Smith v Adwest Engineering Ltd [1994] UKEAT 582_92_2005

EAT
Smith v Adwest Engineering Ltd
[1994] UKEAT 582_92_2005 · 1994-05-20

JUDGE PEPPITT QC:

This is an appeal from a reserved decision of the Newcastle upon Tyne Industrial Tribunal sent to the parties on 14 July 1992. The Tribunal found that the Appellant before us had been unfairly dismissed but was not entitled to any award of compensation. The unfairness found by the Tribunal lay in his selection for redundancy.At the material time the Respondents manufactured steering components for motor cars. They employed 318 men at Reading and 92 at Sunderland. The Appellant was their production engineer at Sunderland. He had been employed by them since 1974, working his way up from the post of machine tool fitter. In late 1991 there was a slump in the motor car industry. That slump resulted in the need for redundancies at Sunderland. There was a meeting between Mr Beasley, the Respondents' manufacturing director and the unions in the course of which it was agreed that selection for redundancy would be by reference to a procedure which had been operated by the Respondents for some 18 years; that is LIFO by function. The procedure was adopted for all of the Respondents' employees including staff.Thereafter the Respondents decided that the Appellant's function of production engineer should be made redundant. There was only one production engineer at Sunderland. The result was that if that criterion had been applied, it was inevitable that the Appellant would have been made redundant. There followed a series of interviews afforded to the Appellant about his position. Those interviews took place on 3, 4 9 and 12 September 1992. The first meeting was with Mr Beasley; the next three were with Mr Colby, the Respondents' works manager. All those meetings were conducted against the background of the criteria for selection for redundancy being LIFO by function. In those circumstances the Appellant was surprised as was the Tribunal, that the Respondents did not then and there confirm that the Appellant was to be made redundant. The reason why that confirmation was not immediately forthcoming emerges from the facts found by the Tribunal in paragraph 5(c) of its decision which in the circumstances we should read in full:"The reason for the delay in making a decision about the applicant was made clear by the evidence of Mr Beasley. There were three professional engineers at Sunderland; production engineer, project engineer and industrial engineer. Although the production engineer function was to disappear, Mr Beasley needed time to consider the applicant along with the occupants of the other two posts. Neither of those men had been given any indication that his own position was at risk; Mr Beasley said that if his review endangered one of them he would have given notice to him of the risk impending to him. Unlike the earlier review which had identified the production engineering function as the one to go because it could be done from Reading, this review was strictly ad hominen . The three individuals' qualifications and skills were compared. The applicant was not a serious contender for the position of industrial engineer (and before us he does not contend otherwise). However the positions of Mr Robinson (the project engineer) and the applicant were more in contention, and Mr Beasley, although he bore in mind the applicant's long service, eventually decided that Mr Robinson's experience in procuring the very expensive CNC machine tools the business needed was greater than the applicant's. He said that if management interest made it necessary to hang on to the applicant rather than Robinson, he would have departed from the laid down procedure, LIFO by function, and risked the consequences. But in the end, he decided that it would put the company's operations at risk if he exchanged the applicant for either Robinson, or Bowron, the industrial engineer, so he decided it was the applicant who was to go. After consulting his management colleagues at Reading, on 16 September, he telephoned and told Mr Colby. He also agreed that Mr Colby could reply to the applicant's request for reasons in writing and agreed the terms of the latter's letter of 18 September (R17). We note that this letter, although in its third paragraph it purports to be assessing functions, thereafter deals with personalities. The fourth paragraph concludes with the words "There is certainly no-one within our business to effectively replace him [Mr Robinson] in his function". We conclude that the actual selection of the applicant for redundancy was on the basis of "length of service and skills".It follows from that express finding by the Tribunal that at no time in the course of his 4 interviews in early September was the Appellant aware that the Respondents were in fact considering his position, not as he was led to believe on the basis of LIFO by function, but on the basis of length of service and skills. It is therefore unsurprising that the Tribunal went on to find in paragraph 6 and 7 of their decision, the following:
"6. We find that the management, while ostensibly following one procedure in considering the applicant's position, was actually following another. The applicant did at one stage protest that he could do anything Robinson could do, but in the context of the discussions which constantly told him that it was his function which was going, he did not get a fair opportunity to develop arguments about his skills relative to those of others, specifically Robinson. Indeed part of the respondent's case was that the applicant made no representations on the matter, a fact which we find unsurprising in the circumstances.
7. We find that the reason for the dismissal was redundancy, but that the way the applicant was treated during the consultation period obliges us to say that in equity and in all the circumstances the employer acted unreasonably in treating it as a reason for dismissing the employee. This application therefore succeeds."We have no hesitation in reading paragraph 7 of the decision in the light of the findings made by the Tribunal in paragraph 6. The unfairness comprised in the Appellant's treatment during the consultation period lay in the fact that he was addressing the issue on the basis that the Respondents were considering his position by reference to LIFO by function whereas in reality they were considering it by reference to length of service and skills.Thus far it seems to us, with respect, that the decision of the Tribunal cannot be faulted. The attack made by Mr Hutchinson on behalf of the Appellant, lies in the final paragraph of the Respondents' decision, paragraph 8. That paragraph reads as follows:
"However the procedure which should have been adopted (LIFO by function) would have led inevitably to the applicant being selected. He has not suffered any loss by the way his dismissal was handled, so is not entitled to any compensatory award. As to the basic award, there must be set off against this the redundancy payment he has received. In the result, we hold that the applicant is not entitled to any award."
Mr Hutchinson submits that in that paragraph the Tribunal misdirected itself as to the matters to be considered when embarking upon the question of compensation under section 74(1) of the Employment Protection (Consolidation) Act 1978. He submits, and Mrs Gearing on behalf of the Respondents agrees, that the proper approach was that suggested by Lord Bridge in his well known speech in Polkey vAE Dayton Services Ltd [1988] ICR 142 at pages 163D to 164A. The question which Lord Bridge held it was legitimate to ask in the context of compensation, though not, of course, in relation to the fairness of the dismissal was "Would it have made any difference if a fair procedure had been adopted by the employers". That question need not necessarily be answered "yes" or "no". It was not an "all or nothing" decision. If tribunals have any doubt about the matter they can assess their view of the prospects of the employee retaining his employment by a percentage deduction in the compensation he would otherwise have received. But here the Tribunal found that had the employers adopted the criteria which they announced they were applying, that is LIFO by function, dismissal would have been inevitable. That, says Mr Hutchinson, ignores the reality of the situation. The Tribunal should have asked itself the question in relation to the criteria the Respondents in fact adopted, that is length of service and skills and it was in relation to those criteria that the Tribunal found that the Appellant had been unfairly deprived of the opportunity to state his case.Notwithstanding Mrs Gearing's able and lucid arguments to the contrary, we are unanimously of the view that Mr Hutchinson's submission is well founded. An employer who dismisses unfairly by reference to one set of criteria can hardly escape liability to pay compensation by contending that he should have applied another. The Appellant was dismissed on the basis of length of service and skills. He was not given a fair opportunity to address arguments on that basis, so the decision was unfair on that ground. The Tribunal did not apply its mind to the question of whether if that opportunity had been afforded to him he would or might have retained his job. In our judgment that was a misdirection on the part of the Tribunal.Accordingly, we think our proper course is to remit this case to the same Tribunal for the sole purpose of their making findings on this specific question. In doing so they can entertain such further evidence as they consider appropriate. To this extent therefore the appeal will be allowed.