Surelock McGill Ltd v Masih [1992] UKEAT 616_92_1702

EAT
Surelock McGill Ltd v Masih
[1992] UKEAT 616_92_1702 · 1992-02-17
MR JUSTICE WATERHOUSE : This is an appeal from decisions made by an Industrial Tribunal which sat at London South in January and June 1992. Their decisions with the full reasons were sent to the parties on 5 August 1992 and were that(a) the Respondent had been unfairly dismissed on the ground of redundancy and(b) (by a majority) the Respondent should be awarded full compensation in the sum of £3,013.85.The appeal is now brought by the employers, following a preliminary hearing before this Appeal Tribunal, on two main grounds. The first is that the finding of unfair dismissal due to procedural faults in the dismissal was wrong in law because, on the facts found by the Tribunal and fully supported by the evidence, it was clear that any consultation beyond that which occurred would have been futile. The second main ground is that, if that submission fails, the majority of the Tribunal, that is, the lay members, in contrast to the Chairman of the Tribunal, failed to address themselves to the question whether there was any prospect of the Respondent having been retained in the Appellants' employment if fair and proper consultation had taken place. It should be said that the Chairman took the view that any such consultation would have failed. He considered, therefore, that, in accordance with the principles laid down by the House of Lords in Polkey vAE Dayton Services Ltd [1988] AC 344 , the potential award should be reduced by 100% so that the Respondent was not entitled to a compensatory award, or alternatively that a very small award of two weeks' net wages only should be made. The basic award was, in any event, nil because of the amount of the redundancy payment that the Respondent had received.Turning to the facts as briefly as possible, the Respondent was employed by the Appellants as a capstan operator from 17 October 1988 until he was dismissed at the beginning of May 1991. The evidence before the Tribunal was that he worked a particular type of capstan machine and that, whilst he could set that machine, he could not set any of the other machines in the capstan shop. At the beginning of April 1991 the Respondent sustained some form of accident at home with the result that he was off work for the rest of that month. He had apparently torn ligaments in his leg and was unable to travel to work. Appropriate sickness certificates were sent to the employers regularly and the Respondent's doctor advised him that it would be preferable for him to find lighter work. We should say that the injury affected his knee and, ultimately, the problem was cured so that he is now fit for work generally and is in fact in regular employment. However, as a result of the advice tendered by his doctor, the Respondent did begin to look elsewhere for light work and gave particulars of his existing employers and employment in connection with those applications. Whether or not he named them formally as a reference, he gave particulars of his employment with the result that finance consultants to whom he had applied wrote to his employers for a reference so that the employers became aware that he was seeking other possible light work.The Respondent was dismissed somewhat unusually at the beginning of May 1991 when he telephoned the works manager in order to talk to him about his employment generally. There was substantial evidence before the Tribunal below about what was said in the conversation and it is clear that, in the course of it, Mr Simpson decided there and then to dismiss the Respondent and communicated that decision to him. The background to the decision was that a very substantial customer of the Appellants had informed them that they would not be sending them work in future and that the existing contracts would simply be completed; there would be no further business from that source. That particular customer represented about a quarter of the Appellants'overall work done and there was also evidence before the Tribunal that the Appellants needed to know quite a substantial period before the end of one contract that further contracts were coming forward in order to achieve appropriate continuity.For some time before this the Respondent's work had been solely on a capstan machine used in producing work for the customer whose contracts were to end and there was evidence that two employees had already left by the time of the telephone conversation between Mr Simpson and the Respondent, having become aware of the fall-off in work and no doubt having decided to seek employment elsewhere. Despite the fact that those two employees had left, the management had reached the conclusion that others would have to be made redundant and they had decided that the persons to be made redundant would probably include the Respondent.The findings of the Tribunal about the conversation are set out in paragraph 5 of their reasons as follows:
"Mr Simpson told Mr Masih that the work from Barrow Hapburn had more or less ceased. There was some discussion about Mr Masih's condition and how much longer he would need before he was fit to return to work, in answer to which point Mr Masih said that he would be back after three weeks or so but he could not be specific. Mr Simpson told Mr Masih that he would have to do other work when he returned and mentioned the sort of work being done, or which had been done in the past, by a labourer."
That was the end of the conversation save that it is common ground that, in the course of it, Mr Simpson said that he had no alternative but to dismiss Mr Masih on the ground of redundancy. Although the case had some of the flavour of dismissal for lack of capability in view of the temporary, physical condition of the Respondent, the finding of the Tribunal was that the dismissal was on the ground of redundancy and there is no challenge to that finding by either party. The dismissal did not take immediate effect. There was evidence before the Tribunal that Mr Simpson wished to make sure that the amount paid to the Respondent was correct and the actual letter terminating his employment was sent to him on 21 May. That letter made clear that the dismissal was on the ground of redundancy.Those are the bare facts of the case. It is clear from what has been said that there was no consultation whatsoever with the Respondent beyond the telephone conversation which took place on his own initiative and at a time when he had no reason to think, according to the evidence, that he was about to be dismissed. Mr Simpson said that he regarded the telephone conversation as a formal consultation and he told the Tribunal that it was his view that the only alternative work of labouring could not be offered realistically to the Respondent in view of the nature of his disability. On those facts the Respondent alleged that he had been unfairly dismissed, relying partly on the fact that he, rather than others, had been selected for redundancy and placing great emphasis upon the absence of any consultation with him in the normal sense before the decision was made.The Tribunal reached the unanimous conclusion that the dismissal had been unfair because the Appellants had not consulted the Respondent about his possible redundancy and had not ascertained what suggestions or representations he might wish to make about it. That point had been put in cross-examination to the first witness called on behalf of the Appellants, their production director, Mr Arthur Cox, and he had conceded that the Respondent might have been able to put forward a persuasive argument as to why he should have been retained.In reaching their conclusion the Tribunal purported to follow the decision of the House of Lords in Polkey vAE Dayton Services Ltd (supra). They relied, in particular, upon the proposition that, in almost every case in which no consultation took place, the dismissal would be unfair. The first point taken on behalf of the Appellants therefore is that there was a misinterpretation by the Tribunal of the decision in the Polkey case because they failed to consider whether or not it had been established that a proper process of consultation in this particular case would have had any effect. It is submitted that the Appellants would still have reached the same conclusion as that of Mr Simpson, even if such consultation had taken place.This argument is based upon the proposition that, despite what was said in the Polkey case, disapproving the line of decisions following British Labour Pump Co Ltd v Byrne [1979] ICR 347, it is still necessary for the Court in exceptional cases to consider whether or not the decision to dismiss the employee on the ground of redundancy was inevitable so that consultation would have been of no effect. Reliance is placed, in particular, upon a passage in the speech of Lord Bridge of Harwich in which he said at page 364F:
"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."
Thus, says Mr Wilken on behalf of the Appellants, the proper view here was that this case fell four square within the exception envisaged in that passage and the conclusion of the Tribunal should have been that the dismissal was fair because the employers reasonably came to the conclusion that consultation would be futile.Mr Wilken has drawn the attention of the Appeal Tribunal to two other reported cases which are said by him to afford some support for the view that it would be appropriate to regard this case as exceptional by Lord Bridge. The first of the cases is Spink v Express Foods Group Ltd [1990] IRLR 320 but it is to be noted that that was a case of misconduct in which the question was whether or not the disciplinary procedure followed had been fair. The conclusion of the Industrial Tribunal was that the dismissal in that case must be considered unfair but the Appeal Tribunal reversed that decision. He has sought to place emphasis upon certain submissions made by Counsel for the Appellants in that case about the questions to be asked in cases of alleged procedural unfairness, basing himself upon the Polkey case and another decision of this Appeal Tribunal. It is, however, unsafe to try to re-write what was said in Polkey in terms of questions said to be applicable to every case. What is more important is that we have been unable to find in the judgment of the Appeal Tribunal in Spinks , delivered by Mr Justice Wood as President, any express endorsement of the questions formulated in the submissions made by Counsel. There is nothing in that case, in our judgment, that would justify the conclusion in the present case that the Appellant had themselves reasonably concluded that consultation would be futile.Rather similar comment applies to the other case cited by Mr Wilken, namesly, Robertson v Magnet Ltd (Retail Division) [1993] IRLR 512. That was a decision of the Scottish Division of this Appeal Tribunal in a redundancy case. The Appeal Tribunal in that case allowed an appeal from a majority decision by an Industrial Tribunal that the dismissal of an employee had been fair. The conclusion of the Appeal Tribunal was that the dismissal was unfair because of procedural defects and the President of the Tribunal, Lord Coulsfield, after referring fully to the Polkey decision and to the passage from Lord Bridge's speech, already quoted in this judgment, went on to say:
"As we understand what Lord Bridge said, the exception will normally only be available to the employer where the employer has himself considered whether consultation would be useful, and reached the conclusion that it would not. The speech of the Lord Chancellor (at p.540) seems to be the same effect. In the present case, there is no hint in the findings of the Industrial Tribunal, nor was there, so far as we can tell from the statement of reasons for the decision, any hint in the evidence that the employers had considered whether or not to consult the appellant and come to the conclusion that it would have been futile to do so."
Far from assisting Mr Wilken's argument, that part of the ruling in Robertson might well be applied to the present case. Mr Wilken has endeavoured to persuade us that the management, in the shape of Mr Simpson, the works manager, can be said to have considered the question of consultation and to have rejected it as futile. The difficulty about that is that the Notes of Evidence do not support that conclusion. Indeed, Mr Simpson's evidence was to the effect that he had considered that the telephone call amounted to consultation and he did not expressly suggest that he had considered any question of consultation thereafter. Moreover, it is not a case, in our judgment, in which any reasonable employer could have reached the conclusion that consultation would be futile, particularly having regard to the admission by the production director that the Respondent might have been able to make representations which would have led to his continuing employment.Attractively and tenaciously as this argument has been presented, we are quite unable to accept that there was any error of law by the Tribunal here in reaching their conclusion that the Respondent had been unfairly dismissed. Having regard to the somewhat extraordinary circumstances in which an instant decision to dismiss was communicated to the Respondent, even though there may have been preliminary discussion about it by the management, it would be surprising if the Industrial Tribunal had reached any other conclusion.Quite different considerations apply, however, when we turn to the criticism of the decision of the Industrial Tribunal on the assessment of compensation. The criticism is put bluntly on the basis that the majority of the Industrial Tribunal asked themselves the wrong question and gave the wrong answer to that question. Particular criticism is focussed upon the conclusion set out in paragraph 8 of the statement of reasons but it is necessary to refer back to the preceding paragraph to put it fairly in context. The relevant passages are:"7. The respondents told us of the other employees who had left, and of their present requirements, from which it is clear that there can be no question of the reinstatement or re-engagement of Mr Masih in his former position. Nevertheless, we have noticed that a Mr Parker, a centre lathe turner, was employed again after an interval despite the drop in the volume of work which was stressed by the Respondents." [That is the Appellants in the appeal]8. However, the lay members of the Tribunal believe that Mr Masih should have been offered the position of a labourer, as indicated in Mr Simpson's telephone conversation with him. We do not consider Mr Masih caused or contributed to his dismissal simply by making an application for lighter work whilst he was away sick, since the essence of the unfairness is the Respondents failure to consult with him about his employment..."The criticism made by Mr Wilken is that it is clear from those words that the lay members of the Tribunal asked themselves whether or not they, as employers, would have offered Mr Masih the position of labourer instead of asking themselves whether, if there had been a proper process of consultation, a reasonable employer would have offered the position of labourer to Mr Masih, or alternatively to assess as a percentage what prospect there was more generally, as the result of a proper process of consultation, of the Respondent having been offered suitable other employment by the Appellants.We accept that the lay members of the Tribunal failed to ask themselves the correct question when considering this aspect of the case. Insofar as they narrowed their consideration to the question whether or not an offer might have been made to the Respondent of a position as labourer, the evidence before the Tribunal was contrary to the conclusion that they reached because he was unfit to do the work of labourer at the time when the decision to dismiss was to be made. On the other hand, we do not wish to say anything to suggest that it would necessarily have been appropriate for the Appellants to have confined their attention to the possibility of offering him work as a labourer. Quite clearly, if consultation had taken place, it would have been appropriate for the Appellants to have looked at the matter broadly before reaching any decision. In saying that, we have in mind the very clear words of Lord Bridge when dealing with this aspect of the matter in Polkey . Lord Bridge said at page 365C:
"Accordingly, applying the British Labour Pump principle, if the answer is that it probably would have made no difference, the employee's unfair dismissal claim fails. But if the likely effect of taking the appropriate procedural steps is only considered, as it should be, at the stage of assessing compensation, the position is quite different. In that situation, as Browne-Wilkinson J. puts it in Sillifant's case, at p.96:
"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"."
Thus, the approach of Browne-Wilkinson J. (as he then was) was expressly endorsed and it was necessary for the Tribunal in the present case to make an assessment of the Respondent's prospects if a fair procedure had been followed.Mr Wilken has urged this Appeal Tribunal to accept not only the proposition that there was an error of law by the lay members of the Tribunal, but also the conclusion of the Chairman, who did not fall into that error, that the chance of the Respondent being offered other employment as the result of consultation was so negligible that the compensation award should be reduced by 100%. Mr Wilken submits that this was the only proper conclusion to be drawn from the evidence before the Industrial Tribunal. Whilst we accept that Mr Wilken has made out his criticism of the error by the lay members of the Tribunal cogently, we have not been persuaded that it would be right to accept the Chairman's own assessment of the matter, bearing in mind that his view was a minority opinion. Assessment of the Respondent's prospects involved consideration of various possibilities, not simply the question of re-employment as a labourer. Other matters were canvassed in the evidence and questions such as whether it was strictly necessary to deal with the redundancy on a section by section basis rather than a wider basis and whether or not it was reasonable to apply a last in first out principle (if it truly was applied) on a section basis rather than on a wider basis were all matters for consideration in deciding what the outcome of a fair consultation procedure would or might have been. The material before us is quite inadequate to enable us to reach a proper conclusion on an issue that is essentially one of fact rather than of law. We have been compelled reluctantly to the conclusion therefore that the proper course in this case is to remit it for hearing by a freshly constituted Tribunal on the issue whether any, and if so what, percentage reduction should be applied in assessing the amount of compensation to be paid to the Respondent in the light of an assessment of his prospect of continued employment in one capacity or another if a fair consultation procedure had been followed. We say that we do so reluctantly because we are conscious of the expense to both parties of a re-hearing of this matter. We stress, however, that the finding of unfair dismissal stands.For the sake of completeness, we should say that, in the course of argument, Mr Wilken put to us that we should follow the approach to the assessment of compensation adopted in Mining Supplies (Longwall) Ltd v Baker [1988] IRLR 417, a decision made after Polkey had been reported. It was another unfair dismissal case in which the ground of dismissal had been redundancy. This Appeal Tribunal held that there was nothing in Polkey to indicate that, if a Tribunal finds that dismissal would still have taken place if procedures had properly been carried out, then no compensatory award should be made. It will be for the freshly constituted Tribunal to decide how to deal with the matter when they have considered the facts. In Mining Supplies (Longwall) Ltd the matter was resolved by an award of only two weeks compensation and it is to be noted that that appears to have been in the mind of the Chairman in the present case when he explained his own reasoning in paragraph 10 of the reasons. We must make it clear, however, that we do not suggest that that would necessarily be the correct solution and it will certainly be open to the freshly constituted Tribunal to approach the matter on the basis of a percentage assessment as envisaged in Polkey .