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United Kingdom Employment Appeal Tribunal |
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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Rolls Royce Motor Cars Ltd v Mair & Ors [1993] UKEAT 794_92_2303 (23 March 1993) URL: http://www.bailii.org/uk/cases/UKEAT/1993/794_92_2303.html Cite as: [1993] UKEAT 794_92_2303 |
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At the Tribunal
Judgment delivered on 9th June 1993
Before
THE HONOURABLE MR JUSTICE WOOD MC (PRESIDENT)
MRS M L BOYLE
MR L D COWAN
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellant Mr P Clark
(of Counsel)
Rowe & Maw
20 Blackfriars Lane
LONDON EC4V 6HD
For the Respondents Mr T Brennan
(of Counsel)
Rowley Ashworth
147 Broadway
Wimbledon
LONDON SW19 1SE
No attendance by or on behalf of the 6th, 7th, 9th, 10th or 11th Respondents
MR JUSTICE WOOD (PRESIDENT) This is an appeal and a cross-appeal from an interlocutory decision of an Industrial Tribunal sitting at Shrewsbury on 29th September 1992 and promulgated on 6th October. It is considered by both sides, the Company and the Trade Unions, to raise matters of importance in industrial relations and in particular at a time of deep Recession, when it is inevitable that redundancies occur.
The issues involve the extent to which, at a very early stage and in each case, it is necessary or reasonable to order discovery where an employer has had to make redundant a substantial number of staff resulting in multiple applications to an Industrial Tribunal, raising various issues and with a number of different representatives engaged.
The background
In 1990/91 the business of Rolls Royce Motor Cars Ltd (the Company) suffered dramatically as a consequence not only of the general economic recession, but more specifically from the Gulf War and a luxury import tax on their product in the USA, so much so that the Company in early 1991 was losing £3m each week as market demand declined abruptly. There were substantial voluntary redundancies in January and February, of 340 and 230 respectively; it was found that this produced an imbalance between manual and staff workers so that a decision was taken at board level that further redundancies had to be made. The number of jobs to be shed was fixed at 106 towards the end of March 1991. On 24th April 1991 several employees (not the present applicants) were dismissed on the grounds of redundancy. They brought proceedings before an Industrial Tribunal sitting at Shrewsbury, under the same Chairman as the one presiding in the present matter, which decided in their favour. An appeal to this Tribunal was dismissed on 3rd February 1993 by a division presided over by Mr Justice Knox. The Company was criticised for failing sufficiently to consult with individuals.
The economic situation regressed further and it became clear that further redundancies would be necessary. There were voluntary redundancies, but the total number of those who fell under the umbrella of possible compulsory redundancy was 1142. The present Applicants were selected for redundancy. They fell within a number of categories and are represented variously - 106 by Amalgamated Engineering Union (AEU); 6 by Manufacturing, Science and Finance Union (MSF); 4 by MSF (Craft); 20 by the Transport & General Workers Union (TGWU); 10 by the Electrical, Electronic Telecommunication & Plumbing Union (EETPU); 2 by solicitors, Messrs Whittles of Manchester and 5 represented themselves. There are thus 11 different representations amongst 153 applicants. The number has altered slightly from time to time.
Compulsory redundancies were required in many of the Functions and in sub-divisions within those Functions. The Functions included Personnel, Marketing, Finance, Manufacturing, Public Relations and Engineering.
The issues
Some Applicants allege discrimination in that the selection was due to trade union activity; others that the criteria were not objective; others that there was insufficient personal consultation or right of appeal and others that there was unfair application of the criteria in the process of selection. It is probably only in the first and the last of these issues that the documents at present under consideration are relevant.
The order
The Order made by the Industrial Tribunal, in its relevant parts, reads:
"2. That each representative shall nominate for the approval of the respondents, one case as a specimen case. Such approved cases together with the applications of those applicants not represented shall be listed for hearing as soon as practicable after the promulgation of the Employment Appeal Tribunal decision. In the event of failure to agree such specimen cases liberty is given to all parties to apply for further directions.
3. That the parties shall by 28 December exchange documents and that the respondents' documents shall include with regard to all employees who were likely to be affected by the redundancies:
(a)their attendance records and
(b)the respondents' assessments naming each employee and their scores for each of the criteria in such assessments."
The Company appeals against paragraph 3 and the Applicants against paragraph 2.
The Cross-appeal - Specimen cases
All documents relevant to the criteria and weighting, and as to the procedures adopted, have been disclosed, thus although these may need to be considered in their application to the various Functions, it seems to us that the selection of sample cases should have been made through Functions and issues, and not through representation as indicated in paragraph 2 of the Order. The object should be to try to cover all issues likely to be raised. There is liberty to apply and on such application the matter could be reconsidered by the Tribunal. However an argument has arisen that the earlier part of paragraph 2 is not open to revision on application, and lest there be any misunderstanding, we propose to allow the cross appeal, to set aside this Order and to remit the matter for reconsideration by the Industrial Tribunal. We do not understand this to be seriously opposed.
The Appeal - The approach to selection
The case of Williams v. Compair Maxam Ltd [1982] ICR 156, is the leading case on the overall approach to redundancy problems. At p.160G to p.162H this Tribunal under the Chairmanship of Browne-Wilkinson J, as he then was, sets out the broad approach. He emphasises the importance of the experience of lay members in this field and we do not need to repeat what was said in that case.
A knowledge and experience of redundancy, in its practical application, is so important in approaching the problems involved, and in this case I am guided by the lay members sitting with me. The broad principles enunciated in Compair Maxam include in paragraph 4 on p.162 the following:
"4. The employer will seek to ensure that the selection is made fairly in accordance with these criteria and will consider any representations the union may make as to such selection."
There is always a duty upon an employer to act in good faith in his dealings with his employees, but this is no higher in a case of selection for redundancy than it is in the fairness of dismissal on any other basis.
Some further aspects are deemed by the present lay members to be important if, despite the trauma of losing employment through redundancy, employees are to feel that they have been fairly treated. Some never will, but there can be no right to employment for life, however desirable a target that may be in human terms.
Once the criteria have been defined and weight given to each, the application of these is important as emphasised in Compair Maxam. Did the assessor have adequate knowledge of the department, or had he only recently arrived? Was the assessor sufficiently qualified, if the work was specialised? Were the appropriate records before him or her? Was sufficient time spent on the assessment? Was there evidence of bias in the assessor - personal dislike, trade union activities, other prejudice or preference?
It must be recognised that all information used in redundancy selection, even that seeming to be entirely objective, needs to be interpreted. For example, two employees may both have been absent from work for 30 days in the previous year. One employee had a major operation and his absence was in one spell related to this. Another individual's 30 days of absence may have been in random spells of 2 or 3 days at a time, in the view of management not properly accounted for. It would be within the bounds of reasonableness, to say the least, to regard these identical spells of absence in a different light for the purposes of selection for redundancy.
After completion of assessments, were those at risk given an opportunity to comment and to raise other issues? Was there a process for appeal?
It is not suggested by the members that these are rigid rules nor that each of the issues raised above is applicable in every case - there may indeed be catastrophic financial disasters where time renders all procedures nugatory. However, more especially where time allows, it is important for sound industrial relations that even given the shock of redundancy, employees should not harbour a grievance which can be avoided by sound managerial practice. It is all a question of balance, of fairness, in the difficult situation arising.
Legal principles
The power given to an Industrial Tribunal to order discovery is in Rule 4(1)(b)(ii) of the Industrial Tribunals (Rules of Procedure) Regulations 1985 (S.I.1985 No.16). The practice follows that in the County Court. Order 14, Rule 8(1) of the County Court Rules reads:
"On hearing of an application under rules 1,2, 5 or 5A, the court, if satisfied that the discovery, disclosure, production or supply sought is not necessary, or not necessary at that stage of the action or matter, may dismiss or adjourn the application and shall in any case refuse to make an order if and so far as it is of opinion that discovery, disclosure, production or supply, as the case may be, is not necessary either for disposing fairly of the action or matter or for saving costs."
This wording follows closely that of the Rules of the Supreme Court Order 24, Rule 2.
The principles of law developed under these rules are now relatively clear, it is the exercise of the judicial discretion which so often poses difficulties. It is the repetitious use of the phrase `not necessary', which must be borne clearly in mind at each stage.
Before an order can be made the documents must be deemed to be relevant to issues raised in any particular case. It follows that those issues should be clearly established before discovery is ordered. Scientific Research Council v. Nasse`[1979] ICR 921.
Secondly, confidentiality may in some cases be of greater importance than in some others. British Railway Board v. Natarajan [1979] ICR 326, 333; Williams v. Dyfed County Council [1986] ICR 449; Perera v. Civil Service Commission [1980] ICR 699. These three cases all involved discrimination.
Thirdly, that although documents are relevant and confidential, the Court or Tribunal must still exercise a judicial discretion whether or not to order discovery. Mere relevance or confidentiality does not automatically decide the issue one way or the other. Nasse` (supra).
Fourthly, it is for the applicant to show that the documents are relevant, that his application is based upon a defined issue and that discovery is necessary at that stage of the proceedings. In other words that he is not merely involved in a "fishing expedition".
Lastly, it is well established that the order for discovery should not be so wide or detailed as to be oppressive.
The issues of relevance have been stressed in a number of cases and in particular in Compair Maxam Ltd (supra) - at p.161E-G where this Tribunal said:
"For the purposes of the present case there are only two relevant principles of law arising from that subsection. First, that it is not the function of the industrial tribunal to decide whether it would have thought it fairer to act in some other way: the question is whether the dismissal lay within the range of conduct which a reasonable employer could have adopted. The second point of law, particularly relevant in the field of dismissal for redundancy, is that the tribunal must be satisfied that it was reasonable to dismiss each of the applicants on the ground of redundancy. It is not enough to show simply that it was reasonable to dismiss an employee; it must be shown that the employer acted reasonably in treating redundancy "as a sufficient reason for dismissing the employee," ie the employee complaining of dismissal. Therefore, if the circumstances of the employer make it inevitable that some employee must be dismissed, it is still necessary to consider the means whereby the applicant was selected to be the employee to be dismissed and the reasonableness of the steps taken by the employer to choose the applicant, rather than some other employee, for dismissal."
In B L Cars Ltd v. Lewis [1983] IRLR 58 at paragraphs 12 and 15 Mr Justice Browne-Wilkinson says:
"12 It also seems to us that it is possible that the majority were not correctly directing themselves as to their function. The passage which we have read indicates that they may have thought that it was the function of the Tribunal to decide whether they (the Tribunal) thought that the correct selection had been made, in the sense of being the selection that they would have made. The correct question they had to ask themselves was whether the selection was one that a reasonable employer, acting reasonably, could have made."
...
"15 On the remitted hearing, the Industrial Tribunal will again have to apply their minds to S.57(3) of the Act. First they must direct their minds to the question, 'Was the selection one which a reasonable employer could have made?, not to the question, `Would we have made that selection?' In approaching their decision, the Industrial Tribunal will have to consider the criteria that were adopted and whether the employers have demonstrated that they have fairly applied those criteria to this redundancy. In the normal case of a large employer, that would normally involve the employers showing that in selecting Mr Lewis they had compared him in relation to his length of service, his job and his skills with those others who might be made redundant, namely, the other industrial engineers in the department. In the ordinary case, although not invariably, that would involve evidence from the person who made the selection indicating that the rating of each of the persons who might be made redundant had been made and that as a result it emerged fairly and genuinely that Mr Lewis was one of the two who rated worst on those heads. Those are the matters for which we would expect the Industrial Tribunal to be looking when they reconsider the matter on the evidence which has already been heard. It is, of course, for the Tribunal to consider at the end of the day the question posed by S.57(3); those are merely indications of the matters for which they might be looking."
We have also been referred to Buchanan v. Tilcom Ltd [1983] IRLR 417 - a decision of the Court of Session. The facts are immaterial and the issues are sufficiently set out and the principles to be applied are explained in paragraphs 7 and 8 of the leading judgment given by the learned Lord President - Lord Emslie.
"7 In this appeal the appellant in challenging the decision of the Employment Appeal Tribunal contended that the Tribunal had merely substituted its own view for that of the Industrial Tribunal upon the evidence. It was for the Industrial Tribunal to decide whether the evidence led before them was sufficient to satisfy them that Mr Grogan had acted reasonably within the meaning of S.57(3) in selection the appellant for dismissal by reason of redundancy. They were perfectly entitled not to be satisfied of that matter in respect that the accuracy of the information upon which Mr Grogan had taken his decision had not been established by direct evidence. There was, in short, no error of law on the part of the Industrial Tribunal and the Employment Appeal Tribunal had no jurisdiction to interfere with their decision.
8 We are not persuaded that the attack upon the decision of the Employment Appeal Tribunal is well founded. The only issue before the Industrial Tribunal was whether Mr Grogan had acted reasonably in selecting the appellant for dismissal on the ground of redundancy. The reason for the dismissal of the appellant was redundancy. As was pointed out in the opinion of the court in Atkinson v. George Lindsay & Co [1980] IRLR 196 where a dismissal for that reason survives (as the dismissal of the appellant does) the tests prescribed in what is now S.59 of the Employment Protection (Consolidation) Act 1978 it will in most cases be extremely difficult for any Tribunal to hold that in dismissing a particular individual his employers acted unreasonably within the meaning of S.57(3). This was readily accepted by counsel for the appellant who recognised also that S.57(3) which applies to dismissal by reason of redundancy does not readily lend itself to that situation. In the event the appellant, apart from throwing out the suggestion that he might have been victimised because of dislike, merely expressed his concern that others, with even less seniority than he and employed in the same work (labouring) had been kept on. In this situation where no other complaints were made by the appellant all that the respondents had to do was to prove that their method of selection was fair in general terms and that it had been applied reasonably in the case of the appellant by the senior official responsible for taking the decision. As was pointed out by Phillps J in Cox v. Wildt Mellor Bromley Ltd [1978] IRLR 157 it is quite sufficient for an employer in a case such as this to call witnesses of reasonable seniority to explain the circumstances in which the dismissal of the employee came about and it was not necessary to dot every 'i' and to cross every 't' or to anticipate every possible complaint which might be made. In our opinion, agreeing with the Employment Appeal Tribunal, it is quite unrealistic and unreasonable for an Industrial Tribunal, which is prepared to accept that the senior official who made the selection reached his decision fairly upon the basis of company information, the reliability of which he had no reason to question, to demand of the employer for the purposes of S.57(3), that he should set up the accuracy of that information by direct evidence of other witnesses speaking, perhaps, to records for which they had responsibility. The Industrial Tribunal, in our opinion, set for the respondents in this case a standard which was much too high. In so doing they misdirected themselves and we have no doubt that the Employment Appeal Tribunal was entitled to go on to hold that the only reasonable conclusion which was open upon the evidence led before the Industrial Tribunal was that the respondents had discharged the onus which rested upon them in terms of S.57(3) of the Act."
Generally in its approach an Industrial Tribunal will have to consider the fairness in each individual case - as emphasised in Compair Maxam - and whether this has been fairly achieved. The task of an Industrial Tribunal is to examine the reasons why the employer selected an individual for redundancy and this must be distinguished from the examination of why an employer did not select some other particular individual. As was pointed out by the learned Lord Chancellor in Polkey v. A E Dayton Ltd [1988] 142 at p.153E, failure to observe any particular sound industrial practice will not necessarily render a dismissal unfair.
The following documents have already been disclosed; the selection criteria and the rating of each, together with the name of the assessor; the summary of selection scores for each Function or Group within it, omitting the names and each rating under a criterion, but giving total points for each person and full details of each applicant; details of the selection procedure and how ratings should be scored, and the minutes of the Review Group (some 12 pages) showing its membership, and its deliberations and conclusions concerning each Function or Group.
The Company's case
The first objection to this Order raised by Mr Clark, is that these documents are not relevant to the issues. He submits that their only use is for an inadmissible purpose, namely, to allow an Industrial Tribunal to embark on its own evaluation and thus to substitute its own view for that of management making the selection.
It is not for the Industrial Tribunal to select who is to be made redundant, that is the function of the employer with its knowledge of the business involved and of its real needs.
The applicant must therefore show some basis upon which the relevance can be assessed, otherwise the objection could properly be made that seeking such discovery is merely a "fishing expedition". Moreover, discovery is ordered only in a particular case as emphasised in Compair Maxam, as yet the specimen cases have not been identified.
Although attendance could be relevant in a case where an applicant is alleging that his or her record is far better than some other employee, who has not been made redundant, it is submitted, and it seems so to us, that an applicant in that position will be able to name the comparator and that only his or her records of attendance would be relevant. Thus in the present case it is our view that to order the attendance record of 1142 employees is unnecessary and that an order would be better left until the issues in any particular case have been narrowed.
We also think the point is well made, that there are a number of matters of principle which are raised and need to be decided before the detailed application of criteria becomes immediately relevant. That stage is not yet reached and this must be balanced against other factors when this order is being considered.
We say at once that we would not have ordered such wide discovery in respect of all the cases at such an early stage. We would have preferred first to identify the specimen cases and then to consider what discovery was necessary upon the issues raised and properly identified in each of those cases. We bear in mind the guidance given by Arnold J, as he then was, when sitting in this Tribunal in British Railways Board v. Natarajan (supra) at p.333 where he said:
"We think that before deciding whether an examination is necessary, the judge or chairman of the tribunal in a case in which the matter is dealt with at first instance, or the appellate court, where the matter comes before it upon review, must decide whether there is any prima facie prospect of relevance of the confidential material to an issue which arises in the litigation; put another way, whether it is reasonable to expect that there is any real likelihood of such relevance emerging from the examination. If there is not, we do not think that the exercise of examination is necessary or should take place. If there is, then to come to the second matter which we have mentioned, it is, we think, a matter of convenience in each case whether the examination should take place at the interlocutory stage of discovery or immediately the matter arises at the trial. We can conceive that there would be many cases in which, having regard to the probable way in which the material, if found relevant, would have to be treated, that it would be essential for the decision to be made at the interlocutory stage of discovery. But there are also cases where having regard to the way in which the material would have to be dealt with, such an early examination would not be necessary. That is a matter which we think must be decided in relation to each case in which the point is relevant."
However we can see that a view could be taken that once such documentation has been disclosed and considered, the feeling of unfairness may evaporate and claims might be abandoned. Moreover, an efficient and fair-minded management might well be prepared to show its paperwork.
The second objection is to the confidential nature of the information contained in these forms. Reliance was placed on the discrimination cases to which we have made reference above. Those cases are, in our judgement, distinguishable in that personal information will be contained therein. In a case such as the present, it might be important for the applicant to know the identity of the person assessed. It might be possible to arrange some system whereby the information was used only for the purposes of the hearing of this case.
Although a redundancy case, and therefore this case, is distinguishable from cases of discrimination, nevertheless, the lay members are anxious that the principle of confidentiality between employer and employee, such a fundamental of the basis for trust and confidence, should not be eroded. Discrimination of necessity deals in comparison. Redundancy raises the issue of fair selection, fair application of criteria.
All matters concerning an individual's performance at work are between him and his employer. This principle should not be lightly discarded. It has been emphasised in the ACAS Code of Practice No.2, Disclosure of Information to Trade Union for Collective Bargaining Purposes, coming into effect on 22nd August 1966, where at paragraph 6 we find:
"No employer is required to disclose any information which ... relates to an individual unless he has consented to its disclosure."
That principle seems to the lay members to be sound, and should not be violated even though that particular Code may no longer be in force. Moreover, if an Industrial Tribunal were to conclude that selection was unfair because the applicant was selected instead of X, whether that be said explicitly or merely implied, they are concerned for the implications of X, who would not be a party to the proceedings and could not be since he has not been dismissed. This would merely complicate all the issues and this cannot have been intended by the legislation.
The last objection taken is that to order such documentation in respect of 1142 employees is oppressive and therefore generally objectionable.
Perhaps our greatest concern is that such a broad order as has been made in the present case, and at the present stage once obtained, could be used as a precedent and become a weapon during industrial conflict between trade unions and management. Any such tendency would only cause exacerbation in industrial relations, but in any event it is in this type of issue that costs should properly be used as a deterrent, where discovery proves in the end to have been unnecessary and unreasonably sought - the mere fishing expedition.
Thus we ourselves would have approached the present problems in the following sequence. First, to seek to identify the specimen cases which were to be tried first. Secondly, to isolate those issues upon which discovery was relevant. Thirdly, to make such order for discovery on those issues in those particular cases, and only if necessary at that stage. In some cases the attendance records would be relevant, in others not. In other and exceptional cases the details of the selection forms would have been relevant, in others not. It may be possible, in order to save time and costs, that the broad principles of the criteria and weighting, the consultation and the appeal procedures can be decided before turning to the actual application of the criteria in the selection process. If the applicants failed thus far, then the last stage would be necessary. However, if they succeeded prior to the selection stage, then it might be unnecessary to expend further money on the selection procedure.
There seems to us to be a danger of exacerbation where an order for discovery is used as a weapon on a broad front and not as it must be, namely relevance to any particular issue in any particular case.
That, however, is not an end to the matter.
The power of this Tribunal to interfere with an interlocutory order on appeal is limited to correcting errors of law.
Medallion Holidays v. Birch [1985] ICR 578
Ashmore v. BC [1990] ICR 485
see also
Adams v. West Sussex County Council [1990] ICR 546, 549E, 550H.
We ask ourselves three questions - is the order made within the powers of the Tribunal? There is no issue in this case but that it was. Secondly, has the discretion been exercised within guiding legal principles? Thirdly, can the exercise of the discretion be attacked on Wednesbury principles?
This is a finely balanced position. We must bear in mind that this Chairman has already dealt with a case in which the Company was concerned and is therefore familiar with some of its practices. Secondly, as we have mentioned above, it may have been his intention that by disclosure of the documentation a number of the cases would be withdrawn. Thirdly, as we have indicated, some of the documentation could be relevant and necessary at a much later stage and in somewhat exceptional circumstances if bad faith was being suggested.
We must also caution ourselves against interfering with the exercise of this discretion, as we would have taken a different course.
However, having done so, we are of the opinion that the learned Chairman erred in failing to isolate the specimen cases and to identify the relevant issues in each case; and in failing to address his mind to the necessity for each limb of discovery at the present stage. We also take the view that the Order made was oppressive and if used as a precedent could exacerbate industrial relations and run counter to the fundamental basis of trust and confidence between and employer and each of his employees - not only those involved in the present litigation.
For these reasons therefore the appeal is allowed and all issues are remitted to the learned Chairman for his reconsideration after the specimen cases have been identified. Each party has asked for leave to appeal in this case and we therefore give leave to appeal to each party.
