MILLENNIUM COMMUNICATIONS SYSTEMS LTD v MR M E LAWS [2001] UKEAT 816_01_0111

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2001] UKEAT 816_01_0111

Case No Appeal No. EAT/816/01

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MILLENNIUM COMMUNICATIONS SYSTEMS LTDAPPELLANT

MR M E LAWSRESPONDENT

Before

Mr Justice Lindsay

Date 1 November 2001

[1]APPEARANCES For the Appellant Mr Pollard Consultant Messrs Pollard Associates Apex House 15 Ambleside Crescent Sprotborough Doncaster DN5 7PR MR JUSTICE LINDSAY (PRESIDENT) We have before us as a preliminary hearing the appeal of Millennium Communications Systems Ltd in the matter Mr M E Laws -v- Millennium Communications Systems Ltd . The case concerns unfair dismissal and redundancy and is on appeal from the Tribunal in Thornaby on Tees. Mr Pollard today appears for the Appellant, Millennium.

[2]On 19 September of last year, an IT1 was presented by Mr Laws for unfair dismissal only. He said he had been employed from 1992 to 26 August 2000. He had a representative acting for him. He said that on 30 June he had been made redundant, without notice, having been as he put it, removed from his work site in York.

[3]On 6 October the company put in an IT3. It pointed out that Mr Laws was a director of and a shareholder in Millennium; that it had been agreed, they said, that he would leave York and move to the Thornaby office; that his role then became redundant. They said that he had agreed to a settlement and was paid and left and that there had been a compelling need to make redundancies, and that indeed, Mr Laws himself, as a director, had negotiated the redundancy of others.

[4]That led to a two day hearing at Thornaby on Tees in March and April 2001. It was conceded that there had indeed been a dismissal. On 24 May 2001 the Decision was sent to the parties. It was the Decision of the Tribunal under Dr I J Watt; it was unanimous and was that:

"(1) the respondent unfairly dismissed the applicant; (2) the respondent be ordered to pay the applicant a compensatory award of £50,000."

In fact that was the then statutory maximum; the computation itself had led to a figure of over £73,000 which was reduced to £50,000 because it was the statutory maximum.

[5]On 2 July 2001 there was a Notice of Appeal from Millennium. It would be right if we reminded ourselves of the fairly detailed terms relating to what is a redundancy that are to be found in section 139, subsection (1) in particular of the Employment Rights Act 1996. It says this:

"(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 - (a) the fact that his employer has ceased or intends to cease - (i) to carry on the business for the purposes of which the employee was employed by him, or (ii) to carry on that business in the place where the employee was so employed or (b) the fact that the requirements of that business - (i) for employees 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."

And subsection (6) points out that: "…… "cease or diminish" means cease or diminish either permanently or temporarily and for whatever reason".

[6]The Notice of Appeal advances ten grounds which we need to turn to. The first is that it is alleged that the Tribunal:

"Failed to consider properly that there was a reason which could justify dismissal, i.e. that the reason was not trivial or unworthy."

But the Tribunal was, as far as we can tell, very well aware that redundancy, if proved to the extent required by section 139, would provide a proper ground for dismissal.

[7]Secondly, it said that the Tribunal:

"Failed to make the parties aware that redundancy, as a reason for dismissal, was a subject for consideration by the Tribunals, i.e. the Applicant having accepted that a redundancy situation had occurred."

Well, an employee does not accept that there is truly a redundancy situation merely, without more, by accepting a statutory redundancy payment.

[8]The third ground says that:

"Included in [the Employment Tribunal's] considerations is an event that occurred after the date of termination of employment. Follows [W Devis & Sons v Atkins 1977 ICR 662 , HL]."

But, as to looking at later events, it can very often be necessary, when section 139 is in play, for a Tribunal to have at later events, for example when a cesser or intention to cease, said to fall within section 139 is relied upon. Subsequent events (in other words, post-dismissal events) can go to the issue of the credibility of what the truth was at the time of dismissal. It is not necessarily wrong, for example, for a Tribunal to disbelieve that there was a redundancy situation at point of time (1) by looking to see that a little later, at points of time (2) and (3), men were being taken on afresh. That seems to us an entirely appropriate thing to be able to do, and we see no arguable error of law there.

[9]The fourth ground is that the Tribunal:

"…substituted its own view for that of the employer in that they appeared not to recognise the expert nature of the Respondent's main witness, a qualified and experienced accountant"

But that gentleman, Mr Alder, was in no way an independent expert; he was the managing director of the employer and the dismissing officer. The Tribunal was perfectly entitled to view his evidence in the way that they did. They were not bound to give it absolute credibility simply because he was a qualified and experienced accountant.

[10]The fifth ground is that the Tribunal:

"failed to determine whether an employee [Mr Laws] was or might be redundant."

The Tribunal took the view that a redundancy situation was not proven within the terms of section 139 on the balance of probabilities. They said:

"Although the Respondent did bring forward evidence that there was a possible case for redundancy this was very circumstantial. No company or trading accounts were produced or other extrinsic evidence the Tribunal were left to infer that the reduction in the number of engineers would reduce the requirement for managers. But off set against this was the fact that not long after the dismissal of the applicant the direct and indirect workforce was expanded again. The evidence is therefore ambivalent. In any event even if it was accepted that there was a potential redundancy situation it still remains to be shown that the respondent acted reasonably in treating that reason as a sufficient reason for dismissing the applicant in accordance with section 98(4)…"

The issue, therefore, of whether there was a true redundancy situation, was left unproven, as the evidence was held to be ambivalent. It cannot be said to be an error of law for a Tribunal to decide that the evidence given was insufficient.

[11]The company, therefore, had failed to satisfy the burden cast upon it. It was the company's job to prove redundancy and they failed to do so. True it is that the Tribunal ultimately did not decide whether there was or was not a true redundancy situation but that, in effect, given that the onus was on the company, is a decision against the company.

[12]The sixth ground is that the Tribunal failed to consider that there was a very substantial probability that the Applicant would have been dismissed in any event, by reference to the principles that emerge from the Polkey case. The Tribunal addressed this in some detail. In their paragraph 9 they say:

"In relation to whether a Polkey reduction should be made the Tribunal has considered King v Eaton No 2 IRLR 1998 686:" and they then give a substantial and relevant quotation from that case and at the end they said: "

The Tribunal is of the view that for the reasons set out in the conclusions below that the failures in procedure were of such a substantial nature that it is impossible for the Tribunal to sensibly reconstruct a hypothetical world in which the unfairness had not taken place." And a little later, in their paragraph 11 they say:

"In considering the issue of a Polkey reduction (ie even if there had been a fair procedure would the applicant still have been dismissed for redundancy) the Tribunal has a very real difficulty in this case. Because the respondent did not have a procedure and in particular because of the absence of any coherent criteria before the Tribunal in relation to selection how is the Tribunal to say what the outcome would have been without itself inventing criteria that it would seem never existed. This case seems to be wholly on a par with the guidance given in King v Eaton No 2 namely that where the unfairness goes to the heart of the matter it is impossible for a Tribunal to reconstruct a hypothetical world that never existed. Where an employer has made some attempt to comply with its obligations it is then possible for a Tribunal to consider outcomes on that basis. In a case like this where the employer has acted with utter disregard to the rights of the employee then it can have no complaint for it is entirely the author of its misfortune. In these circumstances the Tribunal is unable to make any Polkey reduction."

We are unable to spot error of law in that approach taken by the Tribunal.

[13]The seventh ground is that the Tribunal failed to consider that in selecting the Applicant for dismissal the conclusion might have come within the band of reasonable responses. But selection would only be relevant if a true redundancy situation had existed. One would then have to have considered whether the selection for redundancy was properly carried out. But here, as we have already mentioned, the Tribunal was never even satisfied that a true redundancy situation ever came into existence.

[14]Ground eight says that the Tribunal failed to consider the size and administrative resources of the employer's undertaking, but that is not the case. In their paragraph 8 the Tribunal expressly turns to that sort of issue. They say in their paragraph 8:

"The Tribunal had regard to the size and administrative resources of the respondent. Now although this is a small concern it was involved in commercial contracts of some substance and Mr Alder [the managing director] is a chartered accountant. In De Grasse v Stockell Tools [1992] IRLR 269 EAT it was held that size may affect the formality of the consultation process it cannot excuse the lack of any consultation at all."

So the Tribunal did refer to what they took to be the size and administrative resources of the employer's undertaking. They made reference to the fact that the contract that it had was a substantial contract, but there was no reason to believe that they jumped to the conclusion that because the contract was large, therefore the company was large. It manifestly was not and it cannot be reasonably suggested that the Tribunal did not recognise that it was only small. In any event, as that last passage from the citation shows, a total failure to consult cannot be justified, even in a very small company, at all events unless some compelling emergency was proven and there does not seem to have been any case of that kind made out.

[15]Then in paragraph 9 of the Notice of Appeal there is a point about the Tribunal failing adequately to take into account that if Mr Laws got an award of some size, he would be able to buy a car and that would enable him more easily to range over a bigger area when seeking a job. The award, as we have seen, is of £50,000 and so, plainly, could be used, in part, to help Mr Laws buy a car. Whether it would have been prudent for him to do so we could not possibly say. But the Tribunal certainly had this point in mind. In their paragraph 12 they say: "…..Perhaps with the compensation the applicant will be able to afford private transport which will increase his flexibility for secure employment opportunities. Accordingly " [our underlining, not the Tribunal's] " the Tribunal has assumed that the applicant will obtain periods of employment" but they go on to say but at nothing like the level he was earning in the past. So the Tribunal took account of the possibility that he would be able to get a motor car and that that would enhance his position. Even so, they only thought that he would be employed for periods and, almost certainly, at nothing like his level of remuneration with Millennium. It is hard to see an error of law in that part of the case.

[16]And the last and tenth point is that the Tribunal accepted the Applicant's uncorroborated, unsubstantiated contention, as Mr Pollard would put it, that he was intending to retire at sixty five. There was no reference, says Mr Pollard, to his stated date on his pension plan. But it is accepted that Mr Laws did give evidence that he intended to work until he was sixty five. That was oral evidence given on oath which it was open to the Tribunal to accept or refuse. It chose to accept it. It is hard to see any error of law in its doing so, and, in any event, it is hard to see how a date on a pension plan could corroborate or disprove an intention to work to a given date; one can certainly intend to work only to a date short of one's intended retirement pension plan date, or indeed, to work thereafter.

[17]We have now dealt with all ten of the grounds specified in the Notice of Appeal and the case does trouble us because Mr Pollard has told us, and it seemed not improbable to us on a reading of the case, that an award as substantial as the one made, £50,000, could bring the company to its knees. The unfortunate consequence would be that several men would be left without a job. Indeed, Mr Pollard tells us that his instructions are that if the appeal is dismissed, the company will go into receivership.

[18]Well, unfortunately, that - even if true and we have no reason not to disbelieve it - does not identify some arguable error of law in any of the ten grounds that have been asserted. We have not been able to find one there and we have not been able to find one independent of those specified in the Notice of Appeal. Accordingly, albeit with some reluctance and regret for the reason that we have mentioned, we must dismiss the appeal even at this preliminary stage.