Rowell v Hubbard Group Services Ltd [1995] UKEAT 44_94_1201

EAT

Rowell v Hubbard Group Services Ltd

[1995] UKEAT 44_94_1201 · 1995-01-12

JUDGE LEVY QC:

This appeal by Mrs Rowell arises from the following circumstances. She was an employee of Hubbard Group Services Ltd ("the Company") when on 16 October 1992 the Managing Director, Mark Emery, wrote a memorandum to all its employees headed "Redundancies":

"The decision has been taken to make the following redundancies:

20 salaried employees

20 hourly paid employees

This memorandum is to provide employees with 30 days notice of the above redundancies. Redundancies will be made in the period between 16th November and 27th November 1992.

Applications for voluntary redundancy will be considered and should be submitted to me in writing by 26th October 1992. Such applications may be rejected in the ongoing interest of the business.

The following criteria will be used by the management in selecting employees for redundancy.

....

- for hourly paid employees: [among whom Mrs Rowell was numbered]

skill level; work rate; attendance.

[which were held to be fair criteria in due course].

The decision to proceed with redundancies has been made taking account of the need to reduce all aspects of our costs to protect the position of the Company in depressed and highly uncertain market conditions".

Tests were done by the Company on the lines set out between 16 October 1992 and 13 November 1992, when Mr Emery wrote a further letter to Mrs Rowell which read as follows:

"The continuing uncertain state of our markets, combined with the extremely poor financial results, has made a re-assessment of our manning levels essential and we must now confirm that the decision has been reluctantly taken to terminate your employment due to redundancy. This will be effective from 27th November 1992.

In those areas of the Company identified for reduction in manning levels, individuals paid on an hours worked basis were selected using the following criteria.

Skill level; work rate; attendance.

Regretfully we are unable to find you any alternative work. You are entitled to statutory notice .....".

I do not need to read out the financial compensation but the letter concluded with this final paragraph:

"If you wish to discuss any matters arising from this letter, please speak to Brian Groom or myself, and we will endeavour to assist you where possible".

On 27 November 1992, Mrs Rowell was made redundant and on 1 December 1992, she made an application to an Industrial Tribunal claiming unfair dismissal for redundancy.

Little turns on the particulars which she gave. The Company put in its Notice of Appearance on 9 January 1993. There was a hearing on 5 August 1993 before an Industrial Tribunal sitting at Bury St Edmunds and the Decision of the Tribunal was promulgated on 23 September 1993 with Summary Reasons.

The Summary Reasons are very summary. After setting out the short facts about the Company and the need for redundancy, the last paragraph reads:-

"5 Redundancy is a potentially fair reason to dismiss an employee. The tribunal then has to decide whether in all the circumstances the decision to dismiss this employee is fair and reasonable having regard to the conditions laid down in the Polkey case. Counsel for the respondent (Mr Lane who appears before us today) has reminded the tribunal of the requirements laid down in the Polkey case:

One, steps taken by a company to avoid or minimise redundancy. Evidence has been given of voluntary redundancies being asked for. The applicant's solicitor submits that job sharing and short-time should have been considered. We are satisfied these factors would not have been practicable in all the circumstances. Indeed if they had been imposed on the workforce they could have amounted to a breach of contract. Two, that the employers constructed a fair basis on which to select for redundancy. The company used a criteria based on skill, work rate and attendance, and we are satisfied obtained reasonable information upon which to base their fact. Three, [and this is the critical part of the decision] that the employees were warned of the likelihood of redundancy and [these are the really critical parts] were given ample opportunity for consultation and this we are satisfied has been met on the basis of .... [the letter of 16 October which I have read out] by that notice to the staff of proposed intentions of redundancies and the method of selection which was dated 16 October 1992 which the applicant accepts she saw a copy of this document around about that date. Further, the opportunity for discussions with the management over the redundancy can be found [in a letter of 13 November] in particular the last paragraph. Neither of these options were taken up by the applicant. The tribunal are satisfied in all the circumstances the applicant's selection for redundancy was not unfair".

There was oral evidence from a number of witnesses before the Tribunal, to which very little reference is made in the learned Chairman's Summary Reasons. He was asked to supplement those Reasons. By letter dated 18 November 1993 he said:

"Having considered my summary reasons, I would not wish to add anything further which could assist and therefore incorporate my summary reasons into full reasons".

After he had heard Mr Kolvin's submissions, Mr Lane accepted before us that there was a lacuna in the Summary Reasons in that there were no findings of fact on the evidence, which he accepted on certain key aspects of this matter were essential. In the circumstances he felt bound, at the end of his submissions, to accept that at least there had been misdirections which should lead to a re-hearing. Mr Kolvin submitted that we should find the Decision of the Tribunal perverse and in the amended Notice of Appeal, received here on 25 April 1994, his case was set out as follows:

"4. The grounds for the appeal are that:- (i) the tribunal erred in law in that it: (a) misdirected itself as to the obligation of the employer to consult the employee, in that it found that the obligation to consult was satisfied by the Respondent's letters of 16th October 1992 and 13th November 1992 when: (i) the letter dated 16th October 1992 consisted neither of consultation nor an invitation to consult;

(ii) the letter dated 13th November 1992 was a letter of dismissal, post-dated the decision to dismiss and did not amount to an invitation to consult".

Despite Mr Lane's strenuous efforts to persuade us otherwise, we think that that ground of appeal is well-founded. In particular, we cannot put the weight which the Tribunal put on the final paragraph of the letter of 13 November. It read:

"If you wish to discuss any matters arising from this letter, please speak to Brian Groom or myself, and we will endeavour to assist you where possible".

This was a letter written after the decision had been taken to terminate the Respondent's employment and cannot be read as anything akin to consultation. The letter of the date of 19 October certainly consisted neither of consultation nor an invitation to consult; in reality, between 16 October and 13 November, as appears to us from the evidence which was available to us, there was no real consultation whatsoever between the employer and the Applicant.

The next ground of appeal reads:

"(b) misunderstood the need for meaningful consultation in that it found that the letters amounted to consultation".

That is a finding which, I think, is found in the Reasons which we read out. Mr Lane said to us that there was evidence of consultation about which the Tribunal could have found facts, but that they failed to do so. We found little if any other than ambiguous evidence to support his submission.

The third ground of appeal reads:

"(c) found that the obligation to consult was satisfied by an invitation to consult".

That is clearly correct.

The next ground of appeal reads:

"(d) failed to find that, unless a special reason appertained, the Appellant had a right to be consulted as to the choice of selection criteria, application of the selection criteria in her individual case, whether there were extenuating circumstances why she should not be dismissed, whether the needs of the business could have been met by any steps short of dismissal, and whether a job could be found for her within or outside the Respondent Company".

That we think is a recital or a précis of what can be found in the well known case of Polkey vAE Dayton Services Ltd

[1988] ICR 163

, and in his oral submission to us today Mr Kolvin has directed our attention to the passage in Lord Bridge's speech towards the end of that law report. It supports this ground of appeal; there were no requisite findings.

Finally, the Notice of Appeal contended that the judgment below:

"(e) elided the tests for warning and consultation, when the obligation to warn is separate from the obligation to consult".

Both parts of the contention are correct.

In the course of his submissions, Mr Kolvin drew our attention to a passage in the case of Freud v Bentalls Ltd

[1982] IRLR 443

, when Browne-Wilkinson J. and his colleages expanded the test which he had helpfully set out for Industrial Tribunals and ourselves in Williams v Compair Maxam Ltd

[1982] ICR 156

. The test in the Williams case referred largely to organisations where trade unions may be involved in the negotiations in redundancy and that in the Freud case related to the position where individuals are having to operate redundancy without the assistance of trade unions. At page 446 of Freud , paragraph number 14, the judgment reads:

"14 Turning now to considerations of industrial relations practice consultation (as opposed to unilateral action by the employer) is one of the foundation stones of modern industrial relations practice. The statutory Code of Practice emphasises its importance in every rare aspect of industrial relations. In the particular sphere of redundancy, good industrial relations practice in the ordinary case requires consultation with the redundant employee so that the employer might find out whether the needs of the business can be met in some way other than by dismissal and, if not, what other steps the employer can take to ameliorate the blow to the employee. In some cases (though not this one) the employee may be able to suggest some re-organisation which will obviate the need for dismissal; in virtually all cases the employer if he consults will find out what steps he can take to find the employee alternative employment either within the company or outside it. For example, in present day conditions when so many people are unemployed, many employees facing redundancy by reason of the disappearance of their existing jobs are prepared to take other jobs of lower status and commanding less pay. Only by consulting the employee can the employer discover whether such an option is open in any given case. Therefore, good industrial relations practice requires that, unless there are special circumstances which render such consultation impossible or unnecessary, a fair employer will consult with the employee before dismissing him.

15 We must emphasise that we are not saying that good industrial relations practice invariably requires such consultation. There may well be circumstances (for example a catastrophic cash flow problem making it essential to take immediate steps to reduce the wages bill) which render consultation impracticable. We are only saying that we would expect a reasonable employer, if he has not consulted the employee prior to dismissal for redundancy in any given case, to be able to show some special reason why he had not done so".

(emphasis added by us)

For ourselves we saw no reason for the failure of the Company to consult here.

We were also referred by Mr Kolvin to the decision of the Divisional Court in R v British Coal Corporation and Secretary of State For Trade and Industry ex parte Price and others ,

[1994] IRLR 72

. In particular, Mr Kolvin drew our attention to the passage at passage at page 75 paragraph 23 - 24, Glidewell LJ judgment with which Hidden J agreed.

"24 It is axiomatic that the process of consultation is not one in which the consultor is obliged to adopt any or all of the views expressed by the person or body whom he is consulting. I would respectfully adopt the tests proposed by Hodgson J in R v Gwent County Council ex-parte Bryant , reported, as far as I know, only at {1988} Crown Office Digest p.19, when he said:

`Fair consultation means :

(a) consultation when the proposals are still at a formative stage;

(b) adequate information on which to respond;

(d) conscientious consideration by an authority of the response to consultation.'

25 Another way of putting the point more shortly is that fair consultation involves giving the body consulted a fair and proper opportunity to understand fully the matters about which it is being consulted, and to express its views on those subjects, with the consultor thereafter considering those views properly and genuinely".

Though given in a different context than that of Employment Law, we think the passage of assistance to employers when they have to consult with staff in the context of dismissal for redundancy or dismissal. There are no invariable rules as to what is to be done in any given situation; everything will depend on its particular facts. However when the need for consultation exists, it must be fair and genuine, and should, we suggest, be conducted so far as possible as the passage from Glidewell LJ's judgment suggests. Bearing these passages in mind on the one hand, as urged by Mr Lane, we have also borne in mind the warning given to us by Browne-Wilkinson J giving judgment in Williams v Compair Maxam Ltd (supra) about the care to be exercised before a judgment of an Industrial Tribunal is criticised as perverse. We have been forced to the conclusion that the submission of Mr Kolvin was correct and the decision of the Industrial Tribunal here cannot be supported.

In these circumstances, we propose to take the steps which Mr Kolvin has urged us to take, which is to allow this appeal, to substitute a finding that the Appellant was wrongly dismissed, and return this case to the same Tribunal for the remedy procedures to be undertaken.