Stanrew Electronics Ltd v Cottrell [1991] UKEAT 159_90_2509

EAT
Stanrew Electronics Ltd v Cottrell
[1991] UKEAT 159_90_2509 · 1991-09-25
MR JUSTICE WOOD (PRESIDENT): By an Originating Application dated 13th September 1989, Mr Cottrell complained of unfair dismissal.An Industrial Tribunal, sitting at Exeter on the 18th December 1989, found that he had been unfairly dismissed and the issue of compensation was adjourned.He was employed by Stanrew Electronics Ltd who now Appeal against that Decision.Mr Cottrell was employed by the Company from June 1983 and by the year 1989 he was employed as a Chief Inspector at the Company's Works in Braunton. It was a small Company specialising in the manufacture of components and other equipment for the defence industry. It was sub-contracting to a number of prime contractors. It is obvious that a high standard of quality control was needed and the system in 1989 was that Mr Cottrell was the Chief Inspector and that there were two other Inspectors working under him.His work involved some checking of components; supervising his Inspectors and also going out and liaising with other major contractors. There came a time in 1989 when the management of the Company decided that it was necessary to create a new post of a slightly higher calibre than that of Chief Inspector; the post was to be called a Quality Assurance Manager. It was to have a higher status and to be of a slightly different job description.The two Inspectors were to be maintained. The first decision therefore, that the Company had to reach, was whether the old job of Chief Inspector disappeared and secondly, whether Mr Cottrell was suitable for the newly created appointment of Quality Assurance Manager.The Tribunal looked at each of those issues and decided that there was a genuine redundancy and that the Company were acting perfectly reasonably; it was a sound and well reasoned managerial decision, that the Applicant, Mr Cottrell was not suitable for the new appointment as Quality Assurance Manager.The point at issue was over the way in which he was dismissed and the Tribunal deal with that in paragraph 8 of the Decision. They say in the first sentence:
"Nonetheless, we were unanimously of the view that the respondent's selection of the applicant for redundancy was unfair."
Pausing there for a moment, the use of the word "selection" is not very easy to understand because it was the procedure of failing to consult that was ultimately criticised, but we take no particular point on that, nor was any particular point taken in submissions. However, it is the following passage which is important. The Tribunal say:
"The applicant's evidence, which was not disputed, was that the first he knew of his redundancy was on the day that he received his notice. The whole workforce was taken onto the shop floor at the beginning of the working day and was told that redundancies had to be made. Thereafter, the applicant and three others were taken into an office and told that they were chosen for redundancy; as the applicant said. `It was all over by 9 o'clock'.
The total workforce, we were told, was some sixty, and that was the way in which the dismissal, on the grounds of redundancy took place.It is right that Mr Cottrell was paid his redundancy money; he was paid his money in lieu of notice on a gross basis and the Company, so far as the monetary matters are concerned, dealt with him fairly other than if he was entitled to compensation for unfair dismissal.In fact, there was no consultation. The Tribunal were, well aware, of the importance of that finding; indeed they were referred to the well known case of Polkey v. A E Dayton Services Ltd [1988] ICR 142 . That was a case which considered the old law as enunciated in British Labour Pump Co Ltd v. Byrne [1979] ICR 347 where the practice in the past had been that if there was a breach of procedure and it was considered that it would have made no difference the dismissal was nevertheless held to be fair.The law was changed in Polkey and there are passages in the speeches of the learned Lord Chancellor, Lord Mackay of Clashfern and in Lord Bridge of Harwich which indicate that consultation should always take place in redundancy cases unless to do so would be "utterly useless" or to use Lord Bridge's words "futile".It was therefore for this Industrial Tribunal to look to see first of all, whether the employer, the Company, were entitled to take the view here that any consultation would have been "utterly useless".The reasons given by the Company for not consulting are set out in paragraph 9 of the Decision. It is probably convenient to read it as a whole, a number of reasons are there given and they will appear from that paragraph. The paragraph reads thus:
"The respondent agreed that there had been no consultation with the applicant and no advance notice given. The decision not to give notice was said to be to preserve morale, and also to make things financially more attractive for those who were to be made redundant; the idea being that they could be paid their notice entitlement gross, rather than working out their notice and being paid net of tax. As to consultation, the management did consider the possibility, but rejected it. Mr Drew said that he felt that there was no alternative course that could be taken other than making the applicant redundant, and so decided to dispense with it. His argument was that the applicant was earning about £3,000 or £3,500 per annum more than the other Inspectors, that he did not think that the applicant would have been prepared to forego this amount of salary and become an ordinary Inspector, especially as it would have involved a loss of status as well. He thought that there might have been some difficulty with the applicant working as equal to somebody whose superior he had been not so long before. He conceded, however, that both the Inspectors were less experienced than the applicant."
Those were the reasons given to meet the argument that was being advanced that the Applicant would have liked to have considered, or to have been heard on the topic of the possibility of him taking demotion down to the position of one of the Inspectors.Those reasons having been put forward it is quite clear that the Industrial Tribunal did not accept that consultation would have been utterly useless. It is perhaps fair comment to make, and the lay Members sitting with me indeed emphasise this, that there must be rare cases indeed where some form of consultation would not be thought to be reasonable and necessary.For instance, the employee may throw up some new idea; he may have some suggestion to make which ought to be considered and he is entitled to think that his views and his thoughts and his arguments would be taken into account before any final decision is made.The suggestion and the criticism is made however, not so much of that stage of the reasoning of the Industrial Tribunal but of the later views expressed in paragraph 10 which is that:
"The respondent would then have been obliged to consider him for redundancy together with the other two Inspectors, .... the respondent might well have decided to retain him in its employment rather than one of the other two Inspectors."
That is indeed perhaps an aspect of their view of the unfairness of the lack of consultation, but once they find that this dismissal was procedurally unfair, then when looking at compensation they will no doubt and indeed should, reconsider the whole situation and examine the likely picture on the basis that consultation had taken place. They would take into account the clear principle that there is no obligation on an employer to create a vacancy; the decision not to dismiss one of the other Inspectors, when looked at in the round, so long as it is looked at soundly and on a reasoned basis is a managerial decision; it is not one for the Industrial Tribunal; we are back again at the band of reasonable response, so that when compensation is looked at here it may very well be that a Tribunal finds that there would not have been any other employment available for the Applicant.If they take that view then the period of compensation is likely to be a very short one in line with the earlier decisions of this Court including Abbotts and Standley v. Wesson-Glynwed Steels Ltd [1982] IRLR 51, and in a more recent decision of this Court. If however, they thought there was a likelihood of the employment being granted then compensation would be on a very different basis and they would take into account the fact that the Applicant obtained new employment on the 13th November 1989.All those matters would be relevant when looking at compensation. The only issue before the Industrial Tribunal and before us on Appeal, is whether they were entitled to find that the failure to consult rendered the dismissal unfair. What view this Court would have taken, or any other tribunal would have taken is immaterial, that is really an issue of fact but there will be rare occasions indeed where no form of consultation is justified.It follows for the reasons which we have given that this Appeal will be dismissed and the matter will be continued in the industrial tribunal, who will consider the issue of compensation after hearing such evidence as both sides care to call before the tribunal.