United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR B NAPIER (of Counsel) Messrs Pinsent Curtis Solicitors 41 Park Square Leeds LS1 2NS
For the Respondent	MR N DAVIES (of Counsel) Messrs William Hatton Solicitors Third Floor 60 Charles Street Leicester LE1 1FB


 


JUDGE J HULL QC: This is an appeal to us by the National Health Service Supplies Authority against a decision of the Industrial Tribunal sitting at Leicester on 7 October and 3 November 1997 under the Chairmanship of Mr Walker with two Industrial Members. That Industrial Tribunal, on the complaint of Mr Ian Evans, the Respondent to the appeal here, that he had been unfairly dismissed, upheld the complaint and held that he had indeed been unfairly dismissed when he was dismissed for redundancy. To go forward a little, there was no issue that he was indeed redundant. The unfairness lay in the way in which the employers had dealt with the matter.

I must first of all say shortly what the history of the matter is. The Supplies Authority, as I will call it, was set up as a result of the reorganisation of the NHS by whom Mr Evans was first employed in October 1990. It appears that the reorganisation probably finally took place in 1993: I say that because we have been shown some terms and conditions dated 9 August 1993 at page 24 onwards in our bundle which may very well relate to that reorganisation. The effect was, as described by the Industrial Tribunal, there is nothing controversial about this, to reorganise the way in which the NHS first of all purchased its various supplies, which are no doubt of enormous volume and value, and secondly the arrangements for supplying those needs. The Supplies Authority is not a monopoly of the NHS but units were set up dedicated to the supply of various articles which were required by the NHS and it was in one of those units, quite a small affair, that Mr Evans was employed as a higher clerical officer, at the material time he was A&C (I think that stands for Administrative & Clerical) scale 3.

Having been first employed, as I have said, his employment continued after the reorganisation in the small unit known as Unit 3, in Leicester, and as a matter of incidental importance only, unhappily he was ill, in 1996, and was off work for a considerable period. In due course, whilst he was away ill, the question of staffing was considered and the conclusion was reached, and about this there is no dispute, that there was a redundancy situation, if I can use that expression, in unit 3. That is to say reorganisation was to take place and it was apparent with that reorganisation that there were two too many, out of four officers of this grade. One of the officers made arrangements for himself and we are not concerned with him, that still left one officer too many. So there was a redundancy situation. "Redundancy" is defined in the Employment Rights Act 1996 section 139:

"(1) For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to

(a) the fact that his employer has ceased or intends to cease -

(i) to carry on the business for the purposes of which the employee was employed by him, or

(ii) to carry on that business in the place where the employee was so employed..."

That does not apply, there was no question of the Supplies Authority ceasing business or intending to cease carrying on business in that place. Section 139(1)(b) is what applies:

"(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."

That is rather a complicated definition and it is to be noticed that the statute does not provide that the person who is dismissed is to be one of the employees whose labours have become unnecessary or are expected to become unnecessary, or unnecessary in that place. What is necessary is that that should be the cause, it should be wholly or mainly attributable to the fact that the requirement for employees to carry on the work has ceased or diminished.

There is no dispute about that but, if such a situation arises, then it is well settled that the other material provisions of the Employment Rights Act apply. There is no possible controversy about this. Under Section 98 of the Act, it is for the employer who has dismissed an employee to show, if it is suggested that it was unfair, the reason for the dismissal and that it is a reason falling within subsection (2) or some other substantial reason; and one of the reasons under (2) is that the employee was redundant - that of course being defined by the section to which I have just referred, Section 139.

Then Section 98 provides:

"(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."

It is well settled that when a redundancy situation arises the duty of behaving reasonably, that is to say, in this context, fairly and sensibly, falls upon the employer as is in any other situation where he has occasion to dismiss an employee. I am not going to go through the list of matters which the Courts have said and Industrial Tribunals have said they wish to see in the normal case. But among other things, they wish to see first of all that the employer, confronted with the redundancy situation, has properly considered who is to be made redundant. Starting on the premise that there is a redundancy situation, somebody, or perhaps a number of people, must be made redundant, if that is the decision of the employer: but who are they to be?

For that purpose any Tribunal will expect to hear from the employer, if he seeks to justify his decision, that he has looked at a proper pool of employees from whom to choose. It does not necessarily mean that he looks only at the place where the redundancy has arisen; he must look around. He may have a very large factory with a very large number of similar jobs. He may have a very adaptable work force in which various employees can undertake various tasks. But he must first of all start by selecting a suitable pool. It is for him to say what is a suitable pool of employees amongst whom to look for the redundancy.

If he does that in a reasonable manner then it is not for the Industrial Tribunal or anybody else to tell him that he is wrong but it is the duty of the Industrial Tribunal to say whether the conduct of the employer, in that and other respects, falls within the range of approaches which a reasonable employer could adopt. The employer is not allowed to behave completely irrationally. The Tribunal is entitled to look and see whether this falls within the limits of what is sensible and reasonable.

Needless to say that gives a wide discretion to employers. They have to run their own business and every Industrial Tribunal must be fully conscious of the fact that when a responsibility is laid upon an employer it is not for them to put themselves in the position of the employer and say what they would have done.

Next, the employer is required to consult the employees who are likely to be affected and their representatives if they are represented. Consultation, it has been said, is one of the keystones of good industrial relations and the employer must consult his employees in a meaningful way, in proper time, giving them proper information, seeking their responses and, of course, paying attention to the responses and deciding what effect to give to them. An employee may give a response simply on his own behalf, pointing to his own merits and difficulties, or he may, as a well informed and intelligent employee, put forward excellent plans either for avoiding redundancy or for mitigating its consequences. The employer is required to pay attention to such responses.

Then, having chosen the person or people who are to be made redundant, it is necessary for the employer to consider whether, in the light of suggestions made to him, in the light of the situation as it then presents itself, there is any way to avoid redundancy. Sometimes it can be done by reorganisation, there are various ways in which it may be possible to avoid redundancy. That in outline is the problem which arose in this case.

The Industrial Tribunal looked to see what the situation was here and they reached the following conclusions, they say:

"27. There is no doubt that it was a reasonable decision of the respondent to reduce the numbers of grade 3 support supply staff at Glenfield by one.

28. However, given the nature and size of the respondent's undertaking and the number of employees at grade 3 at least in the Leicester area and its central division, we consider that the pool from which the redundant employee was to be selected was not one that any reasonable employer would have chosen, i.e. the remaining three grade 3 support supply staff at Glenfield.

29. Despite the difficulties of the absence on sick leave of the applicant, no reasonable employer would have dismissed him before hand without consulting the applicant. No proposals about the basis of selection were conveyed to him or his view sought before the decision was made on 3 February 1997 or afterwards before he was dismissed by the letter dated 6 February 1997.

30. No reasonable enquiries were made about any alternative possibilities for avoiding the applicant's redundancy, and no reasonable employer would have dismissed the applicant without making full enquiries as to alternative employment for him."

So there the Tribunal found the employers in default on the three matters to which I have referred. They have, on the face of it, applied their minds to the correct test namely not "what would we have done?" but, "would any reasonable employer have behaved in the way that this employer behaved?"

The appeal to us does not complain generally of the decision but what is said by Mr Napier, on behalf of the Supplies Authority, is that, first of all, "it is clear from the decision" he says, "that in the matter of the selection of the pool" (which is the complaint) "the Industrial Tribunal were in fact, whatever they say, taking on themselves the responsibility of saying 'what would we have done?' and not saying, in truth, 'was this within the ranges of action of a reasonable employer?' and this", he says, "is a matter to which the Supplies Authority attach great importance."

He says alternatively that "it was in the light of the evidence a perverse decision. How could they reach such a decision?" His answer may be, as we understand the submission, that indeed it is a wrong decision because of this error of approach, that they were taking on themselves something which they had no right to in deciding what they would have done themselves.

This is a matter to which the Supplies Authority attaches great importance and the adverse finding is one which they particularly wish to attack. I would say, before I go to the details, that they attach great importance to the word "accordingly" in paragraph 31:

"Accordingly we find that the respondent did not act reasonably..."

"...and that", says Mr Napier, "shows that this Tribunal were relying on all three of the defaults which they find. He invites us to take the view that if they had taken a different view about the reasonableness of the selection of the pool then they might very well, in spite of their two other adverse findings of unfairness, have still upheld the fairness of the dismissal. So he says it is enough for him to attack the question of the selection of the pool.

So we have to look and see what was the evidence and what did the Industrial Tribunal say about this question of the pool, the other findings of unfairness not being challenged. The Tribunal said:

"7. It was the respondent's case that each such unit" that means, this unit, unit 3, which was only one of a number of units in Leicester, one of two at least units in the same district "was, in effect, discrete and that the policy was that there should be no financial cross-fertilisation between them. It was on the basis of this that the redundancy of the applicant and the pool from which he was selected was based. We return to that below.

8. However, we noted from the applicant's statement of main terms and conditions of service that his work base would be Leicester, Unit 3 (which we take to be the Glenfield unit)" and then they quote: "'This does not preclude movement to another work base within the division which may be necessary as a result of development or reorganisation of the division's services'. (Our emphasis.) We also noticed references to the policies and procedures 'adopted by the division', 'the divisional procedure manual and scheme of delegation' and 'other divisional staff' (our emphasis) in his job description. It appears that his unit and the others that we have mentioned above formed part of the 'central division' of the Authority. There is also a reference to 'the divisional policy of flexible working hours' in the briefing paper for the reorganisation of the Glenfield Unit."

Those papers are part of our bundle, we have seen them, those are very just extracts from those documents.

They go on to say that Mr Pitt, the manager of this unit, gave evidence to them and they say this:

"11. Mr Pitt told us that the policy of the respondent is to limit redundancy to the particular unit in which the reduction in business etc is taking place. Surprisingly, despite their being present, we had no evidence about this from any of the respondent's human resources staff. Moreover, that policy is not included in the NHS Supplies Redundancy Policy which was produced to us in the respondent's bundle of documents, although not formally exhibited in evidence. But, indeed the tenor of that policy document is not to impose such a limitation but to look more widely when considering negating the effects of a reduction in staffing levels."

That document starts at page 50 in our bundle. Among other very striking passages in that redundancy policy document:

"As far as it is practicable, NHS Supplies will seek to minimise the effect on staff and avoid the need to declare redundancies. If, however, redundancies do arise, the following procedure will be adopted."

Then various steps are set out which, "will be adopted", say the Supplies Authority. They include: "redeployment of staff who are at risk including retraining where appropriate;" they go on:

"Selection for Redundancy

In considering the criteria to be used in selecting employees for redundancy, the maintenance of the correct balance of numbers and skills of employees for the long-term viability of NHS Supplies will be of overriding importance.

Where, following consultation, the need for redundancies remains, any selection criteria used will be based on fairness and objectivity and may include, for example, work experience and skills, capability, performance, attendance, age and length of service."

It goes on to provide for consultation and then, over the page at 52, there is a passage regarding alternative employment:

"When employees who may be redundant are considered for alternative employment within NHS Supplies, account will be taken both of their skills and capabilities and of the requirements of the alternative post, including its location, in the context of the long term viability of NHS Supplies."

They go on to say this:

"Employees accepting alternative positions within NHS Supplies in order to avoid redundancy, may be entitled to claim excess travelling expenses in accordance with..."various provisions that are referred to.

That expressly envisages, it seems to us, standing of course at a safe distance from all this, that seems to be express provision for looking for work elsewhere. If there is to be a policy like this one would expect it to be justified, not merely in terms of, say, accountancy (it makes a useful profit centre to have each unit independent, or matters of that sort) but from the point of view of the human resources management and, of course, the policy of the Supplies Authority. In so far as the Tribunal were told about that, having heard no direct evidence, they were shown these documents and there it was; not only were there provisions in the contract for mobility, which I have mentioned, but there were these express provisions for avoiding redundancy. Were those consistent with the policy which was explained to them orally or by Mr Pitt (not an overall manager but simply the manager there)? What was the justification? Was there a justification for departing from the general policy? Had the general policy been rescinded without anybody being told? Was there a new document on the way, hot from the presses, to explain the new policy?

All those were matters which the Tribunal was entitled to consider. As I have said, it is not for us to say whether the Tribunal were right, it is for the Tribunal, having considered the decision taken by the employer, to look at the justification for it that is put forward, and say whether it falls within the band of reasonable responses which the employer could adopt.

So they go on. They direct themselves in paragraph 18 as follows:

"18. We had no evidence about any substantive enquiries being made about other possibilities in relation to avoiding the applicant's redundancy. Mr Pitt merely told us that he had enquired of Human Resources whether or not there were any vacancies elsewhere and was told that there were not. No enquiries were made about voluntary redundancy possibilities of other grade 3 staff in other Units and any possibility of 'bumping'. Nor does it appear that there was any consideration given to the other possibilities listed in the NHS Supplies Redundancy Policy. We were told that during the redundancy process there was a transfer of two grade 3 staff within the Leicester area but that these transfers were in respect of separate NHS Trusts and had no impact on Glenfield where the applicant was employed. That of course was entirely consistent with the view of the limited pool as being in accordance with the policy which we set out above. However, we do note that both those transferred grade 3 staff had considerably less continuous service than the applicant.

There are some 20 to 25 grade 3 supplies support staff employed by the Authority in the Leicester area alone and no doubt many more beyond that geographical area in the country as a whole."

Then they go on to consider the law. After referring to the statutory provisions that I have mentioned they say this:

"21. We naturally remind ourselves that in judging the reasonableness of the employer's conduct we must not substitute our decision as to what was the right course to adopt for that of the employer and that our function is to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted. If the dismissal falls with the band the dismissal is fair; if the dismissal falls outside the band the dismissal is unfair. (Iceland Frozen Food Ltd v Jones [1982] IRLR 439.)"

They also quoted from what Lord Bridge said in Polkey v A E Dayton Services Ltd [1987] IRLR 503:

"...in a case of redundancy, the employer would not normally act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation."

It was in the light of all those matters, therefore, that they reached their decision:

"28...we consider that the pool from which the redundant employee was to be selected was not one that any reason employer would have chosen.

Now it is said to us not that the Industrial Tribunal might have reached a different decision, or that there was evidence on which they could reach a different decision or anything of that sort. It is said that "as a matter of law that is simply an impossible decision arising either from a wrong approach or because it is, quite simply, perverse." We are reminded by Mr Napier that it is the responsibility of the employers, and they attach great importance to it, to select the pool correctly.

We have considered that as carefully as we can but we are all of the opinion that there was plenty of material here on which the Tribunal was entitled to make the finding which they did. We are all of the opinion that this Tribunal directed themselves scrupulously and accurately in every way, that the comments they made were fair comments and the decision they reached - (whether or not another Tribunal or we ourselves would have reached the same decision had we heard all the evidence is beside the point) - the decision they reached is not one which can be attacked in law.

Moreover, departing for a moment from the main thrust of what has been said to us, we are not satisfied that we could upset this decision on the basis that the word "accordingly" means that the Tribunal had to rely on all three of their findings to support a finding of unfair dismissal. It appears to us that it would be quite impossible, finding emphatically that there had been an unreasonable failure to consult and an unreasonable failure to take steps to seek alternative employment, quite impossible for them to say in those circumstances that the dismissal was fair. That, as I say, is rather beside the point and going outside the main thrust of the appeal.

The main thrust of the appeal, in our view, fails, for the short and simple reason that this was a decision which the Industrial Tribunal was well entitled to reach. In those circumstances, grateful as we are for the very thorough way in which the case was put to us on behalf of the Appellant, we dismiss the appeal.

An award of costs: where it appears to us that any proceedings were unnecessary, improper or vexatious or where there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings... It is very easy to say, when a case is over and it has been well and carefully argued and we have given what I hope is a clear decision, that it was unreasonable to appeal. One sympathises of course with the successful party to such an appeal but it does not appear to any of us that we can possibly say that this was an unreasonable appeal. The Appellants attached great importance to the matter. They were entitled to ventilate it, the matter was not unarguable and when it went through a Preliminary Hearing it was certainly not regarded as unarguable. In those circumstances we cannot make an award of costs.