HIS
HONOUR JUDGE DAVID RICHARDSON
1.
By a judgment dated 16 June 2011 the
Employment Tribunal sitting in Birmingham (Employment Judge Roper presiding)
determined that Mr Geoffrey Nicholls was unfairly dismissed by Rockwell
Automation Foundation Limited (“Rockwell”). It also expressed its intention to
make what is generally known as a Polkey reduction of one third
in the amount of compensation to be awarded.
2.
On the question of unfair dismissal
itself, the Tribunal held the dismissal to be unfair for reasons related to the
way in which Mr Nicholls was marked during a redundancy process. Rockwell
challenges the Tribunal’s reasoning; and says that if the Tribunal had applied
the law correctly it would inevitably have found the dismissal to be fair.
3.
Both parties have also appealed the Polkey
finding. On behalf of Mr Nicholls it is submitted that there was no
sufficient evidential basis for the finding; Rockwell argues that the Tribunal
did not adopt a fair procedure prior to arriving at the reduction.
The background facts
4.
Rockwell’s business includes a department
for field sales engineering department. Mr Nicholls was employed by Rockwell
as a field service engineer (“FSE”) from 3 January 1989 until his dismissal on
20 August 2010. Since 2005 he had worked a 4 day week from Monday to Thursday
– although he also worked some Fridays and hours in the evenings and at
weekends.
5.
In June 2010 Rockwell wished to make cost savings in its field service
engineering department. It decided to make one redundancy among its 11 FSEs in
the UK. On 23 June it informed staff and began a redundancy process.
6.
Rockwell set out detailed redundancy criteria based on those which it
had used in the past. There were four sections, three of which required
detailed marking. The first section (10 points) only concerned current
disciplinary matters. The second (80 points) concerned performance and
included a section entitled “flexibility” to which we will return. The third
(90 points) concerned “skills/ability”. The fourth (400 points) concerned
“competency in role” and involved specific product or project skills.
7.
The marking process was carried out by one manager and checked by
another, who managed the employees on a day-to-day basis and made relatively
minor amendments to the scores. Mr Nicholls was marked the lowest with
(respectively) 275 and 265 points. The nearest candidates to him were some
distance higher. The next was marked by both managers at 300; and the next
again at 310 and 315. After that all FSEs were marked at more than 350.
8.
As we have seen, the largest section of marks was for “competency in
role”. Out of 400 Mr Nicholls received only 150/160. To a significant extent
this was because it was considered that he did not have skills with particular
products: out of 11 products, each given 20 points, he was marked with no
points for five. He received less than full scores for others. But of
particular relevance to this appeal is the scoring he received under
“flexibility”. For “readily available at short notice to undertake customer
related engineering services” he received 5 out of 20. For “applies oneself to
all product issues and undertakes tasks to resolve problems on all issues faced
whether fully skilled on product or not” he received 10 out of 20. For
“adaptable to work on customer projects to meet the project timeframes, working
hours and requirements”, he scored 5 out of 20. Under the heading
“Administration” he received 20 out of 40.
9.
The next largest section was Skills/Ability, under which he received the
middling mark of 60 out of 90, equating to satisfactory. Under the section
Performance, he received 45 out of 80. Here again there was a section headed
“flexibility”. He received only 5 points out of 20 – which equated to the
description “Has only limited capability, rarely flexible in approach. Reluctant
to co-operate with reasonable Company requirements, and even then, the task has
to be carefully selected”.
10.
Mr Nicholls was selected for redundancy
on the basis that his scores were the lowest. After further consultation he
was dismissed with effect from 20 August. His appeal was heard and dismissed
on 1 November 2010.
The Tribunal’s reasons
11.
The Tribunal had to deal with a wide
range of challenges to the dismissal. It found that Rockwell’s reason for
dismissal was redundancy, rejecting Mr Nicholl’s argument that there was no
genuine redundancy (paragraph 31). It found that the procedure adopted was
reasonable and fair (paragraph 32), again rejecting his argument to the
contrary. It rejected an argument that his selection for redundancy was motivated
by his questioning the business need for redundancy; and a further argument
that it was motivated by a dislike of his part-time status (paragraph 33).
12.
In order to explain the Tribunal’s
reasoning for finding the dismissal unfair, it is necessary to cite three
paragraphs from its findings of fact.
“19. Other relevant background is as follows. In 2005 the
claimant had agreed with the respondent to reduce his working hours to a
four-day week from Monday to Thursday. The claimant alleges that Mr Thirtle objected
to this part-time working on the basis that it compromised the claimant’s
ability to be flexible in meeting customer needs, for instance when
commissioning or remedial work was needed to be undertaken at weekends. The
respondent has a Performance and Development Review system, known as PADR,
under which a full appraisal was taken at the end of each financial year, and a
six monthly review was undertaken during each financial year. It is clear from
the PADR review sheets for the previous few years which we have seen that the
matter of flexibility and Friday working was raised, and the claimant was set
targets to be sufficiently flexible to work at least four Fridays a year.
These were all met by the claimant. We have also seen a record of overtime
worked by each of the 11 FSEs during the financial year 2009/2010. There are
three distinct types of overtime which the respondent pays. These are overtime
during a normal week paid at a time and a third; Saturday overtime paid at time
and a half; and overtime on Sundays or night working paid at double time. Only
four of the 11 FSEs worked more normal weekly overtime than the claimant. Only
five of the FSEs worked more Saturday overtime than the claimant. Only four of
the 11 FSEs worked more Sunday or overnight overtime than the claimant. In
addition, we have heard from the claimant about the number of overseas trips
which he undertook and which involved flexible working over and beyond simply
working Monday to Thursday.
20. In addition, we have seen a PADR review sheet for Mr
Robinson who was criticised for his administration skills and put on a specific
performance improvement plan to improve these. There were no such difficulties
raised with the claimant in connection with his administration skills.
21. The marks given to the claimant during the process do not
appear to us accurately to reflect the claimant’s capabilities with regard to
flexibility, administration, or his product skills. The respondent only gave
the claimant 5 out of a possible 20 under Flexibility in section 2.3 which
corresponded to the explanation ‘has only limited capability, rarely flexible
in approach’. In addition, under Flexibility in section 4, the respondent gave
the claimant only 5 out of 20 against ‘readily available at short notice to
undertake customer related engineering services; 10 out of 20 against ‘applies
oneself to all product issues..’ and 5 out of 20 against ‘adaptable to work on
customer projects to meet the project timeframes, working ours and requirements’.
He was given 0 out of 20 for product skills competency under the headings of
Human Machine Interface, and Ethernet, when he had skills with these products.
He was given an average score of 10 out of 20 for each of the two headings
under Administration when Mr Robinson was given exactly the same score despite
having been put on a performance improvement plan to improve his weak
administration. We find that the scores given to the claimant in connection
with product skills, administration, and in particular flexibility, do not
accurately reflect the claimant’s true capabilities as evidenced by several
years worth of PADR reviews, the overtime schedule for 2009/2010, and the
claimant’s evidence in connection with his product skills and the fact that he
worked abroad and worked at weekends when required.”
13.
The Tribunal found:
“34. However, we do find that the dismissal was unfair because
the marks allocated to the claimant in connection with Flexibility in
particular, and also in connection with Administration and Product skills, are
not capable of objective assessment as being fair and accurate. For the
reasons explained in our findings of fact, the marks given to the claimant do
not actually reflect what was recorded in the relevant documentary evidence namely
PADR review sheets and the schedule of overtime payments. It is not for us to
substitute our view for that of the employer, and we have not done so.
Nonetheless we find that the marks given to the claimant in this respect were
clearly lower than they should have been. We find that the respondent did not
act fairly and reasonably in all the circumstances of the case, and accordingly
the claimant succeeds in his unfair dismissal claim.”
14.
During the course of the hearing the
Tribunal had asked Mr Nicholls what marks he thought he should have been given
under the challenged headings. It noted that his best case would have involved
a further 90 marks and noted that this still placed him below all but two
candidates.
15.
The Tribunal’s reasoning on the question
of the Polkey deduction was as follows.
“35. The matter will now be listed for a remedy hearing and
directions in this regard will follow. However, we have considered in detail
the Polkey decision and we make the following important finding prior to the
remedy hearing. As explained in the findings of fact above, on the claimant’s
best case he would still have been in the bottom three candidates from which
one had to be selected for redundancy. It is not for us to embark upon a sea
of speculation, nor to seek to re-mark the various candidates in the
application process, and we do not seek to do so. Nonetheless there must
remain the possibility that the claimant would still have been selected for
redundancy even if the correct marks had been allocated. There was in effect a
one in three chance that he would have been fairly dismissed in any event. For
this reason we intend making a Polkey deduction of one third from any
compensation which might be ordered to be paid by the respondent following the
forthcoming remedy hearing.”
Unfair dismissal
Submissions
16.
On behalf of Rockwell Ms Claire Darwin submits that the Tribunal erred in law in the following ways. (1) It embarked
on the exercise of investigating the scores given for individual items when there
was no good reason for doing so. (2) It subjected aspects of the scoring to
minute investigation – an impermissible exercise in the context of section
98(4) of the Employment Rights Act 1996. (3) It reached its conclusions
on the basis of contemporaneous written documentation alone, whereas an
employer was entitled to (and in this case did) rely on the assessment of
managers in the course of scoring. The fact that all the scores were “not
capable of objective assessment as being fair and accurate” (paragraph 34) was
not to the point: an employer was not obliged to make exclusive use of such
criteria. (4) The Tribunal effectively placed a burden of proof upon the
employer to justify the marking. No such burden of proof existed: it was
sufficient for the employer to show that he set up a good system of selection
and that it was fairly administered. (5) Despite a correct self-direction the
Employment Tribunal effectively substituted its own assessment of the
Claimant’s capabilities; the language of paragraphs 21 and 34 of the reasons
points to this conclusion.
17.
On behalf of Mr Nicholls Ms Jenny Andrews
submits that the Tribunal not only directed itself correctly in law but also
applied that direction appropriately. She answers the submissions of Ms Darwin
in the following ways. (1) There is no absolute rule prohibiting a Tribunal
from investigating markings and assessments. In this case, given the
allegations made by Mr Nicholls, which included a bias against him on the
grounds that he worked part-time, it was essential for the Tribunal to look at
the detail of the marking and assessment. (2) The Tribunal did not subject
the marking to “over minute analysis”. It compared the marking to known
sources of information – in particular written assessments – and noted plain
and obvious discrepancies. (3) It would be an error to say that the marking
criteria had to be wholly objective, but the Tribunal did not fall into this
error. Rather the Tribunal’s conclusion was that a reasonable employer would
not ignore objective evidence, such as assessments or overtime records. (4)
Nothing in the Tribunal’s reasons suggests that it placed a burden of proof on
the employer to prove the accuracy of the information. (5) It is not fair to
criticise the Tribunal for substituting its own view. The Tribunal gave itself
a correct self-direction in law. While it is true that the Tribunal stated its
own finding that “the marks given to the Claimant were clearly lower than they
should have been” this was in reality no more than a way of saying that
Rockwell did not support its marking by reference to any objective markings
system.
18.
Counsel referred us to numerous
authorities on the question of fairness in selection for redundancy. Many
were, we think, really no more than illustrative of the principles of law, to
which we shall now turn.
Discussion and conclusions
19.
The Tribunal, once it had found that the
reason for dismissal was genuinely redundancy, was required to apply section
98(4) of the Employment Rights Act 1996 whereby:
“......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.”
20.
The Appeal Tribunal’s task is different.
It is empowered by Parliament to intervene only on questions of law: see
section 21(1) of the Employment Tribunals Act 1996. The sole question
for the Appeal Tribunal is whether the Tribunal reached its decision in
accordance with the law. See, as to this, Fuller v London Borough of
Brent [2011] IRLR 414 at paras 27-31.
21.
Section 98(4) requires a Tribunal to make
a broad assessment of the question whether an employer acted reasonably in
dismissing an employee. It is well established that it is not for a Tribunal
to investigate the facts underlying a dismissal and reach its own conclusions
about those facts. It must start with the reasoning of the employer; ask how
the employer reached the decision to dismiss; and consider whether the employer
acted reasonably, having regard to factors within section 98(4) which include
size and administrative resources as well, of course, as equity and the
substantial merits of the case.
22.
These features of section 98(4) underlie
the reasoning of the Court of Appeal in British Aerospace v Green [1995]
IRLR 437. In that case, which concerned the question of disclosure of
documents in the context of a very substantial redundancy exercise, Waite LJ
said (page 1010A-E):
“Employment law recognises, pragmatically, that an over-minute
investigation of the selection process by the tribunal members may run the risk
of defeating the purpose which the tribunals were called into being to
discharge, namely a swift, informal disposition of disputes arising from
redundancy in the workplace. So in general the employer who sets up a system of
selection which can reasonably be described as fair and applies it without any
overt signs of conduct which mars its fairness will have done all that the law
requires of him.”
23.
Later, after reviewing cases concerning
“marking” (see page 1010E-1011D) he applied this general proposition to the use
of a marking system in order to select for redundancy (page 1016G – 1017A):
“The use of a marking system of the kind that was adopted in
this case has become a well-recognised aid to any fair process of redundancy
selection. By itself, of course, it does not render any selection automatically
fair; every system has to be examined for its own inherent fairness, judging
the criteria employed and the methods of marking in conjunction with any
factors relevant to its fair application, including the degree of consultation
which accompanied it. One thing, however, is clear: if such a system is to
function effectively, its workings are not to be scrutinised officiously. The
whole tenor of the authorities to which I have already referred is to show, in
both England and Scotland, the courts and tribunals (with substantial
contribution from the lay membership of the latter) moving towards a clear
recognition that if a graded assessment system is to achieve its purpose it
must not be subjected to an over-minute analysis. That applies both at the
stage when the system is being actually applied, and also at any later stage
when its operation is being called into question before an industrial tribunal.”
24.
Although many other authorities were
cited to us they were, to our mind, merely illustrative. The general approach
to section 98(4) is plain.
25.
In this case the Tribunal certainly embarked upon detailed consideration
of certain aspects of the scoring of Mr Nicholls. Ms Andrews has explained,
and we understand, why it did so. Since Mr Nicholls challenged the motivation
of the Rockwell’s management there will have been cross examination designed to
show, from such details as might be challengeable, that its motivation was
suspect. So long as the exercise was kept within bounds (and we emphasise that
setting the boundaries would be a matter for the Tribunal exercising case
management powers) it would be permissible to look to some extent at the way
scores were reached to see if anything in those scores lent weight to the
challenge to Rockwell’s witnesses.
26.
The Tribunal, however, having seen and heard Rockwell’s witnesses,
including the member of management who did the marking, rejected the challenge
to the motivation. Having done so, section 98(4) required it to stand back and
look at the selection process in a broader way.
27.
In our judgment the Tribunal has fallen into error in the following
ways.
28.
Firstly, in our judgment the Tribunal has erred in law in embarking upon
a detailed critique of certain individual items of scoring for the purpose of
determining whether it was reasonable to dismiss. Once granted that there is a
fair system of selection applied without overt signs of unfairness it was not
for the Tribunal to embark on a detailed critique of individual items of
scoring: British Aerospace v Green. This – it seems to us – is
what the Tribunal has done. It has concentrated upon a small number of scores,
accounting for only a very small proportion of the total points available. It
does not seem to have been referred to the line of authorities approved in British
Aerospace v Green; and to our mind it erred in law in its approach to
this part of the case.
29.
Secondly, even if it was permissible at all to embark upon this
exercise, the Tribunal has fallen into the error which is generally described
as substituting its own view for that of the employer. As we have already
said, the task of the Tribunal was to discover the reasons of the employer and
ask whether those reasons were reasonable. Within paragraphs 19-21 there are
no findings as to why the markers attributed the marks they did to the items in
question. This should have been the starting point for the Tribunal. Once the
Tribunal found what the reasons actually were for the scores, it could then
review whether the markers acted reasonably. Paragraphs 19-21, and paragraph
34, show no real sign of this process. The Tribunal has noted that the
question of flexibility did not loom large in Mr Nicholls’ assessments; noted
that he worked a significant amount of overtime; and made its own finding that
the markings “do not accurately reflect the Claimant’s true capabilities” so
that the marks given to the Claimant were “clearly lower than they should have
been”.
30.
Particularly noteworthy, in this context, is that the Tribunal has
overturned findings by Rockwell’s management that Mr Nicholls did not have the
requisite skills with particular products – Human Machine Interface and
Ethernet. The Tribunal has made no findings as to why Rockwell’s management
reached these conclusions, still less that its conclusions were unreasonable.
31.
We have borne in mind Ms Andrew’s
submission – to the effect that the Tribunal may have intended to say that
Rockwell was unreasonable because it did not take into account objective
information (by which she means historic assessments and - she tells us - a
skills database) before reaching its conclusions. We have also borne in mind
the Tribunal’s statement that it concluded the marks in question to be “not
capable of objective assessment as being fair and accurate” (paragraph 34).
But it is not the law that every aspect of a marking scheme has to be
objectively verifiable (by which we mean verifiable independently of the
judgment of management) as fair and accurate. If overall the redundancy
criteria were reasonable (as the Tribunal appears to have accepted) then the
fact that some items were not capable of objective verification is not fatal to
the scheme. See, for example, the comments of Lord Neuberger MR giving the
judgment of the Appeal Tribunal in Mitchells of Lancaster v Tattersall
[2012] UKEAT/0605/11/SM (para 23):
“The Tribunal in this case also criticised the criteria adopted
by the Respondent because they were not “capable of being scored or assessed or
moderated in an objective and dispassionate way”. Just because criteria of this
sort are matters of judgment, it does not mean that they cannot be assessed in
a dispassionate or objective way, although inevitably such criteria involve a
degree of judgment, in the sense that opinions can differ, possibly sometimes
quite markedly, as to precisely how the criteria are to be applied, and the
extent of which they are satisfied, in any particular case. However, that is
true of virtually any criterion, other than the most simple criterion, such as
length of service or absenteeism record…”
32.
Selection criteria are not to be limited
to “those which can be the subject of box-ticking exercises” (para 23).
33.
For these reasons we conclude that the
appeal against the finding of unfair dismissal should be allowed. Moreover we
have no doubt that we should substitute a finding that the dismissal was fair.
The Tribunal found that redundancy was the true reason; rejected the challenges
to the motivation of the members of management concerned; and found that a fair
procedure had been followed. It does not seem to have thought that the
selection criteria themselves were unreasonable: it is, we think implicit in
paragraph 32 of the reasons that the criteria were reasonable, and we note that
the skeleton argument introduced by Ms Andrews below realistically put her
arguments about the selection process under the rubric of consultation (see
paras 3.1 -21 of the skeleton) which is how the Tribunal dealt with them
(paragraph 32 of its reasons). Given the Tribunal’s findings taken as a whole,
we think the dismissal was plainly and arguably a fair dismissal.
Polkey
34.
In view of our conclusions on the
question of unfair dismissal, the Polkey question does not arise;
but we have heard argument upon it and we can deal with it briefly.
35.
On behalf of Mr Nicholl Ms Andrews keeps open, but does not strongly
argue, her challenge. She submits that any Polkey reduction had
to be evidence based, and that the Tribunal did not have the requisite material
to make a reduction. Any reduction would, she submits, be speculative.
Alternatively, one-third was the maximum which could have been awarded. We
reject this argument. A Polkey reduction must of course have an
evidential foundation; but it will inevitably involve a substantial degree of
estimation. In this case there was ample material from which to make an estimation.
36.
On behalf of Rockwell Ms Darwin puts forward a challenge of a different
kind. She argues that the evidence that the Claimant might, at best, have
scored another 90 points was adduced in response to questions from the Tribunal
during the hearing; that the Respondent’s representative was not aware that the
Tribunal would rely on this evidence in support of a Polkey
finding; accordingly it was impermissible to make such a finding.
37.
We reject this submission. It is not now challenged that the Polkey
question was in issue at the hearing. Once granted that Polkey was
in issue at the hearing, the Tribunal’s question and Mr Nicholl’s answer was
plainly relevant to it. Rockwell’s solicitor was in a position to deal with it
in submissions, and if he felt that he required further evidence from his own
witnesses he could have sought to adduce it. The Tribunal did not behave
unfairly and was entitled to make the Polkey finding.
38.
Accordingly we reject the appeals in
respect of the Polkey finding; but in view of our earlier
conclusions the appeal against the finding of unfair dismissal will be allowed.
