United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR M DULOVIC (of Counsel) Messrs Leigh Williams Solicitors 32/40 Widmore Road Bromley Kent BR1 1RY
For the Respondents	MR P EDWARDS (of Counsel) Messrs Male & Wagland Solicitors 4 Barnet Road Potters Bar Hertfordshire EN6 2QT


 


JUDGE PUGSLEY: This is case which comes before us on appeal from the decision of the Industrial Tribunal sitting at Ashford, Kent. It dismissed the appellant's claim for unfair dismissal and action for sex discrimination. In a clear and comprehensive decision the tribunal sets out with admirable clarity its principal findings of fact in paragraph 3 onwards.

The appellant had been employed as a contracts manager by Alpha Care Services from 18th November 1990 to 19th March 1996 and had the responsibility for managing three residential homes in the London Borough of Bromley, the responsibility for which had been transferred out of the local authority. The respondent company had responsibility for four other homes within the local authority and a further undertaking had responsibility for one other home.

In the process of competitive tendering the respondent company won the contract for managing all the homes in the Borough with effect from 20th March 1996. The decision to award the contract was made known on 14th November 1995. The tribunal found that the transfer of responsibility from Alpha care to the respondents was a relevant transfer within the meaning of regulation 5 of the Transfer of Undertaking (Protection of Employment) Regulations 1981 ["TUPE"].

In November 1995 the respondents commenced a business reorganisation entitled Winning Solutions which included the reorganisation of their internal management structure. It was a document which the tribunal found to be long on words and light on substance and did not operate to convey to the appellant that her job was at risk. On the contrary, the appellant was assured that she would be part of the respondent's management team.

Brian Owen was the existing operations director for the respondent and had direct responsibility for the respondent's four original Bromley homes. At the time of the transfer he had responsibility for ten such homes. On 12th February 1996, following an interview, he was offered and accepted the new position.

The appellant was seen on 27th March but only offered alternative employment at a much lower rate of pay. Although she was initially required to make a decision on the spot, she persuaded them to allow her a week to consider the position. During that week Mr Owen resigned by a letter dated 31st March 1996. The respondents did not consider the appellant as she did not have the requisite skills and relevant experience. Instead, they appointed Mr Swirles, a director, to replace Mr Owen. He had neither a social work nor a nursing qualification. This appointment has to be seen in context. The respondents had previously interviewed Mr Quinn in October 1996. He had not pursued his application at that stage. He was interviewed and was offered and accepted the post but was not in a position to take it up for three months.

It is clear from the Notes of Evidence that the respondents did not make any sustained attempt to investigate the experience of the appellant and in evidence she pointed out that she had experience in previous employment of managing some ten homes.

The tribunal summarises its position as follows:

"22. We find that the Applicant was dismissed by the Respondent for a reason concerned with the transfer of this Respondent of the part of the undertaking of Alpha Care Services in which she was employed. We find, further, that the reason for the dismissal was an organisational reason entailing changes in the workforce within the meaning of Regulation 8(2) of the Transfer of Undertaking (Protection of Employment) Regulations 1981 and thus does not fall to be treated as an automatically unfair dismissal. Regulation 8(2) requires us to treat the reason for the dismissal as a reason falling within section 98(1) of the Employment Rights Act 1996, that is, the dismissal must be regarded as having been for a substantial reason of a kind such as to justify the dismissal of an employee holding the position which the Applicant held.

23. It is clear that, but for the gaining by the Respondent of the contract to manage the London Borough of Bromley's homes, the Applicant would not have been dismissed. It is equally clear that the Respondent had carried out a reorganisation of its business prior to the transfer, and such organisation entailed changes in the workforce to include changes in job functions. In this case, bearing in mind that the transferee of the business continued to carry on the business after the transfer, there was in any event a change in numbers with the decision that there should be no requirement for an employee holding the title of Contracts Manager to manager the three homes which had been transferred to the Respondent under the Regulations.

24. We, therefore, have to decide whether the Respondent acted reasonably or unreasonably in treating the reason for the dismissal of the Applicant as a sufficient reason in all the circumstances (including the size and administrative resources of the Respondent's undertaking) and having regard to the equity and substantial merits of the case.

25. The Applicant was not consulted about the Respondent's reorganisation in the period leading up to the completion of the transfer and it appears that she was misled intentionally or unintentionally by Mr Owen, who had represented to her that she would be part of the team.

26. We consider that, once it was known there would be a transfer, and that the transferor was going to become liable for the employment rights of the business being transferred, then there was nothing to prevent the transferee from informing the transferor of plans for employees employed in the undertaking to be transferred. A transferee, who dismisses a transferred employee immediately upon the transfer with no consultation, cannot therefore rely upon a contention that he had no chance to do so prior to the transfer because the employee in question was not his employee. Nor do we think that the Respondent in this case can hide behind the transferor's bad feeling and hostility about the transfer. The transferee, may, however act reasonably if he waits until after the transfer before consulting with a transferred employee about changes in the workforce which will be required. If, therefore, there is an organisational reason entailing changes in the workforce which has drastic impact upon a transferred employee's position, it follows that if the transferee has failed to consult an affected employee prior to the transfer, then he must do so afterwards in order to act reasonably.

27. In this case, the Applicant had had the document entitled "Winning Solutions" in February. Consultation with her by Mr Radia took place on the morning following the transfer, and again by Mr Radia and Mr Owen a week later. Finally, on 2 April there was further discussion over the telephone.

28. The documentation setting out the Winning Solutions reorganisation seems to us to contain many words and little substance. What does emerge is that new specialised teams will be formed, one of which is the commissioning team. That team in fact was not to be team at all, but was to be one person, namely the Director of Contracted Services. The document also states that the position of Assistant Operations Director would also be discontinued. If the Applicant had read that document it was not sufficient to indicate that her job would disappear. It did not amount to a disclosure that there was no position for a contracts manager in relation to homes contracted out by a local authority after the reorganisation. Moreover, the Applicant had not been made aware by Mr Owen that there was going to be no position for her.

29. We are satisfied, however, having heard the evidence, that there were good, sound, business reasons for the reorganisation, and that, whatever defects there may have been in Mr Radia's manner towards the Applicant, he did communicate clearly to her on the morning of 20 March that there would not be a requirement for a person holding her position henceforth, and why not. He indicated at the same time that a search for alternative employment for the Applicant would ensue and he asked her if she would be interested in any vacancies in the surrounding area and how far she would be able to travel. The vacancies finally identified, offered far lower salaries than the Applicant had been earning and we can sympathise with and understand the Applicant's distress at being offered such lowly alternatives.

30. When we consider the reorganisation itself, however, the Respondent's decision to have one senior employee at a considerably higher salary than that of the Applicant, responsible for all the local authority contracted out homes, was neither unreasonable nor an arbitrary one. The Respondent's business was expanding at a very considerable rate and there were 11 such homes at the time of the transfer which were managed under contract with local authorities, with the possibility of more to come. There was clearly, therefore, a need for co-ordination of the management of such homes.

31. We are unable to conclude that the Respondent's treatment of the Applicant was unreasonable, having regard to the situation in which the Respondent's management found themselves following the reorganisation and the transfer.

31. Although, therefore, the Respondent did not explain the position to the proprietor of Alpha Care Services or to the Applicant prior to the transfer, we are satisfied that there was sufficient consultation thereafter to bring the dismissal of the Applicant, when it occurred, within the range of responses available to a reasonable employer in the circumstances of this case.

33. We do not accept the Applicant's submission that a reasonable employer would have offered her the position of Director of Contracted Services, either in preference to Mr Owen or after his resignation had been handed in. For the reasons given, we have accepted the Respondent's explanation for the need to have a person in the position who had a nursing or social work qualification and who had experience of managing a larger number of homes than the Applicant. We do not, therefore, find unreasonable the Respondent's failure to offer that position to the Applicant."

The tribunal then directed itself in accordance with s.98(4) of the 1996 Act and found that the respondents had acted reasonably and therefore dismissed the application.

We hope that we are not distorting the careful argument advanced by Mr Dulovic on behalf of the appellant to say that it can be summarised by saying that the Industrial Tribunal has erred in law in that it has confused the test as to whether there was an unfair dismissal due to lack of consultation with the issue which they would have had to decide had they found, as the appellant contends that they should, unfair dismissal and were considering the issue of remedy. If X dismissed Y without consultation then unless X could reasonably have come to the view that consultation was utterly futile, then X is likely to be found to have dismissed Y unfairly; the appellant relies on Polkey v A E Dayton Services Ltd [1987] IRLR 208 and Mugford v Midland Bank Ltd [1997] IRLR 208. In considering the issue of remedy it may be open to the tribunal to come to the conclusion that however extensive the consultation may have been it would still have made "no difference" to the result and therefore award no compensation or alternatively only award compensation for such limited time that proper consultation would have taken. See Abbotts & Standley v Wesson-Glynwed Steels Ltd [1982] IRLR 51 EAT. In other cases a tribunal will make an assessment of the chance of the consultation making a difference.

The tribunal made a number of findings of fact adverse to the respondent employer. They rejected the argument that it was not reasonable for the employer not to consult prior to the transfer taking effect; they were critical of the way in which the appellant had been misled as to her future position; they considered the document Winning Solutions to be inadequate to warn the appellant of her true position. At the conclusion of paragraph 33 the tribunal reached the decision "we do not find unreasonable the Respondent's failure to offer the position to the Applicant". The appellant suggests that this is not the issue but whether the appellant was properly consulted. It may well be after consultation that an employer comes to a decision that a tribunal accepts is not unreasonable: that is a very different conclusion from saying a finding that consultation would have been futile.

The tribunal found that the respondent acted reasonably in selecting first Mr Owen and then Mr Swirles without there being any finding that the respondent had at any stage considered her experience and suitability for the position.

The appellant's point is a narrow one. It is implicit in their submission that it would be open for the tribunal to find that had there been consultation the tribunal may well have found that the appellant would not have been kept on or there was only small chance of her being retained. The central contention is that there is no finding that consultation would have been utterly futile and that such a decision is not tenable from the evidence.

The Respondents' submissions

The respondents rightly point to the stream of authority which reminds this tribunal that it should not lightly overturn the decision of a tribunal. Paragraph 4.7 of his skeleton argument, Mr Edwards put the matter thus:

"To the extent that the Employment Appeal Tribunal conclude, contrary to the findings of the Industrial Tribunal, that the consultation that the Applicant was inadequate, the Respondents will submit that additional consultation would not have materially affected the decision taken by the Industrial Tribunal."

With all respect to Mr Edwards this exactly encapsulates the error of law upon which the appellant relies. It is to confuse the arguments relevant to the issue of remedy with the issue as to whether the dismissal was unfair.

In our view there is a fundamental error of law even in a decision as well crafted and carefully considered as this decision. The tribunal has confused the test as to whether adequate consultation has taken place with the issue relevant in considering the question of remedy namely as to whether the appellant would have been able to claim monetary compensation.

We appreciate the difficulty that any transferee will meet in deploying staff from the transferor. There is such a large range of situations which could be envisaged when there is a transfer that much will depend on the factual context of the particular case as to whether there needs to be consultation and, if so, what form should the consultation take. In this case the appellant had been misled as to her future. She was not considered for the post either when Mr Owen was appointed nor on his resignation. She was not considered on a temporary basis until Mr Quinn could take up the appointment. The tribunal did not consider whether the appellant should at least be compensated for the time which proper consultation would have taken. Although Mr Kelly in his evidence in cross-examination said that it would have been a charade to have given the appellant the opportunity to apply for the job which Mr Owen secured, there was clearly no attempt to ascertain the depth of the appellant's experience and no finding by the tribunal that consultation would have been futile. The finding they make in paragraph 32 is that; "We do not, therefore, find unreasonable the Respondent's failure to offer that position to the applicant". That is a very different finding than saying that consultation on either of the two occasions would have been futile.

We therefore direct that the appeal be allowed and that a differently constituted tribunal should decide in the light of the guidance we have given whether the dismissal was unfair and, if so, consider to what compensation, if any, the appellant is entitled. We are well aware that a finding of unfair dismissal does not preclude the tribunal from coming to the conclusion that no compensatory award is payable.

Sex Discrimination

The appellant has also claimed that there was sex discrimination. She has pointed out that in the lower levels of home management there were 107 women and ten men. In the ranks of middle and senior managers there were 13 men and 12 women. The appellant contends that the appellant had therefore discharged the onus of proving that she had been subjected to a detriment because of her sex.

It is perfectly correct that statistical evidence can be of the cogent kind as Balcombe LJ pointed out in West Midlands Transport Executive v Singh [1988] IRLR 186 at 189. Although that case was concerned with racial discrimination the principle is equally apposite to sex discrimination:

"Direct discrimination involves that an individual is not treated on his merits but receives unfavourable treatment because he is a member of a group. Statistical evidence may establish a discerning pattern in the treatment of a particular group: if the pattern demonstrates a regular failure of members of group to obtain promotion to particular jobs and under representation in such jobs, it may give rise to an inference of discrimination against the group."

The tribunal observed that it was not aware of any reason for the steep falling away of the differential at the higher parts of management and that no comparisons were put before it as to general trends in that type of undertaking.

The tribunal conclude at paragraph 41:

"We are satisfied with the Respondent's explanation for their failure to appoint the Applicant to the senior position of Director of Contracted Services and we are not satisfied that we should draw an inference of sex discrimination on the basis only of the figures before us."

We consider that this was a finding which the tribunal were properly able to make on the evidence and we see no error of law. We therefore dismiss the appeal against the finding that the claim based on sex discrimination fails.