United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR RICHARD LEIPER (of Counsel) Instructed by: Messrs Capsticks Solicitors 77-83 Upper Richmond Road Putney London SW15 2TT
For the Respondent	MS SUZANNE McKIE (of Counsel) Instructed by: Messrs Doyle Clayton Solicitors Cannongate House 62-64 Cannon Street London EC4N 6AE


 


SUMMARY

Redundancy – Suitable alternative employment

Redundancy offer of suitable alternative employment made – whether the Claimant's refusal was unreasonable. Whether permissible in answering that question for Employment Tribunal to take into account, as a material factor, the degree of suitability of the new post.

HIS HONOUR JUDGE PETER CLARK

1. The issue in this claim brought by Ms Ward, the Claimant, against her former employer, Commission for Healthcare Audit and Inspection, the Respondent, before the London (Central) Employment Tribunal was whether the Claimant was entitled to a redundancy payment, specifically whether the Respondent had made an offer of suitable alternative employment which the Claimant had unreasonably refused, thus depriving her of what would have been her statutory entitlement to a redundancy payment by virtue of section 141 of the Employment Rights Act 1996.
2. By a judgment with reasons promulgated on 20 September 2007, the Tribunal found (a) that the Respondent had made an offer of suitable alternative employment to the Claimant thus satisfying the requirements of section 141(3) but that (b) the Claimant had not unreasonably refused that offer, (section 141(2)). Accordingly she was entitled to a statutory redundancy payment in the agreed sum of £2,175. That finding has wider implications in the context of the Claimant's contractual entitlements on dismissal by reason of redundancy, and the Respondent appeals against the Tribunal's judgment.
3. There is no cross appeal by the Claimant against the finding that the Respondent made an offer of suitable alternative employment.

Background

4. The Claimant commenced employment with the Respondent or its predecessor on 12 February 2001. In April 2005 she was appointed Head of Resourcing, Scheduling and New Business in the Operations Group (the old post) at a salary of just under £80,000 per annum.
5. In a restructuring exercise commenced in May 2006 the Claimant's role was identified for deletion. The Respondent's redundancy and redeployment policy was engaged. The Claimant had been involved in and had survived an earlier restructuring exercise which ended in November 2004.
6. As a result, the Tribunal found (reasons paragraph 9) the Claimant was fairly disillusioned with the process and she raised a formal grievance on 1 September 2006 concerning the redeployment process.
7. The Respondent identified two potential roles for the Claimant: Head of Planning, Business Management and Performance (the new post) and Head of Independent Healthcare. The Claimant did not consider the new post to be suitable for her (having drafted the job description for the post) on four grounds (1) status: her team would be reduced from 28 to 7 staff members and her budget would be cut from £2.9 million to £1.5 million; (2) job content and experience: the new post she perceived to be more "inward looking" than her old post; (3) future job prospects, and (4) job security.

The Tribunal Decision

8. Having set out in careful detail the events which followed, including three offers made to the Claimant relating to the new post, the Tribunal reached the following principal conclusions: (1) the new post did not involve any loss of status nor did it impact adversely on her future job prospects. Whilst there was a material difference in job content between the old and new posts, the Tribunal was satisfied, on balance, that the new post was suitable for the Claimant although clearly not ideal for her. They added at paragraph 29 of their reasons:

"Although the statute provides only for "suitability", there are clearly differing degrees of suitability. The fact that the suitability of this role was marginal rather than overwhelming may properly impact on the reasonableness or otherwise of the Claimant's refusal of it."

(2) the third offer made to the Claimant in January 2007 came with the clarification missing from the two earlier offers. The Tribunal's reasoning on the issue of whether the Claimant's refusal of the last offer was reasonable is set out at paragraph 33 where they say:

"The Tribunal's task is to judge the reasonableness of the Claimant's refusal at the time of the offer and its rejection. Whilst being careful not to conflate the test in section 141 with that of a constructive unfair dismissal, the surrounding circumstances of the offer and the parties' relationship are relevant to the reasonableness of the Claimant's refusal. The Tribunal questioned Ms Walker [Chief Executive of the Respondent] as to whether she felt that relations between the Claimant and Ms Lobley could have been restored to enable them to work together. She was confident they could have been. The Claimant had become so disillusioned with the re-organisation process that she made the very serious allegation that Ms Lobley was fabricating evidence to discredit her and that the Respondent was only offering discussions about the alternative role to improve its position in subsequent proceedings (which was not the case). Some of this disillusionment was understandable - in particular the fact that she was expecting to be able to have a full and frank discussion about the nature of the role on 17^th October but was told that this discussion could not take place on legal advice, but that a response would be forthcoming at a later date. The Claimant never got a substantive response. Since the Claimant did not receive Ms Lobley's letter of 7^th December, she was not aware that Ms Lobley had firstly, offered to engage her in discussions about the alternative role and, secondly, informed her of the fact that the role was being externally advertised. From the Claimant's perspective up until 19^th January, no-one appeared willing to talk to her about the role she was being offered and no-one had had the courtesy to inform her that the role was being externally advertised. Given that she had been effectively on garden leave (at her own request) for 2 months, her feelings of alienation from the Respondent's organisation were compounded by not receiving this letter. By the time she got the discussion she was seeking in the course of the appeal hearing, her feelings were entrenched, and to some extent, understandably so. The clarification she had sought about the job had come too late in the context of her having been under the shadow of the re-organisation for some 8 months. For the combination of reasons outlined above and having regard to the fact that the role was only suitable for her "on balance", the Tribunal is not satisfied that the Respondent has proved that the Claimant acted unreasonably in her refusal of the offer when it was made on the 19^th January 2007. In the circumstances, therefore, the Claimant is entitled to a redundancy payment from the Respondent in the agreed sum of £2,175."

The Appeal

9. In advancing the Respondent's appeal before us Mr Leiper takes two points (1) that the Tribunal erred in taking into account when considering the refusal question the degree of suitability of the new post, and (2) perversity.

Relative Suitability

10. I considered the unreasonable refusal provision in section 141(2) in Hudson v George Harrison Ltd EAT/0571/02, 5 December 2002 unreported see paragraphs 7 to 12. We there rejected an argument that unreasonable in section 141(2) imported of the range of reasonable responses test applicable to fairness under section 98(4) of the Act and respectfully endorsed the analysis of Phillips J in Executors of Everest v Cox [1980] ICR 415 418 C-D where he said:

"The employee's behaviour and conduct must be judged, looking at it from her point of view, on the basis of the facts as they appeared, or ought reasonably to have appeared, to her at the time the decision had to be made."

The onus of proving that the Claimant's refusal of an offer of suitable alternative employment was unreasonable lies on the Respondent, Jones v Aston Cabinet Co Ltd [1973] ICR 292.

11. Further, Ms McKie has referred us to the judgment of the EAT in Cambridge & District Co-operative Society Ltd v Ruse [1993] IRLR 156, (Judge Hague QC presiding). In that case the Employment Tribunal found that an offer of alternative employment was suitable for the Claimant but, by a majority, held that his refusal of that offer was not unreasonable on the basis of the Claimant's perceived loss of status.
12. In upholding that decision on appeal the EAT rejected a submission advanced on behalf of the employer in these terms (paragraph 17):

"Mr Lynch submitted that this finding was inconsistent with the unanimous finding that the offer was of suitable alternative employment. Once an objective finding of that kind has been made, the employee (said Mr Lynch) cannot rely on his subjective perception of that employment to refuse the offer; for if it is suitable, it will only be reasonable for the employee to refuse on personal grounds which relate to other factors."

Mr Lynch appeared on behalf of the Appellant employer.

13. At paragraph 18 the EAT said:

"In our judgment, there is nothing in s.82(5) [of the Employment Protection Consolidation Act 1978 now section 141(2) and (3) of the 1996 Act] (or the equivalent provisions of s.82(6)) to restrict the employee's reasons to factors not connected with the employment itself, and nothing in the reported cases cited to us to that effect. We consider that, as a matter of law, it is possible for the employee reasonably to refuse an objectively suitable offer on the ground of his personal perception of the employment offered. The question of the reasonableness of the refusal is a matter of fact for the Tribunal."

14. The law as we have set it out is not, we understand it, in dispute between counsel appearing before us.
15. Mr Leiper submits that in taking into account their finding, (reasons paragraph 29) that the suitability of the new post offered to this Claimant was marginal and that this may impact on the reasonableness or otherwise of her refusal in finding that the refusal was not unreasonable, at paragraph 33, the Tribunal took a wrong approach in law. He contends that the first question under section 141(3)(b) is whether or not the offer is objectively suitable. If it is found to be suitable that is the end of the suitability question. It is not open to the Tribunal to return to the degree of suitability when considering the second question, whether the Respondent has shown that, viewed subjectively, the Claimant's refusal of that offer was unreasonable.
16. Thus the proposition, elegantly framed by Mr Leiper in discussion, amounts to this; the Tribunal's objective assessment as to suitability has no bearing on the employee's subjective view of the offer leading to her refusal. That is not to say that factors relevant to suitability may not also be relevant at the second, reasonableness of refusal, stage, it is the Tribunal's objective assessment at the first stage which is irrelevant at the second stage.
17. In response, Ms McKie espouses a more inclusive approach to the two-stage test. Whilst recognising the two quite separate questions, the first objective, the second subjective, with which the Tribunal is concerned, she submits that, confining herself to the particular facts of the instant case whereas the Tribunal found the job content of the new post differed to the extent of 60 per cent from the old post; where the Claimant was to some extent understandably disillusioned with the reorganisation process and where the first two offers of alternative employment had been marked by a lack of clarity, in deciding whether or not refusal was unreasonable it was permissible for the Tribunal to take into account their view that the new post was only marginally, rather than plainly, suitable for the Claimant.
18. Attractively as Mr Leiper puts the critical point in this appeal, we prefer the approach advanced by Ms McKie, which accords with our reading of the reasoning of the Tribunal. It seems to us that in an appropriate case where the new job offer is overwhelmingly suitable it may be a little easier for the employer to show that a refusal by the employee is unreasonable. It is part of the balancing exercise which the Tribunal is charged to carry out. In these circumstances, we reject the first ground of appeal.

Perversity

19. It is common ground that the bar is set high for Appellants relying on this ground of appeal, Yeboah v Crofton [2002] IRLR 634 per Mummery LJ, paragraphs 92 to 95. Mr Leiper points to the Tribunal's findings, paragraphs 14 to 16, that when the first relevant offer was made by the Respondent on 11 October 2006 the Claimant's attitude was that there was no future for her with the Respondent. On 20 October 2006 she said that she could not be persuaded to take the new post and would fight it at the ET, a course she repeated at the end of that month. She then began a three-month notice period on garden leave at her request.
20. In these circumstances, he submits, the Claimant had closed her mind to accepting the new post. Her refusal was self evidently unreasonable. We disagree. In our judgment, Ms McKie is correct in submitting that an overwhelming case for a finding on appeal that the Tribunal's conclusion was legally perverse has not been made out.
21. The question for the Employment Tribunal was whether, subjectively, the Claimant's refusal was unreasonable. That is not determined by the position which she took at an early stage particularly where she pursued two separate grievances. The Tribunal, in our judgment, took the whole factual picture into account in reaching a conclusion which, in our view, was a permissible one.

Disposal

22. For these reasons, the appeal fails and is dismissed.