[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Secor Consulting Ltd v. Meffen [2005] UKEAT 0180_05_0212 (2 December 2005) URL: http://www.bailii.org/uk/cases/UKEAT/2005/0180_05_0212.html Cite as: [2005] UKEAT 180_5_212, [2005] UKEAT 0180_05_0212

[New search] [Printable RTF version] [Help]

APPEARANCES

 

 

For the Appellant

MR DANIEL BARNETT (Of Counsel) Instructed by: Turbervilles Solicitors Hill House 118 High Street Uxbridge Middlesex UB8 1JT

 

For the Respondent

MR DAVID READE (Of Counsel) Instructed by: Messrs Coole & Haddock Solicitors 5 The Steyne Worthing West Sussex BN11 3DT

SUMMARY

Unfair Dismissal

Issue in which ET declined to make any Polkey reduction on the basis that to do so would be too speculative.


 


HIS HONOUR JUDGE PUGSLEY

1.            This is an appeal from the decision of the Employment Tribunal sitting in London (South) on 10 November 2004 and 7 December 2004. At the Employment Tribunal hearing Mr Barnett appeared for the company, the Appellant in this matter and Mr Rory Meffen, the Applicant appeared on his own behalf. Mr Meffen is now represented by Mr David Reade of Counsel.
2.            The Respondent employer Secor Consulting Ltd was concerned with providing management consultancy advice to various organizations. In November of 2003 through to April 2004 the Respondent Company was recording a significant loss month on month ranging between £18,000 to £38,000. There had been redundancies in June 2002 to January 2003. In early 2003 the Claimant closed a deal with a total turnover of £1.7 million. This was the first big contract he had secured and indeed on the Tribunal's finding was the only one he had secured during the course of his employment. It was common ground that Mr Meffen was a highly paid employee earning some £100,000 per annum. Essentially, Mr Meffen's role was that of seeking to secure high powerful accounts from which the rewards to the company would be substantial.
3.            The position as found by the Employment Tribunal was that Mr Meffen was not generating sufficient revenue to justify his salary. The Employment Tribunal found that the Applicant, Mr Meffen, was unfairly dismissed due to a lack of consultation. The Appeal in this case centres on the fact that the Tribunal did not make any reduction to Mr Meffen's compensatory award to reflect the lack of chance of him remaining in his £100,000 a year job if a fair consultation had been followed. The Appellant points out that it never formed part of Mr Meffen's case that he would remain doing the same job for £100,000 a year if he had been fairly consulted, his case always was that consultation might have opened up alternatives which would not have resulted in dismissal such as an agreed pay reduction, a demotion to a lower paid position, a sabbatical, or a job share. The Tribunal at paragraph 12 recorded the position thus:

"The Claimant submitted that had proper procedures been followed there would be a doubt as to whether the redundancy would have occurred."

4.            Before dealing with the precise issues in this case it is perhaps pertinent to give a brief history concerning this aspect of the law. In the case of wrongful dismissal the enquiry, a court or employment tribunal is making is whether the employee has breached the contract in such a fundamental way that the employee is justified in dismissing the employee without notice. The issue of whether the employee has breached the contract in such a fundamental way as to entitle the employer to dismiss an employee is one for the court or employment tribunal to determine having heard the evidence in the case and making its own evaluation of the facts. Moreover a court or tribunal in determining that matter may rely on evidence not known to the employer at the time when the decision to dismiss was taken.
5.            In cases of unfair dismissal a very different issue arises. X has been dismissed for dishonesty. In some cases there may be a criminal prosecution in which he has been acquitted. In many cases matters may have emerged which place a very different complexion on the picture which was before the employer when the decision to dismiss was taken. An employee, rather prosecuted and acquitted, or never prosecuted, often feels a burning sense of injustice and in words that are so frequently used at tribunal hearings, expects a tribunal to clear his name. It is right to say that employers and especially small employers view equally strongly about being sued for unfair dismissals. Matters may have come to the lights since the dismissal which in their eyes totally vindicate their decision to dismiss. An obvious example would be when an employee had been dismissed for fighting and when collecting his goods prior to being escorted off the premises, it is found that company property is in his locker and there is no honest explanation as to why that is the case. In some cases small employers innocent of the complexity of employment law cannot understand why an employee is able to bring a case, and in some cases, succeed in an action for unfair dismissal. Similarly, an employee who has been acquitted on a criminal charge, or even one who has not been prosecuted cannot understand why it is that a tribunal can find his case fails, when he has been able to produce evidence which shows the original decision was misconceived.
6.            The reference of an unfair dismissal – unlike a criminal trial – is that the focus is on the employer's action: what the employer believed and whether there were reasonable grounds for that belief after making such enquiries as were reasonable. As Sir John Donaldson pointed out in Earl v Slater and Wheeler v Glove Ltd [1972] ICR 115: but

"If an employer thinks his accountant may be taking the firm's money, it has no real grounds for so thinking and dismisses him for that reason, he acted unreasonably and commits unfair industrial practice of unfair dismissal, notwithstanding that it is later proved that the accountant had in fact been guilty of the embezzlement. Proof of the embezzlement affects the amount of the compensation but not the issue of a fair or unfair dismissal."

7.            Prior to the decision of Polkey v A E Dayton Service Ltd [1987] IRLR 503 there was a stream of authority to the effect that in a case where an incorrect procedure had been followed a Tribunal could still find a dismissal fair if it considered that adherence to the correct procedure would have made no difference. British Labour Pump v Byrne [1979] IRLR 94. The essence of the British Labour Pump principle was that a Tribunal had to look at the practical effect of a failure to observe a proper procedure in order to determine whether or not the dismissal was fair, even though this involved examining facts which were not known to the employer at the time of dismissal in order to determine whether a procedural default made any real difference.
8.            In the case of Polkey v A E Dayton Services Ltd [1987] IRLR 503 the whole structure of unfair dismissal cases in relation to procedural deficiencies was destroyed. Probably no other case in the last 20 years has had such a significant impact on the day to day work of employment tribunals. In brief the decision of Polkey can be summarized as saying:

a) There may be a small class of case in which a dismissal is not unfair even though the usual and appropriate procedures are not followed. For example in a small company if a managing director saw an argument turn into a vicious fight then it might well be that his dismissal of both of the employees might be held to be fair even though he had not made any further enquiries since he was in a position to know what the position without such enquiries being made.

b) Unless a case is within that category a decision to dismiss without interviewing the person it is proposed to dismiss is likely to be unfair.

c) If a dismissal is unfair because an employee has not been interviewed and consulted then the Tribunal has to embark on the speculative exercise of asking what would have happened if such a confrontation had taken place. An employment tribunal may well decide that however the extensive the consultation had been the employer would inevitably have dismissed. In such cases would award no compensatory award. In other cases they might decide that they would have awarded as loss of wages the period of time an adequate consultation would have taken as in the case of Abbotts v Wesson-Glynwood Steels Ltd [1982] IRLR 51 in other cases an employment tribunal has to determine the percentage chance that there had been adequate consultation the employee would still have been dismissed.

9.            There is an inevitable area of speculation and artificiality about what assessing what would have happened if an employee had been consulted in a redundancy case or properly interviewed before being dismissed for dishonesty. This speculative exercise is not confined to Employment Tribunals. It has parallels in other areas of the law. In personal injury cases an employee who has been severely injured may well get back to work on a lighter job and his old safeguarded because there is often a mutual sense of loyalty between employer and employee. But although the employee and a company may still be able to work out a package of measures which will cater for the injured employee's disability in keeping him at work at his old pre-accident rate, sadly that favourable outcome may not be permanent. A Judge has to assess what the Claimant's loss on the open market would be and to take in to account all sort of intangible factors as to whether the company is likely to stay in business or the employee be made redundant. Much will depend on the intangibles and opportunities in the labour market at a time in the comparatively distant future. Nevertheless faced with a host of intangibles as to the future stability of the employer's jobs, courts have to do the best they can, often with conflicting medical prognosis. Courts having no particular skill in assessing economic trends in any industry in 10 or 15 years or longer.
10.        Similarly, in a case in which a Claimant brings an action of professional negligence against a solicitor whose dilatory conducts relate to the case becoming time-barred, the Court has to assess what was the percentage chance of the Claimant succeeding in his action, had his solicitors not prevented his case being adjudicated upon by the Courts? It is right that in King v Eaton Ltd (No.2) [1998] IRLR 686 the Court of Session in Scotland in a case very much turning on its own facts declined to assess a percentage chance when the exercise would be to embark upon a sea of speculation where the opinion of witnesses could have no reliable starting point. However, it has to be noted that that case involved a redundancy in which there was no consultation on the criteria of selection or with any of the individuals concerned.
11.        In a case far more germane to this case; namely a decision of Lionel Lebanthorpe Ltd (Appellant) and Mr J North (Respondent) Appeal No. UKEAT/0265/04/MAA, Bean J reached a very different conclusion on the facts not dissimilar to those in this case. In that case the Tribunal had said:

"We do not think we can speculate as to what might have happened had the Respondent consulted properly or offered the Applicant a less well-paid position in exchange for his being retained; consequently we do not deduce a compensatory award to take account of the possibility of a fair dismissal of redundancy after adequate consultation of their procedure."

Bean J made it clear that this was not a matter of speculation. It is a matter of assessment of the possibility that the scrupulously fair procedure would have made no difference.

12.        It is unfortunate that in this case an unseemly dispute has arisen between Counsel for the Appellant, Mr Barnett and the Tribunal as to what issues were placed before the Tribunal. At paragraph 38 of the Decision the Tribunal say:

"In announcing our decision upon the question of compensation we indicated that we were making no reduction to take into 'consideration any argument that the Claimant would have been dismissed in any event even if there had been fair consultation… We said in announcing our decision orally that we were not taking this into account because no submissions had been made to us on that point. Mr Barnard objected that one third of his principal submissions had addressed this issue!

It is the submission of Mr Barnett that it is wrong for the Tribunal to state no submissions were made and he points out there are references in the body of the decision itself to submissions being made and in the notes of evidence produced by Ms Leader make it clear the point was raised in closing submissions. Furthermore, it is appropriate to say that in their comments upon the Notice of Appeal and supporting evidence the Tribunal say "it is of course correct to say it was the duty of the Tribunal to consider all aspects of compensation and it would have been obvious in any event, Polkey having been raised, consideration be given to the prospect of the emergence of alternatives and to the value of any possible reasonable alternatives."

13.        At paragraph 33 of its Decision the Tribunal state as follows:

"…We believe that consultation would have raised a considerable number of alternatives worth consideration by the Respondent, some of which might well have been considered feasible. The Claimant cited a number of such possibilities in his written evidence. We do not propose to examine them in any detail, but in our view most of them are at the very least arguable proposals and we have in mind other possibilities not in his list. We see no value in ourselves discussing a series of hypothetical possibilities none of which were raised and discussed and none of which have been dealt with save for the purpose of raising them in evidence."

14.        In Paragraph 38 of its Decision the Tribunal noting that Mr Barnett had objected to the suggestion that he had not addressed the issue as to whether there had been consultation it would have been at a lesser salary. They went on to say that they did not understand the Respondent to have pressed the issue. The only submission that the tribunal could find related to the possibility that consultation would have produced employment at a rate of about £50,000 per annum. The Tribunal went on to say that even if the matter had been pressed its view would be similar to that which we have adopted and rejected in consideration of on-going loss between March 2005, namely, that we have no evidence to indicate what earnings as to which we could consider. The tribunal pointed out that it said in its oral decision that any calculation based on such a figure would be a pure guesswork.
15.        In paragraph 39 the Tribunal re-visit this area when they say:

"…If we were to assume that the Claimant might have made an offer to continue in employment at a reduced salary and that that offer might have been accepted, (and we acknowledge that this is a distinct possibility), we have no means of deciding at what level to place a hypothetical alternative salary."

16.        We are not impugning in any way the integrity of the Chairman and members but it would, seem clear to the majority of this Tribunal that this Polkey issue was raised and in view of the comments made by the Tribunal on the Notice of Appeal that in any event it was a matter they had to consider.
17.        The majority view of the Tribunal is that whatever may be the source of the misunderstanding of the issue of whether or not the Claimant would have accepted alternative employment or a lesser salary it was a matter that was raised. Moreover, we accept the evidence put before us by Mr Barnett that there was consideration of the relative salaries of what alternative employment there might have been. Even the most able and conscientious Employment Tribunal panel may at times be so precise about the findings of fact they may make on one aspect of the case that they overlook the fact that by de-fault they are reaching a decision inconsistent with other findings of fact. The consequence of their failure to make any reduction against the possibility that Mr Meffen may have taken a lower paid job was the finding that by default that had there been consultation Mr Meffen would have remained in his job at £100,000 a year. We are bound to say that we consider that in view of the findings of fact that the Tribunal made as to the need of the Respondents to cut on the payroll bill and that the Applicant was not justifying his salary by the revenue he was generating, the Tribunal reached the somewhat inconsistent decision that it was necessarily acceptable for the Respondents to take the course they did and make the Applicant redundant but that if they had consulted he would nevertheless retain his employment and be at the same salary.
18.        The view is that this Tribunal had the obligation, difficult though it was to consider on the figure before it of alternative employment what percentage chance was there that if there had been consultation Mr Meffen would have accepted employment at a lower level. Although there has been some criticism of the Tribunal this is not a case where the Tribunal decision is so flawed that it could not be returned to the same Tribunal, if they are available, to reconsider and to reach a view as to what discount if any they should make against the possibility that Mr Meffen might have retained his job but with a loss of income.
19.        Although certain criticisms have been made of the Tribunal we do not accept that there is a real concern that the Tribunal would feel under pressure to reach the same decision. We do not accept the submission made by Mr Barnett that the Tribunal would be concerned to maintain its previous finding in the light of the decision of this Tribunal. The majority view is that this appeal should be allowed but that it should be returned to the same Tribunal to consider the issues raised.
20.        The minority at this Employment Appeal Tribunal does not agree. Counsel for Secor ((Mr Daniel Barnett) confirmed to the EAT that Ground 2 of his Appeal (Abrogated responsibility to assess the probability of Rory Meffen (RTM) remaining in employment (and on what terms) if a fair procedure had been followed – asserting no evidence provided) was the "most important"; and that Grounds 3 and 4 were "tag-ons". He asserted (referring to Leventhall and Polkey) that the House of Lords had "made it clear that the question of whether a fair procedure would have made a difference is not relevant to liability for unfair dismissal, but is highly relevant to the question of remedy". That may here be termed loosely the Polkey-Sillifant "still have lost" percentage point. There was some (understandable) dispute between Mr Barnett and Mr Reade (Counsel for Mr. Meffen) as to the significance within this ET decision of paragraphs. 38 and 39 but in practice it is necessary to look at paragraphs. 34-40 in toto, supplemented now by the further replies from the ET members.
21.        There was no effective challenge by Mr Barnett – indeed it is doubtful whether there could have been – to the ET's conclusion in paragraph. 35 that (because of the fact that it was only on the second day of the hearing that Secor removed a restrictive covenant) " the claimant was in no position reasonably to mitigate his loss by seeking alternative employment up until the afternoon of the second day of the hearing". It is significant, in the view of the minority, that there was also no challenge here to the mathematical calculation in paragraphs. 36-7 leading to the proposed gross compensation figure of £54,373.
22.        The EAT minority notes that Secor's challenge is made squarely against the unanimous ET decision that they "were making no reduction to take into consideration any argument that the Claimant would have been dismissed in any event even if there had been fair consultation". The ET records the way it responded to Secor's submission on their initial (negative) view on this point. That view had been based on Mr Barnett's submission to them that "if continued employment .. had been offered the net figure would be £34,485 per year" The ET confirmed for the EAT that "having examined and compared our notes we find no indication that they (Secor) record any submission on this particular point " referring instead to "the effect of the prospect that the consultation would have produced no alternative employment at all". The ET's only record of submissions by Secor referred to what may be termed the "taxation point" (i.e. the net pay produced by a hypothetical compensation of £50k); but none of the three members recorded any positive submission by Secor that they would have offered continuation of employment at a gross figure of £50k. In the EAT minority's view, the extensive solicitor's note produced before the EAT by Mr Barnett indicates merely that the ET was entitled to conclude the "the Respondent had not pressed this aspect of the assessment of compensation" and that "any calculation based on such a figure would be pure guesswork". In the absence of any submission to the ET by Counsel on the "most important point" of the appeal, the minority does not accept that cross-examination of the applicant on the alternatives which (he had speculated) might have resulted from consultation amounts to evidence from the Respondent which could form the evidential basis for the Polkey speculation by the Tribunal.
23.        Furthermore, the ET records in paragraph 16 that the Respondent had submitted that there was a reasonable level of consultation and that (even if the dismissal was unfair) consultation would have made no difference. A challenge in cross-examination to a layman's speculation on the alternatives which might have been offered in consultation but which (at the time of dismissal) Secor consciously decided not to undertake did not amount to evidence by Secor on which the ET could base a percentage "Polkey reduction"
24.        In the circumstance where an unrepresented claimant is faced by a company represented by Counsel, then (in the minority's view) this ET was entitled to reach the judgment which it did in the circumstances of this case. The essential relevant part of the Polkey judgment for this case is the reference to the following Sillifant judgment of Browne-Wilkinson J in the following terms:

".. 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 .. 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."

25.        In effect, the Secor ET decided that the decision had effectively already been taken before any possible (but in practice non-existent) consultation; and that there was no chance that Mr Meffen would have kept his employment. That could have provided the basis for a 100% Polkey reduction, but Secor's representatives made no such submission, and that is not now open to them on appeal. On the evidence and submissions made to them, the ET was the fact-finding tribunal which was entitled to reach the conclusion they did on the "still have lost" percentage point; and this appeal reveals no error of law in the way they reached their unanimous decision.
26. In the view of the minority, this appeal should be dismissed