GRAMPIAN COUNTRY FOOD GROUP LTD v ROBERT MCINALLY [2004] UKEAT 0035_04_1711

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2004] UKEAT 0035_04_1711Case No Appeal No. EATS/0035/04Venue 52 MELVILLE STREET, EDINBURGH EH3 7HF
Between
GRAMPIAN COUNTRY FOOD GROUP LTDAPPELLANTROBERT MCINALLYRESPONDENT
Before
Lord Johnston Mr A J Ramsden Miss G B LenaghanDate 17 November 2004
[1]APPEARANCES For the Appellant Mr P Paterson, Solicitor Of- Messrs Tods Murray WS Solicitors 66 Queen Street EDINBURGH EH2 4NE For the Respondent Mr KRW Hogg, Solicitor Of Messrs Allcourt Solicitors 1 Carmondean Centre Carmondean LIVINGSTON EH54 8PT SUMMARY UNFAIR DISMISSAL Unfair dismissal – some other substantial reason LORD JOHNSTON: This is an appeal at the instance of the employer against a decision of the Employment Tribunal sitting in Edinburgh to the effect that the appellant had been unfairly dismissed and was entitled to a monetary payment.[2]The background to the matter is that the appellants, who, inter alia , rear chickens at various locations in Scotland, determined upon a re-organisation, to use a neutral phrase, of their food division, with reference to their premises at Fairview Mill. The proposal was contained in document R36 which was before us and before the Tribunal. In essence, what the employer was proposing was a change in the shift patterns which would lead to continuous working seven days a week, as opposed to a previous three shift system.[3]At the time the employers were seeking to implement their proposals, the appellant was apparently off work ill, and when he returned, he continued to work the old patterns, albeit he was being monitored as to his ability to see if he could handle night shifts. During the same time, all the other drivers, albeit with reluctance, and, indeed, under protest in many cases, accepted the new provisions and pay structure. At the end of the process of monitoring of the appellant, he went to a meeting with the employer, allegedly to negotiate his position but he insisted on a substantial financial settlement before he would accept any proposals and the employer decline to make such an offer. He was accordingly dismissed.[4]Against that background the finding of the Tribunal is as follows:- "In the first instance the Tribunal required to consider the reason for dismissal. There was no evidence adduced to show that the dismissal was for any reason other than for some other substantial reason" (SOSR). This is a potentially fair reason for dismissal in terms of Section 98(1)(b) of the 1996 Act. Accordingly the Tribunal find that the respondents did dismiss the applicant for this reason. The Tribunal then required to consider whether or not the respondents had established SOSR as the reason for dismissal and, in particular, that there was a sound, good business reason for the reorganisation of working practices and terms and conditions of employment. The Tribunal did not find the evidence led on behalf of the respondents to be either sufficient or convincing to justify the changes that they were seeking to make. The Tribunal could readily see that there was much to be gained from utilising the assets at Fairview Mill to their fullest extent. However the Tribunal wholly agreed with Mr Hogg when he stated that the respondents had failed to advance sufficient evidence to show that the proposed changes to working practices and to terms and conditions of employment were justified. The Tribunal did not see any evidence which supported the benefits which these proposed changes were designed to achieve and the Tribunal regarded it as being of some significance that in Production R36 there is no hint whatsoever that the overall business is in difficulty or that existing practices at Fairview Mill have either caused or contributed to any losses and, more importantly that the proposed changes would address the underlying reasons for these losses. Doubtless the respondents had inherited an operation from Marshalls which was not as efficient as it could have been but that was a long way from saying that the proposed changes amounted to a substantial reason for altering terms and conditions of employment in the radical way in which the respondents were seeking to do. Accordingly the respondents have not satisfied the Tribunal that they have established a substantial reason and the application must accordingly fail. For the sake of completeness and because a considerable amount of the evidence was focussed on the issue of reasonableness, the Tribunal conclude that, had the respondents established SOSR to the Tribunal's satisfaction, the Tribunal would have concluded that the decision to dismiss the applicant did fall within the band of reasonable responses open to them when they took the decision to dismiss him on 16 June 2003. The Tribunal accepted that there had been a lack of formality on the part of the respondents in contacting and consulting the applicant in regard to the proposed terms and conditions of employment between him going off work in April 2002 and the beginning of June 2002 in circumstances where they were clearly seeking to impose radical changes to which he was objecting but these were outweighed by the fact that by June 2003 when all of the other affected employees had accepted the new terms and were working to the new patterns the respondents could not make an exception for the applicant. It would have been wholly wrong of them to do so and potentially could have been productive of discontent among the workforce."[5]It is immediately to be noted, firstly, that the issue concentrated upon the question of some substantial other reason, and, latterly, on the question of reasonableness, in which respect the Tribunal supported the employer. They did not, however, do so in respect of the first question.[6]In regard to that question, the law is not in dispute and is best focussed in the Hollister v The National Farmers' Union [1979] IRLR 238 by the Master of the Rolls at paragraph 12 when he says as follows:- "The question which is being discussed in this case is whether the reorganisation of the business, which the National Farmers' Union felt they had to undertake in 1976, coupled with Mr Hollister's refusal to accept the new agreement, was a substantial reason of such a kind as to justify the dismissal of the employee. Upon that there have only been one or two cases. One we were particularly referred to was the case of Ellis v Brighton Co-operative Society Ltd [1976] IRLR 419 where it was recognised by the Court that reorganisation of business may on occasion be a sufficient reason justifying the dismissal of an employee. They went on to say:
'Where there has been a properly consulted-upon reorganisation which, if it is not done, is going to bring the whole business to a standstill, a failure to go along with the new arrangements may well - it is not bound to put it may well - constitute "some other substantial reason".'
Certainly I think, everyone would agree with that. But in the present case Mr Justice Arnold expanded it a little so as not to limit it to where it came absolutely to a standstill but to where there was some sound, good business reason for that reorganisation. I must say I see no reason to differ from Mr Justice Arnold's view on that. It must depend in all the circumstances whether the reorganisation was such that the only sensible thing to do was to terminate the employee's contract unless he would agree to a new arrangement. It seems to me that that paragraph may well be satisfied, and indeed was satisfied, in this case, having regard to the commercial necessity of rearrangements being made and the termination of the relationship with the Cornish Mutual, and the setting up of a new relationship via the National Farmers' Union Mutual Insurance Limited. On that rearrangement being made, it was absolutely essential for new contracts to be made with the existing group secretaries: and the only way to deal with it was to terminate the agreements and offer them reasonable new ones. It seems to me that that would be, and was, a substantial reason of a kind sufficient to justify this kind of dismissal. I stress the word 'kind' as it would not justify the act of dismissal."[7]We were also referred to briefly in St John of God (Care Services) Ltd v Brooks [1992] IRLR 546 and Catamaran Cruisers Ltd v Williams and Others [1994] IRLR 386 .[8]Mr Paterson, appearing for the appellants, submitted that the Tribunal had misdirected their minds on the issue concerning the passage of time, namely, when the proposals were first put forward in June 2002, and should have looked at the matter in the context of all the circumstances surrounding the dismissal in 2003. He further submitted that the Tribunal should not have determined, looking across the board, that there was no substantial other reason of an economic kind to justify the change in working practices. The decision was perverse in effect by reason of the fact that it supported the reasonableness of the employer's action and yet found against them.[9]Mr Hogg, appearing for the respondent, submitted that the issues focussed on the question of some other substantial reason, were issues of fact which the Tribunal had determined and this Tribunal should not interfere. He accepted there was a difficulty with regard to the paragraph in the decision relating to reasonableness, but submitted that was simply an afterthought, not detracting from the main issue to be determined by this Tribunal. The jurisdiction of this Tribunal was ousted by reason of the fact that the issues were only one of fact, as now focussed.[10]We have not found this decision easy. We recognise there was a background as regards the employee's health and that he was allowed to work on the old system for some considerable time after he came back to work, contrary to what was being demanded of the other employees. However, we also are conscious of the fact that the immediate cause of his dismissal was the refusal on the part of the employer to offer a financial settlement or inducement.[11]More importantly, even the briefest examinations of document R36, reveals that this was plainly an economic re-organisation designed to improve productivity and cut losses. We cannot but conclude in that context that that must be some good reason as identified by the Master of the Rolls in Hollister , even if it falls short of a situation where the employer faces total financial disaster.[12]In our opinion, it was perverse of the Tribunal to hold that there was no evidence, or not sufficient evidence, to justify a finding of some other substantial reason as discovered in the document and the proposals being put into place.[13]In these circumstances the matter, to our mind, is open before us and we have no hesitation in concluding that the evidence does reveal a sufficient reason within the phrase "some other substantial reason" as identified in Hollister . We also consider that the Tribunal should have considered the whole matter at the time of dismissal. While there obviously has a historical background as regard the re-organisation proposals, it also must reflect the fact that by that time, this respondent was the only driver that had not accepted the new regime, albeit the others had accepted with reluctance. It must be a relevant factor in assessing the reasonableness of the dismissal, that it was necessary to prevent one man continuing to work on the old system which could have led to discontent among the employees, and disrupt industrial harmony.[14]For these short reasons we are of the view that the Tribunal in this case came to an incorrect conclusion in law and we will quash the decision and substitute a finding that the dismissal was for some other substantial reason, within the context of the legislation, and, was furthermore, a reasonable option open to the employer in all the circumstances including the one we have just mentioned.[15]In these circumstances this appeal is allowed and the decision of the Employment Tribunal will be quashed.