United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 69_95_2301

Appeal No. EAT/69/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 23 January 1996

HIS HONOUR JUDGE C SMITH QC

MISS J W COLLERSON

MR W MORRIS

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LE MAITRE (SALES) LTD          APPELLANTS

MR C FREEMAN          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR C R JONES

(Personnel Consultant)

Professional Personnel Consultants Ltd

Godwin House

George Street

Huntingdon

Cambs

PE18 6BU

For the Respondent MR R BOUTON

(Representative)

Citizens Advice Bureau

Town Hall

Royston

Herts. SG8 7DA


 


JUDGE SMITH QC: This is an appeal by Le Maitre (Sales) Ltd the employers, against the decision of an Industrial Tribunal sitting at London (South) on 7 October 1994 after a two day hearing, when it held that the Respondent employee, Mr Colin Freeman, had been unfairly dismissed, in circumstances where the Industrial Tribunal found that neither reason put forward by the Appellants as constituting the reason for dismissal, that is to say, on the grounds of redundancy or on the grounds of capability, had been established. In addition to appealing against the findings of unfair dismissal, the Appellants seek leave to appeal against the compensatory award made to the Respondent, consequent upon the Industrial Tribunal's finding that he had been unfairly dismissed. We may have to consider that application later.

The Industrial Tribunal set out the facts which they found in paragraphs 1-11 of their extended reasons, to which reference should be made for the full findings of fact. By way of summary, up to his dismissal on 14 July 1993, the Respondent had been employed as the Chief Executive Officer of the Appellant company, which is the sales arm of a group of fireworks companies. He had held that post for just over 2¹/₂ years. It is clear that this was an informal appointment, with no formal job description. The Industrial Tribunal describe as a matter of history, how in part due to a substantial uninsured loss, resulting from a fatal accident caused by an explosion at the Peterborough plant, and in part due to external factors such as the Gulf War and recession, the Appellants fell into financial difficulties. In March 1993 at the behest of the company's bankers Messrs Grant Thornton were commissioned to prepare a report which made recommendations which the bank required to be implemented as a condition of further finance. What it boiled down to was that there were two recommendations, one that an experienced managing director should be appointed to the Board, and secondly the financial reporting function should be very considerably strengthened.

The Appellants decided to combine these recommendations by appointing a managing director with financial knowledge. Messrs Grant Thornton noted the Respondent's lack of financial expertise, and it is common ground that he was not trained in this speciality, nor was he taken on to perform any such responsibilities. Nor we may say with respect to her, was Mrs Haddon, although she went under the title of being the Finance Director. It is apparent from the findings of the Industrial Tribunal that the Respondent was not employed to discharge financial responsibilities and indeed that the Respondent had been asking from time to time for proper financial support, which the Finance Director Mrs Haddon, a member of the family which apparently founded the firm, could not provide, despite her title.

It is apparent, from the findings of the Industrial Tribunal, that the Respondent had little or no co-operation from the Board in these endeavours. It is equally apparent from the findings of the Industrial Tribunal, that the Respondent had suffered considerable lack of authority, due to the fact that he was not given a place on the Board. Despite this, the Industrial Tribunal found as a fact on the evidence of Mrs Haddon, that the Respondent did not in any way lack capability in discharging the functions of Chief Executive Officer, which he was contracted to perform.

The decision having been taken with regard to the new post of Managing Director, the Respondent was interviewed for the new post on or about 5 July 1993, but it is clear that it was a foregone conclusion that he would not get the post, since it is apparent that the new post included accountancy functions which the Respondent did not possess. He was told that he was unsuccessful, having been interviewed on 5 July, by a letter on 6 July. He then asked for a copy of the job description of the managing director's post, which he ultimately received on 14 July, at the same time as he was dismissed, ostensibly on the grounds of redundancy. In our judgment it was unfortunate that he was not even shown the job description before he was interviewed.

On or about 14 July 1993, as appears from the findings of the Industrial Tribunal, the Respondent was asked if he could suggest any alternatives to his dismissal, but his proposals (a) that he should be allowed to train, or re-train, as it was put by the Industrial Tribunal, for the additional accountancy function, or (b) that he should be appointed General Manager at Peterborough, were both turned down by the Appellants. No proposals were made by the Appellants. By paragraph 12 of its decision, the Industrial Tribunal found as a fact that the functions in the job description of the Chief Executive Officer which the Respondent had in fact carried out had been subsumed into the duties required of the new managing director with a considerable number of additional duties being added. The Industrial Tribunal correctly recorded that the Appellants put forward two reasons for the dismissal, namely, (1) redundancy and (2) capability. They then went on to consider whether either of those had been established.

With regard to redundancy, on applying Section 81(2)(b) of the 1978 Act to the facts as they found them to be, the Industrial Tribunal held that the requirements of the Appellants' business for employees to carry out work of a particular kind had not diminished, because, as they held, the Appellants still required the functions of a Chief Executive Officer, as previously carried out by the Respondent, to be carried out within the job description of the new post of managing director, within which such work functions had been subsumed.

The Industrial Tribunal distinguished the case before them from the position in Robinson v British Island Airways Ltd [1977] EAT 47. In that case, two posts had been absorbed into one, whereas in the instant case the Tribunal held that the supposedly redundant post was one post, which was absorbed into one post after the alleged reorganisation. The Industrial Tribunal went on to hold that if, contrary to their judgment on the redundancy issue, there was a redundancy, the Appellants had made no effort to find the Respondent an alternative position within the company, and accordingly, applying Section 57(3), it was not a fair redundancy. With regard to capability, the Industrial Tribunal held as a fact that the Respondent did not lack capability, and distinguished cases which were cited to them. We need say no more about the capability issue, since it does not form any basis for the appeal as it has been argued before us today, which relates entirely to the redundancy reason put forward by the employers.

The Industrial Tribunal specifically found that no other reason had been put forward by the Appellant employers as a reason for dismissal, and in particular it was not argued that the dismissal was for some other substantial reason, namely the reorganisation forced upon the Appellants by their bankers, and accordingly the Industrial Tribunal held the dismissal to be unfair, in the light of the fact that they had rejected the two reasons which were put forward by the Appellants. In our judgment, there is no obligation on an Industrial Tribunal to look for some other reason which might have been put forward by employers. It is clear on the authorities that the Industrial Tribunal's only responsibility is to consider the reasons that are actually put forward by an employer, and if they find that those reasons have not been established, then they are entitled and indeed bound to find that the dismissal is unfair.

Mr Jones, who has presented his submissions to us on behalf of the Appellants with tenacity today, has submitted to us that the Industrial Tribunal erred in law in finding that there was not a redundancy situation. He sought to point to what he submitted were radical differences between the old Chief Executive Officer's responsibilities and the new Managing Director's responsibilities. However, in our judgment this is a very difficult submission in the light of the finding of the Industrial Tribunal in paragraph 12 of their decision namely, having set out Section 81(2)(b), the Industrial Tribunal go on to say that sub-section is not applicable:

"... in that all parties accepted that the functions in the job description for Chief Executive Officer (R4) had not ceased or diminished and were indeed subsumed in the duties required of the new managing director with a considerable number of additional duties being added."

As we have already recorded the Industrial Tribunal were referred to the case of Robinson v British Island Airways Ltd which they distinguished on the grounds that there were there two posts which were amalgamated into a much more responsible job so that a job in a different league was created. Whereas they held that in the present case there was just the one post involved with some additional responsibilities. The Industrial Tribunal had noted that up to the date of the hearing before them, the new Managing Director was still not on the Board of the Appellants. We agree with the Industrial Tribunal's reasoning for distinguishing the instant case from that of Robinson. In our judgment it must always be a matter of degree whether grafting fresh responsibilities on an existing post has the effect of altering the original post and thus radically altering the particular kind of work to be done, so as to create a redundancy situation under Section 81(2)(b). The difficulty is illustrated by the Robinson case itself where Mr Justice Phillips (the then President of this Tribunal) was careful to hold that if he were wrong on redundancy, he would have found that there was some other substantial reason.

In our judgment, it is not every reorganisation or restructuring which creates a redundancy situation. We are satisfied that the Industrial Tribunal were justified in holding that the particular circumstances here did not have such an effect. It was a matter for the Industrial Tribunal to decide on the facts. We cannot say that their finding was in any way perverse or unreasonable. If we are wrong in relation to that matter, and the Industrial Tribunal did err in law in rejecting the reason put forward by the Appellants, namely that this was a dismissal on the ground of redundancy, in our judgment there was abundant material before the Industrial Tribunal upon which they were entitled to find, applying Section 57(3), that this redundancy was unfair.

We have already noted that such shortcomings as there were in regard to the lack of financial and accountancy knowledge within the Appellant company should not have been laid at the door of the Respondent, but rather that, with respect, they should have been laid at the door of the financial director, Mrs Haddon. We consider it relevant to consideration of Section 57(3) that the Respondent was not treated properly in the sense that he was not consulted about this decision in any effective way nor was he offered any reasonable alternative job, nor was any effort made to offer him any such job. There was no attempt made to sit down with him and discuss the matter, or take him into the confidence of the Board of Directors, which consisted of the family directors, about the whole matter. We consider that the Industrial Tribunal were justified in finding as they did that the manner of this redundancy was unfair and outwith the band of reasonable responses of an employer to the situation which, through no fault of the Respondent, had occurred.

Accordingly, we do not consider that there are any grounds for finding that the Industrial Tribunal has wrongly applied Section 57(3) in concluding that any redundancy was unfair. For the reasons we have stated this appeal must be dismissed.