Appeal No. EAT/309/90

	EMPLOYMENT APPEAL TRIBUNAL
	4 ST. JAMES'S SQUARE, LONDON, SW1 4JU

		At the Tribunal
		On 11th November 1991

	Before

	THE HONOURABLE MR JUSTICE KNOX

	MR T S BATHO

	MR S M SPRINGER MBE

MR J PHILLIPS	APPELLANT

BROWNE & TAWSE LTD	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR NIK NICOL
(Of Counsel)
Southwark Law Project
2 East Dulwich Grove
LONDON
SE22 8PP

For the Respondents	MR P W BRUNNER
(Group Personnel Manager)
Brown & Tawse Group plc
Liberty House
PO Box 88
Bell Street
Reigate
Surrey
RH2 7FF

	MR JUSTICE KNOX:  We have before us an Appeal and a Cross-Appeal from the Decision of the Industrial Tribunal sitting at London (North) on the 10th May 1990 whereby they decided unanimously that Mr Phillips was fairly dismissed by the Respondents Brown and Tawse Ltd for the reason that he was redundant.

	The Decision was sent to the parties on the 21st May 1990.

	Before us, as before the Industrial Tribunal Mr Phillips was represented by Mr Nicol of Counsel and the Respondents, who I will call the employers, by Mr P W Brunner their Group Personnel Manager.  We are indebted to both those gentlemen for very clear and helpful arguments.

	The main issue that was before the Industrial Tribunal as identified in the Originating Application and therefore in the answer in the Notice of Appearance, was what the reason for Mr Phillips dismissal was.  In his Originating Application Mr Phillips set out his length of service, said that at the end of April 1989 his Sales Director, Mr Jenkins came to him to tell him that his job would have to fold and a payment of £7,000 would be made to him in respect of his redundancy and he says he received all the money owing to him as well as an ex-gratia payment,  and had no reason to believe that this was not a genuine redundancy situation and therefore did not protest at the time.  Later in September 1989 he found that somebody else had been appointed to his old job which was that of City Branch Manager and for that reason he challenged the reason for his dismissal, on the basis that there was no genuine redundancy situation.

	He was, of course, out of time in making as he did an application on the 6th October which was received by the Central Office on the 7th, because it is common ground between the parties that his employment terminated and the effective date of termination as that term is defined by Section 55(4) of the Employment Protection (Consolidation) Act 1978 was the 12th May 1989.

	A Preliminary Hearing decided that the application could proceed notwithstanding his being out of time.

	There was no challenge made before us of the decision of the Industrial Tribunal that the reason for Mr Phillips dismissal was redundancy and that is something which has, as we see it, been conclusively determined between the parties to this Appeal.

	What is said in the Appeal is that there was a misapplication of the House of Lords Decision in Polkey v. A E Dayton Services Ltd [1988] ICR 142.  The basic facts as found by the Industrial Tribunal, in paragraph 1 were that:
"Mr Phillips employment commenced on 4 July 1980 and after almost nine years' continuous employment he was given notice of dismissal by reason of redundancy on 28 April 1989 and his employment terminated on 12 May 1989"

	It was found that there was a reorganisation planned and that the Regional Director of the South East Division, a Mr Jenkins, decided in the week commencing 24th April 1989 that there was no further requirement for an employee to hold the post of City Branch Manager, which is what Mr Phillips' job was.

	On the Friday of that week, the 28th April, Mr Jenkins visited the City Branch, told Mr Phillips that he had concluded that his position as Manager of the City Branch was surplus to requirements and that his post was accordingly redundant.  The Industrial Tribunal found that Mr Phillips was not much surprised by this, he felt something like that might happen.  They also found that Mr Jenkins on that occasion outlined the financial terms and indicated that Mr Phillips' employment would formally terminate with effect from 30th April 1989 and that he would receive payment in lieu of notice together with his statutory redundancy payment and an ex-gratia payment.

	Mr Phillips was then due for a week's holiday and he went off on that week's holiday, and it was arranged that he should, when he came back, see the Group Personnel Manager who is the Mr Brunner who appeared before us and below.

	There duly did occur a meeting with Mr Brunner on the 8th May and there was a reference by Mr Brunner to the fact that there was no available alternative employment at Mr Phillips' level and Mr Phillips indicated that he did not wish Mr Brunner to pursue any further investigation in that regard.  Some helpful advice was given about "signing on" and how to find alternative employment elsewhere and the date of termination of employment was set at 12th May 1989 from which date he was to be paid in lieu of notice.

	Summarising therefore, from those findings, which I have taken all from the Case rather than the evidence that was given to the Industrial Tribunal, there were four relevant dates, the 8th April when Mr Jenkins and Mr Phillips had their interview and Mr Phillips was told that his post was redundant and that his employment would formally terminate with effect from the 30th April, then the 30th April comes and goes, without so far as one can tell, any notice before that to Mr Phillips rescinding what had been said on the 28th April.  Then comes the 8th May when there is a further discussion about alternative employment and possibilities for Mr Phillips, and then finally one has the 12th May which is agreed on all hands to be the date when the employment terminated.

	When the Industrial Tribunal came to consider the question of the fairness of the dismissal, having determined that the reason was redundancy, a finding which is not sought to be upset, the Industrial Tribunal, first of all stated that Mr Phillips was dismissed without any form of prior warning or consultation and they said of that, that that was unsatisfactory because that was not in accordance with the Industrial Relations Code of Practice.  They go on to say:
"In this instance, however, the fact that the dismissal was effected without prior warning or consultation is only one of the circumstances which falls to be considered in determining the fairness or otherwise of the dismissal."

Then, unfortunately they quote from, as they say, Lord Mackay of Clashfern in the Polkey Decision one of two passages in which his Lordship in fact did say that the fact that dismissal was effected without prior warning is not necessarily conclusive of whether the dismissal was fair or unfair.  The passage that was selected for quotation is not in fact a passage which came from Lord Mackay of Clashfern himself, but was a quotation by him of what Lord Justice Neill had said in the Court of Appeal.  It is contained at ICR 160, G, it reads:
"The failure to consult did not automatically render the dismissal unfair;  it was for the tribunal to determine whether that failure showed that the employers had acted reasonably or unreasonably in treating redundancy as a sufficient reason for the dismissal of the employee.  For that purpose, they had to look at all the circumstances including the consequences of the failure."

Lord Mackay said of that specific passage:
"In my opinion, Neill LJ's answer on first sight was correct.  With much of what he says I would respectfully agree but I cannot accept it all."

He drew attention to the fact that events after the dismissal should not enter into a consideration of the question whether or not the dismissal was reasonable.  He said, which is particularly germane to our case:
"Perhaps the point is highlighted most plainly in the very last sentence which I have quoted.  The consequences of the failure determine whether or not the employee suffered an injustice.  This is not to be confused with the question whether the employer acted reasonably."

In our judgment that is drawing a distinction between, first, the consequences of the failure, which was a failure to observe the proper guidelines, which might have financial consequences at the end of the day, which overall lead to an injustice to the employee, and  secondly, the question whether in dismissing the employer acted reasonably.  The two, are as the House of Lords are at pains to point out, different processes.  This was stated by Lord Bridge at page 162 of the same report when he says specifically about redundancy cases:
"in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation.  If an employer has failed to take the appropriate procedural steps in any particular case, the one question the industrial tribunal is not permitted to ask in applying the test of reasonableness posed by section 57(3) is the hypothetical question whether it would have made any difference to the outcome if the appropriate procedural steps had been taken.  On the true construction of section 57(3) this question is simply irrelevant.  It is quite a different matter if the tribunal is able to conclude that the employer himself, at the time of dismissal, acted reasonably in taking the view that, in the exceptional circumstances of the particular case, the procedural steps normally appropriate would have been futile, could not have altered the decision to dismiss and therefore could be dispensed with.  In such a case the test of reasonableness under section 57(3) may be satisfied."

The Industrial Tribunal having quoted that passage, which in fact came from Lord Justice Neill's Judgment, went on to address the question whether there really was fairness or unfairness and they stated their conclusion in this sentence:
"No unfairness resulted from the lack of prior warning or consultation because of the additional ex gratia payment made to him [Mr Phillips] upon the termination of his employment, which would outweigh any finding that he sustained a financial loss during a reasonable period of notional consultation or warning.  There was no need for the redundancy to be effected on 28 April 1989 and this could have been deferred until the date when it was proposed to transfer the sales and administration staff to the Bromley-by-Bow office.  However, once it was determined that the post of City Branch Manager was redundant there was no reason why the respondents should not carry into effect the redundancy, provided they implemented it in a fair and reasonable manner."

The reference to the date when it was proposed to transfer the sales and administration staff to the Bromley-by-Bow Office is, we take it, a reference to paragraph 4 of the Decision which recites that that was:
"planned to take effect in June or July 1989".

	Finally, it is to be noted that the Industrial Tribunal in paragraph 11(c) of their Decision stated:
"We can only judge the fairness of the dismissal on the basis of the circumstances known to the parties on 28 April 1989 when the decision to make the post redundant was communicated to Mr Phillips.  His employment formally terminated on 12 May 1989 and subsequent events are strictly irrelevant, unless they disclose that there was no genuine redundancy on 28 April 1989 and that it was not the real reason for the dismissal."
We find it impossible to reconcile the passage with which we agree which says that fairness can only be judged on the circumstances known to the parties as at the 28th April 1989 with the finding in the preceding paragraph which says that no unfairness resulted because of the additional ex gratia payment which was made to Mr Phillips.  That payment seems to us to go to the question of whether there was what Lord Mackay calls:
"injustice to the employee".

i.e. a consideration of the overall result of his dismissal, taking into account all the payments that were made in his favour.  That is a process which is entirely relevant to questions of the amount of a compensatory award but it seems to us of the essence of the decision in Polkey v. A E Dayton Services Ltd that that consideration, the amount of an additional ex gratia payment is irrelevant to the issue, was the dismissal fair or unfair, in the light of Section 57(3) of the Act.

	That leads, it seems to us, inevitably to the conclusion that this Decision cannot stand because there has been an inaccurate identification of what the appropriate test is.  There is, unfortunately, a choice of the wrong passage in which Lord Mackay uttered words to the effect that:
"Failing to observe the requirement of the code relating to consultation or warning will not necessarily render a dismissal unfair."  
When he said it himself, which he did at page 153 F he went on to say:
"Whether in any particular case it did so is a matter for the industrial tribunal to consider in the light of the circumstances known to the employer at the time he dismissed the employee".

That is the appropriate test to apply in our judgment and not the test that was quoted from the judgment of Lord Justice Neill with which Lord Mackay found fault.

	That seems to us to lead to the conclusion that this Decision was fatally flawed.  We do not accept the submission that was made to us that it is inevitable from the facts as found by the Industrial Tribunal that one should arrive at the conclusion that the dismissal was unfair.  In our judgment there are too many factors which have not been the subject of effective consideration to enable us to come to that conclusion.  We would, we think, be usurping the functions of the Industrial Tribunal in doing so.

	That makes it inevitable that we should remit this matter to the Industrial Tribunal for reconsideration in the light of the principles in Polkey v. A E Dayton and of this judgment.  
	Before we do that one or two points remain.  First of all there is the issue whether because the Originating Application did not raise the question of the fairness or unfairness of the dismissal the Appellant should be precluded from ventilating this question and claiming that his dismissal was unfair.  It is indeed the fact that the Originating Application did not raise, in terms, any question of fairness or unfairness of the dismissal beyond including a claim, in quite general terms for unfair dismissal.  On the other hand the question whether a dismissal was fair or unfair is inevitably present in any claim to obtain compensation for unfair dismissal, which is what Mr Phillips did because he ticked the box under the heading "Unfair Dismissal Claimants Only - Please tick a box to show what you would want if you win your case" he ticked "compensation" to get an award of money.  So there is absolutely no doubt but that he was making a claim in respect of claimed unfair dismissal.  

	More seriously, however, this question was in fact argued before the Industrial Tribunal by both sides, as their Decision reflects.  Mr Brunner, who conducted the Respondents case with great moderation and frankness accepted that it might have been better if he had objected in front of the Industrial Tribunal to this point then being taken and we are far from dissenting from that view.  If parties do not object at an Industrial Tribunal at a point, particularly one which is inevitably involved in the Decision of the Tribunal, it is in our view, too late to object to the admissibility of the point when the matter comes before the Employment Appeal Tribunal, it having been argued both ways below.  In our judgment therefore it would not be right for us to deal with this question simply on the basis of what was in the Originating Application and to dismiss the Appeal on that footing.

	The other point which needs to be addressed in relation to the employers Cross-Appeal, is the question whether or not the Industrial Tribunal's decision that the dismissal occurred on the 30th April was perverse.  The form which it takes in the Cross-Appeal is a challenge to the finding of the Industrial Tribunal that the Appellant was dismissed without any prior warning or consultation.  The grounds of Appeal given are that the evidence before the Industrial Tribunal showed that warning of impending redundancy was given at a meeting on the 28th April and that consultation took place at that meeting and again at a meeting on the 8th May.  We have already set out the basic facts regarding those two meetings.

	In our judgment it is impossible for the Tribunal to reconsider, as we feel they must, the question whether or not the requirements of Section 57(3) are satisfied in relation to this dismissal without re-examining thoroughly the circumstances around the dismissal and that includes an identification of the date at which the dismissal actually occurred.  It would, in our view, be entirely artificial for there to be a reconsideration of this question without a reconsideration of the question as at what time was the dismissal effected and for those reasons we consider that the Cross-Appeal will have to be allowed on that issue to enable the Industrial Tribunal to reconsider the matter whether Section 57(3) is or is not satisfied in this particular case.  There has to be identified the date of dismissal;  there has to be identified what was the process of consultation if any and whether it was in all the circumstances of the case adequate.

	In the light of the conclusions that are reached on those questions the basic question in Section 57(3) has to be addressed and beyond that it seems that it would be unwise for us to go because we would be seeking to do the Industrial Tribunal's job for them.

	The question has to be addressed whether the same Industrial Tribunal should be asked to reconsider this matter.  We can see no reason why it should not be the same Industrial Tribunal, the parties have not been given an opportunity of addressing us on this and we will hear them if they wish to address us.  We are conscious of the fact that it may physically not be practical politics to reconvene the same Tribunal.  There may be difficulties of a personal nature and therefore we do not direct that it shall be heard by the same Tribunal but we are not minded to direct that it should be heard by a different one, but if the parties wish to address us on that we will hear them.

	We remit the consideration whether or not the dismissal was fair and subsequent consideration such as quantum to the consideration of the Industrial Tribunal if practicable the same Industrial Tribunal.  To that extent both Appeal and Cross-Appeal are allowed.