Appeal No. UKEAT/0176/12/DM
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX
At the Tribunal
On
21 September 2012
Before
HIS
HONOUR JUDGE DAVID RICHARDSON
MRS R CHAPMAN
MR D J JENKINS OBE
DRIVE
ASSIST UK LTD APPELLANT
MR
G ALDERSON RESPONDENT
Transcript of Proceedings
JUDGMENT
SUMMARY
REDUNDANCY
Redundancy compensation – amount of Polkey deduction
The Tribunal reached its conclusion as to the amount of a Polkey
deduction by applying an arithmetical chance without considering material
evidence specific to the Claimant’s position: in so doing it erred in law.
However, albeit by the wrong route, it reached a conclusion which was plainly
of the correct order: the appeal would be dismissed.
HIS HONOUR JUDGE DAVID RICHARDSON
Introduction
1.
This is an appeal by Drive Assist UK Ltd (“DA”) against part of a
judgment of the Employment Tribunal sitting in North Shields (Employment Judge
Pitt presiding) dated 5 January 2012. By its judgment the Tribunal held that
DA had unfairly dismissed Mr George Alderson. It reduced the compensatory
award by 29% under the principle in Polkey v A E Dayton Services Ltd
[1988] AC 344.
2.
Although DA appealed against the finding of unfair dismissal, that
aspect of the appeal was considered by HH Jeffrey Burke QC to disclose no reasonable
ground for appealing. DA’s appeal against a Polkey was referred
to this full hearing.
The background
3.
Mr Alderson was employed by DA as a driver at its Sunderland depot with
effect from 11 March 2008. He was one of 21 drivers. In 2011, having lost two
major clients, DA decided to make redundancies in order to reduce the number of
drivers to 15. DA devised a detailed selection matrix. The Tribunal described
it as comprehensive and indeed difficult to follow. It had no less than 21
criteria; they varied from disciplinary record and unauthorised absence through
to such matters as uniform and tidy appearance. Each criterion attracted a
certain number of marks. There was guidance as to what was required to earn
marks. The total available mark was 79.
4.
Of the 21 employees, Mr Alderson came 16th, so he just missed
the cut. He had 69 marks. Above him the 15th person had 71 marks
and the next four had 72. The higher candidates were spread between 74 and
78. Below him, the 17th person had 68 and the 18th
person had 67. The other candidates were significantly lower again.
5.
The Tribunal found that in significant respects DA did not apply the
guidance consistently or had not worked out what was required to score a
particular mark. Thus, for example, there was a criterion entitled “Ad hoc
absences”, DA made a distinction between certified and self-certified days
which it applied in Mr Alderson’s case but did not apply consistently. DA also
applied criteria on issues relating to fuel receipts and insurance in ways
which could not be clearly justified by the scheme.
6.
These failings were compounded by two procedural failures. Firstly DA
did not show Mr Alderson his own scoring sheet or the matrix and the guidance
given, so he was in no position to know what representations to make.
Secondly, after the appeal, the appeal officer said he would go away and ask
questions of other members of management before he could make his decision, but
he never gave Mr Alderson an opportunity to address him on what they said.
7.
The Tribunal therefore found that the appeal was unfair because it did
not consider that the criteria were fairly, objectively and consistently
applied or that the correct procedures were followed at the appeal.
8.
Before we turn to the Polkey question, it is important to
keep two further aspects of the Tribunal’s reasoning in mind.
9.
Firstly the Tribunal found that DA “made a genuine effort to carry out
the procedures properly and did not relish having to make these members of
staff redundant.” There was no ulterior motive in DA’s
selection of Mr Alderson.
10.
Secondly, the Tribunal did not make any finding that the selection
criteria generally were flawed, rather that the way in which certain criteria
were applied could not be justified. We note that the criteria were unusually
detailed but they were not different in kind from criteria widely in use for
the purpose of redundancy selection.
The Tribunal’s reasoning
11.
The Tribunal’s reasoning in respect of Polkey was as
follows:
“13. We considered the issue of Polkey and it is
clear that if all the right procedures had been in place, there was still a 6
in 21 chance that the Claimant would have been dismissed for reason of
redundancy and therefore there would be a 29% chance he would still lose his job.
Accordingly the award will be reduced by that amount.”
Submissions
12.
On behalf of DA, Mr Rees submits that the Tribunal’s Polkey
reasoning is wrong in law. He submits that the Tribunal ought not to have
taken a purely arithmetical or statistical approach; it should have grappled
with the evidence. There was no reason to suppose that all the other scores
were unreliable. The Tribunal’s criticism of Mr Alderson’s marking would have
resulted in the addition of two marks to his score; that would have brought him
to 71 points; only one other employee was as low as 71; therefore, he submits
there was a 50% chance that DA would have been dismissed any event. He invites
the Appeal Tribunal to substitute a Polkey reduction of 50%.
13.
Mr Alderson, who has represented himself at this hearing, submits that
there is no error in law in the Tribunal’s reasoning.
14.
We asked what material the Tribunal had before it when it assessed the Polkey
finding. We were told that it had the detailed scores for Mr Alderson. It
also had summaries of the scores for all the other drivers, but not the detail.
Discussion and conclusions
15.
The Tribunal’s task is, subject to provisions which are immaterial to
this appeal, to award such amount as the Tribunal considers just and equitable
in all the circumstances, having regard to the loss sustained by the complainant
in consequence of the dismissal insofar as that loss is attributable to action
taken by the employer: see section 123(1) of the Employment Rights Act 1996.
16.
Where there is a chance that an employee would still have been dismissed
if the employer had followed fair procedures, the Tribunal does not have to
take an all or nothing approach to compensation. It is entitled to make an
estimate of the chance that the employee would still have been dismissed and
scale down the compensation in accordance with its estimate. This is what is
usually described as a Polkey reduction. The underlying
principles were explained by Elias P in Software 2000 v Andrews
[2007 ICR 825.
“(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.”
17.
In this case, the Tribunal had regard to the evidence only to a very
limited extent. It looked only to the fact that DA intended to make six
drivers redundant out of 21. It based its Polkey finding only on
that evidence. Reasoning in this way was, in our judgment, wrong in law. The
Tribunal had not rejected the selection matrix as a whole, and it had not found
DA to have operated the matrix with any ulterior motive. It therefore had a
substantial amount of material evidence which it ought to have considered.
18.
Look at it this way. Suppose the claim for unfair dismissal had been
brought not by Mr Alderson, who was just below the cut-off for redundancy
selection, but by the person who scored least many marks below the cut-off
point. Even if he had been affected by the same failures as those which
affected Mr Alderson, it would be an affront to common sense to have awarded
him compensation on the basis that he had a 15 in 21 chance of remaining
employed. His chance of leapfrogging six other people to safety was remote. This
shows that where it can properly do so, the Tribunal should look at the
evidence it has, not just at the overall numbers in the pool.
19.
In assessing the chance that Mr Alderson would have been made redundant
in any event, the Tribunal should have looked at all the evidence which
rationally bore on that question. To this extent we accept the submission
which Mr Rees made to us. It is important, however, not to overstate the task
of the Tribunal in making a Polkey assessment. It was not bound
to engage in a detailed re-scoring exercise. Indeed, it would have been an
error of law to do so. Its task was to take into account the evidence which it
had, making proper allowance for the imponderables and deficiencies in that
evidence, keeping carefully in mind that it was for DA to establish both the
existence and the extent of the chance that Mr Alderson would have been
dismissed in any event.
20.
What was the material which the Tribunal should have taken into
account? The following seems to us to have been material. (1) Mr Alderson was
just below the cut-off point. (2) Mr Rees accepts that two points ought to
have been added to his score which would have brought it to 71. (3) There
were procedural deficiencies in the way Mr Alderson was consulted. If he had
been given his scores and matrix and if he had been given an opportunity to
comment on what management said he might have been able to make effective
representations, which might have made yet further difference to his score.
(4) Quite apart from the employee who scored 71, four others scored 72. The
deficiencies in the scoring methods adopted mean there might have been a degree
of error in their scoring. The chance of an error favouring Mr Alderson
sufficiently was less with those who scored 72 than with the employee who
scored 71. An error might have been either way, but as we have said, the
burden of establishing the existence and extent of the chance that Mr Alderson
would have been dismissed in any event lay upon DA.
21.
Bearing these considerations in mind, we do not accept the submission of
Mr Rees that the chance of Mr Alderson being dismissed was bound to be assessed
at 50%. His submission leaves out of account the factors which we have
mentioned, in particular deficiencies in the process other than scoring and the
fact that there were a number of employees on 72 as well as an employee on 71.
22.
In our judgment, although the Tribunal’s reasoning was incorrect, the
chance of dismissal which it found was plainly and unarguably of the correct
order. Questions of compensation – such as the amount of any Polkey deduction
– are usually questions which involve estimation and assessment rather than
precise findings of fact. We are conscious that as an Appeal Tribunal we are
not ourselves a fact finding body; but where a Tribunal has reached a
conclusion on a question of compensation where its estimation is plainly and
unarguably of the correct order, we do not consider that we are required to
allow the appeal and remit the matter to a Tribunal for further hearing. That
would be an exercise which the Court of Appeal has discouraged: see Buckland
v Bournemouth University [2010] IRLR 445 at paragraphs 50 (Carnwath LJ)
and 58 (Jacob LJ) (“Ping-pong, as some call it, generally serves litigants
badly..”).
23.
In summary, while we see force in the argument which Mr Rees has put
forward as to the Tribunal’s approach to the Polkey reduction, we
do not accept his further submission that the Polkey reduction
should have been 50%. In our judgment the Tribunal’s estimate was plainly and
unarguably of the correct order. We therefore conclude that the appeal should
be dismissed.
