PC Wainwright v Commercial Hydraulic Kontak Ltd [1994] UKEAT 704_93_0811

EAT

PC Wainwright v Commercial Hydraulic Kontak Ltd

[1994] UKEAT 704_93_0811 · 1994-11-08

MR JUSTICE MUMMERY (PRESIDENT): This is an Appeal by Mr P.C.Wainwright against the Decision of the Industrial Tribunal held at Nottingham on 6th August 1993.

The Tribunal decided unanimously that Mr Wainwright was unfairly dismissed by his former employers, Commercial Hydraulics Kontak Ltd, but decided that he should not be awarded any compensation.

The Full Reasons for that Decision were notified to the parties on the 17th August 1993. Mr Wainwright appealed against the Decision by Notice of Appeal dated 3rd September 1993, later amended on the 15th December. The case came on before the Employment Appeal Tribunal as a Preliminary Hearing to determine whether or not the case raised an arguable question of law. On the 9th December the Employment Appeal Tribunal ordered the appeal be allowed to proceed to a Full Hearing, granted leave to amend the Notice of Appeal and directed the Chairman to produce his Notes of Evidence.

This is the hearing of the Appeal. It is also the hearing of a cross appeal on which it is argued that the Decision that the dismissal was unfair for lack of sufficient consultation was erroneous in law. We shall deal first with the appeal.

On the appeal, Mr Wainwright was represented by Mr Richards. Commercial Hyrdraulic Kontak was represented by Mr West. The background to the proceedings is that Mr Wainwright was a sales manager for Commercial Hydraulics at Grantham. He was in charge of special projects concerning hydraulic components, valves and pumps. He started to work for the company in April 1984.

The company decided to carry out a re-organisation which involved two salesmen moving from Bedford to Grantham along with the sales manager from Bedford, Mr Roberts. On the re-organisation, Mr Roberts was appointed sales manager at Grantham. Mr Wainwright was effectively demoted to being a salesman with the other two transferred from Bedford. He was made redundant, in what was conceded to be a redundancy situation. Mr Wainwright's employment with the company ceased at the end of January 1993. He was unhappy with the situation and the manner in which the redundancy exercise had been carried out, culminating in his selection.

He presented an originating Application to the Industrial Tribunal on the 23rd April 1993 complaining of unfair dismissal. His complaint was that there had been no consultation prior to his being told that he had been selected for redundancy on the 27th January. He was told that the selection was based on a comparator list which he was not permitted to see. He received a letter on the 29th January requesting him to see his manager that morning. At the meeting he asked to see the comparator list, and again it was not produced. It was stressed he would not see any comparisons anyway.

He did not receive a copy of the comparator list until he collected his final payments in the early part of February. Immediately he saw it, he challenged the method of point scoring. He claims that he was told by Mr Roberts that it would not make any difference anyway.

Those were his complaints. The claim was contested by the company in an Notice of Appearance dated the 2nd June 1993. The company set out the factual background to the dismissal of Mr Wainwright, with reference to the effects of the economic recession on the company and its business, and of the attempts made to obtain volunteers for redundancy. Account was given of meetings with unions.

It was stated that, by the 26th January 1993, the point was reached, where the company had to inform employees affected as a result of the selection process that they would be made redundant. There is a reference to the letter sent to Mr Wainwright on the 27th January and to the discussion which took place with Mr Wainwright on the 29th January, in particular an offer of alternative employment of a factory vacancy, in which Mr Wainwright was not interested.

An agreement was reached that the redundancy would take effect from 31st January.

Mr Wainwright was informed that the payments described to him earlier would be made. The company disputed the allegation that he was not consulted prior to being selected. It was alleged that he had been advised, along with the other employees, of the company's position. In a general announcement on the 15th January, he was given an opportunity to consider alternative suggestions and counter proposals before the meeting on the 29th January.

In those circumstances, the company's case was that the termination of Mr Wainwright's employment was carried out according to recognised procedures involving a general announcement and consultation with the union, use of fair selection criteria. In their view the dismissal was fair. Those were the rival positions before the Tribunal.

The Tribunal, in its Reasons for its Decision, dealt with the case, in some respects, with surprising brevity. There is no virtue in writing a long Decision for the sake of it but in all Decisions it is necessary for a Tribunal to explain their reasons in sufficient detail for the parties to know why they have won or lost.

The Tribunal set out the Summary of the Facts and stated in paragraph 6 that the selection of Mr Wainwright was dealt with fairly in the crucial area of criteria and assessment. They dealt with the suggestion that Mr Wainwright should have been interviewed before the assessments were made, saying, "We do not think that this is appropriate, and certainly the failure to have interviews would not effect fairness." Mr Roberts, at the end of the day, [he was the sales manager at Grantham] had to choose between three salesmen. "He satisfied us that he applied his mind to the selection and there is really nothing more that can be done."

That is not an entirely satisfactory approach to the situation. There is no explanation as to why the Tribunal concluded that failure to have interviews before the assessments would not affect fairness. It is not clear what the Tribunal were saying when they stated that Mr Roberts had satisfied them that he had applied his mind to the selection. More is required for a fair redundancy exercise than simply applying ones mind to the selection.

It is not fair, however, to look at a paragraph out of context. The difficulty is that this paragraph becomes even more unsatisfactory when one looks at what is said in the two later paragraphs. In paragraph 7 of the Decision, the Tribunal said that:

"7. ....the matter was certainly hurried ....a very short time elapsed between a notice appearing on the board telling the workforce of the possibility of redundancies and the applicant being made redundant. To that extent [the Tribunal thought] there was not sufficient consultation. ......Consultation [they said] does not only relate to selection for redundancy but relates to a variety of other matters, including alternative employment and opportunity of seeking other employment, whilst remaining in the employ of the respondents. There clearly was no other employment for the applicant and this matter was not pursued on his behalf or by him."

In paragraph 8, the Tribunal stated the reasons for their conclusion, both that the dismissal was unfair and that Mr Wainwright was not entitled to any compensation.

Again, the two points, at first sight, sit rather uneasily together.

"8. We are bound to say, therefore, that the failure to have proper consultation must make the dismissal unfair. We are also satisfied that no mention of an appeal was made to the applicant and to that extent that again goes to fairness. These, however, in this kind of case are procedural matters and we are satisfied beyond any doubt that the crucial areas have been dealt with properly. This means that even if there had been consultation and even if there had been an appeal, we are completely satisfied that there would have been absolutely no chance of the applicant retaining employment. This means that although the applicant may have been unfairly dismissed, he will receive no compensation because he has already received a redundancy payment which will deprive him of his entitlement to a basic award."

The final paragraph of the Decision confirmed the decision that dismissal was for redundancy, but that the company had not acted reasonably, having regard to the equity and substantial merits of the case, in treating the redundancy as reason for dismissal.

Mr Richards, in his submissions on behalf of Mr Wainwright, argued that the Tribunal had failed to address itself to the whole question of the possible outcome of consultation and its duration. The Tribunal had taken upon itself to declare, in very forthright terms, that there was absolutely no chance of Mr Wainwright obtaining employment. They stated that opinion when, in Mr Richard's submission, the Tribunal really had no idea what such consultation would have yielded. He submitted that it had long been established that, in order to afford a potentially redundant employee the facility to challenge his selection, he should have full knowledge of his score, how it was compiled and how it was compared with others in the selection unit before the process of selection was complete. That knowledge was denied to Mr Wainwright, right down to the hearing of the case before the Industrial Tribunal.

He relied on the case of Britool v Roberts & Ors

[1993] IRLR 481

for the proposition that an employee need no more than provide an arguable case that dismissal was not inevitable, in order to shift the burden on to the employer to show that, if a fair procedure had been followed, it would have resulted in dismissal.

His complaint was in general terms, that the Tribunal had erred in law by reaching a decision that no compensation should be awarded without exploring in evidence and argument, the whole area of what would have been the likely outcome of consultation. What sort of points would have been made in the consultation by Mr Waintwright? What sort of responses were available to meet those points from the company? How long would this process have continued while Mr Wainwright was still in employment of the company?

Mr West, for the company, has made a number of points. He submitted that the Tribunal had heard evidence about the redundancy exercise. That evidence had been given and accepted by the Tribunal about the fairness of the criteria used. The Tribunal had come to a conclusion on the facts that consultation would not have made any significant difference to the decision to select Mr Wainwright. He would, simply looking at the documents and the evidence before the Tribunal, have been the person selected in any case, consultation or no consultation. He submitted that the consultation process was not completely deficient and went so far as to argue that, in fact, that process had started as early as the 15th January and went through until the 27th.

On more detailed points in his Skeleton Argument, Mr West referred to a number of decisions relating to the effect of lack of consultation on awards of compensation. Inevitably, he referred to the Decision of the House of Lords in Polkey vAE Dayton Services Ltd

[1988] ICR 142

, a case also referred to by Mr Richards in the course of his argument.

(D) :

"If it is held that taking the appropriate steps which the employer failed to take before dismissing the employee would not have affected the outcome, this will often lead to the result that the employee, though unfairly dismissed, will recover no compensation or, in the case of redundancy, no compensation in excess of his redundancy payment."

The submissions of Mr West refer to passage on page 164 and a consideration of particular importance in redundancy cases:

"An industrial tribunal may conclude, as in the instant case, that the appropriate procedural steps would not have avoided the employee's dismissal as redundant."

The position taken by the company is that this appeal should be dismissed. There was no error of law. The House of Lords in Polkey had itself recognised that there may be cases where, although an unfair dismissal has taken place, no compensation is to be awarded.

We have considered these arguments of general principle. In the end, of course, every case has to be decided on its particular facts. The question whether there is an error of law in a Decision has to be considered on the way in which a Tribunal has, in its Reasons, sought to justify its decision.

We have reached the conclusion that there was an error of law in the way in which this Tribunal came to the Decision, that having found Unfair Dismissal, no compensation should be awarded. The error appears to be this. In paragraph 8 of the Decision, the Tribunal seemed to have thought that it was inevitable that no compensation should be awarded, once they had formed the form that consultation would have made no difference to the selection of Mr Wainwright for redundancy. This is an error of law. The legal position as stated in this Tribunal by Mr Justice Wood in the Decision of Mining Suplies (Longwall) Ltd. v Baker

[1988] ICR 676

. That was a case of dismissal for redundancy without consultation. A finding of Unfair Dismissal was made and an award made by the Tribunal of six weeks net pay, having regard to the course that consultation would have taken. The employers appealed against that Decision.

In a Decision, which takes account of the House of Lords Decision in Polkey , Mr Justice Wood gave the reasons why the Appeal Tribunal rejected the submission, on behalf of the employers, that a nil award was the only proper outcome of the case. At page 683 he said, after referring to two earlier Decisions, that the Appeal Tribunal do not accept that

"there is an implication, that if a redundancy would have been inevitable, nevertheless a nil award is the only conclusion."

The Tribunal was of the view that, in cases where a dismissal is unfair for lack of consultation, it is necessary for the Industrial Tribunal to carry out a careful factual analysis and reasoning of the situation. He emphasised that each case will depend upon its own facts.

Where it is established on the facts that a dismissal is unfair for lack of consultation, it is necessary for the Tribunal to ask itself: what would have been the likely effect of consultation? It is an error of law to proceed immediately to the inevitability of the redundancy and state that as a reason for awarding no compensation. It is a more sophisticated exercise. In asking what would be the likely outcome of consultation, it is necessary to look at what the points are that the employee might make in consultation, in response to the points made by the employer. It would be necessary to look at what responses are available to the employer, in answer to the employees points. It would be necessary to look at how long his process of consultation was likely to take place. Where, as in this case, the Tribunal had found that the fairness of the dismissal was affected by the fact that there was no appeal, that matter would go directly to the duration of the whole process leading up to a dismissal which might in the end, turn out to be inevitable.

The fallacy in the submissions made by Mr West is that, if the inevitable result is thought to be redundancy, then consultation is rendered valueless. Consultation is not simply a matter of procedure. Like many matters of procedure, it is in place, because following the procedure may affect the substantive decision.

We have decided to allow this Appeal on the ground that paragraph 8 of the Decision contains an error of law. The error is in thinking that no compensation can be awarded where redundancy is inevitable and that therefore, although the dismissal is unfair, no recompense is payable to the redundant employee over and above the redundancy payment.

We allow the Appeal and remit the matter for consideration on the question of compensation by the Industrial Tribunal. This is a course we are often reluctant to take, because it means further delay and expense. Because the Industrial Tribunal did not investigate this matter as fully as they should have done, we do not have facts in the Decision which would enable us to take the course taken by the Appeal Tribunal in the Minings Supplies case. In that case they were able to say that the likely outcome of consultation was a longer period of employment and compensation could be assessed on the basis of a period of employment during which consultation was likely to have continued.

The remission of this case is unavoidable. There has been a difference of view between Mr Richards and Mr West as to whether this case should be remitted to the same Industrial Tribunal, a course favoured by Mr West, or to a different Tribunal in a different area, a course favoured by Mr Richards.

We have no strong views one way or the other. It is the most convenient course for us simply to remit this matter to a different Industrial Tribunal.

The cross-appeal we can deal with shortly. It was argued by Mr West that the Tribunal should, in all the circumstances, have found that the dismissal was fair. He submitted that the evidence before the Tribunal was that all the staff were advised of the situation on the 15th January. Consultation then started. There was a further meeting of sales staff on the 18th January. Another one on the 25th January. Mr Waintwright was seen on two further occasions on the 27th and 29th January. He was also seen subsequently. In those circumstances, no reasonable Tribunal could have concluded that there was inadequate consultation. The Decision was perverse.

We are satisfied that that is not the case. The Tribunal were in no doubt that this was a hurried exercise carried out in a very short time and that there was not sufficient consultation in relation to the matters which should have been discussed with

Mr Wainwright relevant to his selection for redundancy.

There is no error of law in the decision that the dismissal was unfair. We therefore dismiss the cross-appeal.

The final result is that the Appeal is allowed and is remitted to a differently constituted Industrial Tribunal on the question of compensation. The cross-appeal is dismissed.