I B P Ltd v Warburton [1995] UKEAT 262_95_0705

EAT
I B P Ltd v Warburton
[1995] UKEAT 262_95_0705 · 1996-04-23

JUDGE CLARK :

This is an appeal by the employer, IBP Ltd ["IBP"] against a decision of the Bedford Industrial Tribunal sitting on 17th January 1995 that the employee, Mr Warburton, had been unfairly dismissed. Extended reasons for that decision are dated 1st February 1995 ["the reasons"].At the relevant time IBP employed some 26 people at their premises in Dunstable. The staff were not organised either by a trade union or by a staff association. Management resolved to make two redundancies, one of which was in the warehouse. Mr Warburton was employed as a warehouse assistant, and had been so employed since 8th May 1989.The selection for redundancy was made by assessment of each employee in the relevant pool on the basis of eight criteria. There were four employees, including Mr Warburton, in the relevant pool. An initial assessment of each candidate was carried out by the warehouse controller, Mr Townsend. His assessment were then subject to review by Mr Tipping, service and quality manager and further considered by his senior, Mr Hawkins. Following dismissal, the procedure adopted provided for an appeal to the Managing Director, Mr Alday.There were before the Industrial Tribunal the completed assessments of all four relevant employees. On points scored overall Mr Warburton came some way last. He was selected for redundancy and dismissed with effect from 30th September 1993.On his complaint of unfair dismissal the tribunal found that the reason for his dismissal was redundancy. However, they went on to find that the dismissal was unfair. It is the basis for that finding which Mr Jeans, on behalf of IBP, attacks in this appeal.In paragraph 4 of the reasons the tribunal divide the eight selection criteria used by IBP into two classes. Four, namely quality and accuracy, rate of work, lateness and absence and company service they categorised as being in principle objective and capable of being objectively assessed. The remainder, namely job suitability, flexibility, initiative and leadership, they regarded as subjective criteria.At paragraph 3 of the reasons the tribunal set out the words of Section 57(3) of the Employment Protection (Consolidation) Act 1978 , and in paragraph 6 they direct themselves as to the legal approach to be adopted in these terms:
"6. It has been repeatedly stated in the authorities that criteria used for selection must be objective or at any rate capable of objective assessment. In the IDS handbook 42 published in December 1988 the following statements appear; on page 190 "(criteria) must be capable of objective assessment i.e. capable of some sort of independent assessment using the reasonable employer test. Subjective criteria will generally be unreasonable as the case below illustrates"; on page 192 (under the hearing "Individual Ability and Performance"). "It is a reasonable aim to try to retain a balanced workforce. Hence an individual's skill and knowledge are reasonable considerations provided they are assessed objectively". The same statements appear in a later edition of the IDS handbook dated September 1993 on pages 210 and 211. The case from which these statements are ultimately derived is Williams -v- Compair Maxim 1982 IRLR 83 . These statements in successive editions of the IDS handbook have not as far as we are aware ever been doubted. The tribunal asked Mr Dean, who appeared for the respondents to produce over the short adjournment any authorities of which he was aware establishing that it was acceptable for employers to use subjective criteria and/or apply criteria subjectively. This request was totally ignored."
They then concluded at paragraph 7:
"In the circumstances the tribunal has no hesitation in deciding that Mr Warburton's dismissal was unfair."
Mr Jeans submits that the tribunal's approach to the application of Section 57(3) was flawed in a number of respects.First, he contends, the guidance set out in Williams v Compair Maxam [1982] ICR 156 applies only to redundancies involving recognised trade unions. It is right to say that the five principles set out at page 162C-F of the report are prefaced by the words:
"The two lay members of this appeal tribunal hold the view that it would be impossible to lay down detailed procedures which all reasonable employer would follow in all circumstances: the fair conduct of dismissals for redundancy must depend on the circumstances of each case. But in their experience, there is a generally accepted view in industrial relations that, in cases where the employees are represented by an independent union recognised by the employer, reasonable employers will seek to act in accordance with the following principles:"

(Page 162B)

Having set out the five principles this tribunal concluded with this warning at page 162G:
" The lay members stress that not all these factors are present in every case since circumstances may prevent one or more of them being given effect to. But the lay members would expect these principles to be departed from only where some good reason is shown to justify such departure."
Support for the proposition that the Williams principles are not applicable in cases where a small number of employees are selected for redundancies in a business where there is no trade union representation may be derived from two decisions of the Scottish Employment Appeal Tribunal. See Gray v Shetland Norse Preserving Co Ltd [1985] IRLR 53 and A Simpson & Son (Motors) v Reid & Findlater [1983] IRLR 401 .We have considered those cases, and insofar as they draw attention to the warnings contained in Williams itself, we agree with what was there said. However, we do not accept the extreme submission advanced by Mr Jeans that the principles of good industrial relations helpfully set out in Williams are wholly irrelevant when considering selection for redundancy amongst non-union employees.The principles contained in Williams must be set in their context. They are not a short cut to resolving the issue of fairness in redundancy selection cases. We think that the more telling submission made by Mr Jeans is that non-compliance with one or other of the Williams principles does not render the dismissal automatically unfair. Such an approach disregards the test of reasonableness to be found in the words of Section 57(3). In our judgment, this tribunal fell into the trap identified by the appeal tribunal in Rolls Royce Motors Ltd v Dewhurst [1985] ICR 869 , where Popplewell J, giving the judgment of the Employment Appeal Tribunal, said this at page 874G:
"The tribunal appeared to have applied the right test by saying they [ the Williams principles ] are mere guidelines, but are wrong to hold that the finding that the procedure was unfair in itself necessarily leads to the conclusion that it is unfair under section 57(3)."
In our view such an approach results in this tribunal's decision being fatally flawed. However, there is a further ground for criticism. Williams is not authority for the proposition that use of any criteria which may be regarded as other than objective amounts to a breach of good industrial relations practice. In Williams the criterion used for selection was vague and wholly subjective, namely the retention of those "who, in the opinion of the managers concerned, would be able to keep the company viable." That is far removed from the eight criteria in this case. What Browne-Wilkinson J was saying (page 166F) was that some objective criteria should be included so as to remove the risk of a wholly subjective judgment made by a single manager or supervisor who may have a personal dislike for the employee ultimately selected for redundancy. In the instant case no complaint of bad faith was made; more than one manager was involved in the selection process; on the tribunal's findings objective criteria were included in the overall assessment matrix.In all the circumstances we are satisfied that this tribunal erred in law in its approach to the question of reasonableness, the decision cannot stand. The appeal must be allowed and the finding of unfair dismissal set aside.We are urged to substitute a finding of fair dismissal. We decline to do so. One of the consequences of this tribunal's short cut to a finding of unfairness is that it considered only one issue, that of the selection criteria, in determining the question of reasonableness.A further issue, raised fairly and squarely in the Originating Application, was the absence of consultation. As to this issue the tribunal made no findings of fact or law. In particular, there was no finding as whether Mr Townsend discussed Mr Warburton's assessment with him before the decision to dismiss was taken. The importance of genuine individual consultation in redundancy selection cases when considering the overall reasonableness of the dismissal has been emphasised by this appeal tribunal in Rowell v Hubbard Group Services Ltd [1985] IRLR 195 , a decision expressly approved by the Inner House of the Court of Session in King v Eaton Ltd [1996] IRLR 1991 .Accordingly, we have concluded that this case must be remitted to a fresh Industrial Tribunal for rehearing. We should add that in doing so we have not been influenced one way or the other by the failure of the respondent employee to take any part in these appeal proceedings.