United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR DANIEL BARNETT (of Counsel) Instructed by: British Printing Industry Federation South Western Business Centre Lindsey House Oaklands Business Park Yale Bristol Bs37 5NA
For (1) Mr A Fairbrother (2) Mr P Irvine (3) Mr J Irvine (4) Mr D Simmons (5) Mr A Smith	MR OLIVER SEGAL (of Counsel) Instructed by: Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW
For Mr P Vieyra	MR P VIEYRA (The Sixth Respondent in Person)

SUMMARY

Redundancy

Applicants were selected for redundancy. Respondent (Appellant) asserted the Tribunal erred in not applying 'reasonable band of response' test. Held: it did. Appeal dismissed.

HIS HONOUR JUDGE J R REID QC

1. This is an appeal from a Decision of an Employment Tribunal, held at London Central. There was a hearing over a period of seven days, plus a day's deliberation in chambers. The hearing started on 2 October 2003. The Decision was promulgated on 15 July 2004. The delay, although it is not a ground of appeal, has clearly caused some problems in the detail of the Decision. It is unfortunate that the matter took so long, but no doubt it was unavoidable for administrative reasons.
2. By its Decision, the Tribunal held unanimously that the six Applicants were unfairly dismissed, contrary to section 98(4) of the Employment Rights Act 1996. They went on to deal with a trades union point, which is not the subject of the appeal. The Respondent below appeals against the Decision in relation to unfair dismissal. This is a case which relates to the selection of the Applicants for redundancy.
3. The background facts can be taken fairly shortly. The Applicants worked for the Respondent, which was an operation with four departments: Administration, Pre-press, Printing and Finishing. The Applicants all worked in the Finishing Department; their work involved stitching, folding, guillotining and, after 1998 (as the result of a Perfect Binding machine) what was described as perfect binding. They had been trained to work on the Perfect Binding machine in 1998, as they were the most experienced members of the Finishing Department. In fact, they worked only part-time on that machine; the Tribunal's view was that the Applicants spent approximately one third of their time doing perfect binding work, and that two thirds of their time was engaged in what might be described as the ordinary work of the Finishing Department.
4. In March 2002 the Board became concerned at the profitability of the Company, and in April 2002 cost-cutting measures were discussed at board level, in part in an effort to ensure that the number of redundancies was kept to a minimum. The result was a two-stage redundancy programme; phase one, which did not affect these Applicants, was completed by 17 July, and there were a total of four redundancies from the Respondent. Consultations were then to take place through the Works Council, relating to the Printing and Finishing Departments. Parallel with this, as a result of a ballot in about July 2002, recognition for a union was declared.
5. Subsequently on 1 October 2002, there was redundancy meeting at which a representative of the Respondent stated that the Company was still losing money, and that proposals to make redundant folders and print machine assistants were unworkable without a change of shift-pattern. This was something to which the Union would not agree and the management representative expressed his conclusions that there was little alternative other than to discontinue perfect binding. Following that meeting, the employer's representative wrote a letter in which he said:

"Having carefully considered the matter, it is clear that the redundancies that had been proposed are not final without the accompanying changes to shift arrangements, which cannot now proceed for several weeks, or possibly months. In the meantime, the company still needs to address the continuing weekly losses…"

He then went on and talked about "eight redundancies among our binding staff". The Tribunal took the view that the Applicants received the letter and took the reference to "eight redundancies among our binding staff" as a reference to the Finishing Department as a whole, and not simply to those working on the perfect binding machine.

6. Consultations followed. The employer took legal advice. In the end, the pool was determined as simply those who worked on the Perfect Binding machine, as a result of which the six Applicants were made redundant. The Tribunal concluded, on the background of those facts, at paragraphs 14-17 of their Decision, in these terms:

"The Law

14 We have considered the cases of Williams v Compair Maxam Ltd [1982] IRLR 83 and the well-know guidelines therein, Blundell Permoglaze Ltd v O'Hagen EAT 540/84 and Polkey v AE Dayton Services Limited [1988] ICR 142 HL We apply also the provisions of Sections 139(1), 98(1), (2) and (4) Employment Rights Act 1996.

Conclusions

15 We have concluded that there was a redundancy situation pertaining at the time the Applicants were dismissed. The Respondent had to contend with a reduced income…. The perfect binding machine was an expensive piece of equipment and the decision had been taken that such work should be outsourced. There was, therefore, a diminution in the requirements for employees to carry out .work of that particular kind, section 139(1)(b)(i) or that such work had ceased.

16 Redundancy is a potentially fair reason for dismissal subject to the test of reasonableness under section 98(4) Employment Rights Act 1996. In applying Williams v Compair Maxam, in particular, the question of the pool, we have concluded that the Applicants were the most experienced workers in the Finishing Department. They covered all aspects of finishing work. They had been, in 1998, encouraged to train on the perfect binding machine. Their time spent on that machine was not exclusive but amounted to around one third. Although they were the only ones trained and allowed to work on the perfect binding machine, two thirds of their time was spent on other aspects of finishing work. Those who worked in the Finishing Department should have been part of the pool and that it had been unfairly restricted to the perfect binders…. They were multi-skilled and around a third of their time was spent on perfect binding work. As already stated these Applicants ought to have been in the wider pool involving those in the Finishing Department as the letter of 1 October 2002 had envisaged. Furthermore, the Respondent did not invite any volunteers for redundancy [That statement is accepted to have been inaccurate and is the subject of the second of the two grounds of appeal before us]. The Applicants' dismissals we have decided, unanimously, were substantively unfair.

17 Bearing in mind their lengths of service and the level of their skill and experience, we have further concluded that had a proper redundancy exercise been conducted that they were most likely to have remained in employment with the Respondent."

7. The Notice of Appeal takes, essentially, two points. The first is that the Employment Tribunal wrongly substituted its view as to the correct pool for selection for redundancy for that of the employer, and that it failed to consider whether the pool in fact used was a reasonable pool, as it should have done; and, secondly, that the finding that the Respondent had not invited any volunteers for redundancy was perverse. The argument before us has centred almost entirely on the first of those two grounds.
8. On behalf of the Respondent below, Counsel has submitted that the question that the Tribunal ought to have asked itself was whether the Respondent acted reasonably in selecting those employees who worked on the Perfect Binding machine as the pool for redundancy, and what it in fact appears to have done is substitute its own view. In respect of that, Counsel identified two particular points in paragraph 16 of the Decision, which he said showed that he had substituted their own view. That is the sentence that I have already read – "those who worked in the Finishing Department should have been part of the pool" – and, further on in the same paragraph – "As already stated these Applicants ought to have been in the wider pool involving those in the Finishing Department". It is said that the use of the prescriptive words "should" and "ought" show that there was no recognition that there was more than one possible pool that a reasonable employer could adopt. The argument went on that the Tribunal does not recognise anywhere in its Decision that the reasonable responses test was an applicable one. Whilst accepting that the pool set out by the Tribunal, ie everybody in the Finishing Department, would have been a perfectly reasonable pool, Counsel submitted that of course there could be more than one possible reasonable pool, but there is no answer to the submission that the Tribunal substituted its own view.
9. The law so far as this area is concerned is contained, neatly enough for our purposes, in three decisions which have been cited to us. The first of those is Williams v Compare Maxam Ltd [1982] IRLR 83, which is one of the decisions to which the Tribunal referred in its Decision. There, at paragraph 18, Browne-Wilkison J, as he then was, said this:

"For the purposes of the present case there are only two relevant principles of law arising from that subsection. First, that it is not the function of the Industrial Tribunal to decide whether they would have thought it fairer to act in some other way: the question is whether the dismissal lay within the range of conduct which a reasonable employer could have adopted. The second point of law, particularly relevant in the field of dismissal for redundancy, is that the Tribunal must be satisfied that it was reasonable to dismiss each of the applicants on the grounds of redundancy. It is not enough to show simply that it was reasonable to dismiss an employee; it must be shown that the employer acted reasonably in treating redundancy 'as a sufficient reason for dismissing the employee' ie the employee complaining of dismissal."

And then later on in paragraph 19, he set out the five well-known criteria for which this case is usually cited, the third of which is:

"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."

It seems to us that those two passages taken together show that as long ago as the Williams case, now over 20 years old, the courts were recognising that the reasonable response test was applicable to the selection of the pool from which redundancies were to be drawn.

10. The two more recent cases to which we were referred were a decision in Green v Fraser [1985] IRLR 55 (the Employment Appeal Tribunal in Scotland), where, at paragraph 14, Lord MacDonald MC, the Chairman, said this:

"There is in short what has been described as a band or reasonableness and the actings of an employer will only be unfair if it is shown that they fell outwith that band. In the present case we have a classic example of a situation where tow reasonable employers might follow a different course of action."

That was in relation to a case where there was a reduction in the need for drivers, a driving-cum-mechanic was dismissed and it was held that the employer had not been unreasonable to dismiss him, rather than a mechanic-cum-(to some extent) driver.

11. The remaining decision cited to us was Blatchfords v Berger and others EAT/207/00, a decision of the Employment Appeal Tribunal, judgment delivered on 25 April 2001, in which HH Judge Clark gave the judgment, and pointed out, at paragraph 13:

"The Court of Appeal has recently reaffirmed the principle that in considering the reasonableness of dismissal under section 98(4) Employment Rights Act 1996 it is not for the Tribunal to substitute its view for that of the reasonable employer. Post Office v Foley [2000] IRLR 827. Although that case, and the conjoined appeal of HSBC Bank v Madden, was concerned with dismissal for a reason relating to conduct, the principle applies equally where the potentially fair reason for dismissal is redundancy."

And then he went on and dealt, later on in that paragraph, with the particular facts of that case, and concluded by saying that each case depends on its own facts.

12. It seems to us, therefore, that there is nothing wrong with the Appellant's (ie the Respondent below) submission of law. The difficulty that we have is that we do not think that it has been demonstrated that the Tribunal fell into the error in relation to this first question, that it is said that it did fall into. It is correct that the question the Tribunal ought to have asked itself was whether the Respondent acted reasonably in selecting those employees who worked on the Perfect Binding machine as the pool for redundancy. In our judgment it did. It seems to us that the reference to Williams v Compare Maxam suggests that the Tribunal had well in mind the particular legal guidelines; it does not, it seems to us, lie in the mouths of the Appellants to assert that the Tribunal simply referred to the case as a rubric, without paying attention to the substance of what was being decided, unless there are substantial reasons elsewhere in the body of the Decision to support that.
13. In this case, the only matters relied on were the words "should" and "ought". In our judgment, those show nothing of the sort to assist the Appellant. What they do show is that the Tribunal, having recognised the reasonable response test was the applicable one, then identified what the employer needed to have done in order to have responded reasonably. The words are not an indication that the Tribunal was stating that it, had it been in the employer's shoes, would have used a different test, and indicating what it thought what the employer ought to have done. It seems to us that the Tribunal was applying the law, as set out all those years back in the Compare Maxam case and as more recently reiterated. The Tribunal did, of course, even on the Respondent's case, demonstrate that there was a perfectly reasonable pool; but what it did beyond that was hold that that other pool was a pool which fell within the reasonable bands of response, whereas the pool in fact adopted was not a reasonable pool.
14. There were good reasons for the Tribunal coming to that conclusion. They are set out in paragraph 16 of the Decision:

(i) the Applicants were the most experienced workers;

(ii) they covered all aspects of finishing work;

(iii) it was because of their experience and ability that they had, in 1998, been encouraged to train on the perfect binding machine;

(iv) they did not spend more than one third of their time on that machine;

(v) as a corollary of that, they did, in fact, spend two thirds of their time doing the same work as other members of the Department;

(vi) they were multi-skilled.

All of those were factors which, in our judgment, unimpeachably led the Tribunal to the view that the pool that was selected was not one which was within the reasonable band for selection, and that, in so doing, the Tribunal reached a Decision which cannot properly be attacked.

15. There then follows the second of the grounds of appeal. That relates to the sentence at the end of paragraph 16 of the reasons:

"Furthermore, the Respondent did not invite any volunteers for redundancy."

It was common ground that that was an error. It was in fact something which was done: the Respondent did invite volunteers for redundancy, but the question then arises what follows from that error. It is the sort of minor error which can easily slip into a Decision when the Tribunal has to have in mind matters which have been heard, in some cases as in this, up to eight months before.

16. In our view, the key findings were those matters which I have just set out, and enumerated as numbers (i) to (vi). It is noteworthy that, in paragraph 17, the Tribunal refers to what would have happened had a proper redundancy exercise have been conducted and the fact that the Applicants would most likely have retained their employment. In our judgment, despite Mr Barnett's efforts to persuade us that the sentence was more than icing on the cake, and was a substantive part of the Decision that was not the fact. That throwaway line, it seems to us, does not even amount to icing on the cake: it is no more than a half-cherry buried in the icing. It had no effect on the Decision, and though he correctly submits that that finding was erroneous, in our judgment it had no effect on the outcome of the case. For those reasons, it is not necessary for us to take any steps in relation to that error. It follows, therefore, that we take the view that this appeal should be dismissed.