Appeal No. EAT/220/94

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 19th May 1995

	Before

	HIS HONOUR JUDGE C SMITH Q.C.

	MR R H PHIPPS

	MRS P TURNER OBE

MR T P DRUDGE	APPELLANT

EMAP APEX PUBLICATIONS LTD	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	NO APPEARANCE BY OR 	ON BEHALF OF THE 	APPELLANT

For the Respondents	MR N GIFFIN
(of Counsel)
Mr R Dillarstone
Messrs Greenwoods
Solicitors
30 Priestgate
Peterborough
PE1 1JE

	JUDGE SMITH QC:   In this appeal the appellant, Mr Drudge, appeals against a decision of an Industrial Tribunal sitting at Leicester on 25th May 1993 deciding that Mr Drudge was unfairly dismissed by EMAP APEX, hereafter called `APEX' by reason of redundancy. Initially he was awarded a sum of money by way of a compensatory award, namely, £1,146.00 based on a three weeks loss of pay during a period when the Industrial Tribunal held there should have been, but was not an individual consultation with him. However, by way of review the Industrial Tribunal held that an ex gratia payment made by APEX fell to be set-off against that payment which had been reduced by agreement to £961.52 with the result that the compensatory award was completely extinguished. The Industrial Tribunal felt obliged, as they put it, to follow the decision of this Appeal Tribunal in Rushton v Harcross Timber and Building Supplies Ltd [1993] ICR 230 in preference to a decision of the Scottish Division of the Employment Appeal Tribunal namely Roadchef Ltd v Hastings [1988] IRLR 142 I will say a word more, of course, about those decisions later in this judgment.

	The appellant was not represented before us, and the respondents were represented by Mr Giffin of Counsel, who has been of the greatest help to us and who, we consider, has made very knowledgeable and realistic submissions to us in relation to the issues which we have to determine.

	We have considered carefully the appellant's grounds of appeal and the appellant's skeleton argument put in on his behalf by Mr Richards who appeared on his behalf as a friend of the appellant at the Industrial Tribunal.

	I have already indicated that there is a point on the appeal relating to the ex gratia payment and the effect of the ex gratia payment on the compensatory award. But there is also a further point on appeal which we should deal with first. And that is the question as to whether the Industrial Tribunal erred in not awarding the appellant a percentage award, reflecting a chance that had there been proper consultation he might have been kept on. We have thought it proper to deal with that as a substantive ground of appeal in all the circumstances. Secondly, of course, I repeat there is the second ground, a quite separate ground, as to whether, as a matter of law, the ex gratia payment should have been set-off against the compensatory award which he did receive.

	The background to the matter, and the facts and circumstances giving rise to the hearing before the Industrial Tribunal is a somewhat unfortunate one. Mr Drudge had been employed by APEX for thirty-two years and for the last few years as administration manager of their premium sales department. In early October 1992 there was a transfer of that department by way of management buy-out, as I will describe it by way shorthand, that may not be a strictly accurate description of it. The Industrial Tribunal correctly applied the Transfer Regulations to that transfer and also correctly concluded that the dismissal was for economic, technical and organisational reasons involving a change in the workforce, pursuant to those regulations. No question before us arises in relation to the correctness of those findings.

	The Industrial Tribunal then, correctly in our judgment, asked themselves the question whether the dismissal for redundancy was fair in all the circumstances, applying the principle laid down in Section 57(3) of the 1978 Act. As I just said, it was quite clearly a dismissal on the grounds of redundancy.

	It was equally apparent, as the Industrial Tribunal held, that there had really been a total lack of consultation in relation to this dismissal. The decision indeed was given to the appellant a very short time indeed before dismissal took place, and we can well understand why the Industrial Tribunal concluded that the appellant had been "knocked sideways" by his dismissal for redundancy in those circumstances. The Industrial Tribunal correctly concluded, having applied Section 57(3), that there was a failure to consult, because there had been no individual consultation, and they went on to hold, again correctly, in our judgment, that the proper period of consultation would have been three weeks and in due course made a compensatory award accordingly.

	Counsel appearing for the respondents then submitted before the Industrial Tribunal that, had there been consultation, it would have made no difference and it is plain that APEX called evidence to this effect before the Tribunal. It is perfectly plain from paragraph 8 of the Industrial Tribunal's decision that they specifically took up this question. They dealt with it in paragraph 9 of their decision in this way:-

		"9.	The question then arises, would consultation have made a difference to the end result? We accept the evidence of Mr Llewellyn about talking to managing directors. We accept the evidence of the applicant as to the difficulty he has had in trying to get other employment elsewhere, in many cases in the same field as he has been involved in for the last 30 years and age is clearly against alternative employment being offered to him in the current climate and the evidence from Mr Llewellyn is against the likelihood anyway that he would be offered any employment by any of the other 9 companies in the group of 10, even if they had had vacancies. [And then theses are the important words, the next few sentences] In conclusion therefore we decided that even if that 3 weeks' period of consultation had been given to the applicant before a final decision was taken as to his dismissal it is most likely that he would not have been offered alternative employment. That being so, all that he is entitled to as a result of our finding, and this is what we decided, is a further period of 3 week's pay to represent that period of consultation he should have had. Then we consider that he would have been dismissed and received basically the same compensation for that dismissal that he did receive on 24 September, in other words, holiday pay, redundancy payment at the statutory entitlement, etc., etc. and the ex gratia payment which was awarded to him. ..."

So that is the way in which the Industrial Tribunal dealt with that matter.

	The first issue on the appeal, as I say, is whether the Industrial Tribunal's decision was wrong in finding the appellant would have been dismissed at the end of the three week consultation period. In other words should they have concluded that there was a chance that he would not and assessed a compensatory award based on that chance. We have rightly been referred to and reminded by Mr Giffin of the recent authorities relating to this matter and in particular the case of Redbank Manufacturing Company Ltd v Meadows [1992] IRLR 209, there is no need in this judgment to refer further to that.

	In our judgment, having looked at the matter carefully, we have concluded that the Industrial Tribunal properly addressed their minds to the correct question of law to which the `any difference' principle gave rise in the circumstances before them. And, furthermore, that they reached a reasonable conclusion of fact upon the application of the principles of law to that question in the light of the evidence which was in front of them. We note in particular that there was no argument addressed to the Industrial Tribunal on behalf of the appellant seeking a percentage award. The stance taken by the appellant's advisor before the Industrial Tribunal was that four weeks rather than three weeks was the appropriate period for consultation. It was not that at the end of the period of consultation there was a chance that Mr Drudge might have been kept on in some other employment within APEX, that is not the way in which the matter was put before the Industrial Tribunal. Clearly, in our judgment, in the light of that, the Industrial Tribunal had evidence before it from Mr Llewellyn which, in our judgment, fully justified its finding, that the appellant would have been dismissed at the end of the consultation period. We have taken into account the wording earlier in paragraph 9 using the expression "it is most likely that he would not have been offered alternative employment", but we consider that falls to be construed contextually in the light of the overall remarks made by the Industrial Tribunal in that paragraph. We repeat that we are satisfied they asked themselves the right question and answered it in a reasonable and correct matter. Accordingly the appeal fails on this first point.

	We turn to consider the second point which is raised on the appeal, which relates of course to the ex gratia payment. The question is, does it fall to be set-off against the compensatory award. We deal with this second round of appeal on the assumption, very sensibly and realistically conceded by Mr Giffin before us in argument, that the Industrial Tribunal were dealing with the matter on the basis that APEX would have paid the same ex gratia payment even if the appellant had been employed for a further three weeks. We deal with the matter on the assumption that that is what the Industrial Tribunal found. We repeat that there are two conflicting decisions on this very point namely the decisions to which I have already referred. We have looked with care at both of them and we have been through them with Counsel. We do not propose to say more than that we are all quite satisfied that we should follow the decision of Judge Hague sitting in the Employment Appeal Tribunal in Rushton v Harcross Timber & Building Supplies Ltd [1993] ICR 230, since we consider the reasoning in that judgment to be compelling and we gratefully adopt it. Ultimately the matter is a question of the proper construction of Section 74(7) of the 1978 Act. In regard to that, we rely particularly upon the reasoning of Judge Hague as set out at page 236 of the report:-

		"	We return to consider section 74(7). We consider that the meaning and intent of the subsection is reasonably plain, i.e. that in the calculation of the compensatory award an employer should receive credit for any redundancy payment he makes. The manifest purpose of the subsection was to encourage employers who find it necessary to dismiss for redundancy to be generous in making ex gratia payments. It would be unfortunate if an employer in deciding whether to make an ex gratia payment, and in so deciding the amount, had to take into account the possibility of an industrial tribunal award over and above the ex gratia payment, however generous that may have been. That would have the overall effect of reducing both the frequency and levels of ex gratia payments and would be detrimental to the interests of the employees generally. It is much better that the financial arrangements arising from dismissal for redundancy should be made without the parties having to look over their shoulders at a possible tribunal hearing. We entirely agree with and would adopt the remarks of French J. to the same effect in Horizon Holidays Ltd. v. Grassi [1987] I.C.R. 851, 855."

We entirely agree with and gratefully adopt that reasoning. It is for that reason that we prefer that decision, with the greatest respect, to the earlier decision of the Scottish Division of the Employment Appeal Tribunal in Roadchef. We mention as well, and have been rightly reminded, that as a matter of precedent we should follow the more recent decision, unless we profoundly disagree with its reasoning. The converse is true in this particular case. There is no doubt here, in the instant appeal, in our judgment, that this ex gratia payment falls squarely within Section 74(7) for the reasons which we have given. Accordingly, the Industrial Tribunal was correct to set-off the ex gratia payment against the compensatory award, with the result that it was altogether extinguished and for those reasons the second ground of the appeal must also be dismissed.

	So, the result is that this appeal is dismissed.