MR JOHN JAMES LEWIS v RHYAL ENGINEERING LIMITED [2005] UKEAT 0088_05_3006

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2005] UKEAT 0088_05_3006

Case No Appeal No. UKEAT/0088/05

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MR JOHN JAMES LEWISAPPELLANT

RHYAL ENGINEERING LIMITEDRESPONDENT

Before

His Honour Judge J R Reid

Date 30 June 2005

[1]APPEARANCES For the Appellant MS H GOWER (Of Counsel) Instructed by: Messrs Thompsons 18 Lawford Street Bristol BS2 ODZ For the Respondent MR C HARRIES (Representative) SUMMARY A dismissed for redundancy – unfairly (no consultation). ET held(a) consultation could have proceeded during notice period

(b) the dismissal date would have remained the same

(d) there was no chance the dismissal date would have been extended and so no chance he would never have been made redundant. A fellow worker made redundant a few weeks earlier was re-employed the Monday after A's date of termination following an unexpected new order. Remitted for re-hearing on compensation. Decision illogical and flawed. HIS HONOUR JUDGE J R REID QC This is an appeal from a Decision of an Employment Tribunal held at Carmarthen on 5 April 2004 and of its further decision on review also at Carmarthen on 20 September 2004. The original Decision was sent to the parties on 9 June and the Review Decision was sent to the parties on 27 September.

[2]By their Decision as reviewed the Tribunal held that the Applicant, Mr Lewis, had been unfairly dismissed by the Respondent, Rhyal Engineering Ltd, and ordered that he be paid £1,208.08 by way of compensation. There was at one stage a further matter reserved relating to claim to injury to feelings but that matter has now gone.

[3]Mr Lewis appeals against the Decision and asserts that the Tribunal was wrong in law or perverse. The background to the case is that Mr Lewis was employed as a welder by the Respondent. His employment began on 13 September 2000 and finally came to an end on 24 October 2003. The reason for his dismissal was redundancy although he had originally claimed that there were other reasons that led to his dismissal. The reason why the dismissal was unfair was because there was no consultation before he was made redundant.

[4]The chronology of events was this, that Mr Lewis, who was has one of fourteen welders, received a dismissal letter on 26 September 2003. By that time the company had reduced its number of welders down from the original fourteen to six and of the six on that day four received dismissal letters. He was not told the reason for his dismissal until 2 October and on 3 October his employment was extended until 17 October. On 17 October it was extended again until 24 October. In fact his last working day (because the work on which he was engaged finished) was on 22 October. The reason that matters went as they did was because the engineering business was in a fickle market and a lot of the work that it did was comparatively short-term, work given at comparatively short notice and/or for comparatively short periods.

[5]Following Mr Lewis's dismissal his employment having terminated on the previous Friday the 24 th, on Monday 27 October the company obtained a fresh order and rather than ringing up Mr Lewis or indeed one of the other three of the final batch of welders who had been made redundant they rang up and re-engaged another welder, a Mr Martin who had been made redundant a few weeks before.

[6]The Tribunal against the background of those facts held that there had been no consultation and that had there been a proper period of consultation it would have commenced either on 26 September - see the Review Decision - or on 26 September or on some earlier date - see paragraph 45 of the original decision. The Tribunal went on to hold that there was no reason why the giving of notice should preclude meaningful consultation during the currency of the notice – see paragraph 18.2 of the Review Decision and also went on to hold:

"18.3 At the end of the three-week period nothing heard in evidence suggested circumstances had arisen which made it likely that the Applicant would be retained. The extending of the notice period was specifically attributed to additional but short-term work."

The position on the Tribunal's holdings thus appeared to be that any consultation period would have expired by 17 October and that the notice originally given on 26 September 2003 could continue to run alongside the consultation process. The Tribunal then went from there to hold that the appropriate compensation for Mr Lewis was three weeks pay, being the likely period of consultation. They awarded him £958.08 under that heading plus £250.00 for his loss of statutory rights.

[7]That decision (and my summary of it now appears somewhat muddled because the Decision itself appears somewhat muddled) was attacked on a number of grounds. The first ground that Ms Gower, Counsel for Mr Lewis raised was that the Tribunal was in error in its application of Polkey because instead of looking at the question of chance that he would have retained employment the Tribunal, she submitted, had apparently taken the view that they had to determine the question of whether or not he would remain in employment on the balance of probabilities. She pointed out that the expression in paragraph 18.3 of the Review Reasons which I have already referred to "which made it likely that the Applicant would be retained" his language more appropriate to considering the matter on the balance of probabilities rather than indicating that they were considering whether there was a chance he would be retained and holding that there was no chance.

[8]We do not have to determine which of the alternative possible constructions of that rather loosely drafted in paragraph is correct because there are other grounds on which she also relies. The second ground on which she relies is that the Tribunal erred in determining what was the appropriate compensatory award by doing so simply by rule of thumb. She referred the Tribunal to the Decision of Elkouil v Coney Island Ltd

[2002] IRLR 174

in which an Employment Appeal Tribunal held that the correct approach was not to treat them the question of compensation as if it forced them in a strait jacket and that what the Tribunal should do is look at what the outcome would have been if that was done which ought to have been done. It does seem to us that there is considerable force in that submission. The calculation of compensation contains in the original decision no reference to the basis on which it was made. The entirety of the reasoning in the original decision is this:

"49. Compensation is calculated as follows: Compensatory Award There weeks (likely period of consultation) £ 958.08 X net weekly wages of £319.36 £250.00 Loss of statutory rights £1,208.08 "

[9]In reconsidering the matter at paragraph 18.4 the Tribunal said:

"Application of the principles in the case of Polkey v Dayton Services was appropriate in relation to the amount of compensation to be awarded by the tribunal only insofar as such should be limited to the time the Applicant would have continued to be employed for such period as consultation would have occupied."

[10]On the Tribunal's other findings(1) the consultation would have taken three weeks but

(2) the consultation would have expired before the period of notice expired and

(3) the consultation period could run coterminously with the notice period. On that basis it is not possible to see how the Tribunal logically came to the conclusion that Mr Lewis had suffered loss for which he should be compensated to the extent of three weeks wages. If Ms Gower were correct on this logically on the Tribunal's view they should not have awarded him anything beyond the £250.00 for his loss of statutory rights. Mr Harris on behalf of the employer said that that was the correct analysis and adopted the suggestion from us that the position was simply that the employer had not thought it worthwhile cross appealing in relation to so small a sum.

[11]In our view therefore so far as this ground of appeal is concerned it does appear that there is an error of law on the part of the Tribunal. This really ties into the next of the grounds of appeal namely that the Tribunal has failed to give adequate reasons for its conclusion as to why the Appellant was not likely to, or there was no chance that he would, be retained in employment given that the Tribunal appears to have thought that from somewhere a further three weeks employment should have been available and given further that had the three weeks period been tagged on to the date when he left or alternatively had the notice period started to run from the expiry of three weeks after 26 September he would still have been in employment on 27 October when new work apparently came in and another welder who had been earlier made redundant was re-employed. It is said that in those circumstances there must at least have been a real chance that he would have kept his employment or perhaps he would have had at least one in four chance since he would have been placed in a pool with the other three who were made redundant at the same time as him and might well have been the lucky one to be kept on come the 27 October.

[12]We cannot see any adequate reasons in the Decision either originally taken or with the review decision to explain how the Tribunal dealt with this point. It seems to us therefore in that respect the decision is inadequate.

[13]Then it is said that the decision is perverse or further inadequate in three respects. Firstly, that it was perverse or wrong in law in saying it could be meaningful consultation while the notice period was running. In our view it may at least in theory be possible for the consultation period to run conterminously with a notice period but if it is to do so that will be a very rare occasions. In this particular instance it may be that, absent other factors, that could have happened here. The situation was that was a drip feeding of redundancy so that welders were made redundant one after the other as work finished and no other work was found. They were made redundant according to criteria which clearly must have been settled at a very early stage: they were adopted or taken from the national criteria which we were shown at page 51 of the bundle. It seems to us that given that this was a unionised workforce but by the time it came to Mr Lewis' turn the criteria and the pecking order in which welders were made to be redundant must have been well settled. In these circumstances if that were the only matter about which there could have been consultation, this might have been one of those rare cases where one could have notice and consultation lying side by side. But on the material before us that is not the only sort of thing which could have been debated in the course of consultation. Such matters as laying off to see if work came in, part-time working, job sharing and the like could all have been a subject to discussion and should have been subject to discussion before notice was given. We therefore take the view that either the decision was perverse, or (if it was not) it was not perverse for reasons which are not adequately explained.

[14]Then it is said the decision was perverse in that the Tribunal found that the period of consultation should have commenced on 26 September. So far as this ground is concerned we are not satisfied that there is any element of perversity. There are two apparently inconsistent statements in the original decision and in the review decision to which I have already referred. In the review decision the date 26 September is taken simplicitor in paragraph 45 of the original decision the reference is to "26 September or on such earlier date" as the Respondent became aware of the need to declare redundancies. We think that the true construction of the two decisions is that the 26 September was the latest date at which the Tribunal found consultation should have commenced whilst not deciding whether or not so far as Mr Lewis was concerned it should have commenced at a much earlier stage when presumably the employer was putting all fourteen of the welders it then had into a pool for redundancy. So far as that is concerned we do not think that the decision was perverse.

[15]As the third ground of perversity alleged is that it said that no reasonable Tribunal properly directed could have reached the conclusion that there was no chance that the Appellant could have remained in employment on 27 October if consultation had taken place.

[16]Again we do not think that the findings starting from where the Tribunal did were perverse. If the Tribunal had been correct in taking the view that the notice period and the consultation could properly run side by side and if that period of consultation ran from the 26 September and assuming that the Tribunal is right in its finding that the new work which led to Mr Martin being reemployed did not hove over the horizon until the 27 October, it cannot be said that Tribunal was perverse in holding (if it did) that there was no chance that the Appellant would have remained in employment 27 October. So on this ground we would not have held that the Tribunal was perverse. That however does not save the decision. It seems to us that this is a decision which for the reasons that I have given contained a number of flaws.

[17]We have considered carefully whether this is a case where it would be possible either to remit the case to the same Tribunal or for us to substitute a decision of our own. We have with some regret come to the conclusion that neither of those results is appropriate. So far as remitting the matter to the same Tribunal is concerned, it has already had two bites of this particular cherry without managing to produce a satisfactory decision. It seems to us, and we have borne in mind in particular what is said in paragraph 46 of the Decision in Sinclair Roche & Temperley v Heard

[2004] IRLR 763

, that given the flawed nature of the Decision it would not be proper and appropriate to send the case back to the same Tribunal. So far as us substituting a decision of our own is concerned, whilst it would be desirable if we could to do so, given that the time and expense of having the matter reheard before a proper conclusion can be reached, there are clearly substantial issues that need to be investigated in a way which we cannot investigate them. We do not have the factual material on which we could properly substitute a decision of our own.

[18]It follows that the matter will be remitted for a re hearing on the question of remedy to a differently constituted Tribunal. There is no appeal against the Decision that the dismissal is unfair and the Tribunal reconsidering the matter will therefore be starting from the premise that this dismissal was unfair by reason of the failure to consult. Regrettably it will be necessary for the Tribunal reconsidering the matter to reconsider a very substantial amount of the evidence and to consider a good deal more evidence than that was placed before the original Tribunal. We have been told that Mr Lewis is still unemployed and that he would base his case for compensation on the proposition that had there been proper consultation and the chances are he would be, or he had a realistic chance of, still remaining in employment since Mr Martin, Mr Lewis understands, is still employed by Rhyal Engineering.

[19]Given that by the time of rehearing it will be getting on two years after the event it may well be that he will be looking at his chances of recovering a very substantial sum of money. Against that there will have to be investigation into the question of what his chances were as against in particular the other welders who were made redundant at the same time, the extent to which he would have lost time (since we understand he has had at any rate some periods of ill-health), what efforts he has made and what effort he should have made to find other employment and indeed what the real prospects were that had consultation taken place when it should have done (be that starting on 26 September or be that starting at some far earlier date) he would still have been employed on 27 October. Thus regrettably it looks to us that if the rehearing is likely to be a lengthy and expensive procedure if it is to be done properly.

[20]It is of course always open to the parties one way or another to resolve matters by negotiation but if they cannot do so and it may well be that the difference between them is such that is something that cannot be done. The matter I fear will have to go back for this lengthy and expensive rehearing. For those reasons therefore the appeal is allowed and the decision as to compensation is set aside. The matter is remitted for rehearing before a differently constituted Tribunal. I conclude by thanking both the applicants very much for their succinct and very helpful submission.