Appeal No.	 EAT/760/96

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 12 December 1996
Judgment delivered on 23 January 1997

Before
HIS HONOUR JUDGE PETER CLARK
MRS T A MARSLAND
MR P A L PARKER CBE

MR P MUGFORD	APPELLANT

MIDLAND BANK PLC	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR D O’DEMPSEY
(of Counsel)
Messrs Lawford & Co
Solicitors
102-104 Sheen Road
Richmond 
Surrey
TW9 1UF	
For the Respondents	MR T LINDEN
(of Counsel)
Messrs Booth & Co
Solicitors
PO Box 8
South Parade
Leeds
LS1 1HQ	

	JUDGE PETER CLARK:   This is an appeal by the applicant, Mr Mugford, against a decision of the Bristol Industrial Tribunal sitting on 2nd April and 17th May 1996 that he was not unfairly dismissed by the respondent Bank. Extended reasons for that decision are dated 29th May 1996.

The facts
The applicant commenced employment with the Bank on 2nd February 1970 and at the relevant time was the manager of its branch at Downend, Bristol.

	During 1995 the Bank planned a substantial restructuring exercise which was to result in some 3,000 redundancies across the board, including some 858 managers, that is, approximately 1 manager per branch.

	The applicant had started in a clerical position and gradually worked his way up the ladder. He was appointed manager of the Downend branch as a grade M94; the Bank wanted a grade M93 in that post.

	The Bank recognised the trade union BIFU for collective bargaining purposes, and had entered into a Security of Employment Agreement [“SEA”] with that union which provided for procedures to be followed in the event of compulsory redundancies being necessary. We pause to observe that the SEA provided for consultation with the union over redundancies, but makes no mention of consultation with individual employees identified for redundancy.

	On 17th March 1995 a formal presentation was given to the applicant’s area manager, Mr Mike Davis, as to the Bank’s proposed restructuring and the effect that would have on his area. That was followed by a divisional conference held on 22nd March 1995 at which he was informed of the selection criteria for redundancy, and how individuals were to be selected for redundancy. On the same day Mr Davis briefed his managers, including the applicant, on the proposed restructuring of the Southern Division and the selection criteria which were to be applied.

	On the basis of performance reviews of the applicant and his scores in the Executive Development Forum [“EDF”], an assessment known only to senior managers including the area manager, but not to individuals, Mr Davis recommended the applicant for redundancy. He took the view that the applicant did not have the required capability in credit skills and risk management that was required under the Bank’s selection criteria.

	That recommendation was made, unknown to the applicant, in April 1995. On 11th May a letter to the applicant was signed by Mr Malcolm Walter, Divisional Personnel Manager, in which he wrote:

“Dear Mr Mugford
I write to confirm to you that your job will disappear and you are therefore in a potential redundancy position.
Over the next few months every effort will be made to find you suitable alternative employment but if we are not able to do so, then regretfully your employment with the Bank will be terminated on 30 September 1995 and your notice period will be deemed to have commenced from the date of this letter.”

That letter was handed to the applicant by Mr Davis at a meeting held on 17th May. The applicant was unhappy to learn that he was in a potential redundancy situation and wrote at the bottom of the letter:

“I will be challenging the decision and the basis upon which it has been made.”

	A further meeting took place between the applicant and Mr Davis on 26th May. The applicant was shocked by the news that he was potentially redundant. We see from the file note prepared by Mr Davis that on that occasion he advised the applicant:

“I have advised Paul that the purpose of this meeting is not to discuss the reasons for the decision reached, but to fully explore his re-deployment position with the Bank under the terms of the SEA, but without building up false hopes.”

	There then followed further meetings between Mr Davis and the applicant. On 23rd June Mr Davis showed the applicant a copy of the EDF paperwork which related to him. He, in turn, indicated that he was content for his union to take the matter up on his behalf. 

	On 27th July he was given formal notice of dismissal to take effect on 30th September. An appeal, heard after the termination of his employment, was unsuccessful.

The Tribunal decision
The tribunal found that the reason for dismissal was redundancy. It then considered the question of reasonableness under section 57(3) of the Employment Protection (Consolidation) Act 1978 (now section 98(4) of the Employment Rights Act 1996).

	At paragraph 14 of the reasons the tribunal say:

“14	Further, in the event that the reason for dismissal is redundancy we need to satisfy ourselves:
	(iv)	that the respondent bank’s criteria for selection was objective and reasonable; and
	(v)	that the application by the respondent bank of that selection criteria was objective 		and reasonable; and
	(vi)	that there was consultation with the applicant prior to the dismissal; and
	(vii)	proper consideration was given to an alternative to dismissal.”

	We accept, as Mr Linden points out, that it is not for the employer to satisfy the tribunal about these matters once evidence in that connection has been led by the employer; there is no onus of proof on the employer under section 57(3) as amended.

	Nevertheless, the tribunal make no criticism of the Bank in relation to points (iv), (v) and (vii), and there is no appeal against those findings. Instead, the appeal focuses on the question of individual consultation with the applicant.

	The tribunal dealt with that question at paragraph 19 of the reasons in this way:

“19	So far as consultation is concerned, there was no consultation of any sort between March and May 1995 and no positive steps were taken in this regard by the respondent bank between May and September 1995. However, there is no evidence to suggest that consultation was not available to the applicant had he sought to avail himself of it, and indeed there were numerous discussions between the applicant and Mr Mike Davis over that period although in many respects about consequential banking affairs rather than the applicant’s particular redundancy situation. It is clear that there was consultation throughout between the bank and the union. We find however that the respondent bank fulfilled its obligations as to consultation: but even if it did not, in the circumstances at the time, such consultation would have made no difference.”

	Having considered those issues raised in paragraph 14 of the reasons the tribunal concluded that the dismissal was fair.

Consultation
Mr O’Dempsey invites us to restate the current industrial practice in relation to consultation. We do not propose to do so in this appeal. However it would be helpful to review the state of the authorities on this topic.

	The importance of consultation, both collective and individual, in the course of a redundancy exercise, has varied over the years. It was considered to be of little significance by Lord Denning MR in Hollister v NFU [1979] ICR 238, a case involving dismissal due to a business reorganisation, but raising similar issues of reasonableness to those present in a redundancy dismissal. That approach was followed by the Court of Appeal in the redundancy case of Noble v David Gold & Son Ltd [1980] ICR 543.

	The significance of consultation in the redundancy context was to some extent restored by Browne-Wilkinson J in relation to collective consultation, see Williams v Compair Maxam [1982] ICR 142, and individual consultation where no union presence existed. Freud v Bentalls [1982] 443.

	However a sea-change took place following the House of Lords decision in Polkey v AE Dayton Services Ltd [1987] ICR 142, where Lord Bridge said at page 162H:

“... in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representative ...”

	Perhaps the high water mark of recent decisions is that of the Employment Appeal Tribunal in Rowell v Hubbard Group Services Ltd [1995] IRLR 195.

	Mrs Rowell was dismissed by the respondent company on the grounds of redundancy in November 1992. On 16th October, the managing director had sent a letter to all employees warning them of impending redundancies and setting out the criteria upon which selection for dismissal would be based. On 13th November, a further letter was sent to Mrs Rowell informing her that her employment was being terminated due to redundancy, reiterating the criteria upon which selection for redundancy had been based and giving details of the financial compensation due to her. The letter concluded by saying that any matters arising from it could be discussed with the managing director or another member of management. There was no trade union representation in that case.

	An Industrial Tribunal found that the employers had satisfied the requirements of a fair procedure for dismissing an employee on the grounds of redundancy; and in particular, concluded that the requirements that the employee be warned of the likelihood of redundancy and given ample opportunity for consultation had been adequately met by the letters of 16th October and 13th November.

	At paragraph 15 of the report of the judgment in that case given by Judge Levy QC, he referred to the formulation of the meaning of consultation by Hodgson J in R v Gwent County Council ex p. Bryant [1988] Crown Office Digest 19:

“Fair consultation means:
(a)	consultation when the proposals are still at a formative stage;
(b)	adequate information on which to respond;
(c)	adequate time in which to respond;
(d)	conscientious consideration by an authority of the response to consultation”

That definition was further approved in the employment context by the Court of Session in King v Eaton Ltd [1996] IRLR 116. 

	In Rowell the appeal tribunal concluded that the Industrial Tribunal’s finding that adequate individual consultation with the applicant employee had taken place was perverse, and reversed the tribunal’s finding of fair dismissal. This tribunal found that there was in fact no individual consultation with the employee prior to termination of the employment contrary to the findings of the Industrial Tribunal.

	It is submitted by Mr Linden in this appeal that there is no obligation upon an employer to consult both with the union, where one is recognised, and with the individual. He refers to the sentence in Lord Bridge’s speech in Polkey at page 162H. Here, there was consultation with the union. The Industrial Tribunal was entitled to conclude that adequate consultation had taken place.

	We do not think that the position is so clear cut. Nor do we believe that Lord Bridge intended his words to bear the meaning contended for by Mr Linden.

	It must be remember that Polkey was a case, on its facts, where no consultation had taken place either with the individuals or a trade union. The issue was whether the principle derived from the British Labour Pump Ltd v Byrne [1979] ICR 347, that if consultation would make no difference the dismissal could in those circumstances be fair, was correct in law. The House of Lords overruled Byrne, holding that the question as to whether consultation would make any difference was irrelevant to the question of fairness. per Lord Mackay LC page 153D-F. However, both Lord Mackay and Lord Bridge allowed of an exception to the normal rule that consultation ought to take place, namely where to engage in consultation would be a useless or futile exercise.

	The so-called ‘Polkey’ exception has since been explained by the Court of Appeal in Duffy v Yeomans & Partners Ltd [1995] ICR 1 to mean this; it is not necessary for the employer to have thought at the time of dismissal that consultation would be futile; it is enough that a reasonable employer would have reached that conclusion.

	As to whether a reasonable employer would or would not consult with an individual employee is, it seem to us, essentially a question of fact for the industrial jury, properly directing itself.

	The experience of the industrial members of this appeal tribunal is that consultation may take a number of forms. Where there is a recognised union, as in this case, the employer may enter into a redundancy procedure agreement which sets out agreed selection criteria, provision for re-deployment, collective consultation, a requirement to seek volunteers and so forth. Alternatively, absent such an agreed procedure, there may be consultation over the redundancy selection criteria to be applied, together with the other matters to which we have referred.

	However, experience also shows that trade unions rarely if ever wish to be involved in the actual selection of individuals for redundancy (other than on the basis of LIFO principle), since to do so would involve choosing between their members. That is generally regarded as an invidious choice for trade unions to have to make. On the other hand, trade unions will usually provide representation of their members at individual consultation meetings, following identification by the employer of individuals for redundancy.

	It is in these circumstances that consultation between the employer and individuals identified for redundancy becomes important. It should normally take place before a final decision to dismiss is reached. It gives the employee an opportunity to put his case to the manager carrying out the selection, so that the latter may reach a fully informed decision.

	Support for this view is to be found in Walls Meat Co Ltd v Selby [1989]ICR 611, where the Court of Appeal, applying the reasoning of the House of Lords in Polkey, upheld an Industrial Tribunal decision that the dismissal of the employee was unfair where the employer failed to enter into any further consultation with the union or the employee after it had prepared a list of names of employees identified for redundancy. In particular, no discussions took place with the view to finding the employee alternative employment.

	Further, we find the approach of the Employment Appeal Tribunal in Rolls Royce Motor Cars Ltd v Price [1993] IRLR 203 instructive on this point. In that case the employer consulted with the recognised trade unions over selection criteria to be used in a proposed redundancy exercise. No agreement was reached and the employer proceeded to apply its chosen criteria in selecting 29 employees for redundancy. No individual consultation took place with those identified for redundancy under the criteria. The Industrial Tribunal, in considering reasonableness under section 57(3) of the 1978 Act, concluded that the dismissals were unfair in circumstances where no individual consultation had taken place. 

	On appeal it was argued on behalf of the employer that paragraph 46 of the ACAS Code of Practice then in force (it has since been revoked with effect from 1st June 1991) provided for consultation “with employees or their representatives”. That expression is to be found in the speeches of Lord Bridge and Lord Mackay in Polkey. Accordingly, it was submitted that an employer discharges his obligation to consult if he does so either with the trade union or with the employee individually. It is not necessary to do both. Mr Linden similarly submits in this case, notwithstanding that the code has now been revoked. The argument was rejected in Price. Knox J, giving the judgment of the appeal tribunal put the matter this way at paragraphs 30 to 31 of the report:

“	It was pointed out that the process of consultation as regards the selection of the criteria came to an end because the unions ceased to carry on any such process and would not cooperate in further investigation of that particular issue, and it may very well be that that was as far as the company could be expected to take the process of consultation in relation to the selection of the criteria themselves. But it is at the second stage that it seems to us that it would not be right to express the obligations on employers in terms of a rigid rule that states that the obligation is only to consult either the unions or the individuals and if the unions have been consulted as far as the unions are prepared to be consulted, that releases the employer from any further consultation duties.
	We of course do not go to the opposite extreme and say that in all cases employers are under an obligation to consult with individuals. Here we have a decision on the facts of this particular case by the Industrial Tribunal, that an employer acting reasonably would have seen, for example, individuals identified on the points system and disclosed the assessment to them. We are unable to find that there is any principle of law that makes that a necessarily erroneous view. To do that it seems to us that we would be in grave danger of erecting what was said in Williams v Compair Maxam into the terms of a statute, and we would equally be in grave danger of providing an alternative to the actual provisions of s.57(3) which leave the matter wide open for decision by an Industrial Tribunal whether the dismissal was fair or unfair in the circumstances set out in that subsection. For those reasons we are not persuaded that the Industrial Tribunal was guilty of a relevant and significant error of law in this decision.”

	We would ourselves similarly adopt that approach in this case.

	Finally, it should be noted that consultation can continue until the employment is terminated. See Stacey v Babcock Power Ltd [1986] ICR 221, applied in Walls Meat v Selby, per Balcombe LJ, 610F.

	Having considered the authorities we would summarise the position as follows:

(1)	where no consultation about redundancy has taken place with either the trade union or the employee the dismissal will normally be unfair, unless the Industrial Tribunal finds that a reasonable employer would have concluded that consultation would be an utterly futile exercise in the particular circumstances of the case.

(2)	consultation with the trade union over selection criteria does not of itself release the employer from considering with the employee individually his being identified for redundancy.

(3)	it will be a question of fact and degree for the Industrial Tribunal to consider whether consultation with the individual and/or his union was so inadequate as to render the dismissal unfair. A lack of consultation in any particular respect will not automatically lead to that result. The overall picture must be viewed by the tribunal up to the date of termination to ascertain whether the employer has or has not acted reasonably in dismissing the employee on the grounds of redundancy.

The instant case
Mr O’Dempsey submits that this tribunal reached a perverse conclusion in finding the dismissal fair in circumstances where no consultation took place with the applicant before the decision to identify him for redundancy had been finally taken. Such a finding was an “impermissible option”. Piggott Bros. & Co Ltd v Jackson [1991] IRLR 309, 312. Further, he contends that the tribunal misdirected itself in paragraph 19 of the reasons in finding that consultation was available to the applicant had he sought to avail himself of it. He submits that the onus lies on the employer to engage in consultation, not on the employee.

	We are unable to accede to those submissions. It is clear that the tribunal asked itself whether adequate individual consultation took place in this case. It was critical of the lack of consultation with the applicant before the decision to identify him for redundancy was finally reached. However, it concluded that such consultation as did take place with the union and with the applicant was adequate in the overall context of fairness, taking into account the other factors which weighed in favour of a finding of fair dismissal, namely, that the selection criteria were reasonable and were reasonably applied by Mr Davis in the applicant’s case, and that the Bank took reasonable steps to find him alternative employment. Whilst we ourselves might well have reached a different conclusion had we been sitting as an Industrial Tribunal we remind ourselves that that is not the test on appeal. Having given the matter careful consideration we are persuaded by Mr Linden that on the facts as found in this case we cannot say that the tribunal fell into error; to do so would be to elevate individual consultation prior to the decision being taken to identify an employee as redundant to a pre-requirement for a fair dismissal. The statute does not allow of such an approach.

	Had we found otherwise, we would then have gone on to conclude that the tribunal had fallen into error in its alternative finding that had it found consultation to have been inadequate the dismissal would nevertheless have been fair on the basis that proper consultation would not have made any difference to the result. However, that point does not now arise in this case where the tribunal, in our judgment, reached a permissible finding that the Bank had fulfilled its obligations as to consultation.

	Accordingly, the appeal must be dismissed.