EXCEL TECHNICAL MOULDINGS LTD v MR W A SHAW [2003] UKEAT 0267_02_2603

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2003] UKEAT 0267_02_2603Case No Appeal No. EAT/0267/02/DA EAT/0524/02Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
EXCEL TECHNICAL MOULDINGS LTDAPPELLANTMR W A SHAWRESPONDENT
Before
Mr Justice BurtonDate 26 March 2003
[1]APPEARANCES For the Appellant MR J N GALBRAITH-MARTEN (of Counsel) Instructed by: Messrs Fullagarbrooks Solicitors Cheltenham House 45 Regent Street Swindon Wiltshire SN1 1JS For the Respondent MR A VAITILINGAM (of Counsel) Instructed by: Messrs Kitson Hutchings Solicitors 2/3 Vaughan Parade Torquay Devon TQ2 5EF THE HONOURABLE MR JUSTICE BURTON (PRESIDENT) This has been the hearing of two appeals by the Respondent employer, Excel Technical Mouldings Ltd. The first was against the finding of a Tribunal on 16 November 2001, in a Decision handed down on 7 January 2002, that the Applicant, Mr Shaw, was unfairly dismissed. The second was in respect of the subsequent Decision by the same Tribunal on remedy, as a result of a hearing on 12 March 2002, handed down on 4 April 2002.[2]The issues before us can be summarised in this way:-(1) Did the Tribunal correctly conclude that this was not a dismissal for redundancy? Given that they concluded that there was not a dismissal for redundancy, no other reason for dismissal was put forward, and so there would have been no other basis upon which they could have reached a conclusion that the dismissal was fair.(2) If the Tribunal was wrong in relation to its conclusion as to redundancy, and they should have found that there was a redundancy situation and a dismissal for redundancy, then they would need to consider whether that dismissal for redundancy was fair and the issue would arise as to whether there had been adequate or any consideration of the issue as to whether there was consultation by the Respondent company of the Applicant.(3) In the event that the dismissal was unfair, a number of matters are raised by way of challenge to the conclusions of the Tribunal on remedy.[3]We shall deal with the second and third issues shortly.[4]As to the issue of consultation, the Tribunal did not adequately deal with that question, as is now common ground. In paragraph 27 of their Decision on liability, the Tribunal says the following:
"A further issue that we have considered is if there had been a redundancy situation, which had led to the applicant's dismissal, what the outcome might have been if there had been consultation."
That appears to be an implicit conclusion that there was no consultation; the Tribunal is certainly not addressing that issue, and appears only to be anticipating an argument that would be relevant on remedy, namely as to whether in fact if there had been consultation the Applicant would still have lost his job.[5]That implicit finding of no consultation is not mirrored by any other consideration anywhere in the Decision, and, indeed, is at odds with the way in which the Tribunal dealt with the evidence which would have been central on the question of consultation. In paragraph 16 the Tribunal set out as follows:
"The applicant had a meeting with Mr Stook on the 19 March 2001. There is a dispute between the parties as to precisely what happened on that occasion. ….. We do not think a great deal turns on the precise wording and we do not find it necessary to reach a conclusion as to which of those two were correct, since in our view the effect is the same. ….."
The result of that is that, given that the Respondent was relying on the content of that meeting on 19 March, and subsequent correspondence between the parties, at least for part of its case there had been adequate consultation, there cannot have been proper dealing by this Tribunal with that issue, and cannot have been the implicit finding upon which, apparently, the remark in paragraph 27 of the Decision must be based. Consequently, if the issue of consultation arises, that is if the question of fairness of the dismissal for redundancy falls to be considered, this Tribunal would not have dealt with that issue at all and it may be that they were not seeking to do so in the light of their Decision, and the matter would have to be remitted for further consideration.[6]As to the matter of remedy, we have indicated that there are a number of challenges to the Tribunal's Decision on remedy. It appears simply to have addressed use of the Ogden Tables, without even indicating which table it was adopting, and it then came up with a figure for future loss based, as it was put in paragraph 19 of the Second Decision, "entirely on the guidance of the Ogden Tables" at least in the first instance, although they then deal with " the substantial measure of assistance to be derived from them". We, however, are of the view, as we have indicated, and Mr Vaitilingam on behalf of the Applicant has not sought to defend the conclusions of the Tribunal in this regard, that there has been simply inadequate consideration by the Tribunal of the issues necessary for consideration, before it even turned to the Ogden Tables. The Tables may well be of considerable assistance in appropriate cases; they plainly are in a personal injury case, or in any other case where it is accepted, for example, that, as a result of the wrong done and being sued for, someone who would otherwise have remained in work will never be able to work again. But there remain always, in this kind of case, issues to be considered and discounted or taken into account, such as:(1) Would the Applicant have remained in the job which he or she now has, or would have had, for long in any event? On the facts of this case, if the Applicant had been offered an alternative job by the Respondent, as is canvassed on the facts of this case, would it in fact have been accepted? If accepted, would it have been long-lasting? How long would he have remained in it and how long would he have been able to remain in it?(2) Insofar as future unemployment must be taken into account, would he have remained in any job for an entire period or would natural vicissitudes have resulted in loss of that job?(3) Could there actually be an improvement in the employment position of the Applicant, or generally, so that, in fact, in future he might obtain a better job and either remain in that job or on the other hand lose that job, either through redundancy or ill-health or any other cause? All these factors need to be considered before there can be an arrival at a conclusion, irrespective of whether there was use of the Ogden Tables.[7]We do not propose to say anything more than that in relation to this case, because of the agreement between the parties that this appeal on remedies must result in a remission to an Employment Tribunal, and, in any event, unless the matters goes off for some reason, it is expected that there will be a full appeal before this Tribunal, I think before the President, at some stage in the near future on the whole issue of the applicability and use and treatment of the Ogden Tables.[8]We turn then to the first issue, which is the only one which has taken time before us. There has been very able argument on both sides by Mr Galbraith-Marten, for the Respondent and by Mr Vaitilingam, who also appeared below, unlike Mr Galbraith-Marten, for the Applicant , and they have both been clear and tenacious.[9]The facts must be briefly touched upon. Mr Shaw, whose business, as we understand it, was taken over or was merged into the Respondent Company not long before the events which now took place, had been General Manager of the Respondent Company. The structure was set out in an appendix to the witness statement of the Respondent's witness, Mr Stook. He was the top of the tree, General Manager, Operations and directly underneath him by way of line manager were six other managers, Mr Jefferies, Quality Manager, Mr Moxon, Materials Manager, Mr Evans, Production Manager, Mr Thom, Technical Manager, Mr Allen, Finance Manager and Mr Yardley, Sales Manager.[10]The company was in considerable difficulty. Information about the middle of February 2001 was received by the company to indicate that the Respondent's monthly losses were running at the order of £28,000 to £30,000, which was higher than they had been led to believe. As the Tribunal put it in paragraph 12 of its Decision, desperate times required desperate measures and what occurred was that, with or without consultation, as discussed above, the Applicant left the company on dismissal. There is some evidence that there was at least the possibility of an alternative position for him and/or of the Respondent's wish for him to remain with them if at all possible, but none of that is relevant to the issue before us, which is whether his dismissal was by reason of redundancy.[11]The law as to this is very clearly stated by His Honour Judge Clark in Safeway Stores PLC -v- Burrell [1997] ICR 523 at 529 when he sets out what he understood to be the statutory framework of section 139 of the Employment Rights Act 1996 , namely 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 caused wholly or mainly by the state of affairs identified at stage (2)? `[12]That formulation has been the subject of subsequent approval, in particular by the House of Lords in Murray -v- Foyle Meats Ltd [1999] ICR 827 . What is here submitted by Mr Galbraith-Marten, and was submitted below, is that the requirements of the employer's business for employees to carry out work of a particular kind had ceased or diminished, namely the requirements of the employers for a general manager, because what happened upon the dismissal, in the circumstances briefly referred to above, of Mr Shaw, is that the new organisation can be described as follows: instead of Mr Shaw at the head of the tree, there was what was described as a triumvirate, a management board headed by three people.[13]Of those three people, one was a representative of the group, and not employed by the Respondent Company, namely Mr Judkins. If one leaves him aside, the family tree was now headed not by one, Mr Shaw, but by two: Mr Allen, who had been Finance Manger, was now one of the triumvirate, described as "Finance, Pricing & Logistics"; Mr Jefferies, who had been Quality Manager, was now also one of the triumvirate, described as "Production Technology and Sales" and we understand that the evidence was that Mr Jefferies did more or less 80% of the job previously done by Mr Shaw, and the balance of the 20% would have been shared between Mr Allen and Mr Judkins. Then there were five subordinate managers rather than six, Messrs Evans, Thorn, Moxon and Yardley remaining the same, and Mr Morris now being Quality Manager, the position previously held by Mr Jefferies.[14]We must deal briefly with some evidence which was before the Employment Tribunal but did not form the subject of its Decision, to which we have been referred today. It is twofold: First, it is apparent from Mr Stook's witness statement that in addition to the managerial changes to which we have referred, there were other dismissals. That appears as part of the urgent restructure to save substantial sums of money. This appears in paragraph 16 of Mr Stook's witness statement, which has been put before us by agreement between the parties. It read as follows:
"This restructure was to save costs and improve efficiency. They [The Directors of PVI the group] decided to reduce the sales force from two to one, to reduce the night shift and to make all the employees in the tool room redundant."
There is no mention of that in the Tribunal's Decision, as we have indicated.[15]Secondly, what became clear from cross-examination of Mr Stook was that Mr Morris, who replaced Mr Jefferies as Quality Manager, had previously been Quality Engineer, and on his promotion to Quality Manager, he, Mr Morris, was not replaced as Quality Engineer. The result was that, on any basis, the position of Quality Engineer had been eliminated. There was, it seems, no evidence given, certainly none of which we have been told, as to whether the work of the Quality Engineer was simply carried on by Mr Morris in his new position as Quality Manager, additionally to the administrative and managerial responsibilities which he would have taken on, or whether the work of the Quality Engineer was now done by some other engineer or technical person.[16]Mr Galbraith-Marten has based his appeal before us, as indeed it was based before the Tribunal, upon the proposition, using the word very loosely for the moment, that the position of General Manager was made redundant, and that that was enough to create a redundancy situation. He sought to put forward a fall-back argument, which was not put forward below and did not form the basis of his Notice of Appeal, based upon what can loosely be called "bumping". Bumping is itself helpfully explained by His Honour Judge Clark in Burrell at 539F - H, but, of course, in this case it can be effectively understood by saying that if there was no diminution of work for managers, nevertheless there was diminution of work for quality engineers and that the reason why there was no apparent redundancy, to which we shall return on the face of it, among managers was because there had been a redundancy among engineers. The battleground, in those circumstances, leaving aside the extra evidence which we are not considering relating to the quality engineers, can thus be shortly stated.[17]If that had been the finding or indeed if that at all had been an appropriate finding, and if that had been the argument and the finding, then that would have been sufficient to have achieved a finding of a redundancy situation, not necessarily among the managers, but among some other employees, with consequential effect upon the managers, and eventually upon the person dismissed. In those circumstances, that context of bumped redundancy can lead to a dismissal, which does not otherwise look like a dismissal for redundancy, being so found.[18]Mr Galbraith-Marten accepts that this case was not put on that basis below. He equally accepted, because he sought an amendment to the Notice of Appeal to that effect, that it did not form the basis of the present challenge to the Decision and, indeed, one can well understand why it does not or did not, on the basis that it did not, in fact, form the basis of the Respondent's rationale, and there is, of course, considerable authority in this Tribunal about the very rare circumstances in which leave to raise a point not argued below will be considered. His suggestion/amendment alleged a perverse finding by the Tribunal because it had not taken into account the evidence as to the position of the Quality Engineer, and the dismissals in the tool room.[19]That application for amendment was opposed by Mr Vaitilingam and we have reserved to this judgment, i.e. the end of the hearing, our decision. We are satisfied that it is inappropriate to grant leave to amend the Notice of Appeal to raise this point, now only at the hearing of the appeal, and, further, in relation to a point which, we are satisfied, was not argued below. In any event, it would require consideration of evidence which was not considered in proper detail below, for the very reason that it was not raised, such as the causal relationship between the position of Mr Morris and Mr Jefferies and/or in relationship to the tool room. If the point arises it would, therefore, arise only in the situation in which we otherwise decided to remit the matter to the Tribunal for further hearing or were in doubt as to whether we should do so.[20]We turn then to the basis on which the Tribunal below did decide that matter, and in respect of which Mr Galbraith-Marten's main criticism is made. Paragraph 13 of the Decision ends in this way:
"13 ……. The respondents decided that a new management structure would have to be put in place, which did not involve the applicant." 14. Accordingly they put in place a new structure which involved a triumvirate management committee. Mr Allen, formerly the Finance Manager, took over financial responsibility, including pricing and some other areas. Mr Jefferies became the Production and Operations Manager. His place was taken by a Mr Morris who was promoted from the level of Quality Engineer to Quality Manager."
And then the following central sentence follows:
"The overall number of subordinate managers was reduced from six to five and the third member of the triumvirate was a Mr Andrew Judkins, a representative seconded in on a part time basis from PVI"
The Tribunal thus recognised that on the face of the family tree, ignoring Mr Judkins, there was a reduction of those in the lower level of the tree from six to five.[21]The Tribunal then sets out its findings - and in the case of consultation, non-finding - on the facts and returns to the question of redundancy in paragraph 23, in which it asks the question as to whether there was a redundancy situation, referring, properly, to section 139 of the Employment Rights Act 1996 . We note that no authorities were cited by the Tribunal and it would certainly have helped to be sure that the Tribunal has followed the correct approach if it had specifically referred to, for example, Safeway Stores PLC -v- Burrell . Nevertheless, they set out the test in paragraph 24 whether the need for employees had ceased or diminished, or was expected to do so.[22]Much has been made here of the fact that the job functions had to be re-absorbed elsewhere between the members of the new management structure. So it was, so it almost always is in redundancy situations; the same amount of work may still have to be done, albeit by fewer people, so at that stage it is plain that they are correctly addressing the issue that it is not a question of diminution in work necessarily, but diminution in people, that is employees doing that work which is in issue.[23]Paragraph 25 is then central. "In this case, the respondent's own evidence suggests that there was no reduction in the number of management employees, particularly if the presence of Mr Judkins, a nominated representative of TVI is taken into consideration. Even without his presence there is no reduction. In this case we have the additional factor that whilst the applicant's salary package was a factor in the respondent's thinking, they were nevertheless considering a post for him at a package which might have been at about the same level. That does not sit easily, in our view, with the notion of a redundancy situation".[24]In paragraph 26 the Tribunal continues:
"We find that the Respondent has not established that there is a redundancy situation in this case."
[25]Plainly, for the purpose of considering this Tribunal's Decision, one must leave aside the question which they there referred to, of the Applicant's salary package, particularly given the issue as to whether the employers were, indeed, considering an alternative post for him; but it is quite plain that the thinking, and, indeed, the conclusion of the Tribunal is set out in very short form.[26]If one takes together paragraph 14 and paragraph 25, which paragraphs are said by Mr Galbraith-Marten to be inconsistent, in paragraph 14 the conclusion is that the overall number of subordinate managers was reduced from six to five; but, nevertheless, in paragraph 25 the Tribunal is, albeit in words which might have been clearer, accepting the submission of the Respondent that there was no reduction in the number of management employees.[27]Mr Galbraith-Marten points to the fact that there was no longer a general manager, no one doing the unique job of general manager. In loose terms, the position of the unique sole general manager was thus made redundant. Instead, there were two, if one leaves aside Mr Judkins, people in that position. Mr Galbraith-Marten says that that is enough, and looking at the analysis by Judge Clark in the case of Burrell on a perfectly straightforward basis, the requirements of the employer's business for employees to carry out work of a sole general manager has ceased. In those circumstances, there can be no doubt but that there was, says Mr Galbraith-Marten, a redundancy situation.[28]Mr Vaitilingam supports the approach of the Employment Tribunal, however, which was not to stop at the position of general manager, but to look at all the managerial employees and, ignoring the point that was not raised, by way of the position of the quality engineer, one is there left with the simple formula which is accepted by the Tribunal that there were, before, seven employees carrying out the work between them, and there are still seven management employees, two of them jointly carrying out the work which used to be carried out by Mr Shaw, as well as, no doubt, their own, and five carrying out the balance of the managerial work. All the work still remains to be done. It is not suggested, or at any rate there is no evidence, that, for example, the tool room completely closed, rendering it unnecessary to have any particular management posts relating to it. All the managerial work remained; it had been carried out by seven people; it still continued to be carried out by seven people.[29]Mr Vaitilingam relies, inter alia, on Shawkat -v- Nottingham City Hospital NHS Trust which, although in fact decided by the Court of Appeal, upholding the decision of an Employment Appeal Tribunal, on 21 June 2001 i.e. before the hearing on 16 November 2001, was not referred to by either side before that Tribunal, although the Court of Appeal decision was not actually reported until afterwards, namely in 2001 IRLR 555 .[30]Shawkat was a case which, on the face of it, has different facts from this, and Mr Galbraith-Marten describes the decision as muddying the waters, but as being, in his submission, of no assistance to us. We are persuaded that it is of assistance to us. The facts there, simply stated, are that there were surgeons who carried out solely cardiac work in a cardiac department, and surgeons who carried out solely thoracic work in a thoracic department. The re-organisation of the two departments changed the work, effectively amalgamating the two departments, so that the applicant, who had previously solely carried out thoracic surgery, was now required to carry out both; and he resigned and sought to treat the matter as constructive dismissal, by virtue of redundancy and lost. The facts are summarised by by the Court of Appeal in paragraph 7. "What the employment tribunal in fact did was to reiterate its finding that there was no diminution in the requirements of the Trust for employees to carry out work of a different kind, and explain that that finding related to thoracic surgery. They then stated in paragraph 11 that the evidence before them could only lead to a finding that some members of staff at Dr Shawkat's level (and above) would be required to carry out thoracic duties. The fact that Dr Shawkat's thoracic sessions were reduced was not because there was any diminution in the requirements of thoracic surgery but only because the Trust wanted him to do cardiac work in part of his time, and not thoracic work in that part of his time. The tribunal then stated in terms that there was no reduction in the amount of thoracic surgery that needed to be performed, that there was no reduction in the number of employees required to perform this work, and that the Trust's requirements for employees to carry out thoracic surgery had not diminished. They then concluded that Dr Shawkat was not dismissed by reason of redundancy but because the Trust attempted to impose unreasonable duties on Dr Shawkat, which he had reasonably declined to carry out."[31]It is apparent there that the Tribunal, as upheld eventually in all higher Courts, concluded that, in looking at the statutory questions as to whether the requirements of business for employees to carry out work of a particular kind have ceased they would not consider the precise job title or job specification, and one here digs back into what has been called on occasion "contract heresy", and thus regard there as being no work of the particular kind for a specialist thoracic surgeon, but rather look at the work that was carried out.[32]There must be, in our judgment, a close analogy with the position here, in which what Mr Galbraith-Marten is arguing is that the position of sole general manager, no doubt with a job specification to that effect, must be seen as work of a particular kind, namely the job of being a general manager, rather than by reference to the managerial work which formed the substance of it. It appears to us that, if anything, the decision in Shawkat is helpful to Mr Vaitilingam in seeking to establish the proposition he does in support of the Tribunal; but what perhaps can be seen even more clearly in looking at the decision in Shawkat, is that the Tribunal's decision was one of fact, and we do not conclude that they erred in their approach, albeit that one would have welcomed rather more explanation, and certainly a brief citation along the way.[33]It is apparent that, on the evidence that the Tribunal had heard, they honed in on the work of a particular kind as having been managerial work. Even if they had been invited to reach such a conclusion, they were not minded to reach a conclusion that there was anything special about the job of general manager, other than the fact that he was the top of the tree of those who did the managerial work, and they formed the conclusion that the requirement of the business of the Respondent for employees to carry out managerial work had not ceased or diminished, albeit that there might have been a reshuffle of responsibilities, a reshaping of the line management structure; the work that the seven employees between them did had remained the same, and there were before and after the dismissal of Mr Shaw, seven employees doing that work.[34]In those circumstances, we are unable to conclude either that there was an incorrect approach in law or a perverse Decision by the Tribunal, or that the conclusions in paragraphs 14 and 25 to which we have referred, are inconsistent and, in those circumstances, we dismiss the appeal. In those circumstances, the question of consultation does not arise, and it is agreed that the matter must be remitted for remedies to be considered, and we shall hear argument as to whether that should be to the same or to a different Tribunal.