Coleman v Logical Systems International Ltd [1994] UKEAT 658_92_2405

EAT
Coleman v Logical Systems International Ltd
[1994] UKEAT 658_92_2405 · 1994-05-24
MR JUSTICE KNOX: This is an appeal by Mr Gary Adrian Coleman from the decision of an Industrial Tribunal which sat at Reading on the 24th April 1992 and sent its decision on the 6th August 1992 to the effect that Mr Coleman's dismissal by the Respondent both in the Industrial Tribunal and here, Logical Systems International Limited, was unfair.The Respondent did not appeal from that decision. The appeal before us is on quantum. It is of course by Mr Coleman, and there are two grounds that have been argued before us on Mr Coleman's behalf. The first ground regards the impact of the burden of proof in the context of the legislation regarding unfair dismissal; in this particular case it was said for redundancy. It will be convenient to place the argument in its statutory context because Mr Tod emphasised the precise words of the relevant Section. It is Section 57 of the Employment Protection (Consolidation) Act 1978 and the first subsection contains provisions requiring the employer to show certain things. Subsection (1) reads:
"(1) 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 (or, if there was more than one, the principal reason) for the dismissal, and (b) that it was a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."
Then subsection (2) has a list of reasons which includes in (c) "was that the employee was redundant". Subsection (3), which has been altered since it first saw the light of day now has no onus of proof in it. It is a very familiar provision, which, omitting irrelevancies, reads as follows:
"(3) Where the employer has fulfilled the requirements of subsection (1), then 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."
The factual background briefly was as follows. Logical Systems International Ltd, which I will call "the Company", was a relatively small Company with some 28 staff. It provided services to clients in the computer field and this was done by effectively providing the employees of the Company to the clients for their computer software systems. In a sense the Company was hiring out its expert labour to various outside organisations. The Industrial Tribunal found that the business was client-led, and by that we take it to mean that the need for the Company's employees to work arose from the requirements of the Company's own clients, so that in a sense the Company did not have an independent business of its own save the provision of specialist skills to third parties.The circumstance that leads to the first main point of the appeal is that the person who actually decided on Mr Coleman's dismissal and dismissed him, was a Mr Kirkham who was, when the matter came before the Industrial Tribunal, no longer in the employment of the Company and he did not give evidence on behalf of the Company. The only witness that was called on the part of the Company was Mr Peter Dove who was the Operations Manager for the Company, both then and at the relevant time. Mr Kirkham on the other hand was the Managing Director at the time but was no longer there. We have the Notes of Evidence and they include in Mr Dove's evidence the following passage:
"The company is client-led - it supplies services to clients - it provides computer software systems for client - I say it was clear that business moving away from defence where applicant had skills to a new area which needed fourth generation language skills Coleman did not have these - business moved away from defence in accordance with Government planning - company's business is to supply skills to a client company as required - Coleman had particular skills see letter of appointment - course (at cost of £2,000) offered - with particular skills in mind - I had no involvement in the dismissal - I was aware that 2 months after British Aerospace ceased to require applicant Mr Coleman, Kirkham and I discussed training course - no requirement for skills in the defence field - mistakes made by Kirkham."
and I need not read further on into that. It was established by the Industrial Tribunal that the dismissal which ensued almost at the same time as Mr Coleman was going for the second instalment of a training programme which would potentially at least have given him the skills that he was previously short of, took effect in July 1991, to be precise on the 24th July.The first submission that Mr Tod made to us was that if one has regard to the exact wording of subsection (3) of Section 57 there is a statutory requirement that the reason for the dismissal must be established before an industrial tribunal by direct evidence. He went so far as to submit that it would need to be the direct evidence of the person who made the decision to dismiss and executed the decision. He accepted that if there was documentary evidence of that state of affairs that that would be admissible but he resisted any suggestion that it was a legitimate process for the industrial tribunal to find that the employer had discharged the onus which subsection (1) places upon him of showing the reason for dismissal by a process of inference rather than a process of direct evidence oral or written. He submitted that the documentation before the Tribunal had failed to establish evidence as opposed to a bare allegation that there was a redundancy situation and that Mr Dove, who was not the dismissing officer, and was not involved in the dismissal could not satisfy the Tribunal that a potentially fair reason in this case, redundancy was established to the required standard. He referred us to the well known passage at the outset of Cairns LJ decision in Abernethy v. Mott Hay and Anderson [1974] IRLR 213 at p.215 where Cairns LJ gave a description of what a reason for dismissal in the context of the 1978 Act Section 57 means in the following terms:
"A reason for the dismissal of an employee is a set of facts known to the employer, or it may be of beliefs held by him which cause him to dismiss the employee. If at the time of his dismissal the employer gives a reason for it, that is no doubt evidence, at any rate as against him, as to the real reason, but it does not necessarily constitute the real reason."
and the Lord Justice goes on to give common form examples of a purported reason, not turning out on investigation to be the real reason.On the basic question whether the Act in Section 57 permits of a process of fact finding by inference rather than by direct evidence from the dismissing officer we have no doubt at all that since the Act is entirely silent on the question how the onus of proof is to be discharged by an employer, that is a matter which is left for the industrial tribunal to resolve by its process of hearing evidence. That process is of course governed by the Industrial Tribunal Rules of Procedure, which under Rule 8 do give a degree of freedom to an industrial tribunal in assessing evidence which is greater than any which is given to a court of law, and in particular, hearsay evidence is specifically made admissible.We are quite unable to accept the proposition that there has always to be direct evidence, whether in writing or orally, from the dismissing officer before a company can discharge the onus which subsection (1) Section 57 imposes upon the employer. That there is an onus is of course self evident on the face of the Section and we would not quarrel with what was said by Phillips J in Elliott v. University Computing Co (Great Britain) Ltd [1977] ICR 147 on the need for an employer to show that there was the relevant reason, or principal reason, for the dismissal.On the other hand the jurisdiction of this Tribunal is limited to questions of law and the deciding of questions of fact is something which is entrusted to industrial tribunals. That is of course trite law and Mr Tod properly accepted that this is not one of those exceptional cases such as exclusion from a trade union, which at any rate at the relevant time was something in respect of which this Tribunal has a jurisdiction not only over questions of law but also questions of fact. There is no question of that in this appeal. So on the first question it really comes down to a question whether it was possible to say that there was no evidence upon which an industrial tribunal properly instructed, could reach the conclusion that it did reach, namely that the reason for dismissal was redundancy. I have already read the passage in Mr Dove's evidence in which he is recorded, it clearly was not a verbatim transcript, as having said that "the business had moved away from defence and that Mr Coleman did not have the skills that were required for the new area but did have the skills that had been required in the previous area of business". There is no doubt as to what constitutes redundancy for these purposes. It is defined in Section 81(2) and there was no argument addressed to us on that aspect of the matter. We have come to the conclusion that the first submission that there was no material upon which the Industrial Tribunal could reach the conclusion that they did reach that it was a redundancy based dismissal, has to fail.That was only the first, albeit the principal submission, that was made by Mr Tod. His second submission, disregarding for the moment one that he abandoned very properly as it seemed to us, regarding a conclusion that was reached by the Industrial Tribunal about Mr Dove's views about what happened when a subcontract job was cancelled and came to an end, was this, that in paragraph 13 of the Industrial Tribunal's decision it said this:
"The Tribunal feel that the company did not act reasonably, as there was no consultation or proper process of selection for redundancy, neither did the company take any steps to avoid redundancy. We therefore find that the dismissal for redundancy was unfair."
As I have already said there was no appeal from that decision and that is the context in which one approaches the decision on quantum and that was effectively governed by paragraph 16 which read as follows:
"Although the Tribunal has come to a decision that the dismissal was unfair, the same result would have occurred, we believe, had there been discussions with the applicant and consultation and we therefore believe that the consultation process would have lasted, at the most, one month."
and there then follow some calculations which are based on that proposition that there was only one month of compensation to be awarded. There has been no argument on the figures before us, the question is entirely one of principle, and it is as we see it this - whether it can be said that there was any material upon which the Industrial Tribunal could properly reach a conclusion, in the context of its finding that there was no proper process of selection for redundancy, that Mr Coleman would have been dismissed at latest one month after the date when he was in fact dismissed. This again is, plainly, we feel, an issue of fact and before we have jurisdiction to interfere with such a conclusion we have to be satisfied that this conclusion in paragraph 16 was not a permissible option for the Industrial Tribunal to arrive at. Putting it another way there has to be a necessary inconsistency between the finding that there was no proper process of selection for redundancy and the finding that the consultation process would have lasted at the most one month.The relevant background to that includes that there were certainly two people about whom evidence was led as being persons potentially exposed to dismissal for redundancy. A certain Mr Voss certainly was mentioned in the course of evidence. His name appears in the Notes of Evidence, and in particular it was said of him by Mr Dove, in answer to a question by a Tribunal Member that Mr Voss had the same skills and less service, presumably than Mr Coleman. In reply to another Member of the Tribunal Mr Dove is recorded as having said:"I do not know if Voss was on similar system".The Industrial Tribunal also mentioned in the course of their decision in paragraph 7 another gentleman called Mr B Aface but that is something of a mystery because there is no mention that we have been able to find, nor have Counsel, of such a person in any of the Notes of Evidence or indeed in any of the other documentation before us. The question really resolves itself into one whether there was a necessary inconsistency between the Industrial Tribunal finding that there was no proper process of selection for redundancy and the inevitability of Mr Coleman's dismissal within the space of a month. The argument in favour of there being an inconsistency was that if it was a question of choosing between one or another, or perhaps more than two, persons for redundancy it would be a necessary feature that there should be a proper system for selection for redundancy.The argument before this Tribunal was presented on behalf of the Company by Mr Ashton, a Director of the Company not a professional lawyer, and he submitted to us that the process was effectively one of self-selection by the clients in the sense that if the client ceased to need the services of the employee of the Company that of itself led to that employee's services ceasing to be required. The obvious alternative of course is that the Company would take its employee back in-house and find another third party who needed that employee's skilled services. Indeed, it is clear on the evidence that Mr Coleman did spend very nearly two months in-house during the course of which he did various internal operations for the Company but, as the Industrial Tribunal says, during the time that Mr Coleman was in-house he did various odd jobs, he learnt on Oracle and also undertook security work. But that came to an end when he was dismissed.We have looked carefully at this issue and we have been driven to the conclusion that for us to interfere, with what is quite plainly a factual conclusion by the Industrial Tribunal, some much stronger case than has been established by the absence of a proper system of selection for redundancy would need to be shown by the evidence, otherwise we would be interfering with a conclusion of fact which it is no part of our function to do, and on the material which is before us it is, in our view, not possible to say that it was impossible for the Industrial Tribunal properly to reach such a conclusion. They did have evidence before them, and indeed they acted upon it, that the business was client led; they did have evidence that there was a change of direction at the relevant time; they did have evidence from Mr Dove, who was clearly in a position to give evidence on this subject, about Mr Coleman's capabilities in the changed context of the Company's business. It is not, in our view, possible to say that it was not a permissible option for the Industrial Tribunal to come to the conclusion that in all the circumstances Mr Coleman was doomed to become redundant even if the Company had done the process of choosing for redundancy in a proper way which of course they failed to do, and unless we have such a strong case as to allow us to say that the factual conclusion was an impossible, or impermissible one, it is not for us we fear to interfere. It goes without saying that we are not expressing a view of our own as to the proper factual conclusion to be reached. That is not our function and we must not be taken to expressing an opinion upon it. What we do have is a duty to decide whether there is an error of law shown below, and we on the whole, after careful consideration have concluded that there is not.The appeal will therefore be dismissed.