Employment Judge DaveyIn person for claimantMr Femi Ogunshakin (instructed by solicitor) for respondentDate 20 June 2023
JUDGMENT
[1]The claimant’s claim for unfair dismissal is well-founded. The claimant was unfairly dismissed by the respondent.[2]In respect of the calculation of remedy, there is a 75% chance the claimant would have been fairly dismissed if the respondent had followed a fair procedure in dismissing him.
REASONS
[1]The claimant was employed by the respondent on 22 February 2017 as a purchasing and sales director. His employment terminated on 30 April 2022 when he was made redundant. He was notified he was being made redundant on 31 January 2022, with three months notice and placed on garden leave for the remainder of his employment. He accepts that he was paid the correct redundancy payment and was paid correctly during his notice period which included a requirement for him to take all outstanding annual leave.[2]By a claim form presented on 31 May2022, following a period of early conciliation from 28 April 2022 to 16 May 2022, the claimant presented a claim for unfair dismissal, age discrimination and breach of contract. Page 1 of 16[3]By a response form presented on 25 July 2022, the respondent denied the claims and asserted the claimant had been fairly selected for redundancy.[4]At a preliminary hearing on 30 November 2022, the claimant confirmed he had been paid all outstanding redundancy pay and there was no outstanding notice pay. The claimant’s claims for age discrimination and breach of contract were dismissed upon withdrawal.[5]The only claim before me was for unfair dismissal by reason of redundancy. Preliminary matters[6]At the outset of the hearing, I dealt with some preliminary issues. Application for further disclosure[7]The claimant made an application to the Tribunal on 13 and 21 March for the Tribunal to order the disclosure of invoices from Victus Consultancy Ltd to the respondent for the provision of services provided by contractors, specifically the sons of the respondent’s directors, Mr Luke Fey and Mr Alistair Gailbraith. The claimant was concerned these contractors were being used to supplement the work he was doing to justify making him redundant.[8]I decided this application should be granted. The respondent is a small business with four employees and five people contracted to provide services (including the two directors) and the directors are the sole/primary shareholders in some linked companies. There is an overlap in the work done by the employees and contractors across the linked companies, including the respondent. The respondent confirmed it was able to provide these documents and this could be done without a delay in the proceedings.[9]On balance, I concluded the documents were relevant to the issues and disclosable. Further, in accordance with the overriding objective, it was proportionate for the respondent to supply these documents and this could be done without causing any delay to the proceedings. Inclusion of s111A Employment Rights Act 1996 documents in the hearing bundle[10]The respondent included documents under the subheading ‘Section 111A Proceedings’ numbered 221-232 in the hearing bundle, this being a reference to s111A Employment Rights Act 1996. Reference was also made to these ‘s111A proceedings’ in the witness statements.[11]The respondent’s representative Mr Ogunshakin presented a skeleton argument at the outset of the hearing submitting that these documents were ‘off the record’ and should be removed from the bundle. The claimant made no objections to the removal of the documents and stated it was the respondent who had brought these documents into the public domain. This was not disputed. I agreed with the respondent that these documents were not Page 2 of 16 admissible before the Tribunal and granted a brief adjournment so the documents could be removed and the witness statements could be redacted.[12]At the beginning of day two of the hearing the respondent made an application to re-introduce the s111A documents on the basis they could be suitably redacted. I decided to refuse this application. Section 111A(1) , Employment Rights Act 1996, provides that evidence of pre-termination negotiations is inadmissible in any proceedings on a complaint under section 111. In subsection (1) “pre-termination negotiations” means any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee. Section 111 provides that “A complaint may be presented to an employment tribunal against an employer by any person that he was unfairly dismissed by the employer”.[13]I also had regard to the Judgement of the EAT in Faithorn Farrell Timms LLP v Bailey 2016 ICR 1054, EAT which confirms that the fact of any offer or discussions held with a view to terminate employment on agreed terms was inadmissible, not just the content. Therefore, it is not enough to redact the s111A documents as there was a requirement for them to be excluded in their entirety. Further disclosure[14]The respondent made a second application at the beginning of day two of the hearing for the inclusion of further documents in the bundle. One set of documents confirmed that a linked company to the respondent, HK Packaging Ltd, went into liquidation. The other document was an email which confirmed the respondent was engaged in intellectual property (IP) litigation in the High Court. These documents were relevant to this hearing because these events occurred during the redundancy consultation period and helped to explain the extended consultation period and the finances of the respondent at the material time. The claimant objected to the inclusion of the documents on the basis the documents should have been disclosed earlier and that the respondent had mismanaged the disclosure process. I allowed the application. These documents numbered only a few pages, would not cause a significant delay to the hearing and were relevant to the issues.
The issues
[15]What was the reason or principal reason for dismissal? The respondent asserts that it was redundancy. The claimant disputes there was a genuine redundancy situation.[16]If the reason was redundancy, did the respondent act reasonably in all the circumstances in treating that as a sufficient reason to dismiss the claimant. Did the respondent:16.1 adequately warn and consult the claimant; Page 3 of 1616.2 adopted a reasonable selection decision, including its approach to a selection pool;16.3 take reasonable steps to find the claimant suitable alternative employment; and,[17]Was dismissal within the range of reasonable responses.
The law
[18]Section 98 ERA 1996 provides as follows: “98 General (1) 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 principal reason) for the dismissal, and (b) That is it either a reason falling within sub section (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.”[19]Under sub-section (2) redundancy is a potentially fair reason.[20]As per s.98(4) “(4) 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 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.”[21]Section 139(1) deals with redundancy as follows:- “(1) 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 — … (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.[22]In redundancy cases a Tribunal will have regard to the guidelines in Williams v Compare Maxam Ltd [1982] IRLR 83, EAT. In Williams the Employment Appeal Tribunal set out four factors that a reasonable employer might be expected to consider:a. Whether the selection criteria were objectively Page 4 of 16 chosen and fairly applied.b. Whether the employees were warned and consulted about the redundancy.c. If there was a Union, whether the Union’s view was sought.d. Whether any alternative work was available.[23]Nevertheless, it is permissible to have subjective criteria. In Swinburne and Jackson LLP v Simpson EAT 0551/12 confirmed it was well settled law that an employment tribunal reviewing redundancy selection criteria would not go wrong so long as, in determining fairness, it recognised that employers sometimes needed to deploy criteria which called for the application of personal judgment and a degree of subjectivity.[24]In assessing the fairness of the dismissal for redundancy, following the decision of the House of Lords in Polkey v A E Dayton Services Ltd [1988] A.C. 344, the Tribunal must also consider procedural fairness. Polkey establishes that a failure to follow proper procedure is likely to make the dismissal unfair, unless the employer could reasonably have concluded that to do so was “utterly useless” or “futile”. Lord Bridge at P364 stated that: “in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation. In the case of an unfair redundancy dismissal where the Tribunal considers that there is a chance that the employee would have been dismissed in any event, then the Tribunal may reduce the compensation awarded accordingly.
The evidence
[25]I had a hearing bundle of 532 pages.[26]I had witness statements and heard oral evidence from the following:26.1 Mr Colin Galbraith, Company Director (commercial)26.2 Mr Edwin Fey, Company Director (financial and technical)26.3 Mrs Jacqueline Hudson, Independent HR consultant (ourHRPeople)26.4 The claimant.
Findings of fact
[27]The respondent is a small business importing and supplying fruit and vegetables. The respondent was initially known as ‘Green Team (UKR) Ltd’ until 17 July 2020, when it changed it’s name to GFS Fresh Ltd. In 2021, it had four employees (Mr Lucien Jeffries, Mr Jason Cooke and Mr Michael Pope and the claimant), two directors (Mr Galbraith and Mr Fey) who were not employees though billed the respondent for their services, one self-employed contractor (Mr Kevin Shippey), an accountant and a cleaner.[28]The respondent company worked closely with other ‘linked’ companies. The ones relevant to the issues are Victus Consultancy Ltd (owned by Mr Galbriath) Page 5 of 16 which invoiced the respondent company for consultancy services and HK Packaging Ltd, now in administration (owned by the respondent).[29]The claimant was initially appointed as a Sales and Procurement Director of the respondent on 29 November 2016. At this time, he was not an employee. The claimant was employed by the respondent, keeping the same title of ‘Sales and Procurement Director’ on 22 February 2017. The claimant was appointed as a board director of the respondent in July 2018, which included an offer of 10% of the issued share capital of the respondent. The claimant was also appointed as a director of HK Packaging Ltd in February 2019.[30]By a letter dated 26 February 2020, the claimant resigned from both his directorships and remained as an employee for the respondent, initially with the same job title.[31]The claimant’s main responsibility was the procurement of sweet potatoes and butternut squash. His role involved contract management, logistics, shipping and customs. The claimant stated he also did sales and managed some customer accounts. The claimant’s day to day role did not include trading though it was not disputed by the parties that he covered this role as and when required, usually when one of the traders was on leave.[32]On 8 September 2020, the claimant signed a job description that described him as ‘Purchasing and Sales Manager’. The claimant says this was part of a paper trail for a food safety audit, he did not check the wording of the job description before he signed it, he did not agree to a change to his terms and conditions of employment and he continued to use the title of Sales and Procurement Director until his employment ended. The respondent says this became his new job title following his resignation as a company director and other than the change in job title, the claimant’s terms and conditions of employment remained the same.[33]I accept the respondent’s position that there was change in job title in principal and this reflected the fact the claimant had resigned his directorship. That said, I note the claimant’s continued use of the job title ‘Sales and Procurement Director’ and that this was not challenged by the respondent, as confirmed by Mr Galbraith in oral evidence.[34]For the avoidance of doubt, I do not consider the name change to the claimant’s role, to be a material factor in his selection for redundancy. This occurred in September 2020. The claimant was not told his role was at risk of redundancy until May 2021.[35]By an email dated 29 March 2021, Mr Galbraith told the claimant the respondent planned to take advantage of the furlough scheme (officially the Coronavirus Job Retention Scheme) and that the claimant would be placed on furlough 50% of the time, working the remainder. The email stated: ‘ ‘We are going to furlough 3 people to work ½ time. Page 6 of 16 The figures and availability of both purchase and sale are seriously affected by Covid and particular on our on the spot business and we have to look to regain some of our losses by use of the Government furlough scheme. Therefore as of 1st April we want to place you on a 50% work basis until further notice.’[36]The email goes on to say that the claimant should work in the mornings, that his pay would be topped up to 100% each month and that Mr Cooke and Mr Jeffries were also being furloughed on a 50% work and 50% furlough basis.[37]On 18 May 2021, Mr Galbraith saw the claimant in the reception area and asked him to step into the boardroom. Once in the boardroom, Mr Galbraith told the claimant the company needed to consider making redundancies.[38]Later the same day, Mr Fey sent a letter to the claimant. The letter stated as follows: ‘The organisation is considering redundancies as an option following a decision by the directors to restructure the business in line with its revised commercial objectives. Unfortunately, your post is one at risk of redundancy. What happens next? The organisation will now start the consultation process. The purpose of consultation is to: discuss and explore ways of avoiding or reducing the number of redundancies and reach agreement if possible; give you the opportunity to make suggestions and raise any questions you may have; consider possible suitable alternative employment within the organisation; seek to agree criteria for selecting staff if redundancies do become necessary; and identify your needs during the process and provide you with any necessary support and assistance I want to make it clear that no decision has been taken on this yet and that no decision on this will be made until the consultation has concluded.’[39]The respondent had no formal redundancy policy or procedure.[40]The claimant received another letter from Mr Fey dated 7 June 2021, inviting him to an individual consultation on 16 June 2021. Very similar letters were sent to Mr Jeffries, Mr Cooke and Mr Pope, the respondent’s three other employees. The letter repeated the purpose of the meeting as set out in the earlier letter dated 18 May 2021 and stated as follows: ‘After the meeting, we will consider all of the representations that you and others have made. It may be necessary to have a further consultation meeting with you if there are any outstanding issues or concerns. However, we will keep you informed and involved whatever decision we ultimately take.’[41]The meeting took place as scheduled between Mr Fey and the claimant on 16 June 2021. The claimant received the minutes totalling 5 pages from the meeting on 25 June 2021. Page 7 of 16[42]By a 5 page letter dated 7 July 2021, the claimant disputed much of the content of the minutes.[43]Much of the disputed information was about the precise detail of the way in which the respondent’s business operates. What was not in dispute and relevant to the issues was that no decision about the number of redundancies had been taken and no timescale was provided. The minutes state ‘EF again replied he hoped redundancies would not be necessary but if they proved to be necessary they would be actioned as soon as possible using the appropriate guidelines for the health of the company’. With reference to the selection criteria, the minutes state ‘AW asked how would the redundancies be decided? EF again reiterated that hopefully none would be needed but if it became necessary redundancies would be appropriate to the savings and skills that were appropriate to the company’. No information was provided about what the selection criteria would be if there were redundancies.[44]The meeting minutes state the claimant would consider a pay cut to avoid redundancy whereas the claimant stated in his response letter dated 7 July 2021, that this was not the case. What is agreed is that there was a general discussion about reducing costs and potentially reducing hours. I accept the claimant’s position about his pay, if he was willing to accept a pay cut, there would be no reason for him to dispute this.[45]Mr Fey stated in the minutes ‘ARW admitted he was not a salesman’ and in response, the claimant stated this was not said though ‘at no time during employment has any discussion taken place advising that sales should be developed and form an integral part of his role’. I accept the claimant’s position on this. The respondent’s witnesses made references to the claimant not being a skilled salesman in evidence and I consider the statement in the minutes to be more of a reflection of their view then something explicitly stated.[46]During the consultation meeting, the claimant raised concerns about the status of Mr Luke Fey and Mr Alistair Galbraith and whether their services would end to reduce costs and prevent redundancies.[47]Mr Luke Fey and Mr Alistair Galbraith were both self-employed and their services were provided at no cost to the respondent, as confirmed by the invoices dated November 2019 to March 2022 and supplied by the respondent during the course of the hearing. Further, neither were doing comparable work to the claimant. Mr Alistair Galbraith is a fully qualified engineer who also, for a period, was assisting his father at the respondent, due to Mr Galbraith’s ill health and Mr Luke Fey was a school leaver with no work experience. Mr Fey explained during oral evidence that the company had a tradition of offering roles to the adult children of it’s staff and contractors, including the claimant’s daughter. The respondent is a small company with an informal approach to offering ‘work experience’. I find that Mr Luke Fey and Mr Alistair Galbraith were not relevant to the redundancy situation.[48]Turning to the restructure, Mr Fey acknowledged in evidence that while he discussed the need for a restructure during the consultation meeting, no decision had been taken about how the respondent would restructure. By his Page 8 of 16 own evidence, the consultation was about looking at what could be done at the respondent to increase sales and reduce costs to potentially avoid redundancies.[49]Following this meeting, the claimant was aware that his role was at risk of redundancy and that he was in a pool of four, these being all the respondent’s employees. However, he was not aware of whether there would be any redundancies and if so, how many or what the selection criteria were.[50]The respondent accepted there was a delay between the notification of a redundancy situation and the decision to make the claimant redundant. Mr Galbraith’s explanation for this was that the respondent was dealing with intellectual property litigation (referred to in evidence as the ‘IP case’) in the High Court and the other side were ‘going after us on a personal level’. Mr Galbraith explained this case was time consuming for him and Mr Fey and it was not possible for the respondent to manage this litigation, run the respondent company and deal with the proposed restructure of the company and potential redundancies. In addition, the respondent owned company, HK Packaging Ltd, went into administration in August 2021. The respondent provided evidence about both the IP case which ended in January 2022 and the insolvency of HK Packaging Ltd. Given the size and recourses of the respondent, I accept Mr Galbraith’s explanation for the delay between the initial consultation on 16 June 2021 and the notification of redundancy on 31 January 2022.[51]The respondent’s position was that the claimant would have been aware of the ongoing risk of redundancy between June 2021 and January 2022, due to the difficult circumstances the respondent was in both financially and due to the IP case. However, the respondent could not provide any firm details of specific conversations about the ongoing redundancy situation or the proposed restructuring of the respondent. I do not accept that there were any further consultation meetings or meaningful conversations (either formally or informally) about the redundancy situation between the claimant and respondent following the meeting on 16 June 2021 and by Mr Galbraith’s own evidence, the respondent had other matters to preoccupy its time.[52]The claimant was placed in a ‘pool of four’ employees at risk of redundancy. The pool consisted of all of the respondent’s employees being Mr Jeffries, Mr Cooke, Mr Pope and the claimant.[53]The respondent was concerned that the claimant was a reluctant salesman who expected other colleagues to provide him with contracts to manage. The claimant lost three major contracts for the respondent which he did not dispute.[54]The parties made references in oral evidence to the claimant being moved from a pool of four to a pool of one. Mr Galbraith was unable to give a precise date when this happened. Mr Fey confirmed the decision to make the claimant redundant followed a ‘board decision’ which he confirmed was a conversation between Mr Fey and Mr Galbraith in mid-December 2021. Page 9 of 16[55]The claimant says he was never told what the selection criteria used by the respondent was whereas the respondent says this was discussed during the consultation process. I do not accept the respondent’s position. There was no reference to the selection criteria in the consultation minutes. Neither is there any evidence the selection criteria were either formally or informally discussed with the claimant between the consultation meeting and the decision to make him redundant.[56]Mr Fey and Mr Galbriath told me the selection criteria was based on the skill set of the four employees with a requirement for each employee retained by the respondent to manage end to end procurement pods (being the new roles within the proposed restructure) and this dictated the selection criteria which was based on having the skills of a trader and a salesman. The respondent did not use a scoring system as part of the selection criteria.[57]As far as the respondent was concerned, the claimant would not fit into the proposed restructure because he was neither a trader nor a salesman. Mr Galbraith stated he lacked the skills of both and whilst he may have covered the trader’s roles when they were on leave, this was something everyone did due to the size of the company and that he was only ‘babysitting’.[58]Mr Galbraith also confirmed that at no point following the consultation process did the respondent consider asking the claimant if he would take a pay cut whereas he did confirm the other traders agreed to a pay cut following the claimant’s notification of redundancy on 31st January 2022.[59]The claimant initially stated he could and had been involved in trading and sales and he was capable in these roles. On further questioning, he acknowledged his role was more of a logistical role and that he dealt with contracts, imports and customs and was responsible for 70% of this work. He confirmed he was not responsible for finances which was with Mr Fey.[60]By a letter dated 31 January 2022, the claimant was notified he was being made redundant following ‘numerous consultation meetings’ The letter goes on to state ‘there was no time limit set for the consultation period’ and ‘it was important to ensure that there was a full opportunity for all options to be considered following the consultation process’. The letter then states the claimant was ‘aware from the consultation process, it was felt that organisational change to divide the company into procurement pods, each one being managed by one of the traders and sales would be beneficial for the future of the company. As part of the process, you let us know that you did not consider yourself to be a trader’.[61]I do not find this letter to be an accurate reflection of what happened. There was only a single consultation meeting on 16 June 2021. Despite the respondent stating that a further consultation meeting may be necessary, this did not happen, this was despite the fact that at some point between the meeting on 16 June 2021 and the letter dated 31 January 2022, decisions were made by the respondent that the restructure would entail a move to ‘procurement pods’ with traders responsible for contract management from end Page 10 of 16 to end. Following on from that, the selection criteria would therefore require employees to be skilled traders and salesman, this fitting the skill set of Mr Jeffries, Mr Cooke and Mr Pope more than that of the claimant. These factors were never discussed with the claimant prior to the redundancy appeal meeting on 18 March 2022. When the claimant asked when he was told what the selection criteria would be, Mr Fey told the Tribunal ‘I don’t think anything was ever formally portrayed in a letter’.[62]There is no evidence that the respondent considered suitable alternative employment for the claimant. Apart from a discussion on 16 June 2021, about the claimant’s role in general terms which occurred prior to a decision about the type of restructure and selection criteria, he was never given the opportunity to discuss what suitable alternative employment, if any, was available to him in the new structure.[63]Following the notification of redundancy letter on 31 January 2022, the claimant was placed on garden leave for the duration of his three month notice period.[64]On 7 February 2022, the claimant submitted an appeal against the redundancy, a letter of grievance and a DSAR request.[65]The claimant’s appeal set out that the redundancy procedure and selection was unfair; that following the length of time since the consultation, the dismissal letter was ‘out of the blue’; there was no meaningful consultation; there was no warning about the first consultation meeting (being the conversation between the claimant and Mr Galbraith on 18 May 2021); there was no cogent explanation as to why redundancies were necessary; no explanation as to why contractors had kept their roles while the claimant was being made redundant and details of the respondent’s redundancy procedure and policy were never supplied.[66]The claimant also complained that his redundancy pay had been incorrectly calculated though by a letter dated 2 March 2022, Mr Galbraith confirmed the redundancy entitlement had been recalculated and the claimant accepts he has been paid the correct statutory redundancy.[67]The claimant’s grievance was focused on being placed on garden leave which formed part of his breach of contract claim which was subsequently dismissed on withdrawal so is not an issue before us today.[68]The claimant also made a DSAR request for his data. Another matter which does not concern the Tribunal.[69]The respondent instructed Mrs Jacqueline Hudson, an independent consultant from myHRpeople to hear the claimant’s appeal. The respondent confirmed to the claimant that it has taken the decision to use an external consultant due to the size of the company and the lack of any senior management not already involved in the redundancy procedure. I find this to have been a reasonable decision.[70]The appeal hearing was held on 18 March 2022 with the claimant, Mrs Hudson, Mr Galbraith and Ms Woodhouse (notetaker) in attendance by Zoom. The Page 11 of 16 meeting lasted approximately 90 minutes. The respondent maintained its position that a fair procedure was followed and the claimant was fairly selected for redundancy. Mr Galbraith told the claimant that when the respondent decided to restructure using end to end procurement pods, it removed the three other employees, who were all traders from the pool of four as they were suited to the new roles, this resulted in a pool of one, consisting only of the claimant.[71]The claimant complained the appeal process took too long from the appeal letter to the hearing, the hearing was procedurally unfair because Mrs Hudson followed a rigid agenda and would not allow him any breaks or an opportunity to refer to his notes and he did not receive a copy of the minutes until 26 April 2022.[72]Mrs Hudson told the Tribunal she carried out a thorough review of the documentation and her evidence confirmed this. She also stated she thought the redundancy consultation had been fair, albeit the respondent could have followed a better procedure though it was a small company. Mrs Hudson confirmed she was instructed in an advisory role and the ultimate decision to dismiss the appeal was with the respondent.[73]Mrs Hudson stated she did not give the claimant a break during the appeal because he would get a break between the appeal and the grievance but she did allow the claimant time to find relevant notes to refer to. She was able to prove the minutes were supplied by email at 12.18pm on 22 March 2022, four days after the appeal hearing. The claimant was unable to explain why he had not received them at this time.[74]While Mrs Hudson could have taken a more flexible approach at the appeal hearing, she managed the timetabling for the process fairly and the claimant received the outcome letter and minutes in a timely manner.[75]By a letter dated 21 March 2022, the respondent dismissed the claimant’s appeal against redundancy. This decision was taken by the respondent and not Mrs Hudson. The outcome letter reflects the content of the minutes of the redundancy appeal meeting and does not acknowledge any failings on the part of the respondent in its management of the redundancy process. There is also no reference to any consideration of retaining the claimant in his existing or an alternative role.[76]Except for the timetabling and the management of the appeal meeting, I find the appeal process was unfair. The respondent did not use the appeal as an opportunity to consider retaining the claimant in employment or to address and acknowledge its own failings. The appeal was simply a procedural step the respondent followed. Relevant law and conclusions[77]The claimant’s position was that following resignation of his position as a board director of the respondent company on 26 February 2020, the respondent contrived a redundancy situation to justify his dismissal. Page 12 of 16[78]The respondent’s position was that the company had suffered financial losses due to a combination of factors including the Covid 19 pandemic which impacted on business, the loss of some contracts and additional financial pressures brought about by litigation against the respondent and its directors personally, and the liquidation of HK Packaging Ltd, a company owned by the respondent. The respondent also stated in evidence, it had to borrow money in late 2021, to keep the respondent afloat.[79]I have to decide if the dismissal was fair or unfair, this is a two stage process. The first stage is for the respondent to show a potentially fair reason for dismissal, and secondly if that is done, the question then arises whether the respondent acted reasonably or unreasonably in all of circumstances in treating it as a sufficient reason for dismissing the employee. What was the reason, or principal reason, for dismissal?[80]The first stage, I have to decide was the reason or principal reason for dismissal. Section 98 of the Employment Rights Act 1996 (ERA) identifies a potentially fair reasons for dismissal one of which is ‘redundancy’ at s98(2)(c). Section 139 ERA sets out in what circumstances a dismissal will be taken to be for the reason of redundancy. This includes the requirement for work of a particular kind that has ceased or diminished which applies here.[81]I find that there was a genuine redundancy situation which necessitated a need to review the structure and finances of the company. The claimant was aware of the respondent’s financial problems from at least March 2021 when he was placed on furlough. I remind myself it is not the function of the Tribunal to decide how a business should be managed and that it is for the respondent to decide if it should consider making redundancies.[82]I find that the reason for dismissal was redundancy, and this was a potentially fair reason. The claimant’s role as a Sales and Procurement Director, latterly a Purchasing and Sales Manager was at risk of redundancy, as were the roles of Mr Jeffries, Mr Cooke and Mr Pope, all of the respondent’s employees. Did the respondent act reasonably in all the circumstances in treating that as a sufficient reason to dismiss the claimant?[83]Turning to the second stage, under section 98(4) for a redundancy dismissal to be fair, I have to decide whether the respondent acted reasonably in dismissing the claimant for redundancy. I need to decide whether the dismissal was fair in all the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably. I find that it was not. It follows that the claimant’s dismissal was unfair. In making this decision I take into account that the respondent is a small business, with limited administrative resources, and which is not expected to reach the same standards as a large, well-resourced business. However, I find that the redundancy process in this case was outside the range of what a reasonable employer in these circumstances might have done.[84]In line with the guidelines established in Williams v Compare Maxam Ltd [1982] IRLR 83, EAT for an employer to reasonably dismiss an employee for Page 13 of 16 redundancy it must first establish a number of factors before concluding the only reasonable step is to dismiss. Did the respondent adequately warn and consult the claimant?[85]The respondent did not adequately warn and consult the claimant. There was an initial consultation meeting on 16 June 2021, limited to notifying the claimant his role was at risk of redundancy and discussing ways the company could avoid redundancies only. The claimant was notified he was in a pool of four (all of the employees of the respondent) during the consultation meeting.[86]I remind myself of the content of the respondent’s letter dated 18 May 2021, which stated ‘it may be necessary to have a further consultation meeting with you if there are any outstanding issues’. Following the consultation meeting, there were outstanding issues, namely the detail of the proposed restructure, the selection criteria the respondent planned to use and whether there was an opportunity within the restructure for the claimant to be offered suitable alternative employment. Did the respondent adopted a reasonable selection decision, including its approach to a selection pool?[87]Overall, I find the respondent did not adopt a reasonable selection decision, including its approach to a selection pool.[88]The respondent’s initial decision to place all employees of the respondent in the selection pool was within the band of reasonable responses. At some point, the claimant was moved from a pool of four to a pool of one. The claimant was never consulted on this. Neither was he consulted on the details of the proposed restructure and consequent selection criteria and only learned about this during the appeal meeting.[89]No objective measure or scoring matrix was used by the respondent and ‘selection’ was based on undocumented conversations between Mr Fey and Mr Galbraith. While I find that the selection criteria were not objectively chosen and fairly applied, in accordance with the principals in Swinburne and Jackson LLP v Simpson EAT 0551/12 the respondent was a small employer that knew the skillset of its employees so some degree of personal judgment and subjectively was reasonable in this case. Did the respondent take reasonable steps to find the claimant suitable alternative employment?[90]I find that the decision to move the claimant to a pool of one and make him redundant occurred simultaneously. I accept Mr Fey’s oral evidence that the decision to make the claimant redundant was taken around mid-December 2021. Notwithstanding that the respondent did not consult the claimant about suitable alternative employment, it follows from this decision that the respondent did not take reasonable steps to find the claimant suitable alternative employment before making the decision to make him redundant. Further, the claimant was offered no opportunity to confirm if he was willing to take a pay cut whereas the respondent’s other employees all took a pay cut Page 14 of 16 following the restructure so a conversation must have happened between them and the respondent at some point prior to this. Was dismissal within the band of reasonable responses?[91]For the reasons stated above, I find that the redundancy process was outside the range of what a reasonable employer in these circumstances might have done. Would the claimant have been dismissed in any event?[92]Since I hold that the claimant was unfairly dismissed, in line with the principal established in Polkey v A E Dayton Services Ltd [1988] A.C. 344 I must now consider if there is a chance that the claimant would have been fairly dismissed in any event. There was a downturn in the respondent’s finances, and the respondent reasonably made a commercial decision to restructure the business which involved making an employee redundant. The Tribunal does not question this decision. At the time the decision was made there were four employees of the respondent.[93]The restructure of the respondent required a change of roles for all four employees. Within the restructure, employees would manage trade, sales and contracts from end to end in what the respondent termed as ‘procurement pods’. As a consequence, the claimant’s role became redundant and I accept this as nobody was employed to do the claimant’s role in the restructure.[94]The respondent concluded the claimant lacked trade and sales skills, which would form the primary basis of the new roles and his strategic work could be absorbed by Mr Fey, who was already responsible for the financial and technical work. On this basis, he was selected for redundancy. The other three employees were all primarily traders and salesmen so their skill set was closer to the new roles and they retained employment within the restructure.[95]In evidence, the claimant did acknowledge while he was capable of trading and doing sales, his role was more strategic and logistical, dealing with the management of existing contracts and customs and imports rather than trading and procuring custom and new contracts.[96]I find that had the respondent followed a fair consultation procedure, based on the very different skill set of the claimant compared to that of the respondent’s other employees, all traders, there would have been a 75% chance the claimant would have been selected for redundancy, including consideration of suitable alternative roles.
Remedy
[97]The claimant has been paid the correct statutory redundancy entitlement. Since the basic award for unfair dismissal and the statutory redundancy payment compensate for the same loss, the claimant is not entitled to a basic award.[98]A deduction of 75% will be made to the compensatory award under the principles in Polkey. Page 15 of 16[99]The ACAS code of practice doe not apply to redundancies.[100]The claim is listed for a remedy hearing in respect of the claim of unfair dismissal, when the amount awarded will take account of these conclusions.