RALPH MARTINDALE & CO LTD v MR K HARRIS [2007] UKEAT 0166_07_2012

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2007] UKEAT 0166_07_2012Case No Appeal No. UKEAT/0166/07Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
RALPH MARTINDALE & CO LTDAPPELLANTMR K HARRISRESPONDENT
Before
His Honour Judge Pugsley Mr B Beynon Mr T StanworthDate 20 December 2007
[1]APPEARANCES For the Appellant MR D SQUIRES (of Counsel) Instructed by: EEF Legal Services Broadway House Tothill Street London SW1H 9NQ For the Respondent MS S GARNER (of Counsel) Instructed by: Messrs Keelys Solicitors 28 Dam Street Lichfield Staffordshire WS13 6AA SUMMARY Unfair Dismissal – Reasonableness of dismissal Redundancy - Fairness The criteria for selection of offer of new employment to potentially redundant employees. HIS HONOUR JUDGE PUGSLEY This is an appeal from the decision of an Employment Tribunal sitting in Birmingham in which it decided that the Claimant was unfairly dismissed. The Claimant, Mr Harris, who was born in March 1945, had worked within the Respondent group of companies for a period of some 36 years beginning in January of 1970. He began as a Technical Engineer, and was at the time of dismissal working under the title of Group Development Executive, having taken up that appointment in 2003.[2]In the period 2005 -2006 there was a significant decline in orders and a decision was taken by the Group to reduce working at one of its mills to a single mill. As part of the reorganisation which was necessary to make reductions to the work force, it was decided to remove one layer of management. Mr Harris was informed that he was at risk of redundancy and he was given a letter indicating that because of the forecast levels of future business it had been necessary to reduce levels of employment and his position had been identified at risk. The position of a Mr Ensor, the Managing Director at Ralph Martindale England Ltd, was also one which was identified as being at risk. A new position of Director and General Manager was to be created at Ralph Martindale England and both Mr Ensor and Mr Harris applied for that position. There was a third candidate a Mr Whitehouse. The company had decided to issue an internal vacancy advertisement and Mr Whitehouse applied. Mr Marshall, the Group Production Director's evidence to the Tribunal was that Mr Ensor and Mr Harris were the outstanding candidates and that was effectively the area where there was competition and that Mr Whitehouse was never really in contention for the position.[3]It was decided to award the job to Mr Ensor on the basis that he had scored higher in a matrix compiled by Mr Marshall, and that he had a less insular management style. Mr Harris was informed that he was unsuccessful in his application. There were further meetings and although Mr Harris was offered a position of Technical Engineer, which had significantly lower pay and responsibilities, he decided that he did not wish to take that position and he was therefore told he remained at risk of redundancy. No other work was found for Mr Harris and his redundancy was confirmed. He appealed against the decision and that appeal was rejected.[4]In order to place the issues that we have to determine in context, it should be noted that Mr Harris was unrepresented at the hearing and, as identified in the first paragraph of the Tribunal's decision, the major issue between the parties was whether the dismissal of the Claimant was genuinely for redundancy or whether that was used as an excuse to demote him and reduce his salary even though he would be carrying out the same work. Beyond that, the Claimant contended that the procedures used to dismiss him were unfair and, in particular, the methods of selection of the Claimant as being at risk of redundancy and later for dismissal were unfair in that no objective standards were applied during the process. In addition to this, the Claimant made complaints to his employer under the grievance procedure during the course of the dismissal process and claimed that the employer's failure in dealing correctly with his complaints was an actual breach of the statutory grievance procedure.[5]It is only fair to say that although the Tribunal found the Claimant was unfairly dismissed they found that there clearly was an economic situation where there was a diminution of work of a particular type at the Respondent company. The Tribunal found that the Claimant's dismissal was as the result of a decision to rationalise within the company or the Group and that the Respondent had proved that the reason for dismissal was redundancy and was therefore a potentially fair reason subject to the provisions of s98(4) of the Employment Rights Act 1996 (ERA). Furthermore, the Tribunal found that the statutory dismissal and disciplinary procedures had been complied with and they made no order in respect of that. The issue which has arisen in this case concerns the finding by the Tribunal that the Claimant was unfairly dismissed but that in the light of the decision of Polkey vAE Dayton Services Ltd [1987] IRLR 503 his compensation should be reduced by 50 per cent because they concluded that there was a 50 per cent prospect of dismissal in this case, even if the correct procedures had been followed.[6]At the nub of the Tribunal's decision is paragraph 15.2 – 15.5 which state as follows:
"15.2 Where two senior employees are at risk of dismissal for redundancy, the fact that they are in different pools may be of some importance: however where, as here, the practical situation is that both are ostensibly capable of carrying out the new role, and whichever is not appointed will be made redundant, such a pooling decision is of minimal importance. Therefore current industrial practice would indicate that the method of selecting which employee will get the new role would involve a reasonable employer in operating a system which was objective and avoided the possibility of a decision which might be seen as capricious or arising out of favouritism for one candidate over another on personal grounds. We can see that consultation with employees or unions as to what criteria should be adopted for selection to a new position would not be appropriate. However there was no job description for the new role. The criteria selected were dealt with in an entirely subjective way, the interview, which might have been expected to apply objective criteria connected with the role, had no influence on the outcome of the decision making, Mr Marshall relying almost entirely on his subjective view as to the abilities of candidates. We cannot accept that such an approach reflects the current industrial relations practice of a reasonable employer. In those circumstances it is clear that the reason for dismissal was not a sufficient reason within the meaning of section 98(4) of the ERA given the size and administrative resources of the respondent. 15.3 The new role was opened to the workforce by internal advertisement. We do not consider this to reflect the approach in current industrial relations practice of a reasonable employer. The following statement reflects the tribunals view as to current industrial relations practice in the absence of any particular circumstances suggesting a different course. If there was a question as to the capability of either person at risk of redundancy to undertake this role, then it should have been established that neither was suitable before opening the new role to further applicants. 15.4 It is our judgment that the process adopted was not reasonable, and that in consequence the claimant was unfairly dismissed."
The Tribunal found there was a 50 per cent chance of Mr Harris being dismissed. "15.5 …In these circumstances we must find that the dismissal was unfair given section 98A(2) of the Employment Rights Act 1996."[7]The central point of the appeal is that, on behalf of the Appellant, Mr Squires says there is an unreported authority to the effect that one cannot equate the process for determining the fairest process for selecting an employee to the process of seeking employment itself - Akzo Coatings v Thompson (EAT/117/94). In that case His Honour

Judge Peter Clark said:

"There is, in our judgment, a world of difference between the way in which an employer approaches selection for dismissal in a redundancy pool where some will be retained and others dismissed. It is to that exercise which points 2-4 in the Williams guidelines are directed. These observations have no application when considering whether the employer has taken reasonable steps to look for alternative employment. The Tribunal's approach was wholly erroneous in law."
[8]In Ball v Balfour Kilkpatrick Ltd (EAT/823/95), another unreported case, His Honour

Judge Smith QC said:

"that there is no rule of law that selection criteria must be exclusively objective. He went on to say "
It is clear on the authority of Akzo Coatings Plc v Thompson and Others [1996] EAT (unreported) that the touchstone in such a situation is reasonableness rather than the application of either agreed selection criteria for redundancy or the application of objective criteria."[9]In another unreported case Darlington Memorial Hospital NHS Trust v Mr T Edwards and Mr R Vincent (EAT/678/95) in 1996 His Honour Judge Hull QC giving the judgment of the EAT said that the Tribunal's direction as follows: ' We take the view that it makes little difference in cases such as this whether the choice of staff for the new posts is part of the original selection for redundancy or an entirely different process. We say this because of the choice of staff for new posts must, in any event, be fair based on similar principles of selection for redundancy.' was wholly mistaken: "If these are new posts with a different job description from anything which the various Applicants brought to them, then it seems to us that the employer is most certainly not under a duty to carry out something very like the exercise which he has to carry out in deciding who to select for redundancy. On the contrary, if he is to be allowed to manage his business, he must select as he thinks right. If he tells the employees that they will be allowed to apply for new jobs, as was manifestly the case here, then of course he will be required to carry out the exercise in good faith. If they are to be allowed to apply their applications must be considered properly. If the criteria are different from the old jobs so be it, that was part of the original occasion of redundancy, it was as much reorganisation as redundancy, although redundancy was the result. But to say that they are the same process and that it must be based on similar principles is quite simply, in our view, wrong. It may be, we are not going to decide this, that the duty goes beyond faith, and it may be said that there is some sort of duty of care, but there it is, it is something which the employer has said he will do and he must do it. He must consider the applicants."[10]Whilst we accept that the authorities of Akzo Coatings v Thompson , Ball v Balfour Kilpatrick , and Darlington Memorial Hospital NHS Trust v Edwards & Vincent all point to the fact that it is wrong to equate the test of what is appropriate in selecting a person for redundancy with the criteria that should be applied in the process of considering persons for alternative employment, we nevertheless note, as we have said, from the decision cited to us, namely Darlington Memorial Hospital NHS Trust v Edwards & Vincent , is some authority for saying that the selection process must at least meet some criteria of fairness.[11]In view of the crucial findings we do not apologise for reiteration of paragraphs 15.2 to 5.4 of the decision:- "15.2 Where two senior employees are at risk of dismissal for redundancy, the fact that they are in different pools may be of some importance: however where, as here, the practical situation is that both are ostensibly capable of carrying out the new role, and whichever is not appointed will be made redundant, such a pooling decision is of minimal importance. Therefore current industrial practice would indicate that the method of selecting which employee will get the new role would involve a reasonable employer in operating a system which was objective and avoided the possibility of a decision which might be seen as capricious or arising out of favouritism for one candidate over another on personal grounds. We can see that consultation with employees or unions as to what criteria should be adopted for selection to a new position would not be appropriate. However there was no job description for the new role. The criteria selected were dealt with in an entirely subjective way, the interview, which might have been expected to apply objective criteria connected with the role, had no influence on the outcome of the decision making, Mr Marshall relying almost entirely on his subjective view as to the abilities of candidates. We cannot accept that such an approach reflects the current industrial relations practice of a reasonable employer. In those circumstances it is clear that the reason for dismissal was not a sufficient reason within the meaning of section 98(4) of the ERA given the size and administrative resources of the respondent. 15.3 The new role was opened to the workforce by internal advertisement. We do not consider this to reflect the approach in current industrial relations practice of a reasonable employer. The following statement reflects the tribunals view as to current industrial relations practice in the absence of any particular circumstances suggesting a different course. If there was a question as to the capability of either person at risk of redundancy to undertake this role, then it should have been established that neither was suitable before opening the new role to further applicants. 15.4 It is our judgment that the process adopted was not reasonable, and that in consequence the claimant was unfairly dismissed."[12]The Employment Tribunal then found that had the Appellant correctly followed procedures there was a 50 per cent chance of Mr Harris being dismissed i.e. a 50 per cent chance that he and not Mr Ensor would have obtained the position of Director and General Manager; and went on to conclude:
"In those circumstances we must find the dismissal was unfair given section 98A(2) of the Employment Rights Act 1996, where the employer has to demonstrate that he would have dismissed even if he had followed a correct procedure."
[13]The reality of the situation, as this Tribunal made it clear although they only had the Akzo case cited to them, is that they were not slavishly following Williams v Compair Maxam Ltd . [1982] ICR 156 . In the context of this case, we consider it is pertinent to note that the words the Tribunal uses at paragraph 15.4 of its decision is this:
"the process adopted was not reasonable, and that in consequence the claimant was unfairly dismissed."
[14]We cannot accept the submission that the Tribunal were not entitled to rely on their own sense of what good industrial practice was. As Miss Garner, on behalf of the Respondents, has pointed out that in the cases of Rolls Royce Motors Ltd v Dewhurst [1985] IRLR 184, at paragraph 14, and Williams v Compair Maxam Ltd [1982] ICR 156 , at paragraph 16, the decisions do talk about tribunals being endowed with concepts of what good industrial practice is. To suggest, as has been suggested by Mr Squires, that there should be notice given to the advocates of the view the Tribunal has of good industrial practice is to elevate a matter of normal practice to a legal requirement. Much depends on the facts of each case.[15]We do not consider that this decision can, if viewed objectively, be open to the criticisms that are made of it in the grounds of appeal. At paragraph 15.5 the Tribunal asks the question:
"would the respondent have reached the same conclusion, in other words to dismiss the claimant, had it correctly followed procedures?" and found themselves "inevitably drawn to the conclusion the respondent would have a fifty per cent prospect of dismissing the claimant, as there were two candidates who on the evidence were both ostensibly qualified to carry out the role. We have no means to draw any distinction between them. In these circumstances, we must find the dismissal was unfair given section 98A(2) of the Employment Rights Act 1996, where the employer has to demonstrate that he would have dismissed even if he had followed a correct procedure."
[16]The word 'must' might be a slightly infelicitous phase but we think that the gravamen of what this statement means is obvious. We do not think we can read into it that the Tribunal thought they must inexorably find the decision fair because the employers could not establish Section 98(A)(2). On the contrary, we think that it is palpably clear that once the Tribunal had made the findings it had, then as it was not satisfied that it would have made no difference, to use the old parlance, then it was open to them to use the words, that in view of their prior findings, it was inevitable they would find the dismissal was unfair. They then go on to find, as we have already indicated, that there was a 50 per cent chance of the Claimant being dismissed.[17]We are not so much dissenting from the other decisions of the Employment Appeal Tribunal on this issue as saying this is a case where the Tribunal although it only had Akzo cited to it in terms refused to follow the slavish adherence to the guidelines set-out in Williams v Compair Maxam . We consider it was open to the Tribunal to take the view that on the overall issue of fairness they were entitled to consider, in the precise circumstances of this case, the recruitment procedure between what were effectively two candidates, in their decision as to the fairness of the decision to dismiss. This is not an area of litigation that has been explored greatly but as was indicated in the decision of His Honour Judge Hull QC it may be that there are duties of care. We put it in this way. This Tribunal heard the parties. It had a particular feel for the chemistry of the case. We consider that the approach the Respondent took, as determined by this Tribunal in its findings of fact, was one the Tribunal was entitled to say was not fair, having regard to the requirements of fairness under s98A(4). And although it is right that opening up to other internal candidates did not have any particular significance because that candidate was never really, for reasons we need not be concerned with, in contention with the Claimant, nevertheless it indicated an approach about which the Employment Tribunal were entitled to form a view. We therefore dismiss the appeal.