Varig Brazilian Airways v Tully [1997] UKEAT 1014_96_1007

EAT
Varig Brazilian Airways v Tully
[1997] UKEAT 1014_96_1007 · 1997-07-10

JUDGE J HULL QC:

This is an appeal to us by Varig Brazilian Airlines against part of an award in favour of a former employee, Mr Tully.Mr Tully began his career with the Airlines in 1976 and most if not all of his time was spent in this country. He apparently had a rather special position because he was concerned with the Brazilian community in this country and they represented a rather specialized section of the Airline's business. We do not need to go into that. There came a time when the Airline was experiencing some financial problems in this country. There was a shortage, it was said, of work. It is admitted for present purposes there was what is called, in layman's language at any rate, a redundancy situation, that is to say that it was necessary to make economies and to part with certain members of staff and Mr Tully was one of those chosen. He was made, as it was put by the employers, redundant on 31 July 1994 and he was paid a sum which was said to be as follows by the employers: £4,407.50 for redundancy money and an ex-gratia payment of £11,129.He presented his complaint to the Industrial Tribunal on 27 September 1994, saying that he had been unfairly dismissed and asking for reinstatement. There was a letter written by the employer's representative, Mr Greenhalgh, at page 14 of our bundle and which evidently was intended to stand and allowed to stand as notice of appearance. It deals with other cases, too, but it deals with this one and in that Mr Greenhalgh wrote:
"My client does intend to resist the applications made ... The applicants were dismissed. The reason for each dismissal was redundancy."
He then mentioned the severance payment and how it was based on an agreement in an earlier case. That was the situation.There was a communication, again written by Mr Greenhalgh, on 27 June 1995, in which he sent a copy of a sworn statement by the General Manager in this country, a Mr Bjarne Eklund and Mr Greenhalgh said:
"In the light of the revised instructions mentioned in the fifth paragraph of this statement, I wish to apply for leave to amend the respondent's notices of appearance ... The respondent does not now wish to contest the applicant's claims with respect to liability, but wishes the tribunal to determine what, if any, compensation is payable to each of the applicants."
Mr Eklund said in his sworn statement, as it is called, after setting out the needs of the company:
"I believed at that time that we had done as much as was possible and necessary to inform and consult the staff and the unions about the developing situation. I have since been advised that we should have had more, and more formal, consultation with the union about how staff should be selected for dismissal by reason of redundancy. In the light of that advice I have instructed that VARIG should not now contest the cases before the tribunal with respect to liability."
To a first reading that would suggest the situation was really clear. There had been a redundancy situation, Mr Tully was one of those unfortunate enough to be selected for redundancy as a result. The only question was whether he had been fairly treated in being selected and it was now conceded he had not been properly consulted and, therefore, it was conceded that was unfair and the only question was, in accordance with the principles of law, how much he should be awarded, if anything, in respect of the unfairness. That would have been, I think, the superficial view of most people looking into it.The case was heard by the Industrial Tribunal. The Tribunal sat at London (North) under the chairmanship of Mrs Prevezer, with two industrial Members, on 21 May 1996. The question of liability was conceded. They heard some evidence. Mr Patrick gave evidence to them. Mr Patrick spoke of the redundancy, the decision to make Mr Tully redundant. They received the sworn statement which I have mentioned and there was also a letter which we have been shown of 19 April 1995 which we believe was shown to the Tribunal. These details do not matter very much. We are told that the Industrial Tribunal are wrong in saying that Mr Tully appeared in front of them in person. He was represented by a trade union official. Mr Greenhalgh was there for the employers.We think that the best thing is to look at what was being said by the Tribunal to see whether there is, in fact, any error of law which is shown here. They say in the first paragraph:
"There was a previous hearing which was adjourned to enable the Respondents to bring evidence to show why it was not practicable to order reinstatement or re-engagement (which was what Mr Tully wanted).
2. We heard evidence from a Mr Patrick who is the Commercial Manager for the Respondent company who informed us that the redundancies had been made due to financial pressures and that the numbers employed are dictated from the headquarters in Brazil. However it appears that most of those made redundant were Brazilians whilst British were retained. The Applicant who is Brazilian had been employed in the sales department and Mr Patrick informed us that no one else had been employed in that department since the redundancies in 1994. ... In addition there was evidence to suggest that they could not reinstate the Applicant as he did not get on well with his colleagues.. ..4. We find that it is not practicable for the employer to comply with an order for reinstatement or re-engagement in this case because there was no employment available and he would not work well with the rest of the staff following the Applicant's letter to the President."That was a letter which was written some time after the redundancy and certainly some of the things said in that letter by him might make it difficult for him to be reinstated. That was, of course, a matter for the Tribunal and not for us.On the face of it, therefore, the Tribunal were looking into the question of reinstatement and looking at the practicalities of that. Were there still any employees left in the department? Were there other reasons why he should not be reinstated? They set out the redundancy payment, as it was called, and the ex-gratia payment and they say:
"6. The Applicant has claimed unfair dismissal and initially that had been resisted by the Respondents claiming that the reason for the dismissal was redundancy. In June 1995 following a sworn statement from a Barry Eklund who was the general manager of the United Kingdom and Scandinavia for the Respondents, Mr Eklund admitted that the dismissals were unfair as there had not been formal consultation with the Unions as to how the staff should be selected. As liability was admitted we did not hear direct evidence of the reason for the dismissal. We find from the evidence that we did hear that the reason for the dismissal was unfair as admitted and also because he had difficulty working with his colleagues and because he was Brazilian."
On the face of it that does cause us a little concern. What had been admitted was that the procedure was unfair, there had not been proper consultation. It had not been admitted that the reason was unfair, as the Tribunal says, and it is rather disturbing to hear them saying this when they say:

"... we did not hear direct evidence of the reason for the dismissal"

the evidence about difficulties working with his colleagues and the evidence about his being a Brazilian, of course, came in on the question whether it was practicable to reinstate him, so there is a certain doubt and difficulty in our minds about that.Then they refer to the case of Bullman v Allmakes Ltd (1995) IRLR . In that case, the Court of Appeal referred to the provisions of s.73(9) of the Employment Protection (Consolidation) Act 1978. That Act, which has now been replaced, provided that:
"The amount of the basic award shall be reduced or, as the case may be, be further reduced, by the amount of any redundancy payment awarded by the tribunal ... in respect of the same dismissal or of any payment made by the employer to the employee on the ground that the dismissal was by reason of redundancy ..."
and it was held in that case by the Court of Appeal that if such a deduction was to be made it had to be genuinely a case of the termination being by reason of redundancy. It was not enough for the employer simply to think that or to say that. They said that the two limbs of that subsection were to be construed in the same way. Of course, since the Industrial Tribunal in the present case was minded to say that reinstatement was not practicable and, therefore, to order the proper measure of compensation, they had to decide that question. Was the dismissal by reason of redundancy or for some other reason? If it was by reason of redundancy then, of course, they had to make the appropriate deduction in respect of the sum paid ostensibly for redundancy. If it was for some other reason, then that result would not follow, so they had to address their minds to that situation and they quoted from that decision and then they went on to say as follows:
"11. In applying these principles the case before us we also find that section 73(9) does not apply in these circumstances where the Applicant was unfairly dismissed"
pausing there, of course s.73(9) only applies where the Applicant has been unfairly dismissed, so it is a strange way of putting it.
"despite the fact that the Respondents at the time thought that they were dismissing the Applicant by reason of redundancy as there were other reasons for his selection other than redundancy."
They proceeded, therefore, not to make the s.73(9) reduction.We ask ourselves, is that on the face of it a decision which is satisfactory in law? We bear in mind what Mr Greenhalgh has said about the misapprehensions and difficulties. Certainly, the employers entered into this with the not unreasonable belief that what they were talking about was simply quantum and the Tribunal, as a result of their view of the case, had to decide the question whether the reason or, as the Act puts it, the principal reason, for dismissal was redundancy. Quite plainly, subsection (9) of s.73 has to be read in that way; that the principal reason for the dismissal was redundancy. In that case the deduction has to be made, otherwise not. It must be a case of "the principal reason"; if one looks at s.57, it is the duty of the employer to show what is the reason, or if there is more than one, the principal reason for the dismissal. It certainly would not be enough to prevent such a deduction if it could be shown that, the principal reason being redundancy, there were other reasons. The burden was on the employer to prove what the principal reason was. The employer thought that that was a matter of concession. It evidently was, or was seen to be by the Tribunal, not a matter of concession. The burden was, therefore, on the employer.The Tribunal was either under a duty to say "We were quite unable to find what the principal reason was" or to say, "The principal reason was something else". Here they have done neither of those things. They simply say in paragraph 11 that:

"there were other reasons for his selection other than redundancy"

No doubt there were. But the question for them was, was the principal reason for this dismissal redundancy? To that we think, having embarked on that enquiry, they were obliged to answer "Yes" or "No". If the principal reason was redundancy, then they were obliged to make the deduction; if there was some other reason, then either they had to state what that other reason was or to say, if they truthfully could, that they were quite unable to decide what the principal reason was.In those circumstances, we think that this decision is expressed in an unsatisfactory way. Miss Eady reminds us quite rightly that we were not present at all that passed. She points out quite rightly that there were opportunities or appear to have been opportunities for the employers to understand quite clearly what was happening and to make sure the Tribunal were fully apprised of the employers' case. That may well be so but the fact is that, having looked at the matter, the Tribunal, in paragraph 11, have not given what seems to us to be a satisfactory answer to the question which they were asked about the proper way in which compensation was to be assessed. Miss Eady says, and this is logically a forceful submission, that they referred to Bullman , which makes quite plain what the test is, they applied that and they did not make the deduction. She says it follows that they must have found that the principal reason was not redundancy. That, with respect, it seems to us, will not do. The Tribunal's decision should tell the parties plainly why they have won or why they have lost on the issues in the case. It does not need to do so at length but it must tell them. To say, "Oh, well, you must infer from our decision, and the way in which we do the arithmetic, that we have reached a clear conclusion on the topic", in view of this, with all respect, rather muddled last paragraph, seems to us to be going too far. A decision which requires Miss Eady to spend perhaps 45 minutes and use great skill in explaining the matter to us, for which of course we are very grateful, is not a satisfactory decision. We think, therefore, in all the circumstances, the right and just course is to remit this case to the same Tribunal. It may of course be that they reached a perfectly sound conclusion on these matters but the fact is that they have not expressed it clearly, so that we can understand it plainly. We think the right thing for them to do, and this is what we ask them to do in remitting it to them, is to take such steps as they think right, whether by reopening the hearing and asking the parties (of course, they will hear the parties about this) whether they wish to submit any further evidence, or whether simply by asking the parties whether they wish to make further submissions, whichever way seems to them to be just, to reopen the matter. They must make quite clear to the parties the basis of their decision on this important matter, whether they find that the principal reason for the dismissal was redundancy or not, giving no doubt such reasons as seem right for that decision. So that is the order which we propose to make. Those are the reasons of us all.