Appeal No.	 EAT/864/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 23 June 2000

Before
HIS HONOUR JUDGE J ALTMAN
MR K EDMONDSON
MRS R A VICKERS

MR C ALLSOPP	APPELLANT

GLASS SYSTEMS (UK) LTD	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MS F KRANSE
(of Counsel)
Instructed by:
Messrs Malcom Foy & Co
Solicitors
52 Hallgate
Doncaster DN1 3PB
	
For the Respondents	MR M DALE
(of Counsel)
Instructed by:
Richard C Hall & Partners
Crown Buildings
121A Saughall Road
Blacon 
Chester CH1 3ET	

HIS HONOUR JUDGE ALTMAN:

1.	This is an appeal from the assessment of compensation, following a finding of unfair dismissal of the Appellant employee, by the Employment Tribunal sitting at Sheffield on 9 April 1999.  The Employment Tribunal found in paragraph 6 of their decision that:
6. “The Applicant, in November 1998, had no prospect of retaining his employment with the Respondent.”
They found that he was dismissed for redundancy, which was an admissible reason, but although they do not say so in terms, they found that the Respondents were not reasonable in treating that as the reason for dismissal, in accordance with the statutory tests.  They approached the matter therefore, as one for what is sometimes called a ‘Polkey Deduction.’ although the use of that label has been deprecated, and we believe rightly, in a recent decision of the Employment Appeal Tribunal.  

2.	Accordingly, the starting point for the assessment of compensation in cases of this kind is the case of Polkey v Dayton Services Ltd [1988] ICR 142.  That was a decision of the House of Lords.  The primary purpose of that case was to determine whether it could be said that where a dismissal could fairly have taken place with a proper procedure and that it would have taken place with a proper procedure, but that the procedure was defective, could it be said that nonetheless the dismissal was fair.      

3.	The decision is quoted nowadays, frequently in relation to what was a minor aspect of the House of Lords’ considerations.  Accordingly, in the judgment of Lord Mackay at page 156 he said:
“Thus in the case of a failure to give an opportunity to explain, except in the rare case where a reasonable employer could properly take the view on the facts known to him at the time of dismissal that no explanation or mitigation could alter his decision to dismiss, an Industrial Tribunal would be likely to hold that the lack of equity inherent in the failure would render the dismissal unfair.” 
He then went on to say:
“There may be cases where the offence is so heinous and the facts so manifestly clear, that it would be a fair dismissal.”
When Lord Bridge came to give his speech in that case, he said this at page 162:
“Employers contesting a claim of unfair dismissal will commonly advance as their reason for dismissal one of the reasons specifically recognised as valid….but an employer having prima facie grounds to dismiss for one of these reasons will in the great majority of cases not act reasonably in treating the reason as a sufficient reason for dismissal unless and until he has taken the steps, conveniently classified in most of the authorities as ‘procedural’, which are necessary in the circumstances of the case to justify that course of action.”

4.	Lord Bridge then turns his attention to redundancy cases of which this is one.  He says:
“In the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation.  If an employer has failed to take the appropriate procedural steps in any particular case, the one question the Industrial Tribunal is not permitted to ask in applying the test of reasonableness posed by s.57 (3) (as it then was) is the hypothetical question whether it would have made any difference to the outcome if the appropriate procedural steps had been taken.  On the true construction of s.57 (3) this question is simply irrelevant.  It is quite a different matter if the Tribunal is able to conclude that the employer himself, at the time of dismissal, acted reasonably in taking the view that, in the exceptional circumstances of the particular case, the procedural steps normally appropriate would have been futile, could not have altered the decision to dismiss and therefore could be dispensed with.  In such a case the test of reasonableness under s.57 (3) may be satisfied.”
And then later on he says this:
“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…. 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.”
Lord Bridge then goes on to quote from Browne Wilkinson J as he then was in the Silliphant case:
“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 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.”  

5	We consider that it is always helpful to return to the source in this sort of area, even though it has not been quoted or referred to during the course of argument, because we are conscious that in subsequent cases the Employment Appeal Tribunal in paraphrasing the decision in the Polkey case, have used other words which might give an indication that there is a gloss now to be applied to the compensation provisions of the statute (the Employment Rights Act), which requires an Employment Tribunal to consider in all cases whether, in the case of a procedural defect, as it is called, the application of the proper procedure would have made any difference.  Some cases suggest that the Tribunal ‘will’ consider it. One case has suggested that there is an obligation upon a Tribunal to consider it. But one must remember, it seems to us, that as long ago as the Norton Tool case it was made clear that the assessment of compensation is provided for in the appropriate sections of the Act, which is a self contained code.  There is provision within that code for percentage reductions due to blameworthy conduct and when one goes back to Polkey it is clear that the reference to what has become categorised as the ‘Polkey Deduction’ is simply a permissive approach available to an Employment Tribunal in appropriate cases.  It seems to us that it is always important to bear in mind that legal background.    

6.	We turn now to the decision in this case and our conclusions about it.  Briefly the Appellant began work in July 1996 for the Respondents.  There is some evidence that he had done labouring work.  However, by the time of the matters being considered by the Respondents in relation to the reorganisation at work in 1998, they had what the Employment Tribunal described as ‘financial and competitive difficulties.’  The Appellant at that time was the only Salesman employed by the Respondents.  His role they described as being ‘essentially’ that of a salesman and that work took up between 65 – 95 % of his time.  In addition, he undertook administrative work in Personnel and in Health & Safety.  In July 1998, he was off sick.  In August 1998 in the process of reorganisation, a Personal Assistant and Secretary was appointed to the Managing Director.  A receptionist was appointed and a Salesman in an associated company was moved and his work adjusted to taking on a Project Management role.   

7.	The focus of the company changed in a way described in paragraph 3(D) of the decision.  The Employment Tribunal found that it changed because both: 
3 (D) “As a result of the deteriorating financial situation and the applicant’s absence.”
The Respondents decided to concentrate on a small number of major companies, rather than a large number of small customers and the sales duties were being performed by the Managing Director.  The Employment Tribunal then found that:
3 (G) “At the end of October 1998, the respondents decided that they would have to cut back on staff - a decision was taken that 3 glaziers, one glass cutter, one driver, one admin/clerk and the sole sales role would be made redundant.”  

8.	The Employment Tribunal then went on to analyse the situation.  They say that the Respondents claimed to have consulted those due to be made redundant, but except for the Appellant for the reason that he was absent from work.  On 11 November 1998 the Appellant wrote to the Respondents’ to discuss his possible/imminent return to work.  He had notified them in September that he was expected to be off for 3-6 months but hoped to get back sooner.  The Employment Tribunal found:
 “Coincidentally they (the respondents) wrote to the applicant on 11 November 1998 notifying him of his redundancy.”  
The word coincidentally may have been a rather forgiving finding on the part of the Employment Tribunal. That was their assessment of the situation. 

9.	It is quite clear that the time of that dismissal, there had been no preceding warning or consultation of any kind and the Employment Tribunal so found.  They then went on to analyse the opportunities for alternative work.  The associated company was out of consideration because they did not need an additional employee.  They found that a general labouring job was out of consideration because it was unclear whether the Appellant’s medical condition, at the time, would have rendered this feasible and they say that his experience was limited in terms of available roles, and they refer to people appointed, during his absence from work and they consist of: Office Manager, a PA/Secretary and a Receptionist/Office Junior and they find that the Appellant, ‘reasonably’ had not been considered for these posts.  

10.	So far as the question of medical condition at the time is concerned, and its being unclear whether it would have rendered some of the work feasible, the Employment Tribunal appear to be basing their conclusion upon the fact that the Appellant was absent at the time and having to undergo an operation and of course, that would have informed, to some extent, the reasonableness of the dismissal.  However in coming to decide the matter of compensation, the Employment Tribunal had to ask itself what may have happened if there had been consultation and we have found no evidence, before us, to which the Employment Tribunal on the material then before them could have come to the conclusion that the situation was unclear. 

11.	The Employment Tribunal had found that it was unclear without consultation, but it appears to us on the face of it, that they did not ask themselves the question as to what would have emerged if there had been such consultation. In assessing compensation, it is not the task of the Tribunal to look at the reasonable views of the employer at the time. It is inevitably the task of the Tribunal to ask themselves what would actually have happened if there had been consultation.  That is a hypothetical exercise and we accept the submissions made by Miss Kraus on behalf of the Appellants’ that the Employment Tribunal did not approach the evidence, in relation to the question as to what, on the balance of probabilities, would have happened.  

12.	We are left asking ourselves how unclear would the medical position have been, if there had been proper consultation at the time, which we are urged to find was at the latest in October.  Indeed on behalf of the Respondents, Mr Dale has pointed out that there was no evidence that there was a labouring job available.  But that seems to us to highlight the error of the Tribunal in not asking the right questions in that area.  The Employment Tribunal then go on in paragraph 5 to say that:
5. “The tribunal concluded that the applicant’s role as a salesman which was his primary and the most essential part of his role had genuinely disappeared.”    
We assume that they are referring there to the situation that had taken place in October, or even November, when the decision to dismiss was taken.  However, when we look at the way in which his work did disappear, we see that it was during a reorganisation in August and that it was partly due to his own absence from work that the reorganisation took place.  

13.	Therefore it seems to us there is an element of circularity in the reasoning of the Employment Tribunal in concluding that the role had genuinely disappeared as a starting point for their considerations, because their own finding is that the redundancy related to the absence in part of the Appellant himself. It seems to us that the Employment Tribunal erred in failing to go on, when assessing compensation, to ask themselves whether, in the light of consultations at the appropriate time, which may have revealed that the Appellant would be coming back to work, that the reorganisation in August may have been handled differently, or that if the consultation had taken place at a later time, whether the result may have been adjusted back with hindsight.  Again, we find that the Employment Tribunal appears to have come to a conclusion without considering the role of consultation.  At the end of paragraph 5 they say:
5. “However, the respondents singularly failed to address the issue of consultation, both in terms of redundancy exercise and the issue of alternative employment.”       
It appears from that, that the Employment Tribunal is referring to the weeks or time before the dismissal, as part of a redundancy exercise.  But at the same time they take the results of that exercise and all the procedural reorganisation, not as the factors which might form part of the consultation but as the fixed events which had occurred before consultation should have occurred.  

14.	It is inevitable therefore, that in asking themselves whether consultation would have made any difference, the answer reached by the Employment Tribunal would be “no”, because they accept the events, concluded without such consultation, as the starting point. The whole point of consultation is that it is designed to make a difference and, indeed, to seek to avoid redundancy.  Therefore an assessment of the effect of consultation can only be made if the Employment Tribunal envisages a situation in which it takes place before decisions are made.  Of course, if the Employment Tribunal asked themselves the question as to what difference it would have made after the decisions are taken, it is inevitable that they will conclude that it would not have made a difference.  

15.	In those circumstances it seems to us that the Employment Tribunal erred in law in failing to address the evidence, in relation to what may have happened if there had been consultation with regard to the medical situation and in the way that we have described.  What may have happened to the decisions that were taken had there been consultation at the relevant time? We remember that part of this whole exercise was as a result of the absence of the Appellant as part of the reasons for certain steps taken in the reorganisation.  Therefore we are left inevitably uncertain as to what conclusion the Employment Tribunal would have found, if they had asked these questions.  We have been helpfully referred to a number of authorities on principles to be applied in approaching decisions of an Employment Tribunal. 

16.	 We acknowledge that the Employment Tribunal have the feel of the case and that it is difficult sometimes, to look at the decision of an Employment Tribunal and gain a complete picture of what material was before the Employment Tribunal at the time.  But we have been able to see the notes of evidence and we have been able to look at the findings of fact of the Employment Tribunal and it seems to us that they could only have come to the conclusion they did by the process of reasoning which we have criticised. Had they not done that, they would have inevitably been left asking themselves what difference may consultation have made, answering the question with the answer ‘who knows?’  We have considered whether it would be appropriate to remit this matter to an Employment Tribunal for reconsideration.  

17.	This appeal relates only to compensation; there is already a finding of unfair dismissal.  In all the circumstances, it would be a difficult process for this matter to be remitted for re-hearing. In any event, we are satisfied, on looking at the evidence, that on the findings of fact of the Tribunal, an Employment Tribunal properly directing itself would inevitably have come to the conclusion that they could not tell whether consultation would have made a difference or not.  Accordingly, we allow this appeal and we remit the case to the same Tribunal, if possible, to assess compensation on the basis that there should be no deduction on the basis of the dicta contained in the Polkey case.