MR F L LAYTON v THE BLACKPOOL FOOTBALL CLUB LTD [2000] UKEAT 1095_99_0612

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2000] UKEAT 1095_99_0612

Case No Appeal No. EAT/1095/99

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MR F L LAYTONAPPELLANT

THE BLACKPOOL FOOTBALL CLUB LTDRESPONDENT

Before

Mr Justice Bell Mr A E R Manners Mrs T A Marsland

Date 6 December 2000

[1]APPEARANCES For the Appellant MR MICHAEL MORRISON (Solicitor) Messrs Gorna & Co Solicitors Virginia House Cheapside King Street Manchester M2 4NB For the Respondents MR KENNETH CHADWICK (Deputy Chairman) The Blackpool Football Club Ltd Oyston Mill Strand Road Preston PR1 8YR MR JUSTICE BELL : This is an appeal by Mr Frank Layton against the reserved decision of the Employment Tribunal held at Manchester on 25th June 1999. The decision with extended reasons was promulgated on 22nd July 1999. Mr Layton alleged unfair dismissal and breach of contract by the respondent. The effect of the tribunal's decision was that the reason for Mr Layton's dismissal was redundancy; that the dismissal was unfair but that Mr Layton had only 50% chance of retaining employment with the respondent had it acted fairly; that the respondent was in breach of contract in dismissing Mr Layton without proper notice; that the proper award of damages was £1,320.27 and that after taking account of those damages and a 50% " Polkey reduction" the proper award for unfair dismissal was £2,254.96. The appeal challenges the tribunal's finding of a redundancy and the tribunal's approach to that finding. If that finding survives, the appeal goes on to challenge the tribunal's approach to the assessment of compensation in two respects: namely, the 50% reduction and limitation of future compensation to a period of 12 weeks from the date of the tribunal hearing.

[2]The factual history, as found by the tribunal, is that Mr Layton was first employed by the respondent on 11th September 1995 as a lottery sales executive. On 5th May 1998 he was promoted to the position of commercial manager with a substantial increase in salary and potential commission. He had the use of a company car in both positions. The respondent company is part of a group of companies controlled by the Oyston family. In 1998, shortly before Mr Layton's appointment as commercial manager, a fraud by an employee of one of the companies deprived the Group of substantial sums of money. The respondent company itself carried out a number of activities, it did not just run the football team. Some were profitable and some were not. Overall the respondent company was not profitable with substantial operating losses for the years ending 31st May 1997 and 31st May 1998. It had been supported over the years by injections of capital by the Oyston family.

[3]In September 1998 the respondent dismissed an accountant employee for redundancy. But in December 1998 it appointed a retail manager of its shops at Mr Layton's suggestion. The appointee, Mr F, took up the job on 18th January 1999.

[4]In early January 1999 Mr Tingle, the Group accountant, Ms Bridge, the respondent's managing director, and Mr Karl Oyston, a director of the respondent, considered the respondent's financial position. There was a downturn in revenue due to the protests of some fans, and management accounts showed a continuing operating loss of a substantially higher amount than the previous year. The three decided that they should cut the respondent's overheads by dismissing an employee or employees and they chose Mr Layton. He was dismissed on 11th January 1999 with immediate effect and without notice.

[5]At paragraph 9 of the extended reasons for its reserved decision the tribunal concluded:

"… They [ the three ] then decided that they should cut the overheads of the respondent company by dismissing an employee or employees and they chose the applicant. We accept they decided that they could re-distribute his duties amongst remaining employees and that was the basis of their choice."

[6]At the same time the three decided that they could dismiss the assistant to the head of stadium development, although he was not actually dismissed until April 1999. At the same time, also January 1999, they decided that the contract of the chief scout could be terminated. In April 1999 the respondent's managing director, Ms Bridge herself, was dismissed. Some of her responsibilities were taken on by the directors.

[7]At the same time, in April 1999, the head of stadium development was dismissed and it was decided that the proposed new stadium development would not go ahead immediately.

[8]At the outset of the tribunal hearing the respondent admitted that Mr Layton's dismissal was unfair because he was not consulted about the alleged removal of his post or any alternatives to dismissal before making the decision to dismiss him or actually dismissing him. But it asserted that redundancy was the true reason for his dismissal and that in the prevailing circumstances consultation would not have made any difference to the result. Alternatively, Mr Layton only had a percentage chance of retaining his employment had the respondent acted fairly it contended. The respondent also admitted that it was in breach of contract in dismissing Mr Layton without notice. No term of notice was specified in his contract of employment but obviously he was entitled to reasonable period of notice. The respondent paid Mr Layton £4,154 at the time of his dismissal. £990.00 was the statutory redundancy payment which left the balance of £3,164 to mitigate his loss. Mr Layton made strenuous efforts to find new employment. On 8th March 1999 he started employment with Liverpool Football Club as a sales manager. After about 7½ weeks he left to take employment with another company as a promotions manager. He was in that work at the time of the tribunal hearing, 5½ months after his dismissal. Both his jobs after leaving the respondent brought a company car but less remuneration than he had earned with the respondent.

[9]The tribunal decided that a reasonable period of notice for termination by the respondent of Mr Layton's contract was three months. After carrying out the appropriate calculations, it arrived at a loss of earnings during that period amounting to £4,484.27. Less the sum of £3,164, that led to the award of damages of £1,320.27 for breach of contract.

[10]There is no challenge to that part of the tribunal's decision. With regard to the issue of whether the reason for Mr Layton's dismissal was redundancy, the tribunal found the matters which we have already quoted from paragraph 9 of the extended reasons. At paragraph 12 the tribunal concluded:

"12. We have come to the conclusion that we accept that the respondents decided to remove the applicant's post from their organisation. Although it is true that they were almost simultaneously creating a new post of Retail Manager and that Mr F was engaged seven days after the applicant's dismissal, we are satisfied that that post was a completely different post with different duties and a different level of responsibility. We therefore come to the conclusion that the reason for the dismissal in this case was truly redundancy as the respondents decided that they no longer had a need for an employee of the description of the applicant namely, a Commercial Manager, with the portfolio of duties which he then had."

[11]The tribunal then turned to what would have happened if the respondent had carried out proper consultations in the following terms:

"13. The applicant gave us some evidence of what he felt he could have urged if the respondents had consulted him about his position before making their decisions. We are satisfied that there were a number of matters which he could have put forward and which he would have done. First, he would have argued that although his post meant fairly substantial outgoings he could and would increase the revenue for the company if left in post and that therefore the net effect of retaining his services would be an improvement of the company's position. Secondly he would have argued that his services should be retained and another employee dismissed, with him taking on extra duties so that if necessary his continuing duties would be enlarged. Thirdly he would have argued that Mr F should not be appointed in the new circumstances and that he should be offered that role with or without other duties and if necessary with a reduction in his remuneration. Fourthly he could have argued that one of the existing two Gold Bond Lottery agents, who between them covered the whole of the country, should be dismissed instead and he should be given that role."

[12]The tribunal found, in effect, that Mr Layton would have been prepared to cover one of the lottery agent's areas, despite an earlier wish to reduce to his travelling, and that his previous retail experience suited him for the retail manager's role and for other sales roles which existed in the organisation. It noted the deferral of the dismissal of the assistant head of stadium development, and that although the respondent's operating loss was considerable, Mr Layton's point about the net cost of his post might well have carried some force as the lottery operation had expanded considerably during the period of his involvement. It accepted that Mr Layton would have been likely to accept a reduction in salary if necessary. The tribunal went on to conclude at paragraph 21 of its extended reasons:

"… We think it very likely that the respondents would have found it necessary to offer the applicant a lower salary despite the consultation. We bear in mind that the respondents had been prepared to create a new post in May 1998 after they had received the applicant's arguments at that time. We do accept that the respondents were genuinely seeking reductions in overheads and that such reductions from their point of view were a more certain way of reducing the deficits than the hope of greater revenue. We do feel that the applicant had a high chance of retaining some employment balancing all the considerations. Bearing in mind on the one hand the high possibility of the applicant having to accept a reduction in salary of some sort, together with the evidence that later in the year the respondents found other cuts by dismissals and that he equally had a high chance of retaining some employment at a speculative level of income we have come to the conclusion that the respondents have shown that he only had a 50 per cent chance of retaining his employment."

[13]Since the factors which the tribunal took into its reckoning included both prospects of employment at all by the respondent after 11th January 1999, had there been proper consultation, and prospects so far a salary was concerned in any employment by the respondent, we take that last conclusion to be a way of expressing the view that taken in the round Mr Layton's prospects or chance of continued employment by the respondent in some capacity had he not been unfairly dismissed without consultation, were to be valued at 50% of the value of his employment on the pre-existing terms had it continued. So there should be a 50% discount of or against total earnings lost through Mr Layton's unfair dismissal when assessing his compensatory award. (The basic award was cancelled out by the payment of the statutory redundancy pay).

[14]Having made that decision of principle, the tribunal set about the arithmetic. The damages for breach of contract compensated Mr Layton for loss of earnings to 12th April 1999. The tribunal calculated the loss of earnings thereafter to the date of the hearing, on the basis that Mr Layton had stayed in the respondent's employment on his full original package, at £2,242.92. His loss on that basis was continuing at a rate of £178.50 per week, but his new existing position carried bonuses depending on his performance in bringing in funds, and given his previous success in increasing membership of the respondent's lottery scheme, and his previous good track record generally, with much experience to offer, the tribunal concluded that it was likely that he would be offered employment with greater remuneration at some stage in the relatively near future. The tribunal continued:

"23. … We think in relation to the future loss we also have to bear in mind in coming to a figure the further possibility that the applicant would have been faced with dismissal for redundancy by the respondents because of further cuts. We find that it would be just and equitable in all the circumstances to award him £2,142.00 for future loss which is about twelve weeks at his present rate of loss. The applicant has also lost the security of his continuous service but as the qualifying period has now been reduced to one year he only has to work for that period in his present employment before he is entitled to the protection of the Employment Rights Act 1996. We award the conventional figure of £125.00 for that loss. 24. The total Compensatory Award is therefore the interim loss £2,242,92, the future loss of £2,142.00 and loss of statutory rights of £125.00, making a total of £4,509.92 less 50 percent which leaves the figure of £2,254.96. …"

[15]We turn to the contentions of Mr Morrison for Mr Layton on this appeal, prefacing them by saying how grateful we are for the clarity both of his skeleton argument and his oral submissions before us this morning.

[16]The first ground of appeal is that in determining the reason for the dismissal the tribunal misapplied the statutory definition of redundancy in section 139 of the Employment Rights Act 1996 in that it failed to consider the reason for dismissal but looked at the result of the dismissal, namely the removal of Mr Layton's position and the redistribution of his duties. Mr Morrison contends that the tribunal failed to approach the issue correctly by asking, first, whether the respondent's requirements for employees to do work on a particular kind had ceased or diminished and, then, asking whether Mr Layton's dismissal was caused wholly or mainly by the cessation or diminution in the requirement for employees. See Murray and another v Foyle Meats Limited

[1999] IRLR 562

and Safeway Stores PLC v Burrell

[1997] IRLR 200

. Mr Morrison contends that had the tribunal adopted the correct approach the findings of fact which it made would have led it to the conclusion that Mr Layton's dismissal was attributable to the respondent's decision to cut its overhead by the amount of his remuneration and not to any reduction in its requirement for employees.

[17]Section 139(1)(b) of the 1996 Act provides:

"(1) For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to- … (b) the fact that the requirements of that business- (i) for employee to carry out work of a particular kind, or (ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer, have ceased or diminished or are expected to cease or diminish."

[18]In the Murray case the House of Lords held that the language of paragraph (b) asked two questions of fact. The first is whether one or other of the various states of economic affairs exists. In that case, as in this case, the relevant one was whether the requirements of the business for employees to carry out work of a particular kind had diminished. The second question was whether the dismissal was attributable wholly or mainly to that state of affairs. See the leading speech of the Lord Chancellor, Lord Irvine of Lairg, at paragraph 5 of the report. At the end of his speech Lord Irvine said:

"The key word in the statute is 'attributable' and there is no reason in law why the dismissal of an employee should not be attributable to a diminution in the employer's need for employees irrespective of the terms of his contract or the function which he performed. Of course the dismissal of an employee who could perfectly well have been redeployed or who was doing work unaffected by the fall in demand may require some explanation to establish the necessary causal connection. But this is a question of fact, not law."

Lord Irvine commended the analysis of the statutory provisions by Judge Peter Clark in the Safeway Stores case. In that case at paragraph 24, page 203, Judge Peter Clark said:

"Free of authority, we understand the statutory framework of s.81(2)(b) [ the predecessor of section 139(1)(b), in the 1978 Act ] to involve a three-stage process; (1) was the employee dismissed: If so, (2) had the requirements of the employer's business for employees to carry out work of a particular kind ceased or diminished, or were they expected to cease or diminish? If so, (3) was the dismissal of the employee (the applicant before the industrial tribunal) caused wholly or mainly by the state of affairs identified in stage 2 above?"

After considering various authorities,

Judge Peter Clark continued at paragraphs 69 and 70, pages 206 and 207 of the report:

"The correct approach Like the appeal tribunal in Cowen v Haden Carrier , we started by looking at the statute and construing the words free of authority. Similarly, we have looked at the authorities. Unlike that tribunal, we return to our original approach and conclude first that it was correct, and secondly that no binding authority causes us to abandon that position. We would summarise it as follows: (1) There may be a number of underlying causes leading to a true redundancy situation; our stage 2. There may be a need for economies; a reorganisation in the interests of efficiency; a reduction in production requirements; unilateral changes in the employees' terms and conditions of employment. None of these factors are themselves determinative of the stage 2 question. The only question to be asked is: was there a diminution/cessation in the employer's requirement for employees to carry out work of a particular kind, or an expectation of such cessation/diminution in the future redundancy. At this stage it is irrelevant to consider the terms of the applicant employee's contract of employment. That will only be relevant, if at all, at stage 3 (assuming that there is a dismissal)."

Then at paragraph 71, page 207, as follows: (2) At stage 3 the tribunal is concerned with causation. Was the dismissal attributable wholly or mainly to the redundancy? Thus- (a) Even if the redundancy situation arises, as in Nelson , if that does not cause the dismissal, the employee has not been dismissed by reason of redundancy. …"

[19]Mr Morrison contends that the first ground of appeal went to the answering of the third question in Safeway . What the tribunal found or should have found was that the respondent decided to get rid of Mr Layton and then decided how to distribute his functions. See the sentence, which we have already quoted, from paragraph 9 of its extended reasons:

"They then decided that they should cut the overheads of the respondent company by dismissing an employee or employees and they chose the applicant."

In those circumstances, Mr Morrison contends, that Mr Layton's dismissal was not attributable to the need for less employees but a need to cut the wage bill. Mr Layton was the highest paid employee. But in our view we must note also the last sentence of paragraph 9 of the extended reasons and the first of paragraph 12:

"We accept they decided that they could re-distribute his duties amongst remaining employees and that was the basis of their choice. … 12. We have come to the conclusion that we accept that the respondents decided to remove the applicant's post from their organisation."

In the present case and in the light of those findings, in our view the tribunal in this case did pose and answer the right questions. It found, in effect, that the respondent's need for economies required the removal of Mr Layton's post and that an employee was no longer required in that post to carry out his work which could be redistributed amongst the remaining employees in so far as it was necessary to carry it out. Moreover, that was the cause of Mr Layton's dismissal. It may have been provoked by the need to cut wages and the amount of Mr Layton's wage may have been a factor, but the correct questions were still posed and answered in our view. That, in our view, is the clear affect of the tribunal's decision. Accordingly, this ground of appeal must fail.

[20]The second ground of appeal argued by Mr Morrison is that irrespective of the tribunal's finding as to the reason for the dismissal, the tribunal failed to consider whether the unfairness was procedural or substantive. Had it done so, it was bound to find that the unfairness was substantive in that the respondent chose to dismiss the appellant without any attempt to identify a pool of employees from which to make a selection for dismissal. See Steel Stockholders (Birmingham) Limited v Kirkwood

[1993] IRLR 515

and King v Eaton Limited (No,2)

[1998] IRLR 686

. Steel Stockholders was a decision of the Employment Appeal Tribunal sitting in Edinburgh. In the judgment in that case Lord Coulsfield referred to a familiar passage in the speech of Lord Bridge in Polkey vAE Dayton Services Ltd

[1987] IRLR 503

HL as follows:

"In a familiar passage in his speech in Polkey , supra, Lord Bridge referred to the grounds for dismissal specified in s.57(2) of the Employment Protection (Consolidation) Act 1978, and continued: 'But an employer having prima facie grounds to dismiss for one of these reasons will in the great majority of cases not act reasonably in treating the reason as a sufficient reason for dismissal unless and until he has taken the steps, conveniently classified in most of the authorities as "procedural", which are necessary in the circumstances of the case to justify that course of action. Thus, in the case of incapacity, the employer will normally not act reasonably unless he gives the employee fair warning and an opportunity to mend his ways and show that he can do the job; in the case of misconduct, the employer will normally not act reasonably unless he investigates the complaint of misconduct fully and fairly and hears whatever the employee wishes to say in his defence or in explanation or mitigation; in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representatives, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation.' Lord Coulsfield continued: "

Lord Bridge went on to say that, in considering such a case, the Industrial Tribunal was not entitled to ask whether their failure to take the appropriate procedural steps made any difference to the decision to dismiss, but he subsequently went on to say that, if the taking of the appropriate steps would not have affected the outcome, the employee, though unfairly dismissed, might recover no compensation. In our view, however, those observations were directed to cases in which the unfairness of a dismissal arises from a failure to take steps which can properly be categorised as 'procedural'. They do not apply where the grounds for holding a dismissal unfair arise form the substance of the decision, as was, indeed, conceded on behalf of the appellants in the present case. It was, however, contended on behalf of the appellants that, in a case of redundancy, the basis of selection for redundancy was one of the procedural steps leading to a dismissal. It is true that Lord Bridge included the adoption of a fair basis of selection among the steps which he described as procedural. To adopt an example familiar in the field of administrative law, if an employer selects men for redundancy on the grounds of the colour of their hair, he can scarcely maintain there after that no compensation should be payable because a different basis of selection might have led to the choice of the same employees for dismissal. In any given case, therefore, it is necessary to consider whether the unfairness can properly be classified as procedural, or substantive. In the present case, it is, in our view, clear that the unfairness which the Industrial Tribunal found to exist was related to substance rather than procedure. The Industrial Tribunal's criticism of the employers is, put shortly, that they created an artificially narrow pool from which to make the selection, and that the result of their doing so was to deprive the respondent of something of substantive importance, namely the opportunity of being compared against the whole range of employees who were genuinely involved in the reorganisation which was being carried out. In these circumstances, in our opinion, the principles discussed by Lord Bridge in Polkey have no application to the present case. It was, therefore, not necessary for the Industrial Tribunal to consider whether, on some different basis of selection, the respondent might nevertheless have been chosen to be made redundant. We would only add that, while we accept that it is the duty of an Industrial Tribunal to apply the Polkey principle as a rule of law binding upon them, as was held in Hepworth Refractories Ltd , supra, it is not their duty to embark on an independent investigation of the facts and circumstances in order to see whether they can identify some other criterion of selection upon which the dismissal of the applicant might have been justified when, as was the position, we understand, in the present case, no attempt has been made to ask them to do so, or to suggest what that criterion might have been."

[21]With every respect to the conclusions of our colleagues in Scotland in that case, we would not accept a distinction in principle between "procedural" and "substantive" in fairness for the purposes of deciding whether a Polkey approach should be applied if that is what the judgement in Steel Stockholders requires. We note that in his classification of "procedural" unfairness Lord Bridge included not just failure to warn or consult, but failure to adopt a fair basis on which to select for redundancy and failure to take reasonable steps to avoid redundancy by redeployment which latter features may also be said to amount to substantive unfairness by the definition put forward by Mr Morrison. Moreover, after the part of his speech quoted by Lord Coulsfield, Lord Bridge went on to say at paragraph 30 of the decision in Polkey :

"If it is held that taking the appropriate steps which the employer failed to take before dismissing the employee would not have affected the outcome, this will often lead to the result that the employee, though unfairly dismissed, will recover no compensation, or, in the case of redundancy, no compensation in excess of his redundancy payment. Thus in Earl v Slate & Wheeler (Airlyne) Ltd [1972] IRLR 115 the employee was held to have been unfairly dismissed, but nevertheless lost his appeal to the Industrial Relations Court because his misconduct disentitled him to any award of compensation, which was at that time the only effective remedy. But in spite of this the application of the so-called British Labour Pump principle ( British Labour Pump Co Ltd v Byrne [1979] IRLR 94) tends to distort the operation of the employment protection legislation in two important ways. First, as was pointed out by Browne-Wilkinson J in Sillifant's case, if the Industrial Tribunal, in considering whether the employer who has omitted to take the appropriate procedural steps acted reasonably or unreasonably in treating his reason as a sufficient reason for dismissal, poses for itself the hypothetical question whether the result would have been any different if the appropriate procedural steps had been taken, it can only answer that question on the balance of probabilities. Accordingly, applying the British Labour Pump principle, if the answer is that it probably would have made no difference, the employee's unfair dismissal claim fails. But if the effect of taking the appropriate procedural steps is only considered , as it should be, at the stage of assessing compensation, the position is quite different. In that situation, as Browne-Wilkinson J puts it in Sillifant's case, at p.96: 'There is no need for an "all or nothing" decision. If the Industrial Tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment.'"

That is often called the Polkey reason and we see no reason why that should not apply equally in principle to any example of unfairness including the examples given by Lord Bridge. The distinction between procedural and substantive unfairness and the use of those terms were disapproved by the Court of Appeal in O'Dea v ISC Chemicals Ltd

[1995] IRLR 599

. The question was revisited in King which was a decision of the Court of Session, where Lord Prosser said at paragraphs 15 and 16, page 690 of the report:

"Counsel submitted that notwithstanding these observations, no distinction should be drawn between substance and procedure, when considering whether Polkey reduction was appropriate. In O'Dea v ISC Chemicals Ltd [1995] IRLR 599, Peter Gibson LJ had commented, at 604, 24 that the distinction between substance and procedure was controversial, and he had drawn attention to the comments of Knox J in Boulton and Paul Ltd v Arnold [1994] IRLR 532, doubting: 'whether it is for the Employment Appeal Tribunal to adopt a view that this very well-known and frequently quoted passage in a leading case in the House of Lords does not in effect mean what it says.' And after noting other criticism of what is called a 'predetermined classification of conduct', his Lordship says: 'I do not regard it as helpful to characterise the defect as procedural or substantive, nor in my view should the industrial tribunal be expected to do so, though in fact in the present case the industrial did repeatedly describe the defect as procedural. The fact of the matter is that the applicant lost only one-in-five chance of being retained, and I can see no arguable case that he should have been compensated on the same footing as if he was bound to have been retained but with trade union activities.' The other members of the Court of Appeal agreed. Against the background of these decisions, it was submitted that in the present case, the Employment Appeal Tribunal had misdirected themselves when they said: 'Here, as we understand it, the industrial tribunal were of the view that the system had not been fairly or reasonably applied to the four employees. That seems to us not to be a procedural defect; on the contrary, this went to the heart of the employers' decision to dismiss. We respectfully agree with the industrial tribunal's view that in such case, "there will be no escaping a full award of compensation".' The likelihood that an employee would have been dismissed, even if the employer had not been guilty of the failure which made the dismissal unfair, was a general question; and if there was a degree of likelihood that he would thus have been dismissed in any event, that should be reflected by a Polkey reduction, regardless of how one might categorise the failure, in terms of procedure or substance. It was an error to refuse a tract of evidence on the basis of any such categorisation. Even if one were to draw a distinction between substance and procedure, counsel for the employers submitted that in the present case, of the two grounds for holding dismissal unfair, omission of consultation was 'procedural', whereas the absence of evidence from those who made the markings took one into a field which might be called 'substantive'. If one assumed that enquiry into the possibility of a Polkey reduction was inappropriate in the latter category of cases, there was nonetheless a problem here: the Court of Session had left it open whether there had in fact been any unfairness of that kind. And on the procedural matter of consultation, enquiry into the possibility of a Polkey reduction was plainly appropriate. The proper course would have been to allow the evidence, and thereafter consider whether a reduction was indeed appropriate."

Lord Prosser went on to say at paragraph 19 on page 691:

"We are not persuaded that the various expressions of opinion to be found in previous cases are as difficult to reconcile as may be suggested, or as may have been thought when some of these opinions were expressed. If one reads the whole of the final paragraph of the Opinion delivered by Lord Coulsfield in Steel Stockholders (Birmingham) Ltd , it seems to us that he appreciates that the word 'procedural' does not reflect some precisely identifiable category, far less that it represents a category which could be precisely defined in all cases without enquiry into the facts. In broad terms, it appears to us that there will be situations where one can say that what went wrong was 'merely' procedural. Equally, in broad terms, we think there will be situations where one can say that an employee has been deprived of 'something of substantive importance', to use a phrase of Lord Coulsfield's. We see no need to discard entirely terminology of this kind; and while in many cases it may be inappropriate to allocate the particular facts to either category, or to do so without enquiry, it seems to us that a distinction between the 'merely' procedural, and the more genuinely 'substantive' will often be of some practical use, in considering whether it is realistic, or practicable, or indeed 'just and equitable' to embark upon an attempt to construct a hypothesis, enabling one to assess what would have happened, if only it had. If there has been a 'merely' procedural lapse or omission, it may be relatively straightforward to envisage what the course of events would have been if procedures had stayed on track, rather than briefly leaving the track in this way. If, on the other hand, what went wrong was more fundamental, or 'substantive', and seems to have gone 'to the heart of the matter', it may well be difficult to envisage what track one would be on, in the hypothetical situation of the unfairness not having occurred. It seems to us that the matter will be one of impression and judgment, so that a tribunal will have to decide whether the unfair departure from what should have happened was of a kind which makes it possible to say, with more or less confidence, that the failure made no difference, or whether the failure was such that one simply cannot sensibly reconstruct the world as it might have been. It does not seem to us that there is anything very wrong in using the word 'substantive' in connection with this latter situation."

In our respectful view, that is the distinction, if there is to be one, between "merely procedural" and more "genuinely substantive" unfairness in dismissing an employee by reason of redundancy. It is a purely practical distinction, if any, as to the circumstances in which it may be practicable or may not be practicable to envisage what the course of events would have been if everything had stayed on the right track.

[22]In the present case, in our view, the tribunal did consider the substance of the circumstances surrounding Mr Layton's dismissal, not just lack of consultation. It considered the question of whether it might have been fairer not to appoint Mr F at all, or to dismiss another employee or employees instead of Mr Layton. Consideration of those factors came into the arena because Mr Layton would have raised them had be been consulted, but they were clearly considered by the tribunal in their own right. In our view, having considered all the relevant factors, the tribunal had the evidential material in this case to come to the conclusion which it did, so far as the justice of the 50% reduction was concerned. This ground of appeal must also therefore fail.

[23]The final ground of appeal put forward by Mr Morrison is that the tribunal erred in limiting Mr Layton's compensation in respect of future loss to a sum reflecting a period of loss extending only 12 weeks from the date of the hearing. He argues that the tribunal's decision was perverse as there was no evidence before the tribunal to support a finding that Mr Layton's continuing loss would cease by the end of that period. The decision was based on pure speculation and was contrary to the evidence received by the tribunal in relation to Mr Layton's efforts and success in obtaining alternative employment. The tribunal limited Mr Layton's compensation in respect of future loss relying in part on what Mr Morrison describes as "a speculative factual scenario", namely the possibility of him being affected by further cutbacks upon which it had already based its decision to reduce the compensatory award by 50%. In that respect, the tribunal took into account in regard to both its decision to reduce the compensatory award by 50% and to limit the amount of the award to reflect the period of future loss, the prospect of Mr Layton being affected by future redundancies.

[24]Clearly in concluding that it would be just and equitable in all the circumstances to which it referred to award Mr Layton £2,142.00 for future loss, which was about 12 weeks at his existing rate of loss at the time of the tribunal hearing, the tribunal was painting with a broad brush. But that is often the only way to reach a fair decision in judging loss of future earnings, whether by reason of unfair dismissal in Employment Tribunal proceedings or as a result of personal injury in a court action for negligence or breach of statutory duty. The courts are accustomed to doing the best with such material as they have: so no doubt are Employment Tribunals. If the material is insufficient to support the conclusion, the conclusion must fall. But provided that there is evidence, it is wrong, in our view, to condemn a decision such as that in the present case, as speculative. In the present case, in our view, the tribunal had evidential material, to which it referred, to justify its approach to future loss, save in one respect. It is clear that the tribunal did refer to cuts by dismissals by the respondent later in 1999 as one of the factors in making its decision in respect of the 50% reduction, and that 50% reduction was applied not only in respect of assessment of Mr Layton's compensation for earnings lost to the date of the tribunal hearing by reason of his unfair dismissal by way of redundancy, but also in respect of his future loss after the date of the tribunal hearing. Yet in assessing the amount of that future loss and restricting it to £2,142.00, before the 50% reduction, which was about 12 week's remuneration at his existing rate, the tribunal again took into account as one of the factors the possibility that Mr Layton would have been faced with dismissal for redundancy in the light of the further cuts made by the respondent. In our view, that involved an element of "double-accounting". It was legitimate to take account of that factor in assessing the 50% discount or in assessing for how long Mr Layton was likely to continue losing remuneration by reason of his unfair dismissal but not in respect of both. We agree with Mr Morrison that that factor was best taken into account in judging the Polkey reduction of 50%. In those circumstances, it should not, in our view, have been taken into account again in respect of the future loss, save insofar as the 50% discount also applied to that future loss. In that respect the tribunal, in our view, fell into error in its otherwise careful consideration of the issues. We add that Mr Chadwick conceded that it was difficult for him to resist Mr Morrison's submissions in this last respect.

[25]We propose, therefore, to allow this appeal to the extent that we remit the matter to the same tribunal for reassessment of Mr Layton's future loss from the date of the tribunal hearing on all the material which was before the tribunal on 25th June 1999. We do not consider, and Mr Morrison agrees, that further evidence should be admitted as to as to what has in fact occurred since the tribunal hearing, one way or the other. But the tribunal should feel free to take any course it sees fit concerning the assessment of future loss on all the evidence which was before it on 25th June 1999 and upon further argument. It should not feel restricted in that respect to the double-accountancy point. In our view, Mr Layton was shabbily treated by the respondent, but save in that one respect, his appeal against the tribunal's conclusions must fail.