Appeal No. UKEAT/0129/10/CEA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 16 July 2010
	   Judgment handed down on 3 August 2010

Before
THE HONOURABLE MR JUSTICE WILKIE
MR B BEYNON
MRS J M MATTHIAS

CARCLO TECHNICAL PLASTICS LTD	APPELLANT

MRS P JEYANTHIKUMAR	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR GAVIN MANSFIELD
(of Counsel)
Instructed by:
EEF Legal Services
Broadway House
Tothill Street
London
SW1H 9NQ

For the Respondent	MS ANNA WATTERSON
(of Counsel)
Instructed by:
The London Discrimination Unit
Lambeth Law Centre
The Co-op Centre
Unit 4
11 Mowll Street
London
SW9 6BG	

SUMMARY
UNFAIR DISMISSAL 
Reasonableness of dismissal
S.98A(2) ERA

The Employment Tribunal did not err in law or substitute its own judgment in concluding that meetings: where the employee’s assessment score in a redundancy selection exercise were handed to her during the meeting; and where the decision to dismiss had already been taken whatever she might have said did not satisfy step 2 of the statutory procedure.

Where the employer counted the same incident twice under different headings in the matrix and where that made the difference between being selected and not being selected for redundancy, the Tribunal did not err or substitute its own judgment in concluding that the dismissal was unfair.

THE HONOURABLE MR JUSTICE WILKIE
Introduction
1.	By a decision promulgated on 18 December 2009 after a hearing on 2 December 2009 the Employment Tribunal held at London South unanimously decided that the Claimant was automatically unfairly dismissed pursuant to section 98A of the Employment Rights Act 1996 (The 1996 Act) and that any award of compensation for unfair dismissal be increased by 10% pursuant to section 31(3) of the Employment Act 2002.  It also concluded that the Claimant was unfairly dismissed pursuant to section 98 (4) of the 1996 Act.

2.	This is the appeal of the Appellant against each of these findings.

Facts
3.	The Claimant began her employment on 16 January 1995.  The Appellant carries on the business of moulding and assembling medical devices and employs at its Mitcham site some 150 staff.  Prior to the dismissal in question there had been four previous redundancy exercises in which the Claimant fell within the pool but in none of these was she selected for dismissal.   By the time with which we are concerned the assembly department, within which the Claimant worked, worked a day and a night shift.  The night shift was operated by one person, there were nine assembly operators on the day shift.

4.	As a result of the loss of certain business the Directors of the Appellant embarked on consultations with its employee committee.  On 16 March 2009, following that consultation, notice was given informing the staff that it was envisaged that it would be necessary to make four employees redundant within the assembly department.  That number increased to five as new business was not secured and, on 20 March, notice was given that five employees were to be made redundant.

5.	The Appellant has a joint information and consultation committee on which there are staff appointed members one of whose tasks was to agree a redundancy policy.  That policy identified the following five redundancy selection criteria: skill (function multiplicity); absence; attendance; quality of work; disciplinary warnings.

6.	Under each criterion there was a matrix of points ranging: in the case of absence, quality, skill and attendance: from 25 down to 5 in steps of 5.  In relation to absence and attendance: those steps were marked by objective criteria based on the number of occasions absent (absence) and the number of days absent (attendance).  In respect of quality and skill: there were descriptions of what was required to qualify for one or other of the number of points.   Those descriptions were essentially subjective.

7.	The fifth criterion: disciplinary record had a range of points from 10 to 0, the intervening number of points being respectively 7, 5 and 2.  Those steps were measured by reference to state of the disciplinary file and, in particular, the type and number of warnings on file.   Accordingly, on that basis, at the point of measurement, those factors were objective.

8.	On 8 July 2008 the Claimant had received a recorded oral warning about concerns with inspection standards.  She had not appealed against that recorded oral warning.

9.	The Appellant considered the assembly day shift as a pool and the night shift (1 person) as a separate pool.  The employee on the night shift was to be made redundant and 3 members of the day shift (of whom there were 9) were to be selected for redundancy, as well as one of the supervisors.  Selection for redundancy was to be against their assessment against the five criteria.  In the event of a tie in the number of points, accumulated length of service would be a tie break.

10.	The assessments were carried out initially by Mr Palmer the assembly manager.  The form was checked by a Mr Malkan the Claimant’s supervisor and reviewed by Mr Sandhu the production or logistic manager.  Mr Palmer’s scores were agreed by those two.

11.	The Claimant scored 82 out of 110 points.  She was the third lowest score in the pool.  Her score was 3 points short of the next highest marking which was 85.  The night shift operator was also marked 85.  Her assessment was completed by the 23 March.

12.	On 23 March the Claimant had a meeting with Mr Palmer, and on the 25 March she received a letter which referred to the meeting of the 23 March at which she had been informed that she was one of the employees at risk of redundancy.  The 25 March letter invited her to a further meeting on 27 March for a further discussion of her situation.  The letter then says as follows:

“All employees confirmed as being at risk will be scored using the company’s agreed scoring matrix and the meeting will serve as an opportunity for you to raise any questions you may have relating to your score sheet and your provisionally selection for redundancy, any alternatives you may have identified to redundancy and to discuss whether you would be interested in any vacancies which may be available.”

13.	The Claimant attended the meeting on 27 March.  She declined to bring a representative with her because she did not believe it likely that she would be made redundant.  At the meeting she was given a copy of her matrix and her scores and was informed that she was potentially redundant and informed of two vacancies on the night shift if she were interested.  She did not express any such interest nor did she say anything about her scores on the matrix.

14.	The Tribunal found that following that meeting Mr Palmer decided the Claimant was to be dismissed.  He invited her to attend a further meeting by letter dated 1 April.  That recorded that at the meeting of the 27 Mr Palmer had explained that she was at risk of redundancy, that they had gone through the scoring using the matrix and he had explained how the scores had been derived.  He explained that her comments and questions would be taken into consideration before any final decision was made.  The letter of 1 April says as follows:

“Over the next few days the company will finalise the selections for redundancy and as agreed will meet with you again on 3rd April 2009 at 10.45am for a further discussion on your situation.  Having taken into account all relevant matters, including any points that you have raised, we will then be in a position to confirm your employment position.  If appropriate formal notice of the termination of your employment due to redundancy will be issued to you after that meeting…”

15.	In fact the letter of dismissal was prepared prior to the 3 of April meeting.  Mr Palmer, at the meeting confirmed the results of the matrix and that the Claimant was selected for redundancy.  She was given the letter dated 3 April.  The Claimant stated she was unhappy with the selection system and offered to work any shift.  She asked about the rotation of shifts and said she felt discriminated against.  She was paid in lieu of notice together with a redundancy payment.  An appeal against her dismissal did not succeed.

16.	The Claimant’s matrix form shows that in respect of absence and attendance she received the maximum mark of 25 on each.  In relation to skill she received a mark of 10 which was the second lowest.  In relation to quality of work she received the mark of 15 which is described as “achieves the quality standard most of the time”.  It is the third highest mark.  Under disciplinary record she received 7 which is the second highest mark described “verbal warnings on file”.  Those marks together added up to 82.

17.	In his witness statement Mr Palmer dealt at paragraphs 3 to 7 with the marks achieved by the Claimant on the matrix.  At paragraph 4 he dealt with the score of 15 for quality.  He said:

“This is reflected by the fact that she received a verbal warning from me on 4th July 2008 for an unacceptable level of performance following an incident where the claimant passed a defective part through the quality control process.”

At paragraph 5, dealing with the disciplinary record, he said as follows:

“As the warning was still live at the time of redundancy assessment this was also reflected in her disciplinary record score.”

In cross examination there was the following exchange between him and counsel for the Claimant:
“Question – by the time of the invitation (to the third meeting) had decided.  Answer – yes because score lower which is why I had letter of dismissal ready to hand to her.
Question – anything she could have said at meeting to change mind?  Answer – no.  Score reflected ability in department.”

The Law
18.	Section 98A of the 1996 Act provides:

“1.   An employee who is dismissed shall be regarded for the purposes of this part as unfairly dismissed if –
a.	One of the procedures set out in part 1 of schedule 2 to the Employment Act 2002….applies in relation to the dismissal,
b.      The procedure has not been completed and
c.	The non completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.”

19.	The requirements of the standard statutory disciplinary procedure in part 1 of the schedule to the 2002 Act include the following:

“Step 1 – statement of grounds for action and invitation to meeting.
(1)   The employer must set out in writing the … other circumstances which lead him to contemplate dismissing or taking disciplinary action against the employee.
(2)   The employer must send the statement or a copy of it to the employee and invite the employee to attend a meeting to discuss the matter.
Step 2 meeting
(1)   The meeting must take place before action is taken, …
(2)   The meeting must not take place unless  -
(a)	The employer has informed the employee what the basis was for including in the statement under paragraph 1(1) the ground or grounds given in it and
(b)	The employee has had a reasonable opportunity to consider his response to that information….”

Relevant Case Law on Section 98A
20.	In Alexander Brigden Enterprises Ltd [2006] ICR 1277 the EAT held that, to achieve the purpose of the statutory procedures, the information provided by the employer had at least to be sufficient to enable the employee to give a considered response to the proposed decision. That in the case of redundancy dismissals that required an explanation both why the employer considered there was a redundancy situation and why the particular employee was being selected.  When a matrix approach to selection was adopted, it was necessary for the employer to provide the employee, not only with the basic selection criteria but also with the employee’s own assessment, though it was not necessary to provide the assessments of other employees.  The combined effect of paragraphs 43 and 45 of that decision is that such information should be supplied in advance of the step 2 meeting and that the failure to provide such information may be so basic that it renders the dismissal automatically unfair as falling foul of the minimum procedural standards.

21.	In Smith, Knight Fay Ltd v McCoy (unreported UKEAT/0245/08), judgment  5 March 2009, the EAT had to consider whether meetings which took place after a person had been told his post would be made redundant, but some substantial time before he was given notice of dismissal, were capable of complying with step 2 requirements.  In that case the EAT concluded that they could, because the “action” envisaged by section 98A and the regulations is not some lesser step, such as in informing the employee that he is going to be made redundant, but means the contemplated dismissal itself.  In the context of redundancy, it would be consistent with general law that the employer should consult with the employee about a prospective redundancy, for example whether it could be avoided by finding alternative employment.  This may have the effect that, during the, potentially substantial, period of time between the point at which dismissal was first contemplated and the point at which it actually occurs there would be the opportunity for meetings which  were capable of satisfying step 2.

Case law relevant to the approach of the Tribunal to an employer’s decision making on grounds of redundancy
22.	In British Aerospace plc v Green [1995] IRLR 433 the Court of Appeal reviewed the relevant authorities on this issue and concluded that, in general, an employer, who sets up a system of selection which can reasonably be described as fair and applies it without any overt sign of conduct which mars its fairness, will have done all that the law requires of him.

The Tribunal’s reasoning
23.	The Tribunal concluded that the dismissal was automatically unfair.  It accepted that a step 1 letter had been sent on the 25 March.  However, it concluded that the meeting of the 27 March was not a step 2 meeting.  It was a consultation meeting.  The meeting of 3 April was the meeting at which the Claimant was dismissed.  The Tribunal at paragraph 55 said as follows:

“The purpose of the step 2 meeting is to give the employee an opportunity to respond to the step 1 letter before a decision is taken.”

The Tribunal plainly had in mind Alexander and Brigden Enterprises which had been cited to them.

24.	The Tribunal concluded that the meeting of 3 April was not a step 2 meeting because the decision to dismiss had been taken prior to that meeting.  The dismissal letter had been written and, in any event, at that meeting she had been dismissed before she was able to make her comments and not after she had done so.

25.	As for general unfairness, the Tribunal concluded that the Respondent had not adopted a fair and reasonable selection procedure.  It criticised the matrix on four bases.  First it relied to a considerable extent upon a subjective assessment of the employees’ skill and quality of work in relation to those two categories.  Second, each of the sections on attendance and absence and on disciplinary record and quality overlapped.  Third, the steps in relation to skill and quality were large and fourth, there were no regular appraisals undertaken so as to assist with the skill and quality criteria.  In that respect we were pointed to page 19 to the Redundancy Handling ACAS booklet which says that:

“Case law shows that there should be some objective evidence to support selection on this basis, for example by reference to the company’s existing appraisal system.”

26.	The Tribunal also considered the matter on the alternative footing that they were wrong and that the redundancy policy adopted was fair and reasonable.  They considered whether the selection was fair.  The main focus of the Tribunal’s criticism in this respect was the fact that the marks which the Claimant received in respect of both disciplinary record and quality were lower than would otherwise have been the case because of the single incident which had given rise to an oral warning.  Thus she was reduced by 5 points against the quality criterion and by the 3 points against the disciplinary record criterion giving a total deduction of 8 points.  The Tribunal concluded that that was neither proportionate nor fair.  In effect, the employer had double counted the same factor by marking her down in respect of that factor on both quality and disciplinary record.  Applying the matrix as a matter of logic, if she had only been marked down once her score would have been at least 3 points higher.  That would have put her level with the next highest person within the pool.  The Tribunal also considered the mark in relation to skill.  It considered it harsh but could not say that it was unjustifiable.  The Tribunal also criticised the way in which the Appellant went about scoring involving the manager rather than the supervisor in the first assessment.

27.	The Tribunal considered a “Polkey” deduction.  It concluded that, because the selection procedure was not fair and reasonable, for example by not having more objective criteria, or a fairer marking protocol, or less differential marks, it was unable to say whether, if a fair procedure had been adopted, the Claimant would have been dismissed, or what was the percentage chance of  her being dismissed fairly.  Accordingly it declined to make a Polkey deduction.

The Grounds of Appeal
28.	The first ground is that the Tribunal wrongly characterised the meeting of 27 March as only a consultation meeting and, accordingly, erred in concluding that it could not also be a step 2 meeting.  They say that Alexander v Brigden Enterprises Ltd goes too far in saying that, in every redundancy case, the employer should provide the marking against the selection criteria.

29.	In the alternative, the Appellant argues that the Tribunal erred in failing to conclude that the meeting of the 3 April was a step 2 meeting and relies on Smith Knight Fay Ltd as an authority for the proposition that a step 2 meeting can take place after a decision has been taken to conclude that the post the employee held was redundant.

30.	In our judgment neither of these grounds succeeds.  We are satisfied that Alexander v Brigden Enterprises does state the law accurately.  In particular, in the present case the Claimant did not receive a matrix score in advance of the meeting of 27 March but she received it at the meeting itself.  Accordingly the Tribunal was entitled to conclude that she had not thereby been given an opportunity to respond to the step 1 letter before a decision was taken.  Even if the Tribunal was wrong to envisage such a clear cut distinction between step 2 meetings, on the one hand, and consultation meetings, on the other, on any view the meeting on 27 March did not satisfy the requirements of a step 2 meeting.

31.	Nor, in our judgment, did the meeting of 3 April.  Whilst there may be circumstances in which the announcement of a decision that a post is redundant at a time which is somewhat removed from the final decision to dismiss may not preclude step 2 meetings thereafter, at which various alternatives to dismissal are ventilated and considered before the decision to dismiss is taken, that was far from the present case.  Not only had the decision to dismiss been taken, but the letter had been written in advance of the meeting and Mr Palmer in cross examination conceded that nothing that the Claimant said at the meeting would have prevented her being dismissed.  Accordingly the Tribunal was entitled to conclude that the meeting of 3 April was not a step 2 meeting.

32.	On that basis the Tribunal was obliged to conclude that the statutory procedure had not been completed in that there had not been a step 2 meeting and that the dismissal was automatically unfair.

33.	As for the approach to the selection procedure used, in our judgment the Tribunal did not stray too far into a minute consideration of the redundancy procedure.  It did address itself to the correct question, namely whether the procedure adopted was fair and reasonable.  Criticisms which it made were manifold and were fundamental.  Thus, even though the procedure had been agreed by the relevant committee, to which the Tribunal gave some weight, in our judgment it was open to the Tribunal, applying the approach required by the authorities, to conclude that the procedure itself was not fair and reasonable for the combination of reasons which it gave.

34.	Even if it could be said that the Tribunal erred by being overly critical of the agreed procedure, in our judgment it cannot be said that the Tribunal erred in substituting its own judgment for that of the employer in its conclusion about the unfair way in which the procedure was applied.  In our judgment the use of one incident to double count, and thereby mark the Claimant down in two categories losing her 8 points rather than either 5 or 3 points, was a fundamental and obvious error in the application of the procedure.  In our judgment it falls a long way from amounting to the Tribunal interfering with the specific assessment to the point where it may be said that the Tribunal was simply substituting its own judgment.  The fact that the Tribunal warned itself off doing so is clear from the way in which it concluded that the assessment under the heading “skill” was harsh but not one with which it could properly interfere.

35.	As for Polkey, on the footing that the Tribunal was entitled to conclude that the procedure adopted was not fair and reasonable, it was entitled to conclude that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction based upon the evidence could properly be made.  The EAT has been warned to be wary about interfering with the Tribunal’s assessment that such an exercise is too speculative.  In this case we have no hesitation in concluding that the Tribunal was entitled to so conclude on the basis that the procedure adopted was not fair and reasonable (see Software 2000 Ltd v Andrews [2007] IRLR 568 at paragraphs 54(3 to 5) an authority which was before the Tribunal).

36.	Finally, even if the Tribunal was wrong in categorising the procedure as not fair and reasonable, in our judgment the application of that procedure by the Appellant was so fundamentally flawed, for the reasons we have already given and which the Tribunal adopted, that it is clear that, had it been properly applied, the Claimant would not have been selected because she would have had higher marks than the next person above her in the pool or she would have had at least equal marks and there was no evidence that her long service would not have prevailed in a tie break.

37.	For these reasons this appeal is dismissed.