Claimants the possibility of redundancies. During the course of that discussion Mr Antoniou made a number of comments from which we inferred that there had been age discrimination (paragraphs 10 and 11 of the Reasons). Further, there was a conversation between Mr Constandinou’s son and Mr Antoniou on 25 May 2015 where the latter compared the factory workforce to a football team, saying old workers like old football players needed to leave so that it could bring in re blood otherwise the team would not be efficient (paragraph 16 of the Reasons). The Tribunal accepted that Mr Antoniou’s comments reflected an ongoing belief by Mr and Mrs Free, as expressed to him, that the Claimants should be made redundant in part because of their age.[3]We accepted that there was a meeting on 18 August 2015 in which they were informed that they were being dismissed by reason of redundancy. They were given preprepared dismissal letters dated 17 August 2015. The Claimants had received no prior warning that they were at risk of redundancy, far less that they were to be dismissed by reason of redundancy at that meeting. No redundancy procedure had been followed and no consultation took place. There was no consideration of alternatives to the Claimants’ dismissal, for example with regard to other administrative costs which could be saved (paragraph 21).[4]We drew inferences from the comments in April and May 2015 and concluded that age was a factor in the selection of the Claimants for redundancy by Mr and Mrs Free. We also drew inferences to the same effect from Mr Free’s comment in the dismissal meeting on 18 August 2015 about the availability of a pension for the Claimants and from Mrs Free’s evidence about previous redundancies which she regarded as “retirements”. Furthermore, we drew inferences from the fact that in previous exercises voluntary redundancy had been offered to the workforce where it was not here and that the manner of dismissal was not only unreasonable but was also contrary to the earlier exercise where a fair procedure had been followed. Overall, from these primary facts, we accepted Mr Caiden’s submission that we should draw the inference that age was a consideration in the Claimants’ selection for redundancy. Whether on the reason why approach or alternatively looking at the Claimant’s younger selves as their hypothetical comparators, we conclude that if the Claimants had been younger, they would not have been automatically assumed to be the appropriate redundancies and there would have been more consideration of ways in which they could have been retained (paragraph 45).[5]We found that this was an unfair dismissal as no fair procedure had been followed. As to the possible outcome of a fair procedure, we took into account the extent of the financial problems that the First Respondent was experiencing, the genuine need to make cost savings, the specialist nature of the work undertaken by the remaining workforce and the lack of need for the level of management performed by the Claimants. There was a possibility that if another worker had volunteered for redundancy, or if some limited managerial or training work was still required, the Claimants may have agreed to consider job sharing, lower wages or different work. Given that the primary driver for the redundancies was financial, the extent of the savings is likely to be relevant to whether or not such alternatives would have changed the outcome for the Claimants. During the 12 week notice period, neither Respondents nor Claimants considered any such alternatives, largely as dismissal was seen as a foregone conclusion by the meeting on 18 August 2015. For these reasons, we did not consider this to be a case in which a 100% Polkey reduction would be appropriate. There is a chance the consultation would have made a difference but realistically the Tribunal considered that the likelihood of continued employment was low even without the factors of age (paragraph 42). The level of the Polkey reduction was left for further consideration at this Remedy hearing.
Law
[6]An award for injury to feelings is compensatory. It should be just to both parties: fully compensating the Claimant without punishing the Respondent. Awards for injury to feelings must compensate only for those unlawful acts for which the Respondent has been found liable. An award should not be so low as to diminish respect for the legislation; on the other hand, it should not be excessive. An award should bear some broad similarity to the level of awards in personal injury cases. In deciding upon a sum, we should have regard to the value in everyday life of that money, being careful not to lose perspective.[7]We take as a starting point the guidance given in Vento v Chief Constable of West Yorkshire Police (No.2) [2003] IRLR 102, in which the Court of Appeal identified three bands for awards: the top being for the most serious conduct, such as a lengthy campaign of harassment; the middle band for those acts which are serious, but not within the top band; and the bottom band for those acts which are less serious, one-off or isolated. Recent Presidential Guidance takes into account the combined effect of inflation uprating and the Castle v Simmons uplift. The Guidance suggests an increase to the bands so that the bottom band now goes from £800 to £8400, the middle band to £25,200 and the higher band up to £42,000. Some adjustment may be required where the claim is presented before 12 September 2017. Injury to Feelings[8]Both Claimants were long term employees of the Respondent who had given many years of good service and had limited experience outside of the Respondent’s workforce. They were undertaking niche work in a highly specialist area. This was work that they thoroughly enjoyed in a stable workforce that was like a family, being particularly close to Mr Antoniou before these events. The comments regarding age were raised directly to them and that this was upsetting essentially making clear that their dismissal was a fait accompli because of age. This is not simply a ‘one-off’ case, as Mr Bourne sought to persuade us. There were the comments linked to threatened redundancy in April 2015, the comments made to the Claimant’s son in May 2015 and the actual dismissal in August 2015. It had a significant impact upon the Claimants. We accepted their evidence as to the injury it caused to their feelings.[9]Whilst we did not find that dismissal was entirely or even principally caused by age, the decision to dismiss was significantly tainted because of age. At times, Mr Caiden appeared to suggest that we should apply a sort of ‘tariff’ approach, in other words because this was dismissal it automatically merited an award in the middle band of Vento. In this, he relied upon Voith Turbo Ltd v Stowe UKEAT/0675/04 in which HHJ McMullen QC agreed that dismissal on grounds of discrimination (there race) is surely a very serious incident and cannot be described as one-off or isolated. We consider that every case will depend upon its fact and, therefore, we took into account our findings of fact and the three discriminatory aspects occurring as they did over a period of four months and their material effect upon the dismissal even if not the sole or material cause. Viewed overall, we are satisfied that the act of discrimination as found was serious, not isolated, but not falling within the top band. For this reason, our starting point was the middle band.[10]The Claimants adduced no medical evidence of personal injury. Mr Constandinou was signed off sick for two weeks in August 2015 and describes being depressed. He was also suffering from other health problems, such as pain in his right knee and left shoulder which were unrelated to discrimination. He was worried about how to support his family following the loss of his job. We accept his evidence that he has found the whole situation particularly distressing. Mr Kakkoufa was very shocked and disappointed, felt depressed and in low spirits following his dismissal. He lacked enthusiasm, was very upset and did not know what to do next. Mr Kakkoufa has had to make the difficult decision to sell his family as he can no longer afford to live there. There was no further evidence about the effect of the discrimination upon their enjoyment of family life, social activities and general well-being.[11]Whilst we accept Mr Bourne’s submission that some degree of injury to feelings was inevitable due to their redundancy, this was made far worse for the Claimants because they knew that their age had played a factor. For those reasons therefore we find that this is a case that falls within the middle of the middle band and we award each Claimant the sum of £17,500 for injury to feelings. Financial Loss[12]Section 123 of the Employment Rights Act 1996 provides that the amount of a compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained in consequence of dismissal, insofar as it is attributable to action taken by the employer. A compensatory award is subject to a maximum of £78,335 or one year’s pay, whichever is lower.[13]Compensation under s.124(6) Equality Act 2010 is assessed on ordinary tortious principles. Its aim is to put the employee in the position he would have been in absent the tort so that the Tribunal must consider whether without the discrimination, the Claimant would have been dismissed then or at some future point, Chagger v Abbey National [2009] EWCA Civ 1202.[14]As for the duty to mitigate, it is trite law that the correct approach is that set out by Langstaff J in Cooper Contracting Ltd v Lindsey UKEAT/0184/15/JOJ. The burden of proof regarding failure to mitigate is on the wrongdoer and it is not for the Claimant to prove that she acted reasonably. The Claimant must be shown to have acted unreasonably, which is not necessarily the same as ‘not reasonably’. Determination of unreasonableness is a question of fact taking account of the Claimant’s views and wishes although the assessment must be objective. The Tribunal should not put Claimants on trial as if losses were their fault, but bear in mind that the central cause of loss is the act of the wrongdoer.[15]The Claimants made limited efforts to find alternative employment in the period following their dismissals. There has been a recent flurry of activity but we treat that with caution as we can see the force in Mr Bourne’s submission that this was directly in response to the Tribunal’s Judgment. However, the Claimants’ work for the Respondent was highly specialist and the range of suitable alternative jobs which they could do is accordingly limited. There are very few firms producing dance shoes in the UK; two are within reasonable travelling distance of the Claimants’ homes (Gina Shoes and Freed of London), the only other is International Dance Shoes Limited located approximately 66 miles away in Milton Keynes. The Respondent has not produced evidence of any actual other jobs available which they say the Claimants could have done.[16]The Claimants were on a relatively high salary and they were reasonably entitled, at least initially, to seek work which was commensurate with their skills and salary expectations. They did contact Gina Shoes and Freed of London but were told that there were no vacancies. At the time of their redundancies, Mr Free offered both Claimants his assistance in finding a new job. Both declined. Mr Free’s evidence at this hearing did not identify any specific vacancy. His intervention, had it been accepted, would have been little more than an introduction. We accept Mrs Free’s evidence of a recent conversation at a dancing conventions that opportunities across the industry are generally low. It is a very challenging market for specialist dance shoe manufacturers. We took into account the limited jobs for specialist workers as the Claimants, the limited turnover of Respondent staff suggesting that in such niche work the likelihood of vacancies arising is low.[17]Overall, we are not satisfied that the Respondent has shown that the Claimants have acted unreasonably and failed to mitigate their loss. Nor do we think that it was safe for us to speculate or make an assumption (as Mr Bourne tried to persuade us to do) as to when the Claimants had a realistic chance of finding work had they made more strenuous efforts to do so. Both Claimants are entitled to compensation for loss to date (104 weeks), subject to the points considered below.[18]As set out in our Liability Judgement, we consider that was a three week period during which consultation should have taken place. The Claimants are entitled to compensation in full for that period. It is common ground that Mr Constandinou’s net weekly pay was £667 and that of Mr Kakkoufa was £752.[19]Thereafter, we need to consider what we refer to as the Polkey or Chagger reduction. The Respondent bears the burden of proving that the Claimants could and would have been fairly dismissed in any event and/or dismissed without the taint of discrimination. Inevitably this will require a degree of speculation based upon the evidence heard and our findings of fact.[20]We had particular regard to the workforce figures included in the remedy bundle at page 337. The Respondent did not recruit any new employees between 20 October 2014 and 3 January 2017. The Claimants’ evidence of employees being replaced addressed matters some 18 months after their employment terminated. In our Liability Judgment, we accepted that there was a genuine redundancy situation; an entire management layer was being removed and was not replaced. The Respondent needed to make significant financial savings. Mr and Mrs Free had already reduced their salaries as directors by essentially sharing one salary between them. What the Claimants referred to as ‘overtime’ was in fact piecework which was still required as before. The Claimants were on high salaries and there was nothing in their evidence to suggest that there was a realistic prospect that either would have accepted a less well paid, non-managerial job or that they would have job shared if offered.[21]The Respondent’s workforce is highly specialist, with employees having their own specialist area of work such as heel covering or finishing. Whilst the Claimants could provide cover for absence, this was not the same as being a specialist in that area. It could not reasonably be expected that the Respondent should “bump” the dedicated skilled worker in favour of either Claimant.[22]Mr Antoniou was the only manager other than the Claimants. We considered the likely outcome had he been included in the pool for possible redundancy and the likely result of a fair selection process. We considered that it would be only superficially attractive to give each of the Claimants a one third chance of remaining, not least as each of the three men had different skill sets. Mr Antoniou had special skills as an engineer which the Claimants did not. Given the nature of the business, these skills were highly regarded by the Respondent. We consider it inevitable that even if all three managers had been pooled, Mr Antoniou was the most likely candidate to avoid dismissal. Whilst not as certain as Mr Bourne suggests, nor were the Claimants’ chances so rosy as urged upon us by Mr Caiden. Overall, we conclude even if there had been no discrimination and a fair procedure had been adopted, there was a 80% chance that the Claimants would have been dismissed in any event.[23]We considered the effect of Mr Constandinou’s health and the likelihood that he would have been absent from work in the period for which compensation is to be awarded. Mrs Free’s evidence was that Mr Constandinou would have been dismissed due to his ill health in the period following his redundancy as the Respondent could not afford to pay him. This did not seem to us to be likely or indeed to be fair. The Claimants’ contracts of employment provides that sickness pay is at management’s discretion. The financial situation of the Respondent was such that it was not awash with cash and could not have afforded to, nor would it have chosen to, exercise its discretion to pay Mr Constandinou his full pay for a lengthy period of time. Taking into account the length of Mr Constandinou’s period of ill-health since his dismissal and the possibility that it may not have been quite so long if he had still been working, we conclude that the Respondent would have paid one month’s full sick pay and then he would have had six months in which he would have been in receipt of sick pay only.[24]Finally, we had regards to the rates of interest we applied from the date of injury for the injury to feelings award and from the mid-point for the financial losses. The statutory rate currently stands at 8%. Whilst this may be a penal rate, as Mr Bourne submitted, and it is certainly more generous than one would get on the financial markets, it arises from a decision to apply an increase where the previous rate was 0.25% and to come in line with the County Court rate. We have heard nothing in this case that would suggest that justice or equity require an adjustment to that interest rate and accordingly we apply interest at 8%.[25]Having given our judgment on the principles as above, both Counsel assisted the Tribunal in the calculation of the appropriate sums. These are agreed as follows: Mr Constandinou Injury to feelings £17,500 & interest of £3,834 = £20,583.84 Financial loss: £12,006 & interest of £1,057.84 = £13,063.84 Total: £33,647.68 Mr Kakkoufa Injury to feelings £17,500 & interest of £3,834 = £20,583.84 Financial loss: £17,446.40 & interest: £1,537.20 = £19,791.99 After grossing up effect, gives a total of: £40,375.83 Claimant’s application for costs[26]Mr Caiden made an application for costs. He relied upon three allegations of unreasonable conduct of the proceedings by the Respondent which he says passes the threshold for an award of costs:(i) in connection with disclosure ordered to take place in June of 2016 (£1,528);(ii) failure to comply with Case Management Orders in respect of supplemental statements in November and December 2016 (£1,062) and(iii) an application to postpone a re-listed hearing correspondence in May or June 2017 (£1,088). To each of these figures must be added VAT.[27]In the alternative, Mr Caiden applies for costs on grounds that aspects of the Response had no reasonable prospects of success insofar as:(i) the redundancy was so clearly procedurally unfair that a concession ought to have been made thereby reducing the length of the main hearing and allowing the Tribunal to move straight to remedy and Polkey;(ii) the age discrimination defence was based upon a faulty and untrue premise that Mr Free was not part of the decision making process. Mr Caiden seeks his brief fee from today’s hearing (£1,850) and his brief fee for previous hearings which would have been avoided or rendered shorter had liability been conceded (£3,000). Again VAT would have to be added to such figures if awarded.[28]Mr Bourne opposes both applications for costs. Dealing with prospects first, he submits that there were genuine issues to be litigated on both the Polkey “futility” argument and disputed facts in the discrimination claim. As such, the hearing would not have been materially shorter even if it were conceded that a fair procedure had not been followed. As for the procedural grounds for the costs application, Mr Bourne is in some difficulty as he is here without his solicitor today. Generally, he submits that the Claimants’ advanced a case of fraud without proper foundation, disputed the genuine redundancy situation and made a number of allegations of personal misconduct against Mr Free. These issues took up most of the hearing time. The delay in providing disclosure was relatively short and was caused by a change in legal representatives and it was not necessary for the Claimants to seek an Unless Order. The supplementary witness statements arose out of the Claimants’ unfounded allegations of fraud and the Respondent was under no obligation to provide statements having been given leave to do so (although he conceded that it did not meet the required date). When the case was relisted for hearing in August 2017, the Respondent’s witnesses were on holiday. Their application for a postponement was not successful. None of these matters, submits Mr Bourne, meet the test of unreasonable conduct.[29]Rule 76 of the Employment Tribunal Rules of Procedure 2013 provides that: “A tribunal may make a costs order or a preparation time order and shall consider whether to do so where it considers that:(a) a party or that party’s representative have acted vexatiously, feasible, disruptively or otherwise unreasonably in either the bringing of the proceedings or part or the way that the proceedings or part have been conducted; or(b) any claim or response had no reasonable prospect of success.”[30]The making of a costs order is a two stage process: the first question has the relevant threshold been passed: The second, even if it had is a costs order appropriate?[31]The leading authority on costs in the Employment Tribunal is Yerrakalva v Barnsley Metropolitan Borough Council [2011] EWCA CIV 1255, in particular the judgment of Mummery LJ. The Tribunal should consider the whole picture of what had happened in the case and ask whether there had been unreasonable conduct by the Claimant in bringing and conducting the case. If so, it should identify the conduct, what was unreasonable about it and the effect it had. The Tribunal should also take into account any criticisms made of the employer’s conduct and its effect on the costs incurred.[32]As for the prospects of the Response, on balance we prefer the submissions of Mr Bourne in particular with regard to the age discrimination cases. As is often said on strike out applications, discrimination cases with a disputed core of evidence require hearing. The fact that the Respondents were ultimately unsuccessful should not be equated with unreasonable conduct; costs do not follow the event in the Tribunal. We are more troubled by whether the Polkey futility argument had no reasonable prospects of success. It certainly had little reasonable prospects as we consider it hard to see how such an argument could reasonably have been sustained on the facts of the case. The failure at the very least to concede that the redundancy was procedurally unfair (absent futility), does seem to us to meet the threshold for an award of costs. However, we do not consider it appropriate to exercise our discretion to do so. We take into account, as Mr Bourne submits, that the largest part of the original Liability Hearing was dealing with the Claimants’ serious challenges to the genuineness of the redundancy situation. It could just as easily be argued that if the Claimants had conceded that the genuine reason for dismissal was redundancy then the case equally would have been much shorter. Overall, we are not persuaded that the limited amount of time spent on the procedural aspects of the redundancy increased materially the time spent overall.[33]As for conduct of the proceedings, whilst we do not doubt that the Claimants have incurred some costs in dealing with these matters, we again bear in mind that the threshold for an order requires that the conduct of the Respondent be unreasonable when judged against the whole picture of what happened in the case. As for disclosure in June 2016, the case was in its very earliest stages, the overall delay was approximately one month. In our experience, such teething problems are not unusual nor necessarily unreasonable. Of course, the Claimant is entitled to take a robust response to the Respondent’s delay and write numerous letters to chase matters and apply for an Unless Order if so advised. In the event, however, the delay was so short that disclosure had been provided before the application was considered. In our experience of proceedings generally in this jurisdiction and looked at in the round of the case as a whole, we are not satisfied that the Respondents met the test of unreasonable conduct.[34]As for supplemental witness statements, the Respondent was given leave to file such statements rather than ordered to do so but, having chosen to do so, can reasonably be expected to comply with a deadline given in an Order. The Respondent not only failed to do that, it also breached its own proposed deadlines. In principle, that appears to us capable of amount to unreasonable conduct. The Claimant could have applied for an Order that the Respondent be prevented from relying on such evidence or the Tribunal taken that view of its own motion. Looking at the case overall in the exercise of our discretion, we take into account that the purpose of the supplementary statements was to deal with the allegations of fraud made against the Respondent. These were very serious allegations which were not made out. We do not consider it appropriate to award costs against the Respondent for something which was caused by the Claimants’ allegations.[35]We deal finally with the matter of the relisting in August 2017. Having read the correspondence, it appears from the solicitor’s letters that a less experienced member of the Respondent’s legal team failed to check properly the witnesses’ availability on dates when the matter was relisted. That is unfortunate and irksome. The Respondent to some extent pay the penalty for the error because they were not given the postponement that they requested. Again however we prefer the submissions to Mr Bourne and find that this is not the same as unreasonable conduct for the purposes of meeting the threshold for a costs order.[36]The Claimants’ application for costs is refused.