Thompson Wholesale Foods v Norris [1994] UKEAT 800_92_0202

EAT

Thompson Wholesale Foods v Norris

[1994] UKEAT 800_92_0202 · 1994-02-02

MR JUSTICE WATERHOUSE: This is an uncontested Appeal from the decision of an Industrial Tribunal which sat to hear the Originating Application of the Respondent Employee on 13 August 1992. The decision of the Industrial Tribunal was to make a total award of £7,352 on the ground that the Respondent had established that he had been unfairly dismissed by the Appellants. The finding of the Industrial Tribunal, namely, that the dismissal was on the ground of redundancy or some other substantial reason, is not challenged by either party nor is the finding that the dismissal was unfair. The Appellants complain, however, that the award was excessive. The matter came before a differently constituted Appeal Tribunal on 12 May 1993 by way of preliminary hearing, when it was ordered that the Appeal should be allowed to proceed to a full hearing. Since then, the Respondent has conceded, by his solicitors' letter dated 28 January 1994, that, in making its assessment of the award, the Industrial Tribunal did fail to follow what is described as the two-stage test; in accordance with that procedure the Tribunal should have assessed, firstly, what percentage chance there would have been of the Respondent receiving an offer of re-employment from the Appellants and, secondly, if that chance had been realized, what employment would have resulted and what pay would the Respondent have received in that employment.

The history of the matter can be dealt with very briefly. The Respondent commenced employment with the Appellants on 22 August 1988 and worked in a small printshop used by the Appellants at their factory in Skelmersdale to print forms and other material for the retail food trade. The Appellants are wholesale food distributors and, until the end of 1991, had a number of factories and depots. Without going into unnecessary detail, there was a closure of the Hull depot and a general reorganization of work, which had the effect of reducing drastically the work required in the printshop. Although the Respondent was told early in January 1992 that his future employment was safe, within about a month a decision was taken at a Board meeting of the Appellants that he should be made redundant. He was not informed beforehand and there was no consultation.

The conclusion of the Tribunal was that there had been a reduction in the requirement of the Appellants' business for the Respondent to carry out work of a particular kind in the place where he was employed and that the Appellants had therefore established that there had been a redundancy within the terms of Section 81(2) of the Act of 1978 and the requirements of Section 57(1)(a). Having made that finding, the Tribunal went on to consider whether the dismissal had been fair or unfair. They set out in summary form the evidence relevant to that issue and referred to the decision of the House of Lords in Polkey v. AE Dayton Services Ltd (formerly Edmund Walker) [1988] I.C.R.142, before stating their further conclusion that the dismissal had been unfair because there had been no proper consultation or discussion with the Respondent.

On that fairness issue there had been specific evidence of a possibility that the Respondent might have been considered for alternative employment as a member of the warehouse staff. He had emphasized in his evidence that he would have accepted employment at a lower rate in the warehouse in preference to unemployment but that he had not been given the opportunity to consider that possibility and the Tribunal accepted that no consideration had been given to any other position that the Respondent might have filled.

Having reached those conclusions, the Tribunal went on to deal with the assessment of the compensation. Their finding in relation to that issue was prefaced, in paragraph 11 in the statement of reasons, by the following comment:

"Although no specific argument was put forward by the respondent that because of the inevitability of redundancy in any event this should effect a compensatory award, the Tribunal did consider this when dealing with remedy and came to the conclusion from the applicant's evidence that there were matters which he could have put forward if he had been given the opportunity which might have affected the decision to dismiss him."

That was a part of the finding by the Tribunal that the dismissal was unfair. However, in dealing with the assessment of compensation, the Tribunal disregarded the Respondent's percentage chance of alternative employment if a proper procedure had been followed. They found that the Respondent had lost wages from 1 March to 13 August 1992, that is, the date of the hearing by the Tribunal, and awarded him 23 weeks' loss on that footing at his predismissal rate of £148 per week. Turning to the future loss, the Tribunal considered that it would be reasonable, having regard to the local employment position generally, to award future loss for a further period of 26 weeks, so that he was to receive compensation for a period of approximately 1 year from the date of his dismissal. Thus, the compensatory award worked out at a total of 49 weeks at the rate of £148 per week, to which was added £100 in respect of loss of statutory industrial rights, giving a total of £7,352, of which the prescribed element was the first amount of £3,404.

In support of the appeal, Mr. Giffin has relied principally upon the decision of this Tribunal in KPG Computer Support Services Ltd v Mrs. A. Abayomi , 21 December 1992, Appeal No.

EAT/303/92

, in which Mr Giffin appeared also, and which has not appeared in any of the standard reports. The Judgment in that case was delivered by His Honour Judge J Hicks QC and the Appeal Tribunal based itself upon a number of earlier decisions, in particular, those of the House of Lords in the Polkey case (supra) and of this Tribunal in Redbank Manufacturing Company Ltd v. Meadows ,

[1992] IRLR 209

It is clear from those authorities that, in a case such as the present one, it is necessary for an Industrial Tribunal, on finding that there has been an unfair dismissal on the ground of redundancy, to make an assessment of the chance that the outcome would have been different if a correct procedure had been followed; in other words, to assess the chance that consultation would have been successful and acceptable re-employment found for him. Moreover, it is necessary also for the Tribunal, in such circumstances, to make an assessment of the rate of pay that the employee would have been likely to receive in that new employment as the weekly rate on which compensation is based. Thus, in the instant case, it was necessary for the Tribunal to assess the percentage chance that a fair procedure would have had a successful outcome and then to assess the rate of remuneration which the Respondent would have been likely to receive in alternative work.

It has been indicated to us that the Respondent may question the figures upon which the Appellants will seek to rely as the basis of their calculation but that is not a matter which concerns this Appeal Tribunal at this stage. What is clear to us is that the Appeal is well-founded. It may well have been that the Industrial Tribunal in this case was at a considerable disadvantage because the Respondent appeared with assistance only from a Citizens Advice Bureau and a workmate and the employers were represented only by two directors. It is unlikely, therefore, that the attention of the Tribunal was directed to the relevant recent authorities; and the decision of the Appeal Tribunal in the Redbank Manufacturing Company case had only recently been reported in the Industrial Relations Law Reports. It is clear, however, that the Industrial Tribunal did fail in this case to make the necessary assessment of chance and to base its calculation on a correct factual assessment of the Respondent's prospective earnings if there had been a successful offer of re-employment by the Appellants in an alternative capacity.

The Appeal must therefore be allowed and the award quashed. We direct that the case be remitted to the original Tribunal that heard the matter for the award to be re-assessed on the basis that we have indicated in this Judgment.

We express the hope that the basic figures on which the Industrial Tribunal is to make its amended calculation should be agreed insofar as that may be possible in order to minimize the costs. There is obviously a danger that the costs involved in the rehearing will outweigh any gain to either side, unless matters are agreed as far as possible. If the percentage chance can also be agreed, so much the better, because then the matter can be disposed of by the Industrial Tribunal expeditiously.