HACHETTE FILIPACCHI UK LTD v MS G JOHNSON [2005] UKEAT 0452_05_1412

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2005] UKEAT 0452_05_1412Case No Appeal No. UKEAT/0452/05Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
HACHETTE FILIPACCHI UK LTDAPPELLANTMS G JOHNSONRESPONDENT
Before
His Honour Judge Richardson Mr D Bleiman Mr T HaywoodDate 14 December 2005
[1]APPEARANCES For the Appellant MR I SCOTT (of Counsel) Instructed by: Charles Russell LLP 8-10 New Fetter Lane London EC4A 1RS For the Respondent MS SUSAN BELGRAVE (Of Counsel) Instructed by: Ann Cutting (Employment) 8 Pied Bull Yard London WC1A 2JR SUMMARY Unfair Dismissal and Redundancy In paragraph 22 of its Reasons the Tribunal appears to have decided that the employer was required to give the employee 'first refusal' to return to a particular job when she was redundant. If so, no adequate process of reasoning as to how the 'reasonable responses' test applied and why this result was reached. HIS HONOUR JUDGE RICHARDSON We have before us an appeal and a cross-appeal against a Judgment of the Employment Tribunal sitting at London Central dated 15 June 2005. By its Judgment the Tribunal held that Mrs Johnson was unfairly dismissed by her employers, Hachette Filipacchi UK Ltd (HF). HF appeals against that finding. By its Reasons the Tribunal made it clear that the finding of unfair dismissal was reached by accepting HF's contention that the reason for Mrs Johnson's dismissal was redundancy. Mrs Johnson challenges that finding and also challenges a conclusion of the Tribunal concerning the availability of alternative positions. Mrs Johnson had also claimed that HF discriminated against her unlawfully on the grounds of her sex. The Tribunal rejected that allegation and there is no appeal in respect of it. The Facts[2]HF is a large publishing house. Part of its business consists of the publishing of women's magazines. Mrs Johnson was an experienced editor described by HF as hardworking and loyal. From about 1999 Ms Johnson was editor in chief of a Magazine called B Magazine. When HF acquired B Magazine in 2002 Mrs Johnson became HF's employee.[3]In January 2003 Mrs Johnson told HF's general manager, Ms Harris, that having spent some 3 years as editor in chief of B Magazine she was keen to take on a new challenge. She did not resign as editor in chief of B Magazine but was given a special project to find ways of revitalising it. This project became known as Project Penny.[4]By July 2003 Mrs Johnson had worked up a proposal to revitalise, indeed, effectively relaunch B Magazine. When the HF board looked that the proposal they regarded it as being in effect proposal for a quite different magazine. They were impressed with the proposal and backed it with sufficient money (about £70,000) to enable a mock proposed magazine to be produced to that market research could be undertaken. Project Penny moved away from being a relaunch of B Magazine to the potential establishment of a new magazine altogether.[5]A meeting took place on 14 August 2003 between Mrs Johnson and Ms Harris. At this meeting it was agreed that Mrs Johnson would be project director of Project Penny. It is plain, and the Tribunal found, that at this meeting Ms Harris told Mrs Johnson that if the project did not go ahead Mrs Johnson, having moved away from her day-to-day running of B Magazine, faced the possibility of redundancy; once having taken on the role of project director of Project Penny, Ms Harris did not want her to return and say she wanted to edit B Magazine. It is also plain that there was discussion of other options for employment within HF's organisation. The Tribunal found that Mrs Johnson was greatly concerned about the possibility of unemployment, and may well have decided to remain as editor of B Magazine rather than risk redundancy; she took the comments of Ms Harris about the likelihood of some other role for her as some reassurance.[6]After this meeting Ms Harris wrote to Mrs Johnson a confirmatory letter. The letter makes it plain that if in due course Project Penny was unsuccessful, her role as director of it would become redundant and HF would work to identify other suitable projects for her to work on. The letter states that if HF was unsuccessful in identifying other projects or another suitable role for her in the organisation, she would regretfully be made redundant. The letter also makes it plain that HF were now intending to recruit a replacement editor in chief for B Magazine. The post of editor in chief of B Magazine was indeed in due course advertised and on 10 December 2003 an external candidate was offered the appointment by letter.[7]From August onwards, as the Tribunal found, much of the day-to-day running from B Magazine was handed over to the deputy editor. However, as the Tribunal also found, Mrs Johnson remained editor in chief.[8]Meanwhile, Project Penny progressed to the preparation of a mock edition. Initial market research was very positive. However, subsequent quantitative research in November 2003 produced very low sales figures.[9]On 9 December 2003 the board of HF concluded that the launch of Project Penny was too much of a risk. As the Tribunal found from 9 December the decision that would be made was to all intents and purposes obvious, although it was a provisional decision at that meeting. On 15 December a further board meeting endorsed that decision.[10]It was not until 15 December that Mrs Johnson was told the result of the board meetings. She was told that a consultation period was beginning and HF was keen to try and identify an alternative role for her within the organisation; but she was not consulted in relation to the editorship in chief of B Magazine. By 15 December, of course, the offer to the external candidate had been made.[11]Both before and after Christmas 2003 there was consultation as to alternative positions. Mrs Johnson applied for two posts which became available but was unsuccessful. Her employment ended at the end of April 2004. The Tribunal's Conclusions[12]The Tribunal considered the unfair dismissal claim between 6 July and 8 July 2004. It announced a finding of unfair dismissal in favour of Mrs Johnson. It did not then give a Judgment or written Reasons, apparently because it emerged that HF wished to argue in reliance on the decision in Polkey v Dayton Services [1987] IRLR 503 , that consultation would have made no difference. We observe in passing that it is generally desirable for a Polkey point in a redundancy case to be dealt with at the same time as the substantive issue of unfairness to which it is closely related. It is generally desirable for a Tribunal to list it as a potential issue and if it does not, experienced advocates should check with the Tribunal how the issue is to be dealt with.[13]At all events in due course the Tribunal's Judgment and Reasons on the issue of unfair dismissal, including the Polkey issue were given at the same time as the subsequent remedies decision. By the subsequent remedies decision we are told the Tribunal awarded compensation of some £32,000 to Mrs Johnson.[14]The Tribunal having dealt with the issue of sex discrimination in its Reasons turned in paragraph 22 to deal with the question of unfair dismissal.[15]The Tribunal found, succinctly, that it was satisfied that the reason for dismissal was redundancy.[16]The Tribunal then went on to consider whether the dismissal was fair. It had already reminded itself of the test under s.98(4) of the Employment Rights Act 1996, stating correctly that the test requires the Tribunal to consider whether dismissal in the circumstances is within the band of responses of the reasonable employer and not to substitute its own view.[17]The Tribunal said:
"…It is incumbent upon an employer who is considering dismissal on the grounds of redundancy to properly consult with and properly consider alternative employment. That is an important part of a fair redundancy dismissal bearing in mind the provisions of section 98(4) Employment Rights Act 1996. Given our finding of fact that before the appointment of Ms Sheen to the position of Editor of B magazine and our finding that the Claimant, if faced with the stark choice of returning to B magazine as Editor or unemployment, she would have chosen the editorship of B we consider that the Respondents in failing at the very least to give her the opportunity of considering whether she wished to return to B magazine as editor failed in their duty to properly consult with her and properly consider alternative employment for the Claimant. At the very least, knowing the likely position on 9 December, the Respondent should have delayed offering the position to Fran Sheen and considered the Claimant. Equally, we being satisfied that if she had been given that choice she would have chosen the editorship of B rather than unemployment, we are satisfied that it cannot be said in this case that the failure to offer her that alternative would in fact have made no difference. In those circumstances we consider that the Claimant was unfairly dismissed and that dismissing her in those circumstances did not fall within the band of responses of the reasonable employer. Accordingly her unfair dismissal complaint succeeds. We do not accept the Respondents' contention based upon the principle set out in Polkey v Dayton Services Ltd ."
[18]It is also relevant to note that the Tribunal in the course of reaching its findings of fact had dealt succinctly with evidence concerning alternative positions other than a return to the B Magazine. The Tribunal said:
"Further consultation took place with the Claimant after Christmas and in late January upon the Claimant's return from a holiday in Australia. During the consultation period which followed the Claimant applied for and was considered for a number of other posts which arose within the organisation including other editorships. However, she was not successful in obtaining these posts. The Tribunal accepts the evidence given by Ms Harris as to the reasons for the non-appointment of the Claimant to those posts given the competitive nature of the interview system and the notice period of three months which commenced on 1 February."
Submissions[19]Logically the first question to consider is whether Mrs Johnson was redundant. On this question Ms Belgrave on her behalf submits that the Tribunal erred in law by failing to take into account the contractual position. At all material times she submits Mrs Johnson remained editor in chief of B Magazine; she never resigned; she continued to continue the role, albeit with additional help from her deputy. All others who worked on Project Penny returned to their substantive posts. In these circumstances she submits Mrs Johnson was not dismissed by reason of redundancy.[20]Mr Scott on this issue submits that the Tribunal's conclusion was open to it as a matter of law, applying the terms of s.139 of the Employment Rights Act 1996.[21]On the question of consultation which is raised in different ways by both parties, their submissions may be summarised as follows. Mr Scott submits that the Tribunal erred in law in its conclusion that HF failed in its duty to consult with Mrs Johnson and properly consider alternative employment. As he points out, the Tribunal's reasoning in this respect depends on its finding that she should have been given the opportunity of considering whether she wished to return to B Magazine. He submits that in effect the Tribunal has found that she had a right to return to B Magazine and the Tribunal has not applied the test of the reasonable employer and asked whether not keeping Mrs Johnson in the post of editor of B Magazine was outside the range of reasonable responses of such an employer. If it had asked this question given the facts found, he submits that there was only one answer. He took us carefully through the Tribunal's findings of fact. He said it was reasonable for HF not to offer the post of editor of B Magazine back to Mrs Johnson and that any other answer would have been perverse.[22]On behalf of Mrs Johnson, Ms Belgrave submits that the Tribunal did not err in law. She submits that the Tribunal had the correct legal test in mind and was entitled to take the view it did. She submits that Mrs Johnson should have been informed of the position before the external candidate was offered the post and given a right of first refusal. She points out that in August the position had not finally been determined. Mrs Johnson did not reply to Ms Harris's letter. She was, effectively, working in two different roles. In all the circumstances, she says the Tribunal reached a conclusion which was permissible to it and adequately reasoned.[23]Ms Belgrave has also submitted that on any view HF's consultation about alternative employment was inadequate. She says that in a short consultation period other opportunities were available for Mrs Johnson which were not considered and that overall HF's approach to appointments was haphazard and inconsistent. She says, for example, that there were positions available where Mrs Johnson could have acted up for others who were on maternity leave or otherwise absent and she was not offered those positions. The Law[24]The Employment Rights Act 1996 states at s.98:
"(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- … (c) is that the employee was redundant, or … (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." and states at s.139: "(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 carryout 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."
Conclusions[25]We start with the question whether the reason for Mrs Johnson's dismissal was redundancy. It is now well-established that a three-stage process is involved in determining whether an employee is redundant under s.139(1)(b). First, ask if the employee was dismissed. Second, ask if the requirements of the employer's business for employees to carry out work of a particular kind had ceased or diminished or were expected to cease or diminish. Third, ask whether the dismissal of the employee was caused wholly or mainly by that state of affairs. Applying those principles here, it is plain that Mrs Johnson was dismissed and it is plain that HF's requirements for a project director for Project Penny had ceased. In our judgment, given its primary findings of fact, the Tribunal was entitled in law to conclude that Mrs Johnson's dismissal was caused wholly or mainly by that state of affairs. It is true that as a matter of contract she was still required to do some work as editor in chief of B Magazine and retained that title, but she was also required to work as director of Project Penny and would have taken that project forward if it had been successful. The Tribunal's finding on this question of fact was, in our judgment, certainly open to it.[26]We then turn to consider the questions raised by s.98(4). Again, the law is well-established. The question at all stages is whether the employer acted reasonably having regard to equity and the substantial merits of the case. Therefore, a Tribunal must not find a dismissal to be unfair if the course taken was within the range of courses open to a reasonable employer. This applies to procedural questions as much as to substantive questions: see Sainsbury's Supermarkets v Hitt [2003] IRLR 23 at paragraph 29 where Mummery LJ emphasised that the objective standard of the reasonable employer applies to all aspects of the question whether the employee has been fairly and reasonably dismissed.[27]As regards redundancy it has long been established that the objective standards of a good employer will generally require the employer to give as much warning as possible to consult about selection criteria, and to ensure that selection is made fairly in accordance with those criteria and to seek to see whether instead of dismissing the employee he can offer alternative employment. Not all those factors will be present in every case. In this case the issues argued before the Tribunal related to alternative employment and consultation about alternative employment. The reasonable range of responses test applies to these questions. As HHJ Clark said in his Judgment in Mugford v Midland Bank [1997] IRLR 208 at paragraph 41:
"It will be a question of fact and degree for the Tribunal to consider whether consultation with the individual and/or his Union was so inadequate as to render the dismissal unfair. A lack of consultation in any particular respect will not automatically lead to that result. The overall picture must be viewed by the Tribunal up to the date of termination to ascertain whether the employer has or has not acted reasonably in dismissing the employee on the grounds of redundancy."
[28]In paragraph 22 of its Reasons the Tribunal appears to us to elide questions with required separate consideration and careful reasoning. First, there is the question of consultation about the B Magazine post. Second, there is the question whether HF was required to offer a return to the B Magazine post. It is one thing to determine s.98(4) questions on the basis that there should have been some consultation about the post; another thing altogether to determine them on the basis that HF was required to offer a return to it.[29]As we read paragraph 22 the Tribunal moves without any real process of reasoning from one to the other. One the one hand the Tribunal says that HF should have "given her the opportunity of considering" whether she wished to return to B Magazine. On the other, it speaks of "the failure to offer her that alternative" as if HF was bound to do so. Reading paragraph 22 as a whole, it appears to be predicated on the basis that Mrs Johnson ought to have had a right of first refusal. This indeed, was how Ms Belgrave put it in her Skeleton Argument. That this is the Tribunal's approach also seems probable from its finding of no reduction under the principle in Polkey v Dayton Services Ltd [1988] ICR 142 .[30]We do not say that it is impossible on an application of s.98(4) to reach the conclusion that an employee ought to be offered a particular job. Take a simple case. 'X' is a warehouse operator in an industrial unit. His unit is closing. The employer has a similar unit next door with a vacancy for a similar warehouse operative. It might well follow that an employer in pursuance of his consideration of alternative employment will offer the vacancy.[31]But this case is very different. A number of the Tribunal's findings of fact suggest that it would have been reasonable for HF not to offer a return to the B Magazine post. Mrs Johnson herself had identified the need for a new challenge. She had been given a new challenge in Project Penny. The B Magazine post had already been advertised and a successor identified. In these circumstances it is by no means plain that an application of s.98(4) would lead to a conclusion in favour of Mrs Johnson. Careful reasoning is necessary on the point. Likewise, the question whether it was in the circumstances of this case in accordance with the standard of a reasonable employer to consult Mrs Johnson about retaining or returning to the B Magazine job is closely allied to the question whether in the circumstances HF were required to offer it. In our judgment, these matters have been elided and are not properly reasoned in paragraph 22 of the Tribunal's Reasons.[32]We turn next to the question whether the Tribunal has as Ms Belgrave submitted, had not given adequate reasons for consultation in other aspects. We have already quoted paragraph 19 of the Tribunal's Reasons. We have seen in our papers the lengthy and carefully produced witness statements both of Mrs Johnson and of HF's Ms Harris. They set out the respective positions of the parties concerning alternative employment in a number of other roles. The Tribunal in paragraph 19 of its Reasons accepted the evidence given by Ms Harris as to the reasons for the non-appointment of Mrs Johnson to those posts. The Tribunal referred to the competitive nature of the interview system and the notice period of 3 months commencing on 1 February. While the Tribunal's reasoning is succinct it is possible to identify, by reference to the statements of the parties, precisely how it reached its conclusions in paragraph 19 and we have no doubt that in context paragraph 19 sufficiently tells the parties why they have won and lost on those issues.[33]We turn then to the result of this appeal. We have reached the conclusion that the Tribunal's finding of unfair dismissal should be set aside on the limited basis that its reasoning in paragraph 22 requires full and fresh consideration. It is not adequate for the purposes of determining the s.98(4) issue and requires reconsideration.[34]We have considered whether the matter should be remitted to the same Tribunal or to a different Tribunal. In our judgment the matter should be remitted to the same Tribunal. We bear in mind the considerations set out in the well-known case of Sinclar Roche & Temperley v Heard [2004] IRLR 763 , considerations which survive, although in the event, the remission in that case has itself now been reviewed.[35]In our judgment this Tribunal has reached careful findings of fact, some of which can be said to favour each party. It has shown professionalism in the way that it has undertaken its overall task. Its reasoning in paragraph 22 and its conclusions on unfair dismissal must be revisited, but this can properly be undertaken by the same Tribunal.[36]We have considered a submission by Mr Scott that the case is so plain and obvious that we can substitute our own Judgment for that of the Tribunal. We do not agree that the case falls within the very limited category where the Appeal Tribunal can substitute its own conclusions.[37]Accordingly, the matter will be remitted to the same Tribunal. The Tribunal should bear in mind the terms of this Judgment when it considers the matter afresh. We do not wish to give an exhaustive list of matters which the Tribunal will wish to consider, but it will wish to consider the following:• Did the employer actually consider consulting Mrs Johnson about the position of editor of B Magazine and if not, why not?• Was it within the range of reasonable responses for the employer not to consult her about returning to the editorship of B Magazine?• Was it (and this is a separate matter which requires careful consideration) within the range of reasonable responses of the employer not to regard her as having a first opportunity to take that job over and above the process of advertisement and appointment of the outside candidate which was in train? The Tribunal will need to consider all of those issues. For this purpose we have no doubt that the Tribunal should be prepared to listen to further submissions from both sides on those questions. Whether either side considers it necessary or appropriate for the Tribunal to hear any further evidence on those questions is an appropriate matter for discussion. We are conscious that at the Appeal Tribunal we have only a relatively limited knowledge of the evidence that the Tribunal heard.[38]It follows, finally, from the fact that we are setting aside the unfair dismissal finding of the Tribunal that the compensation finding, including the finding that there should be no deduction under Polkey , are also available for reconsideration. It is inevitable if the Tribunal revisits the question of unfair dismissal that even if it finds there to be an unfair dismissal, the precise basis on which it makes that finding may feed though into the Polkey issue; so the Tribunal must be prepared to consider that issue afresh in the light of whatever its conclusions are on the question of unfair dismissal. For example, if we are right that the Tribunal thought, in effect, that Mrs Johnson had a right of first refusal on the position of editor of B Magazine and that fed through into its decision on Polkey then, if the Tribunal in any respect refines or changes that conclusion on reconsideration, the Polkey conclusion may well also change.[39]For those reasons therefore, this appeal will be allowed. The matter will be remitted to the same Tribunal. The cross-appeal will be dismissed.