Polkey v A. E. Dayton Services Ltd

JurisdictionEngland & Wales
JudgeLORD JUSTICE NEILL,LORD JUSTICE NICHOLLS,SIR GEORGE WALLER
Judgment Date22 October 1986
Judgment citation (vLex)[1986] EWCA Civ J1022-8
Docket Number86/0972
CourtCourt of Appeal (Civil Division)
Date22 October 1986

[1986] EWCA Civ J1022-8

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

(MR. JUSTICE POPPLEWELL)

Royal Courts of Justice,

Before:

Lord Justice Neill

Lord Justice Nicholls

and

Sir George Waller

86/0972

No. 8/84

Dennis Polkey
Appellant (Respondent)
and
Edmund Walker (Holdings) Ltd.
Respondents (Appellants)

MR. R. ALLEN and MISS M. COVER (instructed by Messrs. Seifert Sedley & Co., London, EC1, Agents for Messrs. Gregsons, Nottingham) appeared for the Appellant/Respondent.

MR. F. REYNOLD, Q.C. and MR. J. WARDELL (instructed by Messrs. Gorna & Co., Manchester) appeared for the Respondents/Appellants.

LORD JUSTICE NEILL
1

This is an appeal by Mr. Dennis Polkey against the decision of the Employment Appeal Tribunal given on 2nd October, 1984 whereby they dismissed Mr. Polkey's appeal against the order of the industrial tribunal dated 23rd February 1983 rejecting his application for a finding that he had been unfairly dismissed by his former employers, A.E. Dauton Services Ltd. (formerly Edmund Walker (Holdings) Ltd.) The appeal to this court is brought pursuant to the leave of the Employment Appeal Tribunal.

2

The employers are members of a large group of companies dealing with components for the motor industry. Mr. Polkey, who is now aged 57, was employed by the employers as a van driver. He entered their employment on 19th June 1978 and was responsible for delivering components to a number of regular customers engaged in the stripping and reconditioning of engines whose works lay on the route from Nottingham to Derby and Mansfield.

3

In the summer of 1982 the employers had to consider a reduction in overheads in order to stem the financial losses which had been incurred during the previous months. Matters came to a head when the figures for July 1982 became available. At that time the employers employed four van drivers, three men including Mr. Polkey and a woman, Mrs. Brenner. It was decided that the company could not afford to lose storekeepers or stockkeepers and that the reductions in staff including some reorganisation of duties would have to be made among the van drivers.

4

The decision to declare redundancies was made on 16th or 17th August 1982. On 18th August a discussion took place between Mr. French, the Divisional General Manager, and Mr. Marlow, the Branch Manager, in the course of which it appears to have been agreed that the four van drivers would be replaced by two van salesmen and a representative.

5

On 20th August Mr. Marlow told Mr. French that he had come to the conclusion that none of the three male van drivers was capable of working as a van salesman, that only Mrs. Brenner was suitable for transfer to the new duties, and that accordingly three van drivers, including Mr. Polkey, would have to be made redundant.

6

The first that Mr. Polkey himself knew of the matter was when he was called to Mr. Marlow's office at 2.00 p.m. on 27th August 1982 and was told that he had been made redundant. He was handed a redundancy letter setting out the payments which were due to him. He was then driven home.

7

Not surprisingly, the industrial tribunal commented unfavourably on the fact that there had been no consultation whatever with the employees who were to be made redundant and on the fact that Mr. Polkey had been given no warning. They said this: "The respondents like all employers are under an obligation to consult both in accordance with the Code of Practice and now under the guidance of the recent case of Williams v. Compair Maxam Ltd. (1982) I.C.R. 156. They are also required to give employees as much notice as possible of forthcoming redundancies. In this case we accept that the decision was not made until 16 or 17 August but the existence of a redundancy situation had been known for a long time. Mr. MarLow called Mr. Polkey into his office at 2 p.m. on 27 August, told him quite out of the blue that he was redundant and handed to him his redundancy letter. He then called in Mr. Ward, one of his fellow drivers, got him to take Mr. Polkey home and on his return made him redundant also. There could be no more heartless disregard of the provisions of the Code of Practice than that."

8

Later, the industrial tribunal added: "We feel that the respondents have behaved extremely badly. There is nothing that excuses their failure to consult….."

9

The reference to the Code of Practice was a reference to the Industrial Relations Code of Practice issued by the Advisory Conciliation and Arbitration Service pursuant to section 6(1) of the Employment Protection Act 1975. The purpose of the Code of Practice is to give practical guidance for promoting good industrial relations.

10

Having expressed their disapproval of what had happened, however, the industrial tribunal continued as follows: "The Tribunal unfortunately cannot stop there. It has to consider whether had there been consultation the result would have been any different. Mr. Polkey has told us that one of his duties was to take telephone calls from customers before he commenced his round and that frequently he made telephone calls to customers to see if there was anything they would be likely to be needing before he set out, and that having completed a delivery he would then ask if there was anything needed on the next round. To that extent he kept the supply of spare parts flowing evenly, and conveniently. He has also produced a document which confirms that he had previously been employed in a telephone sales capacity. The fact, however, is that his own customers had disappeared. Selling in this undertaking requires familiarity with very complicated catalogues. Mr. Ward has told us that he on occasions looked up items for Mr. Polkey in the catalogue. Mr. Polkey told us that on occasions customers already knew the numbers and supplied them.

11

"He and Mr. Ward had said that Mrs. Brenner did not have knowledge of the garages upon whom calls were made and was not familiar with the catalogue. Mr. Marlow's evidence was that she had the personality necessary for a sales position and that she had already brought back former customers.……at the end of the day we have no alternative but to find that in this case had they acted in accordance with the Code of Practice, as interpreted in the recent case, the result would not have been any different, and we have therefore unhappily to reject this application." Mr. Polkey appealed against the rejection of his application to the Employment Appeal Tribunal.

12

At the hearing of the appeal, however, it was accepted on Mr. Polkey's behalf that the Employment Appeal Tribunal had no alternative but to dismiss his appeal because they were bound by previous authorities. Nevertheless, leave to appeal to this court was sought and obtained from the Employment Appeal Tribunal.

13

The main argument addressed to this court by counsel for Mr. Polkey was that once the industrial tribunal had determined that in the course of the dismissal the employers had failed to observe material provisions of the Code of Practice relating to consultation they should have found that Mr. Polkey had been unfairly dismissed.

14

The question whether the failure to consult had made any difference was only relevant when the tribunal came to consider what remedies might be available, but on the proper construction of section 57(3) of the Employment Protection (Consolidation) Act 1978 ("the 1978 Act") the issue of unfair dismissal should have been determined in Mr. Polkey's favour. It was also argued by way of an alternative that even if the tribunal might have been free to enquire whether the failure to consult had made any difference they misdirected themselves in holding that they were under an obligation to make this enquiry and that this misdirection provided a further ground of appeal.

15

Mr. Robin Allen did not pursue, however, a further submission adumbrated in the amended notice of appeal, but not argued before the Employment Appeal Tribunal, to the effect that the finding of the industrial tribunal that the failure to consult made no difference was perverse. I need say no more therefore about this third argument.

16

By section 54 of the 1978 Act every employee in qualifying employment has "the right not to be unfairly dismissed by his employer." Accordingly, where a question is raised whether the dismissal of an employee was fair or unfair, it is first necessary for the employer to show what was the reason or the principal reason for the dismissal and that it was a reason falling within section 57(2) of the 1978 Act or "some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held."

17

In the instant case, the employers satisfied this burden by showing that Mr. Polkey was redundant, which is a reason specified in section 57(2)(c). It therefore became necessary for the industrial tribunal to apply the statutory test which is set out in section 57(3) of the 1978 Act in these terms: "Where the employer has fulfilled the requirements of subsection (1), then, subject to sections 58 to 62, the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case."

18

The case for Mr. Polkey was that by failing to consult him and by acting in flagrant disregard of the...

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