United Kingdom Employment Appeal Tribunal

Appeal No. UKEAT/0495/10/CEA

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

  At the Tribunal

  On 16 June 2011

Before

HIS HONOUR JUDGE SEROTA QC

BARONESS DRAKE OF SHEEN

DR B V FITZGERALD MBE LLD FRSA

MR T MACQUET APPELLANT

NAIADE RESORTS (UK) LTD RESPONDENT

Transcript of Proceedings

JUDGMENT

APPEARANCES

SUMMARY

UNFAIR DISMISSAL – Reason for dismissal including substantial other reason

The Employment Tribunal failed to give adequate reasons for decisions that

(a) There was a redundancy situation that led to the dismissal of the Claimant.

(b) There had been, or was expected to be any diminution or cessation in the kind of work undertaken by the Claimant.

(c) Why the Claimant was placed in a redundancy pool on his own.

(d) Why the consultation process was satisfactory.

See Employment Tribunal (Constitution and Rules of Procedure Regulations) 2004, Schedule 1 (6) rule 30(6), Meek v City of Birmingham District Council [1987] IRLR 250.

Case remitted to a differently constituted Employment Tribunal.

HIS HONOUR JUDGE SEROTA QC

Introduction

1.            This is an appeal by the Claimant from the decision of the Employment Tribunal at Watford, presided over by Employment Judge Hobson who sat with lay members.  The Judgment was sent to the parties on 3 August 2010.  The Employment Tribunal found the Claimant had been dismissed by reason of redundancy but he had not been unfairly dismissed.  HHJ Birtles referred the matter to a preliminary hearing on 14 September 2010 and HHJ Richardson referred the matter to a full hearing on 16 February 2011. 

2.            I turn now to say something about the background facts, which we take largely from the decision of the Employment Tribunal and also from documents to which we have been referred in our bundles.  Naiade Resorts Limited is the parent company of the Respondent.  It operates resorts in Mauritius, the Maldives and Reunion. 

3.            The Claimant was initially employed by the Respondent’s parent company but from about 2002, when he was working from London he became employed by the Respondent.  On 20 July 2006 his most recent contract was entered into, appointing him as Marketing Communication Manager for Europe.  As we understand it he was responsible for some 85% of the group’s turnover and, in addition to being concerned with the market in Europe he was concerned with the market in North America.  He was successful at his job.  The Claimant says that his role was mainly in public relations and press related.

4.            There is no doubt that towards the end of his employment there was a degree of discomfort by the Claimant especially in relation to the Group Managing Director, Mr Hardy, and Mr Hardy, it would appear, also felt some discomfort with the work of the Claimant.  Between September and December 2007 the Claimant was in touch with other potential employers and Mr Hardy was aware of this and unhappy.  By early 2008, the Claimant felt that Mr Hardy wanted him out of the company, but nonetheless he was awarded a significant pay increase in or about March of 2008, and the Employment Tribunal was satisfied that Mr Hardy was not in fact trying to get the Claimant out of the company but simply was trying to maximise his performance.

5.            In or about October 2008 the Claimant learnt that one of his former subordinates, Ms Astrid Dalais, had been appointed to a senior post within the group.  She had been recruited on the instruction of Mr Hardy.  The Employment Tribunal - see paragraph 2.14 - found this was a management decision of Mr Hardy.  In the circumstances it was not incumbent on the Respondent to consult the Claimant about her appointment, which was made for genuine business reasons.  At this point in time the Claimant was not at risk of redundancy and there was no indication that his role was to be taken on by Ms Dalais in the view of the Employment Tribunal.

6.            The Employment Tribunal was satisfied that the recruitment of Ms Dalais was separate and independent from the subsequent decisions that were taken about the Claimant and did not trigger the Claimant’s dismissal nor undermine his position.  On 9 January 2009, and I refer to the document which we have at page 10 of our supplemental bundle, an announcement was made to management and team members of Naiade Resorts Limited about the appointment of Ms Astrid Dalais.  She was appointed as Marketing Communication Manager with effect from 1 March 2009.  Although she was to be based in Paris:

7.            In fact, and this is not referred to in the memorandum, the job description of Ms Dalais was incomplete.  If one goes to page 22 of the supplemental bundle, which is a report prepared in April 2010 in response to a grievance appeal and a further grievance from the Claimant, there is a document prepared by the Group Human Resources Manager, Mr Bertrand Piat.  Among the points he was considering was a complaint by the Claimant that his post was virtually identical with the post to which Ms Dalais had been appointed.  Monsieur Piat said that this was not the case, but he then went on to say this:

8.            It is to be inferred that it was known therefore at the time of recruitment of Ms Dalais that her job scope would encompass all aspects of communication, including PR and Press Relations in Europe, which at that point in time were the sole responsibility of the Claimant.

9.            From December 2008, there were concerns as to the effect of the economic crisis on the Respondent’s business.  At the time of Ms Dalais’ recruitment the Employment Tribunal had found there was no need for the Respondent to consult with the Claimant: see paragraph 2.15 of the decision the Employment Tribunal.  That particular finding is not the subject of challenge.

10.         It is not surprising, although the Claimant was criticised for not raising a protest or grievance when he first knew of Ms Dalais’ employment, that he did not do so, because he had no idea that it was proposed that part of her role would be in taking over part of his role, or most of his role.  Somewhat surprisingly we have not seen Ms Dalais’ job description, which may have thrown more light on what it was that she was expected to do at the time of her initial appointment.  In any event, there is no doubt that at the end of 2008 and early 2009, by reason of serious financial pressures the Respondent was downsizing its headcount, to use the jargon that one finds in this kind of case.  The Employment Tribunal noted that between 2008-09 the number of the Respondent’s employees had been reduced by 188, from 2,785 to 2,597, and that the Claimant himself had been involved in the redundancy of at least two other employees.

11.         On 27 February 2009 he was informed that he was at risk of redundancy, in response to which he issued a grievance and a number of grievance meetings then took place, both in London and in Mauritius, but his grievance and appeal were dismissed.  We have already drawn attention to what was said in relation to his role and that of Ms Dalais in the document prepared by M. Piat.  On 23 April 2009, a director wrote to Mr Macquet confirming that his position was redundant, that the Respondent had looked to see whether other vacancies existed in the business but there were no current vacancies suitable to his skills and experience, although the company would continue to look for such vacancies during the currency of the notice period.  His employment was to terminate with effect from 23 April 2009; a somewhat empty promise it may be thought to look for alternative employment during the currency of an employment that was coming to an end on the date that the letter was written, but there it is.

12.         The Claimant appealed against both the dismissal of his grievance and his dismissal, and made the point that the requirement for employees to carry out the duties he had carried out of Marketing Communications Manager, Europe, had neither diminished nor ceased.  There was no difference between his role and that of Ms Dalais’ and he should have been considered for her post.  He also then asserted that the decision to dismiss him had been made on subjective grounds as highlighted by his grievance against the Managing Director, Mr Hardy.

13.         His appeals were dismissed in July 2009 when the points he raised were rejected by Mr Harel, a Director and Chairman of the Audit Committee.  He presented his ET1 on 27 July 2009.  I pause to note here that a central feature of his claim was that the true reason for his dismissal was not redundancy but because of personal animosity towards him on the part of Mr Hardy.

14.         We turn to the decision of the Employment Tribunal.  It set out the facts as we have briefly recounted them and at paragraph 2.15, the Employment Tribunal, having read all relevant documents, grievance investigations and the Claimant’s appeal documents, was satisfied that the Respondent had followed a fair procedure with adequate consultation in relation to the Claimant’s subsequent redundancy.  It concluded that the Respondent was not obliged to include Ms Dalais in the selection pool with the Claimant and it was satisfied there was no suitable vacancy for which the Claimant could have been considered.

15.         The Employment Tribunal went on to direct itself as to the law.  It directed itself in relation to ss.98(2)(c) and 98(4)(a) of the Employment Rights Act in relation to unfair dismissal.  It directed itself by reference to the definition of redundancy in s.139 of the Employment Rights Act, and to the decisions in Safeway Stores plc v Burrell [1997] IRLR 200 and Murray v Foyle Meats Ltd [1999] IRLR 562.  It referred to the well known three stage process as relevant to the case.  It was necessary for the Employment Tribunal to ask, was the employee dismissed?  If so, had the requirements for the employer’s business for employees to carry out work of a particular kind ceased or diminished or were expected to do so?  If so, was the dismissal of the employee caused wholly or mainly by that state of affairs?  The Employment Tribunal did not specifically refer itself to the need for the fairness of the process including consultation if the dismissal was to be regarded as fair.

16.         The submissions as recorded by the Employment Tribunal reveal that the Claimant was submitting that the dismissal was a sham and there was no genuine redundancy situation and that he had been dismissed because Mr Hardy disliked him.  He did complain, clearly, of inadequate consultation, that there was no proof that the Respondent attempted to find him alternative work and that when the Respondent carried out its reorganisation rather than a redundancy programme, the Claimant should have been fairly considered for any new job; this did not happen.

17.         The Respondent submitted there was a redundancy situation because the Respondent had to cut its costs.  The consultation meetings had gone beyond what might usually have been expected.  The decision to make the Claimant redundant was reasonable, there were no alternative jobs for him and there was no obligation to consider the Claimant for Ms Dalais’ post.

18.         The Employment Tribunal concluded there was a redundancy situation by reason of the Respondent’s financial pressures.  He was not dismissed by reason of the animosity from Mr Hardy and the decision to put the Claimant at risk of redundancy was by reason of the company’s serious financial difficulties, with almost 200 jobs already cut.  His role was different to that of Ms Dalais and the Respondent was entitled to exclude her from the pool.  He was dismissed by reason of redundancy.

19.         Turning to the actual decision of the Employment Tribunal, the reasons - and we bear in mind this was a hearing that had lasted about two days - are to be found in a few short paragraphs.  At paragraph 5.1 the Employment Tribunal said:

20.         The Tribunal found the decision to put the Claimant at risk of redundancy was in reaction to and arising from the serious economic and financial downturn from which the company suffered and which resulted, as we have said, in nearly 200 jobs being made redundant.

21.         The Employment Tribunal at paragraph 5.2 went on to say:

22.         The reference there to part of a reorganisation prompted a submission to be made before the Employment Tribunal - although this was not one of the issues - that the Respondent had dismissed the Claimant if not for redundancy then for some other substantial reason.  This was a point which we are told Mr Self, who appeared below, had made to the Employment Tribunal and had made submissions upon it.  Nonetheless the point was not picked up in the decision of the Employment Tribunal and this in fact was the first that we knew of this point, having been raised below in the Tribunal. 

23.         We now turn to the points raised on appeal.  It was firstly submitted by Mr Dickason that the Employment Tribunal had not applied the s.139(1) test but had simply made a reference to serious financial pressures and had given no adequate reasons for its decision that there was a genuine redundancy situation.  S.139 of the Employment Rights Act required the Tribunal to make a finding there had been the relevant diminution or reduction in the requirement of the business to carry out work of a particular kind.  We will refer to the decision of Safeway v Burrell, to which we shall turn shortly, and it was specifically argued before us, as it had been submitted to the Employment Tribunal - see paragraph 4.1 of its decision - that the Respondent had failed to establish any diminution in its requirement for employees carrying out the type of duties performed by the Claimant.

24.         The Employment Appeal Tribunal wished to know who was responsible for marketing outside Europe and North America - that part of the world not covered by the Claimant - but counsel were not able to tell us.  It was submitted in the circumstances, so far as the question of redundancy was concerned, that the Employment Tribunal had failed to comply with rule 30(6) of the Rules of Procedure, which require it to set out its reasoning in certain respects in some detail.  Also, that it was not Meek compliant; we shall turn shortly to the decision in Meek v City of Birmingham District Council [1987] IRLR 250.  It was said the Employment Tribunal had failed to make findings in relation to the Claimant’s contention that Ms Dalais had taken over his role and had failed to explain how it had applied to the law to its relevant findings.  There was no finding of diminution of the company’s needs at the time or expected in the future, or of the kind of work for which it was thought the need had diminished, and the Employment Tribunal had not found, as Mr Self sought to allege, that this was a case where the Employment Tribunal found that the demand for marketing managers had diminished.

25.         The Claimant’s role was mainly in PR and press related.  There was no evidence of a diminution in that kind of work or the requirement for that kind of work diminishing or ceasing, or that it was expected to do so, or indeed the requirement for any particular kind of work diminishing or ceasing.  It was submitted to us by Mr Dickason that all that there was, was a feeling on the part of the Employment Tribunal that the Respondent was “feeling the pinch” at the relevant time.

26.         In relation to questions of consultation and selection, the Employment Tribunal at paragraph 2.15 had simply said that:

27.         Mr Dickason makes the obvious point that the Employment Tribunal simply has given no details as to how or why it made those particular findings.  We are not suggesting that this is a case in which there was no evidence that could possibly have justified those findings.  However, we simply do not know what they were; neither of course does the Claimant.  It is said that the Employment Tribunal made no finding about an important contention raised by the Claimant that the Respondent only consulted with him after it had made the decision to integrate his role with Ms Dalais’ new post.  In relation, therefore, to consultation and selection it was submitted that there had similarly been failure to comply with rule 30(6) and with Meek. 

28.         Similarly the Employment Tribunal had failed to explain how it had applied the law to its relevant findings.  He also made the point that the reason given for Ms Dalais not being in the pool, that is, because her job was different or more extensive than that of the Claimant, was not in fact a good reason for excluding the Claimant from the pool, and in this regard he referred us to the well known decision in Thomas & Betts Manufacturing Co Ltd v Harding [1980] IRLR 255.  Mr Dickason submitted that if we were with him and he was correct in his contentions, the complaint against the decision of the Employment Tribunal was such that, having regard to the well known authority of Sinclair Roche & Temperley v Heard & Fellows [2004] IRLR 763, it was not appropriate for this matter to be remitted to the same Employment Tribunal, but that it should be remitted for a re-hearing.

The law

29.         We will now turn to consider the relevant law.  We start by referring to Regulation 30(6) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004, Schedule 1(6):

30.         In the case of Balfour Beatty Power Network Ltd v Wilcox [2007] IRLR 63 at paragraph 25, Buxton LJ said:

“I do not doubt in future Employment Tribunals would be well advised to recite the terms of rule 30(6) and to indicate serially how their determination fulfils its requirements, if only to avoid unmeritorious appeals.  But the rule is surely intended to be a guide and not a straightjacket.  Provided it can be reasonably spelt out in the determination of the Employment Tribunal that what rule 30(6) requires has been provided by that Tribunal, then no error of law will have been committed.”

31.         We then go on to remind ourselves of what in fact was said by the Court of Appeal in Meek v City of Birmingham District Council [1987] IRLR 250.  It was held that a Tribunal decision was not to be:

“[…] an elaborate formalistic product of refined legal draftsmanship [but rather the] parties are entitled to be told why they have won or lost. There should be sufficient account of the facts and of the reasoning to enable the EAT or, on further appeal, this court to see whether any question of law arises.”  

32.         We also think we should remind ourselves of well known principles, for example in the case of UCATT v Brain [1981] ICR 542, where Donaldson LJ said that:

33.         We also have in mind the more recent statement by Elias J in ASLEF v Brady [2006] IRLR 576 at paragraph 55:

“The EAT must respect the factual findings of the employment Tribunal and should not strain to identify an error merely because it is unhappy with any factual conclusions; it should not ‘use a fine toothcomb’ to subject the reasons of the Employment Tribunal to unrealistically detailed scrutiny so as to find artificial defects; it is not necessary for the Tribunal to make findings on all matters of dispute before them nor to recount all the evidence, so that it cannot be assumed that the EAT sees all the evidence; and infelicities or even legal inaccuracies in particular sentences in the decision will not render the decision itself defective if the Tribunal has essentially properly directed itself on the relevant law.”

34.         Finally, Lord Dyson in MA (Somalia) v Secretary of State for the Home Department [2010] UKSC 49, made clear that where a relevant point is not mentioned by the Tribunal the court should be slow to infer it has not been taken into account.

35.         So far as redundancy is concerned, we have in mind s.139 of the Employment Rights Act:

36.         In subsection (6) the terms “cease and diminish” were defined as meaning “cease and diminish are either permanently or temporally and for whatever reason”.

37.         In the Burrell case to which we have referred, HHJ Peter Clark at paragraph 24, had said that:

38.         HHJ Clark went on to refer to a number of authorities which perhaps we need not refer to.  At paragraph 70 he said this in a passage to which our attention has been drawn by both counsel:

“There may be a number of underlying causes for leading to a true redundancy situation; our stage 2.  There may be a need for economies; a reorganisation in the interests of efficiency; a reduction in production requirements; unilateral changes in the employees’ terms and conditions of employment.  None of these factors are themselves determinative of the stage 2 question.  The only question to be asked is; was there a diminution/cessation in the employer’s requirements for employees to carry out work of a particular kind, or an expectation of such cessation/diminution in the future?  […] Our approach was consistent with the decision of the Court of Appeal in Murphy v Epsom College [1985] ICR 80.  There, the applicant was one of two plumbers employed by a school.  His work consisted mainly of general plumbing work.  The employers decided to employ a heating technician to maintain their improved heating system.  They then decided to dismiss one of the two plumbers and selected the employee for dismissal.  The Court of Appeal upheld the majority view of the Industrial Tribunal that the decision for dismissal was redundancy.”

39.         The case is distinguishable on the facts, because that was a case of a changed job requirement with different skills that rendered the Claimant in that case redundant.  On the issue of fairness we have in mind the judgment of Glidewell LJ, referred to by the Employment Tribunal, in R v British Coal Corporation, ex Parte Price and Ors [1994] IRLS 72 page 75.  Fair consultation means consultation when the proposal is still at a formative stage, adequate information with which to respond, adequate time in which to respond, conscientious consideration by an authority in response to consultation.  The process of selection and consultation must be fair and reasonable and as much notice as possible of any possible redundancy should be given.  We do not need to cite authorities for those propositions.

40.         Now we have referred to the Claimant’s submissions and we have referred to the law.  It is now necessary for us briefly to turn to the submissions that were made by the Respondent.  Mr Self has submitted to us that the Employment Tribunal made sufficient findings of financial difficulties and staff reductions, and that was sufficient for the Employment Tribunal to conclude the need for the Claimant to carry out work of “that particular kind” had been reduced.  The financial position of the company led to the conclusion that a reduction was needed in the number of marketing executives.  Accordingly there was a redundancy situation.  He referred to the Burrell case, which we have now cited, as saying that it pointed to various signposts of a possible redundancy situation, even if they were not the redundancy situation themselves.  He submitted that when, in paragraph 5.1 of its decision, the Employment Tribunal referred to the Respondent being faced with serious financial pressures and there was indeed a genuine redundancy situation, the Employment Tribunal was simply using this as a shorthand way of saying that the requirement in s.139 had been met, namely that the requirements of the business to carry out work of a particular kind had ceased or diminished or were expected to cease or diminish, although this was not clearly set out by the Employment Tribunal it was a reference to a genuine redundancy situation and it was a shorthand reference to this obligation.

41.         In relation to consultation and selection the Employment Tribunal, it was submitted, had made sufficient findings in relation to Ms Dalais’ appointment; that adequate consultation had taken place once the decision had been taken that the Claimant should be placed at risk of redundancy; there was no unfair selection because Ms Dalais’ role was quite different from his.  She had worldwide responsibilities and was senior to the Claimant.  She had a strategic role, he did not. 

42.         Mr Self submitted to us that if we were against him this case should be remitted for further consideration by the same Employment Tribunal and pointed out that the Respondent’s witnesses were all in Mauritius, and there was therefore the added expense and inconvenience of bringing them to England again for a further Tribunal. 

43.         We now turn to our conclusions.  We have come to the conclusion that the criticisms made of the decision of the Employment Tribunal have been made out.  We are always reluctant to find the decision of an Employment Tribunal should be overturned because of inadequate reasons and we have in mind that passages that we have cited earlier; that it is not appropriate to go through a decision with a fine toothcomb; that where a relevant point is not expressly mentioned by the Tribunal we should be slow to infer it has not been taken into account.  However, so far as redundancies are concerned, the reference is simply to serious financial pressures.  There are no adequate reasons to explain that there was a genuine redundancy situation as provided for in s.139.  There has been no specific finding about any diminution or reduction in the Respondent’s needs, either at the time, or that was expected in the future, or any identification of a kind of work for which the needs had diminished. 

44.         The Employment Tribunal, we are quite satisfied, does not appear to have found that the demand for marketing managers had diminished.  The Claimant’s role, to which we have already referred to, was mainly public relations and press related.  There was no evidence that we have seen of the diminution of that kind of work; either that it had diminished or ceased or was expected to do so, nor any other particular kind of work.  As Mr Dickason put it to us, all we have is the Employment Tribunal describing the company feeling the pinch at the relevant time. 

45.         We regretfully come to the conclusion that the reasoning of the Employment Tribunal in relation to redundancy is not compliant with rule 30(6) and we are unable to spell out from other parts of the Judgment that it has complied with rule 30(6).  Further, in our opinion, the Judgment is not compliant with Meek.

46.         So far as selection is concerned, our views are very much as they are in relation to redundancy, but we also point at that the fact that Ms Dalais’ job was different to that of the Claimant did not mean that she was disqualified from going into the same pool.  There was no clear finding as to why she could not have been considered in the same pool as the Claimant, other than the fact that her job was different.  There was no apparent consideration of the fact that the Claimant was put on notice of redundancy even before Ms Dalais had started work.  The Claimant was criticised by the Respondent for not raising the issue of his post being subsumed partly or wholly in that of Ms Dalais’ when he first learnt of her employment.  However, initially, the Claimant had no idea as to the scope of her employment as shown at page 22 of the supplemental bundle.  When he was first told of the employment on 21 October her role was not described in the terms that were subsequently disclosed at supplemental bundle page 22.  Again, in our opinion, so far as selection for redundancy is concerned there has not been a compliance with rule 30(6) and the Judgment is not Meek compliant. 

47.         So far as consultation is concerned, the Employment Tribunal made a clear finding that it was compliant.  The Respondent had submitted in fact that it was more than compliant.  The Employment Tribunal did not, however, deal with the Claimant’s contention that he was only consulted after the decision had been made to integrate his role with that of Ms Dalais, but the Employment Tribunal’s decision wholly fails to explain what was appropriate about the consultation; of what nature the consultation should have been; when it should have taken place and what actually had been achieved; and was it reasonable in the circumstances to consult with the Claimant only at the end of February if a decision had already been taken before the Claimant was informed of possible redundancy as to the role to be played by Ms Dalais.  Again, in our opinion, this part of the decision fails to pass the test of rule 30(6) and of Meek.

48.         We have given anxious consideration as to how to deal with the case once we have allowed the appeal as we do.  We very much have in mind the additional expense to the Respondent of a re-hearing with it having to bring over witnesses from Mauritius.  Unfortunately, we have concluded that the errors of the Employment Tribunal in this case are such that it would be inappropriate - and we have, as we have said, in mind, the Sinclair Roche & Temperley case - and we feel it appropriate therefore to remit this matter, albeit with reluctance, for a re-hearing before a newly constituted Employment Tribunal.

49.         Before I conclude there are two matters.  Firstly, as this is an extempore Judgment, if there are any obvious errors or omissions I will invite counsel to draw them to my attention now.  Secondly, we would all like to express our gratitude to counsel for their very helpful written and oral submissions.

50.         The Order we make is that this matter is remitted to be reheard by a differently constituted Employment Tribunal in accordance with the terms of this Judgment.