Ryan v G T (Golden Triangle) Design Ltd [1996] UKEAT 300_96_0111

EAT
Ryan v G T (Golden Triangle) Design Ltd
[1996] UKEAT 300_96_0111 · 1996-11-01
MR JUSTICE MORISON (PRESIDENT): This is a case which has a slightly unfortunate history in the sense that it has been before an Industrial Tribunal, then to this Court, and then back to another Tribunal and now back to this Court.The first Tribunal concluded that the reason why Mr Ryan had been dismissed was on the grounds of capability, but that his dismissal was unfair procedurally and substantively, and were minded to make him a compensatory award of just under £9,000. There was an appeal against that decision and the matter was referred back to another Tribunal for them to apply their minds to the question - which is frequently in jargon terms referred to as the " Polkey " decision - what would have happened had the employers acted fairly, because in a capability case in particular, if not enough time has been given for the employee to settle down, a question will certainly arise as to what would have happened if a reasonable period had been given by the employer.The background facts may be shortly stated. For some two years Mr Ryan had been employed by a small company called GT (Golden Triangle) Design Ltd., which on the findings of the first Industrial Tribunal employed some eight full-time designers, one full-time administrator and one part-time, with one sales representative, namely Mr Ryan. The business was managed by two directors. Mr Ryan was in charge of sales. He was employed in a small business. It was the evidence of the employer, given to the original Industrial Tribunal, that throughout the period of two years Mr Ryan had been unable to develop sales and to earn money which was sufficient to cover his own costs as an employee, by which I mean his own costs in terms of salary and benefits, quite apart from any question of overheads.When the matter came before the second Tribunal they had to apply their minds to the question of the Polkey decision in the light of a decision called Wolseley Centres Ltd v Simmons [1994] ICR 503 and in particular the passage at page 508 E-G . Essentially the first question they had to ask themselves is: what would a fair employer have done in this case? They concluded unanimously:
"... the applicant having been told in July 1993 that he had nothing to worry about, a reasonable employer would have given him a period of at least three months thereafter in which to improve his sales figures and would have given him clear warnings as to the likely consequences of failure. "
Against that decision of the Tribunal there is no appeal. Having asked themselves that question, the next question they were required to answer was whether it was reasonably clear, one way or the other, that the employee would have been dismissed or would not have been dismissed. The Tribunal's conclusion as set out was:"We do not think, on the basis of the earlier findings, that the applicant's sales figures would have improved and, in our view, he would have been dismissed at the end of October 1993 whether by notice or without notice and payment of a month's salary in lieu thereof."...We take that to be a recognition by the second Industrial Tribunal that it was clear to them on the material before them, that the employee would have been dismissed if, in any event, at that time if the employers had acted correctly. Against that finding this appeal has been lodged.It is said in the first instance that effectively the Industrial Tribunal on the second occasion did not have regard to the proper test to be applied, nor to the need to have further evidence. So far as the test to be applied is concerned, it is only if a Tribunal does not think that the position is reasonably clear, that they are required, as a third stage, to assess the percentage chances. The Tribunal never arrived at the assessment of a percentage chance. It is submitted, in effect, that they did not do so through error. On the contrary we are of the view that there is no reason to believe they have misdirected themselves in law. They never arrived at the third stage because they had concluded that it was reasonably clear that the employee would have been dismissed in any event.As to the question of the material which was available to enable them to arrive at that finding, in paragraph 3 of the second Tribunal's decision, they refer to the fact that they had heard representations from both parties. Indeed the Applicant had submitted a written Skeleton Argument, in support of his contention at the second Industrial Tribunal that there was really no material for believing that the original award should be reduced in any way. It was his submission that it would not be proper for the Respondent to be allowed to adduce fresh evidence in the present hearing, because it would allow the Respondent a second bite of the cherry.He referred in his Skeleton Argument to the evidence which had previously been given to the effect that he would have been dismissed in two months in any event, and sought to deal with that in paragraphs 9, 10 and 11.On the other hand, the Industrial Tribunal also had representations from Mr Jones. He reminded the Industrial Tribunal on the second occasion, that Mr Ryan had not been covering his costs; that they were running a small business and not a charity; and that despite a meeting which had taken place in June 1993 at which the sales figures had been discussed, there was no improvement in his performance. Hence Mr Jones' submission to the Industrial Tribunal that, on the material that there was available to them, there was no basis for concluding that there was any chance that the sales figures would have improved, because they did not improve after the June meeting.It seems to us that there will be cases where an Industrial Tribunal should hear further evidence when dealing with a Polkey case. However, they will also wish to bear in mind that the Polkey exercise requires them to ask a hypothetical question, the answer to which is not going to be provided in the normal way by evidence which they can accept or reject, simply because, ex hypothesi, they are considering events which could not have occurred: they are asked to apply their minds to what would have happened but did not in fact happen. So they were faced with this difficulty. They had to ask themselves this question: would the Applicant's sales figures have improved during the trial period which they thought should have been given to him?On all the material which they had available to them, based partly on the fact that for two years he had not covered his costs, it seems to us manifestly clear that they had material on which they could then conclude that the answer to the question was clear: namely, that there would not have been such improvement as to save him from being dismissed. On that basis it was not necessary to ask what the percentage chances were, because the evidence was overwhelmingly clear, both based on what had happened before and having regard to the representations which were made to them on the second occasion.It seems to us that the way the Tribunal have conducted themselves on the second occasion cannot be faulted and particularly having regard to the submission which was made by the Applicant, that it would be wrong to allow the Respondents to give any further evidence in the case. Accordingly, we are not persuaded that the decision was wrong, on the contrary, we believe it to have been correct and therefore we dismiss this appeal.