Appeal No.	EAT/1010/97

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 10 February 1998

Before
HIS HONOUR JUDGE C SMITH QC
LORD DAVIES OF COITY CBE
MISS A MACKIE OBE

PIZZA EXPRESS (RESTAURANTS) LTD	APPELLANTS

MR S PAL	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR J DAVIES
(Solicitor)
Messrs Lewis Silkin
Solicitors
Windsor House
50 Victoria Street
London
SW1H 0NW	
For the Respondent	MR C NEWBERRY QC
Free Representation Unit
49-51 Bedford Row
London
WC1R 4LR

	JUDGE SMITH QC:     This is an appeal by Pizza Express (Restaurants) Ltd against the decision of an Industrial Tribunal held at London (South) on 11th June and 9th July 1997, when the Industrial Tribunal held that the applicant/employee, the respondent before us, Mr S Pal, had been unfairly dismissed by the appellants and awarded him £7,348.00 by way of compensation for unfair dismissal. Extended reasons for the decision were sent to the parties on 31st July 1997.

	We have had the benefit of careful arguments from a solicitor on behalf of the appellants, and from Mr Newberry QC acting on behalf of Mr Pal. We have paid careful regard to the submissions that are set out in the respective skeleton arguments.

	Putting the matter very shortly, the appellants appeal both against the finding of unfair dismissal and also against the amount of the compensation. With regard to the finding of unfair dismissal, it is submitted that the Industrial Tribunal erred in law and reached a perverse conclusion in finding that the appellants had failed to discharge their obligation to the applicant to see if they could find him alternative employment. And further, that if the Industrial Tribunal found that there was a failure to consult, which it was submitted to us is unclear, then they should have held, so it is submitted to us, that such consultation would have made no difference. Alternatively, it is submitted, that they failed properly or at all to assess the percentage chance that the respondent, Mr Pal, would have kept his job and wrongly concluded that it was 100% certain that he would. Reliance was placed on the decision in Polkey v A E Dayton Services Ltd [1987] IRLR 503. Finally, a point was taken that the Industrial Tribunal should have held that it was unreasonable for the respondent to seek a graduate trainee position, and that loss flowing from that decision on his part was not attributable to the dismissal.

	By way of response, and again dealing with the matter only shortly, the respondent by Counsel submitted that if the Industrial Tribunal decision is read sensibly, and not construed like a statute, it is clear that the Industrial Tribunal were finding that there was a failure to consult about offering the respondent other managerial posts, and that in the particular circumstances of this case, that rendered the dismissal unfair. Further, it is plain, so it is submitted, that the Industrial Tribunal did consider whether a Polkey reduction should be made in relation to compensation, which is the only permissible stage at which it should be considered, and were entitled to hold that it did not. It is submitted that on the findings of fact of the Industrial Tribunal, it was quite reasonable for the Industrial Tribunal to conclude that the respondent had acted reasonably in seeking employment as a graduate trainee.

	Before we consider those submissions, it is necessary to refer, of course, to the Industrial Tribunal’s decision. The Industrial Tribunal made its findings of fact in paragraphs 6 to 15 of its decision. We do not propose to set out or summarise all those findings of fact, suffice it to say we have taken those all into account, and that reference should be made to the detailed findings of fact made by the Industrial Tribunal should it be necessary for that exercise to be done.

	We note that the Industrial Tribunal made some important findings relative to the issues in this appeal. It is clear from their findings that in 1996 the appellants considered the East Sheen restaurant to be a suitable restaurant to be a “training restaurant” with a training manager in charge. It also clear, in our judgment, that the Industrial Tribunal found that, although contracts had been exchanged on 14th October 1996 to take over the restaurant from the franchisee, Mr Kidney, a deliberate decision was taken not to tell the staff including the manager at the East Sheen restaurant, the respondent, about the take over. It was only on or about 13th November 1996 that the respondent, Mr Pal, who, we repeat, was the manager at the East Sheen restaurant, was told by Mr French, the Area Manager, that he was to be replaced virtually immediately by a training manager, and that he would be made redundant. By 22nd November 1996, the Industrial Tribunal found that the respondent had been dismissed on the grounds of redundancy. The Industrial Tribunal found as a fact that at about the same time a Mr Honan had been appointed training manager at the East Sheen restaurant by way of transfer from his position as manager of the Streatham restaurant. The Industrial Tribunal also found as a fact that the Streatham post had been filled at much the same time, and had not been offered to the respondent, Mr Pal. What was offered to Mr Pal was initially a waiter’s job, and secondly, in point of time, an assistant manager’s job, both of which would have resulted in a very much lower remuneration and both of which were reasonably refused on the findings of the Industrial Tribunal. Although Mr Pal had access to a weekly list of available posts put out by the appellants, no further alternative post was offered to him.

	It was against those facts, amongst the other facts that the Industrial Tribunal found, that the Industrial Tribunal, having found that the reason for dismissal was redundancy, and that this was a potentially fair reason for dismissal, then reached their critical conclusions by reference to a consideration of s.98(4) of the Employment Rights Act 1996, in paragraph 24 where they expressed themselves as follows:

“24.     In considering whether the dismissal was fair or unfair, the Tribunal had regard to the criteria set out in section 98(4), and after full consideration concluded that the dismissal was unfair. There was only one manager at the East Sheen Restaurant, so that the application of selection criteria is not an issue to which attention can be paid in this case. Similarly, the warning and consulting of employees are of lesser importance in a case of one manager in a small establishment than in an organisation covering a wide area. But in this case, the Tribunal finds that the Respondent’s offer only of the job of waiter or assistant manager at East Sheen, or a waiter at Clapham, and failure to consult or discuss properly about the possibility of a manager’s post at another of the Respondent’s restaurants in the area or even further afield, render the dismissal unfair. Having regard to the resources of the Respondent’s business (with managers reporting from branches to area managers, who report to the Regional Manager) and the size of the business, the Tribunal finds that the Respondents acted unreasonably in dismissing the Applicant in the circumstances of the case.”

	In our judgment, it is clear that the Industrial Tribunal were holding that the appellants’ failure to consult or discuss properly the redundancy situation was inextricably intermingled with and interrelated to their failure to make proper and reasonable efforts to find alternative employment for the respondent. 

	In our judgment Mr Davies, solicitor for the appellants, was, with respect, incorrect in seeking to argue that the two duties on an employer, namely the duty to consult with the individual employee and the duty to make reasonable offers of alternative employment to that employee, are separate in a case such as this. In our judgment, the Industrial Tribunal were correct here to conclude that the two duties ran in parallel, and we can detect no confusion of thought in the way the Industrial Tribunal expressed themselves in paragraph 24.

	Next, in our judgment, the Industrial Tribunal were entitled to conclude on the facts that they had found, that there had been a lack of proper and adequate consultation with the respondent with regard to the respondent being offered a manager’s post at another of the appellants’ restaurants. In our judgment this was a finding of fact which the Industrial Tribunal were entitled to make in the circumstances of this particular case. They had found that the respondent had been presented with a redundancy situation without proper consultation, in circumstances where a manager’s post had become available directly by reason of the respondent’s replacement by a training manager, and yet that post had not been offered to him or discussed with him. In our judgment, it is a misinterpretation, with respect, of the Industrial Tribunal’s decision to argue, as Mr Davies sought to do, that the Industrial Tribunal were holding merely that the appellants had not tried energetically enough to find an alternative post for the respondent. It was their failure to consult with him individually about whether an alternative manager’s job should be offered to him, which the Industrial Tribunal held to render the dismissal unfair. In our judgment, the instant case falls to be distinguished from the case of Quinton Hazell Ltd v W C Earl [1976] IRLR 296 in that respect. 

	In our judgment it is plain from a proper consideration of the decision in the leading case of Polkey, that once an Industrial Tribunal have decided that a dismissal is unfair because of a failure to consult, as in this case, and consequently a failure reasonably to consider possible alternative employment, it is impermissible for an Industrial Tribunal to hold that such consultation would not have affected the result. Polkey decided that that approach was wrong unless it can be shown that such consultation would be futile. Here, no such argument was put forward. We did not understand Mr Davies to argue that the Industrial Tribunal should have held that consultation would have made no difference, and thus, that the respondent should get no compensation at all, but if did seek so to submit, we must reject that submission as being erroneous in law.

	However, it is of course necessary for the Industrial Tribunal to decide when considering the issue of compensation whether a Polkey reduction falls to be made, to reflect the chance that the employee would have still lost his employment. It is clear from paragraph 25 of its decision that the Industrial Tribunal assessed that chance at nil, and thus awarded the respondent compensation on a 100% basis. The submission that is made by Mr Davies is that that was a perverse decision. It is submitted that since there is no specific reference to the Streatham job in paragraph 24 of the decision, and since in that paragraph the Industrial Tribunal speak of:

“... the possibility of a manager’s post at another of the Respondent’s restaurants in the area or even further afield ...”

it follows that it is perverse to conclude that it was 100% certain that the respondent before us would have obtained a manager’s post and thus to award full compensation. 

	However, in our judgment there are a number answers to that submission. First of all, in our judgment, it is very difficult indeed to establish perversity in such a case in the absence of a finding based on a total lack of evidence to support it; or on a plain misinterpretation of evidence that was laid before the Industrial Tribunal. In our judgment it is quite unclear what evidence was before the Industrial Tribunal on this point, and that is no criticism of the Industrial Tribunal. Thus, the Industrial Tribunal may have concluded that had proper consultation taken place at the proper time, the respondent would have been offered and would have accepted the Streatham job. Their findings of fact would seem to support such a conclusion. Secondly, in our judgment, it is clear, following Britool Ltd v Roberts [1993] IRLR 481, a decision of the Employment Appeal Tribunal, that although the initial burden is on an employee to prove loss, where a dismissal is held to be unfair due to lack of consultation or warning, the employee will have a prima facie loss, i.e., loss of his job, and then, as it is put in the headnote:

“... very little more is then required of the employee to cause the evidential burden to shift to the employer to show that the dismissal could, or would be likely to, have occurred in any event. If the employee is able to put forward no more than an arguable case that but for the lack of consultation or warning he would have kept his job, that will ordinarily be sufficient.”

	Here, there is no suggestion that the Industrial Tribunal failed to take account of evidence put forward by the appellants before them, or failed to deal with submissions made to the appellants by them in relation to this matter of the Polkey deduction with regard to compensation. The reality is that the Industrial Tribunal were left to reach their own conclusions in the light of the principles in Polkey to which they correctly referred themselves in paragraph 25 of their decision, in a situation where there had been a failure to consult properly and where the manager’s post at Streatham had been filled without being offered to the respondent at the very time when he was being presented without proper consultation with his redundancy. In those circumstances, in our judgment, the employer cannot be heard now to complain about the way in which the Industrial Tribunal dealt with the Polkey reduction. It was a question of fact for the Industrial Tribunal to decide, having correctly referred themselves to the proper principles. If an employer wishes to address such arguments and call such evidence, he must do so, in our judgment, at the proper time, i.e., before the Industrial Tribunal, and not try and plug the gap in the Employment Appeal Tribunal.

	Finally, in our judgment, in the light of the findings of fact in paragraph 14 of the Industrial Tribunal’s decision, the Industrial Tribunal were amply justified in concluding that the respondent’s loss did not include any elements which were not reasonably or attributable to the dismissal as helpfully defined in Simrad Ltd v Scott [1997] IRLR 147, in the Scottish Employment Appeal Tribunal, and accordingly this appeal must be dismissed.