UNIPART EBERSPACHER EXHAUST SYSTEMS LTD v TERENCE JOSEPH KEENAN [2002] UKEAT 1473_00_2502

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2002] UKEAT 1473_00_2502

Case No Appeal No. EAT/1473/00

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

UNIPART EBERSPACHER EXHAUST SYSTEMS LTDAPPELLANT

TERENCE JOSEPH KEENANRESPONDENT

Before

His Honour Judge Wilkie

Lord Gladwin of Clee

Date 25 February 2002

[1]APPEARANCES For the Appellant MR MARK SUTTON (of Counsel) Instructed By: Mr David Cubitt Messrs Osborne Clarke OWA Solicitors Hillgate House 26 Old Bailey London EC4M 7HW For the Respondent MR ANDREW SHORT (of Counsel) Instructed By: Thompsons Solicitors The McLaren Building 35 Dale End Birmingham B4 7LF JUDGE WILKIE QC : This is an appeal by Unipart Eberspacher Exhaust Systems Ltd against a decision of the Employment Tribunal, sitting in Birmingham on 14, 15, 16 August and 19 September 2000, which found that the appellant had unfairly dismissed the applicant, Mr Keenan. The remedy hearing has yet to take place.

[2]Mr Keenan complained that he was unfairly dismissed by the appellant on 14 May 1999. He claimed that his dismissal for redundancy was unfair for a number of reasons including those connected with his health and safety activities, and his trade union membership as well as being unfair in general terms.

[3]The appellant at the time of the tribunal hearing had 300 employees with a turnover of approximately £50 million. They did not recognise any independent trade union but they did have, and had for some time, a body known as the Employee Forum which met monthly, comprised members of management and representatives of the workforce, there being one representative for about every ten employees. The representatives were volunteers. There is no further information as to how they are appointed or in respect of what criteria. However, the Employee Forum's discussions range over a wide spectrum of matters from contractual terms and workforce numbers to social matters. Its minutes were exhibited on a notice board on the premises. The representative of the cell of about ten employees within which Mr Keenan fell was a Mr Connolly.

[4]Mr Keenan had started his employment with the predecessor of the appellant in April 1995 and was transferred to the appellant from 30 March 1998. By the time of the events with which we were concerned his job title was Conformance Technician on grade 2. His line Manager was a Mr Conduit. However, it was clear to the tribunal that Mr Keenan had developed a substantial interest in health and safety matters and by the relevant time spent of the order of 80% of his time on health and safety matters. That was initially something which the appellant encouraged and made use of. However, during 1998 they decided to introduce a system entitled "Nuts and Bolts" which meant involving people at all stages of the manufacturing process in health and safety checks. Of necessity the adoption of this policy affected the applicant.

[5]The business of the appellant was substantially and adversely affected by events concerning Rover. During July 1998 to July 1999 Rover had accounted for 70% of the appellant's turnover. Turnover deteriorated in October 1998. Honda Civic volumes were 45% below budget and Rover 400 volumes were 49% below budget. By December 1998 the shortfalls were: on Rover 400 71%, on Rover 200 60% and on Rover 600 80% below budget.

[6]The appellant had to respond to the substantial shortfalls in production and took a number of steps to reduce their costs. By January 1999, notwithstanding the departure of 77 employees, it appeared to the appellant's management that it was necessary to reduce the employee payroll by a further 21 people but, rather than declare redundancies, it was decided to constitute a "Re-deployment Pool" and to transfer 21 employees to it. They would be employed on specific cost saving projects. This Pool was announced to the Employee Forum on 11 January 1999 and thereafter to a meeting of all employees. There was further discussion of that Pool at the Employee Forum meeting on 26 January 1999 and in the minutes of that meeting it was noted that "It was reiterated that this pool is not a redundancy pool". The employees to be selected for the Redeployment Pool were on the basis of certain criteria. Criterion (a) was by reference to areas specifically affected by the volume reductions: that was to be determined by where an individual specifically worked. Criterion (c) was where the employee held a position where a job no longer existed as a full-time occupation or a role that the appellant could manage without. The applicant was selected for transfer to the Pool and it is clear from Mr Conduit's evidence that the basis of his selection was that the business did not really have a need for the role which Mr Keenan had previously been doing in the Company. That seems to indicate that he satisfied the criterion in (c) rather than (a) above.

[7]We then turn to the redundancy exercise itself. During April 1999 it became clear to the appellant that further action needed to be taken and it concluded that 14 people would have to be made redundant. Management addressed the question of selection criteria and decided that the main objective of the selection process should be the retention of the most flexible workforce but that the criteria should be as objective as possible. Six criteria were to be used. The relevant one for our purpose is criterion (a), entitled "Specific areas affected by Rover Cutbacks". Within this heading there were three sub-divisions. First, cells affected covering product manufactured for Rover 200 and Rover HHR models. Second, support functions allied to the above models and third, support functions that the business no longer required. The scoring system for this criterion was stated to be between five points, where 0-20% of work related to the Rover cutback, and graded thereafter up to 81% – 100% of work related to Rover cutback for which the person would receive one point. The higher the score the better for the purpose of avoiding being selected for redundancy.

[8]On 21 April 1999 there was a meeting of the Employee Forum at which the relevant appellant executive, Mr Tarmey, explained the need for the redundancies and issued an Employee Brief indicating that a set of proposed redundancy selection criteria had been presented to the Employee Forum representatives and that over the next succeeding days they would consult with a view to a meeting the following Thursday in the Employee Forum to agree final selection criteria.

[9]That further meeting of the Employee Forum took place on 27 April 1999. The minutes of that meeting included, amongst other things, the following question and answer:

"[ Question ]: If you work on a Rover cell, have you more chance of losing your job than if you worked on a Honda cell?. [ Answer ]: If an individual falls with the 'danger area' the exact contributing reasons for this will be reviewed to ensure that the selection is fair. If there are any extenuating circumstances that need to be considered, then these will be taken into consideration."

When the selection criteria were applied to the applicant, Mr Keenan, he received a score of one for the first criterion which indicated, pursuant to the detail within that criterion, that 81% – 100% of the applicant's work related to the Rover cutback. However, the score of one on that criterion was given to all members of the Redeployment Pool, pursuant to a direction to that effect. That direction was neither mentioned on the sheet setting out the details of the proposed selection criteria, nor was it mentioned to the Employment Forum at any of the relevant meetings. Indeed, perhaps unsurprisingly, all 14 of the people identified by the exercise as redundant were members of the Redeployment Pool.

[10]Following upon the application of the selection criteria and pursuant to the envisaged timetable, on 30 April 1999 Mr Keenan attended a meeting with Mr Conduit at which he was told that "it looks probable that you will be selected for compulsory redundancy following the review of the selection criteria". It is worthy of note that he was accompanied at that meeting by Mr Connolly, the representative on the Employee Forum of his cell, apparently at his request.

[11]The scoring appeal took place on 7 May 1999 and the applicant was again accompanied by Mr Connolly. At that point he raised a number of matters which were pursued at the tribunal but apparently did not raise the question of his score of one under the first criterion.

[12]The tribunal had to consider a number of complaints by Mr Keenan. They rejected his complaint that he had been selected for redundancy by reason of his trade union membership or activities and they also rejected his contention that he had been selected for redundancy by reason of his health and safety activities. They also rejected his contention that the selection pool was unfairly arrived at. However, in respect of the question of unfairness in the general sense, the tribunal concluded that the reason for his dismissal was redundancy within the statutory definition in the 1996 Act. They then addressed two separate issues upon each of which the tribunal decision was that the dismissal was unfair. The first matter concerned the adequacy of consultation prior to his being notified that he was risk on 30 April 1999. Prior to that stage the consultation had been conducted exclusively with the Employee Forum. In paragraph 56 of the decision the decision of the majority of the tribunal was set out and it reads as follows:

"It was said on his behalf that the respondents should have consulted with him personally regarding the selection criteria and the pool for selection while those matters were still undecided, and that it was not sufficient to raise those matters at the Employee Forum only. The majority of the tribunal accepted the applicant's argument; they found that a reasonable employer would have, and the respondents should have, made arrangements for individual consultation with the applicant and others subject to the selection process, and that it was unfair not to have done so."

[13]The minority member of the tribunal set out his disagreement and the reasons for it. In so doing he set out his reasons in eight numbered sub-paragraphs, at paragraph 57. The first five of these sub-paragraphs appear to take the form of findings of fact and it is noteworthy that this is not one of those decisions where there was a clear demarcation within the text of the reasons between the fact-finding exercise and the analysis and reasoning followed by conclusions. Certainly, the minority member made the following findings:

"(i) the Employee Forum was a well established and understood channel of communication between management and employees; (ii) each employee representative on the Forum had a constituency of about 10 employees whom he was intended to consult and inform; (iii) the minutes of the Forum were publicised on the notice board; (iv) the applicant admits he received the Employee Brief referred to in paragraph 26 above; he admits he saw a copy of the draft criteria; he admits he discussed them with other employees but not Mr Connolly; "

In passing we may say that, as we have indicated above, Mr Keenan however did engage the services of Mr Connolly both on 30 April and 7 May. The minority went on:

"he admits he knew of the opportunity of consultation via the Employee Forum. He says he chose not to avail himself of the opportunity of consultation via the Forum because he did not recognise its legitimacy as its representatives were not elected. He did not claim that the respondents knew of his view regarding the Forum. (v) his representative was Mr Connolly who says he did report back to his 'cell'. "

The other numbered sub-paragraphs seem to us rather to be expressions of opinion rather than findings of fact but they are as follows:

"(vi) in respect of other employees, the system of communication via the Forum appears to have worked as envisaged. (vii) it would not be reasonable to expect the respondents to interview, individually, 170 employees; (viii) the case authorities seem to envisage that initial consultation regarding the scheme of selection generally may be with a representative body and that individual consultation is required only when the individual has been identified for redundancy. That happened in this case."

[14]We have been referred to a number of the relevant decisions, all of which set out principles which are very well established and we mean no disrespect to either counsel by not referring to them in extenso . As far as the basic principles were concerned we were reminded of the judicial review education case in R v Gwent County Council and Secretary of State for Wales ex parte Bryant [1998] Crown Office Digest 10, a first instance decision of Hodgson J, the principles enunciated in which have found favour in the employment context and, secondly, the case of Mugford v Midland Bank Plc

[1997] ICR 399

in which the Employment Appeal Tribunal has said that it is a matter of fact and degree whether consultation with a trade union over selection criteria releases the employer from considering with the employee who is being identified for redundancy and that the question is whether consultation with the individual and/or his union was so inadequate as to render his dismissal unfair. The overall picture must be viewed by the tribunal up to the date of termination to decide whether the employer has or has not acted reasonably in dismissing the employee on the grounds of redundancy.

[15]It seems to us, for the reasons set out in paragraph 57 of the decision, that this is one of those rare cases where we are obliged to conclude that the decision of the majority finding that the consultation process adopted by the appellants in this case was unfair and is one which we can describe as perverse. This appears to have been a well established forum for consulting with employees, communicating with employees and receiving their views. Far from being ineffective or a management tool this particular body seems, on an individual basis through Mr Connolly, to have been utilised by Mr Keenan in a meaningful way and, more significantly, it posed the question and obtained the answer to the question which leads on to the second limb of unfairness which the tribunal found, namely the fact that in the application of the criteria which had been discussed with the Employee Forum management had, apparently unbeknownst to the Employee Forum, or to any employee, departed from the process which they had discussed with their employees through the Employee Forum.

[16]There is absolutely nothing in this decision which, in our view, can justify the conclusion that the appellant, in conducting its initial setting up of the criterion through consultation with the Employee Forum, was acting in a way which was not within the band of reasonable responses to this appellant facing this redundancy situation and therefore, insofar as the appeal is mounted on this first limb, we uphold the appeal.

[17]However, the dismissal was found to be unfair on a second basis as well and the tribunal, which decided unanimously on this issue, commences addressing this question at paragraph 62 in its decision, where they say this:

"The next issue is the application of the criteria, and in particular the direction to give 1 point, under the first criterion, to all the people on the Redeployment Pool."

[18]The tribunal then make certain findings of fact which seem to us to be manifest from the evidence received. It is clear that the applicant was placed in the pool under heading (c) ie positions where the job no longer existed as a full-time occupation, or a role that the respondents could manage without. This differentiated his reason for inclusion in the Redeployment Pool from the heading (a), ie areas specifically affected by the volume reductions. This is so, even though the reason for setting up the Redeployment Pool in the first place was the diminution in the volume of work emanating from Rover. In paragraph 63, they say:

"Although the first criterion [that is to say, redundancy selection criterion] has a sub-division 'support functions that the business no longer require' which appears to mirror heading (c) for inclusion in the [Redeployment] Pool, it is clear that that sub-division is governed by the criterion heading ie 'Specific areas affected by the Rover Cutbacks'. This is put beyond doubt by the scoring schedule."

[19]Once again, relying on the face of the documentation itself, it seems to us that those conclusions of fact are plain and obvious. In paragraph 64 the tribunal go on to do the best they can to give a score under that particular criterion and it is this with which the appellant principally find a quarrel. The tribunal says:

"As the inclusion of the applicant in the Pool had nothing to do with Rover cutbacks, he should have received a score of 5 for the first criterion and not 1. The respondents seek to say that the entire existence of the Pool was due to volume cutbacks and therefore it was reasonable to give all members a score of 1. The Pool may have been set up for that reason, but that was not why the applicant was included in it."

[20]The criticism which is made of the reasoning of the tribunal in paragraph 64 is that it involves the tribunal in a level of detailed scrutiny which repeated authorities have said is inappropriate. We were referred to the case of British Aerospace plc v Green

[1995] IRLR 433

and, in particular, the passage at paragraph 3 in the judgment of Waite LJ in the Court of Appeal which reads as follows:

" The degree of scrutiny required of the industrial tribunal Employment law recognises, pragmatically, that an overminute investigation of the selection process by the tribunal members may run the risk of defeating the purpose which the tribunals were called into being to discharge – namely a swift, informal disposal of disputes arising from redundancy in the workplace. So in general the employer who sets up a system of selection which can reasonably be described as fair and applies it without any overt sign of conduct which mars its fairness will have done all that the law requires of him."

He then cites, with approval, the words of the Lord President, Lord Emslie, in the Court of Session in Buchanan v Tilcon Ltd

[1983] IRLR 417

, which mirrors that approach. We were also referred in subsequent paragraphs to a citation from Eaton v King and Others

[1995] IRLR 75

and to the conclusion in Waite LJ's judgment and, in particular, in paragraph 31, where he says:

"The use of a marking system of the kind that was adopted in this case has become a well-recognised aid to any fair process of redundancy selection. By itself, of course, it does not render any selection automatically fair; every system has to be examined for its own inherent fairness, judging the criteria employed and the methods of marking in conjunction with any factors relevant to its fair application, including the degree of consultation which accompanied it. One thing, however, is clear: if such a system is to function effectively, its workings are not to be scrutinised officiously. The whole tenor of the authorities to which I have already referred is to show, in both England and Scotland, the courts and tribunals (with substantial contribution from the lay membership of the latter) moving towards a clear recognition that if a graded assessment system is to achieve its purpose it must not be subjected to an over-minute analysis. That applies both at the stage when the system is being actually applied, and also at any later stage when its operation is being called into question before an industrial tribunal. To allow otherwise would involve a serious risk that the system itself would lose the respect with which it is at present regarded on both sides of industry, and that tribunal hearings would become hopelessly protracted. There were therefore strong reasons of policy against allowing disclosure of the retained assessments at this stage, and no special circumstances justifying a departure from that policy."

[21]Were we satisfied that the reasoning in paragraph 64 was either the sole or the main basis of the decision of this Employment Tribunal, we would have a great deal of sympathy with the case which the appellant has put forward as being one which reflected an approach which the authorities to which we have just referred have said was inappropriate. However, it is plain to us that the reasoning in paragraph 64 of the decision does not contain the nub of the reasoning in this decision because in paragraph 65 the tribunal go on to say as follows:

"Further, neither the Employee Forum nor the employees were told of the direction, much less consulted about it. Additionally, it went against the answer given at the Employee Forum on 27 April 1999, to the effect the exact contributing reason for someone falling within the 'danger zone' would be reviewed to ensure the selection was fair."

Paragraph 66 goes on to consider each of these paragraphs implicitly in turn. It says at paragraph 66:

"The tribunal is unable to say what effect the incorrect scoring had on the applicant's position, because it has insufficient information on the position of others in the pool for selection and the Redeployment Pool [and then it goes on] but finds that this misapplication of the notified selection criteria in any event renders the applicant's dismissal unfair."

[22]The language there is referring back to paragraph 62, namely the application of the criteria and, in particular, the direction to give one point in the first criterion to all the people in the Redeployment Pool. Notwithstanding Mr Sutton's able and persuasive arguments, we are perfectly satisfied that the reasoning of the tribunal in paragraph 66, which is said to constitute the basis of the unfair dismissal finding as set out in paragraph 68, is primarily concerned with the problem of process rather than the detailed marking under each of the criteria. It plainly refers both to paragraph 62 and to paragraph 65 and in terms of the categorisation in British Aerospace v Green reveal an overt sign of conduct on the part of the employer which marred the fairness of the dismissal - that is to say the fact that, notwithstanding all that had been said in the Employee Forum when, it came to the application of the criteria, there was a direction which went out which stood in the way of the proper application of the criteria and imposed a different regime.

[23]It therefore seems to us that the unanimous decision of the Employment Tribunal was manifestly one to which they were entitled to come and did not constitute over-officious meddling in the detail of the application of the selection criteria. On the contrary it focused on an error of process in the application of these criteria. It therefore follows that the appeal, on this limb, falls to be dismissed. Therefore, the finding of unfairness remains extant and the parties will have now to address themselves to the remedies hearing.