ARDTARAIG FARMING CO v MR ALISTAIR YOUNG [2008] UKEAT 0032_07_0406

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2008] UKEAT 0032_07_0406Case No Appeal No. UKEAT/0032/07Venue 52 MELVILLE STREET, EDINBURGH, EH3 7HF
Between
ARDTARAIG FARMING COAPPELLANTMR ALISTAIR YOUNGRESPONDENT
Before
Lady SmithDate 4 June 2008
[1]APPEARANCES For the Appellants MR K MCGUIRE (of Counsel) Instructed by: Messrs Maclay Murray & Spens LLP Solicitors 151 St. Vincent Street Glasgow G2 5NJ For the Respondent MR D REEKIE (Advocate) Instructed by: Quantum Claims Employment Division 70 Carden Place Queens Cross Aberdeen AB10 1UP SUMMARY UNFAIR DISMISSAL: Reasonableness of dismissal Claimant, an estate handyman, dismissed for redundancy. Tribunal found dismissal to be unfair because the respondents failed properly to consider and consult on the question of him working as a part time employee or as a self employed contractor. Employment Appeal Tribunal, whilst accepting that it was open to the Tribunal to conclude that any reasonable employer would have done so, remitted to a freshly constituted Tribunal to consider what, on a balance of probabilities would have been the outcome had such consideration and consultation occurred. THE HONOURABLE LADY SMITH INTRODUCTION This is an appeal by employers against a finding that they unfairly dismissed their redundant handyman which was the judgment of an Employment Tribunal sitting at Glasgow, Chairman Mr A Worthington, registered on 26 February 2007.[2]The claimant was represented by an employment consultant before the Employment Tribunal and by Mr Reekie, advocate, before us. The respondents were represented by a solicitor before the Employment Tribunal and by Mr McGuire, barrister, before us. We will continue to refer to parties as claimant and respondents. BACKGROUND[3]The respondents are a partnership of the Trustees of the Ardtaraig Settlement Trustees and the Chalmers-Watson Ardtaraig Trust. They are responsible for the management of Ardtaraig Estate in Dunoon, Argyllshire, an estate which extends to some 500 acres incorporating an Estate House, six cottages, a salmon farm, a mussel farm, a landing point, a share of a wind farm, commercial forestry and sheep grazing. The Estate House is normally occupied every alternate weekend in the winter, including for shooting purposes, and for some 14 – 15 weeks in the summer.[4]The claimant's late wife carried out caretaking and cooking duties in the Estate House prior to her death. The claimant began working for the respondents at the same time as his wife, in 1995, as a handyman. He was provided with accommodation in one of the respondents' cottages. When the house was occupied, he attended to carrying logs into the house and removal of rubbish from it. During the growing season, he cut the hedges and carried out general garden and swimming pool maintenance. From time to time, he carried out maintenance and external painting work on the cottages. By 2004, the respondents need to have a full time employee carrying out the tasks performed by the claimant had diminished significantly. By early 2006, they came to the view that that requirement had diminished to the extent that he was redundant. Whilst there was a still a requirement for various handyman tasks to be carried out, they were not sufficient to justify a full time position. If the services of self employed contractors were used to carry out that work, they would, they considered, achieve a saving of something between £5,000 and £10,000 per annum.[5]The respondents' Mr Keith Chalmers Watson appears to have had three meetings with the claimant. The first was on 30 January 2006. At that stage, the respondents envisaged having the services formerly carried out by the claimant performed by an outside contractor. As a result of that meeting, they wrote to the claimant by letter dated 1 February 2006, confirming that they would establish the rental value of the cottage he occupied, the cost of his employment to the estate and the amount of the redundancy payment that would be due to him if that was the option decided on.[6]The second meeting was on 8 February 2006. The matters covered by the letter of 1 February were discussed. The claimant's position was set out in a letter that the respondents had not received by the time of that meeting but appear to have received subsequently. It was that he sought to appeal against the reasons for his possible redundancy. He was surprised that he had suddenly become too expensive. At either the first or second meeting the claimant had also suggested that he be allowed to work part–time.[7]The respondents gave consideration to the claimant's proposal that he work part–time and the Tribunal sets out its findings on that matter at paragraph 18:
"The four trustees had discussed the possibility of part time employment for the claimant but had decided that the claimant's residual duties could not practicably be carried out on a part time basis since the essential jobs in particular (namely, carrying logs into the Estate house and taking out garbage) were not needed at certain times of the year and what then, asked the Trustees of themselves, would the claimant then do. As for the means by which those residual duties would be carried out if the claimant were to be made redundant, the respondents had still not decided in the course of their various consultation meetings with the claimant."
[8]The third meeting was on 18 February 2006. At that meeting the respondents told the claimant that they had decided to make him redundant. He was advised of his right to appeal but he did not appeal.[9]After the respondents decided to make the claimant redundant, they decided: "... to engage their self employed gamekeeper to carry out the tasks which hitherto had been performed by the claimant. It was left to the gamekeeper to decide whether to carry out those tasks himself or to 'employ others'. It was also arranged that the gamekeeper would be paid the sum of £708 per month for that service." (para 21)[10]We understand from what we were told in the course of the hearing before us that those payments to the gamekeeper were entered in the partnership accounts as "wages" and were made every month. The Tribunal's Judgment[11]The tribunal was critical of the respondents. Since the tasks that the claimant had been carrying out still required to be done, they ought to have considered and consulted on the possibility of him carrying on carrying out those tasks. They were, the Tribunal said: "… patently duties which the claimant could have continued to perform either on a part time employment basis or on the same basis as the gamekeeper, namely as a self employed contractor." (para 45)[12]The tribunal continued, in the same paragraph:
"We do not consider that the respondents ever properly considered this matter or discussed it sufficiently with the claimant. Had they done so, we consider that, bearing in mind the claimant is some 57 years of age, it is more likely than not that he would have accepted the diminished role."
The Tribunal makes no finding as to which role? Part-time employee or self-employed contractor?[13]On that reasoning, the Tribunal found that the dismissal was unfair. Reference back to the Tribunal:[14]Certain questions were referred back to the Tribunal when the case was considered at sift stage. They included the questions of whether the possibility of the claimant's services being engaged on a self employed basis was explored with any witness and whether or not the claimant was asked how he would have responded if he had been asked to work on a self employed basis. In their note in response, the Tribunal answered those questions in the negative but added:
"As is clear from the judgment (see paragraph 45), the Tribunal concluded that this dismissal was unfair because the respondents failed properly to consider the question of part time working for the claimant, either on a part time employed basis or as a self-employed contractor ... the claimant had made it perfectly clear that part time work would have been acceptable to him – indeed it was he who had suggested it to the respondents and the Tribunal concluded that the claimant's position was that whether that work was in part time employment or on a self employed basis, it would have been acceptable."
The Appeal Submissions for the Respondents[15]Mr McGuire submitted that the Tribunal had erred in that, on the evidence, the Tribunal was bound to conclude that the respondents had given sufficient consideration to part time working but had concluded that it was not an option. That was a conclusion which was, in the circumstances, open to a reasonable employer. The decision was a commercial one and it involved considerations of both cost and flexibility. The Tribunal had looked behind the respondents' commercial decision in a way that they were not entitled to do: James W Cook & Company (Wivenhoe) Ltd v Tipper [1990] IRLR 386. There had been no allegation of bad faith such as occurred in the case of Redland Roof Tiles Ltd v Eveleigh [1979] IRLR 11 and, as in the case of Cox v Wildt Mellor Bromley Ltd [1978] IRLR 157 the respondents had at least dealt in outline with the issue of part–time working.[16]He also submitted that the reference to the possibility of the claimant working on a self employed basis showed that the Tribunal had clearly erred in law. By its very nature, self employed working would require the claimant first to have been dismissed. It could not be "hived off" as an essential part of the Tribunal's reasoning. It showed that the Tribunal had a fundamental misunderstanding of the reasonableness question that arose in the redundancy context.[17]As to disposal, Mr McGuire's primary submission was that this Tribunal should conclude that the dismissal was fair. Failing that there should, he submitted, be a remit to a freshly constituted tribunal, bearing in mind the principles laid down in Morgan v Electrolux and Sinclair Roche Temperley v Heard & Co. Submissions for the Claimant[18]For the claimant, Mr Reekie submitted that the appeal should be refused. He accepted that, as he put it, "the Tribunal's reference to self employment was an error" because that would inevitably have involved a dismissal and that the Tribunal ought not to have taken account of it as a possibility but it did not, he said, fundamentally undermine the decision. The Tribunal criticised the respondents for failing properly to consider retaining the claimant on a part time basis and it was plainly not within the range of reasonable responses for an employer to act that way. There was a lack of meaningful consultation.[19]He submitted that the respondents were confusing the test for whether there was a redundancy with the test for whether it was reasonable to dismiss. The Tribunal did have the range of reasonable responses test in mind and they determined that there was a failure to consult properly about alternatives.[20]In the event that the appeal was upheld, there should, Mr Reekie submitted, be a remit back. It could be a remit to the same tribunal. Discussion and Decision[21]The Tribunal found that there was a procedural failure, namely a failure properly to consult with the claimant. This was a redundancy situation. There was no question of the claimant not being capable of carrying out the residual handyman tasks that were still required. The claimant had raised the question of working part time. Part time work can be carried out on a flexible basis and part time employment patterns range from those where the employee works four hours each day to those where he works a full five days some weeks but none on others. Indeed, a part time employee may not work for the employer at all during some months of the year. It all depends on the particular arrangement entered into. Equally, an employer may decide to have work that he only requires to be done at certain times of the year carried out by a self employed contractor. Again that is a matter of what particular arrangements are entered into in the individual case.[22]On the evidence, the Tribunal found that these matters were not explored with the claimant and that they should have been because any reasonable employer would, in the circumstances, have done so. We are not persuaded that that was not a conclusion that the Tribunal were entitled to reach on the findings in fact made. The issue of part time working had been raised by the claimant in the letter which was received by the respondents after the second meeting. It should have been fully discussed at the third meeting but it was not. In the circumstances, the Tribunal considered that the issue should have been discussed by looking not only at the possibility of the claimant carrying on as a part time employee but also at the possibility of using his services on the basis that he was a self employed contractor. That was a conclusion that was open to the Tribunal and not one with which we could or should interfere. We did not consider the Redland Roof Tiles case to be in point and we do not accept that the conclusion involved an illegitimate investigation by the Tribunal into commercial and economic reasons of the sort that were criticised in the James Cook case, where the Court of Appeal were pointing out that in considering redundancies in the context of a commercial decision to close down a business, it is not for a Tribunal to investigate the commercial and economic reasons which prompt such a closure.[23]However, matters do not end there although the Tribunal thought that they did. As Mr Reekie recognised if, such consultation having taken place, a move to self employment rather than employment was a possible outcome then that required to be taken into account. That is because if that had occurred, it was implicit that the claimant's employment would have come to an end and, on the Tribunal's own reasoning, would have done so fairly. The Tribunal needed to consider, if that was a possible outcome, when would it have happened and on what basis? That would have involved assessing what would or could have been acceptable to each of the parties in all the circumstances of the case.[24]The Tribunal appears to have overlooked these questions. They have failed to recognise that there was an inherent contradiction in approaching matters on the basis that the claimant was unfairly dismissed but if he had moved onto self employed working then a dismissal would not have been unfair. They had the chance to notice that contradiction when responding to the questions referred back to them but rather than doing so, they repeated it. Further, they failed to recognise the need, particularly for Polkey purposes, to consider what would have happened if the procedural failing identified by them had not occurred ( Polkey v AE Dayton Services Ltd [1987] IRLR 503 ). We have in mind, of course, looking at the question of whether the claimant would have been dismissed if there had been proper consultation and whether that element should be reflected by reducing compensation by a percentage representing the chance that he would still have lost his employment. Disposal[25]In the circumstances, we will uphold the appeal. We are not, however, persuaded that we can determine the issue which remains. Nor do we consider it appropriate to remit back to the same tribunal given that whilst they had the opportunity to notice and, of their own motion, review their judgment when the reference back to them was made, they failed to notice their error and, moreover, repeated it.[26]We will accordingly, remit to a freshly constituted tribunal to determine the issue of what, if the respondents had consulted with the claimant regarding the possibilities of(a) part time employment and(b) providing his services on a self employed basis, were the chances, if any, of his continuing to be an employee of the respondents and, if so, on what basis?