United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS CELIA IVIMY (of Counsel) Instructed by: Messrs Roythorne & Co Solicitors 10 Pinchbeck Road Spalding Lincs PE11 1PZ
For the Respondent	MR DANIEL DOVAR (of Counsel) Instructed by: Messrs Lloyd & Associates Solicitors 48 Onslow Gardens South Kensington London SW7 3PY


 


MR COMMISSIONER HOWELL QC

1. In this appeal, which is before us today for full hearing, pursuant to the directions given at the Preliminary Hearing on 23 October 2002, Mr Ian Arthur Grant seeks to have set aside as erroneous in law a decision of the Leicester Employment Tribunal, sitting in March and May 2002, when they dismissed his claims for unfair dismissal on the ground of redundancy against his former employers BSS Group Plc.
2. Mr Grant was a long-serving member of the staff of BSS. He was a Sales Representative based in the Peterborough area and had been in their employment for some 27 years from 14 October 1974 to 30 June 2001, which is accepted as the effective date of termination of his employment on the ground of redundancy.
3. The facts, so far as it is necessary to refer to them, appear from the Tribunal's statement of Extended Reasons sent to the parties on 24 June 2002 and show in particular that under paragraph 3:

3 "The Applicant had at the time of his dismissal in June 2001 been employed by the Respondent company as a sales representative for some 27 years. Over that time his sales area had varied considerably, but had included wide parts of East Anglia. At the date of dismissal he was based in Peterborough with an area based around that town. He had had a long and successful career as a salesman.

4 The company had had a previous round of redundancies in April 1999 when "massive" redundancies were made. The company says that the procedure used in that round had been damaging and costly and had led to a number of people leaving who they would not have wanted to leave. That particular policy finished in May 2000 when a new Chief Executive was appointed. In April 2001 a new Managing Director was appointed."

4. In that month, as recorded by the Tribunal at paragraph 6:

6 "In April 2001 the new Managing Director called for 2% cost cuts to be made in every area. Bill Gibson, who was Area Director for the Applicant's area, considered and rejected various possibilities for cuts. He noted that he had six Sales Personnel to cover five areas and decided that he could cut costs by making one representative redundant. He decided to use the same criteria as the company had used in the 1999 exercise. He chose as the pool for redundancy the Peterborough area, rather than his entire sales area. The reason he gave was that he had two representatives resident in Peterborough, the Applicant was one, and the other Mr Scott Crawford, who divided his sales activities between Peterborough and Luton where there was another full-time sales representative, together with company policy that to reduce the level of costs the representative for each area would be based in that area.

7 On 29 May 2000, Mr Gibson signed off a matrix applying the criteria for redundancy to the two individuals being considered for redundancy the Applicant and Mr Crawford. The Applicant's matrix was then reviewed and subsequently countersigned by Mr Sullivan, the Operations Director. Mr Crawford's matrix was not reviewed, or if it was, Mr Sullivan did not sign it."

5. There then followed an intimation by Mr Gibson to Mr Crawford that he was at risk of redundancy, but Mr Crawford was not invited to take part in any consultation about that, unlike the Applicant Mr Grant who was given a follow-up letter setting up consultation meetings, and was given to understand that he was potentially in line for compulsory redundancy.
6. Following that, and a couple of meetings to which we need not refer, as the Tribunal recorded in paragraph 13 of their Extended Reasons:

13 "On 18 June 2001, there was another meeting in the consultation process when the Applicant met Peter Sullivan, the Operations Director.

14 On 20 June 2001, solicitors instructed by the Applicant sent a detailed letter to the company setting out the Applicant's criticism of the criteria, how they had been applied to him, and why they felt they were unfair. The company responded promptly and in detail by the Human Resources Director, Mr Mitford, on 21 June.

15 On 26 June 2001, there was a final meeting of redundancy consultation following which the Applicant's employment was terminated.

16 The Applicant lodged an appeal against the decision which was heard in September 2001 by the Chief Executive of the company, Pat Donovan and by the Human Resources Manager, Andrea Walton."

7. The Tribunal then explained the criteria that had been applied on the matrix under six headings, "Length of Service, Attendance Record, Commitment, Product Knowledge, Selling Skills and Performance against Objectives", and the weighting process used; and no criticism in this appeal is made of the acceptance by the Tribunal of the criteria and the marking system themselves. The only issue which has been argued before us is whether the Tribunal erred in law in accepting that the way these criteria had been applied to the Applicant had been fair.
8. They then dealt in their Extended Reasons with certain particular criteria and markings. It is only necessary for us to refer to two passages. First in paragraph 18 where, in relation to product knowledge it was recorded that the company had given the Applicant a low mark, despite there being no specific evidence about how he failed in this respect and as the Tribunal later commented, it is difficult to see how an employee in this kind of a business with 27 years experience could have failed to have a reasonable amount of product knowledge of the products with which he was intimately concerned in selling.
9. Then, in paragraph 19 they recorded that:

19 "There was considerable factual dispute about the 'Performance against Objectives'; namely what objectives had been set. In this respect there was conflict on the evidence and in so far as the Respondents put forward a figure at all we preferred the Applicant's evidence. The targets that the Applicant maintained he had and had exceeded were set out in his Performance Appraisal which had been signed by Mr Gibson. At the beginning of 2001 his targets were not contradicted. During the appeal there was also documentary evidence to support them."

10. Although there were references by the Respondents to various other objectives they said that the Applicant had not met, it does not appear from paragraph 19 of the Tribunal's statement of reasons that there was any substantial evidence about this or about score of one mark only for Performance against Objectives denoting, according to the criterion document which has been provided at page 34 of the appeal file:

1 "No attempt or progress made towards achieving objective. No action plan in place and final performance is significantly below target and the standard required."

That score, we find, as the Tribunal apparently did, particularly difficult to understand.

11. The Tribunal then addressed the question of whether there was a genuine redundancy situation, in other words the need for the reduction of the workforce by at least one employee in this context, and found that there was. No challenge was made to that finding.
12. However, in dealing with that topic they did record a significant comment in paragraph 21 as follows:

21 "We were also concerned that some of the evidence from the Managers, Mr Gibson and Mr Sullivan, indicated an element of personal dislike of the Applicant. There were the remarks allegedly made by Mr Gibson in 1999, and the evidence from Mr Sullivan who said that he should have been disciplined on various issues years ago and he was allowed to get away with things for a long period."

13. However, they did record also that they felt the Applicant put undue weight on these remarks, perhaps understandably, and concluded therefore, in paragraph 23, that the call for cuts was genuine and that:

23 "While Mr Gibson may perhaps have enjoyed the opportunity to get rid of an employee who for various reasons he did not feel he needed, he did not manufacture that opportunity."

14. The Tribunal then addressed themselves, having established that there was a redundancy situation and that the actual reason for Mr Grant's dismissal had been redundancy, to whether the Respondents had acted reasonably in the process they applied and whether it was fair in all the circumstances to have thus dismissed him.
15. They dealt first with the question of the pool from which the selection was made and recorded that there was an option of taking a pool of six from the East Anglia area rather than the pool of two from Peterborough and said:

25 "We heard evidence from the Respondents that they wanted to narrow the pool so as to avoid the risk of people they wanted to keep feeling their jobs were at risk and leaving voluntarily. The Applicant suggested that the pool was kept narrow in order to maximise the opportunity to get rid of him, but we accept that it was a reasonable decision for the company to make, taking account of their policy that Salesmen should be resident in their area and that they did have two sales representatives resident in Peterborough."

16. They then referred to the selection within the pool and made further criticisms of the process and the selection adopted by the employers, in particular that they accepted as a matter of fact that the decision that the Applicant should be selected rather than Mr Crawford appeared to have been made before consultation about the criteria took place and, further, that it seemed that the consultation process had not been followed up with Mr Crawford. They recorded:

26 "We are concerned that Mr Crawford appears not to have been shown the matrix, and that it was not reviewed by Mr Sullivan indicating that he was not seriously being considered for redundancy once the matrix had been applied."

17. They then continued:

27 "With those concerns about the selection process we then looked at how the criteria were applied to the Applicant. It is not for the Tribunal to substitute their own judgment for that of the company when deciding who should be selected, but we felt that on the evidence some of the Applicant's markings are hard to justify. He was given a marking of 1 on a scale of 1 to 5 for 'Performance against Objectives', when in our finding he had in fact achieved his profit sales targets: that tended to show a lack of objectivity when Mr Gibson was making this rating. We were also concerned about 'Product Knowledge', where there did not appear to be any evidence to support this low marking. On the face of it someone who had been doing the job for 27 years must have known the products quite well."

And it was confirmed to us that the product range of this particular company is not of the kind that changes frequently or overnight, so that that comment by the Tribunal appears to have been a reasonable one.

18. They then recorded in paragraph 28 that they had already remarked on the fact that Mr Sullivan had had to re-mark 'Length of Service and Selling Skills' which on his view had been marked unduly low by Mr Gibson and they expressly said:

28 "So we had some concern about the objectivity of the matrix markings as first made by Mr Gibson and even as double-checked by Mr Sullivan."

19. It is a significant point to which we will have to return later that, despite expressing those reservations on the way the selection process had been applied to the Applicant and the failure to apply it in an exactly similar way to Mr Crawford, the Tribunal did not go on and record any clear finding as to whether they found the process of application of the selection criteria to have been reasonable or unreasonable in terms of section 98 (4) of the Employment Rights Act 1996. What they did do is continue as follows:

29 "It seems to us that if there was bias on the part of Mr Gibson, there were three opportunities in the process for that to be corrected and put right. The first was the double check by Mr Sullivan, which to some extent did correct a wrong score. The second, and major, opportunity was the consultation procedure. Our concern was that the Applicant did not use the consultation procedure to make the points that he made today, of if he did, he did not use it very well. The Tribunal appreciates the difficulty for an Applicant who does not have a representative, is not a trade union, and does not take a companion to represent him, but we noted that his solicitors had put the points quite carefully in the letter and that the company had answered those points one by one. That letter was received before the final meeting when the Applicant could have gone over his points in detail and put points to rebut the company's case, but he did not use that opportunity. The third opportunity to correct any concerns about Mr Gibson's objectivity was in the appeal process when two independent people heard the Applicant's case. We have seen the notes of that meeting, and it went over a lot of ground, but the Applicant did not make any detailed case about the marking on the criteria and if he did have points to put he did not make them when he had the chance to do so."

20. The Tribunal continued:

30 "Finally in relation to the application to the criteria, the Tribunal looked at what would have happened if he had been given a more favourable marking on the areas where he has made his criticisms. In our view even if he had been marked in a more favourable way he may still have ended up tying with Mr Crawford in a narrow competitive situation and, therefore, the outcome may even have been the same, particularly given that Mr Crawford was a younger man who presumably had some ability and potential, because he has since been promoted.

31 Although we have expressed our concern about some of the aspects of the way in which the Respondents went about applying their criteria to the Applicant, we concluded the procedure was applied in such a way as to correct any flaws that it may have contained and that even with flaws, it may have made no difference, so we conclude that the company acted fairly when dismissing the Applicant for redundancy.

32 Finally, although the Applicant suggested there was no offer of alternative employment, there is no evidence from either side that alternative posts suitable to the Applicant were available."

21. The Tribunal's conclusion that the company had acted fairly thus appears, on first reading at least, to have been based on two alternative findings by them. First, that the procedure had been applied in such a way that any flaws they had previously identified had been corrected. Secondly, that, even if that was wrong, in their words "It may have made no difference"; but without making a finding such as one might expect to have been made in that context as to whether it in fact would or not.
22. We have been grateful to Counsel on both sides for their clear and well-focused submissions on this appeal. On behalf of the Appellant Ms Ivimy relied on three principal arguments. First, that the application of the selection criteria in the way the Tribunal recorded it had rendered this dismissal unfair; the Tribunal were bound as a reasonable Tribunal so to hold, and were wrong to conclude that such defects could have been corrected by the consultation and appeal process to which they referred. Secondly, she said that in any case the consultation procedure had been defective and unfair because, in view of the way that Mr Grant and Mr Crawford had been separately treated, it was apparent from the Tribunal's own findings that the result had been pre-ordained. Thirdly, she said that the Tribunal's finding that the employer could properly have narrowed the pool of potential redundancies down to two people concerned was a perverse finding which no reasonable Tribunal could have reached.
23. Mr Dovar on behalf the Respondents argued conversely that, while the Employment Tribunal could certainly be criticised for not expressing more definitive conclusions on certain material issues of fact, such as the way the marking system had been applied, it was clear from their ultimate rejection of the unfair dismissal claim that they had found the overall process fair; that was a conclusion open to them and was not invalidated by the doubts expressed, albeit at some points in rather tentative terms, about the motivation of Mr Gibson and Mr Sullivan and the objectivity of the marks on which the selection for redundancy was based.
24. In his submission, the conclusion that any defects there had been as a result of bias or other flaws in the procedure had been cured by the reconsideration and appeal process, amounted to a conclusion that the appeal process in particular had constituted a complete rehearing of the material issues and therefore had been sufficient to satisfy the standards set down in Lloyd v Taylor Woodrow [1999] IRLR 782, holding that defects in redundancy procedures could, as a matter of principle, be corrected by an appeal process which constituted a complete re-hearing.
25. For this purpose, in Mr Dovar's submission, there really was no distinction to be drawn between criticisms of the way the selection process had been operated, and criticisms of lack of consultation; since the criticisms on the former aspect related to the individual markings awarded and the selection of the pool, both of which were perfectly capable of being discussed and remedied in consultation.
26. Taking Ms Ivimy's third point first, on the validity of the Tribunal's conclusion that a pool of two for selection for redundancy was not unfair, we accept Mr Dovar's submission that that conclusion, as recorded by the Tribunal in paragraph 25 of their Extended Reasons, was a reasonable one. They do, in that paragraph, identify objective reasons from which an employer might reasonably confine the redundancy exercise in this particular case to achieve the 2% cost saving to a simple comparison between two people and we see for ourselves no real ground for saying that such a restriction must have been actuated by personal dislike. The reference to people they wanted to keep in paragraph 25 is, in our judgment, not an indication of bias or restriction of the pool for improper reasons, in the context of what is said in paragraph 4 of the Tribunal's Extended Reasons as to the difficulties that had been encountered by the company in what was obviously a bruising round of redundancies the year or so previously, when they had in fact lost a number of people as a result of the process, who they had not in fact wanted to lose. On that basis we reject that as a ground of appeal.
27. It is, as we have already said, not in dispute that the Tribunal were justified in finding there had been a genuine redundancy situation here; and the particular criteria used, that is the use of the same marking system as had been adopted in the 1999 round of redundancies for these redundancies as well is not criticised on this appeal. That appears to us to be a rightly made concession by Ms Ivimy. We looked at the marking system and the matrix, and the members with industrial experience are satisfied that they are unexceptional and that that was a perfectly reasonable system to have used. So everything depends on the way that system was applied to Mr Grant in this case.
28. On that, it appears to us that our conclusion on the first point, that a pool of two was a reasonable pool to adopt, does have this effect; that once the exercise becomes a simple comparative exercise between two people in the Peterborough area, that fact makes it of particular importance for the employer to ensure that the actual process of applying the criteria to the two people involved was carried out fairly and even-handedly between the two of them before making a genuine decision which of the two was to be selected to have to be made redundant.
29. Having read the Tribunal's findings and conclusions in conjunction with the submissions made to us, we have concluded that it is far from apparent, on the Tribunal's own findings, that this was in fact the case. In particular, the Tribunal found that there had been elements of personal dislike, involving both Mr Gibson and Mr Sullivan, as recorded in paragraph 21 of their Extended Reasons which we have already quoted. Secondly, the decision to select Mr Grant rather than Mr Crawford is recorded as having been made before any consultation had taken place; and, thirdly, the selection and the application of the matrix appears to have been applied in a very different manner between the two of them, as recorded in paragraphs 26 and later.
30. The company does not appear to have been involved in any serious attempt to discuss redundancy, or consultation with a view to redundancy, with Mr Crawford in the same way as Mr Grant, and his matrix was not in any way reviewed, so that there is a very large question mark, on the Tribunal's findings, as to whether there even was a proper even-handed comparison between the two throughout the process which led to Mr Grant's dismissal.
31. Further, the Tribunal recorded substantial concerns whether the actual markings of Mr Grant's own matrix were objective and justifiable, as they said in paragraph 28, "even as double-checked by Mr Sullivan". In particular, we refer to what they said in paragraphs 18 and 19 about the apparently unexplained low marks for Product Knowledge and Performance against Objectives which, on the Tribunal's own findings, plainly raised another very substantial question mark about whether they could be objectively justified as reasonable.
32. Further, those defects did, as is apparent on the Tribunal's findings, remain throughout uncorrected. They were actual substantive defects in the application of the selection process and they remained unaltered as a result of any consultation process and in the appeal process; even though it is quite right to say, as Mr Dovar did, that insofar as the defect was based on the possibility of bias on the part of Mr Gibson, that possibility may of course have receded since the same bias was not shown to have been shared by the members of the appeal panel or the Chief Executive. But the fact remains that, even though the bias may have been of less importance at the appeal stage, the objective concerns which the Tribunal expressed about the actual marking and selection process remained uncorrected.
33. In addition, it appears to us that the Tribunal's decision, referring in paragraph 30 and 31 to what "might have been the case" if the Applicant had been marked in a more favourable way, embodies a clear misdirection in law since the question the Tribunal had initially to determine was whether the process as actually applied to the Applicant was fair or unfair; and only after that question had been determined would any question arise whether the same result would have been reached in any event had a fair process been applied.
34. In the light of those points we have had to conclude that, in the absence of clear findings made by the Tribunal as to the objective reasonableness of the markings and of the consequent decision to dismiss Mr Grant rather than Mr Crawford (and nowhere in the Tribunal's decision do we find clear findings on those crucial issues) the Tribunal's overall conclusion that the dismissal of Mr Grant for redundancy was nevertheless fair, was not a sustainable conclusion and we therefore allow the appeal to that extent and set the Tribunal's decision aside.
35. That leads on to us having to consider how the case should now best be dealt with in the interests of all the parties. Ms Ivimy invited us to make our own finding that Mr Grant's dismissal had been unfair and remit the case to the Tribunal merely for consideration of the appropriate remedy by way of compensation which would follow from that finding. Mr Dovar, on the other hand, submitted that the right course would be to remit the entire case for a complete re-hearing of all issues about whether the dismissal had been unfair and whether the process had been correctly carried out.
36. We find that question difficult. We are conscious that questions of fact and degree, such as are involved in assessing the reasonableness of an employer's actions, are generally for the Employment Tribunal and not for the Appeal Tribunal to determine, because the Employment Tribunal is the one with the most direct hands-on experience of such questions and is the Tribunal which hears and sees the evidence itself.
37. Nevertheless, it is also the case that where there is sufficient material before the Appeal Tribunal to determine what the answer to such questions should be it will do so; and we have particularly in mind that to do so, if we are able, will minimise the expense and delay to both parties involved in a rehearing so that a final resolution in the case, proportionate to what is involved, can be achieved.
38. At the end of the day, relying in particular on the experience of the two industrial members of this Appeal Tribunal panel, we have concluded that it is right to reach our own conclusions on the issue of unfairness. That experience leaves my two colleagues, in particular, in no real doubt that there were material aspects of the selection process, as applied to Mr Grant in this case, which, on the Tribunal's findings (even accepting that those were less than definitive in some respects) did make this dismissal for redundancy unreasonable in terms of section 98 (4) of the Employment Rights Act 1996.
39. In particular, that is so for three reasons. First, the mark for – Performance – which, on the Tribunal's findings in paragraph 19, was, we consider, outside the band of reasonableness for a reasonable employer, there being no evidence to support the low mark given. Second, and similarly – Product Knowledge – again, as the Tribunal found, there being no evidence to support the mark of only 2 given for that as recorded in paragraph 27. Third, there was the failure to carry out a proper comparative exercise between Mr Crawford and Mr Grant, as recorded by the Tribunal in paragraph 26.
40. For those three reasons, taken together in the context of the facts we have outlined, we have been satisfied that it was outside the band of a reasonable process for an employer to have selected Mr Grant in preference to Mr Crawford for redundancy on that basis.
41. Those defects were, all of them, left unremedied by the consultation and appeal process, so that we see no ground for doing as the Tribunal did, and holding that, despite those defects in the selection, they could be disregarded and a finding that the overall process was fair nevertheless made.
42. We consider, in this context, that there is a distinction to be drawn between the selection being based on unfair and objectively unjustified grounds, which is the case here, (those being as a matter of substance, left unremedied because the marks and the application of the process the Tribunal found to have been defective were never altered) and, for example, cases such as a lack of opportunity for discussion and consultation on such matters as alternatives to redundancy, which can, of course, be much more readily remedied by full consultation and a re-hearing and re-consideration process taking place later on. But in any case the validity of a later appeal process to correct earlier defects does depend on the correction having actually taken place, and on the Tribunal's findings that was not the case with the defects to which we have referred.
43. On the basis, therefore, of those firm conclusions, in particular by the industrially-experienced members, we have to conclude that Mr Grant's dismissal for redundancy, in the way it was carried out in this particular case, was unfair and we so hold.
44. We therefore simply remit all questions of remedy and compensation to the same Tribunal to determine on the basis of that finding. For this purpose we direct the Tribunal that compensation is to be entirely at large, and it is a matter for them to determine any compensatory award under section 123 of the Employment Rights Act 1996. Specifically we direct them that it is therefore open both to the Applicant to contend that the result of a proper process of selection would have been his retention in the employment of the company, and, conversely, equally open to the Respondent to contend that the result would have been bound to have been his selection for redundancy after all, because that would have been the result of a proper comparison between him and Mr Crawford; and for this purpose both sides are to be at liberty to submit any further (material) evidence they have in order to support those rival contentions.