Pannell Kerr Forster v Wild [1992] UKEAT 301_91_1405

EAT
Pannell Kerr Forster v Wild
[1992] UKEAT 301_91_1405 · 1992-05-14

JUDGE HAGUE :

Mr Paul Wild was formerly employed by Pannell Kerr Forster, a well known firm of accountants with offices in many places, in their Nottingham office. He worked at the material time in the audit department.On 14 September 1990 he was told he was being made redundant. There was not sufficient work to occupy everybody in the audit department. He was given one month's pay in lieu of notice and dismissed. He then made a claim to the Industrial Tribunal for unfair dismissal. That claim was heard by the Tribunal at Nottingham on 18 January 1991. One of the issues at that hearing, and it appears to be the main issue at which most of the evidence was directed, was whether he had been unfairly selected for redundancy. On that issue the Tribunal found against him. They held in paragraph 8 of their Reasons:
"We are satisfied there was a redundancy situation; and that the employer used a reasonable criteria in selecting him for redundancy."
However, the Tribunal went on to hold that there had been no consultation by the employers with Mr Wild, and held that he had been unfairly dismissed for that reason.At the conclusion of the hearing, and I think after retiring, the Chairman of the Tribunal announced the Tribunal's decision and went on to order the employers to pay Mr Wild compensation in the sum of £5,153.13. Mr Wild told us, and it was not disputed on behalf of the employers, that the Chairman explained how that sum had been made up. He had material from the documents which enabled him to do that, plus some short evidence from Mr Wild about his current employment situation. The main elements of the compensation were 18 weeks pay from the date of dismissal up to the date of the hearing and an estimated 15 weeks future loss of earnings. But there had been no prior submissions or no discussion about the quantum of compensation. Quite what happened after the Chairman gave this oral decision is not quite clear. According to the employers he said words such as "all right", perhaps as a question. Mr Wild had told us that the employers' representative was asked if she wanted to say anything on compensation, but he accepted she was rather taken aback, everything happened in a very short space of time and nothing more was said.On 17 April 1991 the Tribunal's reasons for the decision were sent to the parties. They contain nothing in the way of reasons for assessing the quantum of compensation. Paragraph 11 of the Reasons simply says:

"The Tribunal award the applicant compensation in the sum of £5153.13."

Furthermore, the Chairman's notes of evidence reveal little or nothing that is relevant to quantum of compensation. In particular there is no note of any evidence given as to what effect consultation might have had.It is we think quite clear that this lack of reasons constitutes a breach of Rule 9 of the Industrial Tribunals (Rules of Procedure) Regulations 1985 set out in the Schedule to those rules. Sub-Rules (2)-(4) read as follows:
"(2)The decision of a tribunal, which may be given orally at the end of a hearing or reserved, shall be recorded in a document signed by the chairman.
(3)The tribunal shall give reasons, which may be in full or in summary form, for its decision.(4)The reasons for the decision of the tribunal shall be recorded in a document signed by the chairman, which shall also contain a statement as to whether the reasons are in full or in summary form."It has been made clear in a number of cases, and in particular NORTON TOOL CO LTD v TEWSON [1972] ICR 501 at pages 504B/505D, that it is essential that a Tribunal should set out their reasonings in coming to their quantum compensation. They must set out their reasoning in sufficient detail to show the principles upon which they have proceeded.Parties are entitled to know the reasons because if they do not know the reasons it is impossible to tell whether anything has gone wrong and whether there might be any grounds of appeal. Of course the amount of a compensatory award is, under the statute, a matter for the discretion of the Tribunal; but it is a discretion which has to be exercised properly.The absence of any reasons for determining the quantum of compensation was pointed out to the Chairman of the Tribunal. He relayed the following comment to this Tribunal:
"It is clear from my notes that the calculations for the basic award and compensatory award were properly made, including taking into account the redundancy payment already made by the employers.
It is common practice obviously to read out those calculations and I have no reason to think that I did not do so in the normal way, but I cannot remember precisely now whether I did or not.I accept that the written reasons only specify a global sum".Now the employers accept, as they must, the decision of the Industrial Tribunal that Mr Wild had been the subject of unfair dismissal, but they appeal to this Tribunal on the quantum of compensation. The first point which they take on that is that the lack of reasons in the written reasons given for the Tribunal's decision. In the circumstances of this case we think that is a valid objection because of the breach of Rule 9 which we have referred to. But it is only a technical breach because we do in fact know the method in which the compensation was calculated. If there had been nothing more, we would not have thought it right to interfere with the decision of the Industrial Tribunal.We turn to the employers' second point. Under Section 74 of the Employment Protection (Consolidation) Act 1978:
"..the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."
The sub-section thus directs us to look at the action taken by the employer. It may be that such action has resulted in little or even no loss to the employee; and it has been recognised that if there is a procedural defect such as a lack of consultation (as in this case) making the dismissal unfair, the Industrial Tribunal may, and we stress the word may, come to the conclusion that the procedural defect has made no difference because the employee would in any event have been dismissed and therefore the compensatory award should constitute only a small amount or even nothing. An example of where that occurred is to be found in the case of MINING SUPPLIES (LONGWALL) LTD v BAKER [1988] ICR 676 . On the other hand, the Industrial Tribunal may consider that the lack of consultation made a very considerable difference and there would be little or no reason to reduce the full amount of the compensation which might be awarded. It all depends on the facts of the particular case. But one thing is clear: the question of whether the procedural defect made any difference is an important element which must be considered in fixing compensation.Since the decision of the House of Lords in POLKEY vAE DAYTON SERVICES LTD [1988] ICR 142 it is settled that this question is (except in rare cases) relevant only at the second stage of assessment of compensation and not at the first stage of deciding whether or not there has been an unfair dismissal. It is, we think, clear from that decision that the question must be specifically addressed by the Tribunal in considering the quantum of compensation. The Tribunal must consider what, if any, effect it has on the compensation. The Tribunal may make an appropriate percentage reduction if it thinks appropriate. In the POLKEY case Lord Bridge of Harwich at page 163 quoted with express approval the dicta of Mr Justice Browne-Wilkinson in SILLIFANT v POWELL DUFFRYN TIMBER LTD 1983 IRLR 91 at page 96 which reads as follows:
"There is no need for an "all or nothing" decision. If the industrial tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment."
For these reasons we think there is clearly a duty to consider that point and an equal duty on the Industrial Tribunal to give its reasons for their conclusions on it. No such reasons are given in this particular case we consider that of itself is sufficient to justify this appeal. But the matter goes further. It is impossible for us to tell with certainty, but it does seem highly probable that in fact there was no consideration of the point at all, because if there had been some consideration it was very odd that nothing was said about it in the reasons given. That view of the matter is to some extent confirmed by the contents of the Chairman's letter I have referred to.As to the third point taken on behalf of the employers, we think it is clear that there was no proper opportunity given to either party to deal with the question of the quantum of compensation before the decision on the amount of compensation was announced. It is really only common sense that before a decision of any Tribunal, whether the High Court or an Industrial Tribunal or indeed any other body with judicial powers in accordance with natural justice both parties should be able to put their viewpoints to the tribunal. In the case of Industrial Tribunals that is confirmed by Rule 8(2) of the Rules. In this case it seems to us that there was, as we have said, no proper opportunity to make submissions or call evidence on the matter. The only opportunity, and a very brief and perfunctory opportunity it was, was given after the decision had been made and announced. That is too late. On that ground also we think that this Appeal must succeed.The difficulty which has arisen in this case stems from the fact that it is unclear whether at the hearing and in the evidence the Tribunal was dealing at one and the same time with both the issues of unfair dismissal and the question of compensation. Often in practice it is convenient to deal separately with the two issues. The reasons are obvious. First, if the issue of unfair dismissal is decided against the employee, no question of compensation arises. Secondly, even where there is a finding of unfair dismissal, it is often convenient for the question of compensation to be held over so that the parties can try to agree the compensation rather than argue about it in front of the Tribunal. On other occasions it may be more convenient to deal with both issues at the same time. What is important is that the matter should be raised at an early stage of the Industrial Tribunal hearing and clarified one way or another, so that the parties know whether or not to call evidence and make submissions on the quantum of compensation as well as on the primary issue of unfair dismissal.In the circumstances of this case we allow this Appeal and remit the question of compensation, and we stress only the question of compensation, to a differently constituted Tribunal. That issue must be considered by the Tribunal completely afresh with such evidence and submissions as the parties think fit to put before the Tribunal. Before us Mr Wild has put in a cross-Appeal to the effect that the compensation awarded to him should be increased. That is a matter he will be able to put to the newly constituted Tribunal.