Cartwright v Kings College London (Unfair Dismissal : Polkey deduction) [2012] UKEAT 0565_11_3004

EAT
Cartwright v Kings College London (Unfair Dismissal : Polkey deduction)
[2012] UKEAT 0565_11_3004 · 2012-04-30
[1]This is an appeal by Mr Douglas Cartwright (“the Claimant”) against a judgment of the Employment Tribunal in Bristol (Employment Judge Carstairs presiding) dated 27 May 2011. By its judgment the Tribunal awarded the Claimant compensation for unfair dismissal in the sum of £1,827.14. The Claimant says this award was made upon wrong legal principles and was in consequence insufficient. There is a cross appeal by Kings College London (“the Respondent”), arguing that no award was justified at all.[2]These proceedings have already been on one occasion to the Court of Appeal: [2010] EWCA Civ 1146 . The Claimant’s claim for unfair dismissal was heard in 2008 at the London South Employment Tribunal (Employment Judge Hall-Smith presiding) (“the Hall-Smith Tribunal”) and dismissed by a judgment dated 30 December 2008. His appeal was dismissed by the Appeal Tribunal on 24 June 2009. His further appeal to the Court of Appeal was, however, allowed on 27 October 2010. The Court of Appeal held that the Claimant was unfairly dismissed and remitted the question of remedy. It was this question which the Employment Tribunal in Bristol (“the Carstairs Tribunal”) determined by the judgment which is under appeal. The background facts[3]Full accounts of the background facts can be found in the reasons of the Hall-Smith Tribunal and in the judgment of Rimer LJ in the Court of Appeal: a summary will suffice for the purposes of this appeal.[4]The Claimant was employed by the Respondent with effect from 4 October 2000. By 2005 he was a permanent employee – a Non-Clinical Teaching Fellow in the Department of Physiotherapy at the School of Biomedical and Health Sciences. His particular interest was biomechanics. He taught a certificate course in rehabilitation engineering.[5]There came a time when the Respondent decided to run down the certificate course and replace it with a graduate diploma in rehabilitation engineering for the year 2007-2008. In the end, however, there was a lack of student interest in the proposed new diploma; it was cancelled. By June 2007 the cancellation of the diploma was under consideration; and at a meeting on 12 June attended by the Claimant the question of the Claimant’s post possibly becoming redundant was raised. The Claimant himself recognised, in an email on 2 July, that he had “effectively been told his job was at risk”.[6]There followed a meeting on 6 July and a letter dated 9 July. The issue of redundancy was raised; redeployment and voluntary severance were discussed. The Hall-Smith Tribunal expressly found that by the time of the meeting the Claimant knew that his job was at risk.[7]On 6 August there was a further meeting, called by the Respondent “an individual consultation meeting”, at which the Claimant was told that the Respondent would seek redeployment, but if this was not secured his contract of employment would terminate on 31 January 2008. It was agreed that voluntary severance would be explored and redeployment opportunities considered. These matters were confirmed in writing by the Respondent in a letter to the Claimant dated 15 August.[8]D uring the autumn of 2008 there were indeed discussions about possible severance payments, and the Claimant applied unsuccessfully for an alternative post. Further letters, dated 5 October and 31 October confirmed that his employment would cease on 31 January in the absence of redeployment. Eventually on 19 December 2008 he was given notice to expire on 31 January 2008. The Claimant, although afforded an opportunity to do so, did not appeal; his employment terminated accordingly; and he received an enhanced redundancy payment in the sum of £23,513. The findings of the Hall-SmithTribunal and the Court of Appeal[9](1) The Hall-Smith Tribunal found that the Claimant was genuinely dismissed for redundancy: see paragraph 59 of its reasons. He appealed against this finding. His appeal on this ground was unsuccessful: see Rimer LJ at paragraphs 77-81. He concluded that the Tribunal’s finding – that the Claimant was dismissed by reason of redundancy, a potentially fair reason for dismissal – was “unimpeachable”.[10](2) The Hall-Smith Tribunal found that the Respondent’s decision to dismiss him on this ground was fair (that is to say, that it acted reasonably within the terms of section 98(4) of the Employment Rights Act 1996 ): see in particular paragraphs 60, 62 and 63 of its reasons: – “60. We conclude that the Respondent acted reasonably throughout the process, and when he resumed full-time work in September 2007 he was provided with stop gap work to undertake until the termination of the Certificate in January 2008. There was insufficient work for the Claimant to undertake following the termination of the Certificate.62. We conclude that the Respondent acted reasonably throughout the entire process. The Claimant was aware as early as July 2007 that his job was at risk and the reasons for it. There were subsequent meetings with the Respondent and the Claimant accepted that the question of redundancy was raised at the meeting with Dr Kitchen and Mr Newton on 9 August 2007.63. The Respondent assisted the Claimant in his search for alternative employment. The Claimant’s approach to redeployment was not particularly proactive having regard to the fact that he was late in replying for the position of Education Mentor and did not take up Dr Kitchen’s offer of assistance by asking her colleagues whether the Claimant could shadow them. We noted that the Claimant later failed to appeal against his dismissal.”[11]The Claimant appealed against this conclusion: see paragraphs 83 to 98 of the judgment of Rimer LJ. He argued in particular that the Tribunal did not give proper consideration to factors relevant to section 98(4) and did not follow a reasonable procedure. His appeal on these grounds was unsuccessful. The reasoning of the Tribunal in respect of section 98(4) was upheld.[12](3) The Hall-Smith Tribunal found that the Respondent had complied with step one of the standard dismissal and disciplinary procedure set out in Schedule 2, Part 1, Chapter 2 of the Employment Act 2002 . On this ground alone the Court of Appeal allowed the appeal, substituted a finding of unfair dismissal and remitted the matter to the Employment Tribunal for consideration of remedy. Statutory provisions[13]The right not to be unfairly dismissed is conferred by the provisions of Part X of the Employment Rights Act 1996 . At the relevant time these provisions contained amendments added by the Employment Act 2002 which have subsequently been repealed by the Employment Act 2008 but which remain applicable to this case.[14]Section 98(1) provides that it is for the employer to establish the principal reason for dismissal and that it is of a kind specified in section 98(2) (or some other substantial reason). Section 98(2) specifies redundancy. Section 98(4) provides that where the employer has fulfilled the requirements of section 98(1): – “The determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) –(a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and(b) shall be determined in accordance with equity and the substantial merits of the case.”[15]Section 98(4) was, however, expressed to be subject to section 98A: see section 98(6)(a). This section provided as follows: – “98A Procedural fairness (1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if - (a) one of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 (dismissal and disciplinary procedures) applies in relation to the dismissal, (b) the procedure has not been completed, and (c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.”[16]For the purposes of this case the relevant procedure under the Employment Act 2002 was the Standard Procedure set out in Schedule 2. “Step 1: statement of grounds for action and invitation to meeting 1.(1) The employer must set out in writing the employee’s alleged conduct or characteristics, or other circumstances, which lead him to contemplate dismissing or taking disciplinary action against the employee.(2) The employer must send the statement or a copy of it to the employee and invite the employee to attend a meeting to discuss the matter. Step 2: meeting 2. (1) The meeting must take place before action is taken, except in the case where the disciplinary action consists of suspension. (2) The meeting must not take place unless – (a) the employer has informed the employee what the basis was for including in the statement under paragraph 1(1) the ground or grounds given in it, and (b) the employee has had a reasonable opportunity to consider his response to that information.(3) The employee must take all reasonable steps to attend the meeting.(4) After the meeting, the employer must inform the employee of his decision and notify him of the right to appeal against the decision if he is not satisfied with it. Step 3: appeal 3. (1) If the employee does wish to appeal, he must inform the employer. (2) If the employee informs the employer of his wish to appeal, the employer must invite him to attend a further meeting. (3) The employee must take all reasonable steps to attend the meeting. (4) The appeal meeting need not take place before the dismissal or disciplinary action takes effect.(5) After the appeal meeting, the employer must inform the employee of his final decision.”[17]It was the failure to comply with Step 1 of this procedure which underlay the Court of Appeal’s finding of unfair dismissal.[18]On remission the Tribunal was required to apply provisions within Part X governing remedies. It was first required to consider orders for re-instatement and re-engagement. Failing such an order, it was then required to consider compensation.[19]Section 123 governs the making of a compensatory award. The key provision is section 123(1):
“123 Compensatory award (1) Subject to the provisions of this section and sections 124, 124A and 126, the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.”
[20]In order to deal with a subsidiary argument put forward by the Claimant it is convenient also to set out, in their form as relevant to this case, sections 123(7) and 124A(1) of the 1996 Act and section 31(3) of the Employment Act 2002 “123(7) If the amount of any payment made by the employer to the employee on the ground that the dismissal was by reason of redundancy (whether in pursuance of Part XI or otherwise) exceeds the amount of the basic award which would be payable but for section 122(4), that excess goes to reduce the amount of the compensatory award. 124A Adjustments under the Employment Act 2002 Where an award for compensation for unfair dismissal falls to be –(a) reduced or increased under section 31 of the Employment Act 2002, or(b) increased under section 38 of that Act (failure to give statement of employment particulars), the adjustment shall be in the amount awarded under section 118(1)(b) and shall be applied immediately before any reduction under section 123(6) or (7). 31(3) If, in the case of proceedings to which this section applies, it appears to the employment tribunal that – (a) the claim to which the proceedings relate concerns a matter to which one of the statutory procedures applies, (b) the statutory procedure was not completed before the proceedings were begun, and(c) the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer to comply with a requirement of the procedure, it must, subject to subsection (4), increase any award which it makes to the employee by 10 per cent and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount, but not so as to make a total increase of more than 50 per cent.” The reasons of the Carstairs Tribunal[21]At the remedies hearing the Claimant sought re-instatement and re-engagement with compensation as an alternative.[22]As to compensation, the Claimant gave evidence on his own behalf and argued that if Kings had not dismissed him unfairly his employment would have continued for at least 15 months; there was plenty of ad hoc work for him to do and no problem over funding; if necessary he would have taken a career break; he would have become eligible for consideration for early retirement; he would have made suggestions such as these if he had been given a proper statutory dismissal procedure; and dismissal would have been avoided. On the other hand the Respondent’s witness Professor Kitchen gave evidence that following the statutory procedure would have made no difference; and Mr Coghlan submitted that the Respondent could have complied with Step 1 by modifying a letter sent in August 2007.[23]As to the facts, the Tribunal said:
“3.3 Because the facts were set out in the original Tribunal decision and were left largely untouched by the Court of Appeal except regarding the Step 1 letter, the Tribunal has not had to make its own findings of fact as to what happened except in respect one matter. 3.4 The Tribunal noted and accepted Professor Kitchen’s evidence that the Claimant’s former position no longer existed and that she was not aware of the availability of any suitable employment in any other department of the Respondent.”
[24]The Tribunal decided not to order re-instatement or re-engagement, and there is no appeal from that decision.[25]The Tribunal’s essential reasoning on the question of compensation appears in paragraphs 6.5 to 6.7. “6.5 So far as compensation is concerned, it was clear from the Court of appeal decision that the dismissal was otherwise fair. The Tribunal was satisfied, on the basis that the Tribunal findings were not disturbed except in respect of the Step 1 letter, that the Claimant would have been dismissed even if a Step 1 letter had been sent to him. 6.6 The Tribunal had regard to the guidance provided in Polkey vAE Dayton Services Ltd [1988] ICR 142 HL. The Tribunal considered what would have happened when the Respondent’s Human Resources Department realised that the letter, which was relied on most persuasively in the Court of Appeal which was sent in August, was insufficient or inadequate and should have been followed by a Step 1 letter after the error was realised. The Tribunal concluded that it would have taken the department a further two weeks to send that letter off, having regard to the need to discuss the matter with Professor Kitchen before it was drafted. 6.7 Accordingly the Tribunal was satisfied that this would have added to the Claimant’s length of service but only by a further period of two weeks. For that reason the Tribunal awards the Claimant two weeks’ pay.”[26]There were two other components to the Tribunal’s award. One was an uplift of 20% under section 31(3) of the Employment Act 2002 for failure to comply with the standard dismissal and disciplinary procedure. The other was a conventional sum to compensate for loss of employment rights. The Claimant’s submissions[27]The Claimant’s first submission was that the Tribunal erroneously looked back to, and concentrated upon, events in August 2007. He drew attention to section 98A(1) of the 1996 Act. The Tribunal should have identified that the unfairness took place on 31 January 2008 – viz, his dismissal at a time when the statutory dismissal and disciplinary procedure had not been complied with. Therefore the Tribunal should have asked – what would have happened if the dismissal which took place on 31 January 2008 had not occurred? At that stage the Respondent had yet to comply with Step 1, let alone Steps 2 and 3.[28]The Claimant further submits that the Tribunal did not apply guidance in the cases which relate to the Polkey principle. He referred to Polkey v AE Dayton Services Ltd [1987] IRLR 503 itself; and to Eaton v King (No 2) [1998] IRLR 686, Gover v Property Care Ltd UKEAT/0458/05, Software 2000 Ltd v Andrews [2007] IRLR 568 , Zimmer Ltd v Brezan UKEAT/0294/08 and Johnson v Rollerworld UKEAT/0237/10. We drew the parties’ attention to Mining Supplies (Longwall) Ltd v Baker [1988] ICR 676. The Claimant submitted that this case was distinguishable on the facts, since there was no split hearing and dismissal was not certain.[29]Building on this line of cases, the Claimant submitted that the Tribunal made its finding even though no proper evidence was called by the Respondent to show it would have had a valid reason for a dismissal subsequent to 31 January, still less that the dismissal would have been fair. This, he submitted, was an error of law.[30]He further submitted that the Carstairs Tribunal was in error in placing reliance on the findings of the Hall-Smith Tribunal. That Tribunal had not considered the Polkey question; it had made no findings as to what would have happened if the dismissal had not taken place on 31 January. Reliance on the findings of the Hall-Smith Tribunal by the Carstairs Tribunal (see paragraph 6.5 of its reasons) was, he submitted, perverse. In the absence of such evidence he submitted that the Tribunal was bound to hold that there should be no Polkey reduction. The Tribunal lacked the reliable evidential basis upon which to assess any chance.[31]The Claimant criticised the Tribunal’s approach in paragraph 6.6 of its reasons: why should the Tribunal suppose that the HR Department would have realised in August that its letter was insufficient or inadequate? He submitted that the finding of the Tribunal that his employment would have lasted just 2 weeks longer was perverse or insufficiently reasoned. He submitted that the Respondent would have had to adopt its own internal dismissal procedure (a point which he had not taken at the first hearing and which the Court of Appeal declined to allow him to take). He submitted that there was no proper factual basis for making any deduction.[32]On the question of compensation, the Claimant submitted that the Tribunal should have applied the uplift under section 31(3) of the 2002 Act before deducting the payment he had received from the Respondent. He referred us to section 124A(1) of the 1996 Act (as it then stood) and to MacCulloch v ICI UKEAT/0275/09.[33]The Claimant finally submitted that the Appeal Tribunal could substitute its own assessment of the compensatory award because it was plain beyond argument that his loss exceeded the statutory cap, which at the relevant time was £60,600. He explained his method of calculating pension loss.[34]We invited Mr Coghlan to address us as to the significance of the cross-appeal. He told us that the Respondent sought to pursue it only if the appeal was to be allowed. Discussion and conclusions[35]We have already quoted the key statutory provision – section 123(1) of the Employment Rights Act 1996 . The task of the Tribunal when assessing a compensatory award is to assess “such amount as the tribunal considers just and equitable having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer”. This is a broad test, requiring and enabling the Tribunal to do practical justice between the parties.[36]The Claimant’s dismissal was found to be unfair only because the Respondent failed to comply with the statutory dismissal procedure applicable under the Employment Act 2002 . This is a recent provision; but ever since the right not to be unfairly dismissed came to the statute book there have been cases where a dismissal has been found to be unfair on grounds of a procedural nature. Failure to follow a proper consultation procedure before dismissing an employee for redundancy has been one such ground.[37]The guidance in Polkey vAE Dayton Services to which the Tribunal referred in paragraph 6.6 has been discussed and applied in numerous cases. The principles were summarised by Elias P in Software 2000 v Andrews at para 54:
“1. The following principles emerge from these cases: (1) In assessing compensation the task of the Tribunal is to assess the loss flowing from the dismissal, using its common sense, experience and sense of justice. In the normal case that requires it to assess for how long the employee would have been employed but for the dismissal. (2) If the employer seeks to contend that the employee would or might have ceased to be employed in any event had fair procedures been followed, or alternatively would not have continued in employment indefinitely, it is for him to adduce any relevant evidence on which he wishes to rely. However, the Tribunal must have regard to all the evidence when making that assessment, including any evidence from the employee himself. (He might, for example, have given evidence that he had intended to retire in the near future). (3) However, there will be circumstances where the nature of the evidence which the employer wishes to adduce, or on which he seeks to rely, is so unreliable that the tribunal may take the view that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction based on that evidence can properly be made. (4) Whether that is the position is a matter of impression and judgment for the Tribunal. But in reaching that decision the Tribunal must direct itself properly. It must recognise that it should have regard to any material and reliable evidence which might assist it in fixing just compensation, even if there are limits to the extent to which it can confidently predict what might have been; and it must appreciate that a degree of uncertainty is an inevitable feature of the exercise. The mere fact that an element of speculation is involved is not a reason for refusing to have regard to the evidence. (5) An appellate court must be wary about interfering with the Tribunal's assessment that the exercise is too speculative. However, it must interfere if the Tribunal has not directed itself properly and has taken too narrow a view of its role. (6) The s.98A(2) and Polkey exercises run in parallel and will often involve consideration of the same evidence, but they must not be conflated. It follows that even if a Tribunal considers that some of the evidence or potential evidence to be too speculative to form any sensible view as to whether dismissal would have occurred on the balance of probabilities, it must nevertheless take into account any evidence on which it considers it can properly rely and from which it could in principle conclude that the employment may have come to an end when it did, or alternatively would not have continued indefinitely. (7) Having considered the evidence, the Tribunal may determine (a) That if fair procedures had been complied with, the employer has satisfied it - the onus being firmly on the employer - that on the balance of probabilities the dismissal would have occurred when it did in any event. The dismissal is then fair by virtue of s.98A(2). (b) That there was a chance of dismissal but less than 50%, in which case compensation should be reduced accordingly. (c) That employment would have continued but only for a limited fixed period. The evidence demonstrating that may be wholly unrelated to the circumstances relating to the dismissal itself, as in the O'Donoghue case. (d) Employment would have continued indefinitely. However, this last finding should be reached only where the evidence that it might have been terminated earlier is so scant that it can effectively be ignored.”
[38]As Elias P observed, it is open to an employer to contend that an employee would or might have ceased to be employed in any event if fair procedures had been adopted. In this way section 123(1) enables tribunals to do practical justice between the parties.[39]As Software 2000 shows, one option for a Tribunal is to award loss for a fixed period. In particular, if a Tribunal is persuaded that if fair procedures had been adopted the employee would have been dismissed in any event, but somewhat later than the actual date of dismissal, then the compensatory award ought to reflect the additional period for which the employee would have been employed.[40]Shortly after the decision in Polkey , the Appeal Tribunal held as much in Mining Supplies (Longwall) Ltd v Baker .[41]In that case the employee was chosen for redundancy on 31 October and dismissed with effect from 7 November; there had been consultation with the unions, but the dismissal was held to be unfair for want of individual consultation. The Tribunal allowed 6 weeks, commencing with the date of dismissal. The Appeal Tribunal disagreed with the Tribunal in two respects. Firstly, it held that the Tribunal ought to have started any period from 31 October, not from the date of dismissal. Secondly, it held that two weeks was the appropriate period. On the facts this meant that the date of dismissal would have been one week later. The whole period of consultation could not reasonably have taken place within the period prior to the date of dismissal; therefore a week’s compensation was due.[42]G iving the judgment, Wood P said: - “Where lack of consultation in redundancy renders the dismissal unfair, the question of loss may well depend on whether the period of consultation which is missing could reasonably and should have taken place within the period prior to the date of dismissal.”[43]As Mining Supplies shows, the Tribunal is not required by section 123(1) to assume that an employer could only have remedied any procedural deficiency on or after the date of dismissal. The Tribunal’s task is to do substantial justice. Where an employer has acted hastily, so that the period prior to dismissal allowed no time at all for the requirements of procedural fairness, then a Tribunal may well add the whole period required to the date of dismissal. Where an employer has allowed time for procedures, but failed in some technical way which was capable of remedy wholly or partly within that time, the Tribunal is not required by law to add anything. Everything therefore depends on the facts of the case in question.[44]We therefore reject the Claimant’s argument that the Carstairs Tribunal was bound to start with the date of dismissal. The Carstairs Tribunal was entitled to hold that in substance any failure to comply with Step 1 took place in the summer of 2007. By that time, as the Hall-Smith Tribunal found, the Claimant had effectively been told that his job was at risk; and his redundancy, together with possibilities for severance payment and redeployment were under discussion. We see no error of law in the Tribunal’s approach.[45]We turn to the Claimant’s argument that the Carstairs Tribunal has failed to apply the guidance in Polkey v AE Dayton Services and subsequent cases.[46]In our judgment the Carstairs Tribunal, in its finding within paragraph 6.6, was applying the principles in Polkey without committing any error of law. It was essentially asking itself whether if the statutory procedure had been followed the Claimant would or might have been dismissed in any event. It concluded that the only difference would have been to the date of dismissal. In reaching this conclusion it was entitled in law to build on the findings of the Hall-Smith Tribunal as it did in paragraph 6.5; there was no sufficient reason for re-opening its findings in any respect; it had a sound factual basis in those findings for the conclusion which it reached; its conclusion cannot be described as perverse; and its reasoning, while brief, when assessed against the background of the Hall-Smith Tribunal findings as upheld by the Court of Appeal, was sufficient to meet the required standard.[47]In our judgment, indeed, it is plain that the failure to serve a Step 1 letter did not lead to any greater loss which it was just and equitable for the Respondent to pay. The Claimant, on the Hall-Smith Tribunal’s findings, knew that his employment was at risk. He knew the grounds upon which the Respondent was contemplating the termination of his employment. There were meetings at which he had every opportunity to make representations; there was consideration of redeployment and severance terms; and he was offered, but did not take up, an opportunity to appeal.[48]In these circumstances we do not need to address the points which the Claimant made to us concerning pension loss. As to section 131(3), the Employment Tribunal applied the uplift to the award correctly. It applied the uplift to the compensatory award, as required by section 118(1)(b), and did not make a reduction under section 123(7), so section 124A(1) was of no significance.[49]C oncluding as we do that the Carstairs Tribunal made no error of law, we dismiss the appeal; and since, in these circumstances, the cross appeal is no longer pursued it will also be dismissed.