Silk v Egerton (GRP) Ltd [1992] UKEAT 389_91_1812

EAT
Silk v Egerton (GRP) Ltd
[1992] UKEAT 389_91_1812 · 1992-12-18
MR JUSTICE WOOD (PRESIDENT): By an Originating Application which was dated the 22nd March 1991, Mr Darren Silk alleged that he had been unfairly dismissed by his employers, the Egerton (Group) Limited. He had been employed from July 1987 and he was dismissed on the grounds of redundancy on Tuesday, 12th February 1991. His particulars of complaint are very short:
"I was dismissed as redundant without any consultation I was told to leave the premises and people were retained with less service than myself. I believe this to be unfair."
In their Notice of Appearance, the Company, first of all say, that due to holidays they will be sending particulars of their defence by letter, which they do, about a week later, a letter of the 30th April 1991 sent to the office of the Industrial Tribunals. They say:
"1. It is our understanding of the legislation that notification and consultation is necessary where employees are members of trade unions or if their terms of service are affected by trade union bargaining."
they go on to say that he was NOT a member of a trade union as so stated and then they refer, in effect, to the provisions of Section 99 of the 1975 Act.The matter came on for hearing before an Industrial Tribunal sitting at Exeter on the 13th June 1991. The Tribunal unanimously found that the dismissal was fair so that the application was dismissed. They also found that Mr Silk was entitled to a redundancy payment of £135.The facts fell within a very short compass and were so stated by the Tribunal. It seems convenient for us simply to read those facts.
"3. Mr Silk started for them [the Respondents] in July 1987 and so by the time he was dismissed in February of this year he had done over three years' service. He worked as a G. R. P. Operative on laminating and doing any other work required.
4. He worked on various products of the company, who have a number of major customers.5. They manufacture cabinets, arch centres for the building industry and various other items. Work has been falling off, in common with most of British industry recently and by December last year, there was a warning to the workforce that all was not entirely well. There was no specific mention of redundancies but the workforce were kept informed on the state of the business.6. On 8 February [that, we interpolate, was a Friday] the problem seemed to be solved. The workforce were told that there was good news and a large cable T.V. order was about to be placed. Unfortunately, that optimism was misplaced. On the following Tuesday [the 12th] the contract was confirmed as not being placed, and that led to the current redundancies.7. Mr Silk thought he was reasonably safe because he had been there rather longer than some of the others. During the day the two Directors who were very much involved in shop floor work, Mr Morgan and Mr Turner, selected four out of the twenty-five workforce for redundancy. They did this by trying to assess who, in their judgement, were the most flexible of employees and who would be able to be switched rapidly with no training or instruction from job to job to maintain the most efficient workforce.8. At 4.30 of that afternoon Mr Silk and three others were called up to the office. Mr Silk was handed an envelope and told that he was to be made redundant. He was paid his money up to date and the appropriate money in lieu of notice. He did not receive a redundancy payment. The person working out payments did not understand that he was entitled to one."That last matter is of no moment, it was simply a misunderstanding and the Tribunal, rightly, attached no particular importance to it.The basis of the decision is contained in paragraphs 14 to 17 of the decision. The Tribunal had decided that warning had been given, as clearly it had been given, but it also dealt, in particular, with selection in paragraph 15, 16 and 17 and in paragraph 14 it deals with the question of consultation. That is the important paragraph for the present appeal. It reads:
"In this case, consultation is unlikely to have made any practical difference: It was really a question of selecting from the staff concerned. This is a substantial complaint by Mr Silk. He takes the view that other members of the workforce, junior in service to him, should have been selected first."
At the hearing before the Tribunal Mr Silk was represented by a trade union representative, the Transport & General Workers' Union, and the Company was represented by Mr Holt, who was the Manager, he was the Quality Control Manager and gave evidence, although the decision to select was made by Mr Morgan and Mr Turner, the Directors, one of them had been ill at the time but the other did not turn up to give evidence. Evidence was also given by a Financial Controller. The Tribunal were, of course, entitled to hear hearsay evidence, they were entitled to decide the matter on that hearsay evidence, but where the question of selection was going to be examined in detail it seems to the Members of this Tribunal that it would be, if possible, wise for the actual people who made the decision to give their views which could then be challenged.The issue of consultation seems to have been relegated by the wording of paragraph 14 where the Industrial Tribunal indicate that the substantial complaint was selection. The Originating Application to which we have already referred makes it quite clear that the first point taken was no consultation. Therefore, that was in the forefront of Mr Silk's mind.On this appeal Miss Eady takes as her main point, the fact that the wording in the first sentence of paragraph 14 shows an approach by the Industrial Tribunal which is in conflict with the principles set out in the well known case in the House of Lords of Polkey & A E Dayton Ltd [1988] ICR 142 . That was also a redundancy case and the importance of that decision was to emphasise that when considering the provisions of Section 57 it is important to look at the action of the employer at the time when the dismissal took place and not to superimpose upon it knowledge that came to light thereafter. The passages which are all cited but which it is necessary for us to refer to again in this appeal, are to be found, first of all in the speech of Lord Mackay of Clashfern, the learned Lord Chancellor at page 153 A, he says:
"This appeal raises an important question in the law of unfair dismissal. Where an industrial tribunal has found that the reason for an applicant's dismissal was a reason of a kind such as could justify the dismissal and has found that there has been a failure to consult or warn the applicant in accordance with the code of practice, should the tribunal consider whether, if the employee had been consulted or warned before the dismissal was decided upon, he would nevertheless have been dismissed?"
Stopping there for a moment, we would emphasise that the phraseology used twice there is "consult or warn" they are different concepts. Then, after citing S.57(3) the learned Lord Chancellor continues at D:
"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, no 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."Looking at that passage it is clear that a failure to consult or warn will not necessarily, of itself, render a dismissal automatically unfair. There may be extreme situations, and we do not regard this as one, where the imminent collapse of a business or a company is such that an employer would have to act almost instantaneously and there may therefore be a situation where warning and consultation in the immediate emergency simply did not cross an employers mind. Those circumstances will be taken into account no doubt, by an industrial tribunal in looking at that sort of situation. However, generally speaking, it is to be encouraged in industrial relations that consultation and warnings should be given unless those extreme conditions exist. It is therefore in the light of that that the learned Lord Chancellor seems to us to be dealing with the circumstances known to the employer at the time of dismissal and even then, when examining that, the phrase which is used by him is "utterly useless" and that is a strong expression.Lord Bridge at page 162 in his speech also deals with this situation it is perhaps simplest to take a passage from the bottom of 162 at H, where he says:
"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."
There again, reading that passage, the comments which we made about the earlier passage in the speech of Lord Mackay seems to flow also from the thinking of Lord Bridge of Harwich in that passage from his speech. There is no necessity merely because there is no consultation to find unfairness, but it does mean that where the employer is taking the view that the procedural steps normally appropriate, we would emphasise that, would be futile, then it is open to an industrial tribunal to take the view that the dismissal was not unfair. But unless that sort of phraseology is used to indicate clearly that the tribunal has reflected upon the wording and the concepts expressed by the two learned Lords of Appeal, it seems to us, that the dismissal is likely to be found to be unfair and that any question of what might have happened can be dealt with when considering compensation. The redundancy payment is likely to exceed the basic award and under the provisions for the compensatory award the terms "just and equitable" are always there for the tribunal to do that which they think is fair, "just and reasonable" in the circumstances between the parties involved.In the present case after the decision had been given a letter was written by the Trade Union representative asking for a review and suggesting that the Tribunal had, perhaps, not considered Polkey . The answer to that is in a decision of the 24th June 1991 refusing a review and when dealing with the case of Polkey the learned Chairman says this:
"The Tribunal did, in fact, do so. [That is consider Polkey ]. It took the view that all employees were kept informed of the state of the business (paragraph 5 of the Decision) and that further warning was not appropriate."
That emphasises in our mind, when one looks at paragraph 5 of the decision, that the learned Chairman was concentrating in his mind on the issue of warning. What it does not answer is the criticism, if it was an implied criticism, of the way that the Industrial Tribunal had dealt with consultation. It therefore seems to us that, in paragraph 14, the Industrial Tribunal may not have directed itself entirely correctly and accurately on the principles enunciated in Polkey . The phrase used is:

"In this case, consultation is unlikely to have made any practical difference:"

practical difference refers, possibly, to the decision to dismiss. Although, it can be argued that this was not a return to British Labour Pump nevertheless, in our judgment, we feel, that it is better, and indeed advisable, if the Industrial Tribunals are taking the view under the guidance of Polkey that consultation was either "utterly useless" or "futile" that that wording should be expressly used. We are finding that a number of appeals are arriving in this Tribunal on this type of point and it would simply clarify the reasoning of an industrial tribunal if the wording of Polkey was closely followed. We emphasise this, indeed Mr Stafford has emphasised to us, that the mere absence of consultation does not necessarily create unfairness in the dismissal. But it must be looked at in all the circumstances of the case and it is a question of a reasonable approach of the employer in the circumstances.What then are we to do? Miss Eady encourages us to make a finding here and now. We have looked at evidence and we have looked at the decision. We feel that the appropriate course to take here is to remit this matter to be re-heard before a different tribunal.It follows therefore that the appeal will be allowed and that is the Order that will be made.