MR B DE GRASSE v STOCKWELL TOOLS LTD [1991] UKEAT 529_89_1111

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [1991] UKEAT 529_89_1111Case No Appeal No. EAT/529/89Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR B DE GRASSEAPPELLANTSTOCKWELL TOOLS LTDRESPONDENT
Before
Mr Justice Tucker Ms S Corby Miss A P ValeDate 11 November 1991
MR JUSTICE TUCKER : This is an Appeal by Bruce Joseph De Grasse against a decision of the Industrial Tribunal held at London South on 17 August 1989. The Respondents are Stockwell Tools Ltd, now in liquidation, the Appellant's former employers.The Appellant had applied to the Industrial Tribunal for a decision on the following questions:) Whether he was entitled to a redundancy payment?) Whether he was unfairly dismissed?The unanimous decision of the Tribunal was that the Appellant was fairly dismissed for the reason that he was redundant and that the Respondents were liable to make him a redundancy payment of £514.80. It is against that decision that this Appeal is brought. The question of law as set out in the Notice of Appeal is:) Whether the Tribunal erred in law in holding that the fact that there was no process of consultation and no warning of redundancy, did not make the dismissal for redundancy unfair, and) Whether the Tribunal erred in holding that the fact that no consideration was given to transferring the Appellant to a position of driver/handyman which he could have done, and which was held by an employee of less service than him, did not make the dimissal unfair.Stripped of the double negatives, the first question comes to this. Whether the Tribunal erred in law in holding that the fact that there was no process of consultation and no warning of redundancy made the dismissal for redundancy fair. A similar exercise reduces the second question to this - whether the Tribunal erred in holding that the fact that no consideration was given to transferring the Appellant to a position of driver/handyman which he could have done and which was held by an employee of less service than him, made the dismissal fair. The grounds of Appeal are:) That the law is that if there is no consultation or in the alternative, no warning of redundancy, then the Tribunal should hold the dismissal unfair and only consider when it comes to compensation what would have happened had these procedures been followed.) Similarly, that the law requires an employer to adopt a fair basis of selection for redundancy and if necessary, to see if an employee can do a job held by another with less service than the employee, even if the other will then be dismissed in his stead, and that failure to even consider this option is sufficient to render the dismissal unfair.The Appellant is now aged about 54. His occupation was that of a machinist and it was in that capacity that he was employed by the Respondents. The Tribunal found that he was not a toolmaker qualified by apprenticeship and that he was taken on by the Respondents as a semi-skilled worker.Mr Swift who has presented the Appeal with clarity and economy, does not dispute the finding by the Tribunal that the reason for dismissal was redundancy, but he submits first, that the employer's failure to consult rendered the dismissal unfair. The Tribunal expressly found that there was no process of consultation with the workforce or with the Appellant before the decision was made that a machinist post was to be made redundant. They went on to find that the Appellant was not given any advance warning that he might be made redundant. The question was and is whether that failure to consult rendered the dismissal unfair. The Tribunal held that it did not. They found that the Respondents' procedural shortcomings resulted in no unfairness to the Appellant. The Tribunal appear to have asked themselves the question whether it would have made any difference to the outcome if there had been consultation. While that might be a relevant consideration to the question of assessing the amount of compensation, it was not in our view, a proper question to ask when examining the Respondents' liability for the dismissal.We have been referred to two cases on this topic. The first of these is the well-known case of POLKEY vAE DAYTON SERVICES LTD [1988] ICR 142 .

(D) and (G):

"Where there is no issue raised by sections 58 to 62 the subject matter for the tribunal's consideration is the employer's action in treating the reason as a sufficient reason for dismissing the employee. It is that action and that action only that the tribunal is required to characterise as reasonable or unreasonable. That leaves no scope for the tribunal considering whether, if the employer had acted differently, he might have dismissed the employee. It is what the employer did that is to be judged, not what he might have done. On the other hand, in judging whether what the employer did was reasonable it is right to consider what a reasonable employer would have had in mind at the time he decided to dismiss as the consequence of not consulting or not warning.
If the employer could reasonably have concluded in the light of the circumstances known to him at the time of dismissal that consultation or warning would be utterly useless he might well act reasonably even if he did not observe the provisions of the code. Failure to observe the requirement of the code relating to consultation or warning will not necessarily render a dismissal unfair. Whether in any particular case it did so is a matter for the industrial tribunal to consider in the light of the circumstances known to the employer at the time he dismissed the employee."In his speech at page 162(H), Lord Bridge said this:
"..in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation. If an employer has failed to take the appropriate procedural steps in any particular case, the one question the industrial tribunal is not permitted to ask in applying the test of reasonableness posed by section 57(3) is the hypothetical question whether it would have made any difference to the outcome if the appropriate procedural steps had been taken. On the true construction of section 57(3) this question is simply irrelevant. It is quite a different matter if the tribunal is able to conclude that the employer himself, at the time of dismissal, acted reasonably in taking the view that, in the exceptional circumstances of the particular case, the procedural steps normally appropriate would have been futile, could not have altered the decision to dismiss and therefore could be dispensed with. In such a case the test of reasonableness under section 57(3) may be satisfied."
We were also referred to the case of SPINK v EXPRESS FOODS GROUP LTD [1990] IRLR 320 where this Tribunal presided over by the President Mr Justice Wood MC said this at para.23 when quoting the submissions (which they accepted) of Counsel for the Appellant:
"His submission runs - an industrial tribunal can find that a dismissal for misconduct is fair even though the employer has been guilty of procedural unfairness provided:
1. It does not mislead itself by asking the irrelevant question whether in the view of the industrial tribunal it would have made no difference to the outcome if the proper procedural steps had been taken - POLKEY per Lord Bridge at p.508.2. It asks itself the question whether the employee himself at the time of the dismissal in the exceptional circumstances of the case could reasonably take the view that proper procedural steps would have been futile and could have been dispensed with, to which question the tribunal must answer "Yes" - POLKEY per Lord Bridge.3. It does not confuse an employer's unreasonable conduct in reaching the decision to dismiss and the question of injustice to the employee so as to consider in relation to questions of fairness matters relevant to the issues of remedy (ie the practical effect of procedural unfairness on the employee) - POLKEY per Lord Bridge.In our opinion Mr Swift is correct in his submission that the Tribunal in the present case did not consider any of these three points. Their failure to do so invalidates their decision and would of itself we think, be sufficient to cause us to allow this Appeal.

(f) They there say this:

"In considering the adequacy of redundancy procedures it is essential to take into account the size and nature of the business. If the respondents had been substantial employers with an experienced personnel adviser the tribunal might well have found that Mr De Grasse was unfairly dismissed because of the respondents' procedural failures. However, the respondents are small employers who have assured regular employment for their skilled workers for many years, the difficulty they were experiencing because of the inadequate supply of incoming orders was manifest to everyone employed in the business."
Mr Swift submits that it is plainly wrong for the Tribunal to suggest that there is no obligation on the small employer to consult and the fact that the Respondents were only a small company cannot remove their obligation to do so. He relies on the decision of this Tribunal in the case of FREUD v BENTALLS LTD [1983] ICR 77 as authority for the proposition that consultation is a necessary step to take.

(C) and (E) where he said this:

"Turning now to considerations of industrial relations practice, consultation (as opposed to unilateral action by the employer) is one of the foundation stones of modern industrial relations practice. The statutory Code of Practice emphasises its importance in every aspect of industrial relations. In the particular sphere of redundancy, good industrial relations practice in the ordinary case requires consultation with the redundant employee so that the employer may find out whether the needs of the business can be met in some way other than by dismissal and, if not, what other steps the employer can take to ameliorate the blow to the employee. In some cases (though not this one) the employee may be able to suggest some reorganisation which will obviate the need for dismissal; in virtually all cases the employer if he consults will find out what steps he can take to find the employee alternative employment either within the company or outside it."
Counsel further relies on the decision of this Tribunal in the case of HENDERSON v GRANVILLE TOURS LTD [1982] IRLR 494 ; as indicating that however small a company may be, it still has to fulfil its obligations under the Code of Practice. That of course was not a redundancy but a misconduct case, but in our view the principle referred to by Mr Justice Popplewell in delivering the decision of the Tribunal is of equal application. In paragraph 18 of the report this is what he said:
"We are driven back to consider the underlying justification by the Tribunal for their view that this bare investigation by the employers was adequate in so far as they proported to rely on the fact that the respondents were a small company, we do not think that their reasoning can be upheld. It is, of course, true that the Act (as amended) now makes specific reference to the size and administrative resources of the employer's undertaking, but we cannot accept that that specific reference in the Act has any bearing on the issue that the Tribunal had to determine in this case. No doubt the Respondents do not have a sophisticated personnel department and have to rely upon the transport manager as the effective person making decisions in relation to drivers but the smallness of the undertaking does not afford any excuse or, indeed, explanation for failure to carry out a proper investigation into a complaint by a customer."
In our judgment while the size of the undertaking may affect the nature or formality of the consultation process, it cannot excuse the lack of any consultation at all. However informal the consultation may be it should ordinarily take place.In the present case there is no finding that the Respondents considered whether or not to hold consultations only to take the view that it would be utterly useless or futile to do so.

(c) of the Reasons:

"..It is suggested that consultation might have resulted in volunteers for redundancy or early retirement or a restriction on overtime working. That suggestion is unrealistic."
That is not a finding that the Respondents made an assessment of the situation and took a particular view about the usefulness or otherwise of holding consultations. It seems to us that on the facts of the present case it could not sensibly be suggested that consultation would have been futile. If he had been consulted the Appellant might well have said "Why cannot I have the driver/handyman's job, I've been here longer than him". The Tribunal found that he had made occasional deliveries on the way to and from work at the Respondents' request.It is not clear whether or not the case of POLKEY was cited to the Tribunal. There is no reference to it in their Reasons. It is of course so well known that there might be no need to make express reference to it. Nevertheless we think that had they been reminded of this case the Tribunal would not have reached the decision which they did. We are obliged to say that their decision was wrong in law and this Appeal will be allowed. We remit this case to the Industrial Tribunal for the assessment of compensation due.