ML LIFEGUARD EQUIPMENT LTD v MR I W WOOD [2001] UKEAT 0376_01_1009

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 0376_01_1009Case No Appeal No. EAT/0376/01Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
ML LIFEGUARD EQUIPMENT LTDAPPELLANTMR I W WOODRESPONDENT
Before
MISS RECORDER SLADE QCDR D GRIEVES CBEMRS T A MARSLANDDate 10 September 2001
[1]APPEARANCES For the Appellant MR G MAHMOOD (of Counsel) Messrs Southern Solicitors 68 Bank Street Burnley BB11 1UB MISS RECORDER SLADE QC This is the Preliminary Hearing of an appeal by ML Lifeguard Equipment Ltd against the decision of an Employment Tribunal sitting at Reading hearing a claim by Mr Wood of unfair dismissal. The appeal is both against the finding of unfair dismissal and also against the computation of compensation. This Preliminary Hearing is convened to ascertain whether the Grounds of Appeal raise an arguable point of law.[2]Mr Wood was employed by the company and was promoted eventually to Divisional Manager, Life Support Division. In that job he was responsible as General Manager for the site in which he worked and had some twelve employees reporting to him. He was dismissed by the company on 11 May 2000. The circumstances which gave to rise to his dismissal were outlined in the decision of the Employment Tribunal and may be summarised as follows.[3]The company for which Mr Wood worked was taken over by another company, Wardle Storeys plc in April 2001. There were to be a number of redundancies as a result of merging of the two companies. There would be 100 redundancies out of a workforce of 140. So far as Mr Wood's situation was concerned the amalgamated company no longer needed two directors fulfilling the role which he fulfilled. It was decided by the employing company that the job which Mr Wood then occupied should be given under what is commonly called a 'bumping redundancy' to a Mr Taylor whose own job was redundant.[4]It appears from the evidence recorded by the Tribunal that that decision was taken without reference to, or consultation with, Mr Wood. A meeting was convened with him at which he was told what the position would be. He was offered a post reporting to Mr Taylor for the duration of a particular contract. No particulars of that job were given to him other than he was assured that his current salary would be preserved. Mr Wood did not accept that alternative role. He was eventually made redundant. Following his redundancy he sought alternative employment. The Tribunal found that, so far as his income is concerned, a company in which his wife was 100% shareholder and which had been paying her a monthly salary, on the advice of the accountant paid that salary to him instead of to his wife. So far as mitigation of loss is concerned the Tribunal record that Mr Wood had an offer of employment in France but his removal expenses would not be paid and the salary which he was to be paid by that company if he accepted the job would have been less than he had been receiving. The Tribunal heard and accepted that Mr Wood was going to pursue training as a commercial pilot and was going to undergo a course of training in South Africa to that end. It was on that basis that they made an award of compensation.[5]Turning first of all to the Grounds of Appeal against the finding of unfair dismissal. The Tribunal held that there had been no consultation with Mr Wood prior to his dismissal and that moreover alternative posts within the group of which there were over 1,000 employees should have been considered. Mr Mahmood, who has appeared for the company, attacks the reliance of the Employment Tribunal upon the failure to consult, saying that the Tribunal should have concluded that consultation would have made no difference and therefore it should have held that the dismissal was a fair dismissal. Reference was made during the course of Mr Mahmood's submissions to the well known case of Polkey v Dayton Services Ltd in the House of Lords [1988] ICR page 142. Where, as in this case, there has been a dismissal without prior consultation with the employee, the Tribunal is not obliged to consider whether consultation would or would not have made a difference to the outcome. In this case, in our view, the Tribunal did not err in law in considering that the failure to consult did affect the fairness of the dismissal. It rightly observed that matters may be reposed on an employee which are not known to an employer which can either mitigate or even avoid the necessity for redundancies. In our judgment there was no error of law in the approach of the Tribunal to this issue. Nor on the material before it could it be said that it's conclusion on the fairness of this dismissal was perverse. Accordingly, we dismiss the appeal against the finding of unfair dismissal.[6]We now turn to the appeal against the finding of compensation. Here Mr Mahmood attacks the finding of the Tribunal on three bases. He submits to us that the Tribunal should have taken into account, in assessing compensation, the income which Mr Wood was receiving from his wife's company after his dismissal. Secondly, he says that the Tribunal should have reduced any award of compensation to take into account the prospects that this Applicant, Mr Wood, may not have been found other employment within the employer's company even if there had been consultation. Thirdly, he submits that the Tribunal erred in finding that Mr Wood did not fail to mitigate his loss by rejecting the job offer in France and by pursuing the idea of seeking a pilot's licence.[7]It must be borne in mind that the Tribunal's power to award compensation is governed by Section 123(1) of the Employment Rights Act 1996:
"…the amount of the compensatory award which a Tribunal is to make shall be such amount as the Tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."
[8]Turning to the first point taken on compensation. It is said that the Tribunal should have concluded that no loss was suffered by Mr Wood because the amount that he received from his wife's company after his dismissal was roughly equivalent to his monthly salary from his previous employers. The evidence before the Tribunal, which the Tribunal recorded in their decision, was that the wife had, prior to her husband's dismissal, been receiving a sum of money from her company and that on accountant's advice, post dismissal, that sum of money was paid to the husband. It appears there was no evidence before the Tribunal as to the amount of any tax advantage derived from this scheme. It is not suggested in any way that this arrangement was anything other than a proper arrangement.[9]In the circumstances, bearing in mind that on the evidence before it, Mr Wood had been deprived by his dismissal of a certain regular income and that he and his wife, as a unit, had been at all times in receipt of the money derived from her company, applying Section 123(1), in our view it cannot be said that the Tribunal erred in law or came to a perverse conclusion in failing to deduct from any award of compensation the money paid to Mr Wood from his wife's company. The matter might have stood somewhat differently if there had been evidence before the Tribunal of a certain specified financial advantage derived from the arrangement whereby, instead of the money being paid to the wife, it was, after his dismissal, paid to the husband, but it appears that that evidence was not given and the conclusion of the Tribunal was a conclusion which was open to them on the evidence.[10]As for the argument relating to the percentage deduction for loss of chance and failure to mitigate. First of all, the loss of the chance was not an argument, we are told, which was advanced before the Employment Tribunal. The Employment Tribunal cannot be criticised therefore for not basing their decision upon it. They came to a conclusion which was open to them on the evidence. So far as the argument on failing to mitigate was concerned, again, on the evidence before it, in our judgment, the Tribunal's conclusion on this part of the case cannot be said to be perverse.[11]The result of our conclusions therefore is that this appeal is dismissed.