Williams v John Menzies (GB) Ltd [1994] UKEAT 465_92_1706

EAT
Williams v John Menzies (GB) Ltd
[1994] UKEAT 465_92_1706 · 1994-06-17

JUDGE HULL QC:

In this case Mrs Williams, who is a lady in middle years, worked for John Menzies, the Respondents, the well known firm of stationers and tobacconists, at their Swindon shop, where quite a large number of people are employed as sales assistants, as she was. She worked for twenty-five hours per week. That is to say in the mornings, from 9.30 am to 2.30 pm on weekdays,There is no doubt that the business of the company diminished owing to general economic conditions. It was therefore necessary to make economies of some sort. What was decided on was that all the assistants were asked by the manager, Mr Hogg, to reduce their hours of work from twenty-five to fifteen, with, of course, corresponding reduction in their rewards.Mrs Williams did not like that and she went and took advice. She was advised, apparently quite correctly, at the CAB, that what she was being asked to do amounted to a serious breach of contract by the employers. It was not a breach of contract which had occurred, it was a threatened breach of contract, and of course if the threat is serious the employee is entitled to treat the mere threat as being a breach for the purpose of considering his position.Mrs Williams was not prepared to accept this and on the 23 August 1991 she resigned and said, quite rightly, that she had resigned in such circumstances that she was entitled to do so, a breach of contract having been threatened. Accordingly, she was entitled to be treated as dismissed under Section 55 of the Act of 1978.She complained to the Industrial Tribunal on 6 September 1991 that she had been unfairly dismissed. She said that she was constructively dismissed and that the employer had no reasonable grounds for reducing her hours. She said that Mr Hogg's policy was to reduce staff to fifteen hours a week.The employers put in an answer to the Industrial Tribunal on the 9 October, that is at page 12 of our EAT bundle. What they said is this:
"It is accepted that the applicant's normal hours of work were 9.30 am to 2.30 pm Monday to Friday ............ Against a general background of poor retail trading at the Unit in Swindon the Management resolved as an alternative to declaring any individual redundant to provide greater flexibility in staffing rotas. The same level of staff would be maintained but each member of staff working reduced hours."
The Industrial Tribunal sat at Bristol on the 18 March 1992 to hear the case under the Chairmanship of Mr Clarkson. Mrs Williams was there in person. She was not represented although she had obtained advice before she came. The Industrial Tribunal was under a duty to consider all these matters in the light of what Section 57 of the Act says. We must of course remind ourselves that it is what the statute says which must in the first instance guide the Industrial Tribunal; the very many cases on this and other topics connected with dismissal are intended as guidance to Courts and Tribunals on how to apply to Section 57 in particular circumstances, but one must always remember when these cases are cited to us, as they were today, that in each of those cases the Tribunals or Judges concerned are dealing with the facts of their particular case.No Tribunal and no Judge can be expected in their remarks to cover the entire ground in the way that the statute endeavours to do. The remarks are always directed, first and foremost, to the particular case which is before them. So we must bear that in mind.Section 57 says as follows:
"In determining for the purposes of this Part whether the dismissal of an employee was fair or unfair, it shall be for the employer to show- (a)what was the reason .....

b)that it was reason falling within subsection (2) ..."

which gives various reasons such as redundancy, or some other substantial reason.
"Where the employer has fulfilled the requirements of subsection (1), then," [subject to matters which we need not go into] "the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether [in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case.]"
So it was the Industrial Tribunal's duty to enquire into that matter. They found that this was indeed a breach of contract and that Mrs Williams was entitled to treat her contract as being at an end. Then we look to see how they dealt with the other questions which they had to consider. They said:
"Because of the downturn [they mean of course the downturn in business] on 13 August she was asked to reduce her contract hours of 25 to 15, a very substantial drop. She said at once that she was not happy with this arrangement and after taking advice on 21 August she made it clear that she would not work these hours. On 23 August, she wrote a letter of resignation and we accept and find that by so doing she was electing under Section 55 to treat the company's clear intention to reduce her hours as a fundamental breach of her contract and by her letter of 23 August she was accepting that repudiation. It follows that she was dismissed under Section 55 and we so find.
Next we turn to the company's case that such dismissal was not unfair. In the Swindon shop of the respondents at the relevant time there were some 27 employees and 19 of them were dealt with in this way. They were not made redundant but their hours were reduced. The employer made the savings required by reducing the hours of staff rather than by making dismissals for redundancy. It was a business re-organisation and we find it a justifiable ground for dismissal."Now, it is true that the Industrial Tribunal there does not make an analysis of the business re-organisation as they called it. It was clear that the reason for the business re-organisation, in their view, was the downturn in business; but they do not go into the way in which the decision was reached. It might be thought that if there was a downturn, there could really only be two alternatives. One would be to dismiss a substantial number of employees in various shops; the other to reduce the hours of a great number, if not all. If there is less work, there is no other obvious way, in a labour intensive concern, in which savings can be made.Having accepted that there was a downturn in business, and that that motivated the course taken, it might well be that there could be a careful debate on the respective merits of these two courses. It is conceivable that other courses might have been suggested. This would be essentially a matter for the employers, it was for them to say how they were to run their business. That is established by many authorities. It was for them in the first instance to consider the imponderables, and reach the decision on what they were going to do about the situation which had arisen. Companies are in business to make profits, not to make losses. Indeed, deliberately to incur losses over a substantial period would threaten the existence of the business itself.No doubt if it was suggested to the Industrial Tribunal that the decision had been reached maliciously or capriciously, or irrationally, the Tribunal might well have looked into it, might have looked at Board minutes, might have considered memoranda, might have heard evidence on this topic. It does not appear that that was put before the Tribunal, or that it was suggested that this was an irrational decision in the sense that the Tribunal could itself review it, and say "we think that the company was quite mistaken" or "was not acting in good faith", or anything of that sort. It does appear that the Tribunal made no finding except that this was a justifiable ground for dismissal, it was a business re-organisation.In our view that was all that was required of the Tribunal in the circumstances of the present case. We were pressed by Mr Archer, who was not present before the Tribunal, but to whom we are very grateful for his attendance here today, with cases of very different sorts, in particular Hollister and Banerjee in which business re-organisation involved hardship, or dismissal, for a long established particular employee; in which it was said that the Tribunal in such circumstances should not simply accept a statement, that it was a business re-organisation, and of course one can see that.Quite different considerations have to apply where there is what is often called a redundancy situation. In those circumstances, if the employers can establish that, as they clearly did, there is really little else to enquire into except whether the decision reached was on the face of it, a rational and fair one, in the sense that it was a response which the employers could fairly arrive at. Obviously, if one may point out the obvious, there would be advantages and disadvantages both to employers and employees in a decision on the one side to make certain individuals redundant, or on the other to reduce hours of work.To quote what has been put to us by Mr Archer, there are certain advantages from the employee's point of view, if certain of them are chosen for redundancy. An equally obvious comment from the other point of view is that if all are kept on, then when business looks up, all will hope their hours will be extended, or there may be bonuses; they will have more time to consider their decision; all sorts of imponderables, as they must be to us. All we say is that the Tribunal's decision does not in our view show any error. It is not suggested there was no evidence on which they could reach their decision. It is not suggested that their decision shows errors of law. What is suggested is that they have failed to spell out the reasons, the grounds on which they say that it was a business re-organisation and a justifiable ground for dismissal.In the circumstances we find that there is no error of law disclosed by putting the matter as shortly as they do, certainly no perversity or impropriety.Then they had to go on to consider the question under Section 57(3), without any burden of proof at all, as to whether in all the circumstances the employer acted reasonably or unreasonably. They held that the employer had not acted fairly. There was no consultation at all, no volunteers were called for. That would be of course for reduction of hours or redundancy. So they found on that ground that the dismissal was unfair. Mr Archer says that they should have found further grounds for saying that it was unfair, or fair, as the case might be. They should have investigated the detriment to the employees and the benefit to the Company in proceeding in the way that they did. That comes in, I think Mr Archer says, both with regard to 57(1) and 57(3).For all we know, they did consider these matters but again it does not appear to have been put to the Tribunal that the decision was so irrational that the cost to the company, or the benefit to the company, and the cost to the employees, and the benefit, had not been weighed in the scales and the Tribunal should enquire into that. It would certainly be very strange if the employers had had no regard to that. If they said they had no regard to that, or were obliged to admit that, if that was put in cross examination, then one would expect the Industrial Tribunal to embark on it.The way in which they found that the dismissal was unfair was that there was no consultation. They did not find that there was any other unfairness, so then they had to go on and consider the question whether that unfairness made any difference and having considered that they said:
"We are unanimous that had there been proper consultation it would not have made any difference."
We cannot help feeling that the cases which were cited to us, although the principles enunciated there are of course of great authority, dealt with very different facts which were put to Tribunals in very different ways and where the Industrial Tribunal or Court of Appeal had before them very much more material than we did.In our view, this is the view of all us, having considered the matter as carefully as we can, we are of opinion that no error of law is shown here in the way in which the Industrial Tribunal arrived at their Decision. It goes without saying, as with all questions of fact, that a different Tribunal might have reached a different conclusion. A fortiori, it takes it no further to say that if we ourselves had been sitting as a Tribunal of fact and hearing the evidence, we might have reached a different conclusion. We cannot find any error in their approach.We certainly cannot find any error of law here, so in all the circumstances we are obliged to dismiss the appeal. We would express, once more, our gratitude to Mr Archer for coming here and giving us the very careful argument which he has addressed to us.