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Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Lynch v Terra Solutions Ltd [2011] NIIT 00878_11IT (10 October 2011)
URL: http://www.bailii.org/nie/cases/NIIT/2011/00878_11IT.html
Cite as: [2011] NIIT 00878_11IT, [2011] NIIT 878_11IT
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THE INDUSTRIAL TRIBUNALS
CASE REF: 878/11
CLAIMANT: Grainne Lynch
RESPONDENT: Terra Solutions Ltd
DECISION
The unanimous decision of the tribunal is that the claimant was unfairly dismissed and a Polkey reduction of 80% applies. The tribunal awards the sum of £2,515.68 in compensation.
Constitution of Tribunal:
Chairman: Mrs Ó Murray
Members: Dr C Ackah
Mr P McKenna
Appearances:
The claimant was represented by Ms R Best, Barrister-at-Law, instructed by Rosemary Connolly Solicitors
The respondent was represented by Mr N Richards, Barrister-at-Law, instructed by Mills Selig Solicitors.
The Claim
1. The claimant’s claim was for unfair dismissal.
2. The respondent conceded that the claimant was automatically unfairly dismissed for failure to follow the statutory dismissal procedure (“SDP”). The respondent further conceded that the claimant was entitled to the four weeks’ minimum basic award.
3. The dispute between the parties was over the level of the compensatory award and whether a Polkey deduction should be made, as it was the respondent’s case that the claimant would have been dismissed even if a fair procedure had been followed.
The Issues
4. The issues before the tribunal were as follows:
(1) Was the claimant’s job redundant?
(2) Was the true reason for the claimant’s dismissal related to the fact that she had taken sick leave a few months before the date of termination?
(3) Was a Polkey reduction of the compensatory award applicable in this case to reflect the chance that following proper procedures would have made no difference to the outcome?
(4) Did the claimant fail to mitigate her loss by refusing an offer of re-engagement approximately four weeks after her dismissal?
Sources of Evidence
5. For the respondent the tribunal heard evidence from Mr Barry McAllister, the Managing Director of the respondent company, and from Mr Robert McGorran Operations Director. The tribunal heard evidence from the claimant on her own behalf. The tribunal also had regard to the agreed bundle of documentation together with further documentation produced during the hearing.
6. The Law
Unfair Dismissal
6.1 The law on unfair dismissal is set out in the Employment Rights (Northern Ireland) Order 1996 as amended (referred to below as the “ERO”). The right not to be unfairly dismissed is set out at Article 126 of the ERO and at Article 130 are listed the potentially fair reasons for dismissal, one of which is redundancy. It is for the employer to show that the dismissal was for one of the potentially fair reasons and it is for the tribunal to determine whether the dismissal was fair in all circumstances.
6.2 Redundancy is defined at Article 174 of ERO and the part of that Article which is relevant to this case states as follows:
“174.— (1) For the purposes of this Order an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to –
…
(b) the fact that the requirements of that business-
(i) for employees to carry out work of a particular kind, or
(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer.
have ceased or diminished or are expected to cease or diminish.”
7. The parties referred the tribunal to the relevant paragraphs in Harvey’s Industrial Relations and Employment Law and made reference to the cases elucidating the general principles in this area in oral and written submissions. The tribunal took account of both parties’ submissions, both oral and written.
8. Redundancy is a potentially fair reason for dismissal and it is for the tribunal to consider whether the respondent acted reasonably or unreasonably in treating redundancy as a reason for the dismissal of the claimant.
9. The decision of the Northern Ireland Court of Appeal in Robinson v Carrickfergus Borough Council [1983] IRLR 122 approved the approach of the EAT in the case of Williams v Compair Maxim [1982] EAT and established the following principles to be applied in a fair redundancy process:
(i) there should be fair warning and consultation;
(ii) there should be fair selection which involves identifying the correct pool of employees and applying objective transparent selection criteria to that pool;
(iii) suitable alternative employment should be actively considered and offered by the employer;
(iv) fair consultation involves providing adequate information and time for the employee to respond to a proposed redundancy so the employee is in a position to suggest alternatives.
10. Under Article 146 of ERO, the tribunal must make an award of four weeks’ pay for procedural unfairness unless the tribunal considers that such an award would result in injustice to the employer.
11. The case of Polkey v Dayton Services LTD 1987 3 All ER 974 HL makes it clear that, if a dismissal is procedurally defective, then that dismissal is unfair but the tribunal has a discretion to reduce any compensatory award by any percentage up to 100% if following the procedures correctly would have made no difference to the outcome.
12. The respondent referred us to the case of Octavius Atkinson and Sons Ltd v Morris 1989 IRLR 158. In this case the Court of Appeal found that there was no obligation on an employer to offer alternative employment to an employee who was made redundant, where that alternative employment only became available after the termination of the employee’s contract. We did not find the Octavius decision to be helpful in this case as the claimant’s case is that her job did not disappear but rather, that most if, not all, her duties were redistributed. The claimant’s case, therefore, is that there was at least a part-time job available which should have been offered to her for her to decide whether to take it has an alternative to being made redundant.
13. The respondent raised the issue of failure to mitigate loss. The claimant is under a duty to mitigate her loss but this duty does not arise until after she is dismissed. The question for the tribunal is whether the claimant unreasonably refused an offer of re-engagement and whether she took reasonable steps to find alternative employment. The onus is on the employer to show failure to mitigate loss. In the Wilding case (cited in Harvey) the Court of Appeal indicated that a tribunal should not be too stringent in its expectations of the injured party.
14. In Harvey at paragraph 2703 of Division D1, it states that the tribunal must specify a sum for loss of wage between the EDT and the date of the end of the tribunal hearing. This sum must be reduced by the same percentage as the remainder of the compensation where Polkey is appropriate. The tribunal must specify the monetary award.
15. At paragraph 2809 of Harvey are set out the principles to be applied in relation to the uplift to the compensatory award for failure to follow the statutory procedures. The factors to be taken into account are: the size and resources of the respondent, the gravity of the offence and the seriousness of the breach. The tribunal must look at all the circumstances surrounding, related to, or causally resulting in, failure to complete the statutory procedure and the tribunal must ensure that the uplift does not result in a disproportionate award.
16. The fact that the claimant has obtained a new job, particularly where that is part-time, does not necessary break the chain of causation between the dismissal and any continuing loss: what the tribunal must look at is when the claimant is likely to get another similarly paid job to the one which she left.
17. The claimant referred us to the case of Brown v Baxter in Harvey at paragraph 2533 in relation to the test to be applied by the tribunal in the assessment of damages.
18. We were referred to the EAT decision of Fox which cites in detail the case of Wardle v Credit Agricole 2011 EWCA, in which the Court of Appeal made some comments on the factors to be taken into account in assessing the percentage uplift for failure to follow the SDP. Elias LJ stated as follows at paragraph 26:
“In my opinion an increase to the maximum of 50% should be very rare indeed. It should be given only in the egregious of cases. An example given by Lady Smith in the McKindless Case which would at any event get close to the maximum is where there is a clear finding that the employer is determined to dismiss the employee whatever the merits and has deliberately and cynically ignored the procedures in case they get in the way of his being able to do so. However, the mere fact that the employer has ignored the procedures altogether would not in my view justify an increase to the maximum although it would often justify some increase beyond 10%”.
Findings of Fact and Conclusions
19. The claimant was employed as an Office/Accounts Manager from 30 April 2009 until 28 February 2011 following her dismissal.
20. The respondent was in the business of civil engineering in specialist tunnelling, boring and drilling contracts on large-scale construction projects in Great Britain and the Republic of Ireland. There were two associated companies in the same premises as the respondent namely H20 Ireland (a fibre optics firm 70% owned by the respondent and 30% owned by a UK company); and Drilling Supplies Ireland which was a company owned by Mr Barry McAllister and operating in the same building as the respondent.
21. The office staff comprised the claimant as Office Manager, and NH and TB. TB was employed by the respondent and was directly managed by the claimant. NH was employed by Drilling Supplies Ireland but worked in the same office as the claimant and the claimant guided her.
22. It was agreed between the parties that there was a severe downturn in the respondent’s work which was related to the slump in work in the construction industry in the UK and Ireland. This meant that from April 2010 until December 2010 there were virtually no contracts being worked upon and there was no new work in the offing. The respondent had little or no work from July 2010 to the date of the claimant’s redundancy. The claimant was fully aware of the respondent’s financial difficulties.
23. The respondent’s focus during this period was the submission of tenders for new work; the gathering in of retention sums related to contracts which had already been performed; and the gathering in of grants from DETI and Invest Northern Ireland.
24. Due to the severe downturn in work, a non-executive director Mr K was taken on
8 November 2010 to guide and advise the company through its difficulties. In particular Mr K provided HR guidance due to his HR background in redundancy matters. As part of Mr K’s review of the business Mr McGorran asked the claimant in December 2010 and January 2011, to obtain everyone’s contract and job descriptions etc as drafted. The two directors involved in the redundancy process had no experience of redundancy in the past. Mr McAllister first made someone redundant when he made NH redundant in October 2010. Both directors relied on the erroneous advice of Mr K who had been involved in redundancy processes in another company. The principal piece of bad advice relied upon was that any posts left after the reorganisation would have to be filled by way of open competition. This ignored the respondent’s duty to consider offering alternative work to the claimant as part of the redundancy process.
25. On 24 August 2010 Mr McAllister and Mr McGorran had a meeting with the claimant to go through, in detail, possible cost saving measures. At that meeting the position of staff namely, HJ, TB and NH were discussed. A memorandum was sent on 24 August 2010 to all staff outlining cost-cutting measures to be put in place and putting the staff on notice of the company’s difficulties due to the depressed economy. We find that the claimant was thus on notice that jobs were likely to be cut and she suspected that her job might have be under threat.
26. NH was made redundant at the end of October 2010 and TB left before she was made redundant at the end of October 2010.
27. The claimant had previously worked four days per week but increased her working week to five days per week at the beginning of November 2010. This was done at the claimant’s request to deal with the work she had to carry out following the departure of TB and NH.
28. The claimant became distressed and upset at work and was sent home by
Mr McAllister’s wife on 24 November 2010. The claimant was off work with work- related stress for two-and-half weeks returning to work on 13 December 2010. The claimant insisted on returning to work early and, such was Mr McAllister’s concern for her, that he insisted that she obtain a certificate from her doctor to say that she was fit for work. The claimant’s case was that she wanted to get back to work as soon as possible because she knew that her work was building up. Teresa Baillie (an accountant) came in four hours per week to provide some cover during the claimant’s absence and the two directors and EC answered the phones.
29. Upon her return to work, there was a return-to-work interview with Mr McAllister and Mr McGorran. This appears to have taken the form of an extensive discussion using a lengthy questionnaire relating to stress devised by the Health and Safety Executive, to ascertain the cause of the claimant’s stress and to seek to put in place measures to ease pressures on the claimant.
30. The outcome of the meeting was that the directors insisted, and the claimant agreed, that her days would revert to four days per week and that she would not be asked to do management accounts.
31. We find the employer to have acted in a caring way in relation to the claimant’s stress leave. We do not accept the claimant’s case that Mr McAllister’s questioning at her return to work interview was inappropriate nor do we accept the claimant’s case that the conduct of that meeting and the respondent’s subsequent conduct meant that they wanted to get rid of her and that this was the real reason behind the dismissal in February. There is reference in minutes of a board meeting to the claimant’s post being at risk. As the meeting predated the claimant’s absence, this shows that the respondent regarded her job at risk before she was off on stress leave. We therefore find that the period of absence due to stress leave was not connected to the decision to make her redundant.
32. It was undisputed that the overall number of staff reduced between September 2010 and February 2011, whether by way of resignation or redundancy, leaving the claimant as the sole remaining office worker. The claimant was not the only member of staff to be made redundant.
33. On 6 January 2011 Mr McGorran asked the claimant to print off a memo and issue it to all staff. In summary, the memo indicated that, in view of the company’s financial position and order book status, a reorganisation would be necessary to include structure and staffing levels. We find that the claimant was aware from this that staff levels would be cut. The claimant’s case is that she immediately confronted Mr McGorran and was assured that her job was safe. This was denied by Mr McGorran. We find the claimant to have embellished her evidence to us somewhat, as she mentioned for the first time in the tribunal hearing that Mr McGorran’s uncle had confirmed to her that her job was safe. We do not accept that she received this reassurance because it is implausible in the light of the other evidence. Even if Mr McGorran’s uncle had given such an assurance it would have been unreasonable for the claimant to have taken reassurance from that as Mr Gorran’s uncle was in no position to offer such reassurance.
34. We find the claimant to have been in denial in relation to the risk to jobs and to her own job. The claimant was in general aware that jobs were under threat, and we do not accept that she was told her job was safe by Mr McGorran.
35. The net result of the discussions at board meetings between 13 December 2010 and 28 February 2011 when the claimant left, was that it was agreed by the directors that some of her work required to be done but no specific new role was created. After the claimant left the directors and EC (who worked for an associated company) and VL dealt part-time with a proportion of the claimant’s former duties.
36. The claimant was called to a meeting on 24 February 2011 with Mr McAllister and Mr McGorran. At that meeting she was handed an envelope which was her letter of dismissal for redundancy. Whilst it was clearly unacceptable that the claimant learned of her dismissal for redundancy in this way as it was in breach of all procedures and good practice, we do not accept that the claimant had no idea that redundancies were likely and we do not accept that the claimant was as shocked as she indicated to us.
37. It was the claimant’s case that the requirement for the accounts function at the same level still existed even though there was a slump in orders and no projects were being worked on. The claimant had just completed the retention recovery exercise and had completed the documentation for the grants as her evidence was that she handed this material to Mr McAllister on 24 February 2011 so this was not ongoing. We therefore do not accept that the claimant’s workload would have remained unaffected by the lack of ongoing projects and the claimant must have known this.
38. We find that the claimant’s post was redundant because of the reorganisation of the office and the severe downturn in work and the reduction in staff for her to manage. The alternative roles of a part-time bookkeeper and a part-time receptionist with a drop in the level of pay (compared to the claimant’s former role) were in prospect at the time the claimant was made redundant although no final decision had been made.
39. There was conflicting evidence about the proportion of the claimant’s work which was done by others after she left. Mr McGorran’s role meant that he was closer to the actual work carried out by the claimant and her successors and we therefore accept his evidence that the percentage of the claimant’s work done by those successors amounted to 25% of the claimant’s former role.
40. The 24 February was a Thursday and it was the claimant’s case that, at the meeting on that day, it was she who suggested that she work for another four weeks and that it was only following her prompting that the employer said there might be two other jobs for which she would have to apply. The claimant did not work on a Friday and came in to work on Monday 28 February. It was common case that the claimant told Mr McAllister that she had an interview at 1.00 pm and she needed a reference for it. It was the claimant’s case that she wanted to work four more weeks at her suggestion and was made to feel so unwelcome on the Monday that she left and did not come back. The respondent’s case is that she left on the Thursday to consider the possibility of applying for the proposed new jobs but came in aggressively on the Monday and stated that she was not to be contacted after that day she needed a reference for an interview that day for a job. We accept the respondent’s case that the claimant left of her own accord even though four weeks’ work was available to her. Our principal reason for accepting the respondent’s account is that the letter of dismissal which was handed to the claimant that day had been drafted before the meeting and makes the offer of four weeks’ work.
41. Both sides agree, and we so find, that the claimant’s effective date of termination was Monday 28 February 2001.
42. By letters dated 24 and 30 March 2011 to the claimant’s solicitor, the respondent made an offer of re-engagement to the post of part-time receptionist on a proposed salary of £112.00 for sixteen hours per week. No response to this offer was made, nor did the claimant contemplate taking the post because she had by then gone to a solicitor and had decided to bring a claim.
43. We do not find the refusal to contemplate that offer unreasonable on the claimant’s part. She had been dismissed, she had engaged solicitors who had already written to the respondent, and it was not unreasonable for her not to want to go back in those circumstances nor in circumstances where her income would be so much reduced. The claimant’s evidence was that she had by then received an interview for the job that she currently is engaged in. In our view this does not amount to failure to mitigate her loss nor does it amount to an unreasonable refusal of an offer of re-engagement.
The Polkey issue
44. The question for us is whether there was a chance that the claimant would have been dismissed anyway even if a procedure had been followed.
45. We accept that the requirement for the work carried out by the claimant reduced substantially due to the reduction business. However we believe that there is a chance that she would have taken a part-time job if offered given her financial circumstances and her concern about getting another job quickly. We therefore do not think that dismissal was inevitable warranting a 100% Polkey deduction
46. The claimant is clearly very employable in that she is highly experienced and was able to obtain an equivalent post very quickly. The claimant gave evidence about her feelings of hurt and about her financial pressures so we find that there was a chance that, on the day of the dismissal if proper procedures had been followed, she might have taken a part-time post if offered. However, we find that taking such a post would have been no more than a stop-gap and there is a very strong likelihood that she would have sought employment elsewhere even if offered the part-time post on reduced salary. We note that the claimant was able to organise an interview for a job within days of her notification of termination Taking all this into account we assess the percentage chance at 20% of her being offered and taking part-time work, for at least a limited period, pending a better paid job. The Polkey deduction is therefore 80%.
47. Future loss should be limited as this contract is to subsist until March 2012 which is over a year from the date of dismissal. We accept that the claimant feels obliged to complete that contract. We anticipate that the claimant will be actively looking for another job before the end of that contract and will likely be employed at the end of that contract at similar remuneration to that received with the respondent. We therefore cap the future loss at the reduction in salary until end of March 2012.
Uplift for failure to follow the Statutory Procedures
48. The failure to follow the SDP meant that the claimant did not get a letter giving notice that she was to be dismissed for redundancy and giving notice of a hearing at which the matter would be discussed. There was no individual consultation with the claimant about the redundancy nor was there any meaningful collective consultation with the workforce other than the memo of January 2011 which alerted them to possible staff reductions.
49. The case law is clear that the tribunal starts at 10% and we must justify increasing from that figure. A 50% uplift is exceptional.
50. We accept that this was a small family business where the directors had no experience of making people redundant. We accept that they reasonably relied on Mr K’s apparent expertise in redundancy matters as their main focus was to try to keep the company afloat. We accept McAllister’s evidence that he was trying his best to get contracts in to ensure that he did not have to let people go. We accept the evidence that there was a large contract for which they had successfully tendered on price but were disqualified in February 2011 for lack of specific experience. This was the final ‘nail in the coffin’ and the key point which led to the claimant being made redundant. We therefore accept that this was not a wilful disregard of procedures: it was due to ignorance and due to following erroneous advice rather than malice. We do not accept that the claimant was completely unaware that redundancies were in the offing and we do not accept that she had been given an assurance that her job was safe. We do not accept that the claimant was targeted nor do we accept that the redundancy was linked to her sick leave.
51. The complete lack of notice and lack of consultation however had some effect in the claimant’s case because proper consultation might have resulted in her not being made redundant, and in her working part-time for some time giving her breathing space to find another job. Taking account of all these factors we assess the uplift at 20%.
Compensation
52. The claimant currently works five days per week for a company on a temporary contract providing maternity cover for an employee due to return in March 2012. The claimant’s wages are lower than they were with the respondent and there is therefore an ongoing diminution of wages in the sum of £4.14 per week.
53. We accept the claimant’s case that the ongoing extra childcare figure of £25.00 per week is a loss incurred by her as a consequence of the dismissal and is therefore attributable to the employer’s action. The period allowed is the duration of the temporary contract which is to end in March 2012.
54. Basic award
EDT = 28 February 2011
£400 x 4 weeks = £1,600.00
55. Compensatory award
(a) Immediate loss of earnings from date of dismissal 1 March 2011 to
18 April 2011 : 6 weeks x £ 348.58 net = £2,091.48
(b) Continuing loss of wage
Previous net £348.58 – Current £344.44 net
= £4.14 loss per week x 42 weeks (to end Mar 2012) = £ 173.88
£25 childcare cost x 42 weeks = £1,050.00 Loss of statutory industrial rights (agreed) = £ 500.00
_______________
= £3,815.36
_______________
Total compensatory award
Minus 80% Polkey reduction = £ 763.07
Plus 20% uplift = £ 152.61
______________
Net compensatory award = £ 915.68
Add Basic award = £1,600.00
______________
Total compensation awarded: = £2,515.68
_______________
Statement for Recoupment of Benefits
56. Loss earnings from EDT to date of hearing :
Immediate loss £2091.48
Plus £4.14x 22 weeks £ 91.08
_______
Total loss earnings £2182.56
Minus 80% Polkey reduction £1746.05
_______
Prescribed Element = £ 436.51
_______
57. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.
Chairman:
Date and place of hearing: 3, 4 August 2011, Belfast
Date decision recorded in register and issued to parties: