United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR P SAPSFORD (The Appellant in person)
For the Respondent	MR JAMES LADDIE (of Counsel) EEF Broadway House Tothill Street London SW1H 9NQ


 


HIS HONOUR JUDGE J MCMULLEN QC

1. This case is about unfair dismissal and Employment Tribunal procedure. The judgment represents the views of all three members who pre-read the relevant papers. We will refer to the parties as Applicant and Respondent.

Introduction

2. It is an appeal by the Applicant in those proceedings against a decision of an Employment Tribunal sitting over three days at Leeds, Chairman, Mr H G Forrest, registered with Extended Reasons on 7 February 2003. The Applicant was initially represented by solicitors, but at the hearing, as here, he represented himself. We agree with the Employment Tribunal that he is an effective and forceful advocate. The Respondent was represented by an officer of the EEF on day 1, and a solicitor of the EEF on days 2 and 3. The Applicant claimed unfair dismissal as summarised in his written closing submissions to the Employment Tribunal, which are before us, in that he was dismissed for redundancy when there was no genuine redundancy situation, the selection process was flawed and the procedure adopted was unfair. The Respondent contended that the Applicant was dismissed for redundancy, genuinely, it having followed a fair and reasonable procedure, individually and collectively.

The Issues

3. The essential issues as defined by the Employment Tribunal were to decide the reason for dismissal and whether it was reasonable to dismiss him for that reason in the light of the procedure adopted. The Tribunal decided that the Respondent did not unfairly dismiss the Applicant but ordered it to pay £2,000 costs incurred by the Applicant's solicitors as the Respondent failed to follow the Tribunal's careful case management directions. The Applicant appeals against the substantive finding in a Notice of Appeal of 6 pages supported by a Skeleton Argument of 18 closely written pages which he describes as, and we agree, a comprehensive approach to his case on appeal. The Respondent does not appeal the costs order. Directions sending this appeal to Full Hearing were given at a Preliminary Hearing by His Honour Judge Reid QC and members on 9 June 2003.

The Legislation

4. The relevant provisions of the legislation are the Employment Rights Act 1996, Section 98(2)(c), which cites redundancy as a potentially fair reason for dismissal, and Section 98(4), which deals with fairness and provides as follows:

"Where the employer has fulfilled the requirement 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."

Redundancy is defined in Section 139:

"139 Redundancy

(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) …

(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 carryout 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.

(6) In subsection (1) "cease" and "diminish" mean cease and diminish either permanently or temporarily and for whatever reason."

Employment Tribunal Directions

5. The Tribunal directed itself by reference to the relevant provisions, which we have cited above, and what we hold to be the nine leading authorities, which are cited in its Extended Reasons at paragraph 5.

The Facts

6. The Respondent makes electronic components at 2 sites in Yorkshire, Pickering and Kirkbymoorside. It employed at the relevant time 150 people. The Applicant was born in 1953 and was employed as its Financial Controller at a salary of £44,000 per year from 1 February 1999 until the relationship ended by his dismissal on notice on 24 May 2002, with redundancy pay and money in lieu of the appropriate notice. The Applicant was at all times well regarded and there were no criticisms whatever of his work or performance. He was employed to work at the Pickering site although his responsibilities extended over the whole of the company.
7. Due to a downturn in the industry, 3 phases of redundancies were entered into by the Respondent company. Each of the redundancies was handled through a body called the EXT, which was the Executive Management Team of senior managers. In accordance with Trade Union and Labour Relations (Consolidation) Act 1992 s 188,ff there being no recognised trade union at the sites, procedures for handling and avoiding redundancy included the election of a representative body. This was described as the representative group. The situation required more and more drastic savings.
8. The Applicant was a recipient of an email sent by Mr Parkin, Operations Director, who gave evidence before the Tribunal. The company itself has a majority shareholding by the chairman, Mr Shaw, and his family, and is a private company. The email included the Applicant as a person who was potentially included in the redundancy round. The Applicant's position as Financial Controller involved, to some extent, duties which were parallel to another senior position, that of the company accountant. The 2 jobs should be replaced by an accounts manager at a substantially lower salary than that which the Applicant had. Some of his responsibilities would be given to the board of the company and others would go to the new post. There was consultation, both collectively and individually. The Applicant was dismissed on 24 May 2002.
9. The Tribunal recorded the submissions of the Applicant which principally involved his contesting the genuineness of the need for a redundancy. The Tribunal rejected his contention that the redundancy was a sham engineered by the chairman, acting through Mr Parkin, in order to get rid of him. The finance department was not the sole department affected by redundancy, the reorganisation proposals made by the company appeared sensible and resulted in a single post being created which subsumed the duties of the Applicant and of the other post. The Tribunal found, in terms, that there was a genuine reorganisation and noted, as is correct, that it was not for the Tribunal to question the wisdom of the reorganisation or its efficacy once persuaded it was not a sham. Thus, the Tribunal decided for the purposes of Section 98(2) that the dismissal was by reason of redundancy as put forward by the Respondent.
10. It was then required to consider the fairness of the decision. Reasonable steps were taken by the Respondent to avoid, and reduce the need for, redundancies; it consulted properly with the workforce; the representative group which was the vehicle for such consultation was taking steps which were both significant and reasonable. As for individual selection and consultation, the Tribunal was troubled by the question of whether there had been sufficiency of that in the Applicant's case. Nevertheless, it is clear that the Tribunal found that the Applicant had an opportunity at an appropriate time to raise all the issues which he wished to raise about the redundancy and their effect upon him. The Applicant, an effective and forceful advocate, well able to put forward his views. Thus, the Tribunal was satisfied that, although initially troubled, there had been sufficient consultation with him. It also found that he was given adequate answers to questions which he himself had raised and no issue of alternative employment arose since, the Tribunal decided, understandably, that the Applicant declined to apply for the lower rated new post. The Tribunal decided to award costs, as we have noted above, but that issue is taken no further by the Respondent.
11. The Applicant's case before us has been reduced to a detailed argument in which points are taken on individual consultation, the selection criteria, group consultation and perversity. There are a number of sub-headings to each of those, but they are the broad bases on which the Applicant contends that the Tribunal did not make a correct decision in law. On behalf of the Respondent, it is contended that the Applicant is seeking to rerun issues of fact which the Employment Tribunal decided against him.
12. It is submitted by Mr James Laddie, who appears on behalf of the Respondent today, that there is not a high hurdle for a Respondent in a redundancy situation to establish the reason for redundancy. In this case that hurdle was surmounted by reference to the 3 phases and the drastic savings which were required in the company's interest. The management team, and indeed the representative group, included persons whose departments had rigorous defenders, as was the finance department. There were cuts in the finance department too. This is a classic redundancy situation where the interests of the business require a reduction in the number of persons doing particular jobs and tha certain duties be subsumed, in this case to the board and into the new post. The Tribunal resolved the issue of genuineness of the redundancy by finding there was no sham.

The Legal Principles

13. It is common ground that the principles to be derived from the authorities cited from the Employment Tribunal reasons can be found in Williams v Compare Maxam Ltd [1982] IRLR 83 and Mugford v Midland Bank [1997] IRLR 208. The principles are set out in paragraph 19 in the Williams judgment in sub-paragraphs 1-5, and are as follows:

"1 The employer will seek to give as much warning as possible of impending redundancies so as to enable the union and employees who may be affected to take early steps to inform themselves of the relevant facts, consider possible alternative solutions and, if necessary, find alternative employment in the undertaking or elsewhere.

2 The employer will consult the union as to the best means by which the desired management result can be achieved fairly and with as little hardship to the employees as possible. In particular, the employer will seek to agree with the union the criteria to be applied in selecting the employees to be made redundant. When a selection has been made, the employer will consider with the union whether the selection has been made in accordance with those criteria.

3 Whether or not an agreement as to the criteria to be adopted has been agreed with the union, the employer will seek to establish criteria for selection which so far as possible do not depend solely upon the opinion of the person making the selection but can be objectively checked against such things as attendance record, efficiency at the job, experience, or length of service.

4 The employer will seek to ensure that the selection is made fairly in accordance with these criteria and will consider any representations the union may make as to such selection.

5 The employer will seek to see whether instead of dismissing an employee he could offer him alternative employment."

Further, in a case where complaints are made of inadequate consultation, the relevant authorities yield the following guidance, as astringently extracted in Mugford by His Honour Judge Peter Clark at paragraph 41, sub-paragraphs 1, 2 and 3 as follows:

"(1) Where no consultation about redundancy has taken place with either the trade union or the employee the dismissal will normally be unfair, unless the industrial tribunal finds that a reasonable employer would have concluded that consultation would be an utterly futile exercise in the particular circumstances of the case.

(2) Consultation with the trade union over selection criteria does not of itself release the employer from considering with the employee individually his being identified for redundancy.

(3) It will be a question of fact and degree for the industrial tribunal to consider whether consultation with the individual and/or his union was so inadequate as to render the dismissal unfair. A lack of consultation in any particular respect will not automatically lead to that result. The overall picture must be viewed by the tribunal up to the date of termination to ascertain whether the employer has or has not acted reasonably in dismissing the employee on the grounds of redundancy."

14. When an allegation is made of perversity the standard is set out in, amongst others, Piggot Brothers & Co Ltd v Jackson [1991] IRLR 309, where the Court of Appeal decided that a decision of an Employment Tribunal can be characterised as perverse only if it was not a permissible option. In order to hold that the decision was not a permissible option the Employment Appeal Tribunal will almost always have to identify a finding of fact which was unsupported by any evidence or a clear self misdirection in law by and if it cannot do that then the Employment Appeal Tribunal should re-examine with the greatest care any preliminary conclusion that the decision under appeal was not a permissible option.

Our Conclusions

15. In our judgment the arguments of the Respondent are correct and we reject the arguments made by the Applicant. It cannot be said that the Tribunal failed to recognise the legal tests which it was required to apply. Nor can it be said that it made decisions which are not supported by cogent reasoning on the principal areas of dispute. For example, given that the primary contention of the Applicant was that his dismissal was engineered by the chairman through the medium of Mr Parkin, the Tribunal was required on contested evidence to decide whether redundancy or personal animus was the reason for his departure. It came to the conclusion that the departure was genuinely-based redundancy. There was adequate material comprehensively put forward by the Respondent and cogently argued for by the Tribunal in its decision on that basis.
16. Secondly, on the question of whether or not there was sufficient consultation, it must be recognised that this consultation took place in a statutory context and there has been, Mr Laddie assures us, no complaint made by the representatives or the employees about the statutory procedure for conducting this exercise. Credit was given by the Tribunal to the efforts put in by the representative group in its contribution to determining central issues, such as whether or not there should be redundancies, the scale of them and what criteria should be used to select those unfortunate to be the victims of it.
17. As to individual consultation, the Tribunal did not find this an easy task to determine, and yet from the passages which we have referred to the Tribunal makes it clear that although not initially consulted with the fullest information there came a time when the Applicant was provided with a full opportunity to make his arguments, to understand the reasons why redundancy was to be brought about and to understand the criteria upon which selection was to be based. In a sense his position was peculiar to him since he was the only Financial Controller and there is some force in Mr Laddie's point that selection is difficult to consider when there is a pool of one, as there was in this case. Thus, it seems to us the complete answer to the criticism of a failure by the Tribunal to uphold the Applicant's claim that there was inadequate consultation is given by the finding that he had every opportunity to put forward his case and to understand the reasons for redundancy.
18. The Tribunal made a decision on each of the central issues and we detect no error of law. It also follows that the criticism of perversity cannot succeed in this case against the tests which we have set out from Piggot v Jackson above. We would like to pay tribute to Mr Sapsford for the very careful way in which he has marshalled all his thoughts and arguments in his comprehensive written presentation to us and supplemented it with his comments upon the submissions of the Respondent. We are grateful to him and to Mr Laddie for the concise way in which they have represented the points today. The appeal is dismissed.