MR D J KNOTTS v UNITED FRIENDLY INSURANCE PLC [2003] UKEAT 0702_02_2306

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2003] UKEAT 0702_02_2306Case No Appeal No. EAT/0702/02Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR D J KNOTTSAPPELLANTUNITED FRIENDLY INSURANCE PLCRESPONDENT
Before
Mr Recorder LubaDate 23 June 2003
[1]APPEARANCES For the Appellant No Appearance or Representation By or on Behalf of the Appellant For the Respondent MR WILLIAMSON MR RECORDER LUBA QC Introduction This is an appeal brought before us by Mr D J Knotts against a decision of the Employment Tribunal at Newcastle upon Tyne. Following a hearing on 9 November 2001 and 12 December 2001 the Employment Tribunal reached a unanimous decision that the Applicant had been unfairly dismissed but that no compensation was to be awarded.[2]The application for unfair dismissal had been brought against two Respondents, United Friendly Insurance Ltd and Royal London Mutual Insurance Society Ltd. The second Respondent was dismissed from the application by consent and the correct name of the true Respondent was changed to become United Friendly Insurance Ltd.[3]The appeal before us is brought by Mr Knotts, the Applicant before the Employment Tribunal below, who complains that the Employment Tribunal did not properly deal with the question of compensation, if any, flowing from his unfair dismissal and in particular that it did not properly discharge its responsibilities in considering whether there should be made what is known as a ' Polkey ' deduction. Background[4]In order to understand the appeal it is necessary to say something a little more about the background. Mr Knotts had been employed as an Area Sales Manager with United Friendly. He was employed by them from 1992 until his employment was terminated by reason of redundancy on 8 December 2000. What had happened was that the company United Friendly (or at least its relevant business) had been subject of an all-share purchase by Royal London, which effectively took over the operation. The Transfer of Undertaking (Protection of Employment) Regulations 1981 did not apply.[5]As a result of the effective take-over of United Friendly's business by Royal London, the question arose of the reorganisation of the business to take effect following the merger. In particular, the company decided to restructure into a different system of area and regional management.[6]The upshot was that Mr Knotts' retention with the company would depend upon his successfully finding a position in the new structure. There were two possible posts open in relation to the new structure for which Mr Knotts considered himself eligible to apply. The first of these was considered by the employers on the basis of what was known as a "desktop" interview. Mr Knotts was not personally interviewed for the position because, unhappily, at the relevant time he was away from the place of employment recuperating following some sort of ailment. In relation to the second possible post, Mr Knotts was considered but in the event was not successful.[7]The Tribunal make comprehensive findings of fact in relation to what happened in respect of each of the two job opportunities. To deal, firstly, with the second of them they found that there was no complaint at all to be made of the employer's handling of Mr Knotts' consideration for the second post. The procedure had been handled correctly and the Applicant was properly considered for the second possible post.[8]In relation to the first possible post, the Tribunal were not satisfied that the "desktop interview" was a procedurally fair way of handling Mr Knotts' opportunity for continued employment by the employers. In particular, because he was off work he was not offered (and in the Tribunal's view should have been offered) a personal opportunity to state his case and explain why he was an appropriate candidate for that post.[9]The Tribunal were not satisfied that the employers could give any reasonable explanation why Mr Knotts was not offered the opportunity for a face-to-face interview and in those circumstances they found that there had been a procedurally unfair dismissal. The operative reason for the dismissal was, of course, redundancy and Mr Knotts has received what we are led to believe is a significant contractual redundancy payment.[10]The consequent question for the Employment Tribunal was whether there should be made a reduction, in the compensation otherwise payable, under the principle in the Polkey case. That is a reference to the well-known judgment in Polkey vAE Dayton Services Ltd [1987] IRLR 503 . The task for a Tribunal is to consider what the Applicant has seriously lost by reason of the unfairness in the manner of his dismissal. The Appeal[11]As we have indicated, the appeal is concerned entirely with the Tribunal's conclusion in relation to the Polkey matter. In the final sub-paragraph of paragraph 7 of their Extended Reasons, the Tribunal ask themselves the rhetorical question as follows:
"So what is it that the Applicant can truly be said to have seriously lost?"
They answer that question, or seek to answer it, as follows:
"It is very difficult to quantify and hence we have to think about the "
Polkey " case because " Polkey " tells us that if there is something that has been plainly unfairly done in a significantly procedural way it has to be highlighted…we have to look at Polkey and consider what is the chance that had Mr Knotts had the full interview with Mr Colin Hughes and Human Resources that he would definitely have got the job. We think that this is almost impossible to quantify."[12]In fact, the Tribunal do fail to quantify it. In their very last paragraph of the Extended Reasons they say this: 8 "Bearing those things in mind, we find that the way that we can meet this situation is to make a declaration that there was unfairness in the first post involved, but we find it impossible to put a realistic or any figure on loss, it is incalculable in our judgment."[13]It is in those circumstances that, having made the declaration of unfair dismissal, the Tribunal awarded no compensation. The criticism contained in the Notice of Appeal is that the Tribunal failed to properly assess compensation in that they improperly failed to quantify or identify the figure or percentage deduction appropriate in this case. Further it is said that the Tribunal erred in failing to request the parties to submit, whether orally or in writing, submissions in relation to compensation and this issue.[14]By a Respondent's Notice, the grounds of appeal are disputed. They are pithily summarised in two paragraphs of a Respondent's Answer which are before us and they have helpfully been augmented by the oral submissions of Mr Michael Williamson who appears before us today for the Respondent and in his short but nevertheless very helpful Skeleton Argument.[15]The first matter to which Mr Williamson draws our attention is that the Polkey question was 'live' before the Tribunal. He draws our attention to the fact that in paragraph 4 of the Extended Reasons the Tribunal record Mr Williamson as having directed their attention to a number of authorities including the decision in the Polkey case.[16]Furthermore, he indicates that his Skeleton Argument (seen in advance by the representative of the Appellant at the Employment Tribunal hearing) contains reference to "…the principle in Polkey" and then gives the full legal reference.[17]Thus it is said by Mr Williamson that the Polkey issue was certainly in play before the Tribunal. In those circumstances, he submitted, it was incumbent upon the Appellant, who made oral submissions by his solicitor only after Mr Williamson had made his submissions, to deal with the Polkey point.[18]It seems to us safe to conclude on the basis of this material that the Polkey question was deployed in the submissions made by the Respondent before the Tribunal. We must infer that the opportunity was given to the Appellant, in the oral submissions of his solicitor, to deal with the proposition that the principle in Polkey applied.[19]The Appellant's complaint, however, is somewhat different. He indicates that what was lost was the opportunity to deal with any invitation from the Tribunal as to the appropriate impact of Polkey on the compensation otherwise to be awarded; in particular, that the Tribunal failed to invite submissions on the specific percentage or degree of the Polkey deduction.[20]Doing the best he can to assist us today, Mr Williamson has indicated that he cannot, on reflection, indicate whether or not such an invitation to the parties was made in the course of the hearing or in the course of exchanges. He fairly emphasises that the relevant Employment Tribunal Chairman would be expected, as a matter of ordinary course, to have made such an invitation to the parties. Further, Mr Williamson cannot assist us clearly, again intending no criticism to him whatsoever, as to whether the parties did each put a "percentage" or "degree of deduction" figure to the Tribunal.[21]Mr Williamson, in the first part of his oral submissions before us this afternoon, indicated that he had perhaps not put a percentage deduction on it but that "he had suggested that the Polkey deduction should be high". Later, in answer to questions from us, he indicated that he was sure that he had put in a percentage.[22]These submissions are not precisely consistent but we do not criticise Mr Williamson for that. He was doing the best he could from his memory, the matter not being assisted by his own note of the exchanges, nor of any note of the Appellant's representative before the Tribunal on the question of specific percentage or degree of deduction.[23]The short answer from Mr Williamson to the criticism made by the Appellant (that the Tribunal did not invite the necessary submissions) is to draw attention to the fact that the opportunity was provided to the Appellant or his representative to make such submissions. He seeks to distinguish for that reason the decision delivered by this Employment Appeal Tribunal on 10 April 2002 under the title Market Force UK Ltd v Hunt [2002] IRLR 863 . In that case the Employment Tribunal had not followed the customary practice and procedure of inviting the Applicant's and Respondent's advocates to make submissions as to the percentage of the Polkey deduction. This Tribunal, in that case, found that to be unfair because the parties had been deprived of an opportunity of making those submissions. As we have indicated, Mr Williamson seeks to distinguish that judgment on the grounds that in this case there was an opportunity to make submissions.[24]We have no direct evidence on the question of whether the Tribunal did expressly invite submissions. The best Mr Williamson, for the Respondent, can do is to draw attention to the fact that the opportunity to make them was there, invitation or not. Sadly, we do not have any note from the Chairman as to what occurred, nor has there been any direction that he produce such a note.[25]However, it is not necessary for us to reach a conclusion as to whether Mr Williamson has provided a complete answer to the first complaint of the Appellant (about the non-opportunity to make submissions on percentage deduction). That is because, in our view, this appeal must be allowed on the other ground put forward by the Appellant; and that is that the Tribunal, whether they invited submissions on the question of percentage or not, have not reached a final conclusion in their Extended Reasons as to the question of the appropriate percentage or degree of deduction. The passages already quoted from paragraphs 7 and 8 of the Extended Reasons indicate plainly that the Tribunal here has simply "left the question hanging".[26]Mr Williamson's retort to that point, made by the Appellant in the Notice of Appeal and in a letter he sent to this Employment Appeal Tribunal on 27 May 2003, is that one can find in the Extended Reasons pretty good indicators that the Tribunal would have made a very substantial reduction and that this would have had no effect, or almost no effect, on the amount of monies actually received by the employee.[27]Mr Williamson in particular draws our attention to the fact that the interview element of the selection process for the first post only counted for a maximum of 25% of the weighting in the selection procedure. 75% was concerned with previous performance and matters of that kind. So that, it is said by Mr Williamson, a very high percentage deduction should be made because only an opportunity of putting in 25% worth of the potential selection criteria was lost by Mr Knotts.[28]Secondly, says Mr Williamson, if one looks at the Tribunal's findings it is clear that they had in mind the fact that a very substantial sum of money had already been paid to the Appellant. The Tribunal knew what the sum was. Mr Williamson contends that, properly understood, what the Tribunal decided was that any sum they would award after a Polkey deduction would inevitably be extinguished by the contractual payment.[29]That is not, in our judgment, the way in which the Tribunal have stated the matter in paragraphs 7 and 8. Beyond the passage we have already read from the final sub-paragraph of paragraph 7 the text continues as follows:
"Even if we felt confident enough that we could quantify a sum of compensation, such sum would have to be set against the amount of additional money that the Respondents have paid to the Applicant by way of his contractual entitlement. Contractual payments are set against any loss found."
Later they say in paragraph 8:
"…had we made any award then that would have been effected by the payments that the Applicant has already received."
[30]These references to setting-off against other payments do not, in our judgment, amount to the Tribunal finding that whatever deduction they made would have been extinguished by the contractual payment. If that is what they meant it is not what they have said.[31]Ably as Mr Williamson has sought to join together the straws and strands of the Tribunal's decision so as to uphold its conclusion on the Polkey deduction, we cannot find that this Tribunal properly discharged its responsibilities in that respect. It does not do justice for the Applicant to be faced with paragraphs such as the final paragraph of paragraph 7 and paragraph 8 of the Extended Reasons where the Tribunal have simply left hanging as "incalculable" or "unascertainable" the Polkey deduction.[32]A Tribunal faced with this situation must do the best it can. In doing so it should have the benefit of submissions from the two parties. The fact that there is no reference to any percentages or any suggested percentages rather does suggest that, in this case, the Tribunal might not have pursued the course of inviting such submissions expressly when perhaps that would have been helpful.[33]However, we have not determined this appeal on the first point mentioned above. We are satisfied that the second point is made good, namely that the Tribunal has failed to discharge its responsibilities in making a clear finding on the Polkey deduction.[34]In those circumstances we are unanimously of the view that this appeal must be allowed. The next question is as to disposition. There is certainly no question of the original complaint of Mr Knotts being remitted for total rehearing. Indeed, in our view, it is quite plain that Mr Knotts makes no objection, or no serious objection, to a Polkey deduction figure being in contemplation. Therefore it seems to us that the right course is for this matter to be remitted to the Employment Tribunal at Newcastle upon Tyne for consideration as to whether there should be a Polkey reduction and if so what should be the extent of that deduction. Once that matter has been ascertained then questions of the inter-relationship with contractual payments can be resolved.[35]We shall now hear Mr Williamson as to whether the matter should be remitted to the same Employment Tribunal or whether a different Tribunal should consider the matter. [Discussion][36]In the circumstances we direct that this appeal be allowed, the appeal be remitted to the Employment Tribunal at Newcastle for the purpose of determining only whether there should be a Polkey deduction and, if so, the extent of that deduction.[37]We have further concluded that it would be both proportionate and economical if the matter could be heard by the same Chairman and members as heard it in December 2001. If it is administratively inconvenient for that to occur then a reconstituted or newly-constituted Tribunal should consider the remitted matter.