Appeal No. EAT/423/91

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 5 July 1993

	Before

	THE HONOURABLE MR JUSTICE KNOX

	MR T S BATHO

	MISS A MADDOCKS OBE

KILGOUR ENGINEERING LTD	APPELLANTS

MR R BRYAN	RESPONDENT

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MISS J EADY
(OF COUNSEL)
Cooper Law & Lester
286 Church Street
Blackpool
FY1 3QA

For the Respondent	MR B CARR
(OF COUNSEL)
Rowley Ashworth
247 The Broadway
Wimbledon
London SW19 1SE

	MR JUSTICE KNOX:  This is an appeal by the employers in this case, Kilgour Engineering Ltd, from a decision given by the Industrial Tribunal at Manchester.  The proceedings before the Industrial Tribunal were divided into two.  The first hearing occurred on 21 February 1991 and that produced a unanimous decision of that Tribunal against the contention of the employee Mr Bryan, that he had been dismissed for trade union activities but also a decision equally unanimous in his favour, that his dismissal for redundancy which was found to be the reason for his dismissal, was unfair in the context of section 57(3) of the Employment Protection (Consolidation) Act, 1978.

	There is no appeal from that decision.  The appeal is from the second stage before the Industrial Tribunal which occurred on 12 April 1991, a decision, which was sent to the parties on 17 June of that year, that the employers, Kilgour Engineering Ltd, should pay to Mr Bryan a compensatory award of £7,004.  The appeal before us has been argued on principle rather than on the precise figures.

	The background to the history of the matter is that Mr Bryan was employed as a turner.  He was a skilled worker and worked on different types of lathe.  He was employed from 9 April 1984 until he became redundant on 11 June 1990.  The decision of the Industrial Tribunal in the first stage, when it was held that he had been unfairly dismissed, deals with the factual background.  The employers were engaged in engineering manufacturing mechanical parts used in the aircraft industry.  This was a business in which there were sharp fluctuations in work and there was a major downturn in May or June of 1990 when a customer in Sheffield told Kilgour Engineering Ltd that that customer would in future be carrying out the turning that it required inhouse.  This was a blow to the employers in this case and they decided that they would have to save labour costs by making workshop operatives redundant.

	It happened that Mr Bryan was the trade union representative and he was interviewed in his capacity as union shop steward on Monday 4 June and was told that a number, not precisely specified, of redundancies would have to be made and that the employers would be prepared to consider volunteers.  He made enquiries amongst the workforce with regard to that aspect of the matter but nothing further on that score transpired.

	On the management side on Thursday 7 June, there was a decision that nine redundancies would be made but no information was given to the workforce and in particular to Mr Bryan until the actual day when the redundancies were made operative which was the following Monday, 11 June.  The Industrial Tribunal found that the criteria for selection was the well-known principle of last in first out and that, it was found, was something to which no objection was raised by Mr Bryan.  In fact only seven redundancies were made effective on that Monday, 11 June and unfortunately for Mr Bryan he was the seventh on the list and was therefore made redundant.  He then did in fact get two later employments, one very short term and one rather longer but not permanent and these proceedings came before the Industrial Tribunal after that second employment had come to an end due to further redundancy.

	More significant for present purposes is the fact that there was an upturn in Kilgour Engineering's order book which caused them in the following October to re-engage people who had previously been made redundant.  That was at a point of time when he was employed in the second of his subsequent two employments so that he was not approached with a view to being re-engaged.  At the time of the redundancies being made it had been agreed that if there was a sudden upturn in work, those who had been made redundant would be given the first opportunity of recall in order of seniority of service.  That of course would have put Mr Bryan at the head of the queue for such re-engagement but for the reasons mentioned that did not occur.

	So far as the first decision is concerned, the only passage that need be read from the Industrial Tribunal Decision is the one where they summarise the effect of the dismissal process saying this:

"There was no warning, no consultation with the applicant about his dismissal and he was not invited to put forward any points which might have perhaps obviated the decision or at any rate ameliorated the blow."

and there was a finding of unfair dismissal as I have already said.

	At the second hearing, two points were argued on behalf of Kilgour Engineering Ltd.  Only the first of those two is relevant for the present appeal.  The Industrial Tribunal's account of what was argued on their behalf is as follows in paragraph 6 of the second Decision.  The solicitor who appeared for them was a Mr Cooper:

"In his submission to the Tribunal Mr Cooper argued two grounds on which any compensatory award should be nil.  The first was that as the Tribunal had found a redundancy situation to exist as defined in section 81(1) and that there was nothing inherently unfair in the unit of selection for redundancy and the way in which the criteria chosen for selection were applied, only the procedure adopted for making the applicant redundant (ie failure to warn or consult) rendered the dismissal unfair.  As he would have been made redundant in any event had the correct procedure been adopted, he was not entitled to any compensatory award."

That of course is Mr Cooper's argument.

	On that the Industrial Tribunal said this:

"In view of the sensitivity of the applicant's position as a shop steward, when the Company decided on Thursday the 7 June 1990 that a specific number of redundancies were to be made the following Monday, and that the number included the applicant, there should have been some consultation with him to warn him what was proposed and give him the opportunity of making representations which he might well have been able to make on his own behalf.  His was a difficult position because he could not be seen by his members to be making every effort to save his own job and sacrificing theirs.  In the event there was no consultation with him whatsoever, and he was only informed on the afternoon of Monday 11 June 1990 that he was to be made redundant and he left the respondent's premises that day.  The Tribunal came to the unanimous conclusion that it could not be said that his dismissal on the ground of redundancy was inevitable even if proper consultation had taken place.  The applicant might very well have been able to bring forward some proposals from his knowledge as a shop steward which might have obviated the need for his job to be sacrificed but in the event he never had the opportunity to do this."

The Tribunal then goes on to deal with the second point which does not arise in this appeal and to quantify their award, a point of which also no issue arises before us.

	What was submitted to us on behalf of Kilgour Engineering Ltd was that the Industrial Tribunal had failed to give effect to the law as laid down in Polkey v A E Dayton Services Ltd [1988] ICR 142 and had failed to make the assessment that that decision called for of the likelihood of Mr Bryan's job being salvaged by the process of consultation.  True it is that the Industrial Tribunal specifically found that it could not be said that his dismissal was inevitable, which was the submission Mr Cooper had advanced and which if successful would have reduced the compensation to Nil, but it was submitted that the Industrial Tribunal had specifically found that there was a possibility that Mr Bryan might have been able to bring forward proposals which might have obviated the need for his job to be sacrificed and that in those circumstances this was one of those cases where it was not certain either that he would have been made redundant if proper procedures had been followed, or at the other end of the spectrum, that it was certain that his job would have been preserved if he had been properly consulted.

	The law on the subject has been conveniently summarised in a Judgment of Mr Justice Tucker in Red Bank Manufacturing Co Ltd v Meadows [1992] IRLR 209.  The facts in the headnote, or the equivalent of a headnote, are stated as follows:

"Mr Meadows was dismissed on grounds of redundancy after 32 years' service with the appellant company.  An Industrial Tribunal found the dismissal unfair because the employers had failed to consult with the employee before dismissing him.  In assessing the amount of compensation to be awarded, the Tribunal based their calculations on the difference between Mr Meadows's actual earnings since dismissal and what he would have received in the job from which he had been dismissed.

The employers appealed against the sum awarded on the following grounds.  First, even if a fair procedure had been followed, no job would have been found for Mr Meadows and, therefore, the award should have been nil, or there should at least have been a percentage reduction to reflect the chance that the outcome would have been the same."

The second ground of appeal is not a point that arises in this case because the old job had disappeared in the Meadows' case and therefore a calculation based on what that job would have produced was said to be inappropriate.

	In relation to the first point which is germane to this appeal, Mr Justice Tucker quoted what the Industrial Tribunal said in that particular case which included this:

"It may be that had there been consultation or even discussion prior to dismissal, the employers' reluctance to consider the applicant for a junior position may have been dispelled. 

and to that the Industrial Tribunal in that case had added:

 "We do not know and it is not for us to speculate what might or might not have occurred."

	Upon that attitude Mr Justice Tucker went on to say this and I quote it at some slight length because it contains the relevant passage from the speech of Lord Bridge in the Polkey decision which the Notes of Evidence in this case show was the subject of a reference at the second hearing to this Industrial Tribunal:

"We have no doubt that the Tribunal had those observations still in mind when they came to consider the question of compensation.  Unfortunately, however, they do not make any express reference to the further consideration which ought to have been given to the second stage of the exercise, as referred to by Lord Bridge in his speech in Polkey at p.508,30:

`If it is held that taking the appropriate steps which the employer failed to take before dismissing the employee would not have affected the outcome, this will often lead to the result that the employee, though unfairly dismissed, will recover no compensation or, in the case of redundancy, no compensation in excess of his redundancy payment.  Thus in Earl v Slater & Wheeler (Airlyne) Ltd [1972] IRLR 115, the employee was held to be unfairly dismissed but nevertheless lost his appeal to the National Industrial Relations Court because his misconduct disentitled him to any award of compensation, which was at that time the only effective remedy.  But in spite of this, the application of the so-called British Labour Pump principle [1979] IRLR 94, tends to distort the operation of the employment protection in two important ways.  First, as was pointed out by Browne-Wilkinson J in Sillifant's case, if the Industrial Tribunal, in considering whether the employer who has omitted to take the appropriate procedural steps acted reasonably or unreasonably in treating his reason as a sufficient reason for dismissal, poses for itself the hypothetical question whether the result would have been any different if the appropriate procedural steps had been taken, it can only answer that question on a balance of probabilities.  Accordingly, applying the British Labour Pump principle, if the answer is that it probably would have made no difference, the employee's unfair dismissal claim fails.  But if the likely effect of taking the appropriate procedural steps is only considered, as it should be, at the stage of assessing compensation, the position is quite different.  In that situation, as Browne -Wilkinson J put in Sillifant's case, at p.96:

"There is no need for an `all or nothing' decision.  If the Industrial Tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment."'

We do not ignore the fact that the Tribunal did state at paragraph 6 of their second decision that they had taken into account all the evidence and documents, and that they said that the fact that they did not mention particular matters did not mean that they had overlooked them...

 However, it seems to us that since the decision in Polkey it is necessary for a Tribunal when calculating the amount to be awarded for compensation to ask itself this two-stage question:  If the proper procedure had been followed, and if consultation had taken place, would it have resulted in an offer of employment?  This was the question to which the Tribunal did address themselves in the earlier hearing, and to which they gave the answer that it might have done so.  What the Tribunal failed to do, and what in our view they should have done, was to go on to consider first what that employment would have been, and second what wage would have been paid in respect of it.

In considering the first of those questions, it would not have appeared to have been open to the Tribunal to conclude that the employment which might have been offered was the respondent's old job, since that had disappeared through redundancy."

	Mr Carr for Mr Bryan before us, did not dispute the appropriateness of this approach, thus set out very clearly by Mr Justice Tucker which is plainly based on what was said  
in the House of Lords in the Polkey decision.  What Mr Carr did submit to us was first that this is really a new point of law which is taken for the first time in this Tribunal, and secondly that if he is wrong about that, and it was not a new point so that it must be taken to have been ventilated before the Industrial Tribunal, then their decision must be that they had come to the conclusion that the percentage reduction should be `nil' and he pointed out that there was evidence before the Industrial Tribunal upon which it would have been possible to reach such a conclusion.

	Dealing with those points in the order in which they are made, we are not satisfied that there is a new point of law involved here.  What was argued by Mr Cooper undoubtedly appears to have been that a `nil' award should be made because the case, he submitted, fell into that category mentioned by Lord Bridge where the position was, in any event, going to be lost and the failure to adopt a procedurally correct process of dismissal would not have affected the ultimate outcome.

	That in our view does not constitute the submission of a separate point of law from the reduction argument which was advanced before us.  There is a clear distinction between on the one hand making a choice between two possible ways of putting a case which are either mutually exclusive or at any rate quite separate from each other and putting a case a great deal higher than it ultimately turns out to be susceptible of being supported on the other.  This seems to us to be the latter type of situation.  Mr Cooper put the case at its highest in relation to compensation and submitted that there should be a `nil' award, but we are unpersuaded that that is a legally separate type of submission from the argument advanced before us that, accepting, as the Industrial Tribunal found, specifically, that dismissal on the ground of redundancy was not inevitable, nevertheless a `reduced' compensation award could be made.  
	We turn therefore to look at the second argument which was that it must be taken from the Industrial Tribunal's decision that they came to the conclusion that a 100% award was the right one in the circumstances to make.  In our view this is not a submission which can be accepted in the light of the specific findings by the Industrial Tribunal that the situation was a doubtful one.  We have particularly in mind the passage which I read from the second Decision of the Industrial Tribunal which it will be recalled says:

"The applicant might very well have been able to bring forward some proposals from his knowledge as a shop steward which might have obviated the need for his job to be sacrificed but in the event he never had the opportunity to do this."

That in our view is the equivalent of the finding that was actually made in the Red Bank Manufacturing Co Ltd case where the Industrial Tribunal had perhaps somewhat more explicitly said "it may be that had there been consultation the employers' reluctance to consider the applicant for a junior position may have been dispelled" but in both cases it seems to us that there was an express finding of a doubtful situation and in those circumstances it does not seem to us to be possible to say that there was affirmatively a finding that a `nil' deduction in respect of the prospects of redundancy fell to be made.

	We appreciate that there are grounds for arguing that the compensatory award should be very much reduced from the full award on the one side and that there are ample grounds as Mr Carr showed us, for a possible conclusion that the reduction should be either very small or non-existent.  That is well outside the field that is available to us for decision but it is right that we should record that it was specifically accepted on behalf of Kilgour Engineering Ltd by Miss Eady that the subsequent events, and in particular the fact that the superintendent at the time, later production director, Mr Wooding, went on to the lathes the day after Mr Bryan was made redundant and stayed there first of all for the first job that needed finishing for some four or five days, and thereafter for another job which lasted three months is material that can properly be taken into account in deciding what the chances were of Mr Bryan's job being preserved.  Similarly the fact that there was an upturn in the work in October which is four months after the redundancies took effect, is something which can be taken into account by the Industrial Tribunal.

	Finally, it was accepted that it would be appropriate for us to remit this matter to the same Industrial Tribunal if it can be reconstituted, to reconsider the matter in the light of the Polkey decision which in our view clearly requires an Industrial Tribunal to assess the chances of the preservation of a job in a case of procedural irregularity on dismissal for redundancy and to that extent we allow this appeal and remit the matter for reconsideration in the light of this decision.