Entwistle & Ors v IMI Air Conditioning Ltd [1993] UKEAT 174_91_2601

EAT
Entwistle & Ors v IMI Air Conditioning Ltd
[1993] UKEAT 174_91_2601 · 1993-01-26
MR JUSTICE KNOX: There are five appellants but, although minor differences exist between their several cases, their appeals all raise the same issues. They appeal from the decision of the Industrial Tribunal sitting at Leeds on the 21st and 22nd January 1991, sent to the parties on the 26th February 1991 whereby the appellants' claims that they were wrongly dismissed were rejected. The existence of a redundancy situation was at no stage in dispute. The issues arise on the question of the fairness of selection for redundancy.Each of the Originating Applications contains the following:
"I was selected for redundancy in contravention of a customary arrangement relating to redundancy.
The customary arrangement for handling redundancies was to make temporary employees redundant first. I was a permanent employee. Temporary employees holding similar positions to myself were not made redundant.In addition the employer acted unreasonably in failing to have meaningful consultations with my Trade Union. The Company merely informed us of their intentions and had no regard to our representations."The employer ("the Company") was IMI Air Conditioning Ltd, the respondent before us. It is part of the IMI Group and its business consists mainly in the manufacture and assembly of air conditioning units. Not surprisingly demand is greater in the spring and summer for such products and although the bulk of production is manufactured for stock prior to the high season it was found by the Industrial Tribunal that it had been customary for the Company to take on temporary workers at peak periods in the spring and summer to maintain production and then dismiss them when they were not required.Trade in 1990 was worse than cyclical. In the summer of 1990 profits fell and stocks rose. Management decided it was necessary to reduce the manning levels and 35 people, all temporary employees, were dismissed in August 1990. However trade continued bad and it was decided at the end of August that another 25 redundancies had to be made. 11 voluntary redundancies reduced the number of compulsory redundancies to 14 amongst whom were numbered the applicants, all of whom were permanent employees and not temporary ones.There was no formally agreed procedure for dealing with redundancies and the Company therefore sought to negotiate with the shop stewards. An informal meeting was followed by a formal one when the shop stewards were taken through the criteria upon which the Company proposed to act in selecting for redundancy. The Industrial Tribunal found the following facts regarding that meeting:
"The shop stewards were taken through the criteria. The discussion then went on to consider whether any points needed to be changed. The procedure is set out in exhibits A3, 4 and 5 which lay down the criteria for selection for redundancy. The respondents had no previously agreed procedure for redundancies and on this occasion were trying to get this procedure agreed, and so they had a conference with the shop stewards. The shop stewards made some suggestions for alteration, in particular under the headings of flexibility and retention of skills, they wanted additional points to allow for skills obtained in the wiring section. This the respondents agreed to. They wanted labouring taken out completely as a means of assessing selection. That was agreed to by the respondents. Again the shop stewards requested that in paragraph 1.3.1 operators would be assessed on their willingness to work shifts as required taken out and that was agreed. Finally, under the heading of "attendance", the assessment of attendance sets out points for numbers of days absent. The shop stewards wanted that to be taken out of the consideration but the management did not agree."
A further meeting ensued on 7 September but the shop stewards told management that they did not want to go further with the proposed criteria and were registering a failure to agree. This was in accordance with a request from their full time official Mr Firth who thereby became involved at the next negotiating stage. This was agreed before us to have occurred on the 17th September although there was no specific finding to that effect by the Industrial Tribunal. This too produced no agreement and the next stage up the negotiating machinery only occurred on the 26th September at an external conference between the A.E.U. and the Engineering Employers Federation. By this time all the applicants save one, a Mr Flanagan, had been dismissed on the 21st September. Mr Flanagan was not dismissed until 28th September but no separate point was taken about this and it can be ignored.It was common ground that the employees thus made redundant were seen twice by Mr Hammersley, assistant production manager, but the Industrial Tribunal said:
"it is disputed that they were given any information as to their means of selection. The applicants claim that they had no idea of the points which they had been allocated or how they had been assessed and that very little took place at those consultations."
The Industrial Tribunal in its decision recorded an argument on behalf of the applicants that they were in difficulties in these meetings with Mr Hammersley in that they did not know the procedure for selection or the way in which points were awarded under several headings, quality, performance, attendance and flexibility so they could not raise matters of detail which might have been material in determining whether they were selected for redundancy. However the Industrial Tribunal identified the case for the applicants as being that the selection for redundancy was unfair in particular because whereas in the past temporary workers only had been made redundant, on this occasion some temporary workers were retained and permanent employees made redundant. It is not in dispute that some temporary employees scored higher marks than the applicants with the result that it was the applicants, rather than those who scored a higher number of points who included some temporary as well as permanent employees, who were made redundant. Equally it is not in issue that length of service, or LIFO as it is often called, was not taken as the criterion or indeed as one of the criteria and that had it been the sole criterion none of the applicants would have been dismissed.What was debated before the Industrial Tribunal was first whether the dismissals of the applicants were unfair because they fell within the provisions of s.59(b) of the Employment Protection (Consolidation) Act 1978 ("the E.P.(C).A.") and secondly whether the dismissals were unfair under s.57 of the E.P.(C).A, disregarding any unfairness as a result of the operation of s.59.s.59 reads as follows:
"Where the reason or principal reason for the dismissal of an employee was that he was redundant, but it is shown that the circumstances constituting the redundancy applied equally to one or more other employees in the same undertaking who held positions similar to that held by him and who have not been dismissed by the employer, and either - (a) that the reason (or, if more than one, the principal reason) for which he was selected for dismissal was one of those specified in section 58(1); or (b) that he was selected for dismissal in contravention of a customary arrangement or agreed procedure relating to redundancy and there were no special reasons
justifying a departure from that arrangement or procedure in his case,

then, for the purposes of this Part, the dismissal shall be regarded as unfair."

Para (a) can be ignored because no issue under s.58 arises.

(b) as follows:

"Section 59(1)(b) refers to a customary or agreed procedure. Where there is a customary or agreed procedure it is automatically unfair to dismiss for redundancy in contravention of that customary or agreed procedure. Mr Jeffery makes the point that the respondents were in breach of a customary procedure because they had on previous occasions dismissed the temporary employees but not the permanent employees until this last dismissal in September 1990. So we have to decide whether in fact the employers were in this case in breach of a customary or agreed procedure. Mr Jeffery suggests on the basis of the fact that temporary employees have been the ones who have been dismissed in the past that there is a customary procedure but for this section to apply there must be a redundancy situation. And although there was a redundancy situation in the summer of 1990 in previous years there was no redundancy situation. There were no redundancies in previous years there was simply a terminating of the temporary employees when the seasonal work had dropped off. So the only time when they were faced with a redundancy situation was in the summer of 1990 when there was a redundancy situation. So we do not find that section 59(1)(b) applies here."
There are undoubtedly some errors in that paragraph. There is the clerical error in that reference is made to s.59(1) and there is no subsection (1) as such. That is not of any practical significance at all, for there is no doubt what was being referred to.There was a misquotation in the references to "a customary or agreed procedure" whereas the statute refers to "a customary arrangement or agreed procedure." We do not consider that to be an error of significance because the Industrial Tribunal must by "customary or agreed procedure" have meant "customary procedure or agreed procedure". The latter was admittedly not present and so what the Industrial Tribunal was looking for was a "customary procedure". We are not satisfied there is a significant difference between the statutory phrase "customary arrangement" and the phrase used by the Industrial Tribunal. Both are non contractual and both refer to custom as having established a means of selecting for redundancy. No doubt "arrangement" is a more felicitous word than "procedure" but we are not persuaded that the Industrial Tribunal led itself into looking for an inappropriate state of affairs by its misquotation.Thirdly, and most seriously, we consider that the actual reason given by the Industrial Tribunal for deciding that s.59(b) did not apply was erroneous. Mr Jeans, for the Company, reserved the right to argue in higher Courts should this matter proceed to the Court of Appeal or beyond, that the dismissal of temporary workers at the end of a seasonal peak did not in the context constitute redundancy but he accepted for the purposes of the appeal before us that the termination of the employment of the temporary employees when the seasonal work dropped off was within the definition of redundancy in s.81(2) of the E.P.(C).A. Clearly it does fall within the literal words of that provision. The conclusion therefore is that the reason relied upon by the Industrial Tribunal for holding that s.59(b) did not apply was unsound. We have however come to the conclusion that on the facts found by the Industrial Tribunal its decision was the only possible one because the custom which it identified of dismissing temporary employees when the seasonal work dropped off was not contravened when a quite different occasion for making workers redundant supervened. The custom established in evidence was an arrangement or procedure, it matters not which, dealing with the phenomenon of a fall off of seasonal work and it was dealt with by the dismissal of those taken on temporarily. In verbal terms the point was expressed by Mr Jeans by saying that there was no customary arrangement or procedure for making temporary employees redundant first, i.e. before permanent employees because there had not previously been any contest between temporary and permanent employees -- only temporary employees were affected by the custom. Mr McMullen's argument was based on the numbers involved in that he submitted there were 105 employees of whom 37 were temporary and all that was required was to find 25 redundancies which as a matter of mathematics could obviously be found out of 37 persons. So, he argued, it would have been possible to make 25 temporary employees redundant leaving all the permanent employees and 12 temporary employees still employed. The fact that there were, at least in the Company's view, organisational objections to that solution in that some temporary employees were needed for the continued proper functioning of the business and that expense would be incurred in retraining permanent employees to take the places vacated by redundant temporary employees is not relevant to the question whether the customary arrangement was contravened. In our view that turns on the ambit of the customary arrangement and if its ambit did not cover the situation giving rise to the redundancies in question there was no contravention of the customary arrangement. In our view the factual findings regarding the earlier custom did establish that, so that the Industrial Tribunal's decision on this point was one with which we agree.This makes it unnecessary to consider the criticisms levelled at the Industrial Tribunal's decision on the question whether the circumstances constituting the redundancy applied equally to other employees in the same undertaking who held positions similar to that held by each applicant. That requirement governs both paras (a) and (b) of s.59 and has to be satisfied in addition to the requirements of paras (a) and (b). Since for the reasons already given we do not consider that paragraph (b) was satisfied it is unnecessary to consider whether the additional requirement regarding the holding of similar positions was satisfied.The other subject of complaint raised by all the Originating Applications was that the Company acted unreasonably in failing to have meaningful consultations with the applicants' trade union and that the Company merely informed the applicants of its intentions and had no regard to their representations.A close and skilful scrutiny by Mr McMullen of the notes of evidence and of the exhibits before the Industrial Tribunal threw up a variety of points upon which he relied in order to demonstrate an error of law in the Industrial Tribunal's decision on the issues arising under s.57 of the E.P.(C).A. that it was within the band of reasonableness to apply the criteria which the Company did apply bearing in mind that the employers at the time were not able to get agreement with the shop stewards. Here again although there are certain matters where the Industrial Tribunal was not entirely accurate we are unpersuaded that, if one has regard to what the issues before it actually were, a relevant error of law has been demonstrated.The first point taken was that the Industrial Tribunal was in error in saying that consultation stopped at the point when a failure to agree was recorded. This seems to us to be a verbal rather than a substantive point. The Industrial Tribunal was plainly aware that the negotiating machinery taken as a whole had further stages built into it. It specifically referred to the outside conference on the 26th September. What the Industrial Tribunal was in our view clearly referring to in saying that consultation stopped on 7th September was that that stage of consultation, that is to say consultation with the shop stewards, then stopped. It was of course right in that because the shop stewards took the action needed to take the matter up the negotiating ladder, registering a failure to agree and declined to negotiate further regarding the criteria for redundancy. We are unpersuaded that the Industrial Tribunal was either in doubt or in error as to the situation governing negotiation.Secondly Mr McMullen persuaded us that the Industrial Tribunal was in error in referring, as it did, to the procedure which the Company followed in making selections for redundancy. He submitted, and we accept, that the procedure used was in various respects different from that in A3, 4, & 5 and was contained in exhibits R3, 4 & 5 dated 10 September 1990. Indeed there appears to have been an intermediate version, not amongst the exhibits before the Industrial Tribunal, when the initial suggestions of the shop stewards were, with one exception, accepted by the Company and the latter's initial proposals were modified to accommodate the agreed modifications. We do not regard this inaccuracy by the Industrial Tribunal as significant because we take the view that it was well aware what the criteria applied at the end of the day actually were. They were set out in the documents before it and the marks awarded under the several heads were also before it. We do not regard the reference to exhibits A3, 4 & 5 as the procedure ultimately applied as anything more than a slip.The third point taken was that there was a failure by the Industrial Tribunal to investigate the application of the criteria used and that the Industrial Tribunal abdicated its responsibilities when it said, as it did in para 15 of its decision,
"The Tribunal cannot put itself in the position of an employer and assess how competent or reliable an employee is. That is a judgment which the employer must make and we cannot interfere with it, we can only say that on the basis of this a selection was made and we have to accept that these points were genuinely given and so far as the respondents can they have made an assessment of each individual's ability. We take into account that we have to accept the assessment as it is set out by the points in that situation."
It is at this point that it is important to bear in mind the issues as presented to the Industrial Tribunal. They were limited to the claimed failure to have meaningful consultations with the relevant union and failure to have regard to the applicant's representations or to do more than inform the latter of the Company's intentions. There was no allegation in any Originating Application that there was anything other than an honest attempt to apply the chosen criteria. There was an issue whether it was proper to apply those criteria but there was no claim that the actual process of awarding points or marks was distorted or improper. Nor was there any cross-examination of the Company's witnesses directed at any such issue. The nearest approach to this relied upon by Mr McMullen was that the note taken by a member of the Union at the Works conference on the 17th September 1990 was put to Mr Hammersley in cross-examination and that that note included a statement that the author, a union representative, informed the Company:
"That should they go ahead and select from full time employees, individuals would have the right of redress at an Industrial Tribunal, claiming unfair selection for redundancy, and that we would need to see the Company assessments as to how they had made their decision of who was to go. This would mean seeing all assessments in order that the true picture could be seen in making a judgment."
The answer recorded in the notes of evidence was:

"Mr McAuliffe could not do Carter's job because he had not done grading."

This does not satisfy us that before the Industrial Tribunal there was a challenge to the fairness of the application of the chosen criteria rather than to the fairness of the selection of the criteria in the light of the cessation of negotiations upon them at shop steward level. We bear in mind that several of the applicants in evidence expressed varying degrees of dissatisfaction with their own individual points or marks. Without discernible issues in the Originating Applications or in cross-examination of the Company's witnesses that does not persuade us that the Industrial Tribunal should have ruled upon the validity of the individual marks awarded.We were referred to several authorities showing that it is an Industrial Tribunal's duty to rule on whether there was a fair basis for selection for redundancy. Thus Lord Bridge in Polkey v. Dayton Ltd [1988] ICR 142 at 162.3 said:
"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."
Similarly in Williams v. Compair Maxam Ltd [1982] I.C.R.156 at 162 Browne-Wilkinson J. included among the principles in accordance with which reasonable employers would seek to act the following:
"The employer will seek to ensure that the selection is made fairly in accordance with these criteria and will consider any representations the union may make as to such selection."
These general statements are not in our view authority against the proposition that it is necessary to see what the issues between the parties are. There may be an issue as to the fairness of the selection of the criteria applied. There may be an issue as to the fairness of the application of the selected criteria. The two are not the same and where as in the present case it is the fairness of the criteria and of the adoption of the criteria that is in issue, expressions of dissatisfaction at the mode of the application of the selected criteria are not sufficient to raise an issue on that score not previously advanced. We would not endorse the view that an Industrial Tribunal can never address the question whether an employer's application of criteria in individual cases was flawed. But if it is not raised it is not to be brought in by a side wind. We do not understand the decision of the Industrial Tribunal in this case to invoke any such proposition as that it is not possible for an Industrial Tribunal to investigate the fairness of the method of application of criteria in individual cases where the issue is raised. In our view it was not raised here and there therefore does not seem to us to be a basis upon which we should interfere with the Industrial Tribunal's view that the Company's procedure for selection for redundancy was reasonable in the circumstances. That seems to us to be the right question and the answer is a matter of judgment for the Industrial Tribunal.We therefore dismiss this appeal.