United Kingdom Employment Appeal Tribunal

Appeal No. UKEAT/0190/12/RN

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8JX

At the Tribunal

On 10 July 2012

Before

HIS HONOUR JUDGE DAVID RICHARDSON

MR D J JENKINS OBE

MR J R RIVERS CBE

WREXHAM GOLF CO LTD APPELLANT

MR G R INGHAM RESPONDENT

Transcript of Proceedings

JUDGMENT

APPEARANCES

SUMMARY

UNFAIR DISMISSAL – Reasonableness of dismissal

The employer, a Club, needed to make savings and decided that the role of club steward was no longer required.  It dismissed the employee, the club steward, for redundancy.  The Tribunal found that the dismissal was unfair, in particular because “no consideration was given to the possibility of establishing a pool from which any redundancies could be made”.  Held: section 98(4) required the Tribunal to consider whether it was reasonable for the club to focus upon the club steward as the employee potentially to be made redundant. Appeal allowed.  Cases considered: Taymech Ltd v Ryan [1994] UKEAT/663/94, Capita Hartshead v Byard [2012] UKEAT/0445/11, and Halpin v Sandpiper Books Ltd [2012] UKEAT/0171/11.

HIS HONOUR JUDGE DAVID RICHARDSON

1.            This is an appeal by Wrexham Golf Club Limited (“the Club”) against a judgment of the Employment Tribunal sitting in Prestatyn (Employment Judge Evans presiding) dated 21 December 2011.  By its judgment the Tribunal upheld a claim of unfair dismissal brought by Mr Graham Ingham.

2.            Mr Ingham was employed by the Club as Resident Club Steward from 1 June 2005 until 21 March 2011 when his employment was terminated on the grounds of redundancy.  His responsibilities included management of the bar area, cashing up and locking up at the end of the evening and taking sole responsibility of the Clubhouse area over the weekend.  He was one of 11 employees at the Club.  The senior employee was the Club’s Secretary, Mr West.

3.            In October 2010 the Club’s Board took a decision that money needed to be saved.  A sub-group was appointed to look at all aspects of bar and catering facilities, including staff costs.  Its unanimous view was that the role of club steward was no longer required.  The strategy proposed was that the bar and catering aspects of the Club should effectively become one operation.  The Steward’s activities would be undertaken by other members of staff.

4.            At a board meeting on 9 November 2010 it was agreed that the recommendation should be acted on, and resolved that Mr Ingham should be consulted and advised that the role of steward was at risk should alternative measures not be identified.

5.            On 10 November Mr West met Mr Ingham, informed him about the sub-group’s conclusion, and told him that a period of consultation was taking place in order to seek suggestions or ideas from him as to how the potential redundancy could be avoided. He confirmed the position in writing on 11 November.  A further meeting took place on 26 November.  Mr Ingham was offered 11 hours bar work as an alternative to his position as club steward, but only on a 4 week trial.  Mr Ingham was told there would be a board meeting on 29 November.

6.            On 29 November Mr Ingham wrote a letter to the Board of Directors putting forward various points in his favour.  He said that it was not appropriate to distribute some parts of his role to other members of staff, since they were less experienced in the licensed trade.  He said the bar had operated at a profit, whereas the catering facilities operated at a loss; he questioned why there should be a redundancy in the bar, when other avenues did not return a profit.  He queried whether other areas within the Club had been considered for savings – such as catering, administration, greens and cleaning contracts.  He referred to two members of the “waiting on staff” and questioned whether savings could be made there.

7.            In a letter dated 1 December 2010 Mr West invited Mr Ingham to a meeting on 8 December.  He was told that his position had been selected at risk of redundancy; that no final decision had been taken and he would have a final opportunity to put forward comments, concerns or counter-proposals.  The meeting was postponed until 20 December.  On 22 December Mr West wrote to Mr Ingham to inform him that it had been decided to make him redundant. An appeal was heard on 13 January 2011 and rejected.

8.            The Tribunal noted that it was accepted on behalf of Mr Ingham that the dismissal was for redundancy.  It referred to section 98(4) of the Employment Rights Act 1996 and set out, in paragraphs 13-20 of its reasons, a legal self-direction in impeccable terms.

9.            The Tribunal then set out detailed findings of fact.  In the course of doing so it made a finding that by 10 November 2010 the Club had decided to terminate the role of club steward and with it the employment of Mr Ingham and a finding critical of the Club’s response to Mr Ingham’s letter dated 29 November 2010.

10.         The Tribunal stated a conclusion that the Club “did not act within the range of reasonable responses” in choosing to make Mr Ingham redundant (paragraph 50).  It gave, in essence, the following reasons for its conclusion.

11.         Firstly, the Tribunal was critical of the Club for failing to consider the possibility of establishing any kind of pool. The Tribunal said:

12.         Similar reasoning was repeated in paragraph 59 and in paragraph 62 of the Tribunal’s reasons.

13.         Secondly, the Tribunal was critical of the information provided to Mr Ingham and the consultation with him.  At least in part this followed from its conclusion that the Club ought to have considered a pool: see the paragraphs which we have quoted.  The Tribunal however had wider criticisms of information and consultation, set out in paragraphs 56 and 57.

14.         Thirdly, the Tribunal had a procedural criticism.  The sub-group which had originally met and considered the question of making savings in October included both Mr West (who was responsible for the dismissal) and Mr Brunyee (who was a member of the appeal panel).  The Tribunal said that the size of the Club’s undertaking ought to have enabled it to ensure that Board members other than those on the sub-group, were appointed to deal with the dismissal and appeal (paragraph 58).

15.         On behalf of the Club Mr Sam Healy submits that the Tribunal’s conclusion on the question of the pool was erroneous in law. He submitted that it did not follow that, because the Club did not consider the question of a pool, the decision to make Mr Ingham redundant was necessarily outside the range of reasonable responses.  There is no inherent reason why there should not be a pool of one.  There must be cases where it is so obvious which person should be selected for redundancy that it is reasonable for an employer not to consider other employees for redundancy at the same time.  In this case the Club’s sub-group had decided that the role of Club Steward was potentially redundant; Mr Ingham was the only person in the role of Club Steward; his role may have overlapped with bar staff but it was a discrete role, therefore it could not possibly be described as unreasonable for the Club to consider him on his own for redundancy.  The Tribunal must have failed to apply the “band of reasonable responses” test to the question of the pool; and it may have taken an over-legalistic approach to some words of Mummery J in Taymech Ltd v Ryan [1994] UKEAT/663/94.  Mr Healy took us to relevant authorities of the Appeal Tribunal on the question of choosing the pool: in particular, Taymech, Capita Hartshead v Byard [2012] UKEAT/0445/11, and Halpin v Sandpiper Books Ltd [2012] UKEAT/0171/11.

16.         Further Mr Healy submitted that the Tribunal’s conclusions on the question of consultation were perverse.  The Club was a small employer which had carefully undertaken a process of consultation, keeping open in its correspondence the possibility of retaining the role of steward and making savings elsewhere, specifically stating that no final decision had been taken.  In any event he submitted that the Tribunal’s reasoning on the question of consultation was in part at least dependent upon its erroneous conclusions on the question of the pool.

17.         Mr Ingham has taken only a limited part in this appeal.  Through solicitors he has filed an answer saying that the decision of the Tribunal was correct and pointing out that there is in any event no appeal from the Tribunal’s criticisms of the procedure adopted.  He and his solicitors have written to the Appeal Tribunal to say that due to financial restrictions caused by unemployment he is unable to attend or be represented.

18.         Since it was common ground that the dismissal was by reason of redundancy, the task for the Tribunal was to apply section 98(4) of the Employment Rights Act 1996, which provides that: –

“..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.”

19.         The Appeal Tribunal’s task is quite different.  Parliament has vested in the Appeal Tribunal power only to deal with questions of law.  The Appeal Tribunal is concerned only to ensure that the Tribunal has taken its decision upon correct legal principles, giving reasons which are tenable in law.

20.         It is convenient first to consider the Tribunal’s reasoning on the question whether the dismissal was unfair by reason of the failure of the Club to consider establishing a pool rather than concentrating upon the position of Mr Ingham as bar steward.

21.         The word “pool” is not found in section 98(4) of the Employment Rights Act 1996.  But it is well known to employment lawyers and those who work in human resources.  It gives expression to a key decision which has to be made when an employer has decided that its requirements for employees to carry out work, or work of a particular kind, have ceased or diminished. Which employees will be considered for selection?  The group of employees from whom the selection will be made is often called “the pool”.  There is no rule that there must be a pool: an employer, if he has good reason for doing so, may consider a single employee for redundancy: see, for an example, Halpin v Sandpiper Books Limited at paragraphs 14-15. Thus it is sometime said that there may be a “pool of one”; a somewhat inelegant phrase representing an underlying reality.

22.         The Tribunal referred to, and may have placed particular weight upon, Taymech v Ryan.  In that case the employee was employed as a telephonist and receptionist, although she did some other general administrative work when she could.  The employer decided it could manage without a telephonist/receptionist and dismissed her.  The Tribunal, applying what was then section 57(3) of the Employment Protection (Consolidation) Act 1978, considered that the pool for selection should have included the larger group of those who did administration, not merely the employee who was telephonist/receptionist.  The Appeal Tribunal held that the Tribunal did not err in law.  Mummery J said:

23.         In Capita Hartshead v Byard the Appeal Tribunal (Silber J presiding) has recently reviewed the cases and set out the following “applicable principles where the issue in an unfair dismissal claim is whether an employee has selected a correct pool of candidates who are candidates for redundancy” (para 31):

(a) “It is not the function of the [Employment] 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” (per Browne-Wilkinson J in Williams v Compair Maxam Limited [1982] IRLR 83 [18];

(b) “[9]...the courts were recognising that the reasonable response test was applicable to the selection of the pool from which the redundancies were to be drawn” (per Judge Reid QC in Hendy Banks City Print Limited v Fairbrother and Others (UKEAT/0691/04/TM);

(c) “There is no legal requirement that a pool should be limited to employees doing the same or similar work.  The question of how the pool should be defined is primarily a matter for the employer to determine.  It would be difficult for the employee to challenge it where the employer has genuinely applied his mind [to] the problem” (per Mummery J in Taymech v Ryan [1994] EAT/663/94);

(d) The Employment Tribunal is entitled, if not obliged, to consider with care and scrutinise carefully the reasoning of the employer to determine if he has “genuinely applied” his mind to the issue of who should be in the pool for consideration for redundancy; and that

(e) [Even] if the employer has genuinely applied his mind to the issue of who should be in the pool for consideration for redundancy, then it will be difficult, but not impossible, for an employee to challenge it.”

24.         In this case we are conscious that the Tribunal has referred to section 98(4) and to the range of reasonable responses test.  We have concluded, however, that the Tribunal did not apply that test to the question whether it was reasonable to focus upon the Club Steward as the person at risk of redundancy.

25.         The Tribunal did not criticise the conclusion of the Club that the role of Club Steward should cease.  Its reasoning seems to proceed from its finding that the Club did not consider developing a wider pool of employees.  At this point the Tribunal needed to stop and ask: given the nature of the job of Club Steward, was it reasonable for the Respondent not to consider developing a wider pool of employees?  Section 98(4) requires this question to be addressed and answered.  On its face, it would seem to be within the range of reasonable responses to focus upon the holder of the role of Club Steward without also considering the other bar staff. The Tribunal does not say why it was unreasonable to do so.  This may be because the Tribunal had in mind the words of Mummery J in Taymech which we have quoted; but no judgment should be read as a statute.  There will be cases where it is reasonable to focus upon a single employee without developing a pool or even considering the development of a pool.  The question which we do not think the Tribunal really addressed was whether this was such a case.

26.         We turn then to the question whether the Tribunal was perverse in the conclusion it reached concerning consultation.  The difficulty of succeeding on a perversity appeal before the Tribunal is well known.  A perversity appeal is essentially a complaint about the Tribunal’s findings of fact.  Because Parliament has expressly provided that there is to be an appeal to the Appeal Tribunal only on a question of law, there is only the most limited scope for such an appeal: see Yeboah v Crofton (2002) IRLR 634 at para 93. 

27.         We do not think the Tribunal’s findings were perverse. 

28.         The Tribunal’s findings were, however, to a considerable extent linked to its prior finding relating to the pool.  At least in part, the Tribunal’s findings on the question of consultation must fall with its conclusions on the question of the pool.

29.         As an Appeal Tribunal we have a limited role.  We can substitute our own view that a dismissal is fair, or unfair, only if it is plain what the answer must be.  Otherwise the matter must be remitted for reconsideration.  In our judgment we cannot safely disentangle the different elements of the Tribunal’s reasoning so as to say that the dismissal must be found to be fair or unfair.

30.         It follows that the matter must be remitted for re-hearing.  Applying the criteria in Sinclair Roche Temperley v Heard [2004] IRLR 763, we consider that remission ought to be to a freshly constituted Tribunal.  The Tribunal will hear the case afresh; it is not bound by any of the conclusions of the first Tribunal – but nor is it precluded from reaching similar conclusions.  It must, however, when it addresses section 98(4) specifically consider whether it was within the range of reasonable responses for the Club, once it had decided that the role of Club Steward was to disappear, to focus upon the Club Steward as the person at risk of redundancy without developing a pool.