A E Reynolds Ltd v Hodge [1996] UKEAT 975_95_1402

EAT
A E Reynolds Ltd v Hodge
[1996] UKEAT 975_95_1402 · 1996-02-14
MR JUSTICE MUMMERY (PRESIDENT) : This is the preliminary hearing of an appeal against the decision of the Industrial Tribunal held at Liverpool on 6 December 1994. The Tribunal unanimously decided that Mr Hodge had been unfairly dismissed by his former employers, the Respondents A E Reynolds Ltd. The Tribunal held that he was not entitled to a basic award because he had received statutory redundancy pay and that he was only entitled to a compensatory award of £182.The Tribunal explained their reasons for these conclusions in their extended reasons sent to the parties on 8 March 1995. A E Reynolds Ltd appealed against the decision. Their Notice of Appeal was served on 15 February 1995. In the Notice of Appeal they stated two grounds on which they said the Industrial Tribunal had made legal errors. First, the Tribunal found, as a fact, that, had there been consultation prior to dismissal, the decision to dismiss would have remained unchanged. It was therefore contended that consultation would have been futile and the Appellant did not act unreasonably or unfairly in not consulting. Secondly, the Tribunal erred in law in that they found that, had there been consultation, the Applicant would have been employed for a further two weeks. Those are the two main points made at the Preliminary Hearing today by a Director of A E Reynolds, Mr Mahoney.We have to decide whether the points relied on by Mr Mahoney are arguably errors of law by the Tribunal in their decision. If there is no reasonably arguable legal point, then the appeal will be dismissed now, without a full hearing at which Mr Hodge either attending in person or with representation. The further point is that the Tribunal has no power to change a decision of an Industrial Tribunal because it disagrees with the facts found by the Tribunal, or because this Tribunal would have reached a different decision if they had been sitting at Liverpool hearing this case. The limited power of this Tribunal is correcting legal errors by Industrial Tribunals. Did this Tribunal commit any error?It is a straightforward case. Mr Hodge started his case on 15 August 1994. He complained he had been unfairly dismissed from his job as a vehicle transporter driver. He had been employed in that job by the company since August 1991. His complaint was that, when he arrived for work on the morning of 9 August 1994, he was told by the service receptionist that he was to drive a customer to West Derby. When he got back at about 8.40 a.m. he was called up to the Boardroom by the Manager, Mr Shaw. Shortly afterwards Mr Mahoney came in and said "I've got some bad news, the Transporter hasn't been making any money for the past year, so we're going to have to make you redundant." Mr Mahoney then handed him a typed letter outlining the reason for his departure and paid him the money due, together with a cheque and advised him it would be best if he left right away. Mr Hodge said that he knew A E Reynolds were still using the transporter. Someone else was now driving it.A E Reynolds disputed the claim. They said that Mr Hodge had been dismissed because he was redundant. They explained in the Notice of Appearance, signed by Mr Mahoney and dated 20 September 1994, that, due to a severe drop in business, it had been decided they could no longer afford to retain a full-time driver for the transporter. The transporter is still in use as and when required, but is driven by existing staff, usually car cleaners. There is no full-time transporter driver. Mr Hodge has not been replaced.That is the dispute as to the reason for dismissal. The Tribunal found in the extended reasons that the reason for dismissal was redundancy. They said in paragraph 11:
"Under Section 57 of the Employment Protection (Consolidation) Act 1978, there are five potentially fair reasons for dismissal. It was clear in this case that Mr Hodge was dismissed by reason of redundancy, which is one of those potentially fair reasons."
On that aspect of the case, the Tribunal accepted A E Reynolds' contentions. The next question was whether the company had acted reasonably in treating the redundancy as justifying Mr Hodge's dismissal. On this aspect of the case they found as a fact that the company was a family business of motor traders operating out of two locations - Liverpool and Southport. They employed about sixty people. The requirement for the use of the transporter had diminished over the years, principally as a result of the way in which the trade had altered. The Directors took the view at a meeting in July that, in view of the relatively low usage of the transporter during that month, they no longer required a full-time driver. This was confirmed when they consulted Mr Shaw who ran the body shop and was responsible for overseeing the transporter. The Directors considered the options for Mr Hodge, but felt there were no other jobs for him.The Tribunal did, however, find that:
"13. Although the company is relatively small, there are a number of positions, which, to a greater or larger extent, Mr Hodge could perform. For example, there was a full-time and a part-time service driver and a full-time parts van driver. Mr Hodge himself had previously driven the parts van and certainly felt capable of becoming a service driver. On the other hand, Mr Mahoney was perfectly happy with the current incumbents, although the two full time ones had less service than Mr Hodge.
14. The transporter itself was being used less than every day and in future would be driven by people such as the paintsprayer and technician, who would be taken off their normal jobs."These findings led the Tribunal to consider the question of consultation. The issue is, as apparent from the two grounds of appeal, at the heart of this case.There is no doubt about the general legal principle. It is as laid down by the House of Lords in Polkey [1987] ICR 142 . In a case of redundancy the employer will normally not act reasonably unless he warns and consults any employees affected. In this case Mr Mahoney's case was that there had not been warning or consultation, but this was a case where a reasonable employer might take the view that consultation would be utterly futile. Mr Mahoney has told us that in fact - though this does not appear in the Notice of Appearance or in the decision - a conscious and deliberate decision had been taken by the company not to consult with Mr Hodge. He said advice had been taken on that. Reliance was placed on a decision of the Court of Appeal in Duffy v Yeomans . That case decided that it would not be unfair to make someone redundant without consultation in circumstances where no reasonable employer would have consulted. That would not be unfair for lack of consultation.The Tribunal took note of Mr Mahoney's view, though it does not seem from the decision that they took note of a point that this was a deliberate and conscious decision not to consult. That is not the issue, however, because the Tribunal did make it clear both in paragraph 15 and 16 that they could not accept the view that Mr Mahoney and his fellow Directors had formed about consultation. They said:
"15. ... There were possibilities that the work might be organised in a different way such that Mr Hodge might be retained."
and then in a crucial paragraph:
"16. In other words, we do not believe a reasonable employer might reasonably have acted as the company did in this case and for that reason we find the dismissal to be unfair."
In our view, there is nothing legally incorrect in what the Tribunal have said. The question they had to decide related to consultation; although the word consultation is not mentioned in Mr Hodge's application to the Tribunal, it is clear from the facts summarised about the circumstances of his dismissal, that part of his complaint was that he was simply told one morning, without warning, that he was redundant. The Tribunal considered this issue. They asked themselves the correct legal question: would a reasonable employer have failed to consult in the circumstances of this case? They said no. A reasonable employer would have consulted. It followed that the dismissal was procedurally unfair, even though there was a fair reason for making Mr Hodge redundant.The Tribunal then looked, as they were legally correct in doing, at how this affected compensation. It did have an important affect on compensation, because the Tribunal came to the conclusion in paragraph 19 that, having considered what would have happened if the appropriate consultation had taken place and all the possibilities had been canvassed, consultation would not have had an effect on the decision. The net result would have been the same: Mr Hodge would have been dismissed by reason of redundancy.That conclusion of the Tribunal did not make what was an unfair dismissal fair. What it did was to affect, probably drastically, the amount of compensation. As their view was that Mr Hodge would have been made redundant anyway, he was not able to claim full compensation for loss of his job, because he would have lost his job, even if he had been treated fairly in relation to his dismissal. What the Tribunal did, and in our view it is legally correct, was to ask what would have happened if he had been consulted? The most that would have happened is that he would have retained employment while he was consulted. Their estimate was that he would have been employed for a further two weeks. Two weeks pay was £182 nett. That was the award they made.In our view, there is no legal error in that. Mr Mahoney's case was this: how could the dismissal be unfair for lack of consultation when consultation would not have made any difference to the result? He repeated that he had taken advice to the effect that there was no need to consult in this case. On the basis of that advice, a deliberate decision was made not to consult. There were good reasons, he said, for not consulting this particular individual. He said, relying on the case of Duffy & Yeomans , that it was not unfair to omit consultation, because it would have been a futile exercise.In our view, these submissions are not legally correct. It does not follow that consultation is futile because that consultation would not have made any difference to the result. Consultation might make a difference to the result. As explained by Lord Bridge in Polkey , it is an important part of a fair procedure for redundancies. The purpose of consultation is to discuss the possibilities -to put forward proposals, to consider counter-proposals and possibly arrive at a different decision. The fact that a different decision is not arrived at, does not mean that the process has been futile or a waste of time. In our view, the Tribunal were entitled, on the facts that they found, to conclude that this was a procedurally unfair redundancy, because a reasonable employer would not have acted in the manner that A E Reynolds acted in making Mr Hodge redundant. There is no error of law in the compensation that they awarded. We do not think that there is any point in this case proceeding to a full appeal. It will be dismissed. Leave to appeal is refused.