England and Wales Court of Appeal (Civil Division) Decisions

IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
(His Honour Judge Peter Clark)
REF NO: UKEATPA088509

		Royal Courts of Justice Strand, London, WC2A 2LL
		20/12/2010

Lord Justice Maurice Kay :

1. Dr Dyna Arhin commenced employment with Enfield Primary Care Trust (the Trust) in September 2003 as a Consultant in Public Health. She also held the position of Assistant Director. Mr Glenn Stewart was employed in the same two capacities. They worked under Dr Ugo Okoli, the Director. In 2006, in accordance with a national programme of change pursuant to "Commissioning a Patient-Led NHS", published in July 2005, the Trust instigated a reorganisation plan. The intention was to achieve a 20% saving in staff costs. The outcome was that Dr Arhin was dismissed by reason of redundancy on 30 June 2007. Mr Stewart was retained. Dr Arhin commenced proceedings in the Employment Tribunal (ET). In a decision promulgated on 23 January 2009, the ET decided that Dr Arhin had been unfairly dismissed but it rejected her claim of race discrimination. The basis for the finding of unfair dismissal was that, although there had been a genuine redundancy situation, the Trust had acted unfairly by failing to put Dr Arhin and Mr Stewart into a pool so as to enable a competitive selection procedure to take place. It had simply resorted to the device of "slotting in" which, though appropriate in defined circumstances, was not appropriate where there was another employee who was eligible for the new post.
2. By a remedies decision dated 15 June 2009, the ET refused reinstatement and reengagement. No issue arose as to a basic award in view of the contractual redundancy payment of £19,645.62. However, the ET made no compensatory award because it concluded that Dr Arhin "simply had no chance of achieving the post in a competitive selection process". There therefore had to be a 100% deduction from the putative compensatory award pursuant to the Polkey principle. On 25 November 2009, the Employment Appeal Tribunal (His Honour Judge Peter Clark sitting alone) found no legal error in the decision of the ET. Dr Arhin now appeals to this Court, Black LJ having granted permission following an oral hearing on 9 May 2010.
3. The race discrimination claim which was rejected by the ET at the liability hearing was the subject of a separate decision in the EAT. In March 2010, it allowed Dr Arhin's appeal and remitted the race discrimination claim to the ET for further determination. We are told that that process will have taken place since we heard the present appeal.
4. In order to understand Dr Arhin's grounds of appeal, it is necessary to set out parts of the ET's decisions on liability and remedies.

The ET decision on liability

5. In its liability decision, the ET concluded that the respective job descriptions of Dr Arhin and Mr Stewart were "substantially the same, perhaps the only small difference can be seen in the fact that [Dr Arhin] had one or two additional duties whereas Mr Stewart had more line management duties". However, "there was no job description for the new post". It added:

"… under the policy without a job description it is in fact difficult to decide what type of post the Trust was in fact talking about. Set that against the fact that [Dr Arhin] and Mr Stewart had pre the organisational changes held substantially the same job descriptions, whatever the Trust or Dr Okoli sought to advance."

The ET decision on remedies

6. The remedies hearing considered reinstatement, re-engagement and compensation. However, reinstatement fell out of the picture when Dr Arhin stated in evidence "I am not asking for reinstatement". It is necessary to set out substantial extracts from the decision relating to the other remedies.
7. The ET first stated "the following findings":

"It is clear from the documentary evidence and not disputed by [Dr Arhin] that between September 2006 and the date of her dismissal on 30 June 2007 [she] took nine periods of sickness absence. These included absences for the whole calendar month of May 2007 and 87 further calendar days, including almost all of June 2007. Calculated on the basis of 30.5 calendar days per month, this meant that [she] was absent for a total of 3.68 months during this period …

… following the … dismissal she appears to have been continuously certified to refrain from work from 11 July 2007 until 31 May 2008. This follows almost directly on from her absence due to sickness for almost all of May and June 2007.

Although [Dr Arhin] appears to have confirmed that she was fit to return to work on 11 March 2008, according to a letter from the Job Centre …, the Tribunal have not been shown any medical evidence (independent) confirming, as [she] asserts, that she would have been certified fit to return to work by her GP on 11 March 2008. Notwithstanding this, this amounts to a total period of at least eight months following her actual dismissal during which, on the basis of the documents …, it seems highly likely (on the balance of probabilities) that [she] would had been absent from work due to sickness had she not been dismissed.

…

If [Dr Arhin] had not been selected for redundancy, it is likely that her line manager, Dr Okoli, certainly from the evidence we have heard, would have taken advice from Human Resources as to how to manage the sickness absence …

… [Dr Arhin] had advised Dr Okoli on 4 May 2007 that she had been diagnosed with active connective tissue disease … as a result of this, Dr Okoli wanted to make arrangements for a referral to Occupational Health in a meeting which [Dr Arhin] did not attend on 10 May 2007.

Indeed Dr Okoli suggested that [Dr Arhin] self refer, and it seems undisputed that she spoke to Occupational Health by telephone on 16 May 2007 and arranged an appointment for 11 June 2007. For some unknown reason Dr Arhin did not attend that appointment. It is also clear that had she not been under notice of dismissal at that time, the respondent would have ensured that she be seen by Occupational Health as soon as possible.

…

It is clear … [Dr Arhin] had already requested a copy of the ill-health retirement application form in February 2008 and must therefore have been considering that possibility at that stage.

The alternative is, if Dr Arhin did not want to consider applying for ill health retirement, or if the application had been unsuccessful for any reason and yet at the same time the medical advice confirmed that she was likely to continue to be unable to work for the foreseeable future, as set out at paragraph 11.6 of the PCT's policy, then it is equally clear that the respondent would have had to consider terminating her employment on the grounds of incapability or ill health."

8. On the question of re-engagement, the ET observed that Dr Arhin had not identified a particular post in relation to which she could have been re-engaged. The ET concluded:

"In effect, it appears the only possibility is for the respondent simply to create an entirely new post which seems to defeat the object of the original redundancy exercise and trying to keep the respondent's finances in check and staffing costs."

9. The ET also expressed concern about the relationship between Dr Arhin and Dr Okoli, adding:

"The Tribunal furthermore found it difficult to see that there would be a harmonious and professional working relationship possible between [Dr Arhin] and Dr Okoli. Added to that it cannot be forgotten that when Dr Okoli was trying to interact with [Dr Arhin] before the redundancy to discuss the possible redundancy and alternatives, [she] simply did not co-operate."

10. Finally, as regards this part of the decision, the ET made the following findings as to the likelihood or otherwise of Dr Arhin having been successful if there had been a competitive selection exercise:

"It is clear that Dr Okoli, as Director of Public Health, would have had control over the selection process and would have decided the selection criteria after consultation with Human Resources and would ultimately have had to have made the decision between [Dr Arhin] and Mr Stewart.

It is further clear that Dr Okoli considered that the person most capable to carry out the post-reorganisational role, ie the remaining public health consultant's role, as required by the policy, would be best illustrated by the candidate's recent experience of managing areas of responsibility in managing staff relevant to the post-reorganisational post. It is clear, and accepted by the Tribunal from what Dr Okoli said, that Mr Stewart was already undertaking the majority of the tasks that would be incorporated into the post-reorganisational post.

Dr Okoli supports this … in relation to the greater relevance of Mr Stewart's experience to the post-reorganisational post as against that of [Dr Arhin]. In terms of knowledge, maintaining an efficient workforce and the balance of skills Dr Okoli, looking at the individual's previous work and experience, would have concluded that Mr Stewart best fitted the post in the post-reorganisational structure. The fact that [Dr Arhin's] medical qualifications might have been better than Mr Stewart's, although having some weighting, is not conclusive for the post in the post-reorganisational structure."

11. At a later stage in the decision, the ET summarised its conclusions. The following passages are relevant:

"The Tribunal are satisfied that [Dr Arhin] would have been dismissed under the sickness absence procedures sometime before 11 March 2008 and therefore on that basis she would not receive any award for loss of accrued pension rights as she would have had a period of two months nil pay from the second week of January to the second week of March 2008 which, of course, does not count towards pensionable service. There nil award under this head …

So far as re-engagement into a broadly similar post, firstly the claimant has not identified any post that she believed she could be re-engaged in but perhaps more important, the Tribunal have considered once again the practicality of it … given [the] attitude she displayed throughout the liability and the remedies hearing towards, particularly, Dr Okoli, it is difficult to see how there could be a harmonious and professional working relationship."

12. This aspect was amplified by reference to contemporaneous emails. The ET also referred to Dr Arhin's consistent failure to attend meetings with Dr Okoli to discuss the possible redundancy situation and concluded, again, that "there simply is no possibility of a proper professional working relationship".
13. Finally, the ET returned to the question of whether Dr Arhin would have been dismissed in any event by reason of her ill health. Relying on "very cogent evidence" from Miss Sawyer, the Assistant Human Resources Director, the ET stated that it was

"entirely satisfied that sometime before [Dr Arhin] went onto nil pay, in January 2008 and probably when she went on to half pay prior to that date, she would have been taken down the long-term sickness absence procedure and after consultation … would, to the Tribunal's mind, have come to the conclusion some time between January and March 2008, that she would have been dismissed on grounds of her ill health, that dismissal being a fair dismissal under the respondent's procedures and the policies … for managing such long term sickness absence.

That being so, that means that [Dr Arhin's] losses can only extend to the end of her sick pay which as we know by January 2008 she would have been on nil pay.

That means given the fact that she would have been dismissed in that period …, using the guidelines to Tribunals on the assessment of pension loss, there is no pension loss other than for the period whilst she was on full pay and half pay.

The Tribunal then goes further to cover all the arguments and that is what chances of success would [Dr Arhin] have had, had she been entered into a competitive selection process with Mr Stewart. The Tribunal were of the unanimous view that had there been a competitive selection exercise which would have been conducted by … Dr Okoli for reasons purely to do with the requirements of business and the best person for the job in the new post-organisational structure, Mr Stewart would have been appointed. The Tribunal assesses [Dr Arhin's] chances of being appointed as nil.

In those circumstances given the Tribunal's view that [Dr Arhin] simply had no chance of achieving the post in a competitive selection process, that means that there has to be a 100% deduction from the compensation we have assessed, which means that she is left with a nil award."

14. The ET further considered the implications of Dr Arhin herself having failed to comply with the procedure by not attending meetings with Dr Okoli when she was under threat of redundancy. It concluded that the reason was that Dr Arhin was "being difficult for whatever reason in avoiding meeting Dr Okoli", although she had had every opportunity to do so and that Dr Okoli had made genuine attempts to hold meetings. This led to the alternative finding:

"The fact of the matter is that [Dr Arhin] simply was not willing to engage in the process and therefore … if the Tribunal had to go that far, there should be a percentage reduction in her compensation. Again the Tribunal were of unanimous view, had we needed to make that decision, that given [Dr Arhin's] unwillingness to engage in the process, by meeting Dr Okoli, that a 25% reduction in any compensation would be just and equitable as well."

The grounds of appeal to this court

15. Although she is acting in person, Dr Arhin has formulated and developed her grounds of appeal in a creditable and helpful way. As is often the case, the grounds overlap and are sometimes repetitive. It seems to me that, if this appeal is to succeed, Dr Arhin needs to establish one or more of the following grounds: (1) the ET ought not to have focused on the decision or putative decision of Dr Okoli because, if the proper procedure had been carried out, the decision would have been taken not by Dr Okoli but by a statutory Advisory Appointments Committee (AAC) which may have taken a different view of the merits of Dr Arhin and Mr Stewart; (2) the ET failed to identify with sufficient precision what the requirements of Dr Arhin's job, Mr Stewart's job and the reorganised job were, with the result that its decision that Dr Arhin would never have been appointed to the reorganised job was inherently flawed; (3) the conclusions of the ET about the probability of a dismissal on health grounds were speculative and/or perverse; (4) the ET failed to decide whether Dr Arhin's ill-health was caused or contributed to by the conduct of the Trust and its managers; (5) the findings on re-engagement were perverse; (6) the alternative finding of a 25% reduction in the award by reference to Dr Arhin's unwillingness to engage with the proffered procedures was perverse; (7) the reasoning of the ET did not adequately comply with the duty to give reasons. Other grounds were adverted to orally and in writing, but these seem to me to be the salient ones.
16. When Black LJ granted permission to appeal, she did so essentially by reference to ground (2) above, but she did not exclude the other grounds.

Discussion

17. The first point to make about the grounds of appeal is that, to the extent that they assert perversity, they are the subject of a stringent test. As Mummery LJ said in Crofton v Yeboah [2002] 1 RLR 634 (at paragraph 93), a perversity appeal ought only to succeed where

"an overwhelming case is made out that the employment tribunal reached a decision which no reasonable tribunal, on a proper appreciation of the evidence and the law, would have reached."

18. One way or another, Dr Arhin has to establish that, in relation to the 100% Polkey reduction, the decision of the ET was perverse in that sense.
19. I identified the "wrong procedure" point as the first ground of appeal because, if it is well-founded, it may diminish the value of Dr Okoli's evidence, which provided the foundation for the Polkey reduction. Dr Arhin submits that, in the situation that arose, the appointment to the reorganised position should have been taken out of the hands of Dr Okoli and entrusted to an AAC pursuant to the National Health Service (Appointment of Consultants) Regulations 1996 and that, if it had been, there would have been a robust interview process in which she, a highly qualified doctor, might well have prevailed over Mr Stewart, who is not medically qualified. The case for the Trust is that this appointment fell outside the AAC procedure by reason of regulation 5(1)(e) which provides for exemption if the person appointed is

"a person who is transferred from employment as a consultant –

(i) by an Authority to another consultant post with that Authority, or

(ii) by an NHS Trust to a consultant post with an Authority where the employment of the officer would otherwise be terminated by reason of redundancy."

20. An "Authority" for this purpose means "a Health Authority, a Special Health Authority or two or more such Authorities of the same kind": regulation 2(1).
21. As I understand it (and I have to say that we have not received great assistance on this point from either side), the employer in the present case is "an NHS Trust" rather than "a Health Authority". If that is right, regulation 5(1)(e) would seem not to be in point. Nor would regulation 5(1)(e)(ii) because that contemplates an appointment by an NHS Trust to a consultant post with an Authority. On the other hand, the Department of Health has produced Good Practice Guidance dated January 2005 in relation to the Regulations in which it is stated that the AAC procedure does not apply when "a consultant [is] transferred within a Trust to another consultant post within that Trust". The matter is not made easier by the contents of a letter from the President of the Faculty of Public Health of the Royal College of Physicians dated 18 March 2009 which distinguishes between "a large-scale NHS reorganisation … eg Commissioning a Patient-Led NHS" and the position where only a single department is reorganising (without any change of the employing organisation)". In the latter case "the process is decided by the HR Department of the employing organisation". The present case is concerned with reorganisation in a single department but in the context of Commissioning a Patient-Led NHS. It is also concerned with a post for which medical qualification is not a prerequisite. I find it counter-intuitive to assume that the AAC procedure was in play. I repeat, however, that I am not satisfied that we have all the material which we would need to resolve this issue. In the event, as I shall demonstrate, it is not necessary for us to resolve it.
22. I turn to the second ground, the one by reference to which permission to appeal was granted. As correctly construed by Black LJ, it is a perversity challenge. It involves a comparison between the conclusions of the ET on the remedies hearing and passages in the liability decision. I do not consider that either was as clear as it might have been. On the other hand, it is not necessarily fatal if there is a tension between the two. The issue at the liability hearing was the fairness of the decision-making procedure. The issue at the remedies hearing related to the consequences of its unfairness. Matters considered at one level for the former purpose may receive enhanced consideration for the latter. The question identified by Black LJ can be expressed thus: was it perverse to find, on the remedies hearing, that there would have been a real chance of Dr Arhin getting the reorganised post in preference to Mr Stewart if there had been a fair competitive selection procedures?
23. On the assumption that Dr Okoli would have been the central figure in the decision-making process, the ET found that she considered that the successful candidate would have to show "recent experience of managing areas of responsibility in managing staff relevant to the post-reorganisational post" and that "Mr Stewart was already undertaking the majority of the tasks that would be incorporated into [it]". Dr Okoli considered that Mr Stewart's experience had "greater relevance" and that "in terms of knowledge and maintaining an efficient workforce and the balance of skills", he "best fitted the post". Finally, "for reasons purely to do with the requirements of the business and the best person for the job, … Mr Stewart would have been appointed", whereas Dr Arhin's chances of being appointed were "nil".
24. Whilst I tend to agree that the omission to produce a detailed job specification played a significant part in relation to the issues at the liability hearing, it seems to me that there was sufficient material before the ET at the remedies hearing for it to form a tenable view of what the outcome of a fair competitive selection procedure would have been. If Dr Okoli had been the central figure in that procedure, I do not consider that the putative assessment attributed to her can be categorised as perverse. Moreover, her views would no doubt have been given great weight if the AAC procedure had been deployed. In the EAT, Judge Peter Clark said (at paragraph 9):

"Even if the exercise was carried out by an AAC that does not undermine … the Tribunal's conclusion that ultimately in the interests of the business, and based on the respective capabilities of the two candidates, it would not be [Dr Arhin] who succeeded in securing the single remaining post."

25. I find no legal error, let alone perversity, in that analysis.
26. Grounds (3) and (4) relate to health matters. Dr Arhin makes a number of submissions to the effect that the ET ought not to have concluded that she would have been fairly dismissed on grounds of ill-health sometime between January and March 2008 and that it ought to have found that the Trust caused, contributed to or exacerbated her ill-health by the way in which it treated her. The complaints are put on the basis of unwarranted speculation or perversity. As to the "caused, contributed to or exacerbated" point, the burden was on Dr Arhin. In reality, she had no prospect of establishing her allegation without cogent expert evidence. She did not have any. There was a letter from her GP dated 5 November 2007 which contained quite a lot of detail but it did not establish causation and it contained a prognosis that was, if anything, unhelpful to Dr Arhin's case. There was a brief letter from a consultant rheumatologist dated 21 September 2007 which expressed general optimism. Also, there was the Job Centre letter which stated that "you confirmed that you were fit to return to work from 11 March 2008". I have set out the ET's findings on this issue in some detail, including the amount of sick leave, the request for an application for ill-health retirement in February 2008 and the fact that, in line with its publicised policy, the Trust would have dismissed Dr Arhin on grounds of ill-health between January and March 2008. In my judgment, these findings are unassailable. They are in no sense mere speculation or perverse.
27. Ground (5) relates to re-engagement. Dr Arhin makes the telling submission that the ET was wrong to emphasise the strained relationship with Dr Okoli as a factor against re-engagement because Dr Okoli had left the Trust and had gone to live in Nigeria shortly before the remedies hearing. She had returned to this country briefly for the purpose of giving evidence at the remedies hearing. I accept that the ET erred in this regard. However, the remaining factors against re-engagement were still cogent – the lack of an identified, suitable job; the underlying need to economise; and the way in which Dr Arhin had conducted herself in relation to the internal dispute. I am not persuaded that the ET's error was a material error. This was never a case for re-engagement, notwithstanding evidence that Dr Arhin was well-liked and respected by a number of colleagues.
28. Ground (6) attacks the alternative finding of a 25% reduction in compensation by reason of Dr Arhin's "failure to engage", pursuant to section 31(2) of the Employment Act 2002. Dr Arhin has not demonstrated that this was an impermissible finding on the totality of the evidence.
29. Ground (7) is a reasons challenge. I do not for one moment consider that the remedies decision was a model of reasoning and clarity. However, it did enough to explain to the parties why the outcome was as it was.
30. If follows from what I have said that I would dismiss this appeal. However, I ought to refer to an overarching submission made by Ms Murphy to the effect that, having regard to the amount of money actually paid by the Trust to Dr Arhin (over £19,000), even a 10%, as opposed to a 100%, Polkey reduction would have resulted in no nett compensatory reward. Ms Murphy provided a series of calculations. Dr Arhin does not challenge the methodology or the arithmetic. Her challenge is limited to a submission that depends on one or more of her grounds of appeal – particularly the grounds relating to ill-health – succeeding. They have in fact failed. It seems to me that Ms Murphy's calculations support the dismissal of the appeal.

Conclusion

31. For all these reasons, I would dismiss the appeal. I nevertheless express sympathy for Dr Arhin who was unfairly selected for redundancy, who has undoubtedly had significant health problems but who, in spite of everything, has presented her unfortunate case in a skillful, articulate and courteous way, for which thanks are due.

Lady Justice Smith:

32. I agree.

Lord Justice Leveson:

33. I also agree.