MR M DAVIS v ITNET [2003] UKEAT 0514_02_2103

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2003] UKEAT 0514_02_2103

Case No Appeal No. EAT/0514/02

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MR M DAVISAPPELLANT

ITNETRESPONDENT

Before

MR COMMISSIONER HOWELL QC

HON DR WILLIAM MORRIS OJ

MISS S M WILSON CBE

Date 21 March 2003

[1]APPEARANCES For the Appellant MR M RUDD (of Counsel) Instructed by: Messrs Ouvry Goodman & Co Solicitors 12 High Street Sutton Surrey SM1 1HP For the Respondents MISS R TUCK (of Counsel) Instructed by: ITNET Laburnam House Laburnam Road Bournville Birmingham B30 2BD MR COMMISSIONER HOWELL QC This appeal which is before us today for full hearing, pursuant to the directions of the Appeal Tribunal given on 3 July 2002 at the preliminary hearing, is brought by Mr Michael Davis, seeking to have set aside the Decision of the Birmingham Employment Tribunal, set out in Extended Reasons sent to the parties on 21 March 2002. In it the Tribunal held that although Mr Davis had been unfairly dismissed from his former employment with the Respondents, ITNET on 2 May 2001, he was not entitled to any compensation at all for the unfairness of that dismissal under section 123 of the Employment Rights Act 1996 and the award made to him to be was to be limited only to a comparatively small amount of £120, the balance of the standard award due to him after taking into account the redundancy payment and payment in lieu of notice that he had already received from the employer.

[2]The Respondents are information technology contractors, who according to the Employment Tribunal's findings took over the contract for the Wandsworth Council's accounting systems, when those were "outsourced". Mr Davis, the Appellant and the Applicant before the Tribunal, had worked for many years for Wandsworth as an analyst programmer on Cobol mainframe systems, which were at that time used by Wandsworth when its accounts were handled in-house. He was part of the Wandsworth accounting undertaking transferred to ITNET in 1995 when that was outsourced, and his employment rights with Wandsworth were secured and transferred to ITNET under the Transfer of Undertakings (Protection of Employment) Regulations.

[3]The Tribunal further found that ITNET lost the Wandsworth contract in October 1999 and failed to secure any other permanent work for the team that had formerly worked on that contract. No new contracts were secured as hoped, so that the demand for analyst programmers in the Respondents' employment was reduced. The Appellant was off sick from December 2000, and apart from a short period from 21 December, again from January to April 2001, with first a stress-related illness, and, secondly, what was diagnosed as pleurisy. He was warned that his position was at risk of redundancy on his return to the office on 21 December 2000, and at that time was given some lists of alternative vacancies for which he could apply.

[4]On his return from his second bout of illness on 17 April 2001 it was confirmed to him that his employment was at risk, but he was not dismissed; and subsequently, at a meeting on 27 April 2001 he was in effect offered two options, on the basis that the Respondents' redundancy procedure was being applied to him afresh at that time. The options were to take immediate redundancy with three months' money in lieu of notice, or to continue in the Respondents' employment for another thirty days so as to be able to look for vacancies while still within the company and take redundancy at the end of that time, with only two months' money in lieu of notice.

[5]Again, continuing the findings of the Tribunal, by a letter from his solicitor on 30 April 2001 he elected for the first of those two alternatives, immediate dismissal; and his dismissal was confirmed by the employer on 2 May 2001, which was accepted as the date of termination of his employment. He was then paid in full three months' money in lieu of notice in accordance with the offer made to him. In the course of the Tribunal proceedings, it was admitted by the employer that Mr Davis's dismissal for redundancy had been unfair. It is to be inferred that that was for procedural reasons and failure of consultation, from, at any rate December 2000 onwards, because the Tribunal also found, and that finding is not open to challenge before us, that his dismissal was genuinely by reason of redundancy in that there had been a decline in demand for analyst programmers working on Cobol mainframe systems where his particular skills had been gained: that was in the fast-moving context of these computer systems, an increasingly out of date technology. For the same reason, the Tribunal found that it was not practicable to offer him reinstatement in the same position, the need for which had disappeared, there being, on the evidence before them, no vacancies at all for that kind of work.

[6]However, the Tribunal found that the admitted unfairness in the procedure from December 2000 onwards, in their words "made little difference to his eventual selection for redundancy and his eventual dismissal". He had made no applications for other posts from January to April, when the discussions on his redundancy were re-opened. There had been a possible post in a team being put together to work on a contract for a particular firm (the Equitas team), but on the Tribunal's findings that was not in fact open to him in any practical sense in April, since by the time he was in a position to apply, he was too late and the position had already been filled by a person engaged on a private contract basis.

[7]The Tribunal found that he had made no other attempt to find any other posts, and in electing for immediate redundancy at the end of April or beginning of May 2001, had himself put a stop to any further question of redeployment within the company after that date. They further held that the employers' failure to provide retraining did not alter the position so far as their assessment of the compensation for his loss was concerned, as in their words "the question was what other roles he could have undertaken at the actual date of his redundancy". Consequently the Tribunal held that his redundancy was inevitable at the date of his actual dismissal, despite any procedural defects leading to it; and on that basis awarded no compensation at all, in other words imposing a 100% reduction in what would otherwise have been the fair compensation for the unfair dismissal.

[8]The Tribunal then dealt with the issue of re-engagement, holding they were not precluded from doing so by their decision that reinstatement to his original position was not possible. They dealt with this separately, after further argument and a further hearing, and held that of the vacancies for which he had indicated a wish to be considered there was only one, a position working on ICL equipment, that was suitable for him, but because the salary attached to that position was some £5000 more that the salary at which he had previously been working, to order his re-engagement with a view to taking up that vacancy would leave him substantially better off; it was therefore not a practicable thing for the Tribunal to order under the provisions as to re-engagement in section 115 of the Employment Rights Act 1996 . Other possible positions at lower salaries were impracticable for various other reasons, referred to by the Tribunal, and there is no challenge to their findings on those other jobs. The appeal as regards the re-engagement question relates only to the vacancy for ICL work at a higher rate of pay.

[9]Against those remedy decisions on compensation and failure to order re-engagement, the Appellant appealed on grounds set out at some considerable length within the Notice of Appeal, dated 2 May 2002. These can however for present purposes be conveniently summarised, as they were by His Honour Judge Clark in the judgment at the preliminary hearing, into three main heads which have been used as the basis of argument before us on the full hearing. 1) Whether the Tribunal reached an impermissible conclusion in finding that it was inevitable, if a fair procedure had been followed, that the Appellant would nevertheless have lost his employment. 2) Whether the Tribunal erred in looking at the date of dismissal, rather that at the date of the Tribunal hearing, when considering whether or not reinstatement was practicable. 3) Whether the Tribunal erred in concluding that it was not reasonably practicable to re-engage the Appellant in the post identified at paragraph 24 of the Extended Reasons, on the basis that that post paid £5000 per year more than the Appellant had received prior to his dismissal, the Tribunal having identified a factual issue as to whether he required further training in that post, but without having resolved that issue.

[10]Dealing first with ground one, which was the most substantial ground argued before us by Mr Rudd on behalf of Mr Davis and Miss Tuck on behalf of ITNET, Mr Rudd made clear that the challenge on the appeal was not to the Tribunal's finding that this was a genuine dismissal for redundancy, or to the imposition or consideration by the Tribunal of at least some reduction in the compensation otherwise payable for the admitted unfairness. The challenge was rather to their reduction of the compensation to nothing at all, on the ground that there had been no possibility of any alternative to the dismissal in fact imposed on 2 May 2001.

[11]We found the decision on this a somewhat difficult one; and we have in mind the general principle in Stewart -v- Cleveland Engineering

[1994] IRLR 440

, to which Miss Tuck drew our attention, that it is not, of course, for the Appeal Tribunal to interfere with the conclusions of an Employment Tribunal on questions of fact and degree, which are primarily what are in issue here, in deciding the appropriate compensation it is just and equitable to order for an unfair dismissal, and that the threshold for finding a decision on such matters perverse, as we are invited to do by Mr Rudd, is a very high one.

[12]Nevertheless, it is equally clear that if we are satisfied the Employment Tribunal's conclusion on such an issue of not capable of being sustained by the findings made on the material before them, it is our duty to set aside the conclusion, in order to avoid the injustice that would otherwise occur. That is a proper thing for the Appeal Tribunal to do in the particular context of an Employment Tribunal decision imposing a 100% reduction in compensation where its findings are not sufficient to support a conclusion that a redundancy dismissal at the same date would have been certain in any event, is demonstrated by the authority of Constantine -v- McGregor Cory

[2000] ICR 938

, a decision of the Appeal Tribunal under Mr Justice Lindsay, the then President, where what was referred to as an "all or nothing" decision reached by an Employment Tribunal on this kind of issue was set aside and the case remitted to the Tribunal to reconsider the basis of compensation on the basis of a percentage reduction in compensation as being, in those circumstances, the only reasonable course for an Employment Tribunal to adopt.

[13]In this case, as I have said, it is conceded by the employer, as noted in paragraph 10 of the Tribunal's Extended Reasons, that the dismissal was unfair. Conversely, it was found that this was a genuine redundancy dismissal and we accept Miss Tuck's submission that that necessarily involves the finding of fact that Mr Davis's original post had gone, for all practical purposes, by the time he was dismissed from it. Those findings are not open to challenge, and, consequently, we again accept Miss Tuck's submission that the only realistic possibility of Mr Davis being retained in the Respondent's employment, once his original position had disappeared, would have been if he could have been redeployed to other work, being provided with any necessary retraining to enable him to qualify for such re-deployment.

[14]We also accept her submission that over the period we were invited by Mr Rudd to consider, which was that from August 2000 onwards, and certainly from the date of the meeting referred to by the Employment Tribunal in paragraph 5 of their Extended Reasons, on 21 December 2000, when Mr Davis was first advised that his position was at risk of redundancy, it was reasonable for the Tribunal to conclude, as they did, as recorded in paragraph 19 of their Statement of Reasons, that the selection group for the purpose of redundancy (the members of what was referred to as "Cost Centre 298", that being the team previously employed on the Wandsworth contract) that selection group was the appropriate selection group for redundancy and by that date had been reduced to one employee only, namely the Appellant; all the others having found alternative roles somewhere else by that date.

[15]The consequence of that is that the only real question of unfairness in Mr Davis's dismissal can have arisen in the consultation and action, or lack of it, carried out by the employer, in conjunction with him, with a view to redeployment in other work within the Respondents' organisation, and any necessary retraining to put him in a better position to qualify for that. On this, the findings of the Tribunal are, in fact, remarkably scant. The efforts made by the employer really consisted only, as recorded in paragraph 5 of the Extended Reasons, of providing Mr Davis at the meeting on 21 December 2000 with some lists of vacancies and with either those or other lists of vacancies also being sent to him in what was referred to as the "Pulse system" which was the company's own intranet.

[16]As also recorded in paragraph 5, when he did make an application for one of those vacancies, his CV seems to have got lost within the Respondents' organisation. Apart from that, there is no evidence at all of any other specific offers or suggestions being made to him by the company with regard to possible vacancies for which he might be suited, or with regard to how he might best fit himself for redeployment and for applying for whatever vacancies did become available. The only other attempt at providing him with the opportunity of further vacancies was made at the further meeting referred to in paragraph 17 of the Tribunal's Extended Reasons, when the Respondent did very fairly allow him in effect, to "start again" in the redundancy process by offering him a further thirty days back at work with a view to being able to look for vacancies in the company in that period: but again it is to be noted that that was all they did. They did not suggest any vacancies; it seems to have been left entirely to him to carry out the search for himself.

[17]There is no evidence in the Tribunal's findings of any attempt by the employer to offer retraining of the type that, given his somewhat out of date previous experience, he plainly needed in order to broaden what were by then old fashioned skills, for which there was a reducing need. There is no evidence of the company having made any positive effort with a view to his redeployment; and, in that, in particular, the industrially experienced members of the Appeal Tribunal note that they do appear to have fallen short of the standards they had set themselves in the Redundancy Guidance Notes for managers, on page 178 of the bundle of further documents with which we have been supplied. (This is the only one of those documents to which we think it necessary to make reference, so the fact that this large bundle was submitted by one side without agreement has had no effect on the outcome of the appeal.) There the Respondents' redundancy procedure and policy becomes apparent, in the instructions for managers who have to conduct risk-of-redundancy interviews, such as took place with the Appellant on 21 December 2000, where, in particular, it is emphasised to the manager that:

"You will need to tell them that every effort will be made to find them alternative employment within the business and to re-deploy them. If no alternative role can be identified by (a date - 4 weeks after that of the interview) then their role will be declared redundant. They should contact the Resource Manager, who is [a named person to help them in their search]"

There was no evidence referred to by the Tribunal of any positive efforts of that kind having been made by the employer with a view to redeployment or possible retraining of Mr Davis.

[18]Again, drawing on the experience of the industrially qualified members of this Tribunal, we have concluded that any reasonable Tribunal should have had regard to the possibility that a reasonably pro-active employer, engaging on a full-hearted consultation process, would or might have been able to arrange at least some retraining to put the Applicant in a better position to obtain re-deployment within the Respondents' organisation. We do not find what the Tribunal said in paragraph 19 of their Extended Reasons about training a sufficient basis for their apparent conclusion that the possibility of a more pro-active consultation process and of retraining opportunities, would still have been bound to have ended in total failure and an inevitable redundancy by the end of April the following year. What the Tribunal said in that paragraph was only this:

"However, the respondent has to consider the applicant's skills at the date when redundancies are declared. Whilst with further training the applicant might have been in a position to undertake other roles in the company he would not have been immediately effective at the date of the redundancy."

[19]Whether the times to which the Tribunal are referring as "when redundancies are declared" and "the date of the redundancy" are the same or different, it does not appear to us that on what is said there, the Tribunal have demonstrated that there was a complete absence of hope of any better position as regards redeployment, even if some attempt at arranging re-training for the Applicant had been made by the employer at an earlier date than his eventual redundancy.

[20]Therefore, despite Miss Tuck's very well argued submissions, we have reached the conclusion that the Employment Tribunal's findings here do not show how, as a reasonable Tribunal, they could properly have concluded that a redundancy on 2 May 2001 was certain and inevitable, however good a process of consultation with a view to re-deployment and offering of possible training had been undertaken by the employer from the time the prospect of having to make the Appellant redundant first began to face them, which must have been during the year 2000; in December of that year at the latest.

[21]We therefore take the same course as the then President and our colleagues did in Constantine 's case, and allow the appeal, set aside the Tribunal's Decision holding that no compensation at all was payable for the unfairness of the dismissal, and remit the case for reconsideration of whether at least some compensation is just and equitable in this case, based on a percentage assessment of the possibilities had proper consultation and discussion with a view to redeployment and the offer of any available retraining taking place at an earlier stage, when redundancy was first contemplated. That disposes of ground one.

[22]On ground two, the reinstatement point, it is conceded by Miss Tuck that there is a technical error of law in the Tribunal's approach to the issue as recorded in paragraph 12 of their Extended Reasons, in that they are apparently looking at the wrong date for the purposes of deciding the practicability of reinstatement, since they do refer expressly to the lack of availability of other posts at the time of Mr Davis's dismissal. That, Miss Tuck, quite rightly concedes, is incorrect. What the Tribunal should have been doing was considering the question of practicability of reinstatement as at the date of their own Decision: but we also accept her further submission that this was a mistake by the Tribunal without any practical effect, in view of their finding that the post in "Centre 298" in fact no longer existed. That, of course, remained the position at the time of their own decision, so that which ever date you looked at, that finding made it inevitable that the Applicant could not practicably be reinstated to it, so it is not necessary for us to make any formal Order on ground two; it has no material effect at all.

[23]Ground three was the question of re-engagement. It was argued by Mr Rudd that the Tribunal had wrongly failed to take into account the practicability of a proposal which Mr Rudd, who appeared as Counsel at the hearing, was categoric that he had put forward on behalf of the Appellant to the Tribunal, that he should be re-engaged so as to be able to take up the post involving the ICL skills as an ICL analyst which was agreed to be available, but should be permitted to take it up only at his old salary of £28,000 per year instead of the substantially higher one of £33,000 at which that post had been advertised. It is not possible on the material before us to discern if that submission is well founded; the argument is not even mentioned in the Tribunal's Extended Reasons. Again however we find it is not necessary for us to determine whether there was any error of law on the Tribunal's part in failing to address that point, in view of our conclusion on the first main ground which makes it necessary for us to remit the whole question of remedy to the Tribunal for re-hearing.

[24]In the result, we remit the case to the Employment Tribunal to reconsider the question of remedy for the admittedly unfair dismissal of Mr Davis on 2 May 2001. That reconsideration will involve one or possibly two heads. The first is compensation, in accordance with the judgment we have given on ground one. The second, which may need to be considered, is the question of any possible re-engagement if the Appellant still contends on the re-hearing before the Tribunal that this would now be a practicable course for the Tribunal to take. On both of those issues, either side is to be at liberty to submit further evidence to the Tribunal, so as to enable the Tribunal to make the best assessment it can in the light of the information then before it at the re-hearing.

[25]The final question we have had to address is whether the Tribunal to conduct this re-hearing, should be composed of the same members as the original one, or a completely fresh one, as Mr Rudd suggested. We have concluded that it is not necessary for us to direct that there should be a completely fresh Tribunal to re-hear this. We have no reason to suppose that, in the light of the guidance we have attempted to give on the relevant questions on ground one, the same Tribunal, which, of course, has had the benefit of hearing all the evidence at the earlier hearings, would not be able to carry out perfectly proper and objective assessment of what the compensation ought to be, taking account of a possible percentage reduction rather than the all or nothing basis adopted on the previous occasion.

[26]We therefore make no direction that the Tribunal hearing the case on the re-hearing should be a completely fresh Tribunal. Conversely, we do not make any direction that it necessarily has to be the same one; we consider it will be quite satisfactory for the composition of the new Tribunal to be left to the Tribunal authorities themselves, depending on the availability and convenience of members to conduct a re-hearing which, in the circumstances, we hope will be able to be organised at a relatively early date.