THE HONOURABLE LADY SMITH
Introduction
1.
This is an employer’s appeal from the judgment of an Employment Tribunal
sitting at Glasgow, registered on 20 October 2010 (Employment Judge, Rosemary
Sorrell) finding that the Claimant was unfairly dismissed and awarding
compensation of £17,130.39 for loss of statutory rights and loss of earnings.
2.
For convenience, we will continue referring to parties as Claimant and Respondent.
3.
The Claimant represented himself before the Tribunal and before us. The Respondent
was represented by Mr Templeton, employment consultant, before the Tribunal and
before us.
Background
4.
The Respondents are consulting engineers. Theirs is a small business
involving a board of four directors and, at the relevant date, 17 employees.
Prior to the Claimant’s dismissal, those employees included three associate
structural engineers. The Tribunal found that the associates carried out
different roles but made no findings in fact regarding what was involved in the
job of each of them. They experienced a downturn in business in 2008/9 and by
2009, decided they would have to make an employee redundant.
5.
The Claimant commenced employment with the Respondent on 24 April 2006
and was dismissed on 4 September 2009. Following a pre- hearing review, it had
been determined that the reason for the Claimant’s dismissal was redundancy.
The issue for the Tribunal was, accordingly, whether or not that potentially
fair dismissal was fair or not.
6.
The Claimant worked initially as a junior structural engineer and, on 1
September 2007, was promoted to the role of associate structural engineer,
earning £37,200 plus bonus. The Respondent employed three associates. As
amongst their employees, associates were the higher earners. Staff appraisals were
carried out on the basis of a checklist of certain criteria, until 2007, but
ceased at that time.
7.
In April 2009, at his request, the Claimant’s hours were reduced to four
days per week. His earnings were reduced on a pro rata basis. The Tribunal found
that that was an inconvenience to the Respondent. At no point, however, did
the Tribunal find that that inconvenience was causative in the Claimant’s
dismissal.
8.
As we have noted above, by 2009 the Respondent decided there was a need
for them to make an employee redundant. They had never required to make anyone
redundant before. The Respondent determined on the associates as being the
relevant pool as they were the higher earners. There being three associates,
there was accordingly, a pool of three employees to be considered in the
redundancy process. The Claimant did not, in the course of his dealings with
the Respondent at and around the time of his dismissal, in his ET1, at the
pre–hearing review, or in the course of the full hearing before the Tribunal,
challenge that pool as being inappropriate or unfair. In the course of the
hearing before us, he suggested that the pool should have been all employees
earning £30,000 per annum, since that was the saving that the Respondent would
make from his redundancy, but that was the first time such a suggestion was
made and it took no account of the bonus entitlement which, on the Tribunal’s
findings, his post attracted.
9.
On 1 June 2009, the Respondent’s four directors met to score the three
candidates in the pool in accordance with a matrix of criteria that they had
drawn up after some internet research and discussion. They discussed the
associates and carried out the scoring exercise collectively. They did not
replicate the criteria used in a staff appraisal system that had ceased in 2007
although, contrary to the Tribunal’s statement at paragraph 69, it was not
the case that they ‘bore no relation to the criteria set out in the staff
appraisal’ – comparison of the appraisal criteria with those used in the redundancy
process demonstrates that, in both cases, timekeeping and attendance,
capability, adaptability, relationships with clients, motivation and ability to
work with other people, were key features. The Respondent did not consult with
the employees in the pool beforehand or warn them that they were at risk of
redundancy.
10.
The matrix of criteria used by the Respondent were a list of factors
commonly considered in redundancy exercises:
(i)
time and attendance
(ii)
capability
(iii)
adaptability
(iv)
client/customer focus
(v)
length of service
(vi)
disciplinary record
(vii)
motivation
(viii)
team fit.
each of which
was marked on a score of 1-10. All criteria had equal weighting. The partners
regarded the criteria as interlinked, their desire being to retain those
associates who could move their business forward.
11.
The Respondent’s four directors discussed scoring together. The Claimant
scored lowest, at 65 marks. The two other associates both scored 74 marks. The Claimant
scored lower than them on all criteria other than (i) and (vi), where he scored
the same. Both of the other associates had been long term employees of the Respondent,
one having worked for them since 1995 and the other since 1977. The directors
had regard to the Claimant having been overheard to say that he did not need,
financially, to work but there is no finding that that awareness had any effect
on any of his numerical scores.
12.
The Tribunal did not find that the directors’ determination of the
redundancy pool, of the matrix of criteria or of the candidates’ scores was
carried out by them in anything other than good faith.
13.
On 5 June 2009, the Claimant was called to a meeting and handed a letter
advising him that he was being dismissed, with three months notice, due to the
economic downturn. He requested a meeting to discuss the matter. Meetings
between the Claimant and Respondent followed in the course of which the Claimant
raised various questions regarding his selection for redundancy. He did not
challenge the need for redundancy. He asked a number of questions relating to
his selection for redundancy. He was provided with answers including the
details of the scoring system that was used, his scores and details of how the
scores were arrived at. He asked whether the directors had considered voluntary
redundancies and was advised that they had but did not think that anyone would
take it up; also, it was considered that that approach would not be in the best
interests of the company. At the first meeting, which was on 8 June, the Claimant
asked if he could appeal. He was asked why and he said that he thought the
selection criteria might be unfair. One of the directors responded to that
assertion (not, as is stated by the Tribunal at paragraph 19, to the Claimant
asking if he could appeal) by saying: “Oh for fuck’s sake”.
14.
The Claimant appealed, stating as his grounds that there was no
consultation prior to his receiving the letter advising of his dismissal for
redundancy on 5 June, that the redundancy candidates were not involved in the
process, that the selection criteria were not objectively verifiable and that
there was a lack of a fair and open procedure. His appeal was heard by two of
the directors, on 2 July 2009, on behalf of the whole board. By letter dated 8
July, the Claimant was advised that his appeal had not been successful. The
terms of the letter noted that the Claimant had restated his four grounds of
appeal and had added little more by way of substantive information, and
explained the reasons for the rejection of his appeal as follows:
“We acknowledged that we had been remiss in the initial
consultation process and, therefore, failed to follow some procedures. We have,
however, had a number of consultation meetings with you since then, albeit you
noted that you are not satisfied with that. We considered that the other candidates
did not know they were being considered for redundancy until after we had
reached our decision. You stated your opinion that the selection criteria
headings that we used were all subjective and were not fair. We advised that
all these parameters are important considerations in the way in which the
business has always operated.
Having discussed the matter following the appeal hearing, the
Directors have decided to reject that appeal and continue with the redundancy.
Whilst we may acknowledge initial procedural failures on our part, the end
result would not have been different. If we had properly followed all the
initial procedures, the whole process would simply have taken a little longer.
The Directors are satisfied that the process was fair. The decision was taken
objectively to safeguard the foreseeable future of the firm and in recognition
of the size and nature of the firm and the way in which it operates.”
15.
The question of whether or not alternative employment could have been
offered to the Claimant arose before the Tribunal. We make two observations.
First, one of the Respondent’s directors, Mr McNeill, gave evidence that “there
simply were not any alternative vacancies.” (paragraph 73 of the Tribunal’s
reasons) and it was not suggested to him that there were vacancies. Secondly,
whilst the Tribunal then stated that there was no evidence from the Respondent
to suggest that “any efforts at all were made in this respect” (paragraph 73),
at no point do they suggest that they found Mr McNeill to be lacking in
credibility or reliability in his evidence on the matter.
Form ET1
16.
In his form ET1, the Claimant stated that he complained of unfair
dismissal on four grounds: no consultation or process prior to the written
notice, redundancy candidates not involved in the process, selection criteria
not being objectively verifiable, and lack of fair and open procedure. He made
no complaint in his ET1, in evidence, or in the course of submissions before
the Tribunal that the Respondent’s determination of the pool for redundancy was
unfair; he did not seek to make any case regarding the Respondent’s
determination of redundancy pool, at all.
Relevant law
17.
The principles of law applicable in the circumstances of this case are,
first, those which we have summarised in two recent decisions concerning
dismissals for redundancy - First Scottish Searching Services Ltd
v McDine and another UKEATS/0051/10/BI and Semple
Fraser v Daly UKEATS/-0045/09 - section 98 of the Employment
Rights Act 1996 provides that it is for the employer to show the reason for
a dismissal (s.98(1)) and that redundancy is a potentially fair reason
(s.98(2)(c)). Whether or not dismissal for that reason is fair or unfair
depends on the answer to the issue identified in section 98(4):
“…….where the employer has fulfilled the requirements of
subsection (1), the determination of the question whether the dismissal is fair
or unfair (having regard to the reason shown by the employer) –
(a) depends on whether in the circumstances (including the size
and administrative resources of the employer’s undertaking) the employer acted
reasonably or unreasonably in treating it as a sufficient reason for dismissing
the employee, and
(b) shall be determined in accordance with equity and the
substantial merits of the case.”
18.
Accordingly, once a potentially fair reason for dismissal is
established, the question of whether or not the employer acted reasonably in
deciding to dismiss lies at the heart of every case where a claim for unfair
dismissal is pursued including cases of dismissal on grounds of redundancy.
It is not for an Employment Tribunal to ask themselves whether they would
have dismissed the employee; it is not for them to seek simply to substitute
their own decision for that of the employer (Iceland Frozen Foods Ltd v
Jones [1982] IRLR 439). As explained in Iceland
Frozen Foods that is because the concept of reasonableness as used in
s.98(4) involves recognising that, in many cases, there will not be a single
reasonable response to the circumstances that have led to the dismissal; there
will be a band of reasonable responses within which one employer would
reasonably take one view whereas another, equally reasonable, employer would
take a different view. To put it another way, in many cases, there will
be room for legitimate differences of opinion amongst reasonable employers as
to what is a fair way to respond. Thus, as explained in a redundancy case, Williams
v Compair Maxam Ltd 1982 ICR 156:
“ …it is not the function of the industrial tribunal to decide
whether they would have thought it fairer to act in some other way: the
question is whether the dismissal lay within the range of conduct which a
reasonable employer could have adopted.” (p.161)
19.
Secondly,
against that background, various observations have been made in the
authorities regarding redundancy dismissals which show that, in assessing the
reasonableness of a decision to dismiss for redundancy, it will rarely be
appropriate for an Employment Tribunal to embark on a detailed scrutiny of the
system used for scoring or the application of the system in a particular
case. In Buchanan v Tilcon Ltd [1983] IRLR 417, a decision of the First Division in which the opinion was delivered by the Lord President (Lord
Emslie) (referred to in both Eaton Ltd v King in 1995 and British
Aerospace plc v Green) a clear limitation is expressed as to what was
to be expected so far as scrutiny of employers acting in a redundancy situation
was concerned:
“ …In this situation where no other complaints were made by the
appellant all that the respondents had to do was to prove that their method of
selection was fair in general terms and that it had been applied reasonably in
the case of the appellant by the senior official responsible for taking the
decision. As was pointed out by Phillips J in Cox v Wildt Mellor
Bromley Ltd [1978][1978] IRLR 157 it is quite sufficient for an employer in
a case such as this to call witnesses of reasonable seniority to explain the
circumstances in which the dismissal of an employee came about and it was not
necessary to dot every “i” and to cross every “t” or to anticipate every
possible complaint which might be made.” (at
p. 418)
20.
In the same vein, in British Aerospace plc v Green, Waite
LJ, at paragraph 3, said:
“Employment law recognises, pragmatically, that an over-minute
investigation of the selection process by the tribunal members may run the risk
of defeating the purpose which the tribunals were called into being to
discharge – namely a swift, informal disposal of disputes arising from
redundancy in the workplace. So in general the 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.”
21.
The same theme was taken up by this Tribunal in John Brown
Engineering Ltd v Brown and others. At paragraph 8, Lord
Johnston said:
“….in each case what is required is a fair process, where an
opportunity to contest the selection of each individual is available to the
individual employee….it also has to be reasserted that it is no part of the
industrial tribunal’s role in the context of redundancy to examine the marking
process as a matter of criteria under a microscope; nor to determine whether,
intrinsically, it was properly operated. At the end of the day the only
issue is whether or not the employers treated their employees in a fair and
even handed manner.”
22.
Then, in McCormick & Ors v Sanmina Sci UK Ltd [2006]
AER 138, Elias J, as he then was, rejected the claimant’s contention that an
employers “absence” criterion should have included something to allow for the
reason for absence, observing at paragraph 86, that to have acceded to that
submission would have been to allow exceptions to what was a “carefully
drafted” redundancy scheme and the Tribunal’s upholding of that contention had
amounted to a substitution of its own view. At paragraph 87, he explains
that this Tribunal was satisfied that:
“it could not properly be said that no reasonable employer could
adopt this criterion.”
23.
Later in the judgment, at paragraph 93, he refers to the need to
consider whether a particular approach to scoring was within the band of
reasonable responses that was open to a reasonable employer.
24.
As
the judgment of the Court of Appeal in Bascetta v Santander [2010] EWCA Civ 351 makes clear, the principles articulated in the earlier
cases, referred to above, still hold good. In particular, the passages
that we have referred to in both British Aerospace plc v Green
and Eaton Ltd v King are referred to with approval.
25.
In a redundancy situation, an employer will require to identify the
group of employees from which the person or persons to be made redundant will
be selected, often referred to as the “pool”. As has been repeatedly
recognised, employers are afforded a measure of flexibility when it comes to
determination of the pool; provided they genuinely apply their mind to the
matter and act reasonably in determining it, their decision will not normally
be open to question (see, for example: Taymech Limited v Ryan
[1994] UKEAT/663/94 per Mummery J; Harvey – Industrial Relations and
Employment Law para 1685).
26.
Thirdly, whilst in general terms, in circumstances of redundancy, a
reasonable employer will be expected to consult before deciding who to dismiss,
there is no rule of law that lack of proper consultation necessarily renders
the dismissal unfair (see: Williams at p.161 and Hollister
v National Famers’ Union [1979] ICR 542.) The implications of a lack
of prior consultation regarding the question of whether or not the dismissal
was fair or unfair will depend on the whole relevant facts and circumstances of
the case. Whilst there are circumstances in which there is a statutory
requirement for consultation (Trade Union and Labour Relations Act 1992
s.188 which applies where an employer proposes to make 20 or more employees
redundant), they did not apply in the present case. No statutory procedures
were applicable to the Respondent’s redundancy exercise, contrary to what seems
to be suggested by the Tribunal’s repeated criticism of the Respondent for
being unaware of “the statutory procedures”. Indeed, since, on the Tribunal’s
findings, there were only 17 employees (there are no findings from which it
could be determined whether the four directors were employees or not), the
statutory consultation requirements could not have arisen.
27.
Fourthly, it is not the case that the adoption of criteria which involve
a measure of subjectivity necessarily renders the dismissal unfair. Whilst, as
observed in Williams, at p.163, a reasonable employer can be
expected to establish criteria which “so far as possible do not depend solely
upon the opinion of the person making the selection but can be objectively
checked against such things as attendance record, efficiency at the job,
experience, or length of service” (p.161), a number of criteria which are
regularly accepted as being reasonable - capability and performance, for
instance – will, inevitably, involve a measure of judgment which is hard to
describe as being anything other than subjective. It may, of course, be
tempered by, for instance, involving more than one person who knows the
candidates in the scoring process.
28.
Fifthly, the ACAS Code of Practice on Discipline and Grievance does not
apply to redundancy dismissals.
29.
Sixthly, where an Employment Tribunal find a dismissal to have been
procedurally unfair, including where the procedural deficiency consists of a
lack of consultation, it must consider whether or not a Polkey (Polkey
v AE Dayton Services Ltd [1988] AC 344 reduction ought to be made. In Polkey
Lord Mackay of Clashfern, at p.161, referred with approval to part of what was
said by Neill LJ in the judgment of the Court of Appeal:
“…it seems to me to be proper and indeed necessary for the
tribunal to investigate the effect of the failure to consult the employee or to
warn him or to hold discussions or as the case may be. In some cases, the facts
may show beyond peradventure that no discussions or other steps could have made
any difference whatever because the state of the company was so grave. In other
cases the matter will be more evenly balanced. But, for my part, I can see no
objection in principle to the tribunal seeking to evaluate the effect in
practice of any failure by the employer to observe the provisions of a code of
practice or of the guidelines prescribed in cases such as Williams v
Compair Maxam Limited….”
30.
Following Polkey, whilst a dismissal may be found to be
unfair on procedural grounds alone, in deciding what compensation, if any, to
award under section 123 of the 1996 Act, a tribunal has to ask itself whether
any of the evidence which it accepts shows that there is a chance that, absent
that procedural unfairness, the employee would have been dismissed in any event
(for recent discussions see: Scope v Dr Carol Thornett [2006] EWCA Civ 1600; Software 2000 Ltd v Andrews & Ors [2007] ICR 825).
31.
An issue which may arise (and arose in this case) when considering what
would have been the outcome if there had been a fair procedure is that of
whether or not the claimant would or should have been offered alternative
employment. Whilst, if raised as an aspect of the employers’ case that the
employee would have been dismissed in any event, the initial general onus may
be said to rest on the employer, it may not be difficult for him to discharge
it. If, for instance, the employer’s position is that there were no alternative
jobs, it is then for the claimant employee to make the running. As discussed by
Underhill P, in Virgin Media Ltd v Mr G Seddington and anr UKEAT/0539/08/DM
at paragraph 15:
“We do not think that the burden can be regarded as being at all
points on the employer. The burden may indeed be on him to raise the issue (if
the employee has not) – that is, to assert that there was no suitable
employment that the employee could or would have taken – and he will also have
to provide appropriate evidential support for that assertion: the basic facts
about alternative employment will be within his knowledge and not – at least
not always or not completely – within the employee’s. But if he raises a prima
facie case to that effect, it must, it seems to us, be for the employee to
say what job, or kind of job, he believes was available and to give evidence to
the effect that he would taken (sic) such a job: that, after all, is something
which is primarily within his knowledge.”
32.
Seventhly, where the tribunal is satisfied that it is appropriate to
award compensation, it requires to explain why it is awarding the sum determined
on and, in particular, why it considers that it is just and equitable to make
that award “having regard to the loss sustained by the complainant in
consequence of the dismissal.” (see: s.123(1) of the 1996 Act).
The Tribunal’s Judgment and Reasons
33.
At paragraph 62, the Tribunal lists the “Issues to be determined by the
Tribunal”:
“(a) Has the respondent established a potentially fair reason
for dismissal?
(b) Did the decision to dismissal fall within the band of
reasonable responses?
(c) Did the respondent follow a fair procedure?
(d) Were there any failures by either
party to follow the ACAS code and if so were such failures unreasonable?
(e) If the claimant was unfairly
dismissed, what remedy is appropriate?
(f) If compensation is to be awarded,
how much should be awarded?”
34.
It is not clear why the Tribunal included (a) in their list of issues
given that it was not open to them to revisit it. It had already been
determined that the Claimant was dismissed by reason of redundancy.
35.
Nor is it clear why the Tribunal included (d) in their list of issues.
At paragraph 66, the Tribunal set out in some detail what would be the effect
of a failure to comply with the ACAS code but it was not applicable because the
Claimant’s was a redundancy dismissal. The Tribunal does, later in its
reasoning, at paragraph 75, explain that but it seems that they had, by then,
gone through the exercise of considering whether or not it had been complied
with - for reasons which are not apparent. They state:
“75. Although the Tribunal identified a number of procedural
failures by the respondent, in accordance with paragraph 1 of the ‘ACAS Code of
Practice’, it does not apply to redundancy dismissals.”
36.
The Tribunal recognised that they required to determine whether or not
the Claimant’s dismissal was fair by asking whether or not the Respondent had
acted reasonably. At paragraph 59, they state:
“What has to be assessed is …. whether ……., with the knowledge
the employer had at the time, the employer acted reasonably in treating the
redundancy that he believed had taken place as a reason for dismissal.”
37.
It is not clear why or on what basis the Tribunal refer only to the Respondent
‘believing’ that there was a redundancy; it had already been established that,
as a matter of fact, the reason for the Claimant’s dismissal was redundancy.
38.
The Tribunal criticised the procedure adopted by the Respondent in
various respects.
39.
They criticised the Respondent’s selection of the redundancy pool. They
did so notwithstanding the fact that, as above noted, it was no part of the Claimant’s
case. At paragraph 68, the Tribunal refer to the pro rata reduction in the Claimant’s
salary to just over £30,000 arising from him working a four day week, observe
that there was one junior staff engineer whose salary was approximately £30,000
per annum, that the Claimant’s workload was, post redundancy, to be covered by
a combination of a director and that engineer and concluded that:
“this suggests that junior staff did carry out work of a similar
nature to that of the claimant.”
There does not
appear to have been any evidence before the Tribunal regarding the work that
was being carried out by junior staff at and before 2009 and we would observe
that the plans identified for future allocation of the work allotted to the Claimant’s
post (involving a combination of one junior member of staff and a director) do
not obviously demonstrate either that those earning £30,000 per annum were an
appropriate pool or, more importantly, that there was any inherent unfairness
in the pool of associates determined upon by the Respondent.
The Tribunal then refer to
there being differences in the roles carried out by the associates (although,
as above noted, there are no findings in fact as to the nature of those
differences) and conclude that:
“Therefore, it was not only difficult to compare them in a
scoring process, but also to comprehend the basis on which the respondents had
created the selection pool in the manner that they did.”
40.
The Tribunal were critical of the selection criteria for various
reasons:
“69. The selection criteria drawn up by the respondent bore no
relation to the criteria set out in the staff appraisal used by the respondents
until 2007.”
and
“70. Apart from the ‘Time and Attendance’ and ‘Disciplinary
Record’ criteria, the Tribunal do not accept that the selection criteria were
necessarily objective.”
41.
“Length of Service” would also normally be accepted as being obviously
objective but the Tribunal appear to discount it because it “may be regarded as
discriminatory”. They presumably had age discrimination in mind. However, the Claimant
at no time complained that he had been discriminated against on grounds of age.
42.
So far as the other criteria were concerned, the Tribunal accepted that
“capability”, “adaptability”, “client/customer focus” and “motivation” could be
deemed objective but said there was a lack of definition or clear guidance as
to how to measure candidates against those criteria so their objectivity was
undermined.
43.
Regarding “team fit”, the Tribunal considered that it too “may be
regarded as discriminatory”. It is not clear what type of discrimination they
had in mind. We note, however, that the Claimant made no complaints of having
been discriminated against on the ground of any protected characteristic at
all.
44.
The Tribunal were critical of the lack of weighting because:
“71………..This created a risk of double counting in that the
longer the service an employee has the more likely they are to score higher in
terms of ‘Client/Customer Focus’ as there has been a longer duration in which
to develop relations with clients.”
but there was no evidence that that in fact happened and we would
only observe that the reverse could be the case, namely that the longer an
employee is in service, the more opportunity there will have been for problems
in client relationships to occur. The Tribunal are also critical of the fact
that the directors did not refer to documentary evidence about the three
associates but there was no evidence that any documents were available
regarding the other two candidates and the only document referred that related
to the Claimant was an appraisal carried out in April 2007, prior to his taking
on the role of associate; there was no evidence that there was any
documentation available that could have helped the directors with their
assessment of his work as an associate.
45.
The Tribunal did not conclude that the Claimant’s own financial position
was a determining factor but, at paragraph 72, they state:
“The ET3 form states unequivocally that in making its decision,
the respondent took account of the fact that the claimant had been overheard
saying that he did not financially need to work. The Tribunal were not
convinced by the respondent’s attempts to marginalise the significance of this
statement.”
46.
What the ET3 actually says is:
“..the Claimant was selected based solely upon the scores
assigned as part of that process, though the Respondents also had regard to the
fact that the Claimant had, on occasion, remarked that due to his financial
circumstances he did not require to work.”
47.
The Tribunal were of the view that the selection of the Claimant “may
have been somewhat predetermined” (paragraph 72), a conclusion which they draw
from the fact that:
“Both Mr Hughes and Mr McNeill also stated in evidence that they
were not surprised at the outcome of the scoring matrix.”
48.
The Tribunal did not, however, find that the Respondent had
predetermined the outcome of the redundancy process.
49.
The Tribunal accepted that the Respondent attempted to compensate for
the lack of prior consultation by agreeing to meeting with the Claimant on
three occasions but appear to have wholly discounted their doing so because:
“The Tribunal do not accept this as a consultation process. This
was carried out after the critical decision to make the claimant redundant.” (paragraph 73)
and were also critical of the failure of Mr Hughes or Mr McNeill
to take minutes of the meetings, relying on the Claimant to do so. The Tribunal
do, however, appear to have accepted that the Claimant’s meeting notes were
accurate.
50.
The Tribunal were critical of the Respondent’s failure to invite
voluntary redundancies and refer, at paragraph 73 (in the discussion section of
their written reasons) to the reason being that “they did not want to lose
someone they wanted to retain” which would appear to be drawn from the Respondent’s
position being that to do so would not “be in the best interests of the
company”. The Tribunal then conclude:
“This suggests to the Tribunal that they did not wish to retain
the claimant.”
51.
The Tribunal did not, however, find that that was the outcome that the Respondent
was looking for.
52.
The Tribunal were critical of the Respondent’s failure to consider
alternative employment for the Claimant:
“73. The respondent did also not properly consider suitable
alternative employment for the claimant. Mr McNeill stated in evidence that
there simply were not any alternative vacancies. However, no evidence was
offered from the respondent to suggest that any efforts were made at all in
this respect.”
53.
Under reference to Mr McNeill’s response “Oh, for fuck’s sake” (which,
as we have already observed, the Tribunal state was in response to the Claimant
asking if he had a right of appeal whereas, according to the Claimant’s own
note, it was in response to his suggesting that the criteria may be unfair) the
Tribunal stated that that comment was:
“indicative of the respondent’s unreasonable approach to the
claimant’s dismissal throughout.”
54.
Finally, the Tribunal were critical of the appeal procedure because the
appeal was heard by directors who had participated in the decision to dismiss.
The Tribunal recognised that the Respondent referred the decision as to whether
or not to allow the appeal to all four directors with a view to avoiding
unfairness but they then stated:
“Whilst the Tribunal accept that the respondent is not a large
business, it is still essential in terms of both natural justice and good
practice that an appeal is not heard by the same individuals involved in making
the original decision in order to afford an employee an independent and fair
hearing. In circumstances such as these, employers may seek external
adjudicators from a similar business to conduct an appeal hearing.”
55.
We note the suggestion that an “external adjudicator” from some “similar
business” should have been instructed to conduct the appeal hearing. There was,
however, no evidence before the Tribunal about the availability of external
adjudicators, about what other businesses might have been appropriate source of
such adjudicators, about the costs that might be involved, of how the power to
decide the issue could be vested in someone who was not a director of the
company or as to the appropriateness of having an outsider to the business making
a decision on a redundancy dismissal appeal without any input from someone
having knowledge and understanding of the business and, in this case, of the
three associates.
56.
The Tribunal summarise their conclusions at paragraph 76:
“The Tribunal consider that the procedure adopted as a whole by
the respondent was a sham and unfair. It was only due to the claimant’s own
research and thorough approach to the matter that the respondents became aware
of their legal responsibilities. The respondent is a firm of 21 employees which
is a business of sufficient size to be aware of and adhere to its statutory
duties to its employees. However, once made aware these duties and realising
they could not be ignored, the respondent did little to rectify the
difficulties they had already caused themselves. The respondents were very much
of the mind that it was their own company and that they should decide how to
manage their affairs which included making their own decisions, whether in
compliance with the law or not. In the circumstances the Tribunal considers
that the dismissal was unfair on procedural grounds as well as on substantive
grounds.”
57.
Turning to whether or not there should be a Polkey
deduction, the Tribunal only stated:
“79.The Tribunal were also of the view that a Polkey reduction
did not apply in this case as in the event the respondent had conducted a fair
procedure, it would still not have resulted in a fair dismissal.”
58.
As to compensation, the Tribunal awarded the Claimant loss of earnings
from the date of his dismissal and for the period to 18 January 2011, on the
basis that he had said he “should be able to obtain an equivalent rate of pay
by 18 January 2011.” They do not explain the basis for their approach. There
are no findings as to what was going to be the source of the Claimant’s
equivalent rate of pay or, importantly, why those replacement earnings could
not have been arrived at sooner.
The appeal
59.
For the Respondent, Mr Templeton submitted that the Tribunal had erred
in law and its decision could not stand.
60.
He submitted that there was no basis for nor explanation of the Tribunal’s
conclusion that the dismissal was substantively unfair.
61.
Regarding the Tribunal’s finding of procedural unfairness, they had over-scrutinised
the scoring process and substituted their own view of what would have been an
appropriate procedure. As to the pool, the Claimant had no case that the
choice of pool was unfair and it was not, in any event, for a Tribunal to
impose its choice of pool on an employer who has genuinely applied his mind to
the matter: Fulcrum Pharma (Europe) Ltd v Bonassera and anr UKEAT/0198/10/DM.
The pool chosen here was not a sham and was not unintelligible.
62.
Regarding the criteria, it was erroneous to suggest that they all
required to be wholly objective and it was wrong to embark on a detailed
scrutiny: FSS Ltd v McDine UKEATS/ 0051/10/BI; Williams
v Compair Maxam. The appraisal process had not been in use for
some time and there were no findings in fact about whether or not the Respondent
had found it helpful when it was in use.
63.
As to consultation, it was accepted that there was a failure on the part
of the Respondent but the Tribunal had failed to consider what would have
happened if consultation had taken place and there was ample evidence about
that, given what occurred at the meetings that were held once the lack of
consultation was pointed out to them. As explained in Polkey and
in Duffy v Yeomans & Partners Ltd [1993] UKEAT 530.91/0704
the lack of consultation may not render a dismissal unfair.
64.
Regarding alternative employment, Mr Templeton pointed to the Respondent’s
evidence being that there were simply no vacancies. That was sufficient to
discharge any onus on them: Virgin Media Ltd v Mr G Seddington.
There was no basis in the evidence for the Tribunal to suggest, as they
did, that the Respondent could have done more in that regard. It was no part
of the Claimant’s case that there was some alternative job he could or should
have been offered.
65.
Turning to the Tribunal’s criticisms of the appeal process, they had
fallen into error. Whilst Mr Templeton accepted that it was desirable that an
appeal be heard by different persons, that was not always possible in a small
entity and it was wrong to suggest that, as a matter of law, a dismissal was
necessarily unfair if that did not occur. Further, as to the issue of an
outside adjudicator, the Tribunal had speculated, on the basis of no evidence,
as to what might have been able to be done and had not thought about the
obvious questions such as the competency or appropriateness of such a person
determining the issue.
66.
Mr Templeton made other submissions to the effect that the Tribunal’s
approach was indicative of their having in mind that, notwithstanding the
decision of the earlier employment as to the reason for dismissal, they could
still consider whether or not this was a redundancy dismissal as opposed to a
pretext. He drew attention to the use of the expression “believed had taken
place” at paragraph 59, to which we refer above and to their use of the
expression “sham”, in paragraph 76.
67.
Regarding what the Claimant had said about not needing to work, Mr
Templeton pointed out that there were no findings in fact that that matter had
affected the Claimant’s scores and having regard to it did not necessarily have
a negative connotation.
68.
Turning to compensation, Mr Templeton submitted that the Tribunal had
wholly failed to explain their conclusion that there was no basis for a Polkey
deduction; this was a case where one plainly fell to be made. Similarly, they
had failed to explain how and why loss of earnings up to and beyond the date of
the hearing was considered to be attributable to the Claimant’s dismissal:
section 123(1) of the Employment Rights Act 1996.
69.
Mr Templeton invited us to overturn the judgment of the Tribunal and
dismiss the Claimant’s claim which failing to remit the case to a freshly
constituted employment tribunal.
70.
The Claimant submitted that the Tribunal had not overstepped the mark.
He believed that there were substantive failings by the Respondent. He
referred to their having found that his part time working was an inconvenience
and the reference to his own financial position; that showed that the dismissal
was substantively unfair. Further, the directors relied on their own opinions
in the scoring exercise, their decision was predetermined, and they wanted to
“lose” him.
71.
The Claimant referred to that part of the judgment in the case of Pinewood
Repro Ltd t/a County Print v Page UKEAT/0028/10 which records
that the tribunal below had expressed the view that employers require to
provide an explanation of employee’s scores in a redundancy process. He
accepted, however, that he had not challenged his scoring. He said there was
no evidence to link the need for redundancy with the pool of candidates, whilst
accepting that he had not, at any earlier stage, challenged the pool as unfair.
It was, he said, clear from the judgment of the Tribunal that there was “more
to it” and it showed his dismissal to be unfair. He said that the meetings he
had were not consultation meetings – they were just for him to find out how the
Respondent had reached its result.
72.
He referred to the same passages in Fulcrum Pharma as had
been referred to by Mr Templeton and he referred to Williams v Compair
Maxam in support of a submission that whilst some of the criteria were
subjective, the Tribunal had actually found that a number of them were
objective and had not fallen into error in that regard.
73.
The Claimant said the reference to the ACAS guidelines was his fault –
he had raised them.
74.
As to Polkey, the Tribunal had considered what would have
happened; that was evident from their finding that the procedure was a sham and
was unfair. His point seemed to be that if the procedure had not been a sham
and had been fair then it was plain that he would not have been dismissed; he
was a chartered engineer and his experience outweighed that of the junior
engineer. A proper consultation with the candidates who were on £30,000 per
annum would not have resulted in his redundancy. Further, if the directors had
had the appeal procedures independently reviewed, they would have found that
theirs was a knee jerk reaction. That said, the Claimant accepted that it was
not essential to have an appeal heard by a different person from the dismissing
officer.
75.
In summary, the Claimant submitted that it was only the Respondent who
had erred in law, the judgment of the Tribunal had been all fact, the Respondent
was simply denying the facts and dressing up facts as law.
Discussion and decision
76.
We are satisfied that the appeal is well founded.
77.
First, whilst the Tribunal have explained why, in their view, the
dismissal was procedurally unfair, it is not possible to identify, from their
reasons, the basis on which they concluded that it was also substantively
unfair. The reasoning that precedes that conclusion concerns procedural
matters. Nowhere do the Tribunal find, for instance, that no reasonable
employer would have decided to dismiss the Claimant. The conclusion of
substantive unfairness cannot, accordingly, stand.
78.
Turning to the question of whether or not the dismissal was procedurally
fair, we are satisfied that the Tribunal erred in law. They have taken
account of irrelevant factors namely their own view that the Respondent should
have determined on a different pool and their own view that two of the criteria
were possibly discriminatory; they have, in short, substituted their own view.
Then, the Tribunal determined that the Respondent’s approach to criteria was
flawed due not only to possible discrimination but also to lack of objectivity
and lack of the use of weighting. As above noted, there is no rule that each
individual criterion used in a redundancy selection must be objective and none
of the evidence demonstrated that the lack of weighting had in fact caused the
double counting apprehended by the Tribunal. Further, this was not a case
where a single officer marked the candidates; on the Tribunal’s findings in
fact, their scores were the result of discussion amongst the four directors but
they have failed to take that account in their considerations. Overall, we are
persuaded that the Tribunal’s approach has involved too detailed a scrutiny of
the selection process, contrary to the guidance in the authorities to which we
refer above.
79.
There is no doubt that the Respondent failed to consult with the Claimant
and accepted that they should have done so but the Tribunal failed to go on and
consider whether, looking at the whole facts and circumstances including the
meetings that followed the Respondent’s realisation that they should have
consulted, the dismissal was fair and also, what would have happened if there
had been consultation at an earlier stage? They required to do so.
80.
We accept that the meetings that took place with the Claimant were not
consultation meetings in the sense of being meetings taking place at an early
stage and prior to determination of who was to be made redundant, but they
were, nonetheless evidently meetings at which the Claimant was free to raise
any matter, at which he did raise a number of matters which were considered and
answered and were capable, it would seem, of giving a reasonable indication of
what would have happened if consultation had taken place, namely that the Claimant
would still have been selected for redundancy. The Tribunal only, however,
asked themselves whether the meetings amounted to “consultation” but they
required to go further than that. The nature and effect of the meetings was
relevant to the overall question of whether or not the Claimant’s dismissal was
fair. Also, the question of what would have happened if there had been
consultation was highly relevant to the overall issue of whether or not, absent
procedural failing, there was a chance that the Claimant would have been
dismissed in any event. Regarding the latter, we find the Tribunal’s statement
(at paragraph 79) that a Polkey reduction did not apply very
surprising, given the evidence and findings in fact, and we cannot identify any
reasoning that supports it.
81.
Separately, we observe that the Tribunal also appears to have
misdirected themselves in that, at a number of points, they refer to the Respondent
requiring to comply with a “statutory process” yet, as we have explained, no
such process applied to them. Regarding the references to the ACAS Code, although the Tribunal found that it did not apply, it was not a relevant issue at all
and they should not have been asking themselves whether or not the Respondent
had complied with it.
82.
Turning to the matter of the appeal, the Tribunal’s approach, which was
that it is always “essential” for an appeal to be heard by someone other than
the dismissing officer, is incorrect as a matter of law; the question is,
rather, whether a procedure which fails to achieve that renders the dismissal
unfair, bearing in mind the whole facts and circumstances of the case. Further,
the Tribunal’s conclusion regarding the appeal procedure in this case was
evidently influenced by an assumption on their part that the Respondent could
have arranged for an “external adjudicator” from a “similar business” to hear
the appeal. We refer to our earlier observations regarding this matter. The Tribunal
had no basis for making that assumption.
83.
Regarding the matter of alternative employment, we accept that the Tribunal
have also fallen into error. Evidence was given by Mr McNeill, a director of
the Respondent - which the Tribunal did not reject - that there simply were not
any alternative vacancies. We are satisfied that, in the circumstances of this
case, that was sufficient for the Respondent to discharge such onus as lay on
them and there was no evidence led to counter it. The Tribunal’s criticism of
the Respondent as having made no effort had no basis in the evidence – it was
never suggested by any witness that there was actually a vacancy available.
84.
Turning to the matter of compensation, again we would refer to our
earlier comments. As Mr Templeton submitted, the Tribunal have not explained
why they consider that the loss claimed by the Claimant all flowed from his
dismissal. The findings in fact regarding his employment position are extremely
brief and not of themselves explanatory of the outcome which was to compensate
the Claimant for continuing loss of earnings over quite a substantial period.
85.
We can understand why Mr Templeton submitted that the Tribunal’s
reasoning is indicative of their having approached matters on the basis that it
was open to them to decide whether or not the real reason for the dismissal of
the Claimant was redundancy. There is certainly a flavour to that effect as
exemplified by the two matters to which he drew attention at paragraphs 59 and
76 and that impression is reinforced by certain comments which seem to evince
suspicion on their part as to the Respondent’s motivation (see e.g. paragraphs
72 and 73).
Disposal
86.
In these circumstances, we will pronounce an order upholding the appeal.
87.
We have considered whether or not a remit can be avoided but have
reached the conclusion that there is inadequate clarity regarding some of the
relevant facts and a conclusion as to whether or not the Claimant’s dismissal
was fair or unfair cannot be reached on the basis of such facts as are clear
from the present findings. This is, accordingly, not a case in which it would
be appropriate for us to determine the outstanding issues namely (a) whether or
not the Claimant’s dismissal (which was by reason of redundancy) was fair or
unfair?, (b) whether or not, if procedurally unfair, there was a chance of the Claimant
being dismissed in any event and if so, what was that chance in percentage
terms? and (c) if his dismissal was unfair, what amounts to appropriate
compensation, bearing in mind the provisions of s.123 of the Employment
Rights Act 1996?
88.
We will, accordingly, in addition to upholding the appeal, order that
the Claimant’s claim be remitted to the Employment Tribunal for a rehearing. We
consider it appropriate, in all the circumstances, for the remit to be to a
fresh Tribunal.
