Heron v Citylink- Nottingham [1993] UKEAT 409_91_2104

EAT

Heron v Citylink- Nottingham

[1993] UKEAT 409_91_2104 · 1993-04-21

HIS HONOUR JUDGE PEPPITT QC This is an appeal from a reserved decision of the Nottingham Industrial Tribunal sent to the parties on 21st May 1991. The decision was that the Applicant, now the Appellant, had not been unfairly dismissed.

The facts can be stated shortly. City Link operate a delivery service from a number of branches in the Midlands. The Appellant was employed by the Respondents, City Link - Nottingham, one of those branches. He joined the company as sales executive in November 1987 and in February 1990 he was given a managerial function, a role which he combined with his responsibility for sales until his dismissal on grounds of redundancy on 13th July 1990.

The Tribunal found that in March 1990 the Respondents lost the benefit of a contract with Red Star which reduced their turnover by some £750,000 per annum. As a result the managing director of the group, Derek Hogg, had no alternative but to introduce a range of measures designed to reduce the group's overheads. The Leicester branch was closed and overall 60 of the group's employees were made redundant. The staff at Nottingham had fluctuated between 9 and 10 employees. They included the Appellant, Lynn Vawer who was responsible for telephone sales, two indoor operational staff and 4 or 5 drivers. When the Red Star contract was lost two drivers resigned and another was dismissed.

Mr Hogg told the Tribunal that the company could not operate without the remaining drivers and the two indoor employees. But significant economies had to be made and he therefore decided to make the Appellant redundant. This would save the company the Appellant's salary of £10,000 p.a. The Appellant's managerial responsibility was to be assumed by Mr Hogg himself and his sales function by Miss Lynn Vawer in addition to her responsibility for telephone sales. The Tribunal accepted Mr Hogg's evidence that the Appellant, though a good outdoor salesman was not proficient at telephone sales. For this reason Mr Hogg was not able to make Miss Vawer redundant leaving the Appellant responsible for both outdoor and telephone sales. In the event, however, Miss Vawer left the Respondents shortly after the Appellant's dismissal and joined Red Star. But since this occurred after the termination of the Appellant's employment it is of interest only as part of the chronology.

The decision to dismiss the Appellant was taken by Mr Hogg on, ironically, Friday 13th July 1990. It was communicated to the Appellant at 5.30 p.m. on the same day. There was no consultation; the Appellant was simply paid four weeks' salary in lieu of notice and told that his employment was at an end.

Against this background Mr Clayton on behalf of the Appellant did not pursue the contentions made in the Notice of Appel to the effect that this was not a true case of redundancy. Instead he confined himself to one broad submission - that the Appellant's dismissal for redundancy was fatally flawed in the admitted absence of any form of consultation. He referred us to the speeches of Lord Mackay, Lord Chancellor, and Lord Bridge in Polkey v. A E Dayton Services Ltd

[1988] ICR 142

as indicating that only in rare cases can a dismissal for redundancy without consultation be justified. At p.153F Lord Mackay said:

"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."

At p.163A Lord Bridge in the course of an analysis of the effect of S.57(3) of the Employment Protection (Consolidation) Act 1978 said:

"... 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 in 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."

Mr Clayton submitted that the circumstances surrounding the Appellant's dismissal were not such as to obviate the need for consultation. The Respondents' financial position was, as the Tribunal found, 'in a reducing situation' but that had been the position since the loss of the Red Star contract some four months earlier. And even if the Respondents had reasonably decided that they had no alternative but to make the Respondent redundant there were other reasons for consulting him as the Employment Appeal Tribunal had found in Freud v. Bentalls Ltd

[1983] ICR 77

[see per Browne-Wilkinson J at p.82C - 83C] . For these reasons Mr Clayton submitted that the Tribunal must either have misdirected itself or that its decision was perverse in the sense given to that word in Piggott Bros & Co Ltd v. Jackson

[1992] ICR 85

and East Berkshire Health Authority v. Matadeen

[1992] ICR 723

The starting-point for any evaluation of Mr Clayton's submissions is paragraph 17 of the decision by which it was accepted that the Industrial Tribunal's conclusion fell to be judged. It is worth setting out that paragraph in full:

"It is agreed that there was no prior consultation, which is strongly recommended under the Code of Practice. Whilst the House of Lords' decision in Polk ey makes it clear that a lack of consultation may well lead to a finding of unfair dismissal unless there are exceptional circumstances, we decide in this case that the circumstances were exceptional in that immediate decisions had to be made and that in effect the only person who would be made redundant without impairing the efficiency of the team, as Mr Hogg saw it, was the applicant. Nor do we believe that consultation in this case would have made any difference to the outcome."

There are two aspects of this paragraph which call for immediate comment. The first is that the Tribunal properly informed itself of the relevant Polkey criteria and sought to apply them to the facts of the case. Secondly, the final sentence of the paragraph seems clearly to reflect the Tribunal's own view of the inevitability of the Appellant's dismissal for redundancy. As such it was a finding that had no bearing on the validity of the dismissal [see per Lord Bridge in Polkey (supra)]. Mr Grundy, on behalf of the Respondents, did not seek to contend otherwise and Mr Clayton relied upon the sentence only because its appearance in paragraph 17 of the decision suggested that the Tribunal might have had regard to irrelevant considerations in arriving at its finding that in the case of the Appellant's dismissal consultation was not necessary.

But the importance of paragraph 17 of the decision is that is identifies those factors which in the Tribunal's mind constituted 'exceptional circumstances' and so justified the Respondents' failure to consult the Appellant before dismissing him. They were firstly, 'that immediate decisions had to be made' and secondly, that 'the only person who could be made redundant was the applicant'. The real issue for us to decide is whether those findings were supported by the evidence and if so, whether they could properly be regarded as circumstances justifying the Respondents' failure to consult.

As to the need for immediate decisions to be made, Mr Grundy accepted, in our view rightly, that this finding could only be supported if the circumstances made it necessary for the Respondents to dismiss the Appellant on the 13th July 1990 and at no later date. We do not consider that they did. There could well be cases where such reasoning was justified, for example if an employer became insolvent and could not pay his employees wages. But that was not the case here. Certainly the Respondents' financial position had been deteriorating over the four months which followed the loss of the Red Star contract, but there was no evidence that anything occurred on or shortly before 13th July 1990 which made it necessary for them to dismiss the Appellant on that date. The evidence before the Tribunal disclosed no reason why the Respondents could not have given the Appellant at least a week or so to consider his future and to come up with any suggestion he might have been able to make to ameliorate if not to preserve his situation. We have accordingly come to the conclusion that this finding by the Tribunal cannot be supported as a circumstance justifying the Respondents' failure to consult.

We take a similar view of the second of the Tribunal's findings. The fact that an employer, on the facts then known to him reasonably believes that he has no alternative but to make his employee redundant does not per se obviate the need for consultation. There may be circumstances known to the employee but unknown to the employer which might cause the latter to change his mind. The employee might be prepared to accept a more junior post or a significantly reduced salary in order to remain in work. Unless the employer consults the employee will have no opportunity to put forward any such suggestions. Furthermore, even if redundancy is inevitable there are other areas in which consultation will be of benefit to the employee. It would at the very least provide an opportunity for the parties to discuss what help the employer can provide to find the employee alternative employment. As Browne-Wilkinson J said in Freud v. Bentalls Ltd (supra) at p.82E:

"... Only by consulting the employee can the employer discover whether such an option is open in any given case. Therefore good industrial relations practice requires that, unless there are special circumstances which render such consultation impossible or unnecessary, a fair employer will consult with the employee before dismissing him."

Mr Grundy submitted that the Respondents did all that was necessary by giving the Appellant four weeks' salary in lieu of notice to enable him to devote all his attention to finding another job. We cannot agree. In our judgment neither of the reasons relied upon by the Tribunal as constituting exceptional circumstances sufficient to obviate the need for consultation were capable of being so regarded. There was no other evidence upon which the Tribunal relied, or could have relied, in support of its conclusion. To this extent therefore we are unanimously of the view that the Tribunal's decision cannot stand. We therefore substitute for the Tribunal's decision a finding that the Appellant was unfairly dismissed and direct that the case be remitted to a differently constituted Tribunal for the assessment of compensation.