SHAWKAT v NOTTINGHAM CITY HOSPITAL NHS TRUST [2001] EWCA Civ 954

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE
EMPLOYMENT APPEAL TRIBUNAL
(Mr Justice Charles and His Honour Judge Collins)
[2001] EWCA Civ 954Case No Case No: 2000 2426 A1Venue Royal Courts of Justice, Strand, London, WC2A 2LL, Thursday 21st June 2001
Between
SHAWKATAppellantNOTTINGHAM CITY HOSPITAL NHS TRUSTRespondent
Before
Lord Justice Robert WalkerLord Justice LongmoreDECLAN O'DEMPSEY Esq (instructed by Holyoak & Co for the Appellant)THOMAS KIBLING Esq (instructed by Browne Jacobson for the Respondent)Date 21 June 2001
The issue on this appeal is whether, when Dr. Shawkat was dismissed by the respondent Hospital Trust ("the Trust") with effect from 31st December 1996, he was dismissed by reason of redundancy; or, to put the matter rather more accurately, whether the second decision of an employment tribunal published on 24th August 1999 to the effect that he was so dismissed discloses any error of law. The Employment Appeal Tribunal called in the appeal for a preliminary hearing in order to ascertain whether there was a reasonably arguable point of law and held that there was not. Permission to appeal to this court was granted by Peter Gibson LJ on the basis that the argument on behalf of Dr. Shawkat received some support in the remarks of Lord Clyde in Murray v. Foyle Meats Ltd [1999] ICR 827 , 833C and in the commentary in the leading text book, Harvey on Industrial Relations section E, paras. 725-732

Facts

Dr. Shawkat had been employed by the Trust for some time. The Trust runs one of the largest hospitals in Europe and employs about 4,500 people. In October 1993 Dr. Shawkat, who qualified as a doctor in 1968 and became F.R.C.S. in 1980, was appointed to a staff grade thoracic surgery post. This was a new post created in order to assist in the achievement of a reduction in the hours of work of junior doctors. He worked 10 sessions a week but there was no commitment to be on-call. He did, however, make a separate contract to participate in the on-call rota on the basis that he would be first on-call for a limited time and thereafter be second on-call. This contract was not in writing but it was a binding arrangement and, in due course, Dr. Shawkat was second on-call for thoracic surgery in accordance with the rota.Between April and September 1995 the Trust built a Cardiac Intensive Care Unit. The intention was that the thoracic department and cardiac departments be merged and that thoracic surgeons should do cardiac work in addition to thoracic work, cutting down their thoracic work accordingly. Many doctors were happy to re-organise their work in this way but Dr. Shawkat neither wanted to do cardiac work nor felt himself able to do such work as efficiently and conscientiously as he was able to do thoracic work. Matters came to a head when it was made clear to Dr. Shawkat that he would be expected to do first on-call duty in the Intensive Care Unit of the cardiac surgery department. This led to Dr. Shawkat giving notice in October 1995 that as from January 1996 he was no longer prepared to be on-call at all; in order to help out he did in fact continue on-call duties in the thoracic department until February 1996.In November 1995 the Trust made proposals for alterations in Dr. Shawkat's contract whereby his theatre and clinical sessions in thoracic surgery were to be reduced and he would become obliged to do cardiac work as well as thoracic work. On 4th March 1996, he was presented with various options as to his future work. These were repeated in a letter of 30th August 1996 but were rejected by Dr. Shawkat on the basis that two of them included a first on-call duty for cardiac surgery and the third required him to do theatre sessions on a 6 monthly cycle, viz. 6 months cardiac surgery and 6 months thoracic surgery. The Trust accordingly terminated his employment with effect from 31st December 1996.Dr. Shawkat claimed both that he was unfairly dismissed and that he was dismissed because he was redundant. On 6th March 1998 after an 8-day hearing, the employment tribunal upheld his claim for unfair dismissal but dismissed his claim for a redundancy payment:-
"because there was no diminution in the requirements of the Respondent for employees (not just the Applicant) to carry out work of a particular kind."
Dr. Shawkat was dissatisfied with the tribunal's decision in relation to redundancy and appealed to the Employment Appeal Tribunal who held that there were insufficient findings made by the employment tribunal for them to determine whether there was any error of law and they, accordingly, sent the case back to the tribunal for further findings. With respect to the Employment Appeal Tribunal, it is not entirely easy to be certain what further findings were required. They have to be distilled from pages 17-22 of the decision and, speaking for myself, I think the tribunal might have been assisted by more concise indications of precisely what findings they were expected to make.Mr O'Dempsey for Dr. Shawkat laid particular emphasis on the following paragraph at pages 17-18 of the Appeal Tribunal's reasons.
"Central issues are therefore whether for the purpose of section 139(1)(b)(i) in this case work comprising 100 per cent thoracic surgery carried out by a person at the Appellant's level of employment is 'work of a particular kind' having regard to the requirement of the Respondent's business, and, if so, is work comprising a mixture of thoracic and cardiac surgery carried out at that level, work of a different particular kind."
Mr O'Dempsey submitted that these were indeed the central questions and that while the employment tribunal in its second decision had answered the first question by saying that 100 per cent thoracic surgery was "work of a particular kind", they had given no answer to the second question and that we should now order a further remission for that question to be answered. He further submitted that the tribunal would be likely to decide that a mixture of thoracic and cardiac surgery was work of a different particular kind and that it would then necessarily follow that Dr. Shawkat would have been dismissed by reason of redundancy.What the employment tribunal in fact did was to reiterate its finding that there was no diminution in the requirements of the Trust for employees to carry out work of a particular kind and explain that that finding related to thoracic surgery. They then stated in paragraph 11 that the evidence before them could only lead to a finding that some members of staff at Dr. Shawkat's level (and above) would be required to carry out thoracic duties. The fact that Dr. Shawkat's thoracic sessions were reduced was not because there was any diminution in the requirements of thoracic surgery but only because the Trust wanted him to do cardiac work in part of his time and not thoracic work in that part of his time. The tribunal then stated in terms that there was no reduction in the amount of thoracic surgery that needed to be performed, that there was no reduction in the number of employees required to perform this work and that the Trust's requirements for employees to carry out thoracic surgery had not diminished. They then concluded that Dr Shawkat was not dismissed by reason of redundancy but because the Trust attempted to impose unreasonable duties on Dr. Shawkat which he had reasonably declined to carry out.The Employment Appeal Tribunal decided that this process of reasoning disclosed no reasonably arguable point of law and that Dr. Shawkat's appeal had to be dismissed. The argument presented to the Appeal Tribunal was that the employment tribunal should have taken into account the fact that Dr. Shawkat's replacement did both cardiac and thoracic surgery and was thus doing work of a different particular kind and that it must then follow that Dr. Shawkat was redundant. The Appeal Tribunal concluded, however, that the employment tribunal was perfectly entitled to conclude that the relevant work to which they should direct their attention was thoracic surgery and that, since the tribunal was entitled to approach the question in that way, the decision to which they came was a simple matter of fact which could not be challenged.

The Law

The relevant statutory provision is set out in section 139(1) of the Employment Rights Act 1996 but has been in the same form since the Redundancy Payments Act 1965. Section 139(1) provides:-
"(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- (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."

There is thus a 3 stage process for the fact finding tribunal namely: "(1) Was the employee dismissed? If so, (2) had the requirements of the employer's business for employees to carry out work of a particular kind ceased or diminished, or were they expected to cease or diminish? If so, (3) was the dismissal of the employee . . . caused wholly or mainly by the state of affairs identified at stage (2)" see Safeway Stores Plc v. Burrell [1997] ICR 523 resoundingly endorsed by the House of Lords in Murray v. Foyle Meats [1999] ICR 827 , 830A per Lord Irvine of Lairg LC.

Submissions

Mr O'Dempsey submitted that the stage (2) process required the employment tribunal to consider not only the work which the employee was doing at the time of dismissal but also the work which any replacement employee did after the dismissal. If that work was of a different particular kind from that which the employee was doing at the time of dismissal then the requirements of the employer's business for employees to carry out work of a particular kind must, in law, have diminished. This is tantamount to saying that any reorganisation of the employer's business, as a result of which he requires one or more of his work force to do a different job from that which he or she was previously doing must be a redundancy situation.Mr Kibling for the Trust submitted that this had never been the law and that the only question for the employment tribunal was whether the requirements of the Trust's business for employees to carry out thoracic surgery had ceased or diminished. It might or might not be helpful, in the context of that decision, to consider whether the work done by any replacement employee was work of a different kind but the mere fact that it was did not compel the conclusion that any dismissal was by reason of redundancy. In this case the tribunal was well aware that Dr. Shawkat had been required to do cardiac work as well as thoracic work (and thus that any replacement would be likely to be doing precisely that) but they had decided that, in spite of that, there was no diminution in the Trust's requirements for employees to carry out thoracic surgery. That was a decision of fact to which the tribunal was entitled to come.

Conclusion

In my judgment Mr Kibling's submission is correct. It is clear on the authorities that the mere fact of re-organisation is not conclusive of redundancy. Mr O'Dempsey relied strongly on Murphy v. Epsom College [1985] ICR 80 in which the school had originally employed two plumbers but decided, after improving the heating system, to employ a heating engineer of superior skill to the plumbers in order to maintain the improved system and perform functions of a more responsible kind than the functions which the plumbers were expected to perform. The heating engineer would also do ordinary plumbing work. The school then dismissed one of the plumbers who claimed that he had been unfairly dismissed; the school defended the claim on the basis that he had been dismissed by reason of redundancy and that such dismissal was fair. That defence succeeded since the school's requirements for the part-time plumbing services of the employee to assist the other plumber in general plumbing work had ceased but Sir Denys Buckley in the course of the leading judgment said (page 93B):-
"Every case of re-organisation must, I think, depend ultimately on its particular facts. In each case it must be for the individual tribunal to decide whether the re-organisation and re-allocation of functions within the staff is such as to change the particular kind of work which a particular employee, or successive employees, is or are required to carry out, and whether such change has had any, and if so what, effect on the employer's requirement for employees to carry out a particular kind of work."
In the present case the employment tribunal did, in its first decision, decide that the re-organisation of the cardiac and thoracic departments changed the work that its employees in the thoracic department were required to carry out. It was for that reason that the tribunal decided that Dr. Shawkat had been unfairly dismissed in the course of the Trust seeking to implement that change. But it cannot follow of itself that Dr. Shawkat was dismissed by reason of redundancy because the tribunal had to go on to decide, in Sir Denys Buckley's words, whether that "change has had any, and if so what, effect on the employer's requirement for employees to carry out a particular kind of work". The tribunal has found that, despite the change that did occur, the employer's requirements for employees to carry out thoracic surgery had not ceased or diminished and that is a conclusion that was open to them on the facts and must be the end of the matter.Some dicta in some earlier cases had conversely suggested that, if a dismissal had been caused by re-organisation, the reason could not be redundancy. But in Robinson v. British Island Airways Ltd [1978] I.C.R. 304 the Employment Appeal Tribunal said that that could not be right, Phillips J. saying:-
"In truth a re-organisation may or may not end in redundancy; it all depends on the nature and effect of the re-organisation."
In that case the employee worked as a flight operations manager answerable to a general manager, operations and traffic. The employer effected a re-organisation abolishing both posts and creating a single job of operations manager. The new job involved different tasks, new responsibilities and enhanced status for the occupant and both previous employees were dismissed. The employer paid appropriate redundancy pay but the employee complained he had been unfairly dismissed. The employment tribunal and the Employment Appeal Tribunal said the case was not a case of unfair dismissal but of redundancy, so the employee was arguing against redundancy as in Murphy , whereas in the present case it is, of course, the employer who submits there is no redundancy. Mr Robinson argued that only one post was abolished and it was impossible to squeeze two redundancies out of one post. The Appeal Tribunal held that the work of the new post was different in kind from that done by either of the two previous employees and continued:-
"Thus in our judgment it can truly be said that the dismissal of the employee was attributable to the fact that the requirements of the business for employees to carry out work of a particular kind had ceased or diminished and that each was redundant."
For my part, it does not seem to me that the Appeal Tribunal was saying that it must follow, from the fact that the new post is different in kind from the previous post or posts, that the requirements of the employer's business for employees to carry out work of a particular kind must have diminished. It can follow and the Appeal Tribunal, therefore, upheld the tribunal's decision. It need not follow, however, and it is for the tribunal to decide whether it does or not.In this case the Tribunal has decided that it does not follow and that is a conclusion that is open to them.Mr O'Dempsey complains that they have not stated in terms whether the work of a cardio-thoracic surgeon is different from that of a thoracic surgeon, but that is necessarily implicit in their decision taken as a whole which decides that the Trust is liable for unfair dismissal for requiring Dr. Shawkat to assume different duties. But, for the reasons given, that does not mean that a claim for redundancy has to succeed.In the context of a business such as the Trust's, the tribunal's conclusion that the Trust's requirements for employees to carry out the business of thoracic surgery has not ceased or diminished is scarcely surprising. What seems to have happened is that the Trust has reorganised its staff to do more cardiac surgery than previously; the requirements for thoracic surgery, as the Tribunal found, still exist undiminished. That does not mean that Dr Shawkat was redundant nor that his dismissal was dismissal by reason of redundancy within section 139(1). It may be added that even if the requirements of the Trust for employees to carry out thoracic surgery had in truth diminished, it would on the Tribunal's findings be extremely difficult to say that Dr. Shawkat's dismissal was attributable to that state of affairs.In Murray v. Foyle Meats [1999] ICR 827 Lord Irvine LC said that the language of paragraph (b) of section 139(1) was simplicity itself.
"It asks two questions of fact. The first is whether one or other of various states of economic affairs exists. In this case, the relevant one is whether the requirements of the business for employees to carry out work of a particular kind have diminished. . . In the present case, the tribunal found as a fact that the requirements of the business for employees to work in the slaughter hall had diminished. . . That, in my opinion, is the end of the matter."
The tenor of this passage is that the question whether the requirements of section 139 have been satisfied is a question of fact and that the decision of the tribunal should only be disturbed if the reasons disclose an error of law. Here, in my view, they do not.Mr O'Dempsey sought, however, to rely on the dictum of Lord Clyde in the Murray case at 833C:-
"The requirements of the business may call for a particular number of employees and for employees of particular skills and abilities."
He submitted that if it can be shown that the job subsequent to the dismissal required a employee of different particular skill and abilities then there must have been a diminution in the Trust's requirements for employees to carry out work of a particular kind (here, thoracic surgery). For my part I do not think that Lord Clyde intended in any way to depart from Lord Irvine LC's opinion that that was a matter of fact for the tribunal to decide.The editors of Harvey cite the passage from the speech of Lord Clyde and say (para. 731 of section E)
". . . you must look at the skills and attributes of the relevant employees, and not look merely at the overall output of the business. The question is: given that employees are to be categorised by the kind of work they do, has the need for that kind of employee diminished? You have to judge the requirements of the business, but it is the requirements of the business for employees of that sort, as opposed to the requirements of the business for work of that sort. What has disappeared or is disappearing is the need for the employee's skills and abilities. The business no longer needs him to do what he has been doing."
If this passage is intended to lay down a rule of law to the effect that, once an employee of one skill is replaced by an employee of a different skill, a tribunal must find that the requirements of the business for employees to carry out work of a particular kind has ceased or diminished, I cannot agree with it. It is a consideration which a tribunal may take into account if they think it right to do so, but it is not a necessary conclusion from that state of affairs that the requirement for work of a particular kind has ceased or diminished. That is always a question of fact for the tribunal to decide.For these reasons I would dismiss the appeal.

LORD JUSTICE ROBERT WALKER:

I agree.

ORDER

Appeal dismissed with costs to be subject to detailed assessment. Application to appeal to the House of Lords refused.

(Order does not form part of approved Judgment)

Cited in 1 later judgment