Mrs A Sarah v Aetos Capital Group (UK) Ltd: 3202994/2019
JUDGMENT
[1]The Claimant was unfairly dismissed. Had the Respondent undertaken a fair redundancy procedure, there was at least a 50% chance that she would have remained in the Respondent’s employment, and the compensation payable to the Claimant will reflect that percentage.[2]Compensation is assessed as follows: Basic Award £1575 Less: redundancy payment - £1575 Nil Compensatory Award Loss of statutory rights £250.00 Expenses seeking alternative employment £50.00 9 months loss of earnings @ £2561.48 pcm net £23,053.32 9 months medical insurance contributions £459.00 £23,812.32 Less: 50% reduction (chance of fair dismissal) £11,906.16 £11,906.16 Less:(a) Earnings in subsequent employment £3,990.75(b) Balance of redundancy payment £472.50 Total Compensatory Award £7,442.91[3]The Recoupment Regulations apply. The prescribed sum is £7,442.91, and the prescribed period is from 1 March to 30 September 2020.REASONS
[1]This is a claim for unfair dismissal. The Claimant was employed as an accountant by the Respondent from 10 March 2016 until 20 August 2019 when, it is accepted, she was dismissed. The Respondent is a relatively small financial services company, with about fifteen employees in 2019, and is a subsidiary of a larger Chinese undertaking which trades in Hong Kong, Australia and elsewhere in the Far East, whilst being registered in the Cayman Islands. The Respondent asserts that the potentially fair reason for the Claimant’s dismissal was redundancy, and that it acted fairly and reasonably in all the circumstances in dismissing her. The Claimant, whilst not disputing that a redundancy situation existed at the time of her dismissal, contends that wholly inadequate and essentially meaningless consultation took place before she was dismissed, and that no attempt was made to offer her suitable alternative employment, which she says was then available.[2]I heard this case over the course of a two day full merits hearing on 11 and 12 February 2021, which proceeded remotely via the CVP programme due to the continuing Covid-19 pandemic. The Claimant was represented by Ms Darshana Patel of the Free Representation Unit and gave evidence in support of her claim, as did her former colleague Ms Daranee Kerdsawang, who now lives and works in Thailand, from where she gave her evidence. The Respondent was represented by Mrs FaircloughHaynes, a consultant adviser, who called as witnesses Mr Ting Ji, the Respondent’s managing director who took the decision to dismiss her, and Mr Andrew Wood, the Respondent’s compliance officer who heard and dismissed the Claimant’s appeal against dismissal. I was provided with statements from all those witnesses (as well as one from Ms Corinne Kremic, another former employee who was dismissed more or less simultaneously with the Claimant, but who was not called as a witness); an agreed trial bundle; and written submissions on behalf of the Claimant.[3]The relevant events concerning the Claimant’s claim all occurred within a very short time frame during July 2019. Up until then, it was not contested that the Claimant was anything other than a satisfactory employee, undertaking her duties conscientiously and well, with no disciplinary record of which I was told. Part of the Claimant’s duties was to correspond, both verbally on the telephone and by email, and virtually every working day, with colleagues based in either Hong Kong or China, including a company accountant, a finance manager and an operations executive. The significance of that fact is that all such communications were in English: the Claimant’s first language is Urdu, she speaks English fluently, but cannot speak or understand Mandarin or any other Chinese dialect. The Claimant’s annual salary was approximately £46,000 gross; her colleague Ms Kremic, who was the Respondent’s office manager and HR officer, was paid about £34,000 per annum.[4]By way of background, it is right to say that the Respondent company was operating at a loss during 2019. However, it had been doing so for a number of years, and there was a funding agreement in place whereby it received whatever financial support and assistance it required from its Chinese parent company. The Claimant, as the in-house accountant at the Respondent’s London office, was fully aware of that arrangement, since it was she who would notify her colleagues in Hong Kong or China of what sums were needed from time to time; and I am satisfied that that financial support continued up until and indeed beyond the Claimant’s dismissal in August 2019. Secondly, and as both the Claimant and her witness Ms Kerdsawang confirmed, there had been a meeting of the Respondent’s staff in early June 2019 when the Respondent’s CEO had reassured staff that the Respondent’s business in London would continue as before, and would not be impacted by a number of changes in, and the sale of some clients by, the China based undertaking.[5]On 16 July 2019, the Claimant and Ms Kremic were called into separate meetings by Mr Ting Ji, the Respondent’s managing director. Whilst I didn’t hear from Ms Kremic, Mr Ji’s account was that he then told each of them that the Respondent needed to economise and save money, and that it had been decided to amalgamate their duties and functions as, respectively, in-house accountant, office manager and HR officer into one single role; and that he then provided each of them with a job description setting out the requirements of the new role, at the same time making clear that the ability to speak Mandarin (which neither did) was an essential element of the combined role.[6]Mr Ji’s evidence was that the Claimant turned that opportunity down flat there and then for two reasons. First, because she considered that the salary offered of £30,000 per annum was not enough for the combined role; secondly because she cannot speak Mandarin. Whether or not Ms Kremic expressed any interest in the role is not clear, but in any event she was not selected for it.[7]The Claimant’s account of her meeting with Mr Ji is very different. In essence, she says, she was told by Mr Ji without warning or preamble that both she and Ms Kremic would be dismissed, that the Respondent had already identified and hired someone to undertake their combined duties and functions, who would be joining the Respondent shortly, and that Mr Ji did not suggest that she could apply for either the combined role or any other alternative, since her imminent dismissal was a fait accompli.[8]It is not in dispute that the Claimant subsequently attended what the Respondent describes as two further redundancy meetings, the first being on the following day (17 July) with an external HR consultant appointed by the Respondent, the second two days later on 19 July with Mr Ji, when ‘consultation’ was concluded. Mr Ji’s evidence was that also on 19 July he offered the new combined role of accountant/office manager/HR officer to a lady called Lin Zhu, referred to during the hearing and hereafter as ‘Julie’, who can speak Mandarin, and that she accepted the role offered immediately. Four days later, on Tuesday 23 July, Julie started work with the Respondent, as her employment contract in the bundle makes clear; and that was also the day on which the Claimant’s dismissal was confirmed, her last day of employment being 20 August.[9]In relation to what actually happened at their meeting on 16 July, and indeed wherever their evidence conflicts, I have no hesitation in preferring the Claimant’s account to that of Mr Ji for a number of reasons. First, and even allowing for occasional difficulties in communication/comprehension due to the remote nature of the hearing and because English is not Mr Ji’s first language, Mr Ji repeatedly and clearly stated in his oral evidence that his colleague and fellow director Mr Mack Tung had already interviewed Julie by the time of Mr Ji’s initial meeting with the Claimant on 16 July, and that he had then informed the Claimant of that fact. Secondly, that confirms and is consistent with the Claimant’s evidence that Mr Tung had made clear to her on 16 July that a replacement employee had been found for her role, and that there was no alternative to her redundancy dismissal. That would also fit with the Claimant’s account of earlier (and at the time confusing) enquiries having been made concerning her role by the company accountant in Hong Kong, which would only be consistent with her forthcoming dismissal.[10]Thirdly, Mr Ji’s account that he offered the combined role to the Claimant on 16 July, which she then refused; that Julie was seen for the first time on 17 July by him (and subsequently by Mr Tung on 18 July) before being offered the role on 19 July, which she accepted and then started work on 23 July, when the Claimant’s dismissal was confirmed, is in my view inherently unlikely and not credible, as well as being undermined by Mr Ji’s own evidence. Fourthly, evidence in support of the Claimant’s overall account, and in particular of her handover of functions from 23 July onwards to Julie and of her discussions with Mr Ji as to when her leaving package and that of Ms Kremic, who had been simultaneously dismissed, should be included in the Respondent’s monthly accounts, with the consequent delay in payment of other staff salaries, was provided in the unchallenged evidence of Ms Kerdsawang, as well as in the statement provided by Ms Kremic. Finally, the inclusion of an ability to speak Mandarin as an essential requirement for the combined role postholder was, in my judgment, simply a device to try to justify the dismissal of both the Claimant and Ms Kremic, since no such ability had previously been needed by either of them, nor was it then required in order to undertake the combined role, as Mr Ji frankly accepted in his evidence.[11]Those findings are essentially determinative of the Claimant’s complaint. The fundamental duty on an employer is to take reasonable steps to avoid or limit potential redundancies, to engage in timely and meaningful consultation with those employees potentially or actually affected, to utilise so far as possible objectively fair redundancy selection criteria, and to consider suitable alternative employment as a means of avoiding redundancy dismissals. In my judgment, the Respondent has failed to comply with virtually all of those requirements.[12]If it is accepted that a redundancy situation existed at the Respondent in July 2019, where two pre-existing roles (the in-house accountant and the office manager/HR officer) were to be merged, then it was incumbent on the Respondent to take reasonable steps to try to ensure if possible that only one of the two current postholders was made redundant by means of a genuine redundancy pool with appropriate criteria, which would include the salary payable and other terms and duties of the combined role, but excluding any spurious language requirement; and to engage with the Claimant and Ms Kremic in genuine and timely consultation about what was obviously potentially suitable alternative employment. Plainly that didn’t happen, and instead the Respondent chose to dismiss both postholders and in their place recruit a much cheaper replacement who, as the evidence before the Tribunal demonstrated, was ill-qualified to undertake the requirements of the combined role satisfactorily on her own and without third party assistance.[13]I bear in mind that it is not for the Tribunal to second guess an employer, or to substitute its own judgment as to what should have resulted but, had a reasonably fair redundancy selection procedure been adopted, then two things seem reasonably clear to me: first, that the Claimant had at least a 50% chance of being the successful candidate for the combined role, and that percentage will be reflected in the compensation which is payable to her, and secondly that it is likely that the annual salary for the combined role would have reflected the range of salaries then being paid for the accountant and office manager/HR officer roles - £46,000 and £34,000 respectively. Doing the best I can, I consider that an annual salary figure of £40,000 for the new combined role would not have been unreasonable.[14]For these reasons, I find that the Claimant was unfairly selected for redundancy, that the Respondent did not follow a reasonably fair redundancy process, and that the Claimant’s complaint of unfair dismissal is successful and she is entitled to compensation.[15]In relation to remedy, both parties accepted that the basic award should be £1575, although the redundancy monies paid by the Respondent should be set against and extinguish that sum, together with the additional £472.50 then paid which is to be deducted from the compensatory award. Neither party contested an award of £250 in relation to loss of statutory rights, and a figure of £50 towards the Claimant’s expenses in seeking alternative employment seems to me to be fair.[16]With respect to loss of earnings, the Claimant succeeded in obtaining alternative employment as an accountant with another financial services undertaking in November 2019, albeit that didn’t work out beyond January 2020. There is nothing to suggest that that was as a result of any fault on the Claimant’s behalf, and there was clear evidence that the Respondent had refused to provide her with a reference for those employers after she had commenced these proceedings. The Claimant was unemployed thereafter until September 2020, when she commenced work (in a similar capacity as before) for her current employers at a salary significantly higher than that payable by the Respondent. I accept that the Claimant took reasonable steps to mitigate her loss of earnings through seeking employment limited to her particular field of expertise, rather than additionally as a cleaner or other manual worker, as the Respondent suggested. Doing the best I can, I think it is just and equitable to both parties to compensate the Claimant for loss of earnings for a period of nine months from the date of dismissal (20 August 2019), subject to deduction of the sums earned by the Claimant between November 2019 and January 2020 (£3990.75). In addition, the Claimant should be compensated for the lost medical insurance payments by the Respondent over the same period (£459), although her claim for a bonus payment is too speculative and remote in my view. Finally, the Claimant applied for state benefits in March 2020, so that the Recoupment Regulations will apply from 1 March 2020. RECONSIDERATION JUDGMENT The figure by which the compensatory award payable to the Claimant should be reduced pursuant to the Polkey principle is itself reduced from 50% to 40%. Accordingly, the sum of £2,381.23 is to be paid by the Respondent to the Claimant in addition to the compensation already ordered.[1]This is a reconsideration hearing following the Claimant’s successful appeal to the Employment Appeal Tribunal, her case being remitted to this Tribunal for a more detailed evaluation of the appropriate percentage by which her compensatory award should be reduced pursuant to the Polkey principle. Put another way, the Tribunal’s task is to assess the Claimant’s chances of filling the combined role of in-house accountant and office & HR manager in July/August 2019, when the Claimant and Ms Corinne Kremic, the previous holders of those respective roles, were both dismissed, had a reasonably fair redundancy procedure been adopted by the Respondent. This reconsideration was originally listed to be heard on 15 March this year, but did not then proceed because of the absence of both the Claimant and her representative, apparently because notice of the hearing had been sent to the wrong individual at the Free Representation Unit (‘FRU’).[2]I heard evidence from the Claimant, who was represented by Mr Alabi of FRU, and on behalf of the Respondent, represented as before by their consultant Ms FaircloughHaynes, from Ms Li Zhu, who was in fact appointed to that combined role, through the medium of Mr Wang, a skilful Mandarin interpreter, and from Ms Akinmodun, an independent HR consultant, together with closing submissions from both representatives. I was provided with an agreed supplementary trial bundle and with witness statements for this hearing from all three witnesses.[3]At the outset I make plain that I agree with Mr Alabi that at least initially this was, or should have been, a ‘two-horse race’, to adopt his expression, between on the one hand the Claimant, who was the Respondent’s in-house accountant, and Ms Kremic, their office and HR manager, as to who should be appointed to the combined role. In my judgment, it was only if neither of them were willing and able to undertake the combined role that a potential third candidate, for example Ms Li Zhu, comes into the reckoning.[4]Both the Claimant and Ms Kremic were dismissed by the Respondent virtually simultaneously on 16 July 2019, ostensibly but not fairly as I have found by reason of redundancy, the only real difference between them being that the Claimant worked out her notice period, leaving in August that year, whilst Ms Kremic did not do so and her employment terminated in July. The similarities do not end there, since Ms Kremic had been appointed to her role approximately six months before the Claimant had joined the Respondent in March 2016, so their length of service with the Respondent was broadly comparable. It was also accepted by the Respondent that both were conscientious and capable employees, with unblemished disciplinary records. The Claimant was however paid significantly more than Ms Kremic, her annual salary being £46,000 in contrast to £34,000 for Ms Kremic. It is also noteworthy that Ms Li Zhu, who was appointed to the combined role and who started work for the Respondent on 23 July 2019, accepted an annual salary of £30,000, as her contract in the original trial bundle confirms.[5]As I observed in my original judgment, it is not for the Tribunal to second guess an employer and substitute its own judgment as to what should have resulted and who should have been appointed, had an appropriate procedure being followed. The Tribunal should adopt a cautious and relatively broad-brush approach in undertaking its’ assessment.[6]Both the roles of in-house accountant and Office & HR manager were important to the Respondent and needed to be performed well. To take two fairly obvious examples of the duties involved in the respective roles, the Claimant would undertake the monthly payroll calculations and functions, which affected all the Respondent’s approximately 15 or 16 employees, as well as the financial and accounting duties listed in the combined role’s job description (page 49 in the supplementary bundle), that being generated by the Respondent in the summer of 2019 although not used in any meaningful redundancy process. On the other hand, Ms Kremic dealt with all the Respondent’s HR issues, such as those joining, leaving or being disciplined by the Respondent, as well as with its’ marketing operations and general office management. It seems to me to be clear that both individuals would have required at least some training in order to perform the combined role. The Claimant accepted in her evidence that she lacked HR and office management skills and experience, whilst there is nothing to suggest that Ms Kremic, who has an HR foundation qualification, had any relevant accountancy background; but from what I heard and read I find that both the Claimant and Ms Kremic could have undertaken that combined role satisfactorily following appropriate training, so that there was no genuine need for the Respondent to recruit externally for the role.[7]At first sight, it might be thought that the Claimant’s role was the more important of the two, bearing in mind the salary differential highlighted above, and therefore that she was better placed than Ms Kremic for the combined role. Additionally, the in-house accountant’s duties, including staff payroll, dealing with the Respondent’s bank and with their Chinese parent company, which supplied the necessary funding for the Respondent undertaking, arose every month. However, a countervailing point can be made that whilst the job description at page 49 specifies that accounting skills were ‘required’ for the combined role, rather than simply preferred, Ms Li Zhu, who commenced in that role in July 2019, seems to have had only limited prior experience as a bookkeeper, and was able to be trained up in the financial and accounting functions and skills included in the combined role by the Claimant during the course of their two week handover.[8]In addition, as set out in the original judgment and as was not contested, the Respondent was operating at a loss in 2019. Not only were the Claimant and Ms Kremic dismissed by the Respondent in the summer of 2019, but there were redundancy dismissals in both February and during the summer of 2020, those being dealt with by Ms Akinmodun as an independent HR consultant on the Respondent’s behalf, whereby a further seven employees, essentially half the undertaking’s remaining workforce, left and were not replaced. I was told that the Respondent’s FCA Licence was downgraded during the course of 2019, and whilst it was not entirely clear from the evidence I heard what exactly the Respondent’s remaining employees provide by way of broking or financial services, it is clearly a significantly diminished undertaking. In all these significant steps in the reduction of the Respondent’s operations, it was in my view eminently foreseeable that Ms Kremic’s skills and experience as a qualified HR manager and professional would have been helpful.[9]There is also the further issue as to whether the Claimant or indeed Ms Kremic would have been willing to undertake the combined role at an annual salary of £30,000, had one or other of them been offered the opportunity by the Respondent. Whilst I assessed a reasonable annual salary for the combined role as being £40,000, midway between what the Claimant and Ms Kremic were actually being paid in their original roles, had a fair redundancy procedure taken place, the fact remains that in July 2019 Ms Li Zhu was offered and accepted a salary of £30,000 for the combined role. That figure was lower than Ms Kremic’s annual remuneration, and plainly it is not possible to speak for her since she played no part in these proceedings. It is also very significantly lower than the Claimant’s salary. Following her dismissal by the Respondent, and as set out in my original judgment, the Claimant went on to undertake two further accounting roles within the following year at significantly higher salaries to that she was receiving with the Respondent. The Claimant’s evidence at this hearing was that, had she been offered the combined role in July 2019 at an annual salary of £30,000 she would have accepted it, since(a) she was then undergoing IVF treatment and needed to be employed, and(b) because of the general shortage of accounting roles available during the summer. But that evidence is in my judgment significantly undermined by what the Claimant told Mr Wood at her dismissal appeal, when she said that because of the reduced salary on offer for the combined role, of which she had been told, she did not regard that role as being suitable alternative employment to her current role with the Respondent. So, I am left in some doubt as to whether the Claimant would in fact have accepted the combined role, had she been offered it, at an annual salary of £30,000, which Mr Alabi concedes on her behalf as being a material point. It might have been possible, I suppose, for the Claimant to have successfully negotiated a higher figure with Mr Ji, the Respondent’s managing director, although that seems unduly speculative; and I bear in mind that neither side has challenged or disputed the £40,000 p.a. salary figure which I assessed for the purposes of the Claimant’s remedy compensation calculations.[10]As I have already said, this assessment exercise is inevitably somewhat speculative. However, weighing all the above matters together, and in particular bearing in mind not only the significance of the Claimant’s original role as in-house accountant to the Respondent’s daily operation, as reflected in her salary, but also the actual figure paid by the Respondent to the Claimant’s successor and the reduction in the Respondent’s commercial activities and operations which were then at least in prospect if not actually planned, and doing the best I can, I assess the Claimant’s chances of obtaining and accepting the combined role of in-house accountant and office & HR manager, had a reasonably fair redundancy procedure taken place, as being 60%, rather than 50% as originally determined. Accordingly, adopting the remedy calculations and approach set out at the full merits hearing, the Polkey reduction is reduced by the sum of £2,381.23, which figure is added to the compensatory award to be paid to the Claimant by the Respondent.[11]Finally, I record that there was no application for the costs arising from the abortive hearing on 15 March this year, since Ms Fairclough-Haynes accepted that the relevant correspondence and notices of or relating to that hearing had been sent in error to the wrong person at FRU.