The respondent had acquired the business for which the claimant worked. He was dismissed by the respondent in February, which was before the date at which the transfer actually took place in March. The ET found that he had been unfairly dismissed and that the respondent, who was the transferee, was jointly and severally liable with the transferor in respect of compensation payable under TUPE. The respondent had argued that the transfer of the business was not actually complete until after the claimant was dismissed, and therefore there had not been a relevant transfer at the time of the dismissal. However this was rejected by the ET because the transferee had taken over the running of the business, including paying the wages, so the transfer was easily established. The respondent appealed.

The EAT rejected all the grounds of the appeal. The transferee was in control of the business at the time of the transfer so there was a relevant transfer. The claim against the 30% uplift was dismissed because there was enough detail in the Tribunal’s reasons to explain the breaches of the statutory procedures. There was an implied obligation on the employer to invite employees to elect representatives otherwise regulation 13 of TUPE would be rendered pointless. Finally, the ET was entitled to reach a 50% figure for the Polkey reduction.

___________________

Appeal No. UKEAT/0491/11/ZT

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8JX

At the Tribunal

On 3 February 2012

Judgment handed down on 24 February 2012

Before

THE HONOURABLE MR JUSTICE SILBER, BARONESS DRAKE OF SHENE, MR J MALLENDER

COMMERCIAL MOTORS (WALES) LTD (APPELLANT)

MR M HOWLEY (RESPONDENT)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant
MR CHRISTOPHER OVER (Solicitor-Advocate)

Messrs OverTaylor Biggs Solicitor
4 Cranmere Court
Lustleigh Close
Matford Business Park
Exeter
EX2 8PW

For the Respondent
MR ANTHONY KORN (of Counsel)

Instructed by:
FWD Law Associates Solicitors
12 Clifton Road
Newport
NP20 4EW

**SUMMARY**

TRANSFER OF UNDERTAKINGS – Consultation and other information

TUPE – date of transfer - Entitlement and calculation of payment for failure to consult and to comply with statutory regime.

**Polkey** deduction – approach

1. Claimant dismissed on 3 February 2009 but completion of sale by Claimant's employer only occurred in March 2009. Was there an effective transfer of Claimant's contract of employment under TUPE to transferee by date of dismissal?

Held – Yes because the transferee was in control of business at time of transfer (Wheeler v Patel [1987] ICR 631 explained and distinguished).

1. Claim for increase pursuant to section 31(3) of Employment Act 2002 because of breaches of statutory procedures. Was there enough detail in Employment Tribunal's reasons?

Held - Yes.

1. Claim for breach of Regulation 13 of TUPE. Was there an implied obligation on the employer to invite employees to elect representatives?

Held –Yes as otherwise regulation 13 would be rendered pointless.

1. Employment Tribunal made 50% Polkey deduction. The Employment Tribunal was entitled to reach this decision.

**THE HONOURABLE MR JUSTICE SILBER****I. Introduction**

1. Mark Howley ("the Claimant") brought proceedings in the Employment Tribunal claiming compensation from Commercial Motors (Wales) Limited ("Wales") and Commercial Motors (Newport) Limited ("Newport") for unfair dismissal as well as for holiday pay, notice pay and damages for loss of contractual benefits following his dismissal on 10 February 2009.

1. Newport went into liquidation on 21 July 2009 and has played no part in the proceedings either in the Employment Tribunal or before this Appeal Tribunal.

1. The Employment Tribunal in its decision dated 25 May 2011 made a number of decisions including that: -

(a) There was a transfer of the business of Newport to Wales within the meaning of Regulation 3(1)(a) of the Transfer Undertakings (Protection Employment) Regulations 2006 ("TUPE") which took place on 2 February 2009;

(b) The Claimant was dismissed by Wales on 10 February 2009 and the dismissal was automatically unfair under the provisions of section 98A of the Employment Rights Act 1996 by reason of Wales' failure to comply with the provision of the Dismissal and Disciplinary Procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 ("The 2002 Act");

(c) By reason of Wales' failure to comply with the statutory procedures set out in those provisions the award made to the Claimant would be increased pursuant to the provisions of 31(3) of the 2002 Act by 30%;

(d) The Claimant's complaint against Newport under Regulation 15(1) of TUPE resulting from Newport's failure to comply with the requirements of Regulation 13 of those Regulations (a duty to inform and consult representatives) to be well founded and it then ordered Wales (who was jointly and severally liable with Newport in respect of compensation payable under regulation 15(8)(a) of TUPE) to pay compensation to the Claimant in the sum of 13 weeks pay pursuant to Regulation 15(8)(a) of TUPE; and that

(e) A Polkey reduction had to be made because if Newport or Wales had embarked upon a fair procedure in dealing with the question of the Claimant's continued employment as a Dealer Principal, following the transfer of Newport's business to Wales, there was then some prospect of the Claimant being dismissed in any event and in the judgment of the Tribunal a reduction of 50% of the compensatory award due to the Claimant arising from his dismissal was appropriate.

1. On this appeal Wales challenge findings (a), (c), (d), and (e). It has been agreed that issues on compensation will be dealt with at a subsequent hearing if the claim for unfair dismissal is upheld in this judgment.

**II. The background to the Claimant's dismissal**

1. The Claimant commenced his employment with Newport on 9 October 2006. In Spring 2008 Mr Roger Sheddick and Mr Robert Manchip of Wales began negotiations regarding the acquisition of Commercial Motors South West Limited ("CMSWL") and Newport with Mr Paul Williams, who was the in the words of the Employment Tribunal "the man behind CMSWL and Newport". CMSWL was a company involved in the repair of commercial vehicles from a number of depots in Bristol and the South-West. Newport was a smaller organisation engaged in a similar business from premises in Newport. CMSWL acted as agents for Mercedes-Benz vans and trucks, while Newport was a main agent for MAN vehicles and it also dealt with the sale of MG/Rover parts and LDV vans.

1. The discussions concerning the purchase of CMSWL and the assets of Newport were protracted and they continued through 2008 culminating in first the incorporation of Wales on 3 December 2008 and second the production of a number of draft sales agreements in December 2008. A final agreement was entered into on 24 December 2008 in what has become known as "the Christmas Eve Agreement" and which was subsequently described as "a conditional sale of certain businesses operating from the premises at Frederick Street, Newport." between each of the Respondents and CMSWL. Those premises at Frederick Street were the premises from which Newport operated its commercial vehicle dealership.

1. The Christmas Eve agreement was replaced with a subsequent sales agreement, which was completed on 6 March 2009.

1. The Employment Tribunal found that as at 2 February 2009 the position was that a conditional sales agreement had been entered into on 24 December 2008 between the parties and which set a completion date by reference to two conditions precedent which were that:-

"Completion is conditional on:

1. The Leases being in a final form and in a form satisfactory to the Purchaser (acting reasonably); and

2. The Purchaser obtaining bank financing in relation to the payment of the Purchase Price and the ongoing working capital requirements of the business on terms satisfactory to the Purchaser."

1. As at 2 February 2009, the second of those conditions (relating to the financing of the purchase) had been fulfilled but the first condition relating to the property arrangements had not been fulfilled. So as at 2 February 2009, all that was outstanding was for the parties to conclude the discussions that were taking place regarding the property arrangements, we will return to consider in section IV what the effect of this was on the Claimant's employment contract.

**III. The grounds of appeal**

1. Wales appeals on the grounds that:-

(a) The finding that the date of TUPE transfer was 2 February was bad as a matter of law ("Date of TUPE Transfer Issues");

(b) The finding that the Claimant's award should be increased by 30% for breach of statutory procedures was an error of law ("The 30% Increase Issue");

(c) The Tribunal's finding under Regulation 15 (1) of TUPE that the failure to comply with the duty to inform and consult representatives and to award the Claimant 13 weeks pay was as error of law (" The 13 week award Issue "); and that

(d) The 50% Polkey reduction was an error of law and that no reasonable Tribunal could have arrived at this reduction on the evidence before it. ("The 50% Polkey reduction Issue").

1. The claimant also sought to appeal on the ground that the Tribunal failed to make any finding as to the Claimant's contributory conduct, but this ground was not pursued correctly in our view bearing in mind that the Employment Judge explained that Wales in its closing submissions did not raise any question of contributory fault before the Tribunal. Accordingly we will not say anything more about it.

**IV. Ground 1- date of TUPE transfer issue**

1. The Employment Tribunal found that there was a transfer of the business of Newport to Wales within the meaning of Regulation 3(1)(a) of TUPE on 2 February 2009 but Wales challenges this. The issue is whether there has been a "relevant transfer" because under Regulation 4 (1) of TUPE, the effect of a relevant transfer is (subject to exceptions which do not apply) that the contract of employment of the Claimant would thereafter be regarded as if originally made between the Claimant and the transferee, which in this case was Wales.

1. The definition of a "relevant transfer" is set out in Regulation 3(1)(a), which states that:-

"(a) a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity;"

1. The finding of the Employment Tribunal was that:-

"43…there was a 'relevant transfer' of the [Newport's] business to [Wales] on the 2nd February 2009. By that date, the conditional sale agreement had been signed and [Wales] was expecting to complete the sale by the 6th February 2009. By going into possession of the [Newport's] business on the 2nd February and taking over the running of the [Newport] business, not as agent for [Newport] but in its own right, the date on which responsibility for carrying on the business was transferred from [Newport] to [Wales] was easily established. That date was the 2 February 2009."

1. The Employment Tribunal explained later in paragraph 43 that:-

"The critical matter for the Tribunal in this case was that [Wales] had taken over the running of [Newport]'s business with effect from the 2nd February 2009. This was not a case of a transferee waiting for a completion of a sale to take place before taking action in respect of the running of the transferred business."

1. Mr Christopher Over the solicitor for Wales submits that completion of the transfer to Wales had not taken place until 6 March 2009 and therefore there could be no transfer until that time. He relies on the decision of this Appeal Tribunal in Wheeler v Patel [1987] ICR 631 in which Scott J (as he then was) giving the decision of this Appeal Tribunal held that the transfer of the business occurred in that case only when the contract of sale was completed and not before this occurred. In our view, that was a fact-specific decision as in that case the transfer of the business and completion occurred on the same day, but the facts in the present case are different because the Employment Tribunal found that:-

(a)"by going to possession of [Newport's] premises on the 2nd February and taking over the running of [Newport's] business, not as agent of [Newport] but in its own right, the date on which responsibility for carrying on the business was transferred from [Newport] to [Wales] was easily established" [43];

(b)"[Wales] had taken over the running of [Newport's] business with effect from 2 February 2009. In this case, Wales … took direct responsibility for the running of the transferred business with effect from 2 February 2009 [43]; and that

(c)"With effect from 2 February 2009 [Wales] took over responsibility for paying the wages of the staff working at [Newport's] premises" [22].

1. The facts of this case are very different from those in Wheeler where the new owners did not take over or run the business prior to completion and indeed the dismissal in that case was carried out by the transferor and not by the transferee. In this case, it is noteworthy by way if contrast, it was the transferee who dismissed the claimant and not the transferor.

1. The second contention made by Mr Over is that the Tribunal erred because it regarded as the date of the TUPE transfer date, a date which was earlier than the completion date of 6 March 2009, and so as explained by Mr Over, the Employment Tribunal "needed to make it absolutely clear the acts of responsibility as employer which [Wales] took to bring that date forward". As we have explained in paragraph 16(c) above, the Employment Tribunal did exactly that when it found that with effect from 2 February 2009, Wales took responsibility for paying the wages of the staff working at the premises.

1. This conclusion is in accordance with the Directive, which led to TUPE and in relation to which the European Court of Justice explained in Berg & Busschers v Besselsen [1989] IRLR 447, that:-

"19. Therefore, if the purchaser of an undertaking becomes the employer... the transfer must be considered as the transfer of an undertaking as a result of the legal transfer within the meaning of Article 1(1) of the Directive, even if the purchaser only acquires the ownership of the undertaking at the moment when he has paid the complete purchase price."

1. The European Court of Justice has repeated in Celtec v Astley [2005] IRLR 647 that the crucial test for determining whether there has been a transfer for the purposes of the Directive is that: -

"33.It has been held on several occasions that Directive 77/187 applies where there is a change in the legal or natural person who is responsible for carrying on the business regardless of whether or not ownership of the business is transferred."

1. Thus the mere fact that completion had not occurred is irrelevant on the issue of whether there has been a valid transfer when, as in the present case, the transferee has taken on the responsibility of running the business. So we reject this ground of appeal.

**V. Ground 2 - the 30% increase issue**

1. Section 31(3) of the 2002 Act provides that in respect of the statutory dismissal procedure:-

"If ...it appears to the Employment Tribunal that

(c) the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer to comply with a requirement of the procedure,

it must [subject to exceptions which do not apply in this case] increase any award which makes to the employee by 10 per cent and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount, but not so as to make a total increase of more than 50 per cent."

1. The relevant statutory procedure in force at the time relevant to this application was set out in Part 1 of Schedule 2 of the 2002 Act and it required the employer to set out in writing the circumstances which "lead him to contemplate dismissing… the employee" (paragraph 1) and "to invite the employee to attend a meeting to discuss the matter" (ibid). A meeting had under the statutory procedure to take place before any action is taken and this meeting must not take place until "the employee has had a reasonable opportunity to consider his response to the information" (paragraph 2). In addition, after the meeting, the employer was obliged under the statutory procedure to notify the employee of his decision and of the employee's right of appeal (ibid).

1. In this case the Employment Tribunal concluded that the appropriate increase was to be 30% [52]. The case for Wales is that an uplift of 30% would indicate a serious and deliberate breach of the rules, but that there were no findings or evidence showing why the increase could be justified.

1. In our view, this submission fails to appreciate the relevant findings made by the Employment Tribunal which were that on 3 February 2009 the Claimant was informed by Mr Sheddick and Mr Manchip of Wales first that the Claimant did not have a role in the business because they would be working full time, second that they intended to manage all aspects of the business and third that there would be no place for the Claimant. Mr Sheddick said, according to the Employment Judge's note [page 30] that they called the Claimant in without giving any notice as that they had not warned him that his job might be at risk. The Claimant explained in his evidence that he sought the advice of his solicitors, who wrote to Wales raising the question of appeal. Although Wales indicated they intended to respond, they did not do so and no appeal took place.

1. In our view, this sequence of events shows a flagrant breach of the statutory obligations imposed on the Respondents because:-

a. No written statement was served on the Claimant explaining that the Respondents were contemplating dismissing him;

b. The Claimant was not invited to attend a meeting with the Respondent;

c. No meeting took place at which the Claimant could put forward his case;

d. The Claimant was not given the opportunity to appeal; and

e. No attempt had been made by Wales to consider or to seek the Claimant's views as to whether suitable alternative employment could be offered to the Claimant.

1. In our view, the Employment Tribunal had identified breaches of the statutory procedure and it was then entitled to determine where the increase should be placed on a scale between the statutory minimum 10% and the statutory maximum of 50%. Having determined that there was "no semblance of a fair procedure in the way [Wales] went about the termination of the claimant's contract of employment" [45], the Employment Tribunal was quite entitled to regard 30% as being appropriate with it being mid-way between the statutory minimum and the statutory maximum. The Employment Tribunal explained that it could not accept Wales' excuse for non-consultation, which was that the confidentiality agreement constituted a legitimate reason for its failure to consult the Claimant and the Tribunal was unclear as to why Mr Sheddick himself felt able to breach the confidentiality agreement on 3 February 2009.

1. Wales contends that there are no clear reasons justifying this uplift but, as we have explained, the Employment Tribunal had made relevant findings when setting out the chronology and as Keene J pointed out in Derby Specialist Fabrications Ltd v Burton [2001] ICR 833, that Extended Reasons of the Employment Tribunal are directed towards parties, who already know in detail the arguments and issues in the case so that the reasons of the Employment Tribunal

"do not need to be spelt out in the detail required where they to be directed towards a stranger to the dispute."

1. In this case, when setting out their findings on the way in which the Claimant was dismissed, it would have been clear to the parties what the breaches of the statutory procedure were. We are fortified in reaching that conclusion because parties have been warned against taking an unduly legalistic and analytical approach to Employment Tribunal's reasons when considering whether they disclose an error of law. In Union of Construction, Allied Trades and Technicians v Brain [1981] ICR 542, Donaldson LJ said:-

"I think it would be a thousand pities if those reasons began to be subjected to a detailed analysis and appeals were to be brought on any such analysis. This, to my mind, is to misuse the purpose for which reasons are given."

1. In our view, the Employment Tribunal complied with its duty in accordance with these principles to explain its reasons, which justified the uplift and which it was entitled to make. For all those reasons we reject this ground of appeal.

**VI. Ground 3 –** t**he 13 week award issue**

1. Under Regulation 13(2) of TUPE, it is provided that:-

"(2) Long enough before a relevant transfer to enable the employer of any affected employees to consult the appropriate representatives of any affected employees, the employer shall inform those representatives of—

(a) the fact that the transfer is to take place, the date or proposed date of the transfer and the reasons for it;

(b) the legal, economic and social implications of the transfer for any affected employees;

(c) the measures which he envisages he will, in connection with the transfer, take in relation to any affected employees or, if he envisages that no measures will be so taken, that fact; and

(d) if the employer is the transferor, the measures, in connection with the transfer, which he envisages the transferee will take in relation to any affected employees who will become employees of the transferee after the transfer by virtue of regulation 4 or, if he envisages that no measures will be so taken, that fact."

1. The Employment Judge in this case explained in paragraph (1)(b) of the Additional Reasons served on 30 December 2011 that: -

"A decision had been taken by [Newport] which [Wales] was content to go along with, not to inform employees including the claimant of those matters set out in Regulation 13(2) of TUPE. The evidence from Mr Sheddick [on behalf of Wales] was that Paul Williams on behalf of [Newport] had insisted that no information regarding the transfer be given to the employees. As a result of that deliberate withholding of information from the employees, there had been no compliance with the provisions of Regulation 13(2) by 2 February 2009…The Tribunal took the view that there had been a deliberate and sustained breach of the duty under Regulation 13(2) over a considerable period of time prior to the 2nd February 2009 on the part of [Newport] of which [Wales] was fully aware."

1. In reaching that conclusion, the Tribunal had considered, but rejected, the defence which was not expressly relied upon by Wales but which was whether the "confidentiality agreement" could constitute a "special circumstances" within the meaning of Regulation 13(9) and 15(2) of TUPE. It stated that:-

"The Tribunal did consider whether the confidentiality agreement provided [Newport] and [Wales] with a legitimate basis for non-compliance with the duty under Regulation 13(2). In the judgment of the Tribunal, the confidentiality agreement did not have the effect of ousting the duty under Regulation 13(2). The Claimant's submissions on that point were accepted by the Tribunal. Even if the confidentiality agreement was capable in law of producing that effect, the Tribunal felt it should consider whether all necessary steps had been taken by [Newport] and [Wales] towards performing the duty under Regulation 13 [2] and in the opinion of the Tribunal they had not."

1. The Tribunal then referred to reasons which had been given in paragraphs 27 and 28 of its decision in which it referred first to the absence of a signed copy of the confidentiality agreement and second to the fact that Mr Sheddick felt able to breach the confidentiality agreement on 3 February 2009 when the Claimant was finally informed of the acquisition and told at the same time that his services were no longer required. It was explained that there was no evidence from Mr Sheddick or any other witness that the confidentiality agreement had been terminated or that written consent had been given to disclose the protected transaction to the claimant and that :-

"28…It appeared to the Tribunal that by 3rd February 2009 Mr Sheddick was of the view that the protected transaction was so advanced that the confidentiality agreement could be ignored."

1. There are four additional matters with which we must deal. First, although the majority of the obligations on the part of the employer were to inform and consult employee representatives, Regulation 13(11), there is also an obligation on the part of an employer to give to any affected employees the information set out in regulation 13(2) if the employer had previously invited any affected employees to elect representatives and they had not done so in a reasonable time. This was explained by Bean J in Howard v Millrise Limited [2005] IRLR 84 when considering the provisions in a predecessor regulation to Regulation 13 as he said that this provision:-

"14...would be rendered pointless if the employer were not obliged to set the ball rolling by inviting affected employees (assuming there were no recognised trade union representatives or other elected or appointed representatives already in place) to elect representatives for the purposes of TUPE".

1. More recently, Slade J in [Hickling v Marshall]() [UKEAT/0217/10] applied this conclusion when she said that there is: -

"30...the implicit obligation on the employer to invite employees to elect representatives and to comply with the requirements which regulation 14 [the obligation- on employers in relation to the employee representatives] imposes on employers."

1. Second, under regulation 15(9) of TUPE both the transferor and transferee (which in this case are respectively Newport and Wales) are jointly and severally responsible for any compensation payable for the failure to inform or consult. Thus, it is no answer to the claim for Wales to contend that the blame for these breaches was solely the responsibility of Newport with the result that Wales should not be responsible.

1. Third, it is suggested that although the Tribunal referred to the decision in Sweeting v Coral Racing Limited [2006] IRLR 252, it did not apply the principles established in that case which were first that Parliament must have intended that awards under these provisions were intended to be penal in nature rather than compensatory, but second that mitigating factors should be taken into account.

1. In this case, it is clear from the information supplied by the Employment Judge pursuant to the order of Mr Justice Underhill to give further information that Wales were not expecting the events of 3 February 2009 to take place. Wales' case is that first it did not know that Mr Williams was going to strip the computers and to go off and second that if Wales had started to try and appoint representatives, the employees would have found it "scary" (Paragraph 1(vii)). There is no reason to suppose that the Employment Tribunal did not take these factors into account even though not specifically referred to and we repeat what we have said about the proper approach to the reasons of an Employment Tribunal in paragraphs 28 and 29 above. In any event, we doubt very much if any of these matters or any other factors put forward in Wales' skeleton or in the oral submissions before the Employment Tribunal would have constituted mitigating circumstances in the light of the statutory duty and the penal nature of these provisions.

1. Finally, bearing in mind the serious view that the Employment Tribunal took, and indeed was entitled to take, of these breaches, there is no reason to suggest that there was even an arguable error in awarding 13 weeks pay.

**VII. Ground 4 - the 50% Polkey reduction issue**

1. The Employment Tribunal correctly proceeded to consider whether the Claimant would inevitably have been dismissed if Wales had adopted a fair procedure in dismissing the Claimant. It reminded itself of the relevant principles including first that the issue was a matter of impression and judgment and second that if the Tribunal concludes that there is a doubt as to whether or not the employee would have dismissed, that factor 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. This approach was explained by Lord Bridge in Polkey v AE Dayton Services Limited [1988] AC 344, in which he cited with approval the statements of Browne-Wilkinson J to that effect in Sillifant v Powel Duffryn Timber Limited [1983] IRLR 91.

1. In this case, the Tribunal stated that: -

"51…there were well-founded doubts that the claimant would inevitably have been dismissed had [Wales] adopted a fair procedure... there was a 50:50 chance that the claimant would have been dismissed had [Wales] adopted a fair procedure and therefore the appropriate Polkey reduction to be applied in this case is a 50% reduction of the claimant's compensatory award."

1. The first point taken by Mr Over is that this finding is contradicted by the earlier conclusion in paragraph 49, which states (with emphasis added) that: -

"The Tribunal was satisfied that the claimant had presented an arguable case that he would have been retained in a managerial position within [Wales'] organisation on a similar salary where it not for the unfair procedure adopted by the respondents in dealing with the redundancy situation."

1. In our view, there is no contradiction between those passages because the Employment Tribunal had to consider the Respondent's case that a fair dismissal would definitely have occurred if a fair procedure had been adopted but the Employment Tribunal rejected this submission. Instead, it held that if there had been a fair procedure adopted, that there was a"50:50 chance" both that he would have been fairly dismissed in that situation and that he would have retained a similar management decision. This was a conclusion open to them on the facts.

1. The second point made by Mr Over is that it would have been an inevitable outcome that the Claimant would have been dismissed if there had been a fair procedure. That is not what the Tribunal found in paragraph 49, as we have explained in paragraph 43 above. In addition, there was evidence in the Claimant's evidence that he could have taken on the position of Sales Manager or a "sales representative" of all van sales. The Claimant explained that those latter jobs would have meant a demotion but that a lower income would be better than no income and that if he had been offered one of those jobs, he would have accepted them.

1. It was also said by Mr. Over that the Claimant had not put forward any alternative suggestions for employing him, but that presupposes that he was given an opportunity to do so. Such an opportunity would have entailed the Claimant being given an opportunity first an opportunity to consider what alternative jobs were available for him and then second an opportunity to discuss them with the Respondents, who would then have been willing and able to consider them. The evidence shows clearly that the Claimant was not given either of these opportunities. As we have explained, the Employment Tribunal found in paragraph 5, that on 3 February 2009, the Claimant was informed by Mr Sheddick and Mr Manchip of Wales first that the Claimant did not have a role in the business because they would be working full time, second that they intended to manage all aspects of the business and third that there would be no place for the Claimant. Mr Sheddick said, according to the Employment Judge's note [page 30 of bundle] that they called the Claimant in without having given him any notice as that they had not warned him that his job might be at risk. The Claimant explained in his evidence that he sought the advice of his solicitors, who wrote to Wales raising the question of an appeal. Although Wales indicated they intended to respond, they did not do so and no appeal took place.

1. In so far as it is suggested that the Claimant's failure to put forward any proposals undermines his credibility, we consider that (even if contrary to our views, the Claimant could not have put forward proposals in the limited time available) the issue of credibility was an issue for the Employment Tribunal who, unlike us, saw and heard the witnesses and any issue on it could not constitute an error of law.

1. According to the notes from the evidence of Mr Sheddick, he agreed with the account given by the Claimant in paragraph 72 and 76 of his witness statement that the Claimant returned to the Respondent's premises on 6 February 2009 having been asked to do so by the new Directors and that in a conversation which then took place, he explained that he was unhappy about the way that he had been dealt with without any consultation or prior notification. His evidence was that although Mr Sheddick said that he was busy and that he would try to sort things out, nothing occurred.

1. Insofar as it is suggested that the Claimant was at fault in not raising with the Respondent other jobs which he could perform as the onus was on him, that is incorrect because the onus was on the Respondent as was explained by Elias P in Software 2000 Limited v Andrews and Others [2007] ICR 825 at paragraph 54 when he said (with our emphasis added): -

"(1) In assessing compensation the task of the Tribunal is to assess the loss flowing from the dismissal, using its common sense, experience and sense of justice. In the normal case that requires it to assess for how long the employee would have been employed but for the dismissal. (2) If the employer seeks to contend that the employee would or might have ceased to be employed in any event had fair procedures been followed, or alternatively would not have continued in employment indefinitely, it is for him to adduce any relevant evidence on which he wishes to rely. However, the Tribunal must have regard to all the evidence when making that assessment, including any evidence from the employee himself. (He might, for example, have given evidence that he had intended to retire in the near future). (3) However, there will be circumstances where the nature of the evidence which the employer wishes to adduce, or on which he seeks to rely, is so unreliable that the tribunal may take the view that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction based on that evidence can properly be made. (4) Whether that is the position is a matter of impression and judgment for the Tribunal. But in reaching that decision the Tribunal must direct itself properly. It must recognise that it should have regard to any material and reliable evidence which might assist it in fixing just compensation, even if there are limits to the extent to which it can confidently predict what might have been; and it must appreciate that a degree of uncertainty is an inevitable feature of the exercise. The mere fact that an element of speculation is involved is not a reason for refusing to have regard to the evidence."

1. In any event, even if a Claimant had an obligation to raise suggestions of alternative work with his employer, this obligation could not arise in a case such as the present one, where as the Employment Tribunal found to be the case, the Claimant was told without any prior notice that he was dismissed.

1. Mr Over seeks to derive assistance from comments made by Tucker J in Red Bank Manufacturing Co Ltd and Meadows [1992] IRLR 209 to the effect that an Employment Tribunal has to ask itself two questions when calculating the compensation to be awarded when considering the Polkey issue, namely (i) if the proper procedure had been followed, would it have resulted in an offer of employment? and if so (ii) what would that employment have been and what wage would have been paid in respect of it?

1. Those comments are not supported by some more recent statements which stress that a less rigid approach is required and it is noteworthy that no case was referred to us in which it was held that a failure by an Employment Tribunal to follow the Red Bank approach constituted an error of law. The first statements were made in the case of Gover and Others v Propertycare Ltd [2006] ICR 1073 by Buxton LJ at page 1079 (with whom Richards and Lloyd LJJ agreed) when he explained when considering the Polkey issue that he was concerned about introducing technical rules:-

"..into a decision making process that should be a matter for the common sense, practical experience and sense of justice of the Employment Tribunal sitting as an industrial jury" [14];

and that

"…an appellate court should tread very warily when it is being asked to substitute its own impression and judgement for that of the tribunal" [22].

1. In our view, these comments show that a different approach should be taken from that in the Red Bank case. Second, the comments in that case are not in accordance with the more general approach set out by Elias P, as he explained in Software 2000 [54] that :-

"(7) Having considered the evidence, the Tribunal may determine (a) That if fair procedures had been complied with, the employer has satisfied it - the onus being firmly on the employer - that on the balance of probabilities the dismissal would have occurred when it did in any event. The dismissal is then fair by virtue of s.98A (2)(b). That there was a chance of dismissal but less than 50%, in which case compensation should be reduced accordingly. (c) That employment would have continued but only for a limited fixed period. The evidence demonstrating that may be wholly unrelated to the circumstances relating to the dismissal itself, as in the O'Donoghue case. (d) Employment would have continued indefinitely."

1. In our view, the Tribunal looked at the matter clearly and correctly before reaching a decision to which they were entitled to come and none of the submissions of Wales show any errors of law. Mere factual disagreements on the part of Wales are not enough to justify this Appeal Tribunal interfering with the decision. We are fortified in reaching this conclusion by the further comment of Elias J in Software [54] that:-

"(5) An appellate court must be wary about interfering with the Tribunal's assessment that the exercise is too speculative. However, it must interfere if the Tribunal has not directed itself properly and has taken too narrow a view of its role."

**VIII. Conclusion**

1. None of the grounds relied by Mr. Over in his written or oral submissions show that the Employment Tribunal did not direct itself properly or that it took too narrow a view of its role in any aspect of this case. So this appeal must be dismissed. The appeals on quantum were adjourned but they must now proceed. When a draft of this judgment was sent to the legal representatives of the parties, they were asked if they were content for the quantum appeal to be heard by the members of the Appeal Tribunal as had heard the present appeal and they both replied in the affirmative.