Appeal No. EAT/624/91

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 16 July 1993

	Before

	THE HONOURABLE MR JUSTICE KNOX

	MR J R CROSBY

	MRS E HART

MR P M BALL & OTHERS	APPELLANTS

ESPERANTO GRAPHICS	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR B CARR
(of Counsel)
Messrs Kershaws
Solicitors
160 Brompton Road
LONDON SW3 1RP

For the Respondents	MR M WEST
(Personnel Consultant)
Peninsula Business Services
Stamford House
361-365 Chapel Street
MANCHESTER M3 5JY

	MR JUSTICE KNOX:   This is an appeal by nine Applicants before the Industrial Tribunal, from the Decision of an Industrial Tribunal which sat in Nottingham on 2 August 1991, and sent the Decision to the parties on 23 September 1991.  The decision was as follows.  In regard to the nine applicants six were unanimously held to have been unfairly dismissed by the respondent, Esperanto Graphics, which I will call the "company".  There was a majority decision that all the applicants were not dismissed by reason of their Trade Union membership or activities, and that the remaining three did not have sufficient continuous employment to complain otherwise of unfair dismissal.  That latter point followed.  There was no dispute but that they did not have two years' continuous employment and it was, therefore, at no stage in issue but that their only right to complain of unfair dismissal would arise if they could show, and the onus would be on them, that the case fell within the provisions of Section 58 of the Employment Protection (Consolidation) Act 1978.

	The Industrial Tribunal stated the background to the case saying that the applicants were employed by the company as typesetters or paste up compositors, the company being publishers of free newspapers.  All the applicants were given letters on 23 July 1990, terminating their employment at various dates between 27 July and 24 August, the differences being attributable to the length of notice to which they were severally entitled.

	All the applicants were members of the National Graphical Association (1982), which I will call the "NGA".  The factual framework was set out by the Industrial Tribunal and it falls into two convenient categories.  There is the trade union background and there is the employers' economic problems background.  So far as the trade union background is concerned, the Industrial Tribunal found these facts:
"	The respondents negotiated a recognition agreement with NGA, after which NGA supplied the skilled labour which was needed by the respondents for their business. ...... NGA was striving to achieve a generally higher level of earnings  for its members.  The respondents were striving to restrict wages to a level which would not involve them in incurring loss.  ...................

	NGA was also active in seeking to gain improvements in working conditions and terms of employment.  It was fearless in taking steps to protect the interests of its members against anything which it regarded as unfair treatment. "
	The economic side of the matter was dealt with by the Industrial Tribunal saying this:
"5.	In the early part of 1990, the respondents were facing trading difficulties.  Their machinery and equipment was elderly.  The did not wish to face the cost of investing in more modern machines.  The respondents came to believe that they could get their work done as satisfactorily and at less cost by an outside concern.  Their belief was strengthened when they received from NGA written proposals for new wage rates and terms of employment to operate from 1 July.  During July, the respondents negotiated an arrangement to have their typesetting work carried out by the Format Factory whereupon, without consulting representatives of NGA as they were required to do by the Employment Protection Act 1975 they dismissed the applicants."
	The arrangements with The Format Factory only lasted for a very short period.  The work was not being done as the company required and the company terminated that arrangement.  It was common ground before us that The Format Factory's work was not up to requirements.  That was the concession made on behalf of the applicants at the Industrial Tribunal.  The company then decided that they would invest in new machinery and undertake the work inhouse.  On 3 September they began to advertise for typists with word processing skills to operate the new machinery.  The rates of pay offered to these typists were lower than the rates that the applicants had previously enjoyed and the company did not contact any of the applicants about any of the new jobs and no applicant applied for one.

	On that factual background, the Industrial Tribunal identified the question that they had to tackle in a way which has not been criticised significantly before us.  They described the primary question as, whether the reason for dismissal of the applicants was their trade union membership or activities or whether, on the other hand, it was redundancy.  If both, then the question was, which was the principal reason.

	The Industrial Tribunal, at this stage unanimously, said:
"12.	It seems likely that the decision to dismiss was influenced by both factors to a greater or lesser extent."
	and then opinions diverged.  

	One lay member of the Tribunal took the view that the company was reluctant to have dealings with NGA for the purposes of collective bargaining, and he came to the conclusion that the arrangement with The Format Factory was not the subject of any long term contract but was a short term measure consistent with a scheme to take work back after de-de-recognition of NGA had been achieved.  He, therefore, took the view that the principal reason for dismissal did lie within Section 58 of the Employment Protection (Consolidation) Act.

	The other lay member, on the other hand, took the diametrically opposed view, pointed to the considerations of an economic nature which have been set out earlier in the facts and found that economic considerations and not trade union membership had brought about the decision to dismiss.  

	I state their respective reasons in a somewhat abbreviated manner.  Nothing turns on those particular reasons because it was not disputed before us that the process through which those two lay members went was a perfectly legitimate one of drawing inferences from the basis facts which had earlier been found.  The fact that they were diametrically opposite conclusions does not detract, of course, from the legitimacy of the thought processes which they adopted in deciding what was the question that they had to answer and how it should be answered.

	That, of course, left the Chairman, as he said himself, in the position of having to reach his own conclusion.  He arrived at that by what he, with no hint of exaggeration, described as a rather different route and the route that he followed can be analysed as falling into two sets of considerations.  First of all he pointed to three factors regarding the attitude of the applicants at about the time when they were severally dismissed.  First of all he observed that the originating applications of all nine applications were presented simultaneously to the Tribunal on 25 October 1990, and he observed correctly, as far as mathematics are concerned, that that was more than two months after the last of the dismissals had taken effect.

	Secondly, he observed that there was no suggestion made at the time of the dismissals on 23 July 1990, that the applicants had been dismissed by reason of trade union membership or activities.  Thirdly, he observed, again factually entirely correctly, that there was no application, as there could theoretically have been, for interim relief under Section 77 of the Employment Protection (Consolidation) Act 1978, where employees are empowered to apply to the Tribunal in cases where they present a complaint under Section 67 alleging that their dismissal is to regarded as unfair by virtue of Section 58 of the Employment Protection (Consolidation) Act.

	There are very short time limits in relation to any such application for interim relief. 
Section 77(2), so far as relevant, provides:
"(2)  An industrial tribunal shall not entertain an application under this section unless-

(a)it is presented to the tribunal before the end of the period of seven days immediately following the effective date of termination (whether before, on or after that date);"
	Therefore, purely as a matter of practical politics the time for making any such application was not only very short but would have varied between the several applicants because they had differing effective dates of termination because of the length of notice to which they were severally entitled.

	It was submitted to us that those three considerations, which the Chairman undoubtedly had in mind and expressed as relevant factors in reaching his own conclusion by his different route, were all aimed at ascertaining the employees' state of mind and beliefs.  None of them directly impinges on what the employer either believed or treated as the reason for the several dismissals.  In addition the concentration by the Chairman on the situation at 23 July 1990, the date when the notices of termination were given, necessarily involves disregarding the events that occurred subsequently, within three months, before the originating applications were presented.  In that connection a concentration on the situation at the end of July, necessarily involves disregarding what happened at the beginning of September which was the date when the advertisements were issued for the replacement work force to fill the jobs that needed to be manned with the new machinery.  

	In those circumstances, it was submitted on behalf of the Appellants before us, that the Chairman was looking at the wrong mind in considering what the employees' frame of mind was.  It was also maintained that he was not addressing the correct question in exclusively looking at the situation at the end of July rather than having regard to the fact that there could well be circumstances which could possibly explain and justify a change of mind in an employee's approach to the reasons why that employee had been dismissed.

	There have been definitions in the authorities of the true nature of reasons for dismissal under Sections 57 and 58 of the Employment Protection (Consolidation) Act 1978.  Perhaps the best known is the opening paragraph of Cairns LJ Judgment in Abernethy v Mott, Hay and Anderson [1974] ICR 323 at page 330.  We refer to it in passing but it was not read to us and I do not repeat it at this stage.  What we were referred to is the more modern restatement of that principle in the Judgment of Wood J in Port of London Authority v Payne [1992] IRLR 447, at paragraph 86 Wood J said this:
"It seems to us from those decisions that the following principles can be extracted; the first, that the reason is the set of facts which may be beliefs known to or beliefs held by the decision-makers which caused the decision to be made; secondly, that the belief must be a genuine belief and in testing the genuineness of that belief it may be relevant to consider whether the facts upon which it was based were known to the decision-maker to be false at the time or that the inference drawn from those facts was wholly unreasonable but the belief itself does not have to be reasonable, it has to be genuine; thirdly, that it is possible to have a mistaken belief provided it is a belief genuinely held."
	There is no doubt, therefore, in principle, that the belief that matters for the purposes of both Sections 57 and 58 of the Employment Protection (Consolidation) Act, is the employers' belief.  Those arguments were countered by Mr West on behalf of the company, by pointing to the burden of proof in relation to employees whose cases fell either under Section 57 or under 58.  Where an employee claims to have been dismissed for a reason within Section 58(1) and the one with which we were primarily concerned was that the employee:
"58(1)
(a)	was, or proposed to become, a member of an independent trade union"
there is no doubt that the onus of proof is on the employee to establish that proposition and we were referred to authority, if needed, for that in Discount Tobacco & Confectionery Ltd v Armitage [1990] IRLR 15.  On the other hand, under general provisions relating to fairness of dismissal, Section 57(1) and (2), the burden of proof is undoubtedly on the employer to establish that there was a reason for the dismissal and what it was, and that it was a reason either falling within 57(2) or some other substantial reason of a kind such as to justify the dismissal of the employee holding the position which the employee held.

	There is, therefore, undoubtedly a difference in the onus of proof according to which Section operates.  Mr West submitted to us that because of this difference in the onus of proof, it became peculiarly necessary for the Chairman to look at all the facts in detail and, as regards the three employees who could only succeed under Section 58 he said that, because the onus of proof was on them one had to look at what they were alleging in much more detail and in particular all the surrounding circumstances.  He drew an analogy with cases of unlawful discrimination under the Sex Discrimination Act or the Race Relations Act where the process which the Tribunal has to go through is largely a matter of inference from the basic factual findings.  

	He also submitted that, in connection with the point that was made by Mr Carr on behalf of the Appellants that it was wrong to look at the beliefs and understanding of the employees rather than the employer, it was appropriate to look at the belief of both sides as to the reason for dismissal and that where ones side's beliefs, in this case the employees', had gone through a subsequent change, it was appropriate to look at the change of belief and the reason for that change.  It was relevant for the Chairman thus to investigate the thought processes of the employees.  

	In our view the employees' belief is not relevant in ascertaining the employers' reason for dismissal.  It may be, of course, that the knowledge of the two sides may coincide and they may, therefore, have the same appreciation of what the reasons for dismissal are.  That shared knowledge would, by definition, be relevant to ascertaining the employers' reasons for dismissal but, disregarding that possibility of coincidence of information, the process in our view remains throughout one of ascertaining the employers' reasons as that has been described by the judgment that I alluded to of Cairns LJ and in Wood J's decision in the Port of London Authority v Payne.

	We therefore consider that there are solid grounds for considering that the first category of considerations that the Chairman relied upon in support of his conclusion, which was in favour of the employer, was an error of law because he was looking at the wrong set of minds in his arguments.

	So far as the onus of proof is concerned, in our judgement there is a very clear distinction between onus of proof on the one hand, and subject of enquiry on the other.  The differing onus which undoubtedly does exist under Sections 57 & 58 regarding the reason for the dismissal, has in our view no impact on the subject matter of the investigation.  There is nothing anywhere, that we can detect, in the reasoning of any of the members of the Industrial Tribunal to show that they were in any way troubled by questions of onus.  No doubt the decision was not an easy one.  That is sufficiently demonstrated for our purposes by the fact that there was a very clear and diametric conflict of opinion on what the proper conclusion was, but there is nothing to indicate that anyone concerned decided the case on the basis of onus of proof.

	The second category of consideration that the Chairman relied upon was the existence of the protective award.  That was obtained by the NGA on an originating application presented at the same time as the applicants before the Industrial Tribunal, and the Appellants before us, presented their originating applications for unfair dismissal.  In regard to that the Chairman said this:
"20.	Although the applicants as individuals were not parties to the application for the protective award, they knew and must be taken to have approved of it.  They are the beneficiaries of the protective award which was achieved by NGA on their behalf.  The contention that the applicants were dismissed by reason of their trade union membership or activities is inconsistent with the findings of fact on which the decision of the Tribunal to make a protective award was reached.  Having argued successfully on the proposition that the applicants had all been dismissed as redundant, they and NGA ought not now to be heard to claim that they were not dismissed as redundant."
	Mr West did not submit to us positively that that was, first of all, a decision on estoppel, whether by estoppel of cause of action or issue estoppel.  He did submit that that was a possibility but he did not elaborate that submission.  In our judgment there is no basis upon which estoppel, in the proper sense of the word which is capable of applying in Industrial Tribunal proceedings, could apply in this particular case.  We say that because of the fact that if one compares what the issues are in a case under Sections 99 and 101 of the Employment Protection Act 1975, which deals with the making of a protective award, on the one hand, and the issues that arise under Section 57 of the 1978 Act, on the other hand, there is, in fact, no direct coincidence between the two.  What has to be shown in an application for a protective award can be seen most succinctly in Section 101(1) which reads as follows:
"(1) An appropriate trade union may present a complaint to an industrial tribunal on the ground that an employer has dismissed as redundant or is proposing to dismiss as redundant one or more employees and has not complied with any of the requirements of section 99 above."
	Section 99 requires consultation with a trade union and reads:
"(1)  An employer proposing to dismiss as redundant an employee of a description in respect of which an independent trade union is recognised by him shall consult representatives of that trade union about the dismissal in accordance with the following provisions of this section."
	That is what had, in fact, been found to be satisfied in the earlier decision by coincidence of exactly the same persons as sat in the Industrial Tribunal in respect of which this appeal is brought on 21 May 1991.  The issue there is whether an employer is proposing to dismiss as redundant employees in respect of whom there is a recognised independent trade union, to which the answer plainly was yes.  But there is, and indeed the Industrial Tribunal on that occasion so held, no necessary connection between that finding and a finding on an originating application by the employees that the principal, out of two reasons, for dismissal was not redundancy but one which fell within Section 58 of the 1978 Act.  This was, as the Industrial Tribunal itself unanimously found, a case where there was no doubt more than one reason operating on the employers and the issue was, which was the principal one?  That is perfectly compatible with an earlier finding that the employer was proposing to dismiss as redundant the applicants in this case.  

	There is therefore, in our view, no such coincidence in the issues that arose in the two sets of originating applications to ground an estoppel in any proper sense of the word.  It is not necessary for us to labour other points, which would have been obstacles in applying any such doctrine, such as the fact that it does not seem to have been argued as such, although the effect Mr West tells us, and we of course accept, of the protective award was mentioned to the Industrial Tribunal but there was, he accepted, no submission that there was an estoppel as such.  Also, there is a difference in parties because the party to the application for the protective award was the trade union, whereas, the parties before us are the employees.

	Mr West, however, submitted that that was not an end to the matter because there was another basis upon which it was possible to justify the emphasis that the Chairman had placed on the existence of the protective award and its apparent inconsistency with the claims that were now being advanced by the applicants, and that was, in his submission, that the way in which they presented their case, by which I think he meant the way the trade union presented its case on their behalf, affected their credibility in the hearing before the Industrial Tribunal on the unfair dismissal claim.

	It is, perhaps, just within the realms of possibility that that may have gone through the learned Chairman's mind, but what is absolutely clear is that he never said a word about their credibility on this score.  What he said, and we must assume meant, was that the applicants, now the Appellants before us, ought not now to be heard to claim that they were not dismissed as redundant because they had successfully argued on the proposition that was advanced when they were parties to, or were cognisant of, and took the benefit of the union's application for a protective award.  That is what he says his reasoning was and we, of course, accept it at face value.

	Had he thought that the testimony that was advanced on their behalf was not credible, he would have had no difficulty at all in dealing with the case, perfectly simply, by saying that he agreed with the lay member who decided the case in favour of the employer and it would have been unnecessary for him to adopt his own rather different view.  Accordingly, we do not see any force in the argument that it may have affected the credibility of the applicants' claim in the Chairman's assessment.

	For those reasons we have come to the conclusion that the Chairman did, unfortunately, not only take a different route but led himself astray in the process because he does appear to us to have looked at (a) the wrong questions in relation to ascertaining how the employers looked at the matter and (b) the wrong conclusion in considering the protective award because there is no necessary incompatibility between a protective award, on one hand, and a decision in favour of the employees under Section 58 of the 1978 Act on the other.  

	For those reasons the appeal succeeds.  It is inevitable, and Mr Carr accepted this, that in those circumstances, unfortunately, the matter will have to be remitted for reconsideration and in the light of the conflict of opinion which existed below, we think it is essential that there should be remission to a differently constituted tribunal.  There was a cross-appeal but Mr West very sensibly, if we may say so, accepted the proposition from us that there was no point in pursuing it because whichever way the appeal went the cross-appeal was not going to make any particular difference and in those circumstances he did not pursue it and it will fall to be dismissed.