Appeal No. EAT/418/91

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

		At the Tribunal
		On 31 October 1991

	Before

	THE HONOURABLE MR JUSTICE WOOD MC (P)

	MR A FERRY MBE

	MRS M E SUNDERLAND JP

CONTROLLED DEMOLITION GROUP LTD	APPELLANTS

MR B LANE	1ST RESPONDENT
MR L KNOWLES	2ND RESPONDENT

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	Mr J Tillyard
	(Of Counsel)
Merrils Ede
Solicitors
Dominion House
Dominion Arcade
Queen Street
Cardiff, CF1 4AR

For the lst Respondent	Mr P Griffiths
(Of Counsel)
Evans Powell & Co
17 Murray Street
Llanelli
Dyfed SA15 1AQ

For the 2nd Respondent	Mr P Marshall
	(Of Counsel)
	Gomer Williams & Co
	19 John Street
	Llanelli
	SA15 1UP

	MR JUSTICE WOOD (PRESIDENT):  This is an Appeal by Controlled Demolition Group Ltd from a decision of an Industrial Tribunal sitting at Cardiff under the Chairmanship of the Learned Regional Chairman Mr David Powell who in May 1991, found that the Applicants, Mr Lane and Mr Knowles were unfairly dismissed.  They found that Mr Lane was entitled to a basic award of £2,520 and a Compensatory Award of £8,925 and they ordered that Mr Knowles be reinstated.

	The two Applicants were employed by the Respondent Company as asbestos strippers, Mr Knowles from 30 October 1989 and Mr Lane on 26 February 1990.  Their employment came to an end on 5 July 1990.  They each received oral notice confirmed by letter.  It will be seen from those dates that neither had two year qualification period for their allegation of unfair dismissal.

	Mr Lane, in his Originating Application dated 17 July 1990, alleged that his dismissal was unfair due to trade union activities and the defence of the Company to that claim was to deny that but to allege that the reason was redundancy.  Mr Knowles, in his Originating Application dated 10 August 1990, alleged that there was no genuine redundancy.  The defence was that there was and in any event there was good reason for dismissal for absenteeism and some violence at work for the dismissal.  Subsequently Mr Knowles was encouraged to allege "Trade Union activities" and although the pleadings are not amended in writing, it is common ground that he, when appearing before the Tribunal, was relying on the same grounds as Mr Lane.

	Mr Knowles represented himself, Mr Lane was represented by his Trade Union and the hearing took place over some five days during February and May 1991.  The qualification section of the Employment Protection (Consolidation) Act 1978 is in Section 64.  That provides for the normal two years but then by Section 64(3), provides an exception and that sub-section reads:
"Subsection (1) shall not apply to the dismissal of an employee if it is shown that the reason (or, if more than one, the principal reason) for the dismissal was [one of those specified in section 58(1)]

and turning to Section 58(1) that reads as follows:

"...the dismissal of an employee by an employer shall be regarded for the purposes of this Part as having been unfair if the reason for it (or, if more than one, the principal reason) was that the employee

(a)was, or proposed to become, a member of an independent trade union, or 
(b)had taken part, or proposed to take part, in the activities of an independent trade union at an appropriate time ..."

Sub-section (c) is not in our judgment relevant.
	
	The only other section to which we need refer in that same Act is Section 59 and that reads:
"Where the reason or principal reason for the dismissal of an employee was that he was redundant, but it is shown that the circumstances constituting the redundancy applied equally to one or more other employees in the same undertaking who held positions similar to that held by him and who have not been dismissed by the employer, and either

(a)that the reason (or, if more than one, the principal reason) for which he was selected for dismissal was [one of those specified in section 58(1)] or
(b).....

then, for the purposes of this Part, the dismissal shall be regarded as unfair."

Normally, under section 57, the burden of proving a dismissal is on the employee, the burden of proving the reason for the dismissal is on the employer and thereafter there is the so-called neutral burden of proof under section 57(3).  However, where an employee applicant is claiming that there is jurisdiction, in other words that he is avoiding the qualification period because of section 58(1), the burden is upon him.  That is established by SMITH v HAYLE TOWN COUNCIL [1978] ICR 996.  It is a decision of the Court of Appeal and the particular point in question is dealt with by Lord Justice Eveleigh in his judgment at page 1002 at E, where he states quite clearly that the burden is upon him who is seeking to rely upon the exception to bring himself within it.

	So it is for the Applicants here to prove that the reason or the principal reason for their dismissal fell within section 58(1).  The further authority of MAUND v PENWITH DISTRICT COUNCIL [1984] ICR 143 serves to emphasise that.

	Before leaving those authorities, we would merely seek to emphasise that in the case of an Applicant seeking to satisfy that burden of proof, the issues are confined to section 58(1).  Where a reason given by an employer is relied upon under the statute then there are the provisions of section 57 to be considered and there are additional principals such as those under the BURCHELL test to be considered.

	The facts of the present case are somewhat complicated but can be stated perhaps for our present purposes fairly shortly.  The issues are set out in paragraph 1 of the decision of the Industrial Tribunal.  The two applications were considered together and they arose out of redundancy notices given to asbestos strippers and other demolition workers one week after a meeting at the Neptune Hotel, Burry Port, which is near the old Carmarthen Bay power station which was being demolished.

	On 22 June 1990, some 25 or so were present.  This meeting was arranged by the General Municipal & Boilermakers (they are now the GMB and I shall so refer to them) with a view to achieving membership.  Mr Lane, who undoubtedly had taken an active part in trade union activities was not at that meeting, but he had been a spokesman and himself was a member of the GMB.  Mr Knowles did not attend but he had not joined the trade union and his case was that the employers believed that he had.  The issues are set out in this way and I am now quoting from paragraph 1.
"..Both had been employed for a matter of months, far short of two years, and must therefore satisfy us that the principal reason for their dismissal was not redundancy but their actual or intended (or supposed or supposed intended) membership and participation in the activities of an independent trade union, namely the one mentioned.  Mere selection for redundancy on such grounds would not give us jurisdiction, if redundancy were in fact the principal reason for dismissal.  On the other hand, if we have jurisdiction in either case, the applicant must succeed."

	To summarise the views of the Industrial Tribunal they found that the Applicants succeeded in proving that matter and found in their favour.

	There was ample evidence before the Industrial Tribunal that this company did not take a very generous view of trade union activity; that is an understatement, they were clearly antagonistic to trade union activities within their sphere.  There was evidence that this had been made clear in conversations from 30 October 1989 through January and February of 1990 and indeed in the period prior to the meeting at the Neptune Hotel.  There can be no doubt that there was a mass of evidence upon which the Tribunal could reach that conclusion.

	The Tribunal found that there had been in fact a genuine redundancy and there had been a need to reduce the workforce by some 13 but that 20 had been dismissed and 7 had been engaged shortly thereafter.  A reason was given by the company for this which was not accepted and so the conclusion was, and it is one with which the company cannot possibly argue, that this was not a genuine situation.  Although there was a need to reduce the relevant work-force by 13, 20 had been dismissed and as the Tribunal found, the company were taking advantage of the situation to try to rid themselves of those involved in trade union activities.

	The findings of the Tribunal which are of essential importance are contained in paragraphs 13, 15 and 16.  Paragraph 13, it is convenient to read.  The Tribunal say:
"We conclude that the scale of the redundancy was inflated so as to take advantage of the concurrent need for financial saving (not by any means a sudden coincidence but one that had been building up over a period) to get rid of those thought, rightly or wrongly, to be chiefly concerned with union organisation on the site.  In these circumstances it is, we think, illogical to ask whether, if the redundancy had been limited to the number actually required, Mr Lane and Mr Knowles would have been properly included.  That would resurrect the "no difference" rule.  The question is relevant but relates only to the assessment of loss."

and then a particular passage upon which Mr Tillyard relies for the Appellant Company:

"There is furthermore no presumption that if redundancy is one of the two reasons for dismissal it must be the principal one.  We find that as a fact Mr Lane and Mr Knowles, and others who have not brought proceedings, were dismissed principally because of their known or suspected union stance.  Both applicants had somewhat unsatisfactory attendance records and Mr Knowles had also come to the notice of the authorities for fighting, on site but outside working hours, but that was not in our view a significant part of the respondents' reason in either case.  The extent to which the redundancy was inflated for this purpose can be gauged by the subsequent fresh starts, instead of cutting back on redundancy or re-engaging.  It appears that nearly all those dismissed were union members; all may have been suspected.  There is no reason to attempt to assign some of the group to a class of legitimate redundancies, which would be sheer mindreading; the whole organisation was tainted; but it is significant that none of those originally dismissed was reprieved or subsequently re-engaged, and we do not accept Mr Stringer's explanation that in drastically changing, within a week, a redundancy scheme design to save half a million pounds in a year, he "leaned heavily" on two foremen who had then been on the site a few months and weeks, and foremen for one month and one week, respectively."

In paragraph 15 the Tribunal, in the middle of that paragraph, say this:

"..the tribunal is satisfied on the totality of the evidence that both Mr Lane and Mr Knowles were dismissed precisely for the reason that they had become members of the GMB and proposed to take part in its activities.  The "reason" is what the employer either knows or believes:  Abernethy v Mott, Hay and Anderson [1974] ICR 323, 330B, per Cairns LJ.  We are not prepared to decide cases on the opinions of those who decided not to bring complaints themselves."

	Mr Tillyard makes a number of criticisms of the decision.  He accepts that in paragraph 1 the issues are accurately set forth.  His first criticism however is that which pertains to the statement of the presumption in the centre of paragraph 13.  Secondly, he submits that where there has been found to be a redundancy situation, it is not enough to say merely that these two people were not dismissed for redundancy or were dismissed for the principal reason under section 58(1) because unless you look at each individual case of the twenty who were dismissed, you do not know, or cannot tell, whether these two men fell within those where the principal reason was redundancy; although there may have been a secondary reason of selection because of trade union activities if they fell within that umbrella of redundancy then they would not succeed in evading the qualification period required.  Lastly, so far as Mr Lane is concerned, he submits that there was no evidence that could support a genuine belief that he was involved in trade union activities.

	So far as the presumption is concerned, it seems to us that the Tribunal were entirely justified in saying that there is no presumption that any particular reason is right or wrong.  They needed to look to see whether the Applicants, Mr Lane in this case, had established on the ordinary balance of probabilities, the civil burden of proof, that the reason for his dismissal fell within section 58(1).  Likewise his third point, with respect, seems to us to be untenable because there was a mass of evidence, not only that Mr Lane was involved in trade union activities, but also he was far more deeply involved than those who attended the meeting at the Neptune Hotel.  Mr Lane happened to be ill on that occasion and could not attend, but he was clearly a leading light in this particular operation.

	The point that he takes about the insufficient investigation by this Tribunal where 20 were dismissed, seemed to us at one time to be a good one, but we have looked further at the decision and in particular we have looked at paragraph 16 where the Learned Regional Chairman clearly draws the distinction between section 59 and section 58.  It is also to be remembered that in paragraph 1 of the decision he points out quite clearly that if the position of the Applicants fell within section 59 then there would be no jurisdiction; so we are satisfied that he had this point very much in mind and therefore that it was necessary to see whether these two particular Applicants could be said to have fallen within the provisions of section 59 because the principal reason for dismissal was redundancy and they had merely been selected because of trade union activities.

	They did not in our judgment fall into that error because of that passage in paragraph 15 to which we have already referred, where this is said, and I repeat it:
"..the tribunal is satisfied on the totality of the evidence that both Mr Lane and Mr Knowles were dismissed precisely for the reason that they had become members of the GMB and proposed to take part in its activities."

	That phraseology "precisely for the reasons" seems to us to emphasise quite clearly that the principal reason as found, and clearly found, was under section 58 and not otherwise.

	So far as Mr Knowles is concerned, the position is somewhat different.  Mr Tillyard takes the first point so far as the presumption is concerned and the second point about the question of the 20 dismissal and that failure to identify or to consider each case individually in that particular redundancy situation is fatal to the decision.  We have dealt with those two matters which we have decided against him.  But there are two other facets of Mr Knowles' case which are somewhat different. 

	The first comment that Mr Tillyard makes is that it is not sufficient for there to be mere suspicion on the part of an employer and that the Applicant employee must prove a genuine belief based upon sufficient evidence or understanding that the employee was involved in activities under section 58.  He submits here, that that in itself also is not enough but there must be in fact a participation or an activity under section 58.  That involves considering first of all whether there is a genuine belief on the part of the employer.

	The first authority to which we need refer is ABERNETHY v MOTT, HAY AND ANDERSON to which the Learnead Chairman referred.  That is reported in [1974] ICR 323.  The facts of that case are of no particular importance.  It is the well known passage at the beginning of the judgment of Lord Justice Cairns at page 330 which is often quoted and is relevant for our present purposes.  He says this:
"..A reason for the dismissal of an employee is a set of facts known to the employer, or it may be of beliefs held by him, which cause him to dismiss the employee.  If at the time of his dismissal the employer gives a reason for it, that is no doubt evidence, at any rate against him, as to the real reason, but it does not necessarily constitute the real reason.  He may knowingly give a reason different from the the real reason out of kindness or because he might have difficulty in proving the facts that actually led him to dismiss; or he may describe his reasons wrongly through some mistake of language or of law."

	That passage was approved by the House of Lords in W DEVIS & SONS LTD v ATKINS [1977] ICR 662 and the relevant passage is in the speech of Viscount Dilhorne at page 667(G).  This indicates therefore that where one has a genuine belief based upon appropriate facts of understanding, that can be a reason.

	The point taken by Mr Tillyard however, is that one must go further than that and that or there must be an underlying truth in the fact before the reason is sufficiently established.  For this purpose he relies upon the decision of LEYLAND VEHICLES LTD v JONES [1981] ICR 428, a decision of this Court presided over on that occasion by Mr Justice Slynn as he then was.  

	That was a decision upon the wording of section 58(3) of the 1978 Act which has now been repealed.  In that case the provision was that the dismissal of an employee by an employer shall be regarded as fair for the purposes of this part of the act if - I am then picking out the relevant words - "the reason for the dismissal was that the employee was not a member of a specified union" and the employers there had recognised arrangements with certain trade unions.   The Tribunal found that although the employers generally believed that the applicant was not a union member they did not have reasonable grounds for their belief as they had not carried out a sufficient investigation and therefore, submits Mr Tillyard, here it is quite clear that Mr Knowles was not a member of the GMB, did not want to be or indeed did not wish to be involved.  Therefore, says Mr Tillyard, in this case Mr Knowles has failed to establish that their reason for dismissal was within section 58(1).

	There is a substantial difference between those two cases.  In the LEYLAND case, the employer was seeking to rely upon a reason for dismissal.  That reason had eventually, to be considered under section 57 and the usual provisions of section 57 including the BURCHELL test.  In the present case it is for the Applicant employee to establish the reason and there can be no question of investigation or reasonable investigation of the reason by the employee.  The employee can only know what he is told and what he finds out on the evidence.  The distinction is therefore in our judgment a valid one; moreover we think it is desirable that that case should be distinguished because it would really be impossible for an employee to do more than to establish a genuine belief upon grounds which are sufficient to found that belief.  Therefore on that difficult point we decide that the test here is to see whether there was a genuinely held belief and whether there was evidence to substantiate it.      

	The Tribunal found that there was a genuinely held belief.  The last issue is whether there was evidence, or sufficient evidence and basis for that belief and for the finding of the Industrial Tribunal.  Mr Marshall draws our attention first of all to the background of this whole matter.  Undoubtedly there was strong evidence before the Industrial Tribunal on that score.  Secondly, he drew our attention to the Notes of Evidence.  Only part of the Notes of Evidence are before us and this is a case where the evidence of Mr Horan might have been of value but we do not think it essential, for reasons which we will give in a moment.  

	It is right that Mr Knowles initially did not place his claim upon the present basis under section 58.  It is also right that he told the Tribunal in evidence that when he had launched his proceedings it did not cross his mind that he was sacked because he was suspected of joining a trade union.   However, the evidence which he gave was that there had been a meeting between himself and Mr Horan, who was a member of the management, on the day after the meeting at the Neptune Hotel, that was on 23 June, and that there had been a conversation.  It is perhaps not entirely easy to discern from the Notes of Evidence precisely  what occured and what was said, but fortunately the matter was dealt with specifically by the Learned Chairman in paragraph 8 of the Decision.  The two versions of the conversation were given in that paragraph.  The version given by Mr Knowles was clearly that which was accepted by the Tribunal and the finding in the sixth line of that paragraph is as follows:
"..Mr Knowles said that he was warned that Mr Stringer had him on a list of those who had attended, that he told Mr Horan that he had not and that Mr Horan offered to "sort it out", but that that was overtaken by events."

	It seems to us that there is just sufficient there for the Industrial Tribunal to reach the conclusion which it did.  The Tribunal had the advantage of seeing and hearing the witnesses.  There may have been other passages in the Notes of Evidence which are not before us but it seems to us that it would be wrong for us to say that there was no evidence upon which the Tribunal could find that Mr Knowles had satisfied them that the genuine belief of the management and the reason for his dismissal did fall within section 58.

	It is quite clear from the comments made by the Industrial Tribunal that difficult problems will continue to arise under section 58 and where there is a redundancy section 59.  The Tribunal in this case were well aware of those problems and of the importance of clear findings on the reason for dismissal.  They found in each case that the reason fell within section 58 and we are unable to discern any error in either case.  These appeals therefore must be dismissed.