THE INDUSTRIAL TRIBUNALS

CASE REF: 547/06	

CLAIMANT:			Stanley William Graham

RESPONDENT:		Discount Window Systems Limited

DECISION

The unanimous finding of the Tribunal is that the claimant was unfairly dismissed by the respondent and it awards him compensation of £21,337.54.

Constitution of Tribunal:

Chairman:		Mr Greene

Members:		1.  Mr Crawford
			2.  Mr Henry

Appearances:

The claimant was represented by Mr McEvoy, of counsel, instructed by Alana Jones, Solicitors.

The respondent was represented by Mr C Hamill, of counsel, instructed by Worthingtons, Solicitors.

Sources of Evidence

1.	The Tribunal heard evidence from the claimant and for the respondent from Kieran Beattie, George Clifford Donnell and Paul Kenneth McCullough.  The Tribunal also received four bundles of agreed documents amounting to one hundred and fifty-three pages. 

The Claim and Defence
 
2.	The claimant claims unfair dismissal.  The respondent resists the claimant’s claim that he was unfairly dismissed and asserts that the claimant was made redundant.

The Issues

3.	(a)	Was the claimant unfairly dismissed?

(b)	If yes, what is the appropriate remedy?

Findings of Fact

4.	(a)	The respondent employed the claimant as a sales manager and later general manager from 4 May 1993 to 13 March 2006.

(b)	The claimant, who was born on 2 October 1948, was paid an annual salary of £60,000 gross, £732.29 per week net.  He also had the benefit of a pension.  The respondent made contributions of £213.46 per week towards his pension.

(c)	On 13 March 2006 the respondent dismissed the claimant by reason of redundancy.  The claimant has questioned whether there was a genuine redundancy situation in the business.

(d)	The Tribunal is satisfied that there was a redundancy situation in the business.  In so concluding the Tribunal took into account the following matters;-

(i)	The respondent’s financial situation was bad.  The financial year ran from 1 December to 30 November.  In 2005 there had been a loss of £60,495 compared to a profit of £41,565 in 2004.

(ii)	There had been difficulties in the business for two years by reason of increasing overhead costs and declining sales and the respondent had accumulated losses.

(iii)	There had been a profit in the last quarter of 2005 but it was unquantified and was insufficient to prevent a loss of £60,495 for 2005.

(iv)	The first quarter of the next year (December 2005 to February 2006) there had been further losses but a loss for this quarter was usual.

(v)	The claimant had advised the respondent that it would be in a break-even situation around Easter 2006.

(vi)	The respondent made the business decision that it needed to make savings of £100,000.

(e)	The respondent did not give the claimant any warning of his redundancy.  Nor did it discuss the redundancy with him with a view to avoiding the redundancy or to consider alternatives.

(f)	The respondent did not follow normal procedures for making a redundancy.  The managing director elected not to follow the advice of his solicitor about procedures.

(g)	The respondent decided to make the claimant redundant in December 2005 but did not so advise him until 13 March 2006.

(h)	The respondent’s managing director met with the claimant on 13 March 2006 to advise him that he was being made redundant.  The respondent did not offer any alternative employment to the claimant.

(i)	By letter of the 20 March 2006 the respondent formally notified the claimant of his redundancy.  He was paid redundancy of £5,229 and pay in lieu of notice of £11,538.48 for twelve weeks up to 5 June 2006 and outstanding holiday pay.  The claimant was advised of his right of appeal which he did not exercise.

	(j)	The respondent returned to profit around mid-2006.

(k)	The respondent accepted throughout that it had not followed the proper procedures in making the claimant redundant.  It argued that had the respondent followed the proper procedure it would have made the redundancy anyway and therefore the respondent could benefit from the statutory defence at Article 130A(2) of the Employment Rights (Northern Ireland) Order 1996.

(l)	The claimant was in receipt of Incapacity Benefit from 23 March 2006 to 31 July 2006.

(m)	During April, May and June 2006 the claimant considered investing in a friend’s business but decided against it.  In June 2006 he did some training for which he was paid. 

(n)	The claimant obtained consultancy work for Proclad Home Improvements.  During May and June 2006 he worked twenty-four days and earned £2400.  Subsequently he was offered permanent employment with Proclad from 31 July 2006.  There he earns £329.47 per week net but does not have a pension.

(o)	Since obtaining employment with Proclad the claimant has not sought other employment because he believed at his age he would not get a job at the salary he had with the respondent.

(p)	The claimant seeks compensation by way of remedy.

The Law

5.	(a)	To establish that a dismissal is not unfair an employer must establish the reason for the dismissal and that it was one of the statutory reasons that can render a dismissal not unfair.  If an employer satisfies both of the above requirements then whether the dismissal was unfair or not depends on whether in the circumstances the employer acted fairly and reasonably in treating the reason as a sufficient reason for dismissing the employee.

(b)	Where an employer dismisses an employee by reason of redundancy he must warn and consult the affected employees; adopt a fair basis on which to select for redundancy; apply the selection criteria fairly; and take such steps as may be reasonable to avoid or minimise redundancy.

(c)	Where there is a fundamental failure, including a wholesale disregard of procedures, then that will almost inevitably mean that there is a breach of Article 130A(1) of the Employment Rights (Northern Ireland) Order 1996, and in that case Article 130A(2) does not apply at all and the Polkey v A E Dayton Services Ltd [1987] IRLR 503 HL analysis continues to apply. (Alexander v Bridgen Enterprises Ltd [2006] IRLR 422 EAT at paragraph 56).

Application of the Law and Findings of Fact to the Issues

6.	(a)	The Tribunal is satisfied that the respondent has shown the reason for the claimant’s dismissal (redundancy) and that that reason is one of the statutory reasons that can render a dismissal fair.

(b)	There was a wholesale disregard of the statutory dismissal procedures.  Accordingly the dismissal of the claimant is automatically unfair by virtue of Article 130A(1) of the Employment Rights (Northern Ireland) Order 1996. 

(c)	Following the approach of the EAT in Alexander v Brigend Enterprises Ltd the statutory defence at Article 130A(2) of the 1996 Order does not apply.

(d)	The Tribunal must then, following the Polkey test, ask itself would the claimant have been made redundant in any event had a fair procedure been followed (Alexander v Brigend Enterprises Ltd).  The factors that the Tribunal had regard to were;-

(i)	The respondent had suffered a loss of £60,495 up to 30 November 2005.

(ii)	There were losses in December 2005, January, February and March 2006.

(iii)	The respondent had accumulated losses.

(iv)	The respondent decided it needed to save £100,000.

(v)	In the last quarter of 2005 the respondent had made a profit which was unquantified, though the claimant described it as substantial, and the company’s financial position had improved in 2006.

(vi)	The months of the first quarter (December to March) are always difficult months and it was unchallenged that they were only in profit on one occasion in that period during the claimant’s employment.

(vii)	The claimant had replied to a query from the respondent’s managing director in February 2006 that the business would break even around Easter 2006.

(viii)	Around mid-2006 the respondent’s business went into profit.

(ix)	Had there been proper consultation it may be that alternatives to the claimant’s redundancy might have been agreed, or the claimant might have taken a significant salary cut as he had done previously or his redundancy which had been delayed from December 2005 to 13 March 2006 might have been deferred further. 

(e)	The onus is on the respondent to persuade the Tribunal, on the balance of probabilities, that dismissal would have occurred in any event had proper procedures been followed.  The Tribunal is not persuaded that the respondent has proved this contention on the balance of probabilities, having regard to the matters above.  Accordingly it cannot be said that the claimant would have been made redundant in any event had proper procedures been followed.

(f)	Accordingly the dismissal of the claimant was unfair.

(g)	The Tribunal awards the claimant compensation as set out below.  The Tribunal also took into account the following matters when assessing his compensation;-

(i)	The claimant had some incapacity following his dismissal from 23 March to 30 July 2006.

(ii)	During that period he made some inquiries about work, i.e. considering investing in a friend’s business and he did some paid training and consultancy work.
 
(iii)	He then obtained full-time permanent work on 31 July 2006 and has remained in that employment.

(iv)	In his work with Proclad he earns £402.82 less per week and he does not benefit from pension contributions of £213.46 per week. 

(v)	It is always a judgement call for a claimant attempting to mitigate his loss whether to accept a less well paid job or hold out for something better.  Whatever approach is followed a claimant leaves himself open to criticism.  However the Tribunal finds that the claimant should have made some effort to test the job market for a job at a salary closer to that which he previously earned with the respondent.  In so concluding the Tribunal understands that this is difficult, as the claimant stated, for someone of fifty-eight years of age.  The Tribunal feels the claimant’s loss of earnings should be restricted to twenty-six weeks from 6 June 2006 as he should have made more efforts to obtain better paid employment.

(vi)	The Tribunal does not allow any future loss.

(vii)	As this is a case where the statutory dismissal procedure applies and it has not been completed due mainly to the failure of the respondent the Tribunal increases the award it makes by thirty per cent. 

Basic Award

£290 x (1.5 x 12)			=  £ 5,220.00
Redundancy payment		=  £ 5,220.00

								=  £ 0,000.00

Compensatory Award 

	From 7 June 2006 to 6 December 2006
	£732.29 x 26				=  £19,039.54

	Loss of pension
	£213.46 x 26				=  £ 5,549.96

	Total loss									=  £24,589.50
	
Consultancy earnings		=  £ 2,400.00

	Wages from 31July to 6 December 2006
	£329.47 x 18.29			=  £ 6,026.01

											=  £ 8,426.01

	Total loss of earnings							=  £ 16,163.49 

	Loss of statutory rights							=  £      250.00

	Total Award									=  £16,413.49
	
	Increase of Award by 30% to						=  £21,337.54

This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

Chairman:

Date and place of hearing:	2 and 3 November, 14 December 2006 and 19 January 2007, Belfast

Date decision recorded and issued to parties: