Charles Scott And Partners Consulting Engineers Ltd v Hamilton (Redundancy : Fairness) [2011] UKEAT 0072_10_0908

EAT
Charles Scott And Partners Consulting Engineers Ltd v Hamilton (Redundancy : Fairness)
[2011] UKEAT 0072_10_0908 · 2011-08-09
[1]This is an employer’s appeal from the judgment of an Employment Tribunal sitting at Glasgow, registered on 20 October 2010 (Employment Judge, Rosemary Sorrell) finding that the Claimant was unfairly dismissed and awarding compensation of £17,130.39 for loss of statutory rights and loss of earnings.[2]For convenience, we will continue referring to parties as Claimant and Respondent.[3]The Claimant represented himself before the Tribunal and before us. The Respondent was represented by Mr Templeton, employment consultant, before the Tribunal and before us. Background[4]The Respondents are consulting engineers. Theirs is a small business involving a board of four directors and, at the relevant date, 17 employees. Prior to the Claimant’s dismissal, those employees included three associate structural engineers. The Tribunal found that the associates carried out different roles but made no findings in fact regarding what was involved in the job of each of them. They experienced a downturn in business in 2008/9 and by 2009, decided they would have to make an employee redundant.[5]The Claimant commenced employment with the Respondent on 24 April 2006 and was dismissed on 4 September 2009. Following a pre- hearing review, it had been determined that the reason for the Claimant’s dismissal was redundancy. The issue for the Tribunal was, accordingly, whether or not that potentially fair dismissal was fair or not.[6]The Claimant worked initially as a junior structural engineer and, on 1 September 2007, was promoted to the role of associate structural engineer, earning £37,200 plus bonus. The Respondent employed three associates. As amongst their employees, associates were the higher earners. Staff appraisals were carried out on the basis of a checklist of certain criteria, until 2007, but ceased at that time.[7]In April 2009, at his request, the Claimant’s hours were reduced to four days per week. His earnings were reduced on a pro rata basis. The Tribunal found that that was an inconvenience to the Respondent. At no point, however, did the Tribunal find that that inconvenience was causative in the Claimant’s dismissal.[8]As we have noted above, by 2009 the Respondent decided there was a need for them to make an employee redundant. They had never required to make anyone redundant before. The Respondent determined on the associates as being the relevant pool as they were the higher earners. There being three associates, there was accordingly, a pool of three employees to be considered in the redundancy process. The Claimant did not, in the course of his dealings with the Respondent at and around the time of his dismissal, in his ET1, at the pre–hearing review, or in the course of the full hearing before the Tribunal, challenge that pool as being inappropriate or unfair. In the course of the hearing before us, he suggested that the pool should have been all employees earning £30,000 per annum, since that was the saving that the Respondent would make from his redundancy, but that was the first time such a suggestion was made and it took no account of the bonus entitlement which, on the Tribunal’s findings, his post attracted.[9]On 1 June 2009, the Respondent’s four directors met to score the three candidates in the pool in accordance with a matrix of criteria that they had drawn up after some internet research and discussion. They discussed the associates and carried out the scoring exercise collectively. They did not replicate the criteria used in a staff appraisal system that had ceased in 2007 although, contrary to the Tribunal’s statement at paragraph 69, it was not the case that they ‘bore no relation to the criteria set out in the staff appraisal’ – comparison of the appraisal criteria with those used in the redundancy process demonstrates that, in both cases, timekeeping and attendance, capability, adaptability, relationships with clients, motivation and ability to work with other people, were key features. The Respondent did not consult with the employees in the pool beforehand or warn them that they were at risk of redundancy.[10]The matrix of criteria used by the Respondent were a list of factors commonly considered in redundancy exercises:(i) time and attendance(ii) capability(iii) adaptability(iv) client/customer focus(v) length of service(vi) disciplinary record(vii) motivation(viii) team fit. each of which was marked on a score of 1-10. All criteria had equal weighting. The partners regarded the criteria as interlinked, their desire being to retain those associates who could move their business forward.[11]The Respondent’s four directors discussed scoring together. The Claimant scored lowest, at 65 marks. The two other associates both scored 74 marks. The Claimant scored lower than them on all criteria other than (i) and (vi), where he scored the same. Both of the other associates had been long term employees of the Respondent, one having worked for them since 1995 and the other since 1977. The directors had regard to the Claimant having been overheard to say that he did not need, financially, to work but there is no finding that that awareness had any effect on any of his numerical scores.[12]The Tribunal did not find that the directors’ determination of the redundancy pool, of the matrix of criteria or of the candidates’ scores was carried out by them in anything other than good faith.[13]On 5 June 2009, the Claimant was called to a meeting and handed a letter advising him that he was being dismissed, with three months notice, due to the economic downturn. He requested a meeting to discuss the matter. Meetings between the Claimant and Respondent followed in the course of which the Claimant raised various questions regarding his selection for redundancy. He did not challenge the need for redundancy. He asked a number of questions relating to his selection for redundancy. He was provided with answers including the details of the scoring system that was used, his scores and details of how the scores were arrived at. He asked whether the directors had considered voluntary redundancies and was advised that they had but did not think that anyone would take it up; also, it was considered that that approach would not be in the best interests of the company. At the first meeting, which was on 8 June, the Claimant asked if he could appeal. He was asked why and he said that he thought the selection criteria might be unfair. One of the directors responded to that assertion (not, as is stated by the Tribunal at paragraph 19, to the Claimant asking if he could appeal) by saying: “Oh for fuck’s sake”.[14]The Claimant appealed, stating as his grounds that there was no consultation prior to his receiving the letter advising of his dismissal for redundancy on 5 June, that the redundancy candidates were not involved in the process, that the selection criteria were not objectively verifiable and that there was a lack of a fair and open procedure. His appeal was heard by two of the directors, on 2 July 2009, on behalf of the whole board. By letter dated 8 July, the Claimant was advised that his appeal had not been successful. The terms of the letter noted that the Claimant had restated his four grounds of appeal and had added little more by way of substantive information, and explained the reasons for the rejection of his appeal as follows:
“We acknowledged that we had been remiss in the initial consultation process and, therefore, failed to follow some procedures. We have, however, had a number of consultation meetings with you since then, albeit you noted that you are not satisfied with that. We considered that the other candidates did not know they were being considered for redundancy until after we had reached our decision. You stated your opinion that the selection criteria headings that we used were all subjective and were not fair. We advised that all these parameters are important considerations in the way in which the business has always operated. Having discussed the matter following the appeal hearing, the Directors have decided to reject that appeal and continue with the redundancy. Whilst we may acknowledge initial procedural failures on our part, the end result would not have been different. If we had properly followed all the initial procedures, the whole process would simply have taken a little longer. The Directors are satisfied that the process was fair. The decision was taken objectively to safeguard the foreseeable future of the firm and in recognition of the size and nature of the firm and the way in which it operates.”
[15]The question of whether or not alternative employment could have been offered to the Claimant arose before the Tribunal. We make two observations. First, one of the Respondent’s directors, Mr McNeill, gave evidence that “there simply were not any alternative vacancies.” (paragraph 73 of the Tribunal’s reasons) and it was not suggested to him that there were vacancies. Secondly, whilst the Tribunal then stated that there was no evidence from the Respondent to suggest that “any efforts at all were made in this respect” (paragraph 73), at no point do they suggest that they found Mr McNeill to be lacking in credibility or reliability in his evidence on the matter. Form ET1[16]In his form ET1, the Claimant stated that he complained of unfair dismissal on four grounds: no consultation or process prior to the written notice, redundancy candidates not involved in the process, selection criteria not being objectively verifiable, and lack of fair and open procedure. He made no complaint in his ET1, in evidence, or in the course of submissions before the Tribunal that the Respondent’s determination of the pool for redundancy was unfair; he did not seek to make any case regarding the Respondent’s determination of redundancy pool, at all. Relevant law[17]The principles of law applicable in the circumstances of this case are, first, those which we have summarised in two recent decisions concerning dismissals for redundancy - First Scottish Searching Services Ltd v McDine and another UKEATS/0051/10/BI and Semple Fraser v Daly UKEATS/-0045/09 - section 98 of the Employment Rights Act 1996 provides that it is for the employer to show the reason for a dismissal (s.98(1)) and that redundancy is a potentially fair reason (s.98(2)(c)). Whether or not dismissal for that reason is fair or unfair depends on the answer to the issue identified in section 98(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.”
[18]Accordingly, once a potentially fair reason for dismissal is established, the question of whether or not the employer acted reasonably in deciding to dismiss lies at the heart of every case where a claim for unfair dismissal is pursued including cases of dismissal on grounds of redundancy. It is not for an Employment Tribunal to ask themselves whether they would have dismissed the employee; it is not for them to seek simply to substitute their own decision for that of the employer ( Iceland Frozen Foods Ltd v Jones [1982] IRLR 439 ). As explained in Iceland Frozen Foods that is because the concept of reasonableness as used in s.98(4) involves recognising that, in many cases, there will not be a single reasonable response to the circumstances that have led to the dismissal; there will be a band of reasonable responses within which one employer would reasonably take one view whereas another, equally reasonable, employer would take a different view. To put it another way, in many cases, there will be room for legitimate differences of opinion amongst reasonable employers as to what is a fair way to respond. Thus, as explained in a redundancy case, Williams v Compair Maxam Ltd 1982 ICR 156:
“ …it is not the function of the industrial tribunal to decide whether they would have thought it fairer to act in some other way: the question is whether the dismissal lay within the range of conduct which a reasonable employer could have adopted.”
(p.161)[19]Secondly, a gainst that background, various observations have been made in the authorities regarding redundancy dismissals which show that, in assessing the reasonableness of a decision to dismiss for redundancy, it will rarely be appropriate for an Employment Tribunal to embark on a detailed scrutiny of the system used for scoring or the application of the system in a particular case. In Buchanan v Tilcon Ltd [1983] IRLR 417, a decision of the First Division in which the opinion was delivered by the Lord President (Lord Emslie) (referred to in both Eaton Ltd v King in 1995 and British Aerospace plc v Green ) a clear limitation is expressed as to what was to be expected so far as scrutiny of employers acting in a redundancy situation was concerned:
“ …In this situation where no other complaints were made by the appellant all that the respondents had to do was to prove that their method of selection was fair in general terms and that it had been applied reasonably in the case of the appellant by the senior official responsible for taking the decision. As was pointed out by Phillips J in Cox v Wildt Mellor Bromley Ltd [1978] [1978] IRLR 157 it is quite sufficient for an employer in a case such as this to call witnesses of reasonable seniority to explain the circumstances in which the dismissal of an employee came about and it was not necessary to dot every “i” and to cross every “t” or to anticipate every possible complaint which might be made.”
(at p. 418)[20]In the same vein, in British Aerospace plc v Green , Waite LJ, at paragraph 3, said:
“Employment law recognises, pragmatically, that an over-minute investigation of the selection process by the tribunal members may run the risk of defeating the purpose which the tribunals were called into being to discharge – namely a swift, informal disposal of disputes arising from redundancy in the workplace. So in general the employer who sets up a system of selection which can reasonably be described as fair and applies it without any overt sign of conduct which mars its fairness will have done all that the law requires of him.”
[21]The same theme was taken up by this Tribunal in John Brown Engineering Ltd v Brown and others . At paragraph 8, Lord Johnston said:
“….in each case what is required is a fair process, where an opportunity to contest the selection of each individual is available to the individual employee….it also has to be reasserted that it is no part of the industrial tribunal’s role in the context of redundancy to examine the marking process as a matter of criteria under a microscope; nor to determine whether, intrinsically, it was properly operated. At the end of the day the only issue is whether or not the employers treated their employees in a fair and even handed manner.”
[22]Then, in McCormick & Ors v Sanmina Sci UK Ltd [2006] AER 138, Elias J, as he then was, rejected the claimant’s contention that an employers “absence” criterion should have included something to allow for the reason for absence, observing at paragraph 86, that to have acceded to that submission would have been to allow exceptions to what was a “carefully drafted” redundancy scheme and the Tribunal’s upholding of that contention had amounted to a substitution of its own view. At paragraph 87, he explains that this Tribunal was satisfied that:
“it could not properly be said that no reasonable employer could adopt this criterion.”
[23]Later in the judgment, at paragraph 93, he refers to the need to consider whether a particular approach to scoring was within the band of reasonable responses that was open to a reasonable employer.[24]As the judgment of the Court of Appeal in Bascetta v Santander [2010] EWCA Civ 351 makes clear, the principles articulated in the earlier cases, referred to above, still hold good. In particular, the passages that we have referred to in both British Aerospace plc v Green and Eaton Ltd v King are referred to with approval.[25]In a redundancy situation, an employer will require to identify the group of employees from which the person or persons to be made redundant will be selected, often referred to as the “pool”. As has been repeatedly recognised, employers are afforded a measure of flexibility when it comes to determination of the pool; provided they genuinely apply their mind to the matter and act reasonably in determining it, their decision will not normally be open to question (see, for example: Taymech Limited v Ryan [1994] UKEAT/663/94 per Mummery J; Harvey – Industrial Relations and Employment Law para 1685).[26]Thirdly, whilst in general terms, in circumstances of redundancy, a reasonable employer will be expected to consult before deciding who to dismiss, there is no rule of law that lack of proper consultation necessarily renders the dismissal unfair (see: Williams at p.161 and Hollister v National Famers’ Union [1979] ICR 542.) The implications of a lack of prior consultation regarding the question of whether or not the dismissal was fair or unfair will depend on the whole relevant facts and circumstances of the case. Whilst there are circumstances in which there is a statutory requirement for consultation ( Trade Union and Labour Relations Act 1992 s.188 which applies where an employer proposes to make 20 or more employees redundant), they did not apply in the present case. No statutory procedures were applicable to the Respondent’s redundancy exercise, contrary to what seems to be suggested by the Tribunal’s repeated criticism of the Respondent for being unaware of “the statutory procedures”. Indeed, since, on the Tribunal’s findings, there were only 17 employees (there are no findings from which it could be determined whether the four directors were employees or not), the statutory consultation requirements could not have arisen.[27]Fourthly, it is not the case that the adoption of criteria which involve a measure of subjectivity necessarily renders the dismissal unfair. Whilst, as observed in Williams , at p.163, a reasonable employer can be expected to establish criteria which “so far as possible do not depend solely upon the opinion of the person making the selection but can be objectively checked against such things as attendance record, efficiency at the job, experience, or length of service” (p.161), a number of criteria which are regularly accepted as being reasonable - capability and performance, for instance – will, inevitably, involve a measure of judgment which is hard to describe as being anything other than subjective. It may, of course, be tempered by, for instance, involving more than one person who knows the candidates in the scoring process.[28]Fifthly, the ACAS Code of Practice on Discipline and Grievance does not apply to redundancy dismissals.[29]Sixthly, where an Employment Tribunal find a dismissal to have been procedurally unfair, including where the procedural deficiency consists of a lack of consultation, it must consider whether or not a Polkey ( Polkey v AE Dayton Services Ltd [1988] AC 344 reduction ought to be made. In Polkey Lord Mackay of Clashfern, at p.161, referred with approval to part of what was said by Neill LJ in the judgment of the Court of Appeal:
“…it seems to me to be proper and indeed necessary for the tribunal to investigate the effect of the failure to consult the employee or to warn him or to hold discussions or as the case may be. In some cases, the facts may show beyond peradventure that no discussions or other steps could have made any difference whatever because the state of the company was so grave. In other cases the matter will be more evenly balanced. But, for my part, I can see no objection in principle to the tribunal seeking to evaluate the effect in practice of any failure by the employer to observe the provisions of a code of practice or of the guidelines prescribed in cases such as Williams v Compair Maxam Limited….”
[30]Following Polkey , whilst a dismissal may be found to be unfair on procedural grounds alone, in deciding what compensation, if any, to award under section 123 of the 1996 Act, a tribunal has to ask itself whether any of the evidence which it accepts shows that there is a chance that, absent that procedural unfairness, the employee would have been dismissed in any event (for recent discussions see: Scope v Dr Carol Thornett [2006] EWCA Civ 1600 ; Software 2000 Ltd v Andrews & Ors [2007] ICR 825 ).[31]An issue which may arise (and arose in this case) when considering what would have been the outcome if there had been a fair procedure is that of whether or not the claimant would or should have been offered alternative employment. Whilst, if raised as an aspect of the employers’ case that the employee would have been dismissed in any event, the initial general onus may be said to rest on the employer, it may not be difficult for him to discharge it. If, for instance, the employer’s position is that there were no alternative jobs, it is then for the claimant employee to make the running. As discussed by Underhill P, in Virgin Media Ltd v Mr G Seddington and anr UKEAT/0539/08/DM at paragraph 15:
“We do not think that the burden can be regarded as being at all points on the employer. The burden may indeed be on him to raise the issue (if the employee has not) – that is, to assert that there was no suitable employment that the employee could or would have taken – and he will also have to provide appropriate evidential support for that assertion: the basic facts about alternative employment will be within his knowledge and not – at least not always or not completely – within the employee’s. But if he raises a prima facie case to that effect, it must, it seems to us, be for the employee to say what job, or kind of job, he believes was available and to give evidence to the effect that he would taken (sic) such a job: that, after all, is something which is primarily within his knowledge.”
[32]Seventhly, where the tribunal is satisfied that it is appropriate to award compensation, it requires to explain why it is awarding the sum determined on and, in particular, why it considers that it is just and equitable to make that award “having regard to the loss sustained by the complainant in consequence of the dismissal.” (see: s.123(1) of the 1996 Act). The Tribunal’s Judgment and Reasons[33]At paragraph 62, the Tribunal lists the “Issues to be determined by the Tribunal”:
“(a) Has the respondent established a potentially fair reason for dismissal? (b) Did the decision to dismissal fall within the band of reasonable responses? (c) Did the respondent follow a fair procedure? (d) Were there any failures by either party to follow the ACAS code and if so were such failures unreasonable? (e) If the claimant was unfairly dismissed, what remedy is appropriate? (f) If compensation is to be awarded, how much should be awarded?”
[34]It is not clear why the Tribunal included (a) in their list of issues given that it was not open to them to revisit it. It had already been determined that the Claimant was dismissed by reason of redundancy.[35]Nor is it clear why the Tribunal included (d) in their list of issues. At paragraph 66, the Tribunal set out in some detail what would be the effect of a failure to comply with the ACAS code but it was not applicable because the Claimant’s was a redundancy dismissal. The Tribunal does, later in its reasoning, at paragraph 75, explain that but it seems that they had, by then, gone through the exercise of considering whether or not it had been complied with - for reasons which are not apparent. They state:
“75. Although the Tribunal identified a number of procedural failures by the respondent, in accordance with paragraph 1 of the ‘ACAS Code of Practice’, it does not apply to redundancy dismissals.”
[36]The Tribunal recognised that they required to determine whether or not the Claimant’s dismissal was fair by asking whether or not the Respondent had acted reasonably. At paragraph 59, they state:
“What has to be assessed is …. whether ……., with the knowledge the employer had at the time, the employer acted reasonably in treating the redundancy that he believed had taken place as a reason for dismissal.”
[37]It is not clear why or on what basis the Tribunal refer only to the Respondent ‘believing’ that there was a redundancy; it had already been established that, as a matter of fact, the reason for the Claimant’s dismissal was redundancy.[38]The Tribunal criticised the procedure adopted by the Respondent in various respects.[39]They criticised the Respondent’s selection of the redundancy pool. They did so notwithstanding the fact that, as above noted, it was no part of the Claimant’s case. At paragraph 68, the Tribunal refer to the pro rata reduction in the Claimant’s salary to just over £30,000 arising from him working a four day week, observe that there was one junior staff engineer whose salary was approximately £30,000 per annum, that the Claimant’s workload was, post redundancy, to be covered by a combination of a director and that engineer and concluded that:
“this suggests that junior staff did carry out work of a similar nature to that of the claimant.”
There does not appear to have been any evidence before the Tribunal regarding the work that was being carried out by junior staff at and before 2009 and we would observe that the plans identified for future allocation of the work allotted to the Claimant’s post (involving a combination of one junior member of staff and a director) do not obviously demonstrate either that those earning £30,000 per annum were an appropriate pool or, more importantly, that there was any inherent unfairness in the pool of associates determined upon by the Respondent. The Tribunal then refer to there being differences in the roles carried out by the associates (although, as above noted, there are no findings in fact as to the nature of those differences) and conclude that:
“Therefore, it was not only difficult to compare them in a scoring process, but also to comprehend the basis on which the respondents had created the selection pool in the manner that they did.”
[40]The Tribunal were critical of the selection criteria for various reasons:
“69. The selection criteria drawn up by the respondent bore no relation to the criteria set out in the staff appraisal used by the respondents until 2007.” and “70. Apart from the ‘Time and Attendance’ and ‘Disciplinary Record’ criteria, the Tribunal do not accept that the selection criteria were necessarily objective.”
[41]“Length of Service” would also normally be accepted as being obviously objective but the Tribunal appear to discount it because it “may be regarded as discriminatory”. They presumably had age discrimination in mind. However, the Claimant at no time complained that he had been discriminated against on grounds of age.[42]So far as the other criteria were concerned, the Tribunal accepted that “capability”, “adaptability”, “client/customer focus” and “motivation” could be deemed objective but said there was a lack of definition or clear guidance as to how to measure candidates against those criteria so their objectivity was undermined.[43]Regarding “team fit”, the Tribunal considered that it too “may be regarded as discriminatory”. It is not clear what type of discrimination they had in mind. We note, however, that the Claimant made no complaints of having been discriminated against on the ground of any protected characteristic at all.[44]The Tribunal were critical of the lack of weighting because: “71………..This created a risk of double counting in that the longer the service an employee has the more likely they are to score higher in terms of ‘Client/Customer Focus’ as there has been a longer duration in which to develop relations with clients.” but there was no evidence that that in fact happened and we would only observe that the reverse could be the case, namely that the longer an employee is in service, the more opportunity there will have been for problems in client relationships to occur. The Tribunal are also critical of the fact that the directors did not refer to documentary evidence about the three associates but there was no evidence that any documents were available regarding the other two candidates and the only document referred that related to the Claimant was an appraisal carried out in April 2007, prior to his taking on the role of associate; there was no evidence that there was any documentation available that could have helped the directors with their assessment of his work as an associate.[45]The Tribunal did not conclude that the Claimant’s own financial position was a determining factor but, at paragraph 72, they state:
“The ET3 form states unequivocally that in making its decision, the respondent took account of the fact that the claimant had been overheard saying that he did not financially need to work. The Tribunal were not convinced by the respondent’s attempts to marginalise the significance of this statement.”
[46]What the ET3 actually says is:
“..the Claimant was selected based solely upon the scores assigned as part of that process, though the Respondents also had regard to the fact that the Claimant had, on occasion, remarked that due to his financial circumstances he did not require to work.”
[47]The Tribunal were of the view that the selection of the Claimant “may have been somewhat predetermined” (paragraph 72), a conclusion which they draw from the fact that:
“Both Mr Hughes and Mr McNeill also stated in evidence that they were not surprised at the outcome of the scoring matrix.”
[48]The Tribunal did not, however, find that the Respondent had predetermined the outcome of the redundancy process.[49]The Tribunal accepted that the Respondent attempted to compensate for the lack of prior consultation by agreeing to meeting with the Claimant on three occasions but appear to have wholly discounted their doing so because: “The Tribunal do not accept this as a consultation process. This was carried out after the critical decision to make the claimant redundant.” (paragraph 73) and were also critical of the failure of Mr Hughes or Mr McNeill to take minutes of the meetings, relying on the Claimant to do so. The Tribunal do, however, appear to have accepted that the Claimant’s meeting notes were accurate.[50]The Tribunal were critical of the Respondent’s failure to invite voluntary redundancies and refer, at paragraph 73 (in the discussion section of their written reasons) to the reason being that “they did not want to lose someone they wanted to retain” which would appear to be drawn from the Respondent’s position being that to do so would not “be in the best interests of the company”. The Tribunal then conclude:
“This suggests to the Tribunal that they did not wish to retain the claimant.”
[51]The Tribunal did not, however, find that that was the outcome that the Respondent was looking for.[52]The Tribunal were critical of the Respondent’s failure to consider alternative employment for the Claimant:
“73. The respondent did also not properly consider suitable alternative employment for the claimant. Mr McNeill stated in evidence that there simply were not any alternative vacancies. However, no evidence was offered from the respondent to suggest that any efforts were made at all in this respect.”
[53]Under reference to Mr McNeill’s response “Oh, for fuck’s sake” (which, as we have already observed, the Tribunal state was in response to the Claimant asking if he had a right of appeal whereas, according to the Claimant’s own note, it was in response to his suggesting that the criteria may be unfair) the Tribunal stated that that comment was:
“indicative of the respondent’s unreasonable approach to the claimant’s dismissal throughout.”
[54]Finally, the Tribunal were critical of the appeal procedure because the appeal was heard by directors who had participated in the decision to dismiss. The Tribunal recognised that the Respondent referred the decision as to whether or not to allow the appeal to all four directors with a view to avoiding unfairness but they then stated:
“Whilst the Tribunal accept that the respondent is not a large business, it is still essential in terms of both natural justice and good practice that an appeal is not heard by the same individuals involved in making the original decision in order to afford an employee an independent and fair hearing. In circumstances such as these, employers may seek external adjudicators from a similar business to conduct an appeal hearing.”
[55]We note the suggestion that an “external adjudicator” from some “similar business” should have been instructed to conduct the appeal hearing. There was, however, no evidence before the Tribunal about the availability of external adjudicators, about what other businesses might have been appropriate source of such adjudicators, about the costs that might be involved, of how the power to decide the issue could be vested in someone who was not a director of the company or as to the appropriateness of having an outsider to the business making a decision on a redundancy dismissal appeal without any input from someone having knowledge and understanding of the business and, in this case, of the three associates.[56]The Tribunal summarise their conclusions at paragraph 76:
“The Tribunal consider that the procedure adopted as a whole by the respondent was a sham and unfair. It was only due to the claimant’s own research and thorough approach to the matter that the respondents became aware of their legal responsibilities. The respondent is a firm of 21 employees which is a business of sufficient size to be aware of and adhere to its statutory duties to its employees. However, once made aware these duties and realising they could not be ignored, the respondent did little to rectify the difficulties they had already caused themselves. The respondents were very much of the mind that it was their own company and that they should decide how to manage their affairs which included making their own decisions, whether in compliance with the law or not. In the circumstances the Tribunal considers that the dismissal was unfair on procedural grounds as well as on substantive grounds.”
[57]Turning to whether or not there should be a Polkey deduction, the Tribunal only stated:
“79.The Tribunal were also of the view that a Polkey reduction did not apply in this case as in the event the respondent had conducted a fair procedure, it would still not have resulted in a fair dismissal.”
[58]As to compensation, the Tribunal awarded the Claimant loss of earnings from the date of his dismissal and for the period to 18 January 2011, on the basis that he had said he “should be able to obtain an equivalent rate of pay by 18 January 2011.” They do not explain the basis for their approach. There are no findings as to what was going to be the source of the Claimant’s equivalent rate of pay or, importantly, why those replacement earnings could not have been arrived at sooner. The appeal[59]For the Respondent, Mr Templeton submitted that the Tribunal had erred in law and its decision could not stand.[60]He submitted that there was no basis for nor explanation of the Tribunal’s conclusion that the dismissal was substantively unfair.[61]Regarding the Tribunal’s finding of procedural unfairness, they had over-scrutinised the scoring process and substituted their own view of what would have been an appropriate procedure. As to the pool, the Claimant had no case that the choice of pool was unfair and it was not, in any event, for a Tribunal to impose its choice of pool on an employer who has genuinely applied his mind to the matter: Fulcrum Pharma (Europe) Ltd v Bonassera and anr UKEAT/0198/10/DM. The pool chosen here was not a sham and was not unintelligible.[62]Regarding the criteria, it was erroneous to suggest that they all required to be wholly objective and it was wrong to embark on a detailed scrutiny: FSS Ltd v McDine UKEATS/ 0051/10/BI; Williams v Compair Maxam . The appraisal process had not been in use for some time and there were no findings in fact about whether or not the Respondent had found it helpful when it was in use.[63]As to consultation, it was accepted that there was a failure on the part of the Respondent but the Tribunal had failed to consider what would have happened if consultation had taken place and there was ample evidence about that, given what occurred at the meetings that were held once the lack of consultation was pointed out to them. As explained in Polkey and in Duffy v Yeomans & Partners Ltd [1993] UKEAT 530.91/0704 the lack of consultation may not render a dismissal unfair.[64]Regarding alternative employment, Mr Templeton pointed to the Respondent’s evidence being that there were simply no vacancies. That was sufficient to discharge any onus on them: Virgin Media Ltd v Mr G Seddington . There was no basis in the evidence for the Tribunal to suggest, as they did, that the Respondent could have done more in that regard. It was no part of the Claimant’s case that there was some alternative job he could or should have been offered.[65]Turning to the Tribunal’s criticisms of the appeal process, they had fallen into error. Whilst Mr Templeton accepted that it was desirable that an appeal be heard by different persons, that was not always possible in a small entity and it was wrong to suggest that, as a matter of law, a dismissal was necessarily unfair if that did not occur. Further, as to the issue of an outside adjudicator, the Tribunal had speculated, on the basis of no evidence, as to what might have been able to be done and had not thought about the obvious questions such as the competency or appropriateness of such a person determining the issue.[66]Mr Templeton made other submissions to the effect that the Tribunal’s approach was indicative of their having in mind that, notwithstanding the decision of the earlier employment as to the reason for dismissal, they could still consider whether or not this was a redundancy dismissal as opposed to a pretext. He drew attention to the use of the expression “believed had taken place” at paragraph 59, to which we refer above and to their use of the expression “sham”, in paragraph 76.[67]Regarding what the Claimant had said about not needing to work, Mr Templeton pointed out that there were no findings in fact that that matter had affected the Claimant’s scores and having regard to it did not necessarily have a negative connotation.[68]Turning to compensation, Mr Templeton submitted that the Tribunal had wholly failed to explain their conclusion that there was no basis for a Polkey deduction; this was a case where one plainly fell to be made. Similarly, they had failed to explain how and why loss of earnings up to and beyond the date of the hearing was considered to be attributable to the Claimant’s dismissal: section 123(1) of the Employment Rights Act 1996 .[69]Mr Templeton invited us to overturn the judgment of the Tribunal and dismiss the Claimant’s claim which failing to remit the case to a freshly constituted employment tribunal.[70]The Claimant submitted that the Tribunal had not overstepped the mark. He believed that there were substantive failings by the Respondent. He referred to their having found that his part time working was an inconvenience and the reference to his own financial position; that showed that the dismissal was substantively unfair. Further, the directors relied on their own opinions in the scoring exercise, their decision was predetermined, and they wanted to “lose” him.[71]The Claimant referred to that part of the judgment in the case of Pinewood Repro Ltd t/a County Print v Page UKEAT/0028/10 which records that the tribunal below had expressed the view that employers require to provide an explanation of employee’s scores in a redundancy process. He accepted, however, that he had not challenged his scoring. He said there was no evidence to link the need for redundancy with the pool of candidates, whilst accepting that he had not, at any earlier stage, challenged the pool as unfair. It was, he said, clear from the judgment of the Tribunal that there was “more to it” and it showed his dismissal to be unfair. He said that the meetings he had were not consultation meetings – they were just for him to find out how the Respondent had reached its result.[72]He referred to the same passages in Fulcrum Pharma as had been referred to by Mr Templeton and he referred to Williams v Compair Maxam in support of a submission that whilst some of the criteria were subjective, the Tribunal had actually found that a number of them were objective and had not fallen into error in that regard.[73]The Claimant said the reference to the ACAS guidelines was his fault – he had raised them.[74]As to Polkey , the Tribunal had considered what would have happened; that was evident from their finding that the procedure was a sham and was unfair. His point seemed to be that if the procedure had not been a sham and had been fair then it was plain that he would not have been dismissed; he was a chartered engineer and his experience outweighed that of the junior engineer. A proper consultation with the candidates who were on £30,000 per annum would not have resulted in his redundancy. Further, if the directors had had the appeal procedures independently reviewed, they would have found that theirs was a knee jerk reaction. That said, the Claimant accepted that it was not essential to have an appeal heard by a different person from the dismissing officer.[75]In summary, the Claimant submitted that it was only the Respondent who had erred in law, the judgment of the Tribunal had been all fact, the Respondent was simply denying the facts and dressing up facts as law. Discussion and decision[76]We are satisfied that the appeal is well founded.[77]First, whilst the Tribunal have explained why, in their view, the dismissal was procedurally unfair, it is not possible to identify, from their reasons, the basis on which they concluded that it was also substantively unfair. The reasoning that precedes that conclusion concerns procedural matters. Nowhere do the Tribunal find, for instance, that no reasonable employer would have decided to dismiss the Claimant. The conclusion of substantive unfairness cannot, accordingly, stand.[78]Turning to the question of whether or not the dismissal was procedurally fair, we are satisfied that the Tribunal erred in law. They have taken account of irrelevant factors namely their own view that the Respondent should have determined on a different pool and their own view that two of the criteria were possibly discriminatory; they have, in short, substituted their own view. Then, the Tribunal determined that the Respondent’s approach to criteria was flawed due not only to possible discrimination but also to lack of objectivity and lack of the use of weighting. As above noted, there is no rule that each individual criterion used in a redundancy selection must be objective and none of the evidence demonstrated that the lack of weighting had in fact caused the double counting apprehended by the Tribunal. Further, this was not a case where a single officer marked the candidates; on the Tribunal’s findings in fact, their scores were the result of discussion amongst the four directors but they have failed to take that account in their considerations. Overall, we are persuaded that the Tribunal’s approach has involved too detailed a scrutiny of the selection process, contrary to the guidance in the authorities to which we refer above.[79]There is no doubt that the Respondent failed to consult with the Claimant and accepted that they should have done so but the Tribunal failed to go on and consider whether, looking at the whole facts and circumstances including the meetings that followed the Respondent’s realisation that they should have consulted, the dismissal was fair and also, what would have happened if there had been consultation at an earlier stage? They required to do so.[80]We accept that the meetings that took place with the Claimant were not consultation meetings in the sense of being meetings taking place at an early stage and prior to determination of who was to be made redundant, but they were, nonetheless evidently meetings at which the Claimant was free to raise any matter, at which he did raise a number of matters which were considered and answered and were capable, it would seem, of giving a reasonable indication of what would have happened if consultation had taken place, namely that the Claimant would still have been selected for redundancy. The Tribunal only, however, asked themselves whether the meetings amounted to “consultation” but they required to go further than that. The nature and effect of the meetings was relevant to the overall question of whether or not the Claimant’s dismissal was fair. Also, the question of what would have happened if there had been consultation was highly relevant to the overall issue of whether or not, absent procedural failing, there was a chance that the Claimant would have been dismissed in any event. Regarding the latter, we find the Tribunal’s statement (at paragraph 79) that a Polkey reduction did not apply very surprising, given the evidence and findings in fact, and we cannot identify any reasoning that supports it.[81]Separately, we observe that the Tribunal also appears to have misdirected themselves in that, at a number of points, they refer to the Respondent requiring to comply with a “statutory process” yet, as we have explained, no such process applied to them. Regarding the references to the ACAS Code, although the Tribunal found that it did not apply, it was not a relevant issue at all and they should not have been asking themselves whether or not the Respondent had complied with it.[82]Turning to the matter of the appeal, the Tribunal’s approach, which was that it is always “essential” for an appeal to be heard by someone other than the dismissing officer, is incorrect as a matter of law; the question is, rather, whether a procedure which fails to achieve that renders the dismissal unfair, bearing in mind the whole facts and circumstances of the case. Further, the Tribunal’s conclusion regarding the appeal procedure in this case was evidently influenced by an assumption on their part that the Respondent could have arranged for an “external adjudicator” from a “similar business” to hear the appeal. We refer to our earlier observations regarding this matter. The Tribunal had no basis for making that assumption.[83]Regarding the matter of alternative employment, we accept that the Tribunal have also fallen into error. Evidence was given by Mr McNeill, a director of the Respondent - which the Tribunal did not reject - that there simply were not any alternative vacancies. We are satisfied that, in the circumstances of this case, that was sufficient for the Respondent to discharge such onus as lay on them and there was no evidence led to counter it. The Tribunal’s criticism of the Respondent as having made no effort had no basis in the evidence – it was never suggested by any witness that there was actually a vacancy available.[84]Turning to the matter of compensation, again we would refer to our earlier comments. As Mr Templeton submitted, the Tribunal have not explained why they consider that the loss claimed by the Claimant all flowed from his dismissal. The findings in fact regarding his employment position are extremely brief and not of themselves explanatory of the outcome which was to compensate the Claimant for continuing loss of earnings over quite a substantial period.[85]We can understand why Mr Templeton submitted that the Tribunal’s reasoning is indicative of their having approached matters on the basis that it was open to them to decide whether or not the real reason for the dismissal of the Claimant was redundancy. There is certainly a flavour to that effect as exemplified by the two matters to which he drew attention at paragraphs 59 and 76 and that impression is reinforced by certain comments which seem to evince suspicion on their part as to the Respondent’s motivation (see e.g. paragraphs 72 and 73). Disposal[86]In these circumstances, we will pronounce an order upholding the appeal.[87]We have considered whether or not a remit can be avoided but have reached the conclusion that there is inadequate clarity regarding some of the relevant facts and a conclusion as to whether or not the Claimant’s dismissal was fair or unfair cannot be reached on the basis of such facts as are clear from the present findings. This is, accordingly, not a case in which it would be appropriate for us to determine the outstanding issues namely(a) whether or not the Claimant’s dismissal (which was by reason of redundancy) was fair or unfair?,(b) whether or not, if procedurally unfair, there was a chance of the Claimant being dismissed in any event and if so, what was that chance in percentage terms? and(c) if his dismissal was unfair, what amounts to appropriate compensation, bearing in mind the provisions of s.123 of the Employment Rights Act 1996 ?[88]We will, accordingly, in addition to upholding the appeal, order that the Claimant’s claim be remitted to the Employment Tribunal for a rehearing. We consider it appropriate, in all the circumstances, for the remit to be to a fresh Tribunal.