Howard & Anor v. Ambrose [2003] UKEAT 0222_03_2609

EAT

Howard & Anor v. Ambrose

[2003] UKEAT 0222_03_2609 · 2003-09-26

1 This case is about the definition of redundancy for the purposes of section 98(2) of the Employment Rights Act 1996. The judgment represents the views of all three members. We will refer to the parties as Applicant and Respondents.

2 It is an appeal by the Applicant in those proceedings against a decision of an Employment Tribunal sitting at Liverpool, Chairman Mr M Homfray-Davies, registered with Extended Reasons on 3 January 2003. The Applicant was represented there and here by Mr Nolan of the Employment Law Advice Centre. The Respondents did not attend. Today they have the advantage to be represented by Mr Christopher McGarvey, Solicitor.

3 The Applicant claimed unfair dismissal and breach of contract (notice pay). The Respondents initially contended that the Applicant was not an employee. The procedural history has created difficulties, and a well founded sense of grievance by the Applicant about the Respondents' failure to attend at the Employment Tribunal and to put their case.

4 The essential issue presented to the Employment Tribunal was to decide, on the evidence of the Applicant, whether or not there was a dismissal, whether it was a potentially fair dismissal and if so, whether it was fair or unfair. The Tribunal decided that the Applicant was unfairly dismissed and ordered the Respondents to pay him a basic award of £500 and a compensatory award of £3,640.

5 The Respondents appealed against that decision. Directions were given by His Honour Judge Peter Clark in Chambers, sending this matter to a preliminary hearing. His directions included the requirement that the Respondents serve a witness statement explaining in detail the circumstances which led to the failure to serve a Notice of Appearance within time; an opportunity was given to the Applicant to respond.

6 The case came before the EAT, Mrs Justice Cox presiding, when it was decided that a Notice of Appearance which had been given to it would be accepted as valid. The Notice of Appearance is dated 30 June 2003.

7 The Employment Tribunal did not refer expressly to the relevant statutory provisions. These are Section 98(1) and (2) and Section 139 of the Employment Rights Act 1996 .

"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 it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2) A reason falls within this subsection if it -

(a) relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

(b) relates to the conduct of the employee,

(d) is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment."

139 Redundancy

(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."

The facts

8 The Tribunal decided having heard the Applicant's evidence, that he was employed by the Respondents as a chef with continuous employment from 1999 until his relationship was terminated on 2 February 2002. It then said this:

"The reason for the dismissal was that the applicant was surplus to the respondents' requirements, since, he having held an interim licence for them after they took over as managers, they no longer wish to employ him and pay him the sum of £250 per week.

We are satisfied he was an employee of the respondents. The reason for the dismissal is not a potentially fair statutory reason, and so we find that the applicant was unfairly dismissed."

9 The Tribunal did not cite any of the history or the details of the relationship between the parties. It then went on to consider how much compensation should be awarded.

The submissions

10 On behalf of the Respondents it is contended that the passage we have cited betrays an error, for those reasons constitute redundancy within sections 98(2) and section 139. That is the simple point. On behalf of the Applicant no serious opposition was raised to that proposition, but it is right to note his dissatisfaction about the way in which the Respondents had seemingly been allowed to ignore the requirements of the Tribunal and to be successful before the EAT PH.

The legal principles

11 It cannot be doubted that the Applicant was redundant, given the Notice of Appearance which is now valid, which asserts "the Applicant was dismissed for a potentially fair statutory reason, namely redundancy". The provisions with which we are dealing are the oldest in employment law dating respectively from 1965 and 1971, almost unchanged. The standard text book Harvey on Industrial Relations and Employment Law devotes some 200 pages to the issue of redundancy, but for our purposes the first sentence says it all:

"An employee is redundant if, broadly speaking, he becomes surplus to the requirements of the business in which he is employed."

12 Given the finding that he was surplus to requirements, the Tribunal has committed a legal error in failing to hold that that was a potentially fair reason under section 98(2). On these very limited reasons, it is clear that the Applicant was redundant.

13 The question, therefore, is whether this matter should be remitted to the Employment Tribunal. Mr McGarvey has asked us to substitute our decision and to hold that the Respondents have put forward a potentially fair reason, redundancy, meeting their duty under section 98(1). We agree. A finding that the Applicant was surplus to the Respondents' requirements is a finding of redundancy for the purposes of section 98(1) and (2).

14 The case will be remitted for a decision on whether the dismissal was fair and for other matters including length of service to be determined. We see no reason why the same Employment Tribunal should not deal with the matter again, but if there are difficulties the Regional Chairman can reconstitute the Tribunal.

15 We would like to thank both of the Applicants today for the succinct way in which they have dealt with their submissions. The appeal is allowed, and the case remitted for rehearing.