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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Baxter & Ors V Limb Group Of Companies [1994] EWCA Civ 29 (30 June 1994)
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Cite as: [1994] IRLR 572, [1994] EWCA Civ 29

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JISCBAILII_CASE_EMPLOYMENT

BAILII Citation Number: [1994] EWCA Civ 29
No. EATRF 93//1228/B

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
(ON APPEAL FROM THE EMPLOYMENT TRIBUNAL)

Royal Courts of Justice
Strand, London, W.C.2
30 June 1994

B e f o r e :

LORD JUSTICE DILLON
LORD JUSTICE STEYN
and
LORD JUSTICE WAITE

____________________

BAXTER & Others
Appellants
-v-
LIMB GROUP OF COMPANIES
Respondents

____________________


John Larking, Chancery House, Chancery Lane, London, WC2.
Telephone: 071 - 404 7464
Official Shorthand Writers to the Court
____________________

MR. P CLARK and MR. K. BRYANT (instructed by Messrs. Pattinson & Brewer, London) appeared on behalf of the Appellants.
MR. J. HAND QC and MR. W. BIRTLES (instructed by Messrs. Eversheds, Hepworth & Chadwick, London) appeared on behalf of the Respondents.
Handed Down Judgment:
John Larking, Chancery House, Chancery Lane, London, WC2.
Telephone: 071 - 404 7464
Official Shorthand Writers to the Court
HANDED DOWN J U D G M E N T

____________________

HANDED DOWN HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Lord Justice Waite

    This appeal arises from the dismissal on 2nd April 1990 of 26 dock workers formerly employed at Goole in North Humberside. The dismissal came as the culmination of a long running dispute between the dockers and their employers about traditional working practices which the employers wanted to abolish and the employees to retain. Negotiations were protracted but fruitless. The employees took industrial action by refusing to work overtime. They continued the ban after the employers had warned them that it might lead to their dismissal. The employers in due course dismissed them summarily. As the result of a decision by the employers thenceforth to discontinue the use of direct labour altogether, they were neither re-engaged nor replaced. The management preferred to put the work of loading and unloading vessels out to associated companies within their group and pay a service charge instead of wages. When the men later asked the employers to state the reason for their dismissal, they were told that they had been dismissed for taking part in industrial action after a warning that the continuance of the action might result in dismissal.

    The dismissed men brought claims in an Industrial Tribunal which they expressed as claims for redundancy payments and/or compensation for unfair dismissal. So far as their claim rested on unfair dismissal, they based it on a charge against the employers of bad faith: using the industrial dispute, that is to say, as a colourable pretext for dismissing their workforce ostensibly on grounds of participation in industrial action, but with the real motive of escaping liability for the redundancy payments for which the termination of their contracts wold in other circumstances have made the management liable. So far as their claim lay in redundancy, they asserted that at the moment of dismissal the employers' new policy of discontinuance of employment of direct labour had created a state of redundancy and that they had been dismissed on that ground.

    The Industrial Tribunal felt it to be their duty to deal fully with the claims under both heads. In respect of the unfairness claim, they rejected the charge of bad faith. They held that the employers had acted genuinely in treating the overtime ban as industrial action and in purporting to dismiss the employees on that ground. So far as redundancy was concerned, the Industrial Tribunal found that the policy decision of the employers, implemented immediately after the dismissal, to discontinue direct dock labour and go over to contracted stevedore services from associated companies meant that at the moment of dismissal there was a redundancy situation, and they found that the employees had actually been dismissed wholly or mainly on grounds of redundancy.

    The Employment Appeal Tribunal allowed the employers' appeal from that decision. They held, in effect, that the Industrial Tribunal's two findings - on the one hand that the dismissal had genuinely been for participation in industrial action and on the other hand that the dismissal had been wholly or mainly on grounds of redundancy - simply could not stand together: the two findings were mutually inconsistent. The applications were accordingly remitted to the Industrial Tribunal for a re-hearing.

    From that decision the employees now appeal to this court, contending that there was evidence before the Industrial Tribunal on which it was entitled to find that the employees had been dismissed wholly or mainly for redundancy reasons, and that no error of law appeared on the face of their decision entitling the Employment Appeal Tribunal to interfere with that conclusion. The employers cross-appeal, contending that the Employment Appeal Tribunal was right to have set the Industrial Tribunal's decision aside but ought to have done so not on mere grounds of inconsistency but on the more fundamental ground that the tribunal's findings on the bad faith issue had so wholly precluded any possibility of a finding of redundancy as to make it impossible for any reasonable and properly directed tribunal to find redundancy as the cause of dismissal. On that footing, the decision of the Industrial Tribunal was so demonstrably wrong that there would be no point or purpose in directing a re-hearing.

    The issues raised by the appeal and cross-appeal depend largely on the interpretation to be placed on the language used by the Industrial Tribunal when formally expressing their reasons. That language is not wholly clear. Hence the debate in the appeal tribunal and in this court as to what precisely the course of reasoning was which led to their finding that redundancy had supplied the reason for dismissal. The outcome is important for both sides. There has been no appeal by the employees from the Industrial Tribunal's alternative finding that if (contrary to their conclusion in favour of redundancy) the men were dismissed for taking part in industrial action their dismissal was effected in good faith and therefore fair. The consequence is that if the Industrial Tribunal's finding that redundancy was the reason for dismissal is upheld in this court the employees will receive redundancy payments amounting in the aggregate to £850,000. If it is not, the employees will receive nothing.

    The law which the Industrial Tribunal was called upon to apply is laid down by the Dock Work (Compensation Payment Scheme) Regulations 1989 SI No 1111, enacted under the Dock Work Act 1989. Regulation 3 incorporates the universal definition of redundancy that has been in force in English employment law since the Redundancy Payments Act of 1965 and is now enacted in identical terms in S 195 of the Trade Union and Labour Relations (Consolidation) Act 1992. It reads:

    3 (1) For the relevant purposes an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to -

    (a)[this sub-section covers cases of actual or intended cesser of business or re-location and is not material to the present case] or

    (b)the fact that the requirement of that business for employees to carry out work of a particular kind or for employees to carry out work of a particular kind in the place where he was so employed, have ceased or diminished or are expected to cease or diminish.

    In this sub-paragraph "cease" means cease either permanently or temporarily and from whatsoever cause and "diminish" has a corresponding meaning.

    The Industrial Tribunal was required to apply the statutory presumption, which (as set out in the then governing statute - S 91 (2) of the Employment Protection (Consolidation) Act 1978) provides:

    "For the purposes of any such reference [i.e.reference to an Industrial Tribunal], an employee who has been dismissed by his employer shall, unless the contrary is proved, be presumed to have been dismissed by reason of redundancy."

    As for case law, both sides accept that the relevant authorities are Sanders v Neale (1974) ICR 565 and Hindle v Percival (1969) 1 WLR 174. In Sanders case a number of the employees of a bookbinding company took industrial action (by placing a ban on voluntary overtime, industrial training and relief work) in protest against the making of two of their former colleagues redundant following closure of a department of the business. They were warned that if they did not undertake by a specified date to resume normal working they would be regarded as being in breach of their contracts of employment which would then be terminated. The undertaking was not given by the specified date, and the employers thereafter treated the employees involved in the action as dismissed. The Industrial Tribunal concluded that the employees were all dismissed at the specified date for refusing to give the undertaking, and not for reasons relating to redundancy. On appeal by the employees on the ground that the tribunal had erred in law in finding that the employees had been dismissed on the specified date because the employers' repudiation of the contracts of employment had not yet at that point been accepted by the employees, the National Industrial Relations Court held (dismissing the appeal) that the repudiation of a contract of employment was an exception to the general rule that an unaccepted repudiation did not discharge a contract. That holding no longer stands (following the decision of this court in LTE v Clarke (1981 ICR 355)) but both sides in this appeal have relied on the general observations of Donaldson J (unrelated to the repudiation issue) at pages 573 and 574 as follows:

    "The first issue in a redundancy claim is whether the applicant was dismissed by the employer. What constitutes such a dismissal is set out in section 3 of the Act of 1965 and it is for the employee to prove the dismissal if it is not admitted. The second issue is whether the employee has been dismissed by reason of redundancy. Here it is for the employer to prove either that there was no redundancy situation or that the dismissal was neither wholly nor mainly attributable to that situation: see the presumption set out in section 9 (2) of the Act. He may, of course, prove both. What is a redundancy situation is defined by section 1 (2) of the Act, but it should be remembered that the mere fact that the employer proposes a change in the terms and conditions of employment and is unable to carry on his business on the existing terms does not of itself prove that a redundancy situation exists: see Chapman's case [1973] ICR 50 and Johnson v. Nottinghamshire Combined Authority [1974] I.C.R. 170. If the employer fails or does not attempt to prove the absence of a redundancy situation, he can still try to show that the dismissal was wholly or mainly attributable to some other cause.

    In the present appeals there was indeed a redundancy situation, but the tribunal found that it in no way caused the dismissals. The converse was true. It was the dismissals which caused the redundancy. The employees were dismissed because they persistently refused to work normally. Their claim fails not because the redundancy was self-induced, but because it did not cause their dismissal.

    By contrast a situation can arise in which due to a recession in trade it is found that the business is much over-staffed. The employer can either continue with his existing labour force sharing out the available work and paying reduced wages or he can halve the size of his labour force by dismissals. If the employees will not agree to work-sharing and some are in consequence dismissed, the case may be said to be one of self-induced redundancy. But this aspect is irrelevant. The question remains, "Were the applicants dismissed wholly or mainly by reason of redundancy?" The answer will depend upon an exact analysis of the facts, but if the employees could not reasonably be expected to accept the proposed reduction in wages any tribunal would be almost bound to find that the dismissals were wholly or mainly attributable to redundancy and that the dismissed employees were entitled to redundancy payments".

    Hindle v Percival was not a case involving industrial action as the background for dismissal, but it provided the Court of Appeal with an opportunity of stating the general principles which apply when a dispute arises as to whether a dismissal was or was not wholly or mainly on grounds of redundancy. A firm of boatbuilders dismissed a skilled woodworker of long standing on the ground that his working methods were too slow for the type of production required - that is to say a limited woodwork department operating as an adjunct to a business that to accommodate modern demand had been forced to go over principally to fibre glass boat construction. The Industrial Tribunal held, by a majority, that the dismissal had been on grounds of suitability and not of redundancy. Their decision was upheld in the Divisional Court and on further appeal. It was emphasised that these questions are very much a matter for the tribunal in the particular circumstances of each case. Ostensible reasons for dismissal may be honestly expressed, but the tribunal is fully entitled to make up its own mind what the real reason was. Thus Lord Widgery said at page 186:

    "The appellant's first submission in this court is that when deciding whether his dismissal was "attributable" to a diminution in the requirements of the business within section 1 (2) the test to be applied was an objective one and that the tribunal erred by applying a subjective test and considering only the state of Mr. Percival's mind. I agree that the tribunal must look at the facts objectively to discover the true causes to which the dismissal is attributable but I do not find the distinction between objective and subjective tests to be either helpful or conclusive.

    The dismissal is attributable to the facts which caused it to occur. The tribunal must consider the evidence to see what those facts were and must bear in mind that the claimant succeeds on this issue unless the employer demonstrates that a diminution in the requirements of the business was not the main cause. The employer's evidence may be highly material because he knows what prompted him to dismiss the claimant and if his evidence is believed it may go a long way to establishing the true causes of his action. It must also be remembered that the employer is often entitled to dismiss his employee on due notice without assigning any reason at all. He may think that the employee is a bad influence in the works, or suspect him of pilfering, or wish to replace him by a younger man. If dismissal then follows, the employer does not assume the obligation of proving that his suspicions were well founded or of persuading the tribunal that any reasonable employer would have acted as he did. All he must do is prove that redundancy was not the main cause and he does this by proving that the requirements of the business for workers of the relevant kind had not diminished."

    and at page 188

    I do not feel able to draw a distinction between "motive" and "reason" in sufficient vivid terms to be of value to tribunals who have to consider these question hereafter, the lesson of the MacLaughlan case in my opinion is that the tribunal must not accept the explanation put forward by the employer, however honestly, without looking at the whole of the evidence to see if it positively establishes that the dismissal was not mainly due to a diminution in the requirement of the business for employees on work of a particular kind: section 1 (2). In the present case the tribunal did so inquire."

    Lord Justice Sachs at page 183 said:

    "The present claim for a redundancy payment was made under section 1 (2) (b) of the Act. Such a payment could only become due to the employee if it was found by the tribunal (having due regard to the onus of proof), first, that the requirements of the employer's business for employees to carry out work of a particular kind had diminished or was expected to diminish, and, secondly, that his dismissal was attributable wholly or mainly to such a diminution. It is convenient to refer to these findings as being the first and second conditions precedent to entitlement.
    As regards the first of the conditions precedent the test is purely objective in the sense that the test to be applied concerns the actual requirements of the business and not the opinion of the employers or anyone else on that point. Unless the tribunal comes to a conclusion in favour of the employee on that first point the second does not arise.

    As regards the second condition there was much discussion in this court as to whether a tribunal ought to apply an objective or subjective test in deciding whether or not the dismissal is attributable to some established diminution in the requirements of the business. For my part I found, as did Widgery L.J., that the posing of such a question tended to confusion, at any rate when linked, as Mr. Kidwell desired, with attempted distinctions between the motives of the employer and the reasons for dismissal."

    The statute and case law which the Industrial Tribunal was thus required to apply can, in my judgment, be summarised in this way. When a workforce (or a section of it) is dismissed at a time when its members are taking part in industrial action, and the dismissed members are not thereafter replaced or re-engaged, the question whether the relevant employees were dismissed for taking part in industrial action or by reason of redundancy becomes a question of fact and degree for the Industrial Tribunal, whose duty, when answering the question "what was the reason for dismissal?", is:

    (1) to apply the statutory presumption;
    (2)to give due weight to (though without being bound by) the reason given by the employers themselves at the time
    (3)in considering whether redundancy was the reason, to apply the two-staged approach, asking:
    (a)was there a redundancy situation at the time of dismissal; and if so,
    (b)did that situation supply the reason for dismissal?

    The circumstances to which the Industrial Tribunal was required to apply that approach (which must now be described in a little more detail) were the following. Limb Group of Companies, the employers, were formerly an autonomous dock operating concern, but by the material time they had been taken over by a larger group, the EIC Group of Companies. The applicant employees were all dockers, working for the employers at Goole. In the aftermath of the repeal of the former Dock Working Scheme which had been effected (against trade union protest including strike action) by the Dock Work Act 1989, attempts were made within the industry to negotiate fresh working conditions. A sticking point arose in those negotiations, as between the applicants (acting through their Union the Transport and General Workers Union) and the employers. It related to the future application at Goole docks of a working practice known as "short-handed working bonus". The Industrial Tribunal [quoting from their findings at paragraph 6 (j) of their Reasons] described the issue in this way:

    "In the old days, the Scheme days, numbers of dock workers for a particular cargo handling situation were set by a committee and what was set as a number of men to work a certain type of cargo remained `written in stone` so if 10 men were allocated but only 5 were truly needed, nonetheless, 10 men were allocated and had to be paid. The new requirement of [the employers] was that the men would work to.....the numbers of men that the [employers] thought were fair and reasonable numbers for the working of a particular cargo situation...... The requirement of [the employees] was that if they were working overtime and were short handed, and other workers were brought in to work, then the bonus of the other workers would not be paid to them but would be paid to [the employees]. So they were working not only on their own incentive scheme but they would be getting it `topped up` by the labours of others..... The [employers'] position.....was that this was really a payment for doing nothing; a dead payment, and they would not have it."

    The dispute advanced to the point that on 26 February 1990 the applicant employees imposed a ban on overtime working. It was accompanied by a threat that if any outside labour was brought in to do the work for which overtime would otherwise be payable, the applicants would withdraw their labour. The employers' response was that they were adamant against the shorthanded working bonus and were not prepared to introduce it in any circumstances. After further talks which came to nothing the employers wrote to each of the applicants, with a warning that if the overtime ban continued the company would take disciplinary action, which might include dismissal. Each letter concluded with the warning "Be aware that the law provides that employees who are dismissed for taking part in industrial action cannot complain to an Industrial Tribunal".

    There was then a further fruitless meeting, a union proposal for the intervention of ACAS was rejected by the employers, and finally on 2nd April 1990 the employers gave notice to each of the employees by a letter in these terms:

    "Despite numerous requests you have failed to resume normal working. As I have indicated to you before, this Company cannot sustain further industrial action and you are therefore dismissed from your employment with the Company with immediate effect."

    The employers' Managing Director, Mr Limb, gave evidence at the Industrial Tribunal hearing and was asked in cross-examination how far the decision to make other provision for their dock labour requirements had been spontaneous. According to the very brief note made by the employers' solicitor, the cross-examination proceeded as follows:

    "Refusal of overtime dismissed by management.
    Not board members of holding company
    Contingency arrangements made? Had to make them when dismissed men.
    We had no contingency plans till decision taken and had to make arrangements for next morning.
    Discussed with legal advisers.
    Had discussions in group as to company as to future.
    Had been discussing with sister company in Immingham transfer of labour in both directions as and when required.
    Hargreaves [an associate company] supplied some of men after 2nd April. Some Budge Group [another associate]."

    A note was made by the employees' solicitor to similar effect.

    The employers had been correct in reminding the employees, in their letter of warning, that dismissal for participation in industrial action does not generally found any complaint for unfair dismissal. That is the result of S 62 of the Employment Protection (Consolidation) Act 1978. The exemption applies, however, only to cases where the entire action-taking workforce is dismissed. If the employers make any exceptions in favour of participating employees (called "relevant employees") the exemption is lost, and an Industrial Tribunal has jurisdiction to entertain an unfair dismissal claim. In this instance an employee named Coolledge (whom the Industrial Tribunal held to be a "relevant employee") had not been dismissed. He was absent through sickness at the date of dismissal. The Industrial Tribunal held that this act of forbearance on the part of the employers had lost them the benefit of statutory immunity from an unfair dismissal claim by the other employees. There has been no appeal from that preliminary finding by the Industrial Tribunal that it had jurisdiction to entertain a claim based on unfair dismissal.

    The result was that the Industrial Tribunal became seised, in effect, of two alternative claims: that the employees had been dismissed unfairly for taking part in industrial action (the unfairness consisting of the alleged bad faith) and were consequently entitled to compensation; alternatively that they had been dismissed on grounds of redundancy and were consequently entitled to their statutory redundancy payments.

    The Industrial Tribunal made their finding as to the events occurring after dismissal as follows:

    "(q) What happened following the dismissal of these applicants? We find that the [employers] have used, and presumably are continuing to use, workers supplied to them from another company within the EIC Group of companies, rather then Limb Group. The men who now service[d] the dock working needs of any of the Limb companies within the Limb Group come from Grimsby, Immingham or elsewhere. [The employers] do not now employ labour. We repeat, they use labour from other parts of the Group. They have ceased to employ labour. The requirements of [the employers] for dock workers has ceased."

    To those findings the Industrial Tribunal then proceeded to apply the terms of Regulation 3, bearing in mind the statutory presumption in favour of redundancy. They expressed their conclusion thus in the two final paragraphs of their Decision:

    "8 The Regulations and indeed section 81 of the 1978 Act say "`cease` means `cease` either permanently or temporarily and from whatsoever cause and `diminish` has a corresponding meaning." So we look at what happened. The causation is, in a way, irrelevant. What happened in fact is that the requirements of this business for dock workers has ceased, and it has ceased permanently. The requirements for dock workers has gone, the [employers] now have no dock workers as they take in labour they require from another source of supply. We find that is the situation, and that in our judgment does amount to dismissal by reason of redundancy. These dismissals fall within Regulation 3 and Section 81 of the Act.

    The [employees] have throughout, overtly or by implication, suggested that this has all been a scheme, a conspiracy, a `set up`, call it what one will, to get the men out of their employment in such a way that the [employers] are not required to contribute a penny. In other words, it has all been done to ensure that the [employers] are not required to pay redundancy payments. The conspiracy theory is not proven. These [employers] wanted to retain these [employees] and they would have retained them; they made conciliatory moves to that very end but they were not successful; we find that a fundamental matter of principle was involved, namely, the shorthanded working bonus. The [employers] view it (and it seems to us not without justification), as a payment of a worker is not entitled to because he was not actually doing the work, others are doing the work, so why should he be paid a bonus which others had earned. The payment scheme and the regime at Goole does show that there is, or there was, a bonus incentive payment on production and that is what the [employers] wished to maintain and were insistent in the end they would maintain. It was, we find the refusal by the [employees] to accept this fact that generated these dismissals. The decision to dispense with all dock workers services was a reasonable decision and for a sufficient reason. The [employers] dispensed with dock workers entirely. That in our judgment means dismissals by reason of redundancy of these [employees].

    The employers viewed this all as a matter of taking industrial action but what we find to be the reality is that they were in fact dispensing with dock workers entirely; that their requirements for dock workers had ceased. In the circumstances and unanimously we declare that these dismissals were by reason of redundancy, and were fair. .....

    (9) We extend our thanks to Mr Clark and to Mr Irvin for all their help in these cases. Their submissions were made on the final day of hearing. We have not referred to their submissions in our decision but we are conscious that we have 10 1/2 pages of closely written submissions from Mr Clark and Mr Irvin which have been of great use and assistance to us. As Mr Irvin rightly asked `What was the reason for dismissal? This is the main question to be answered here!` "

    The Employment Appeal Tribunal decided that the Industrial Tribunal had wrongly applied a process of "reasoning backwards" and had reached inconsistent and self-contradictory conclusions. Giving the judgment of the appeal tribunal Wood J expressed that in these words:

    "It seems to us essential that the Tribunal should have focused its attention on the facts which existed at the date when the decision to dismiss was made and thereby sought to distil the reason for the dismissal. To look at the situation after dismissal and to infer therefrom what the situation was before requires very careful consideration of the facts and a finding of fact that the true reason for dismissal at the time the decision was made was founded upon facts existing at that time. In the present case it would necessitate the rejection of the evidence given for the Company. If one looks at the position after dismissal and then reason backwards in time to the position before the dismissal then the view taken by the employer becomes immaterial. To do so eliminates the causal or attributive factor. This is required by Hindle.

    In this Decision we have inconsistent findings of fact. The Industrial Tribunal was required first to consider whether or not there was a redundancy situation. It so found. It is unnecessary for us to decide that issue. However, thereafter, in considering the second stage it must find the facts and the reason of the employers at the date the decision to dismiss was made. As we have said this necessitates a finding upon the truth or genuineness of the employer's case. Merely to find what occurred afterwards and to reason backwards eliminates the necessity of the causal connection. This Tribunal accepted the evidence of the Employers in paragraph 8 of the Decision, but also found that the reason for dismissal was redundancy.

    For these reasons we allow the appeal and this matter must be remitted for a rehearing before a different Tribunal."

    Mr Clark, for the appellant employees, attacks that reasoning as unsound. There is nothing inherently illogical, he submits, in finding that a dismissal made purportedly and in good faith on grounds of industrial action was nevertheless effected in truth on grounds of redundancy - and he relies on Sanders as support for that. The Industrial Tribunal found - as it was entitled to do - that a state of redundancy existed at the moment of dismissal because at that same moment the employers' alternative arrangements with their associates came into immediate effect with the result that at the point of dismissal there was no longer any demand for the direct labour services of these - or for that matter any other - employees. The Industrial Tribunal was entitled to go on from there, Mr Clark further submits, to find - as they clearly did on a fair reading of their decision - that the reason for dismissal was redundancy.

    Mr Hand, for the employers, agrees with Mr Clark to the extent of conceding that the ground on which the Employment Appeal Tribunal decided the case (inconsistency of findings) was erroneous. What the appeal tribunal should have done, he says, was to overturn the Industrial Tribunal's finding on two much more radical grounds, namely:

    (1)there was no evidence to support any finding that a state of redundancy had already come into existence at the moment of dismissal; and even if (contrary to that submission) a state of redundancy was in existence at the dismissal date,

    (2)the Industrial Tribunal was precluded by the findings it reached on the issue of good faith from making any finding that dismissal had been wholly or mainly on the ground of redundancy.

    On either basis, submits Mr Hand, the decision of the Industrial Tribunal was so plainly wrong that it would be pointless to order a re-hearing, and the proper order for this court is to overturn their decision and substitute a finding that the employees had been dismissed for taking part in industrial action.

    Mr Hand's first submission can be dealt with shortly. The Industrial Tribunal was fully entitled in my judgment to draw the inference from the timing of the employers' decision to discontinue direct labour that demand for the work in question had ceased or diminished by the date of dismissal. The solicitors' notes of Mr Limb's examination and cross-examination are less satisfactory, I agree, than the Chairman's notes of evidence (which were not available to us or to the appeal tribunal) would have been. Nevertheless I am satisfied that they afford ample evidence to found a conclusion by the Industrial Tribunal that the management's plans to replace direct labour with hired services were already fully in place at the point of dismissal. Nor do I share the appeal tribunal's view that it was impermissible for the Industrial Tribunal to have "reasoned backwards". It seems to me that it is an entirely proper exercise of the fact-finding powers of any tribunal to look at all the circumstances in the round, having regard to events both preceding and following the crucial moment of dismissal as well as to the immediate circumstances of the dismissal itself, and draw whatever inferences appear appropriate from the entire course of relevant events.

    Mr. Hand's second submission is much more formidable. First he seizes upon the Industrial Tribunal's comment -

    "So we look at what happened. The causation is, in a way, irrelevant."

    On the contrary, says Mr Hand, causation was crucial. Here is a strong indication that the Industrial Tribunal had lost sight of their primary duty to find precisely what the causative reason for the dismissal had been. Then he points to the clear and unequivocal findings which the Industrial Tribunal reached as to the circumstances of the dismissal when exonerating the employers from the charge of bad faith, including in particular the finding:

    "It was, we find the refusal by the [employees] to accept this fact [the insistence of the employers against shorthanded working] that generated these dismissals."

    Those findings are so clear, says Mr Hand, and so unequivocal that they preclude all possibility of assigning the dismissal of the employees to any other cause than participation in industrial action. The only possible inference is that this Industrial Tribunal allowed itself to fall into the naive but serious error of assuming that simply because a redundancy situation existed at the moment of dismissal it must automatically and inevitably follow that the reason for dismissal was redundancy. The tribunal members, by applying that erroneous assumption, disabled themselves from giving any independent thought to an examination of the crucial question which it was for them to determine - namely whether redundancy was indeed the actual reason for the dismissal. Had they addressed that inquiry, the answer, in view of their findings in exoneration of the bad faith allegation, would have been inevitable: namely that it was the industrial action and not the redundancy which had supplied the reason for the dismissals.

    Much of the difficulty in this case arises from the confusing way in which the Industrial Tribunal has set out its findings. In the passage I have quoted, the Decision tacks to and fro between the competing topics of redundancy on the one hand and the genuineness of the employers' objections to the industrial action on the other. Nevertheless, as has often been said at different times and in different judicial language, the Industrial Tribunals are entitled to be spared the rigour of an over-literal scrutiny of their reasons in the appellate jurisdictions. Their system is now thirty years old. Their expertise is widely acknowledged. Their Chairmen carry the onerous duty of setting out their conclusions in language which will be as intelligible in the workplace as in a court of law and which will at the same time do justice to the views which the lay members have expressed (often no doubt with blunt informality) in the course of their deliberations. This means that at the appellate level there must be a real striving to see that infelicity of language is not allowed to stand in the way of giving cogent and sensible effect to their conclusions.

    Adopting the benevolent interpretation of their reasons which that approach requires, my own conclusion is this. Despite Mr Hand's able argument, and the support it has received from Lord Justice Dillon (whose judgment I have had an opportunity of reading in draft), the Industrial Tribunal members are entitled to have it assumed in their favour - unless their language is so clear to the contrary that no other interpretation is possible -that they asked themselves the right question and reached an answer by applying to it the processes of inquiry required by law. This tribunal did explicitly ask itself the right question ("What was the reason for dismissal?"). It examined the reason given by the employers for the dismissal - participation in industrial action. It inquired, properly, into the preliminary question whether that reason was proffered in good faith, and concluded that it was. It then proceeded to ask itself whether the reason given by the employers was the real reason for dismissal, and concluded that it was not. Finding that a state of redundancy existed at the moment of dismissal, they went on to find that it was this state of affairs which supplied the true reason for dismissal. For my part I would not be prepared to impute to this Industrial Tribunal a blind assumption that the mere existence of a state of redundancy is sufficient by itself to make redundancy the automatic or inevitable reason for the dismissal. I would prefer to assume that, rather than perpetrate so elementary an error, they had properly addressed their minds to an independent inquiry as to whether the redundancy which they had found to exist did indeed supply the reason for the dismissal.

    For my part, therefore, I would allow the appeal and restore the declaration of the Industrial Tribunal that the employees had been dismissed by reason of redundancy.

    Lord Justice Steyn: I have had the advantage of reading in draft the judgments prepared by Lord Justice Waite and Lord Justice Dillon. The appeal raises no issue of principle. It turns on the meaning of the language used by the Industrial Tribunal in their decision. If the language employed by the Industrial Tribunal is ambiguous, in the sense of being truly capable of two different interpretations, a canon of benevolent interpretation might be applicable. But it seemed to me that counsel for the employees was using the canon of benevolent interpretation to create an ambiguity. One ought first to ask what is the ordinary and natural meaning of the language used by the Industrial Tribunal. If that process leads to a clear meaning the canon of benevolent interpretation is eclipsed. And in my view the cannon of benevolent interpretation does not come into play in this case. The relevant findings of primary fact are not in doubt. I am in respectful agreement that the interpretation favoured by Lord Justice Dillon gives effect to the ordinary and natural meaning of the language employed by the Industrial Tribunal, read against the contextual scene. On that aspect I cannot usefully add anything. I agree with the order proposed by Lord Justice Dillon.

    DILLON L.J.:- In this case the E.A.T. directed a rehearing on the ground that the Industrial Tribunal had made inconsistent findings of fact. In this Court both counsel deny that there are inconsistent findings of fact. I agree with counsel. The real difficulty is that the Industrial Tribunal, having made findings of primary fact which are unimpeachable, failed to relate them to the right question.

    On the face of the letter of dismissal which each of the appellants received on the 2nd April 1990, the reason for his dismissal was that he had persisted in industrial action.

    The case for the appellants was that that was all a "set-up" or part of a conspiracy. The employers had decided to dispense with employing direct labour, and to have all their dock labour provided for them by an associated company, but manoeuvred the appellants into a position in which it might appear that they had been dismissed for taking industrial action. The appellants consequently claimed that they had been dismissed by reason of redundancy.

    For that to be established the Industrial Tribunal had to consider whether the appellants' dismissals were attributable wholly or mainly to redundancy - i.e. to the fact that the requirements of this business for employees (as opposed to contract labour from an associated company) had ceased or was expected to cease.

    The Industrial Tribunal, as they were entitled to, rejected the conspiracy theory. They held - rightly, in my view, so far as the finding went - that the dismissals were generated by the fact that the employees would not give up the short hand working bonus and accept the employers' proposals. But that fact was precisely what the industrial action was about. It is impossible to sever the two and say that the dismissals were generated by the views the employees held about the continuance of the short hand working bonus, and not by the industrial action which the employees took to further those views. That is especially so as the dismissal notices were given out at the end of the meeting on the 2nd April when the employees decided to continue their industrial action and work no overtime. Obviously it was this action which the employees were taking in support of their views which was objectionable to the employers.

    The Industrial Tribunal held that the insistence of the employees on the continuance of the short hand working bonus provided a sufficient reason for the employers to decide to dispense with all dock workers. But that merely means that the decision to dismiss was fair (which on this appeal is not in dispute).

    The Industrial Tribunal, however, jumped to the conclusion that "the respondents, [i.e. the employers] viewed this all as a matter of taking industrial action but what we find to be reality is that they were in fact dispensing with dock workers entirely; that their requirements for dock workers had ceased". That however is a non-sequitur and fails to address the real question.

    The position can be tested quite simply. If the employers dismiss all the employees who have refused to call off their industrial action and engage new employees who they hope will be more amenable, the reason for their dismissals is plainly the industrial action. It can make no difference to the reason for the dismissals if the employers decide to obtain the replacement dockers not as direct labour but as contract labour from another company.

    The position is therefore, in my judgment, very simple. The industrial action which the appellants took in support of their views on the short hand working bonus generated both the dismissal of the appellants and the decision to use contract labour and not any further direct labour. Both were consequences of the industrial action, and the "redundancy situation" was not the cause, or reason for, the dismissal of the appellants.

    I would apply the passage in the judgment of Sir John Donaldson in Sanders v Ernest A. Neale Ltd [1974] ICR 565 at 574C where he said:-

    "In the present appeals there was indeed a redundancy situation, but the tribunal found that it in no way caused the dismissals. The converse was true. It was the dismissals which caused the redundancy. The employees were dismissed because they persistently refused to work normally. Their claim fails not because the redundancy was self-induced but because it did not cause their dismissal."

    In my judgment the decision of the Industrial Tribunal that the dismissals were due to redundancy was plainly and unarguably wrong. Therefore this Court is entitled to adopt its own view. For my part I would dismiss the appeal and allow the cross-appeal.

    (Appeal dismissed.

    Cross-appeal allowed with costs in this court.

    No order as to costs in Employment Appeal Tribunal.

    Order of Employment Appeal Tribunal set aside.

    Application of appellants to the Industrial Tribunal dismissed).

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