Dixon Ward v Foster [1994] UKEAT 740_93_1406

EAT
Dixon Ward v Foster
[1994] UKEAT 740_93_1406 · 1994-06-14

JUDGE HULL QC:

This is an appeal to us by Dixon Ward who are a firm of Solicitors, practising in Richmond. They employed Mrs Foster, who was the Applicant in the Industrial Tribunal, from September 1985 onwards. She was first an articled clerk and then, after her two years articles, on the 8 September 1987 she became an Assistant Solicitor. She stayed with the firm thereafter, mainly doing domestic conveyancing, as it is called, we understand that to be conveyancing of ordinary dwelling houses, and matters connected with that. She certainly did not confine herself to that work; she had done a certain amount of probate work, a certain amount of drawing wills and no doubt, the other incidental matters which arise from the ordinary work of a Solicitor in general practice.She went on maternity leave, being a married lady, on the 15 February 1991. At about that time a Mrs Thomson came in to cover for her. Mrs Thomson stayed on. That was at the Kew office, where they both worked. Mrs Foster returned from maternity leave and from the 30 September 1991, by agreement between the parties, she worked part-time in the sense of doing twenty hours, just mornings I think it was, during every day of the week. She carried on again with her domestic conveyancing.The firm was under a certain amount of pressure from the falling off of work. On the 18 June 1992, without any warning or consultation, Mrs Foster was given a redundancy notice. She was told that what had happened was that two of the senior partners, a Mr Parry and a Mr Robinson, had decided that it was the domestic conveyancing which had fallen off and she was to be made redundant; it was her work which had suffered more than most.As I say, there was no consultation. She was asked to think about it. She eventually did become redundant. She was dismissed for redundancy. September 18, 1992 was her last day at work; she had taken a few days holiday just before that and she went on holiday after that. The redundancy notice finally expired on the 30 September.She complained to the Industrial Tribunal on the 30 October 1992 and her complaint starts at page 25. She asked for compensation. She complained of various matters. To sum it up, in the last paragraph of her grounds for complaint she said:"12. She avers that the dismissal was unfair in that:-(a) the method of her selection for redundancy was unfair;(b) at no time was the Applicant requested to undertake probate work of which she had experience;(c) the Respondent chose to make the Applicant, a longer serving member of staff, redundant as opposed to Mrs Thomson who had only been with the firm since February 1991;(d) she was not consulted;(e) the Respondent failed to consider the Applicant for suitable alternative employment within the firm".The Solicitors, her former employers, put in an answer taking various points. They said at paragraph 7 of page 32 of our bundle:
"It was an unfortunate fact that the Respondents were unable to provide suitable alternative employment for the Applicant. Every effort was made to find suitable re-employment within the Firm. When the Applicant left her work-load was entirely taken over by Jane Davis" [Mrs Davis that was, who is a Partner in the firm] "who continues to deal with the majority of Conveyancing work within the Branch Office. Barbara Thomson's current work-load is almost exclusively Probate and associated matters the exception being Conveyancing work from her own following of clients."
So that was what was said and the employers denied unfairness in the dismissal and said it was a case of redundancy.The matter fell to be decided by the Industrial Tribunal sitting at London South; Miss Donnelly presided and she sat, of course, with two Industrial Members. Their Decision is at page 17, where they give their Full Reasons. They went through the facts with some care. They were entirely satisfied that there was a redundancy situation; the domestic and conveyancing market, they say in paragraph 4, had plummeted.
"On 18 June 1992, the Applicant was called into the office of the partner heading the Kew branch, Mrs Davis, who told the Applicant that she was terribly sorry but that David (Mr Parry) and Richard (Mr Robinson) had decided to make her redundant. She handed a letter to the Applicant which purported to dismiss the Applicant by reason of redundancy, notice expiring on 30 September 1992. The Applicant stated, and the Tribunal accepts, that she was totally amazed as this was the first indication that there were to be any redundancies, let alone that she was to be made redundant. It was suggested to her that she could always have another baby and when she replied to Mrs Davis that she did not want another baby, she was told go away and think about the redundancy situation over the weekend. Quite what she was supposed to do in those circumstances is beyond the Tribunal, but this was the advice given to her. No explanation was offered to her as to why she rather than anyone else had been redundant."
That is what the Tribunal found about the facts leading up to this. Then in paragraph 5 they go on:
"The Respondent stated that the reason Mrs Foster was chosen for redundancy was that the domestic conveyancing in the Kew branch had decreased substantially and she was the person responsible for domestic conveyancing. From the evidence of Mr Parry it was clear that the decisions to select the Applicant for redundancy and to dismiss her were taken by Mr Parry and the other joint senior partner, Mr Robinson and that no consultation with the Applicant took place. Mr Parry was also unclear as to what criteria had been used to select Mrs Foster for redundancy; the main criterion which he appeared to operate on was that domestic conveyancing in the Kew branch had declined. However, in the opinion of the Tribunal, this was not a criterion; this was the reason why the redundancy situation arose."
Now that last sentence is the first which is criticised before us by Mr Ashfield, who has taken more than one point on behalf of the Solicitors. Before I get to that, I should explain the statutory background for the benefit of anybody present who is not quite familiar with it.If there is a dismissal which is challenged then it is for the employer to show what was the reason for the dismissal. One of the reasons, which the employer can properly show, and which is an admissible reason, is that the employee was redundant. Section 57(3) of the Act continues by saying:
"Where the employer has fulfilled the requirements of subsection (1)," [that is to say shown what the reason is for the dismissal] "then" [subject to matters which do not concern us today] "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 questions shall be determined in accordance with equity and the substantial merits of the case.]"
It is quite clear that much of the language used in that sub-Section is not intended to be used in any technical or legalistic sense. For example, the use of the word "equity" is quite clearly the layman's use of the word. When Parliament speaks of the "substantial merits of the case" it is apparent that that is being used in the layman's sense, not in the lawyer's sense of who has the legal merits, but in the sense of the broad merits of the case; and the Industrial Tribunal are to consider that matter when deciding the question whether the employer has acted reasonably or unreasonably.Those general words have fallen to be construed repeatedly, not merely by Industrial Tribunals but on occasions by this Tribunal and also, of course, by the Court of Appeal and the House of Lords. There have been authoritative pronouncements, many of them, particularly in this Employment Appeal Tribunal, in the nature of guidance, or generalisations; not intended to qualify or alter the meaning of the sub-Section of the Act, but to assist Tribunals and the parties before them, and their advisers, in construing these words and putting them to practical application. One of the many glosses on the statute, if I could call them that, has been the view of this Tribunal, supported repeatedly by high authority, that it is not enough for an employer to say "my employee is redundant; the work available for him or her has ceased or diminished".The employer is expected to act fairly in all the circumstances and that may, and probably will, involve extra elements. If there are a number of workers who are to be made redundant (to take language appropriate perhaps to industry rather than a profession) then of course the employer must first of all decide where the redundancies are to fall. He will look for a group of people, or pool of people from whom those who are to be made redundant will be drawn. First and foremost that is a matter for the employer. Then he will have to consider how he is to choose between them. The old fashioned, or mechanistic, method of "last in, first out", may be resorted to.Very frequently an employer will say: "not all my employees are equally suitable for their task, I will try to adopt other criteria"; and so there is the concept of the employer applying criteria to the employees, as it may be criteria of skill or other matters, such as adaptability. The employer is expected, of course, to apply those criteria fairly and openly. He is also expected, and again this is a generalisation, to consult the employees who are likely to be affected, so as to see what they can suggest. Sometimes an employee has some very helpful suggestions to make, and in any event should be heard, so to speak, in his own defence to see whether he has any suggestion to make which can prevent the redundancy of himself occurring and perhaps may prevent other redundancies occurring.So all these considerations, and of course there are others, may be required of an employer if he is to act fairly. It is first and foremost for the employer to say how he is to comply with the provisions of the statute, and how he is to act reasonably in the situation which has arisen. It is for him to select the pool, it is for him to consult, and it is for him to apply criteria fairly and consistently and in an open way, so that they can be seen to be applied fairly.These are not rules written in stone. They are guidance to employers and in any particular case it may be appropriate for an employer to place great emphasis on one side of it or, indeed, no emphasis on another side it, it all depends on the circumstances and nobody suggests that a Solicitors' office should be run in precisely the same way as a large factory employing, perhaps, unskilled workers. Here, the obvious factors which would have to be considered, one would suppose, are Mrs Foster's skills; she had been with the firm a number of years. A Solicitor of her seniority, who has been trained by the firm, is not a person who would be thought of as being readily dispensable. She was senior to other people in the office apparently, and of course an intelligent professional person would be expected to be adaptable to the extent of being able to carry on other work if asked to do so and given proper training. These are all matters of common sense, not law.Having selected Mrs Foster for redundancy the employers were required to show the reason, and they undoubtedly did that; it was accepted that there was a redundancy situation. Then they would be expected to say that they had acted reasonably. The Tribunal heard evidence from Mr Parry.It might well be that in another case the Tribunal would have thought that certain of the matters which I have mentioned could be neglected in all the circumstances without rendering the dismissal unfair; but what they said was that Mr Parry was unclear as to what criteria had been used to select Mrs Foster for redundancy. The main criterion appeared to be that domestic conveyancing had declined in the Kew branch. However, in the opinion of the Tribunal this was not a criterion: it was the reason why the redundancy situation arose.That is criticised by Mr Ashfield on behalf of the Solicitors; he says it is true that redundancy was the reason for the situation, the work had fallen off and that was the reason for the redundancy situation which arose. But the employers were also entitled to consider in deciding that it was Mrs Foster that ought to be dismissed, rather than somebody else.It appears to us that that analysis is perfectly logical and that when it comes to applying criteria the fact that a particular employee's work has fallen off may well be a factor, one of the criteria if one likes. "Criterion" simply means a matter on which judgment rests, it is from the old Greek word for judgment or judging. But if the fact is that they were so vague about it that it was impossible to tell what criteria they were applying, then to go on about how it was her work that had fallen off merely illustrated the fact that they were not selecting a pool of people, or a body of people, among whom redundancy might fall, and selecting from that, but simply saying, like some sort of mantra, "she is the one whose work has fallen off and so she is the one we are going to get rid off".If that was the view of the Tribunal, and it seems to be the way in which they are putting it, then that was a perfectly rational comment. It would have been quite otherwise if Mr Parry had said "we applied considerations as such as length of service as our criteria, length of service, ability, qualifications, willingness to learn and adapt and of course, the fact that this was the very person whose work was falling off, which appeared to us to have relevance". Then, of course, if the Tribunal had told the employers that they were not entitled to consider the fact that her work had fallen off as a material matter, that might very well be a serious matter of complaint, because the employers were, we think, entitled to consider that matter among all the other matters. But it appears on the contrary that, there being no satisfactory criteria, the Tribunal was saying that what was being said was merely the start of the process, that is to say "there is a redundancy situation and this is the young lady whose work has fallen off". They were entitled, it seems to us, to make that comment.Now I come to what appears to us to be the crux of the matter, in paragraph 8. I am simply going to read what the Tribunal said:
"The reason for the dismissal was redundancy, and it was conceded that a redundancy situation existed. However, this did not preclude certain procedures being followed. The Respondent firm employs nearly 40 people over three branches and the Tribunal finds that no consideration was given to the three branches of the firm in identifying the pool for selection for redundancy. The senior partners confined their selection to the Kew branch, which is where they identified the redundancy situation. The Tribunal believes that they should have examined the firm as a whole to identify those who were eligible to be made redundant. Secondly, the employers failed to consider in any way criteria by which people should be selected. Mr Parry gave evidence to the Tribunal that he had no specific criteria. This was clear. Length of service, ability, qualifications and fee-making ability appear not to have been considered in any great way."
Now what Mr Ashfield says about that is this; here we see the Tribunal putting themselves in the position of the employers and saying what they would have done and criticising it on the basis of the view which they would have taken and the actions which they would have followed. This is put very clearly in a case which Mr Ashfield referred to in his skeleton argument, for which we are very grateful Green v Fraser [1985] IRLR 55 , a decision of the Scottish Employment Appeal Tribunal chaired by Lord McDonald. The facts of that case were different, but it is exceedingly valuable to us. In paragraphs 13 and 14 the Tribunal said:
"On behalf of the appellant we were referred to the decision of The Court of Appeal in Thomas & Betts Manufacturing Ltd v Harding [1980] IRLR 255 and to our own comments on that case in Powers and Villiers v A Clarke & Co (Smethwick) Ltd [1981] IRLR 483. Thomas & Betts Manufacturing Ltd makes it clear that in certain circumstances in making a selection for redundancy an employer should not confine himself to employees holding similar positions in the same undertaking. That was a case which related to unskilled work in a factory where an employee of long standing could easily have been fitted in to other work which she had already done even at the expense of an employee who had been recently recruited. We do not consider that this case lays down any hard and fast principle which must be followed in every other case irrespective of the circumstances. Indeed we refer in this connection to the observation of Lord Justice Eveleigh in that case to the effect that he deprecated attempts that are made in industrial relations cases to spell out a point of law developed upon precedent to create rules that have to be applied by the Industrial Tribunal in considering the straight question of fact which is provided for (under the current legislation) in section 57(3) of the Employment Protection (Consolidation) Act 1978. It is also proper to point out that when Thomas & Betts Manufacturing Ltd was decided the corresponding provision of what is now Section 57(3) placed an onus upon an employer to show that he had acted reasonably. That onus no longer exists having been removed by the Employment Act 1980, Section 6. In view of these matters we consider the case of Thomas & Betts Manufacturing Ltd is not one which under current legislation should be regarded as laying down the general proposition which the appellant urged upon us.
In our view the proper approach to this matter is as follows. Section 57(3) raises the question of reasonableness. As has been said in a number of recent cases this is a situation in which one employer may act in a certain way and act perfectly reasonably and another employer in identical circumstances may act in the opposite way and still act perfectly reasonably. There is in short what has been described as a band of reasonableness and the actings of an employer will only be unfair if it is shown that they fell outwith that band."So that was the way it was put by Lord McDonald's division of this Tribunal, if I may call it that, and we gratefully adopt that method of putting it. In each case the Tribunal is to look at what Section 57(3) requires, and to ask themselves whether the employer acted reasonably. Of course, that does not mean "did he act in precisely the way the Industrial Tribunal would have acted", if they by some miracle were put into the shoes of the employer, but it does mean that the employer must act in a way which, looked at fairly from outside, can be said to be reasonable. Some employers will act in one way, some in another; as long as they fall within a general category of reasonableness, they are not to be criticised as unreasonable simply because the Industrial Tribunal would have acted in a different way.Mr Ashfield says that when you look at paragraph 8 it is clear:
"The Tribunal believes that they should have examined the firm as a whole to identify those who were eligible to be made redundant ......"
The Tribunal were going into questions of degree over what the employers should have done and they were essentially taking over the function of the employers; not applying themselves to the question - does this fall within the band of reasonableness, can it in a general way be called reasonable - but saying, what would we have done?We do not think that that is a just way of reading the decision. We do not think that this Tribunal was going outside its proper province. It is true, of course, that in some circumstances the question of selecting an appropriate pool, the question of prescribing criteria and applying them in a fair way, might not be thought to arise in a small organisation, but this Tribunal thought that they did arise in this organisation. There were three branches and there were forty employees, forty members of staff, obviously not all of them would be considered part of the pool of people who might be considered for redundancy. But here they found that the exercise simply had not been undertaken by those Partners responsible and that no criteria had been arrived at. That, on the face of it, was unfair.If an employer simply does not address his mind to these matters he can hardly be said, if the Tribunal considers that it was necessary to do so in the interest of fairness, to have acted fairly. It is not a case of being mistaken or failing to apply them in the way that the Tribunal would, he simply has not done his job in attempting to be fair and reasonable under the statute. It seems to us that that is what the Tribunal is saying. They go on to say later in the same paragraph:
"No note appears to have been taken of the training courses which she went on or that the type of work coming through the Kew office was of a routine and not particularly complicated nature. The assumption was made that the Applicant preferred domestic conveyancing and since domestic conveyancing had reduced, the Applicant was the one to go."
Then they go on to say that there was no consultation. Mr Parry said that such consultation would be futile. They did not accept that. The employers now accept that they acted unfairly in failing to consult. They also accept that they acted unfairly in failing to warn. We do not find that the Tribunal went wrong. We think that it is quite clear from a just reading of the Tribunal's decision that they were applying precisely the right tests.They were quite entitled to say that although this was a Solicitors' firm, and not a large factory, the employers should have thought about alternatives to redundancy, should have considered what employees might reasonably be made redundant in the situation and then have had rational criteria and applied them to those employees, and having embarked on the exercise should of course have consulted the employees concerned and warned them so that they could hear from them in making up their minds.No doubt the Industrial Tribunal will have had in mind the background that this was, I am sure, a well known and highly responsible firm of Solicitors dealing with one of their own members, who was a fully qualified professional Solicitor.The Tribunal was left in the situation that there was, so to speak, a void in the evidence before them. The employers had not embarked on the exercise of considering the size of the proper pool, and the criteria which were to be applied to it, and the Tribunal was therefore reduced to asking itself, as indeed it was bound to do under the decision in Polkey , what would have happened if the employers had acted with perfect fairness, selected an appropriate pool of people in a reasonable way and then applied appropriate criteria and consulted properly with the employee or employees affected?Now that exercise was necessarily in the nature of weighing imponderables. It is not a case where the employers had done most of what was required of them and were able to lay the results of such consideration before the Tribunal. On the contrary the Tribunal had to do its best with such evidence as had been led before it by the Applicant and by the employers.It appeared to the Tribunal that there were seven other qualified people who could have been considered for redundancy. They were dealing, if we understand their decision, with all three branches. These included three assistant Solicitors, two partly-trained legal executives and one fully-trained legal executive and a person who did domestic conveyancing, so there were seven others.They might have concluded that however fair the employers were the same result would necessarily have followed and Mrs Foster would necessarily have been made redundant in which case her compensation would have been very limited; probably limited to the time that the consultation would have taken, perhaps a fortnight or so under the authorities which were cited to us. On the other hand they might have decided that if fairness had prevailed throughout, some other person would most certainly have been chosen and she would have kept her job, in which case, of course, compensation would be on that basis. Or they might have decided, as they did in this case, that it was impossible to say certainly either way but they thought that there was a percentage chance that she would still have been made redundant.Submissions have been made to us about that. What the Tribunal did was, clearly being driven to it, a fairly simple arithmetical exercise. They said that if there were seven potential other members of the pool, then there was a 15% chance that she would have been made redundant.They had to do that, or something like it, because they were weighing imponderables. They did not have the sort of material that would have been laid before them if the Solicitors had done the job themselves and said "well this employee has special qualifications, we felt we must retain him or her at all costs, this employee we regarded as very much a work getter, they were bringing in just the type of work which the firm desperately needed. This particular assistant Solicitor, we thought was more adept to the task and we were very reluctant to move him or her", this sort of evidence.None of that was before the Tribunal so they had to resort to deciding on imponderables. They did decide that there was a 15% chance that Mrs Foster would have been made redundant in any case, and they made that the subject of an appropriate deduction. This approach of assessing the matter in terms of percentage is precisely what has been suggested by the House of Lords in Polkey .We can find absolutely nothing to criticise in the Industrial Tribunal arriving at the sum which they consider to be just by reference to a percentage. It is very frequently done.For those reasons, we dismiss the first part of the appeal.The last part of the appeal is against the refusal by the Tribunal to review their decision. What Mr Ashfield submitted to us was this: he said that an application was made to the Industrial Tribunal to review their decision and it was dismissed in a summary way by the Chairman, as she was entitled to do if she was of opinion that it had no reasonable prospect of success. She was entitled, under Rule 10(3) of the Rules as they then stood, to take that course. He says that she was wrong to do so.The matter can be put very shortly. At page 23 of our bundle is the letter from the Solicitors to the Regional Office. First of all they ask for a review on a basis which is not pursued. They then go to what they call the secondary point.
"The secondary point is that the interests of justice requires such a review as it would appear that in making the calculations the Tribunal has erroneously been under the impression that there were seven employees of similar status who were equally at risk of redundancy. In fact there was only one Assistant Solicitor at the Kew Office whose work was completely comparable with the work of the Applicant, and a full time unqualified employee (Legal Executive) based at the Richmond Office who also dealt with domestic conveyancing work exclusively."
That was what the employers said in their letter, asking for the review.Now the first point, which is obvious, is that that is not what the Tribunal said in their decision. What they did say, and I have already referred to paragraph 10 of their decision, was that there were seven other qualified people who could have been considered for redundancy. They did not say that they were of similar status. They did not say that they were equally at risk of redundancy and they did not say that their work was completely comparable. So that is, with all respect to the writer of that letter, a considerable assumption; some might say presumption; in suggesting that the Tribunal were under the misapprehension which the writer of that letter says that they were. But nonetheless, if he or she believed that the Tribunal had been under a misapprehension he was or she was entitled to ask the Tribunal to review the matter.It appears, we are told, that the matter was not very fully investigated at the trial, and when I asked Mr Ashfield whose fault that was, he said:
"I am entirely content that the Employment Appeal Tribunal should proceed on the basis that it was the Solicitors fault in the nature of things. They had not carried out the enquiries and were not prepared with the sort of evidence which the Tribunal would wish to hear and it is for that reason that the Tribunal had to proceed in a very general way."
So there it was. An application was made for the Tribunal to review its own Decision on the basis that it was in error. It was alleged to be under the impression that there were seven employees of similar status who were equally at risk of redundancy and that their work was immediately comparable with that of Mrs Foster. The reply to that was written under Section 10(3):
"Thank you for your letter of 31 August 1993, which has been referred to the Chairman dealing with this case."
First of all the matter which is not pursued was dealt with as irrelevant. Then going on:
"... the Tribunal was well aware of who could be considered for redundancy. There appears to have been no thought given to the fact that one of them might have volunteered for redundancy, and in any event, solicitors are trained to be able to take on any work after a short period of adjustment."
Now it seems to us that that is showing, as plainly as may be, that this Industrial Tribunal was not under any misapprehension or any misconception that these employees were all precisely similar and all equally at risk. On the contrary, the Chairman is saying "we are not under a misapprehension"; the question of retraining is important and most Solicitors are trained to be able to take on any work after a short period of adjustment, and in addition of course any one of the seven might have volunteered for redundancy.If an application is made to a Tribunal on the basis that the Tribunal was under a misapprehension about the evidence and that justice requires a review, then if the Tribunal says "we were not under a misapprehension", the basis of the application necessarily disappears. Only the Chairman and her Members know what was said between them when they retired and if it is said that their decision is capable of a certain meaning which represents a misapprehension then it is for them to say whether indeed that is a misapprehension from which they suffered. It might be that the Chairman would say "yes I am afraid we did not really go into this, we did think they were all the same", but she did not. If she was not under that misapprehension and her Members were not under that misapprehension what more is there to say? Of necessity the application has no reasonable prospect of success.Mr Ashfield says that it was just the Chairman speaking. In the circumstances, he says, she should at any rate have said "well we will have a hearing under sub-paragraph 4" which provides:
"If such an application is not refused under paragraph (3) of this Rule it should be heard by the tribunal which decided the case ..."
and there are other provisions and the paragraph goes on:
"... if the tribunal revokes the decision it shall order a re-hearing before either the same or a differently constituted tribunal."
So Mr Ashfield well says there are three stages in the process.But if the Chairman was able immediately to say "the basis of this application is simply mistaken, we were not under error, we were not under misapprehension", there is, with respect, no prospect of success and if proceedings are initiated which have no prospect of success then the Chairman was entitled, and indeed one would say judicially bound, to refuse under Rule 10(3). The final blow to this contention is that this was a matter of discretion; discretion can only be criticised if it is shown that it was exercised in a way which rationally it could not be.Mr Ashfield says that the Chairman was speaking for herself, she did not have her Members there, she does not know what was in their minds, who knows what was in their minds? The answer to that is that if the Chairman did not know then she had no business to say so, but she must very well have known what was said in discussions between the Members of the Tribunal in arriving at their decision and she must very well have known whether she could say that they were under no misapprehension. She did say that, and it seems to us that in those circumstances there can no criticism of the way in which the application for a review was refused.We have been referred to the case of Drakard v Wilton [1977] ICR 642 . It appears to us, with great respect, that that was a case very different on its facts and as different in the principles which were applied as any could be. Among other matters, as one of my colleagues has pointed out, the Rules have been changed since then.In all the circumstances, having considered this as carefully as we can, we have come to the conclusion that there is no ground on which this appeal can succeed, and it is therefore dismissed.