Mr Andrew Day v Compton Fundraising Consultants Ltd: 1301174/2017

EMPLOYMENT TRIBUNALS

Case No 1301174/2017

Venue Birmingham

Hearing 26th, 27th and 28th September 2017

Between

Mr Andrew DayClaimant

Compton Fundraising Consultants LtdRespondent

Before

Employment Judge Choudry

Mr J Meichen - Counsel for respondent

Date 18 February 2019

JUDGMENT

The claimant’s claim for unfair dismissal succeeds.

REASONS

Conclusions

[1]The claimant brought a claim for unfair dismissal following the termination of his contract of employment by the Respondent on 23rd November 2016 by reason of redundancy.

[2]The respondent is the UK’s leading fundraising consultancy and manages annual, capital and legacy campaigns for charities and not-for-profit organisations. Evidence and documents

[3]I heard evidence from the claimant and for the respondent from Mrs Sue Linfield (Finance Director). In addition, on the first day of the hearing I was presented with an agreed bundle of some 275 pages. By consent, on the second day of the hearing a further 5 pages were added to the bundle. In addition, I was presented with three witness statements from former colleagues of the claimant – Ms Caroline Hutt, Mrs Amy Stevens and Ms Nicole Conchar. As Mr Meichen had no questions for any of these witnesses due to the historical nature of their evidence, they did not attend the hearing.

[4]I also had an agreed list of issues and written submissions from both parties.

Issues

[5]The agreed issues were as follows: Unfair dismissal5.1 Can the Respondent show, per section 98 of the Employment Rights Act 1996 (“ERA”), that the claimant was dismissed for a potentially fair reason?

5.2 In particular, was the claimant dismissed in circumstances which amounted to a genuine redundancy situation?

5.3 If so, did the respondent, in all the circumstances, act reasonably or unreasonably in treating its reason for dismissal as a sufficient reason for dismissing the employee?

5.4 Was the dismissal fair or unfair having regard to equity and the substantive merits of the case?

5.5 In particular, did the respondent:5.5.1 Consult fairly with the claimant over redundancy?

5.5.2 Select the claimant fairly for redundancy?

5.5.3 Give adequate consideration to any alternatives to redundancy?

5.5.4 Adopt a fair procedure in implementing the claimant’s redundancy?

5.6 If the tribunal determines that the dismissal was procedurally unfair, what difference, if any would a fair procedure have made ?

Applicable law

[6]The claimant disputed that there was a genuine redundancy situation.

Facts

[7]I make the following findings of fact:7.1 The claimant commenced employment with the Respondent on 1st January 1990, originally based in Australia but undertaking work for the UK business.

7.2 On first of April 2005 the claimant was appointed group chief executive officer based in the United Kingdom pursuant to a service agreement of the same date.

7.3 Clause 9.2.2 of the service agreement required the claimant to :“devote the whole of his time and attention and all his abilities and skills to such duties and not engage in any activities outside his employment which may detract from the proper performance of such duties;”

7.4 Clause 9.2.3 of the service agreement required the claimant to : “not (except as a shareholder or investor or representative of the Group all with the prior consent in writing of the board, such consent not to be unreasonably withheld) be directly or indirectly engaged or concerned or interested in any capacity in any trade, business or occupation whatsoever other than the business of the group, whether or not competing in any material respect with the business”.

7.5 The claimant’s job description held him accountable to the board for the implementation and the achievement of all group objectives, strategies, budgets and targets both financial and otherwise as set and approved by the board.

7.6 The claimant had reporting to him a Regional Managing Director who was accountable for the implementation and achievement of all regional objectives, strategies, budget and targets - financial and otherwise as set and approved by the Board. The role of Regional Managing Director was undertaken by Mr Paul Molloy.

7.7 Both the claimant and Mr Molloy were also shareholders in the respondent. The claimant, through his wife and Mr Molloy, through his own and his wife’s shareholding each held 38.15% of the shareholding in the respondent. Other significant shareholders were Mr Don Leir, the Chairman of the respondent who held 12.41% of the shareholding and Mrs Sue Linfield, the Finance Director, who held 3.76% of the shareholding.

7.8 The claimant, Messrs Leir and Molloy and Mrs Linfield were the only directors of the respondent.

7.9 Although on paper Mr Molloy reported into the claimant in reality they were both peers undertaking work for different clients. The claimant focused on capital campaigns which were traditionally of shorter duration as they often required resourcing studies. Mr Molloy worked predominately on fundraising campaigns which were of a longer duration and more labour intensive.

7.10 By 2015 there were some tensions between the claimant and Mr Molloy in relation to the future direction of the business. Mr Molloy preferred to grow the business to a sufficient size so that it would be an attractive acquisition target. The claimant, however, preferred to grow the business organically with a gradual exit through a vendor financed sell-down to the current team who had helped grow the business. Despite these tensions both the claimant and Mr Molloy continued to work together in relative harmony until May 2015 when matters came to a head.

7.11 In or around May 2015 the claimant was appointed a Councillor of Warwick District Council. The claimant stood for election in order to promote the interests of the village in which he lived.

7.12 On 14 May 2015 the respondent had a strategy planning session for the board. Item 5 on the agenda for the day was to review the strengths and weaknesses of the respondent’s business (in the same way as the respondent would approach its client) as regards structure, people, operations and delivery and finances.

7.13 Prior to the commencement of the strategy planning session the claimant picked up Mr Leir to take him to the respondents offices. Mr Leir had travelled from Canada for the purposes of the strategy planning session and a finance operations meeting which was due to take place the following day, on 15 May 2015.

7.14 Whilst they were travelling the claimant advised Mr Leir of his new appointment as a councillor. Mr Leir expressed some concerns as to the impact this appointment would have on the claimant’s ability to fulfil his contractual obligations towards the respondent.

7.15 In the event the claimant’s appointment as a councillor became the first topic of discussion at the strategy day. Mr Leir asked the claimant why he had not raised his decision to stand for the council and his subsequent election with his colleagues previously, even if only as a matter of courtesy. The claimant was of the view that his election was a personal matter as he would be undertaking this work in his own time. If he needed to attend any meetings during the working day he would take leave to attend them. The board, however, felt that the claimant was distracted by non-work related matters and referred to the description of duties on the council website which indicated that the role was “a lot of hard work”. The claimant indicated that this was what the council said but did not reflect the reality of the situation. In evidence, the claimant indicated that given his vast experience in business and through other voluntary roles he did not find the role “hard work”. I accept the claimant’s evidence in this regard.

7.16 I accept that the claimant and other members of the board had undertaken a variety of other voluntary roles in the past.

7.17 The Board also raised with the claimant the general perception that he was, regularly, distracted by personal issues. In addition, the claimant’s alleged lack of transparency was raised through the removal of personal appointments from his diary after the event. The claimant indicated that the appointments were only deleted retrospectively if they did not go ahead for some reason. Concerns were also raised regarding the claimant’s sales vis-à-vis Mr Molloy’s even though he had achieved the sales which he had indicated that he would. It was also suggested that the claimant may wish to consider working part time to enable him to pursue his outside interests. This was not palatable to the claimant.

7.18 In any event the conversation became heated and resulted in the claimant advising the board that if they didn’t like his appointment they should buy him out. The respondent’s position is that the claimant asked to be bought out or “fired”. I do not find it material as to whether or not the claimant asked to be fired given the reason for dismissal. It is agreed that the claimant asked to be bought out.

7.19 The claimant was asked to leave the meeting so that the board could discuss the situation.

7.20 Whilst the claimant was out of the board meeting the remainder of the board discussed a possible management structure whereby there would be only one senior executive. The minutes of this meeting record that it was clear that not only could the respondent operate using such a structure, but that it would be more effective way to operate the company and that implementing such a structure would be in the best interests of the respondent. In evidence, Mrs Linfield indicated that the respondent would supplement the work of the one senior executive with the appointment of two additional campaign managers who would undertake the work of the other senior executive.

7.21 After discussing the various options the Board decided to have a “protective conversation” with the claimant and make him an offer. The claimant returned to the meeting and a protected conversation took place.

7.22 The following day a finance operations meeting took place which was attended by the same individuals. The operational reports showed that the respondent had had a good start to the year with £209,550 pounds in revenue and £25,925 net profit before tax in April. The dividend recommendation prepared before the board meeting was for a dividend of £1.50 a share. However, it was decided that in light of the discussions which had taken place with the claimant the previous day that it would be prudent not to pay a dividend immediately and possibly to wait until July as there should be some caution about the size and timing of the dividend until more was known about the likely calls on cash. Discussions also took place about the sale of the Day family shares. Once again the claimant left the board meeting to enable the remaining board members to discuss a plan for the Day shares. The minutes of this meeting record that the remaining directors had a discussion about a possible timetable around buyback of the Day shares. In addition, a further discussion took place about a possible management structure of the business going forward with only one senior operational executive.

7.23 A valuation report for the sale of the Day of shares was prepared and there were some discussions between the claimant and Mr Molloy as to what clients should be told in the interim although the claimant continued to work throughout this time. However, by 29 June 2015 it was clear that a deal was not going to come to fruition. Accordingly, the claimant wrote to Mr Molloy setting out some of the matters which would need to be implemented in order to enable him to discharge his responsibilities as CEO. The claimant also requested regular meetings with Mr Molloy in order to “mend the fences”.

7.24 On 7th July 2015 Mrs Linfield emailed the claimant requesting a short meeting. The meeting took place on 9th July 2015 as during which the claimant was informed that the respondent was considering redundancies as a part of a reorganisation programme and that his role and that of Mr Molloy was at risk of redundancy. He was invited to attend a further consultation meeting on 13th July 2015.

7.25 In the event the meeting did not take place as on 15th July 2015 the claimant raised a grievance arguing that a “sham” redundancy process was being launched by the Company. The claimant indicated that no reasons had been provided of the need for the reorganisation programme nor had it been discussed at a board meeting or at a shareholders’ meeting.

7.26 Mrs Linfield acknowledged the grievance on 17th July 2015 and put the redundancy process on hold pending an investigation into the grievance.

7.27 The claimant’s grievance was investigated by Wright Hassell’s, the respondent’s solicitors who acted for them in relation to the protected conversations. The claimant raised concerns about this. In the event his grievance was not upheld. The claimant duly appealed and the appeal was heard by Rachel Oliver, an external HR consultant but a number of the claimant’s queries in relation to this appointment were not fully answered by Mrs Linfield.

7.28 In the background discussions continued in relation to the buy back of the Day family shares until mid-September 2015.

7.29 On 4th November 2015 a board meeting took place. Mr Leir attended by telephone. During the course of the board meeting discussions took place about the jobs descriptions for the claimant and Mr Molloy. It was accepted by all that these were out-dated. Mr Leir indicated that on the face of it both the claimant and Mr Molloy undertook the same functions and the board should consider whether two senior executives were required or whether one would be sufficient. The claimant expressed the view that these discussions were only taking place as a result of the breakdown in relationship which had occurred in May. In the event, it was put to vote that a formal notification and consultation process should be implemented to determine whether or not the claimant and Mr Molloy “should become the subject of redundancy”. The resolution was passed with the claimant abstaining.

7.30 On 16th November 2016, Ms Oliver emailed the claimant to advise him that save in respect of one minor point his grievance was not upheld. On the same day Mrs Linfield invited the claimant for a redundancy consultation meeting also to take place on the same day. During this meeting the claimant was shown the proposed selection criteria. The claimant put forward additional criteria to be considered, namely “diversity of work”; “qualifications, education and training” and “Professional Standing within the sector”. Mrs Linfield agreed to consider these. The claimant indicated that he had not seen any business plan for the respondent and was informed by Mrs Linfield that one had not yet been finalised. A similar consultation meeting took place with Mr Molloy on 17th November who confirmed he was happy with the proposed criteria.

7.31 The claimant met with Mrs Linfield again on 24th November 2015 when the claimant was presented with his completed scores. The claimant raised a number of concerns about the selection criteria and, in particular, that they had been construed in a way that favoured Mr Molloy. In particular, that 3 of the 7 criteria related to the generation of revenue rather than profitability which favoured Mr Molloy as he generated more revenue rather than the claimant whose work was more profitably. I am satisfied on the evidence presented to me that the claimant’s work was more profitable than Mr Molloy’s. The claimant was not given an opportunity to appeal his scores and he was informed that he had been selected for redundancy. The claimant was advised of his right of appeal.

7.32 The claimant did not appeal. I accept the evidence of the claimant that he did not appeal as he had already raised his concerns with Mrs Linfield to no avail. Applicable law

Issues

[8]Section 98 (1) Employment Rights Act 1996 provides that in determining for the purposes of this part, whether the dismissal of an employee is fair or unfair, it is for the employer to show: (a) The reason (or if more than one the principle reason for the dismissal). (b) That it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held. A reason falls within the subsection if it – ( c) is that the employee was redundant,

Facts

[9]Section 98(4) provides that where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reasons shown by the employer) -(a) depends on whether in the circumstances (including the size and administrative resources of the employers 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.

Applicable law

[10]Redundancy is defined in s139 as For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to—(a) the fact that his employer has ceased or intends to cease— (i) to carry on the business for the purposes of which the employee was employed by him, or (ii) to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business— (i) for employees to carry out work of a particular kind, or (ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer, have ceased or diminished or are expected to cease or diminish.

[11]In determining whether an employee has been dismissed by reason of redundancy one should have regard to the case of Safeway Stores plc –v- Burrell

[1997] IRLR 200

(EAT). In Safeway, the EAT formulated a three-stage test for applying section 139 ERA 1996 as follows :11.1 Was the employee dismissed? If so,

11.2 Had the requirements of the business for employees to carry out work of a particular kind ceased or diminished (or did one of the other economic states of affairs in section 139(1) exist)? If so,

11.3 Was the dismissal of the employee caused wholly or mainly by the state of affairs identified at stage 2 above.

[12]In considering the question of fairness of a redundancy dismissal consideration should be had to warning and consultation, adoption of fair selection criteria and consideration of alternative employment as per Williams –v-Compare Maxam Ltd

[1982] IRLR 83

. The question at each stage is whether the decision taken by the employer was within the bands of reasonable responses as per Whitbread plc v Hall

[2001] IRLR 275

[13]Furthermore, a tribunal must not investigate the commercial merits of an employer’s decision that redundancies are required (James W Cook & Co (Wivenhoe) Ltd –v- Tipper

[1990] ICR 716

) nor should the tribunal’s substitute its own view about how an employee should be scored for that of an employer (Russell –v- College of North West London UK/0314/13/MC). Conclusions

[14]In reaching my conclusions I have considered all the evidence I have heard and considered the pages of the bundle to which I have been referred. I also considered the very helpful oral and written submissions made by the parties’ representatives.

[15]The first issue I need to consider is whether the respondent had a potentially fair reason for dismissal under Section 98(2) of the Employment Rights Act 1996, namely redundancy.

[16]Mr O’Brien argues that the statutory definition of redundancy is not satisfied and/or redundancy was a sham and/or predetermined. Mr Meichen refers to the strategy meeting on 14th May 2015 and item 5 on the agenda for that meeting which was to review the strengths and weaknesses of the business which included reviewing the structure, people, operations and delivery and finances as evidence of a potential redundancy situation. This was then followed up at the board meeting on 15th May 2015.

[17]I do not accept Mr Meichen’s submission and am satisfied that those discussions, which took place in the claimant’s absence, took place in the context of a potential buy out of the claimant’s family shares and whether the business could continue with one executive if the claimant left the business.

[18]Mr Meichen also points to the fact that the claimant has not been replaced by a senior executive as evidence of a redundancy situation. However, the clear evidence of Mrs Linfield was that the claimant’s work would not cease but would continue to be done. Some of it would be absorbed by Mr Molloy and, in addition, two further senior consultants would be recruited to undertake the corporate campaign work.

[19]In the circumstances, I am not satisfied that the respondent had a genuine redundancy situation as defined in section 139 of the ERA 1996. There was no closure of a business nor a workplace closure. Furthermore, there was no diminished requirements for the respondent’s business to undertake the type of work undertaken by the claimant. I note that the respondent has not pleaded some other substantial reason as a potential reason for dismissal.

[20]As such I am not satisfied that the respondent had a potentially fair reason to dismiss the claimant.

[21]However, if I am wrong in this conclusion I have also considered whether the redundancy was a sham and/or predetermined.

[22]Mr Meichen argues that the claimant is wrong to suggest that the restructure had not been discussed at board level or that it was only discussed after discussions about the claimant’s exit package broke down. Mr Meichen also submits that a full rationale behind the restructure was discussed at a board meeting on 4th November 2015 and approved by the board. However, I do not think that the board meeting on 4th November 2015 assists the respondent in this regard as the redundancy consultation process had already commenced in July 2015, when the discussions about an exit plan broke down. As this point the proposed restructure had been discussed only on 14th and 15th May in the claimant’s absence but in the presence of Mr Molloy who was also allegedly at risk of redundancy. I also note that when the claimant requested a copy of the business plan he was advised by Mrs Linfield that one had not yet been put in place which seemed incredulous if there was a genuine redundancy situation.

[23]Turning to the process I am also satisfied on the evidence, that the selection criteria was put together to ensure that Mr Molloy scored the higher scores given the significant weighting given to revenue over profit. I note that the claimant was not given the opportunity to appeal his scores although he was given the opportunity to appeal his ultimate dismissal. Mr Meichen criticises the claimant for not appealing his dismissal but I am satisfied by the claimant’s explanation and that it was reasonable for him not to do so.

[24]It is clear that the relationship between the claimant and the respondent had broken down and the sensible course in the circumstances was to consider an exit package. However, I am satisfied that when those negotiations broke down the respondent engineered a redundancy situation in order to procure the removal of the claimant and that redundancy process was predetermined. I note that the redundancy consultation process was resumed on the very date that the claimant was notified of his grievance appeal outcome.

[25]I am not satisfied that a fair process was adopted for the reasons set out above and, as such, the claimant’s claim for unfair dismissal succeeds. Signed by

Background

[1]Following the claimant’s successful claim for unfair dismissal the respondent is ordered to pay to the claimant compensation in the sum of £91,895 in accordance with the attached Annex. The Recoupment Regulations do not apply.

Background

[1]The claimant brought a claim for unfair dismissal following the termination of his contract of employment by the Respondent on 23rd November 2016 by reason of redundancy.

[2]By an oral judgment given to the parties on 28th September 2017 and a written judgment dated 30th October 2017 the claimant succeeded in his claim for unfair dismissal. The matter was listed for a remedy hearing before me on 31st October 2017. Evidence and documents in relation to remedy

[3]I was presented with the claimant’s revised schedule of loss, skeleton arguments for remedy from the claimant as well as copies of the cases referred to in the skeleton argument. I was also presented with a further witness statement from Mrs Sue Linfield for the respondent as well as a further 34 pages of documents and copies of two cases – Mr T Glover and others – v- Property Care Ltd

[2006] EWCA Civ 286

and Margaret O’Donoghue –v- Redcar and Cleveland Borough Council

[2001] EWCA Civ 701

– on behalf of the respondent.

[4]Mr O’Brien objected to the introduction of the new evidence on the basis that the case management orders had not envisaged a split trial and that the issue of remedy should have been dealt with at the last hearing, the claimant had dealt with it in his witness evidence and Mrs Linfield had also touched on the subject at the last hearing but had made no attempt to deal with the issue of mitigation.

Issues

[5]Mr Meichen submitted that no final decision had been made at the last hearing as to the submission of further documents. The additional documents had been served on the claimant’s representatives on 26th October 2017. As such there had been sufficient time for the claimant’s representatives to obtain instructions in relation to the additional documentation; the evidence merely expanded on the points already made in relation to mitigation and that the Tribunal in making its decision should have due regard to the balance of prejudice. If the additional information was not included the respondent would suffer greater prejudice than the claimant as it would not be able to deal with the issue of mitigation. This would not be in line with the overriding objective.

[6]After giving Mr O’Brien the right of reply I was satisfied that the respondent would suffer greater prejudice than the claimant if the additional evidence was not adduced. As such, in line with the overriding objective I consented to the submission of the respondent’s additional evidence.

[7]Consequently, I heard further evidence for the respondent from Mrs Sue Linfield (Finance Director). The claimant gave no further evidence but relied on his evidence and witness statement from the liability hearing. Issues

[8]Mr O’Brien confirmed that the claimant was seeking reinstatement. As such, the issues for me to determine were as follows:8.1 Was it practicable for the respondent to comply with a reinstatement/re-engagement order?

8.2 Is the claimant entitled to a further basic award given the fact that he was not dismissed for a genuine redundancy reason?

8.3 What compensatory award should the claimant be awarded?

8.4 Has the claimant failed to mitigate his losses thereby reducing the compensatory award?

8.5 Should the compensatory award be reduced as a result of Polkey? Facts

[9]I make the following findings of fact in relation to remedy in addition to the findings of fact which I made in relation to liability:9.1 The claimant commenced employment with the respondent on 1st January 1990, originally based in Australia but undertaking work for the UK business.

9.2 On 1st April 2005 the claimant was appointed group chief executive officer based in the United Kingdom.

9.3 The respondent is he UK’s leading fundraising consultancy and manages annual, capital and legacy campaigns for charities and not-for-profit organisations. The claimant undertook fundraising work focusing on capital campaigns.

9.4 On 24th November 2015 the claimant was given 12 months’ notice of termination of his employment on the grounds of redundancy. The claimant spent 12 months on garden leave and his employment formally ended on 23rd November 2016, after some 26 years’ service with the respondent.

9.5 It was agreed between the parties that as at the termination date the claimant earned £187,700 (gross) and had a 6% employer pension contribution. His net monthly income was £11,200.

9.6 During the Christmas 2015 holidays the claimant discussed with his wife their future work options. As the claimant’s wife is also an experienced fundraising consultant she offered to start a new company, potentially with former colleagues, to build up a fundraising consulting business which the claimant could join at the end of his garden leave period. The claimant’s wife resigned from her teaching position at Easter 2016, in order to commence full time employment in their new business venture in the summer.

9.7 A new company was registered on 26th February 2016 called Gifted Philanthropy Limited (“Gifted”). The directors of this company are the claimant’s wife, Chris Goldie and Amy Stevens. The claimant joined Gifted on 1st December 2016 as Managing Director. His services are provided by a company called A&J Day Consulting Limited and he receives a salary of £680.33 per month.

9.8 Mrs Linfield in her evidence at the remedy hearing pointed to 9 vacancies that were advertised over the period of June 2016 to October 2016 on the “Third Sector” recruitment website for executive roles within third sector organisations. These included vacancies for Chief Executive Officer of Oxford Radcliffe Hospital’s Charitable Funds, Director of Fundraising and Marketing at Pancreatic Cancer UK and chief executive officer of BBC Children in Need. The salaries for these roles ranged from £70,000 to £110,000 per annum although the precise salary figures were not clear. The full details of the 9 vacancies were not available and save for the role with Pancreatic Cancer UK (which had a salary starting at £70,000) - all I had presented to me were announcements of new appointments to some of the vacancies referred to.

9.9 I was also referred to a number of vacancies for roles that were available within third sector organisations between August and October 2017, which are contained at pages 245 to 275 of the bundle. These vacancies are predominately for Chief Executives Officer roles for leading charities, educational trusts and museums. The salaries are, in the main, significantly less than the salary earned by the claimant with many of them starting at £70,000 and others being less than £100,000. Whilst the claimant has considerable experience in fundraising he has no experience of running a charity nor is he an expert in education. Mrs Linfield accepted in cross-examination that the claimant had no experience of being a chief executive of a charity. However, she could not say that he had no experience of being a director of fundraising as she said that respondent employees did step into this role from time to time for clients, although she did not provide a specific instance of the claimant doing so.

9.10 Mrs Linfield also referred to Saxton Bampfylde, who are well known recruiters for executive roles within the sector and indicated that the claimant should have registered with them and due to his personal connections with this organisation he would have been well placed to secure interviews. However, she could not refer to a specific role which was an ideal match to the claimant’s experience and background.

Applicable law

[10]Section 112 (3) of the Employment Rights Act 1996 provides that where a claimant expresses a wish to be re-instated: “…the tribunal may make an order under section 113. (4) If no order is made under section 113, the tribunal shall make an award of compensation for unfair dismissal (calculated in accordance with sections 118 to [126]…to be paid by the employer to the employee.”

[11]Section 113 provides: “An order under this section may be -(a) an order for re-instatement (in accordance with section 114) or

(b) an order for re-engagement (in accordance with section 115,) as the tribunal may decide”.

[12]Section 116 of the Employment Rights Act 1996 provides: “(1) In exercising its discretion under section 114 the tribunal shall first consider whether to make an order for re-instatement and in so doing shall take into account –(a) whether the complainant wishes to be re-instated,

(b) whether it is practicable for the employer to comply with an order for reinstatement, and

(c) where the complainant caused or contributed to some extent to the dismissal, whether it would be just to order his reinstatement. (2) If the tribunal decides not to make an order for reinstatement it shall then consider whether to make an order for reengagement and, if so,on what terms. (3) In so doing the tribunal shall take into account- (a) any wish expressed by the complainant as to the nature of the order to be made, (b) whether it is practicable for the employer…to comply with an order for re-engagement, and (c) where the complainant caused or contributed to some extent to the dismissal, whether it would be just to order his reengagement and (if so) on what terms. .

[13]Section 122 (4) provides for the reduction of the basic award by the amount of any redundancy payment. However, where an employer fails to satisfy the tribunal that the principal reason for dismissal was in fact redundancy then following the case of Boorman –v- Allmakes Limited [1995] no reduction is made to the basic award.

[14]Section 123 of the Employment Rights Act 1996 provides that: “..the amount of compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer”.

[15]In accordance with Section 124 of the Employment Rights 1996 the compensatory award may not exceed the lower of a year’s pay or the statutory cap from time to time. As the claimant’s effective date of termination the statutory cap in place was £78,962.

[16]The principles upon which the compensatory award is calculated are set out in the case of Norton Tool –v- Tewson

[1972] ICR 501

[17]In the case of Polkey –v- AE Dayton Services Ltd

[1987] IRLR 503

the House of Lords made it clear that the compensatory award may be reduced or limited to reflect the chance that the claimant may have been dismissed in any event and that the employer’s procedural errors accordingly made no difference to the outcome. The EAT provided useful guidance based on previous case law in Software 2000 Ltd –vAndrews and others

UKEAT/0533/06/DM

: “The question is not whether the Tribunal can predict with confidence all that would have occurred; rather it is whether it can make any assessment with sufficient confidence about what is likely to have happened, using its common sense, experience and sense of justice.”

[18]A reduction may even be made on just and equitable grounds to reflect the chances that the claimant would have been fairly dismissed for reasons other than those relied upon by the respondent [obiter in Gover and ors –v- Propertycare Ltd

[2006] ICR 1073

[19]A claimant is under a duty to take reasonable steps to mitigate his losses. This is a question of fact for the tribunal. The case of Wilding – v- British Telecommunications plc

[2002] ICR 1079

made it clear that the burden of proof is on the employer and it is not enough for the employer to show there were other reasonable steps that the claimant could have taken but did not take. An employer must show that the employee acted unreasonably in not taking them as there is usually more than one reasonable course of action open to a claimant.

[20]In Window Machinery Sales Ltd t/a Promac Group –v- Luckey

UKEAT/0301/14

the EAT indicated that when considering the issue of mitigation a tribunal should ask itself, firstly what steps were reasonable for the claimant to have to take in order to mitigate his or her loss; secondly whether the claimant did take reasonable steps to mitigate loss; and finally, to what extent, if any, the claimant would have actually mitigated his or loss if he or she had taken those steps. Submissions

[21]Mr O’Brien, for the claimant, sought a basic award on behalf of the claimant and submitted that credit should be given for the payment made and off set against the compensatory award. The claimant received a basic award of £13,062.50.

[22]In relation to the award of compensation and mitigation Mr O’Brien submitted that the claimant had 26 years experience with the respondent as a fundraiser concentrating on capital fundraising projects working with a few senior executives. As such it was more than reasonable for him to go into business doing the same type of work thereby limiting his loss. Mr O’Brien submitted that it was not reasonable for the claimant to apply to be a Chief Executive Officer of a charity given the fact that this was not in his field of experience. He had line managed around 8 people and being the Chief Executive Officer of the types of charities referred to in the evidence of Mrs Linfield was an entirely different undertaking. The claimant did not have any substantial experience as a senior executive of a charity or commercial organisation or as an in-house fundraising executive. Mr O’Brien further submitted that the respondent had failed to discharge the burden on it to show that the claimant had not mitigated his losses.

[23]In relation to the issue of Polkey Mr O’Brien submitted that if a respondent wishes to rely on an alternative, fair reason to dismiss a claimant then it must be pleaded and the burden is on the respondent. The respondent had not pleaded that that the claimant’s compensation should be reduced because of an inevitable dismissal for some other substantial reason. Furthermore, no evidence was submitted to show that the claimant would have been dismissed in any event. Whilst the Tribunal had found that relations between the parties were breaking down it did not find that there was some other substantial reason justifying dismissal. The fact that the parties were negotiating an exit did not, of itself, amount to some other substantial reason. Furthermore, even if the failure to reach a mutually agreeable settlement could amount to some other substantial reason the respondent had failed to adduce any evidence of the fair procedure that it would have followed or of the fact that if a fair procedure had been followed that the claimant would have inevitably been dismissed. The respondent failed to undertake any mediation or effectively carrying on effectively running separate businesses.

[24]Mr Meichen for the respondent submitted that the claimant should not receive another basic award as he had already received one. In addition, Mr Meichen submitted that it was entirely unreasonable for the claimant to expect the respondent to welcome him back when the parties had an acrimonious relationship over the last 2 years especially when the claimant had effectively set up in competition with the respondent.

[25]In relation to mitigation Mr Meichen argued that it was unreasonable for the claimant not to apply for any jobs given the level of earnings which he had were negligible and potentially less than the recommended rates under the national minimum wage legislation. Mr Meichen was of the view that the claimant would be a seriously attractive candidate.

[26]Finally, Mr Meichen submitted that the claimant would have been fairly dismissed in any event for a different reason but within the same timescale. Conclusions 12. In reaching my conclusions I have considered all the evidence I have heard and considered the pages of the bundle to which I have been referred. I also considered the very helpful oral and written submissions made by the parties’ representatives. 13. The first issue I need to consider is whether to make an order for reinstatement or re-engagement. I am not satisfied given the circumstances of the claimant’s dismissal, the on-going dispute between the parties in relation to shares which the claimant’s wife holds in the respondent business and the fact that the claimant’s spouse has set up a competing business that it would be practicable for the respondent do comply with any order for re-instatement or reengagement. I accept Mr Meichen’s submissions in this regard and find that it is not practicable for the respondent to comply with any order for re-instatement or re-engagement. 14. Given the fact that the claimant’s redundancy was a sham I am satisfied that he is entitled to a further basic award of £12,933 calculated as set out in the attached Annex. 15. In relation to the issue of mitigation I am not satisfied that the respondent has discharged the burden of proof that the claimant has failed to mitigate his losses by seeking alternative employment instead of going to work with his wife in Gifted. I am also not satisfied that the claimant acted unreasonably by not applying for the types of roles highlighted by Mrs Linfield given the fact that he did not have experience of being a Chief Executive Officer for a charity nor had he undertaken any other executive roles for a charity. Given the fact that he had almost 30 years’ experience working in a consultancy it was reasonable for him to want to work in an area for which he had experience and expertise. 16. Finally, in relation to the issue of Polkey whilst it is clear that the relationship between the parties was breaking down the respondent has not submitted any evidence that would enable me to make a finding that it would have been able to effect a fair dismissal as a result of the breakdown in the relationship or for any other reason. As such, I am not satisfied that there should be a Polkey reduction in the compensatory award. 17. I am satisfied that the claimant should be entitled to his loss of earnings from the date of his dismissal to the date of the remedy hearing and that the 20 weeks future loss sought by the claimant in his schedule of loss is just and equitable in the circumstances. As such the respondent is ordered to pay the claimant a further basic award of £12,933 and a compensatory award of £78,962 as set out in the attached Annex. Employment Judge Choudry 28 January 2018 Annex Date of birth : 13/8/1961 Date employment started: 1/01/1990 Effective date of termination: 23/11/2016 Period of continuous service: 20 years Age at Effective date of termination: 55 years Basic award 14 x 1.5 x 479 6 x 1 x 479 £12,933 Compensatory Award Losses from 24.11.16 to 26.10.17(a) Salary – 48 weeks @ £1,800 per week £86,400

(b) Salary sacrifice pension payment: 48 weeks @ £761.54 per week £36,554 Less mitigation – 48 weeks @ £470 per week (£22,560) Sub total £100,394 Future losses (a) Salary – 20 weeks @ £1,800 per week £36,000 (b) Salary sacrifice pension payment: 20 weeks @ £761.54 per week £15,230 Less anticipated mitigation (£9,400) Loss of statutory rights £350 Sub total £42,180 Total loss £142,574 Less basic award already received (£13,062.50) Apply statutory Cap £78,962

[1]The claimant brought a claim for unfair dismissal following the termination of his contract of employment by the respondent on 23rd November 2016 by reason of redundancy.

[3]Following a remedy judgment dated 28th January 2018 which was the claimant’s solicitors made an application for a Costs Order pursuant to rule 76 (1) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 (“Employment Tribunal Rules”). The claimant further invited the Tribunal to determine the amount of costs by way of detailed assessment pursuant to rule 78 of the Employment Tribunal Rules. By an email dated 6th March 2018 the respondent objected to the claimant’s application. As such the matter was listed before me today. Evidence and documents in relation to costs

[4]I was presented with an agreed bundle of documents consisting of 57 pages, a skeleton argument on behalf of the claimant and a skeleton argument and accompanying authorities for the respondent. I heard no witness evidence. Instead, counsel for both parties led me through their very helpful skeletons arguments. Issues

[5]The issues for me to determine were :5.1 Has the respondent acted vexatiously, abusively, disruptively or otherwise unreasonably in the way that the proceeding (or part) have been conducted?

5.2 If so, should the employment tribunal exercise its discretion to make a costs order?

5.3 If so, in what amount ? Applicable law

[6]Rule 76(1) of the Employment Tribunal Rules provides that a tribunal may make a costs order and shall consider whether to do so where it considers that: “(a) a party or that party’s representative) has acted vexatiously, abusively, distruptively or otherwise unreasonably in the either bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted; or (b) any claim or response has no reasonable prospects of success;…

[7]Rule 74 defines costs as any “fees, charges, disbursements or expenses incurred by or on behalf of the receiving party (including expenses that witnesses incur for the purpose of, or in connection with attendance at a Tribunal hearing)”.

[8]Rule 78 (1) provides that a costs order may : “(a) order the paying party to pay the receiving party a specified amount, not exceeding £20,000 in respect of costs of the receiving party; (b) order the paying party to pay the receiving party the whole or a specified part of the costs of the receiving party, with the amount to be paid being determined, in England and Wales, by way of detailed assessment carried out either by a county court in accordance with the Civil Procedure Rules 1998, or by an Employment Judge applying the same principles…..”

[9]Rule 84 provides: “In deciding whether to make a costs, preparation time or wasted costs order, and if so in what amount, the Tribunal may have regard to the paying party’s…ability to pay. Submissions on behalf of the claimant

[10]Mr Starcevic, for the claimant, indicated that he was relying on Rule 76(1)(a). Mr Starcevic also indicated that if the claimant’s application for costs was successful then he would be seeking detailed assessment in the county court.

[11]Mr Starcevic reminded me that the issue of costs was a two stage process as Mummery LJ indicated in Khan –v- Kirklees

[2007] EWCA Civ 1342

: “it is apparent from the regulations themselves, and from the authorities on it, that a two stage test is applied. The first poses the question, broadly: was the conduct of the party against whom costs is sought unreasonable? The second stage of the test is: if it is unreasonable, should the Employment Tribunal exercise its discretion to make a costs order, having regard to all the relevant circumstances?”

[12]Mr Starcevic indicated that if I was satisfied that any of the threshold circumstances in Rule 76(1) were satisfied then I was obliged to consider making a costs order. Furthermore, that the making of a costs order was discretionary and not obligatory and could only be made if the Tribunal considered it appropriate to do so.

[13]As Mr Starcevic pointed out there is no prescription as to what is or is not vexatious, abusive, disruptive or otherwise unreasonable conduct. Furthermore, lying or mounting a deliberately false case was not necessarily such conduct. As Rimmer LJ indicated in Arrowsmith-vNottingham Trent

[2011] EWCA Civ 797

: “Where, in some cases, a central allegation is found to be a lie, that may support an application for costs, but it does not mean that, on every occasion that a claimant fails to establish a central plank of the claim, a award of costs must follow”.

[14]I was also referred to the wise words of the Employment Appeal Tribunal in the case of ET Marler –v- Robertson

[1974] ICR 72

: “Ordinary experience of life frequently teaches us that that which is plain for all to see once the dust of the battle has subsided was far from clear to the combatants when they took up arms”.

[15]I was also reminded by Mr Starcevic that in exercising my discretion as to whether or not to make a costs order the Tribunal should have regard to all the relevant circumstances as per Khan-v- Kirklees

[2007] EWCA 1324

. Furthermore, that I should have regard to the nature, gravity and effect of any unreasonable conduct. Finally, that the threshold conduct related to the litigation and not the conduct out of which the employment dispute arose.

[16]Mr Starcevic submitted that the claimant’s case from the beginning was that the respondent’s redundancy exercise was a sham, not genuine and a device to oust him out of the business. I was referred to paragraphs 14, 16 and 24 of the liability judgment and my findings at paragraph 24 where I indicated that : “However, I am satisfied that when those negotiations broke down the respondent engineered a redundancy situation in order to procure the removal of the claimant and that the redundancy process was predetermined”.

[17]Mr Starcevic argued that my unequivocal finding that the redundancy was a sham meant that the case put forward by the respondent in the Response was also a sham and the evidence given by Mrs Sue Linfield to the contrary was not telling the whole truth according to the statement of truth in her statement and her oath when giving evidence. In effect, it was submitted, that Mrs Linfield, a shareholder and senior employee of the respondent had told a lie. Furthermore, that Mrs Linfield and the other controlling shareholders must have decided upon and instructed the respondent’s lawyers to defend the claim on a false basis that there was a genuine redundancy situation. It was submitted on behalf of the claimant that presenting a defence on a known false basis amounted to acting abusively, disruptively and unreasonably in the whole way in which proceedings were conducted. Such conduct wasted the claimant’s money and the Tribunal’s resources, affected the whole of the proceedings from start to finish and therefore, the respondent, it was submitted, should be ordered to pay the whole of claimant’s costs. Furthermore, Mr Starcevic argued that given the fact that there was an issue of credibility costs should be awarded on an indemnity basis. Submissions on behalf of the respondent12. Mr Meichen on behalf of the respondent relied on the respondent’s initial response to the claimant’s application for costs (pages 28 to 32 of the bundle).

13. In the respondent’s response the Tribunal was reminded that the costs awards were intended to be compensatory and not punitive (Lodwick – v- Southwark LBC

[2004] IRLR 554

) which meant that costs awarded should be proportionate to the loss caused by the unreasonable conduct (Barnsley MBC –v- Terrakalva

[2012] IRLR 78

). I was also reminded that there were no rules as to what constituted unreasonable conduct (Arrowsmith –v- Nottingham Trent University

[2012] ICR 159

) and that each case depended on its facts. As such, it was a question of fact for the Tribunal to determine whether there had been unreasonable conduct.

14. I was also reminded that the Court of Appeal emphasised in Arrowsmith that there was no rule that if a party had told untruths as part of its case this meant there had been unreasonable conduct. Similarly, in Kapoor –v- Governing Body of Barnhill Community School

UKEAT/0352/13

the EAT confirmed that giving false evidence was not automatically unreasonable conduct warranting a costs order.

15. Mr Meichen submitted that the application for costs was misconceived and should not have been made as the Tribunal rules make it clear that costs do not follow the event in an employment tribunal. It was further submitted that the claimant’s application was premised fundamentally on the basis that as the Tribunal had preferred his case over that of the respondent, he should be awarded costs. This was simply wrong – as the claimant’s case was preferred he was entitled to compensation which had been paid in the sum of £91,895. However, it did not follow that because his case was preferred he was also entitled to his costs.

16. Furthermore, Mr Meichen argued that the case had been hard fought out and at the end the Tribunal had made its findings on a balance of probabilities. He argued that the claimant’s application was erroneous and this was illustrated by the fact that at the remedy stage the claimant had made an application for reinstatement when he knew in advance the respondent’s position that reinstatement was not practicable. The Tribunal had agreed with the respondent on this point. However, it did not follow that the respondent was entitled to its costs in defending that aspect of the remedy hearing. 17. Mr Meichen also argued that the respondent did not make any findings of dishonesty against Mrs Linfield and, therefore, the Tribunal was being invited to make new findings of fact at the costs stage. In any event, the fact that the Tribunal did not find that the respondent did not act fairly and that there was no genuine redundancy situation did not mean that Mrs Linfield came to the Tribunal and lied. In any event, even the Tribunal had found that the respondent had lied it did not, automatically, constitute unreasonable conduct warranting the making of a costs order. I was also pointed to the Tribunal that submissions made by Mr O’Brien, the claimant’s counsel for the liability and remedy hearings, the claimant’s previous counsel at the end of the liability hearing no suggestion was made that Mrs Linfield was a liar nor were any findings of dishonesty sought. Finally, no costs warning was issued in the case, no application for a strike out nor a deposit order. This reflected the fact that the case was one which could only be determined after the evidence could be filly heard any tested. As such, it was not unreasonable for either party to proceed to hearing. I was invite to dismiss the application.

Conclusions

[18]In reaching my conclusions I have considered the liability and remedy judgments in this case, the oral and written submissions made on behalf of both parties (including the cases to which I have been referred) and the costs bundle.

[19]The first issue I need to consider is whether the respondent has acted vexatiously, abusively, disruptively or otherwise unreasonably. In doing so I must deal with the issue of whether Mrs Linfield lied or was not telling the whole truth according to the statement of truth in signing her witness statement or her oath. I do not accept this submission of Mr Starcevic. In neither the liability nor remedy judgements did I make any finding that Mrs Linfield lied or did not tell the whole truth. There was no finding of dishonesty against Mrs Linfield and it would be inappropriate for such an inference to be made from the findings of the liability and remedy judgments.

[20]The situation was, as described by Mr Meichen, namely that the case had been hard fought out and at the end the Tribunal had made its findings on a balance of probabilities. The case was not clear cut and certainly not one which would have been appropriate for a deposit order (nor was, quite rightly, any application for a deposit order made). The evidence clearly needed to be tested and was not straightforward. Indeed, my decision in relation to liability was reserved as I had wanted time to carefully consider the evidence before making my decision. The fact, that the Tribunal ultimately found that the redundancy situation was engineered so as to procure the claimant’s selection is not sufficient to amount to vexatious, abusive, disruptive or otherwise unreasonable conduct. I accept the submission of Mr Meichen that the fact that the claimant has won his claim does not mean he is entitled to his costs.

[21]I am not satisfied that the respondent has acted vexatiously, abusively, disruptive or otherwise unreasonably for the reasons set out above.

[22]For all of those reasons, the claimant’s application for costs is therefore refused. Signed by