DGF LTD v MR O O’NEIL [2011] UKEAT 0197_10_1003

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2011] UKEAT 0197_10_1003Case No Appeal No. UKEAT/0197/10Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
DGF LTDAPPELLANTMR O O’NEILRESPONDENT
Before
His Honour Judge Peter Clark Baroness Drake of Shene Mr J MallenderDate 10 March 2011
[1]APPEARANCES For the Appellant MR E P MORGAN (of Counsel) Instructed by: Messrs Hill Dickinson Solicitors 1 St Pauls Square Old Hall Street Liverpool L3 9SJ For the Respondent MS J ANDREWS (Representative) SUMMARY UNFAIR DISMISSAL – Polkey deduction PRACTICE AND PROCEDURE – Bias, misconduct and procedural irregularity Unfair redundancy dismissed. Employment Tribunal formed a view on Polkey deduction without receiving or canvassing submissions. Appeal allowed and case remitted to same Employment Tribunal on Polkey issue for reconsideration based on submissions only. No further evidence to be adduced. HIS HONOUR JUDGE PETER CLARK Introduction This appeal highlights, once again, the importance of establishing the issues which an Employment Tribunal is to determine before that determination is made. The Facts[2]The parties before the Birmingham Employment Tribunal were Mr O'Neil, Claimant, and DGF Ltd, Respondent; we shall so describe them. The Claimant was employed by the Respondent as a window fitter. His employment commenced on 9 May 2005 and ended on 29 October 2008, when he was dismissed by reason of redundancy. Some 95 employees were to lose their jobs out of a workforce of 371.[3]The redundancy exercise was conducted on the basis of a selection matrix under which employees falling within the relevant pool were scored according to the criteria chosen. In the Claimant's pool those, in the event, scoring 138 points or more were retained. The Claimant scored 133 points (later corrected to 134) and was dismissed.[4]He brought a claim of unfair dismissal which was defended by the Respondent. The matter came on for hearing before a Tribunal chaired by Employment Judge Ashton, sitting with Mr P M Davies and P Zealander on 3 and 4 September 2009. Ms Andrews represented the Claimant and Mr Hodges, a solicitor, the Respondent.[5]We have before us in this appeal a witness statement by Mr Hodges, dated 4 August 2010, and comments on that evidence by all three members of the Employment Tribunal following a direction made by the division sitting on the preliminary hearing of the appeal, at paragraph 5 of their order dated 27 August.[6]It is common ground that, on 3 and 4 September, the Tribunal heard the evidence and received both oral and written closing submissions by the parties' representatives. Judgment was reserved until 2.00pm on 30 September 2009, with a remedy hearing to follow, if necessary.[7]As appears from the Tribunal's comments, the panel met on the morning of 30 September in order to deliberate on their judgment. It appears that the Respondent did not specifically address the question of a Polkey deduction in the event of a finding of unfair dismissal on 4 September, only the question of fairness under section 98(4) of the Employment Rights Act 1996 . In particular, Mr Hodges had not advanced any argument based on section 98(A)2 of the Act, then in force.[8]What is clear from the Tribunal's comments is that, during their morning deliberations, the members went beyond discussing simply the issue of fairness, which they resolved in the Claimant's favour. Mr Zealander states:
"I confirm that the Employment Tribunal did consider Polkey when we retired to consider liability. I have good recall of this."
[9]That recollection was endorsed by Mr Davies and by the Employment Judge who said that their finding was that, if a fair and proper scoring system had been applied, the Claimant would not have been dismissed.[10]The judgment on liability finding the dismissal to be unfair was delivered orally at 2.00pm. Polkey was not mentioned in terms in that oral judgment. It then seems that Mr Hodges raised, for the first time, the question of a Polkey deduction. His recollection, set out at paragraphs 22 and 23 of his witness statement, was that the Employment Judge said that the Tribunal had considered Polkey but that, on their findings, once the Claimant's scores had been corrected to 140, he would have been above the bar (set at 138 points) and would not have been selected for redundancy. The Employment Judge gives a similar account at paragraph 6 of his comments.[11]Mr Hodges did not then pursue the Polkey question further and the Tribunal proceeded to a short remedy hearing resulting in an award of compensation in favour of the Claimant, totalling £24,092, without any Polkey deduction.[12]At the conclusion of the hearing on 30 September, Mr Hodges requested written reasons for the Tribunal's judgment. Those were provided on 10 November 2009. Having referred to section 98(A)2 of the Act (which was not argued before the Tribunal) at paragraph 29 of their reasons, the Tribunal go on to say at paragraph 30:
"We further find that there should not be any Polkey reduction in the amount of our award for the percentage chance that had all the employees been re-scored in respect of their attendance as on the basis of the information we have there were significant prospects, as illustrated above, that had the Claimant been scored correctly he would not have been dismissed."
[13]The Respondent's Notice of Appeal was sifted to a preliminary hearing by Underhill J, President. At the preliminary hearing, on which I sat, held on 26 August, we dismissed the liability aspects of the appeal but allowed the Polkey issue, grounds 5 to 7, to proceed to this full hearing. The Appeal[14]Having had the advantage of hearing cogent argument from both Mr Morgan and Ms Andrews, she having (as we have indicated) appeared below, it seems to us that this appeal gives rise to two interconnected issues: first, Mr Morgan submits that, for the Tribunal to determine the Polkey question without receiving submissions from the parties was a breach of natural justice. He invites us to allow the appeal and remit the case to the same Tribunal for reconsideration of the Polkey issue, relying on the decision of the EAT (Mr Recorder Langstaff QC and members) in Marketforce UK Ltd v Hunt [2002] IRLR 863 , and cases there cited.[15]Ms Andrews resists that course. She argues that Mr Hodges effectively raised the substance of the Respondent's argument that no Polkey deduction was appropriate in the course of the hearing on 3 and 4 September. That hearing was not designated as split between liability and remedy and therefore he had every opportunity to specifically address the Polkey issue in evidence and in his closing submissions. In any event, on the Tribunal's findings, a nil reduction under the Polkey principle was plainly and unarguably correct and it would be pointless to remit the case back to the Employment Tribunal.[16]On this issue, we prefer the submissions of Mr Morgan. It is plain that, at the outset of the hearing on 3 September, no attempt was made to define the issues which fell to be determined at the two-day hearing; possibly, because it was hoped that all issues would be resolved during that time.[17]However, the real problem, in our view, was that at the end of the second day the parties' representatives, judging by their closing submissions, were addressing only the liability question (that is, was the dismissal fair or unfair); nor was the position clarified by the Tribunal's letter of 7 September 2009, to which Ms Andrews has referred us, notifying the parties to attend at 2.00pm on 30 September: "When judgment will be given and remedy dealt with, if appropriate".[18]Ms Andrews has taken us to the recent Court of Appeal decision in Salford Royal NHS Foundation Trust v Roldan [2010] IRLR 721 . In that case Elias LJ, giving the leading judgment, made the observation that, where there was a split hearing, the parties should clarify with the Tribunal what issues the Tribunal wished to have determined at what stage. She contends that it was for Mr Hodges, in the present case, to establish before closing submissions when the Polkey issue would be determined.[19]We do not accept that that is the case on the present facts. What is clear to us is that the Tribunal proceeded to form a final, rather than provisional, view that there would be no Polkey deduction without first receiving or canvassing submissions from the parties. That was a procedural irregularity, based on fundamental principles of natural justice and fairness, which lead us to accede to Mr Morgan's first submission.[20]Where we part company with him is on the second issue, as we have discerned it. Mr Morgan invites us to allow the appeal and remit the case to the same Tribunal to reconsider the Polkey issue afresh (which we shall do) but upon the basis that, at the remitted hearing, it would be open to the Respondent to adduce further evidence, oral and/or documentary, in support of the submission that a Polkey deduction from the compensatory award ought to be made. That is a bridge too far. Nowhere in his witness statement does Mr Hodges suggest that he intended to adduce further evidence at the remedy hearing on the Polkey question. We agree with Ms Andrews that it would be wrong to give the Respondent a second bite of the cherry. The opportunity to lay the evidential basis for a later Polkey submission was at the two-day hearing. We respectfully adopt the first of Elias LJ's observations on this aspect, as reported in the IRLR head note in Roldan . Disposal[21]It follows that we shall allow this appeal and remit the Polkey question for reconsideration by the same Employment Tribunal. That reconsideration will be based on the submissions of the parties only; no further evidence may be adduced by either party at that hearing.