Henry Tooze & Co Ltd v Pilkington [1995] UKEAT 678_94_1005

EAT

Henry Tooze & Co Ltd v Pilkington

[1995] UKEAT 678_94_1005 · 1995-05-10

JUDGE SMITH Q.C. :

This is an unfortunate case, in our judgment, which we have had to deal with today and one where, we should say straight away, that there is no doubt that the employer acted in a well-intentioned manner and in the utmost good faith. However, of course what we are concerned with is whether there can be any successful attack on the Industrial Tribunal's decision here on any matter of law and that is what this Employment Appeal Tribunal is exclusively concerned with. There has to be a point of law where the Tribunal have gone wrong, not a point of fact where, perhaps, another Tribunal might have made a different decision, that will not do at all. I make that distinction right at the outset of what we have to say, say what we have to say because we all agree on this matter and on what the result should be.

Let me just give the background. The Appellant employers, Henry Tooze Ltd, represented today by Mr Henry Tooze, who has put his arguments very clearly and honestly before us, appeal, against a decision of an Industrial Tribunal sitting in Sheffield on 26th April 1994, whereunder the Tribunal held that the Respondent before us, the applicant of course before them, the employee Mr Pilkington, who was a shift supervisor, was unfairly dismissed by the employers on 27th August 1993. He was unfairly dismissed by reason of redundancy. We will come on to the circumstances of that in a moment or two.

The Applicant before the Tribunal was a shift supervisor earning about £12- 13,000 per annum, something of that order, those are not exact figures, but they are an approximation of the kind of figures he was earning. The Company made plastic parts for machines and also, apart from carrying out moulding work for others, made machines themselves. Compensation was awarded by the Tribunal in the sum of £2,273.70 altogether, involving, in particular, an award in respect of ten weeks pay from 17th September 1993 to 26th November 1993, and that is at issue in this appeal. It is that award which is really what is complained about by the employers. There was also an order for re-engagement but there is no appeal in relation to the order for re-engagement. What has happened, as a matter of history, is, as we understand it, that Mr Pilkington was in fact re-engaged in about the beginning of May 1994.

Now the Appeal, has been conducted by Mr Tooze in person, as I say, and I should add that Mr Pilkington has had the benefit of being represented Mr Woodhouse from the Sheffield Law Centre, who has presented arguments before us today in support of the decision of the Industrial Tribunal.

The Appeal, as I say, is against the order for compensation for the ten week period I have mentioned, on the grounds, put into legal form, that the Industrial Tribunal erred in law:-

(1) In finding that the Appellant, the employers, had acted unreasonably in dismissing the Respondent, Mr Pilkington by application of Section 57(3) of the 1978 Act. In other words, the Appellants submit that in finding that the Appellants had failed to consult and that, accordingly, they had acted unreasonably, applying Section 57(3). The Tribunal in all the circumstances had erred in law in reaching that conclusion. Although the Appellants accept that there was in fact no individual consultation with Mr Pilkington, nevertheless they say that the Tribunal erred in law in reaching that finding in relation to Section 57(3).

(2) In the alternative, that the Tribunal erred in law, in finding that, had there been individual consultation, Mr Pilkington would probably have kept his job at least until 26th November 1993. The Appellants say that that decision also reveals an error of law.

Those are the two ways in which the matter has been argued before us by the Appellants.

The response by Mr Woodhouse, from the Sheffield Law Centre, is that both the above findings were really findings of fact and that the Industrial Tribunal applied the right principle in both cases in that they asked themselves the right questions and reached conclusions that were within the range of reasonable responses of a Tribunal to those kind of questions. It is submitted that there is no point of law here on either head that I have mentioned above. So that is how issue has been joined.

The decision shows that the Industrial Tribunal held that the Respondent, Mr Pilkington, had been fairly selected for redundancy, as I say, but that there had been a failure to consult with him. The Industrial Tribunal accepted, as was plainly the case, that the Appellant Company had been placed in very serious financial difficulty by a two-pronged blow to the Company, namely first the loss of vital orders from their largest customer, in March 1993, which, in fact, although the Tribunal do not refer to it directly, had led to some redundancies, and we are told to a reduction in the work force from forty-seven down to about thirty-three. Then there was a second blow, a very serious blow, in the failure of certain customers, (whether in breach of contract or not does not matter) to take delivery of certain machinery that had been made by the Appellant Company with the tremendous increase in the cash-flow crisis which that second blow caused. That was about the beginning of August 1993. There is no doubt at all, that as the Tribunal fully accepted, that there was tremendous pressure from the National Westminster Bank, at that stage, who were threatening to put in a receiver, and who had appointed consultants from a well-known firm of accountants Binder Hamlyn, with a view to the bank putting in a receiver.

The Industrial Tribunal took all that into account. Accordingly, it was in those circumstances that the Industrial Tribunal came to deal with the crucial aspect of this matter in paragraphs 4 and 5 of their extended reasons for their decision at page 6 in the bundle before us. It is apparent from the findings of the Industrial Tribunal that they refer to the meeting of staff on 14th August, when the position was explained to the staff, and then to the decision taken on or about the 14th, 15th or 16th August, (the Tribunal says it was 15th or 16th August) as to who should be dismissed for redundancy. And, as I have already said, the Tribunal found that the eleven persons who were then selected out of the thirty-four or thirty-three employees were carefully and fairly selected. Then on 26th August a perfectly reasonable letter was handed to Mr Pilkington, together with an explanation by Mr Tooze of the situation, which contained the unfortunate news for him that he was to be made redundant the very next day, 27th August 1993. In fact, he was summoned into Mr Tooze's office, as the Industrial Tribunal have put it correctly in paragraph 4, and told of his dismissal by reason of redundancy to take effect at the end of the following day's work on Friday, 27th August 1993.

Moving to paragraph 5, there comes the crucial part of the Industrial Tribunals' decision. Having recorded the sympathetic approach being taken by Mr Tooze and the efforts that he was making to try and safeguard the position of the work force, the Tribunal go on, in the third sentence of paragraph 5, to make this important finding:-

"However, there is no doubt that there was no individual consultation with the applicant. That would have been possible in the 10 days."

By that they refer to the 10 days between 15th or 16th August and about 26th August or 27th August 1993. What they go on to say, and their finding is not challenged, is that although Mr Tooze talked to the shifts generally, and probably spoke to all three shifts about the position, there was indeed no individual consultation with any individual employee. Mr Tooze accepted before us that he may have been naive, but he did not appreciate that there was a need for such consultation. We were rightly reminded, by Mr Woodhouse, that there are very good industrial reasons for this requirement of consultation. What the Tribunal go on to say is this, they approached the matter in this way:

"There is no need for us to rehearse the well-known provisions of subsection (3) of Section 57 of the Employment Protection (Consolidation) Act 1978.... "

So, it is perfectly clear that this Tribunal had in mind exactly the right, legal principle, namely the principle as laid down in Section 57(3). They were aware that they must not substitute their own decision. In the employer's, they must look at what the employer did in the circumstances in which the employer was, and in accordance with the House of Lords decision in Polkey , that they must look at whether it was reasonable for the employer to do what he, the employer, did, in the circumstances in which he found himself. And it is quite clear that this Industrial Tribunal was applying a correct test because they refer expressly to Section 57(3). They then expressed themselves very shortly, on this first point, as to whether the dismissal was unfair, by putting it in this way:

"... suffice it to say that the lack of consultation was sufficient to make the dismissal in our unanimous view unfair."

It is that finding which has to be shown to be an error of law. In our judgment the point about looking at this decision is the following. Admittedly it is expressed in brief terms, but we were reminded, and rightly reminded, by Mr Woodhouse, of the industrial realities of consultation. It is not simply something that an employer may pay lip service to. The point is, as he reminded us, that individual consultation, even in situations of grave difficulty for an employer, as we accept this was and one of impending crisis indeed, may, nevertheless, alter the situation. Thus by way of example we were reminded that there could be an offer to do eight hour shifts, lesser shifts, or there could be an offer to accept considerably lower wages for a short period of time, or there could even be discussions about weeks of lay-off. There are all sorts of matters that can be taken up in individual consultation, which can, in certain circumstances, result in redundancies not having to take effect. We take the view on this first point that we cannot categorise this decision, shortly expressed though it was, by the Industrial Tribunal as being an erroneous one or one that no reasonable tribunal could have reached. In our judgment, individual consultation is of considerable importance as a matter of good industrial relations, and a failure so to consult, is always an important factor therefore in deciding whether an employer has acted reasonably in the light of Section 57(3). We have concluded here, unanimously that we cannot interfere with the Industrial Tribunal's decision. We note, of course, the important recent case of Duffy v. Yeomans & Partners Ltd

[1994] IRLR 642

, in the Court of Appeal rightly drawn to our attention, where the boot was rather on the other foot, so to speak, and where the Court of Appeal held that an Industrial Tribunal had not erred in holding that an employers failure to consult the appellant employee before dismissing him on grounds of redundancy did not render the dismissal unfair in circumstances where the consultation would have served no useful purpose, even though the employer had not made a deliberate decision not to consult. In our judgment that is a different situation from the situation that this Tribunal was faced with, and accordingly we cannot interfere for the reasons I have given with that decision of the Industrial Tribunal.

In considering the second ground of appeal we remind ourselves that it is required under Polkey , that when it gets to consider the question of compensation, that the Tribunal must then consider whether, had there been consultation, it would have made any difference. Here again, we have looked carefully to see whether the second point, so to speak, is made out, which is to the effect that no tribunal, properly directing itself, could have said that it was probable that, had there been consultation, Mr Pilkington would have remained in employment up till 26th November 1993.

We again take the view here that the Industrial Tribunal asked itself exactly the right question. It asked itself whether, had there been consultation what the effect would have been. I quote from the Tribunal's decision:-

"In the light of the decision of Polkey vAE Dayton Services Limited [1987] IRLR 503 HL we have considered had there been consultation, what the effect would have been and we have come to the conclusion that the applicant would have probably remained in his employment with the respondents at least until 26 November 1993."

Now here again the reasoning is very short, and there is no particular reason, explicitly set out, for the selection of the date of 26th November 1993. We have had to look closely at that therefore. It was pointed out by Mr Woodhouse that it may be that that date related to the hope and plan and intention of the employers that things may take an upturn by December 1993 and that for that reason the Tribunal reached the conclusion that the 26th November 1993, was the appropriate date when, had there been consultation, it is probable that Mr Pilkington would have remained in employment. Here again, we take the same view as we do in relation to the first matter. We cannot possibly say, as a matter of law, that this Tribunal was not justified in reaching this conclusion, which was essentially one of fact, once they had posed themselves the right question.

Accordingly, we reach the conclusion that, for the reasons we have stated, and despite the very clear and straight forward way in which Mr Tooze has presented his argument before us, their Appeal must be dismissed.