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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Patel v Clemence Hoar Cummings [2006] UKEAT 0214_06_2306 (23 June 2006) URL: http://www.bailii.org/uk/cases/UKEAT/2006/0214_06_2306.html Cite as: [2006] UKEAT 0214_06_2306, [2006] UKEAT 214_6_2306

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APPEARANCES

 

For the Appellant	Mr A Patel (The Appellant in Person)
	Mr M West (Representative) Instructed by: Peninsula Business Services Ltd Riverside New Bailey Street Manchester M3 6PB


 


Summary

The dismissal for redundancy was, in general terms, clearly procedurally unfair; but the Tribunal found that section 98A(1) did not apply while section 98A(2) did; and on the basis of section 98A(2) the employers would probably have dismissed anyway, with the effect that the dismissal was, as a result, not unfair. Held that section 98A(1) & (2) applied or did not apply together, that the transitional provisions in Regulation 18 of the Dispute Regulations applied to section 98A(1) – because that subsection is dependant on the applicability of the statutory procedures – and that, because dismissal was first contemplated before 1.10.04, neither subsection applied; the dismissal was procedurally unfair. Remitted to assess compensation.


 


HIS HONOUR JUDGE BURKE QC

1. In the course of this appeal, by Mr Patel against the dismissal of his claim of unfair dismissal by the Employment Tribunal sitting at Stratford and chaired by Mr Dabezies, it is necessary for us to decide, before proceeding to hear the arguments on the Appeal proper, an issue which has arisen as to the admission, at this appellate level, of new evidence. In order to make it clear how that issue arises it is necessary to set out the history of the litigation in brief terms.
2. Mr Patel became employed by the Respondents, a firm of accountants called Clemence Hoar Cummings, who we will call "CHC", in April 2002 when CHC took over his previous employers, McGaughie & Co. Mr Patel's employment was transferred to CHC pursuant to the Transfer of Undertakings Regulations. He was given three months notice of dismissal on 6 October 2004, it was said on the grounds of redundancy; and his employment ended on 4 January 2005. His appeals against his dismissal finally failed on 24 March of that year. In his claim form presented to the Employment Tribunal thereafter, he complained, by implication arising from his assertion that a new employee, who was the son of one of CHC's partners, had been taken on in the same capacity a few days before his dismissal, that the dismissal was not genuinely for redundancy. He claimed that he had been unfairly singled out and there had been no consultation. In their response CHC set out a detailed account of their alleged need to make cost savings because of falls in turnover in the years 2002/3 and 2003/4, which appeared by October 2004 to be likely to be followed by a further such fall in 2004/5. They claimed that this declining position had been addressed by a continuing process of reduction in the number of fee earners and in particular the number of employees at the grade or grades of qualified accountants who were not partners, Mr Patel being in that category. They set out that the number of partners had fallen from 8 to 6 between April 2003 and 31 March 2005 and the number of managers over that period had fallen from 6 to 2. Mr Patel, with admirable frankness, has accepted that he knew that the Respondent's case was that there had been a series of redundancies among the senior non-partner fee earning category.
3. The hearing before the Tribunal took two days. Mr Patel was unrepresented. CHC were represented by counsel, instructed by a highly experienced firm of London solicitors. There had been an order for disclosure of documents, made prior to the hearing on 19 May. To what extent there had been disclosure of documents is not clear; but certain documents to which we will shortly refer had not been disclosed as part of that process. The evidence on behalf of CHC consisted of Mr Grady, the firm's Managing Partner, who gave evidence on the first day and another partner, Ms Humphry, who gave evidence from the start of the second day. Mr Patel then gave evidence on the second day; and the hearing was concluded. On the morning of the second day, as the Tribunal recorded in their judgment, CHC disclosed for the first time a number of documents which, plainly, should have been disclosed much earlier. Those documents consisted of their financial statements for the years 2002/2003 and 2004/2005; whether they also included the statements for 2003/2004 is not clear and does not matter because the results for 2003/2004 are set out in the results for 2004/2005. The Tribunal said, at paragraph 13 of their judgment, that Mr Patel did not challenge the genuineness of those documents.
4. CHC also produced for the first time at that stage notes of a partner's meeting on 13 September 2004, when it was decided that Mr Patel should be made redundant, and a copy of a compromise agreement between the firm and a Mr Bell dated 9 September 2002. Mr Bell had been in the employment of CHC, having also transferred under the TUPE Regulations from McGaughie & Co, and had left in 2002. He was of a similar status to that which Mr Patel occupied at the time of his dismissal; and indeed Mr Patel says that he moved into Mr Bell's position when Mr Bell left. The compromise agreement shows that CHC had paid Mr Bell £12,000 as compensation for loss of employment, without admission of liability. That agreement contains, at clause 9, a clause entitled "Confidentiality of Settlement" which reads as follows: "The employer and employee agree to keep confidential and not disclose (other than in confidence to professional advisors or as required by law) the existence or terms of this agreement".
5. A further document which was disclosed for the first time in this way was a document sent by Mr Grady to a Mr Smith, another employee in the same or similar category, dated 25 August 2004, setting out that he had been paid an ex-gratia payment of £2,000 as part of a redundancy package. Mr Bell was one of the employees upon whom CHC had relied as having been made redundant. Mr Smith was another such employee. Mr Patel knew that the firm relied on the termination of the employment of both persons as having been attributable to redundancy. No explanation was provided as to why these documents were disclosed so late or at the stage at which they were disclosed. The Tribunal in their judgment do not refer to any explanation; and they were rightly critical of this very late disclosure.
6. The Tribunal found that Mr Bell and Mr Smith, although they did not name them, had been made redundant; see paragraph 16; there is no dispute about the identity of the persons who were there referred to. In his notice of appeal Mr Patel complains that the Tribunal's decision was based on the additional documentary evidence provided on the second day with which, in the time available, he could not be expected to deal. He says, in his Notice of Appeal, that, had the documents to which we have referred been provided in good time, he would have asked Mr Bell and Mr Smith, (although he does not in the Notice of Appeal identify them by name) to give evidence.
7. At the sift stage of this appeal the view was taken, on paper alone of course, that it had no reasonable prospect of success. However Mr Patel exercised his right to seek an oral hearing, pursuant to rule 3(10) of the Employment Appeal Tribunal Rules; and at that hearing on 29 March 2006, HHJ McMullen QC ordered that the appeal should proceed to a full hearing. He also allowed Mr Patel's application to adduce new evidence, namely witness statements from Mr Bell signed on 3 March 2006 and from Mr Smith signed on the following day; but, as is usual when such an order is made at a hearing in which the other side is not taking part, CHC were given the right to apply on notice to vary or discharge that order. CHC made such an application; and on 23 May 2006 HHJ Birtles ordered that that application be dealt with as a preliminary point before the start of but on the day of the hearing of this appeal. It is that application in respect of which we now give this judgment.
8. The grounds on which new evidence can be admitted at an appellate stage before the Employment Appeal Tribunal are almost too familiar to require repetition by us. It is, of course, only in exceptional cases that fresh evidence is admitted at this stage. The conditions for such admission are set out in the well known case of Ladd v Marshall [1954] WLR 1489, subject to one modification in the Practice Direction of the Employment Appeal Tribunal at paragraph 8.2; and those principles have not been in issue in the hearing of this application. They are that, in order to obtain the admission of fresh evidence, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the Employment Tribunal Hearing, that it is relevant and would probably have had an important influence on the hearing and that it is apparently credible. In addition it is necessary to have regard to the overriding objective.
9. Mr West, on behalf of CHC, objects to the introduction of the two new witness statements, on the basis of all three of those pre-conditions which, he says, are not satisfied in this case. As to the first, he submits that Mr Patel knew of both witnesses before the hearing, knew what the issues were, knew that it was the case of CHC that Mr Smith and Mr Bell had been dismissed as redundant and therefore knew that he needed, if he wished to rebut that part of their case beyond his own evidence, to call Mr Bell and Mr Smith. Mr Bell, Mr West tell us and it is not in dispute, was present throughout the first day of the hearing. Mr West, (who was not there because solicitor and counsel were at that time instructed for CHC), tells us that Mr Bell was there during the second day as well. Mr Patel says that Mr Bell was not present because he had another engagement which he had to attend, having attended on the first day in order to assist Mr Patel. Whether he was present on the second day or not is not material to our decision; and we need not try to resolve that dispute of fact.
10. Thus, on that basis, Mr West submits that the evidence of Mr Bell was evidence which Mr Patel either did realise or should have realised was important evidence. It was evidence which he could have called and did not call. The same applies to Mr Smith. Mr Patel's response to these points is two-fold; firstly he explains that Mr Bell attended on the first day only and was not present on the second day when the new documents appeared; secondly he says that he had approached Mr Bell before the hearing about giving evidence; Mr Bell had told him what had happened between himself and CHC but had declined to give evidence because of Clause 9 of the Compromise Agreement, which we have already read in the course this judgment. However, Mr Patel says, once CHC had on the morning of the second day disclosed that document, the position changed. Mr Bell has subsequently indicated that, now that the document is in the open, he is prepared to give evidence; but since he was not present on the second day he could not be asked whether he had changed his mind and thus called. Mr Patel says that it was late disclosure, in particular in Mr Bell's case of the compromise agreement with the confidentiality clause to which we have referred, which changed the position. The disclosure of that document came too late for him to be able to call Mr Bell. As for Mr Smith, Mr Patel submits that Mr Smith had also declined to give evidence, in particular because he did not have a full time job at the time and therefore did not want to jeopardise his future employment position, but has since changed his view in the light of the disclosure by CHC of the letter between Mr Grady and Mr Smith to which we have also referred.
11. Mr West further submits that the evidence of Mr Bell is prima facie not credible because he was disbelieved when giving evidence as a witness in proceedings between CHC and one of their clients; and, as to Mr Smith, he submits that the payment, which he had been made for redundancy on an ex gratia basis, had been accepted and had not been repaid; and evidence from him that he had been dismissed not for redundancy but for poor performance in those circumstances was not credible. Finally Mr West submitted that it was common ground that both Mr Bell and Mr Smith had been dismissed and had not been replaced; therefore there was he said self-evidently a redundancy situation in respect of both of them.
12. We do not accept these latter two submissions. The evidence of Mr Bell cannot be said not to be prima facie credible merely because he was disbelieved in court on one other occasion on wholly different issues at a wholly different time. It has not been suggested that the contents of his witness statement are not prima facie credible, although of course CHC say that they are inaccurate. The attack on his credibility is, in our judgment, unsustainable. The same applies to Mr Smith. Mr Smith could hardly be expected to repay the ex gratia payment to his ex-employers merely because they had given it to him on the grounds that they had dismissed him for redundancy when he took the view that his dismissal was on the basis of issues of competence.
13. The fact that it is common ground that Mr Bell and Mr Smith had been dismissed and not replaced does not mean that it is common ground that Mr Bell and Mr Smith were dismissed for redundancy. It is entirely open to an employer to dismiss an employee for other reasons and then to decide not to replace him. That point does not, in our judgment, take CHC anywhere in this application.
14. However what we have to focus our attention on is the first criterion, namely whether the evidence could not have been obtained with reasonable diligence for use at the Employment Tribunal hearing. That involves our considering whether the disclosure of the documents to which we have referred, at the very late stage at which they were disclosed, changed the picture in terms of calling Mr Bell and Mr Smith for Mr Patel.
15. The only document which is relied upon, so far as Mr Bell is concerned, is the compromise agreement. In our judgment that did not change the picture and could not be said to have changed the picture in terms of whether it was or was not possible for Mr Patel to put before the Tribunal the evidence of Mr Bell, had reasonable diligence been used. All that had changed by the disclosure of that document was that the document itself was in the open and Mr Bell may have thought that, the document being in the open, he could now give evidence without any question of breaking the terms of clause 9 of that document; but he could in any event have given evidence without breaking the terms of clause 9 of that document. Had Mr Patel explained the difficulty to the Tribunal at the outset, they would no doubt have explained to him that the right course was to obtain an order that Mr Bell should give evidence. Mr Bell would then have been called; and Mr Bell would have been told that he had to give evidence and would have given evidence. Indeed it is clear that the term at paragraph 9 does not require him not to give evidence; for it permits him to disclose the existence and the terms of the agreement if required to do so by law. Mr Patel, we have no doubt, did not appreciate that; he was unrepresented; and some may think that it is harsh for us to take the approach that we feel obliged to take. We certainly recognise that the late disclosure of the documents in this case put Mr Patel into a very difficult position; but they did not, in our judgment, change the position to any substantial extent, so far as the availability of Mr Bell's evidence was concerned. That evidence could have been put before the Tribunal and it was not.
16. So far as Mr Smith's evidence is concerned, the position in our judgment is even stronger. The relevant document does not provide any new information, other than that £2,000 had been paid by the employers as a payment as part of a redundancy package. It does not, any more than does Mr Bell's compromise agreement, provide material which undermines the case of CHC that Mr Smith and similarly Mr Bell had been dismissed for redundancy. The other documents which were also disclosed at that late stage do not have any effect so far as the issues are concerned either.
17. The conclusion which we have reached, we have to say with some reluctance, is that the evidence which Mr Patel now seeks to put forward, as set out in the witness statements of Mr Bell and Mr Smith, is not evidence which could not have been obtained with reasonable diligence for use at the Employment Tribunal hearing and is not evidence about which Mr Patel is entitled to say "Well I couldn't have been expected to call that until these documents were disclosed". The documents, in our judgment, made no real difference on the vital issues. Thus we have come to the conclusion that the application to set aside the judgment made unilaterally at the Rule 3(10) hearing succeeds; and that order must be set aside.

HIS HONOUR JUDGE BURKE QC

The History

18. This an appeal by Mr Patel, the Claimant, against the decision of the Employment Tribunal sitting at Stratford, chaired by Mr Dabezies and sent to the parties with written reasons on 8 November 2005. It raises a point of potential importance as to the effect of sub section 98A(1) and (2) of the Employment Rights Act 1996, introduced into that Act by section 34 of the Employment Act 2002. By their decision the Tribunal rejected Mr Patel's claim that he had been unfairly dismissed by his employers, Clemence Hoar Cummings, "CHC". Mr Patel has represented himself before us. The Respondents have been represented by Mr West of Peninsula Business Services Limited. We are grateful to both of them for their helpful arguments. We hope that Mr West will not mind if we say that Mr Patel impressed us by the frank and restrained way in which he presented his arguments to us and by the fair and honest way in which and courtesy with which he answered our questions, even if the answers might have been contrary to his interests; and he is to be congratulated on the way in which he has put forward this appeal.
19. CHC are a firm of accountants, based in Romford, Essex. Mr Patel was first employed by them when they took over his previous employers, McGaughie & Co, and his employment was transferred to CHC under the TUPE Regulations. He was and is a fully qualified accountant. He was not a partner; he was a senior employee and senior fee earner, his job title being, as we understand it, that of Partner's Assistant, although in other places he has been called a manager; they appear to us to amount to very much the same thing. Mr Patel was given three month's notice of the termination of his employment, it was said by reason of redundancy, on 6 October 2004; and his employment ended on 4 January 2005. His internal appeals against his dismissal finally failed on 24 March 2005. The reason for the dismissal, put forward by CHC at the time and in their response to Mr Patel's unfair dismissal claim; was that of redundancy.
20. In his claim form, Mr Patel complained, by implication at least from his assertion that a new employee who was the son of one of CHC's partners had been taken on in the same capacity a few days before his dismissal, that his dismissal was not genuinely for redundancy. He claimed that he had been unfairly singled out for dismissal and that there had been no consultation. In their response, CHC set out a detailed account of their alleged need to make costs saving because of falls in turnover and net profits in the years 2003 and 2004, which appeared, by October 2004, to be likely to be followed by further such falls in 2004 and 2005. They claimed that this position was addressed by a series of reductions in the number of partners and other fee earners, the number of partners falling from 8 to 6 between April 2003 and March 2005 and the number of managers falling within that period from 6 to 2. Mr Patel has accepted that that was indeed the Respondent's case and the case which he went to the Tribunal to meet.
21. The Tribunal correctly identified, at paragraph 2 of their judgment, the issues which arose in broad terms, namely whether Mr Patel was dismissed by reason of redundancy and whether the Respondent acted reasonably in all the circumstances in treating redundancy as a sufficient reason for dismissing Mr Patel. At paragraph 3, again correctly, the Tribunal set out the broad principles of law which applied to the redundancy issue. They also referred to the potential relevance of Section 98A(1) and 98A(2) of the Employment Rights Act 1996, to which we will return later in this judgment.
22. Most of CHC's evidence was presented to the Tribunal on the first day of the two day hearing. Mr Grady, their managing partner, gave evidence on that day. Another partner, Ms Humphry, gave evidence on the morning of the second day; and her evidence was followed by that of the Claimant. Before Ms Humphry gave evidence and about half an hour before the Tribunal sat on the second day, CHC disclosed for the first time a number of documents. First they disclosed their financial statements for the years 2002/2003 and 2004/2005. It is not clear whether they also disclosed the statements for 2003/004; but the figures for that year were set out in the statements for the 2004/05 year. Secondly they disclosed the notes of a partner's meeting on 13 September 2004 at which, according to those notes, it was decided to make Mr Patel redundant. Thirdly they disclosed a compromise agreement between CHC and Mr Bell, a senior employee who also transferred from McGaughie and Co and, it was CHC's case, was dismissed for redundancy in 2002. Fourthly they disclosed a document relating to the dismissal of a Mr Smith in 2004, he being another employee who CHC claimed had been dismissed for redundancy. Lastly they also disclosed a job offer letter, in relation to the son of the partner, about whom we made some comments earlier in this judgment.
23. The Tribunal's judgment records, at paragraph 13, that Mr Patel did not challenge the genuineness of the financial statements thus produced, which had in any event been summarised in CHC's response. It has not been suggested that Mr Patel sought an adjournment, when these documents were produced, to enable him to consider their effect with more time. The Tribunal were rightly critical of CHC's side. CHC were represented by Counsel, instructed by a well-known firm of London solicitors who are vastly experienced in the employment field; but, as the Tribunal recorded, no explanation of this late disclosure was provided to them. Mr West was not present at the Tribunal hearing; despite criticism of the lack of an explanation, which we made in the course of giving judgment on a preliminary point earlier in the course of this appeal, no explanation has even now been forthcoming. However, late disclosure of itself does not constitute a successful ground of appeal; and it is necessary to consider what the grounds of Mr Patel's appeal are. Before we reach that point we must first set out in brief terms the Tribunal's conclusions.

The Tribunal's Conclusion

24. The Tribunal found, at paragraphs 14-16, that CHC's net profit had declined from roughly £900,000 in the year ended March 2003 to roughly £600,000 in the year ending March 2005, although that figure included a £100,000 annuity paid to a partner upon retirement. They concluded that the firm responded to this decline in profitability by seeking cost savings which were, to a large extent, accomplished by natural wastage; but not entirely so, for two employees (and it is not in dispute that they were referring to Mr Bell and Mr Smith) were dismissed in 2002 and 2004 respectively for redundancy. They found, at paragraph 17, that, in or around the summer of 2004, CHC decided that further action to reduce costs was necessary in the light of falling turnover and that at the meeting of 13 September, to which we have referred, it was decided that Mr Patel should be made redundant. As a result, Mr Grady, the managing partner, and Mr Patel met on 4 October 2004. The Tribunal accepted Mr Patel's evidence that Mr Grady told him that he would be made redundant because the billing for Section 5 could not sustain him. He was sent a letter of dismissal on 6 October giving him three months' notice.
25. Having found those facts, the Tribunal, in their conclusion section, posed the issue whether there was a redundancy situation and found that there was. They accepted that a change in audit requirements and a change in software systems necessitated fewer qualified people to do the work and in particular fewer partner's assistants. Although CHC were profitable, they found that they were less profitable than they had been; thus they found that there was a redundancy situation and that Mr Patel was dismissed for redundancy in that situation.
26. They then turned to consider the issue of fairness. They determined that the pool from which selection was to be made for redundancy consisted of partner's assistants. They rejected, however, CHC's case that they had gone through a selection exercise in relation to that pool of considering a set of criteria which we do not need to recite but which could be properly described as familiar in situations such that we are describing. They came to the conclusion that there had been no proper redundancy selection exercise and that Mr Patel had been selected for dismissal on the grounds of redundancy because he was the person who was considered to be the least required by the partners. They further found - and indeed it was concealed - that there had been no consultation at all with Mr Patel.
27. Prior to the introduction of Section 98A of the Employment Rights Act 1996, anyone familiar with the law and practice of unfair dismissal, reading the Tribunal's decision to the point at paragraph 32 which we have reached in our summary of that decision, would have anticipated the result which the Tribunal, in the light of those conclusions, were about to reach as being that the dismissal would be found to have been procedurally unfair and that the Tribunal would then, or at a subsequent remedies hearing, proceed to assess compensation, and, in doing so, would apply what is known as the "Polkey principle", assessing the prospects that, if there had been a proper selection exercise and if there had been appropriate consultation, Mr Patel would in any event have been dismissed or, alternatively, Mr Patel's job would have been saved. Having assessed those prospects in percentage terms, they would then have applied the appropriate percentage to what they assessed as compensation on a 100% basis.
28. However in cases to which they, or either of them, applies, as the Tribunal said at paragraph 34 of their judgment, the legislative landscape has changed by reason of subsection 98A(1) and (2). If Section 98A(1) applies to the case before the Tribunal and it is established that the employers have failed to complete one of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 and it is found that the non-completion of that procedure, is wholly or mainly attributable to failure by the employer to comply with those requirements, then the dismissal is to be regarded, pursuant to Section 98A(1), as automatically unfair. However subsection 98A(2) which applies "subject to subsection (1)", i.e. unless subsection (1) applies, provides that if an employer shows (on the balance of probabilities) that the dismissal would have occurred if the employer had followed the procedure in relation to the dismissal which he has not followed, then the dismissal shall not be treated as unfair solely by reason of the failure to follow that procedure.
29. The Tribunal concluded, at paragraphs 34 to 35 of their judgment, that, by reason of the transitional provisions in Regulation 18 of the Employment Act 2002 (Dispute Resolution) Regulations 2004 (SI/2004/752), "the Dispute Resolution Regulations", Section 98A(1) did not apply to this case, but that Section 98A(2) did apply. They then went on to find that, if there had been a proper redundancy selection exercise and if there had been proper consultation, it was more likely than not that Mr Patel would have been selected for redundancy in any event. For that reason they came to the conclusion that Mr Patel's unfair dismissal claim failed because his dismissal was, by reason of Section 98A(2), fair.
30. The Tribunal subsequently proposed to carry out of their own motion a review of their decision as to Section 98A; but they were persuaded by CHC's solicitors that, in law, they could not do so. Mr Patel's application for a review on what can shortly be described as factual grounds was rejected. There has been no appeal against the Tribunal's decision that there should not be a review.

The Grounds of Appeal

31. Mr Patel has, however, come to us by way of appeal against the Tribunal's rejection of his claim. We can summarise his grounds of appeal in this way; they are four. The first is that, as a result of the late disclosure, he ought to have been able to rely upon and the Tribunal should have had in front of them but did not have the evidence of Mr Bell and Mr Smith. Secondly the late disclosure of the accounts meant that he was not properly able to deal with them. Thirdly the Tribunal came to erroneous factual conclusions and should have come to the conclusion that there was no redundancy situation and no dismissal for redundancy. Lastly the Tribunal's conclusions as to subsection 98A(1) were wrong in law. We will take these grounds of appeal in that order.
32. As to the first we have decided as a preliminary point, upon which we gave judgment earlier today, that the new evidence which Mr Patel wished to adduce should not be adduced; and we have therefore not considered it. Much of Mr Patel's arguments in writing, as he fairly accepts, were based on the new evidence; and those arguments he has, again fairly, not pressed before us. They can of course, make no progress in the light of our earlier decision.
33. As to the second ground, before the Tribunal Mr Patel did not seek an adjournment or object to the introduction of the accounts. He does not challenge the Tribunal's recording in paragraph 13 of their judgment that he did not dispute the genuineness of the accounts. The submissions which he has made to us, both orally and in writing, about the contents of the accounts he was able to and did, as he has told us, make to the Tribunal. It is extremely unfortunate that the accounts, among other documents, were disclosed in the manner we have described; but the fact that that occurred does not mean that there is a ground of appeal which demonstrates that, in relation to either procedure or substance in this area, the Tribunal erred in law. In our judgment the Tribunal did not err in law.
34. As the facts, Mr Patel agrees that there was a fall in turnover and net profit over the relevant years; but he submits that the cost savings achieved by the staff reductions made before he was dismissed made up for those falls and that the partners were managing adequately with those staff reductions and needed no more. The partners were, he says, simply trying to increase their profit share. He submits, as was his evidence and his argument to the Tribunal, that he was dismissed not for redundancy but because he was not productive; and he was not productive, he says, because his partner, for reasons never explained to him, did not give him sufficient work to enable him to be productive. In his case he says, there was no redundancy situation, no financial problem which required or justified CHC dispensing with his services and no proper procedure.
35. Mr Patel accepts that he was able to and did develop all of these arguments before the Tribunal. He has not used before us the word "perversity"; but the effect of his arguments is that the principal factual conclusions of the Tribunal were wrong. It is well known that the Employment Appeal Tribunal is not a fact finding Tribunal and can only interfere with a factual decision of an Employment Tribunal if it is shown that that factual decision was unsupported by evidence or was made omitting a relevant factor or taking into account an irrelevant factor or was a decision on fact to which no reasonable Tribunal could have come. In order to show that one of those faults amounted to perversity, it must be shown that an overwhelming case has been made out; see the well known decision of the Court of Appeal in Yeboah v Crofton [2002] IRLR 634.
36. The fact that it is asserted that the findings of fact made by the Tribunal were wrong will suffice. In this case we are wholly satisfied that no case of perversity has been or can be made out. The Tribunal directed themselves correctly as to the issues, correctly reminded themselves of the test in law for redundancy and made factual findings which were supported by evidence, namely the evidence of the employers, not all of which the Tribunal accepted on all points. The Tribunal reached factual decisions which were open to them and which were not decisions to which no reasonable Tribunal could come. The accounts, the history of the reducing workforce, the findings that Mr Bell and Mr Smith had been made redundant, were all material which supported the Tribunal's conclusions; there was evidence of a continuing decline in turnover and profitability. It cannot be said, and it has not been said, that there was no evidence to support the factual conclusions which the Tribunal reached. If a firm or company, which is profitable but has falling turnover and falling profits, decides to reduce the workforce in order to halt those falls, the fact that by doing so they are not seeking to turn around an overall loss, as opposed to seeking to stem a process of reduction in turnover and profit, or the fact that the effect of diminishing the workforce in those circumstances may mean that the partner's shares are increased does not indicate that there is not a redundancy situation.
37. The question which the Tribunal had to answer in considering whether there was a redundancy situation was that which they posed to themselves, namely whether the requirements for employees to carry out work of the relevant kind, i.e. work by partner's assistants or managers, had ceased or diminished; and they were entitled to find, as they did, that, applying that test, a redundancy situation was established.

Subsections 98A(1) and (2) of the Employment Act 2002

38. That is not, however, the end of the story. It now necessary to turn to subsection 98A(1) and (2). The Tribunal decided that subsection 98A(1) did not apply to this case, but that subsection 98(2) did, with the consequences that we have described. Subsections (1) and (2) of section 98 were, of course, introduced together and would appear to form part of the same package, pursuant to which, if the employer has not complied with the statutory dismissal and disciplinary procedures set out in Part 1 of Schedule 2 to the Employment Act 2002, the dismissal is to be regarded as automatically unfair; but, in a case to which subsection 2 applies there is no automatically unfair dismissal pursuant to subsection 1. Failure by an employer to follow a statutory procedure is not regarded as rendering the employer's action unreasonable and therefore the dismissal unfair, if he shows that he would have decided to dismiss the employee if he had followed that procedure.
39. Mr Patel submitted that subsection 98A(1) did apply in the circumstances of this case. Mr West, on behalf of CHC, submitted that Section 98A(1) was in force at the time but did not apply, although section 98A(2) did apply.
40. We had considered the problem raised by Section 98A in advance and had formed a very tentative and provisional view that neither of the solutions put forward by Mr Patel and Mr West was correct and that the true position might be that neither Section 98A(1) nor Section 98(2) applied in the circumstances of this case. We explained to both Mr West and Mr Patel why that was so, although we feel bound to say that it would be surprising if Mr Patel had been entirely able to follow the complications of the particular statutory provisions to which we will refer in a moment. We now need to resolve the issue as to whether either Mr Patel or Mr West is right or whether the tentative view which we expressed to them might be right.
41. Let us put these comments into context. The timetable here is as follows. On the Tribunal's findings of fact, CHC decided that Mr Patel was to be dismissed for redundancy at the partner's meeting on 13 September 2004. The first intimation of this decision to Mr Patel occurred on 4 October. The actual termination of the contract of employment followed in January 2005 at the expiry of the three months notice period. Section 98A of the 1996 Act was, as we said at the hearing of their judgment, introduced into that Act by Section 34 of the Employment Act 2002. The Employment Act 2002 did not, of itself, bring any of its own provisions into force. All of those provisions, so far as we are aware, had to be introduced by statutory instrument; and there have been at least eight commencement orders, bringing into effect different sections of the Act. The relevant Commencement Order for current purposes is Employment Act [Commencement Order number 6 and Transitional Provision] Order 2004, (SI/2004/1717). Article 2(2) of that Order provided that, subject to article 3, various provisions of the 2002 Act, including Section 34, should come into force on 1 October 2004. Article 3 sets out transitional provisions in relation to Sections 31 and 32 and Schedule 2 of the Act, which are not to apply in relation to a grievance where the employee has presented a complaint to the Employment Tribunal about that grievance prior to 1 October 2004. There are no other transitional provisions in that commencement order, and no transitional provision which applies directly to Section 34 and therefore directly to the introduction into force of Section 98A. Article 3 only affects Schedule 2 of the 2002 Act in relation to the presentation of a grievance prior to 10 October 2004.
42. The Tribunal referred in their judgment to Regulation 18 of the Dispute Resolution Regulations which provides

"These Regulations shall apply in relation to dismissal and relevant disciplinary action where the employer first contemplates dismissing or taking such action against the employee after these Regulations come into force…"

Thus the Dispute Resolution Regulations, themselves set out that the standard dismissal and disciplinary procedure, contained in Part 1 of Schedule 2 to the 2002 Act, do not come into force in relation to a dismissal, where the dismissal was first contemplated before 1 October 2004. Mr Patel's submission is that the Tribunal should not have held that CHC, in this case, first contemplated dismissal before 1 October 2004, that the note of 13 September meeting was a sham or forgery and that the first contemplation of dismissal should be treated in this case as having been on 4 October, when Mr Grady told Mr Patel of the firm's intentions. He argues that, for that reason, Section 98A(1) applied, the statutory standard dismissal and disciplinary procedure plainly had not been complied with in any real sense, entirely due to the shortcomings of CHC, and, thus, the Tribunal should have held that his dismissal was automatically unfair. Mr West puts forward a wholly different argument. It is that Regulation 18 of the Dispute Regulations is a transitional provision in relation to the Dispute Regulations but not a transitional provision in relation to the effect of Section 98A, that there is no such transitional provision in the case of Section 98A and, therefore, Section 98A came into force on 1 October, irrespective of the date on which the dismissal was first contemplated. However, he says, because the dismissal was first contemplated on 13 September, the statutory dismissal and disciplinary Procedure did not apply by virtue of Regulation 18; therefore, although Section 98A was in force, it was of no effect because none of the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 applied in relation to the dismissal. The fact that Section 98A(1) was of no effect did not, he submits, have the consequence that it was not in force or that Section 98A(2) was not in force. Section 98A(2) was in force; and the Tribunal rightly applied it.

43. Let us refer to Mr Patel's argument first. In our judgment the Tribunal were entitled to conclude that the first contemplation of dismissal by CHC was on 13 September. They were entitled to find, as they did, that the partners had, on that day, decided that Mr Patel should be dismissed. The note which Mr Patel said was a forgery was not the only evidence; Mr Grady himself gave oral evidence, about that meeting in any event; but even without that point it was open to the Tribunal, on the material before them, to conclude as they did in relation to 13 September; and we cannot begin to say that that was a perverse conclusion on their part. Thus if Regulation 18 of the Dispute Resolution Regulations has any relevance to this case, in our judgment, it bit in the sense that the statutory procedures set out in Part 1 of Schedule 2 of the 2002 Act did not apply; and thus, whether on the basis set out in by Mr West's argument or otherwise, it was not open to the Tribunal to conclude that Mr Patel had been automatically unfairly dismissed.
44. However we do not accept that Mr West's analysis of the relevant provisions is correct either. In our judgment the correct position is as follows. First subsections 98A(1) and (2) are inexorably linked; they must come into effect together and not separately; it is not possible for one of them to be in effect and not the other. The words "subject to subsection 1" in subsection 2 are a strong indication that that must be so. Secondly it is an essential part of the effectiveness of subsection 98A(1) that the procedures set out in Part 1 of Schedule 2 to the Employment Act 2002 should apply in relation to the dismissal; but for the reasons we have set they did not apply; by reason of Regulation 18 of the Dispute Resolution Regulations they could not apply in the light of the Tribunal's finding as to what happened on 13 September 2004. The consequence of that, in our judgment, is that Section 98A(1) was not in effect in this case, in which the first contemplation of dismissal occurred prior to 1 October 2004; and similarly and for the same reason Section 98A(2) was not in effect. Thus, in our judgment, neither took effect; and the Tribunal were in error of law in concluding that Section 98A(2) did have effect in the present case.
45. What are the consequences of that conclusion. They are, as we see it and indeed as Mr West accepts must follow from our decision, that, because Section 98A(2) did not apply, this case had to be treated as it would have been treated before Section 98A(1) and (2) came into force; in other words, by reason of the failure on CHC's part to carry out any redundancy selection exercise and their failure to carry out any consultation at all about redundancy, the dismissal was unfair. It was procedurally unfair. Mr Patel as a result became entitled to an assessment of compensation; and what the Tribunal ought to have done was to have found the dismissal to have been unfair and ordered that there should be the familiar exercise of an assessment of compensation, applying the Polkey principles in the light of their decision that the dismissal was procedurally unfair.

Conclusion

46. Thus the result is that, for the reasons we have set out, this appeal succeeds; we substitute a decision that the dismissal was procedurally unfair; and the case must be remitted for the assessment of compensation, applying the principles to which we have referred. We have not discussed with the parties what the form of the remission should be; but it appears to us that there is no reason why it should not be to the same Tribunal. We will hear submissions about that.