Drew v G U Manufacturing Co Ltd [1992] UKEAT 121_90_0209

EAT
Drew v G U Manufacturing Co Ltd
[1992] UKEAT 121_90_0209 · 1992-09-02
MR JUSTICE WOOD (PRESIDENT): By an Originating Application dated 16th November 1989 Mr William John Drew alleged that he had been unfairly dismissed by his employers G U Manufacturing Company Limited.His case was heard by an Industrial Tribunal sitting in London (North) under the Chairmanship of Mrs Martin on the 12th January 1990 and the decision was that he had been fairly dismissed. He appeals to this Tribunal.The respondent Company is a small Company which has been in business for some sixty years and manufactures surgical instruments. It was clearly in some financial trouble in 1988 and 1989 and early in the latter year shares were purchased by another Company and a Mr Whitley was appointed Managing Director.As a result of the financial problems the Board had difficult decisions to make and decided that some redundancies were going to be necessary as part of the programme of reducing overheads and improving profitability. Part of the reduction in overheads was the problem of overmanning and the difficult and often distressing problem then facing the Board was whether to make redundancies; where to make redundancies, and individually, whom were to be made redundant.In the May of 1989 seven redundancies were made in sales and administration; in July, nine in manufacturing. In the sales area there were also some redundancies, and in manufacturing there was a lot of duplication, depending on the work, but also redundancies there, and in the electronics assembly. Ultimately it was realised that even further reduction in employees was necessary and the Board turned to examine the Stores and Packing Department. The decision was that it was necessary to reduce the staff there from four to three. Two were involved in stores management and they were to stay; two were in packing and one of those packers was due to be made redundant.The Appellant had been with the Company for three years, the other packer had only two years service, and a decision had to be made between them. The Company, as the Tribunal found, decided to retain the other packer because he was in better health and more physically able to lift the containerised packages of export orders. The workload of the retained packer therefore was undoubtedly to increase and the younger packer was a more appropriate candidate to retain. That decision was ultimately reached on or a few days before the 6th November 1989. The importance of that date was that those who purchased the respondent Company were prepared to provide the redundancy payments provided the redundancies were made before the 6th November and so Mr Drew, who was on holiday from Monday 6th November until Friday 10th, left work on Friday 4th November not having received a redundancy notice. During his holiday leave he received a redundancy notice dated the 2nd November and a letter of the 3rd November saying that he was to be made redundant and to be dismissed. He returned to work on the 13th November and thereafter there were discussions between him and Mr Whitley. Ultimately he was given notice which terminated some 10 days later on the 23rd November 1989.The Tribunal clearly examined the reasons for the choice of Mr Drew as the one to be dismissed and they also had before them some evidence about various discussions which had taken place. One of the important factors which we in this Tribunal immediately saw as an issue, was whether there had been any discussions prior to the 2nd or 3rd November 1989 about the issue of Mr Drew's redundancy and possible dismissal. Those discussions which took place afterwards were obviously relevant but the important issue was whether there had been consultation prior to the decision that Mr Drew was to be dismissed for redundancy. We therefore looked for the evidence and any findings that would help us to understand whether there had been any prior discussion.Two passages from the Decision indicate to us that the Tribunal found as a fact that there were no discussions prior to that relevant date. The first is contained in paragraph 5 of the Decision where the following sentence appears, after a reference to the 6th November, the Tribunal continue:
"That date was imminent and it was therefore not possible to have prior consultation with Mr Drew, and he was informed of the position whilst he was on holiday."
and then in paragraph 11, some five lines before the end this phrase occurs:
"that their inability to consult with Mr Drew before giving him his notice does not make their action unreasonable"
It seems to us, therefore, quite clear that the Tribunal were finding that there had been no discussion prior to November 1989. However, we also point out the expression used by the Tribunal "inability", and having looked at the notes of the evidence and looking at the chronology of the situation we find it wholly impossible to see how, in strict terms, Mr Whitley or any other member of the Board or personnel, were unable to consult Mr Drew during the period between August or September and November, even if the decision was made only shortly before the 6th November or the 3rd November, it would surely have been possible for some consultation to take place.Now consultation prior to making a decision to dismiss for redundancy is an important and essential part of the normal procedure in these circumstances. We are well aware that the distinction is made here between capability, or health, in connection with the redundancy and that which would lead to a dismissal for incapability under Section 57. Nevertheless, there is this element of health and clearly there was here a decision by the employer the Company, which had as part of its reasoning, the health of the Applicant, Mr Drew. It follows therefore, that a discussion, consultation, call it what one will, with Mr Drew would have been important prior to any decision made to dismiss. The importance of that has been stressed in the well known case of Polkey v. A E Dayton Services Ltd [1988] ICR 142 , that was a Decision of the House of Lords, it was a redundancy case and the facts are not material for the principles which were clearly enunciated there. The importance of paying attention to the Code of Practice, the importance of consultation was stressed in two of the speeches of their Lordships in the House of Lords. Two passages are relevant to the present issue, the first is in the speech of the learned Lord Chancellor, Lord Mackay of Clashfern at page 153 at D, he says this:
"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 the light of the circumstances known to the employer at the time he dismissed the employee."Before turning to Lord Bridge it is perhaps relevant to comment there that the learned Lord Chancellor is there looking at what was in the mind of the employer at the time he decided to dismiss and emphasis is laid on that also by Lord Bridge of Harwich in his speech. He deals with the procedural aspects at page 152 at F, and he is dealing with procedure under various headings, he says:
"an employer having prima facie grounds to dismiss for one of these reasons will in the great majority of cases not act reasonably in treating the reason as a sufficient reason for dismissal unless and until he has taken the steps, conveniently classified in most of the authorities as `procedural,' which are necessary in the circumstances of the case to justify that course of action. Thus, in the case of incapacity the employer will normally not act reasonably unless he gives the employee fair warning and an opportunity to mend his ways and show that he can do the job; in the case of misconduct, the employer will normally not act reasonably unless he investigates the complaint of misconduct fully and fairly and hears whatever the employee wishes to say in his defence or in explanation or mitigation; 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."
Pausing there, all those procedural steps seem to be indicated as advisable procedures before reaching the ultimate decision to dismiss. The learned Lord goes on:
"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."
The process therefore of approach for Tribunals is to see whether there was a breach or a failure to comply with the normally accepted procedures. If in fact an employer consciously decides not to follow the procedure, and does so on a reasonable basis, and it is found so by a Tribunal, then Section 57(3) can be satisfied. Likewise, there may be circumstances - they may be rare - where the emergency is such that it simply never crosses his mind and the Tribunal then may say, well it was reasonable in the circumstances that he should have erred in that way because a reasonable employer, even if he thought about it would have decided that it was really hopeless and unnecessary. However, in the normal case, the issue is not one which can be answered as Lord Bridge indicated by this question he says:
"the question the industrial tribunal is not permitted to ask is the . . . . hypothetical question whether it would have made any difference to the outcome if the appropriate procedural steps had been taken."
This Industrial Tribunal deal with the question of procedure and the overall issue of liability in paragraph 11 of the Decision they say this:
"The third issue is whether the manner of Mr Drew's termination makes it an unfair dismissal. The Tribunal agrees that from the employee's point of view it looks to have been a peremptory decision. But it was taken at a time when the company's finances were still very fragile, and at a time when it was still possible for the cost involved to be recharged elsewhere. We have therefore come to the conclusion that in the circumstances their action was justified, and that their inability to consult with Mr Drew before giving him his notice does not make their action unreasonable, and would not have affected the outcome. We have therefore come to the conclusion that in this case the applicant was fairly dismissed and that the grounds for that dismissal were his redundancy."
It may be that if the phrase "would not have affected the outcome" had been omitted it could have been argued that there was no breach of the principle in Polkey , although we would have been extremely unhappy about a finding of inability to consult from the notes of evidence, however, it seems to us here, and it also seemed to us at the preliminary hearing when we allowed this matter to be argued inter partes, that there is here a failure to comply with the direction given in Polkey and therefore there is an error of law in the Decision.That however is not the end of the matter, because then the question arises, what should this Tribunal do? It is argued, and if we may respectfully say so most ably argued by Miss Eady, that it is useless to remit this matter to the Tribunal for consideration of compensation because the Tribunal have used that expression "would not have affected the outcome" and therefore it would have made no difference and that is the end of the matter.We find ourselves unable to accept that submission for a number of reasons. In the first place it seems to us that that expression, which was being used, was being used in relation to the issue of liability, as it is called, and was not dealing with the question of compensation, because of course compensation was not before the mind of the Tribunal. Secondly, it is our view that if one looked at the issue of compensation even though the decision to dismiss for redundancy would have been inevitable, there are various ways in which the compensation could be assessed, or the Order made; it would not just be a nil award. There might for instance be a question of a longer period of notice. It does not seem to us that this is a question of a mere week or fortnight during which consultation could have taken place because there was the period between the 13th and 23rd November which would have been ample, as between the one and one situation here - they had not got a huge group of people -when consultation could have taken place. However the result of that consultation might have meant that a different way forward could have been examined, and indeed it is important to note that even though the dismissal might have been inevitable, the possibility of some form of Order being made. This appears from a later passage in the speech of Lord Bridge of Harwich, at page 164 at A where he says this:
"The second consideration is perhaps of particular importance in redundancy cases. An industrial tribunal may conclude, as in the instant case, that the appropriate procedural steps would not have avoided the employee's dismissal as redundant. But if, as your Lordships now hold, that conclusion does not defeat his claim of unfair dismissal, the industrial tribunal, apart from any question of compensation, will also have to consider whether to make any order under section 69 of the Act of 1978. It is noteworthy that an industrial tribunal may, if it thinks fit, make an order for re-engagement under that section and in so doing exercise a very wide discretion as to the terms of the order. In a case where an industrial tribunal held that dismissal on the ground of redundancy would have been inevitable at the time when it took place even if the appropriate procedural steps had been taken, I do not, as present advised, think this would necessarily preclude a discretionary order for re-engagement on suitable terms, if the altered circumstances considered by the tribunal at the date of the hearing were thought to justify it."
It seems to us therefore, that from that passage and from our impression and our view about the facts of this case, that the matter should be considered afresh by an industrial tribunal. We see no reason to suggest that it should not be the same tribunal.It follows from the reasons which we have given therefore that this appeal must be allowed and the matter will be remitted to such tribunal as the learned Regional Chairman may direct. There will be a declaration that the dismissal was unfair.