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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Packman (t/a Packman Lucas Associates) v Fauchon (Redundancy : no sub-topic) [2012] UKEAT 0017_12_1605 (16 May 2012)
URL: http://www.bailii.org/uk/cases/UKEAT/2012/0017_12_1605.html
Cite as: [2012] UKEAT 0017_12_1605, [2012] IRLR 721, [2012] ICR 1362

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Appeal No. UKEAT/0017/12/LA

 

 

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

 

 

  At the Tribunal

  On 16 May 2012

 

 

 

Before

THE HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)

MRS M V MCARTHUR FCIPD

MS G MILLS CBE

 

 

 

 

 

MR RON PACKMAN T/A PACKMAN LUCAS ASSOCIATES APPELLANT

 

 

 

 

 

 

MS P FAUCHON RESPONDENT

 

 

 

Transcript of Proceedings

 

JUDGMENT

 

 

 


 

 

 

 

 

 

 

 

 

 


APPEARANCES

 

 

 

 

 

For the Appellant

MR BERNARD G WATSON

(Representative)

Peninsula Business Services Ltd

The Peninsula

2 Cheetham Hill Road

Manchester

M4 4FB

For the Respondent

MR ABOU KAMARA

(Representative)

Free Representation Unit

 

 


SUMMARY

REDUNDANCY – Definition

 

A contention that where an employee was dismissed in consequence of a downturn of business, and the introduction of new accounting software, both of which caused a lessening of the requirement of the employer for employees to do book‑keeping work (in this case an employee, since only one did that work) there was no dismissal by reason of redundancy, because the EAT decision of Aylward required a reduction in headcount as a necessary factor, was rejected. Aylward would not be followed, since it was inconsistent with previous Court of Appeal observations, and had erroneously relied upon a misunderstanding of observations of HHJ Peter Clark in Safeway v Burrell.


THE HONOURABLE MR JUSTICE LANGSTAFF (PRESIDENT)

Introduction

1.            This is an appeal against a decision of an Employment Tribunal sitting at London South, which on 31 August 2011 determined that the various claims made by the Claimant should be dismissed save for her claim that she had been dismissed by reason of redundancy.  The Tribunal determined that she was entitled to a redundancy payment of £11,210.  Reasons for that decision were delivered on 17 October 2011.  It is against that decision that the employer appeals to this Tribunal.

 

Background

2.            The background to the decision was this.  The Claimant was employed to provide largely book‑keeping services by her employer.  There was a downturn in business which placed economic pressure upon the employer.  Secondly, the employer introduced an accountancy software package known as the Sage system, which in itself also reduced the number of hours for which it was necessary that a book‑keeper should work.  Accordingly, the employer had a need for fewer hours to be worked providing book‑keeping services than had been worked previously.  The employer sought to persuade the Claimant to reduce her hours significantly per week.  The Claimant refused to agree.  Because her contract entitled her to work the hours she was doing and the employer no longer needed her to work those hours, the employer gave her notice of dismissal, to take effect from 5 October 2010, which it duly did.

 

3.            The question arising from that background was whether the dismissal for those reasons was a dismissal by reason of redundancy.  The Tribunal answered it in one short, and somewhat condensed, paragraph as follows:

 

“It was common ground that Mrs Fauchon was dismissed.  In dispute was the reason for her dismissal.  The Tribunal find that the employer has demonstrated and shown to the Tribunal that the reason was redundancy.  The downturn in the business meant that there was a diminished need for book‑keeping.  Since Mrs Fauchon did not agree to a significant reduction in her hours the reason for her dismissal was redundancy (see Harvey on Industrial Relations and Employment Law, paras E908-912, whose views on the dubiety of Aylward [and Ors v Glamorgan Holiday Home Ltd UKEAT/0167/02] are respectfully shared and endorsed).”

 

4.            The reference to Aylward is a reference to an otherwise unreported case determined at this Tribunal by a panel chaired by HHJ Ansell on 5 February 2003.  It has formed the bedrock of this appeal to us as it has been presented by Mr Watson.  The paragraph in Harvey to which the Tribunal had referred begins at paragraph 908 by identifying that a recession in the trade or business is a classic example of a redundancy situation.  Typically, a recession will mean that the business requires fewer employees and the workforce will be trimmed.  It observes that in one reported case, however, there was held to be a redundancy situation where an employer really needed fewer employees collectively but nevertheless needed to retain every individual in the group.  That was a reference to Hanson v Wood [1967] 3 KIR 23 1, a decision of the Divisional Court.  The Tribunal in that case did not regard a reduction in hours in consequence of a downturn in business as entitling employees laid off in consequence to a redundancy payment.  A Divisional Court allowed an appeal and remitted that case to the Tribunal, directing that unless the employer was by contract allowed unilaterally to vary the hours there was a constructive dismissal, and if there was a dismissal, then it was clearly by reason of redundancy, because the requirements of the business were for less work to be provided by each employee.  Having set out that case, one from a very long time ago in industrial terms but which considered statutory provisions that are reflected in the same wording as they are found today in section 139 of the Employment Rights Act 1996 (ERA), Harvey went on to add this (we quote in full):

 

“910. A later case gives pause for thought.  In [Aylward] the employer needed to reduce costs, and so proposed new terms and conditions of employment.  The principal proposal was that the hotel should close every January and February during its slack period and that employees should not be paid during those two months.  Most employees accepted the change; some did not.  Those who did not were dismissed but replaced.  There was therefore no reduction in the number of employees, merely a reduction in the hours worked.  The EAT apparently held that because there had been no reduction in the number of employees required, therefore there could be no redundancy situation.

911. But, with respect, that cannot be right as a general proposition.  It may be that on the facts of the particular case there was no reduction in the overall amount of work required by the business because nothing much happened in the slack period anyway.  If so, the decision is unexceptionable.  But it cannot be true to say that reduced demand alone can never constitute a redundancy situation.  Suppose an employer employs two employees but demand for his product falls by 50 per cent.  It cannot be right to say that there is a redundancy situation if he sacks one employee but there is no redundancy situation if he puts them both on half time.  The truth is that there is a redundancy situation in either event but a claim to a redundancy payment does not arise unless or until there is a dismissal by reason of the redundancy situation.  […]  It is true therefore that a reduction in hours does not per se give rise to a claim for a redundancy payment, because a reduction in hours does not as such constitute a dismissal.  If, however, the reduction of hours is achieved by way of dismissal, actual, constructive or otherwise, then the dismissal is by reason of redundancy, if and in so far as the reduction in hours demonstrates that overall the business now requires less work from its workforce.  […]  The EAT in Aylward apparently considered various authorities for the proposition that there can be a redundancy situation if the business requires fewer employees but where the overall output remains the same, and took them to mean that there can be no redundancy situation unless the business requires fewer employees.  In particular, the EAT in Aylward relied heavily on the Judgment in Safeway Stores PLC v Burrell [1997] IRLR 200 EAT, but the point being made in [Burrell] was that the language of the act makes it necessary to investigate the requirements of the business for employees in general and not its requirement for the Claimant employee in particular; see especially paragraph 57 of the Judgment.  The case is no authority for the proposition that reduced demand alone cannot constitute a redundancy situation; Aylward is therefore respectfully doubted.”

 

5.            The Tribunal therefore took the bold step of not following a decision of this Tribunal that, it might be thought, was in point, and did so upon the basis of what had been written by way of criticism in Harvey, which, albeit a leading text, is a textbook and is not legal authority.  The issue for us on this appeal centrally posed in his submissions by Mr Watson is whether the Tribunal was right in law so to do; that is, whether the requirements of statute are such that there needs to be a reduction in the number of employees, either actual or anticipated, before a dismissal for that reason can be regarded as a redundancy.  He argues that here the decision was contrary to Aylward and Aylward was appropriate authority.  Aylward, he submits, adopts as a critical part of its reasoning the case of Burrell, a decision of this Tribunal made by HHJ Peter Clark and members, which was not only approved of but ringingly endorsed by the House of Lords in Murray and Anor v Foyle Meats Ltd [1999] IRLR 562.  The “headcount” had to reduce before there could be a redundancy. 

 

6.            The submissions to the contrary are to the effect that, wherever there is a diminution in work and a consequent lessening of the requirement for an employee to work the hours the employee has previously been working, then if the employee is dismissed by reason of that reduction in work, there will be a “redundancy situation”; that means that the dismissal, if it is caused wholly or mainly by the redundancy situation, is one within section 139 of the ERA.  The submission is to the effect that Aylward must be wrongly decided.

 

Discussion

7.            Mr Watson’s argument that reduction in headcount was essential did not represent a principle he would apply to each and every situation.  Mr Watson anticipated that if the hours had been so reduced as, for instance, to change work performed over the course of a year such that it was to be performed only for a month during the year, that that would be a redundancy situation and dismissals by reason of that change would be for redundancy even if employee numbers were not reduced.  He maintained that by contrast a change of slight effect such as losing an hour’s work per week would not, if there was a dismissal for that reason, be correctly regarded as redundancy.  He was unable, however, to help us with any distinction in principle between the two situations. 

 

8.            We think that the matter is to be approached as a matter of principle starting with the statute rather than by way of seeking extreme examples.  When considering any question that arises under the statutory jurisdiction of an Employment Tribunal, the place to begin must always be in the statutory wording.  Here, section 139, headed “Redundancy”, provides, so far as material:

 

“(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 […]

have ceased or diminished or are expected to cease or diminish.”

 

9.            Some observations; first, the whole wording of the section must be taken into account.  The section is concerned with dismissal; it is not concerned with identifying a “redundancy situation”, which, though it can be a useful label, can sometimes be a misleading misnomer.  Any question of whether a dismissal is by reason of redundancy must be approached by looking to see whether what has happened fits the words of the statute and not by asking intuitively if the situation created is a “redundancy situation” and then torturing the words of the statute so as to fit the result that might be suggested by that phrase.  The phrase “wholly or mainly attributable to” applies a causation test.  There thus has to be a dismissal that will be as defined by section 95 of the ERA 1996, and in this case Mr Watson was constrained to accept during the course of his submissions that section 95(1)(a) applied: that the Claimant was dismissed by her employer because the contract under which she was employed had been terminated by the employer.

 

10.         Thus it was common ground that there was a dismissal; the question is whether it is wholly or mainly attributable – that is, caused by – the state of affairs set out in subsection (1)(b).  That makes reference to the requirements of the business; that is, the business for the purposes of which the employee was employed by the employer (see section 139(1)(a)(i)).  So the first focus has to be upon what the business needs.  The needs are for employees – although that is in the plural, it is common ground before us that it does not preclude one employee being made redundant, or for a redundancy simply affecting one employee only, as where the job of an employee who is the only person performing work of a particular kind disappears.

 

11.         The need, however, is not just a need for employees in a vacuum: it is associated with work.  The sub‑clause does not cease after “employees”.  The requirements of the business for employees are linked by the statute to those employees carrying out work of a particular kind.  The reference is to work of a particular kind and not, for instance, to work of a particular duration; but the relevant clause continues “have ceased or diminished”; that is, the requirements of the business have ceased or diminished.  Thus, if the business need for work of a particular kind has diminished – that is, less work of that sort needs to be done – there will be a redundancy situation, bearing in mind the need to give value to each word in the statutory section.  Mr Watson would argue that it is an error to focus only upon the requirements of the business that work of a particular kind should be carried out without including the reference to the need for employees to carry it out.

 

12.         With those observations, we turn to the central case of AylwardAylward was a case in which a hotel had opened for 52 weeks of the year.  It did not trade profitably during January and February.  The business needed, therefore, to reduce costs.  It proposed to do so, so as to avoid insolvency, by trading only from March to December.  To do so, most of the staff would need to be employed only for 42 weeks of the year rather than the 52 weeks for which they had previously been engaged.  At paragraph 7 of the decision of the Appeal Tribunal it is noted that the case was presented on the basis that the staffing levels had not changed, but that what had changed was that the staff were not required to work a full 52 weeks in a year; they were no longer working during January and February and being paid for those months.

 

13.         The Tribunal at first instance came to the conclusion that there was no redundancy situation.  It did so in these terms:

 

“We find first that there was no redundancy situation and that the statutory definition of redundancy is not met.  The dismissals were not wholly or mainly attributable to the fact that the requirements of the respondent’s business for employees to carry out work of a particular kind ceased or diminished.  There was no diminution in the respondent’s needs for employees to carry out the work for which the applicants were employed.  The respondent wished to retain them.  When they left, they were all replaced.  A reduction in the number of weeks for which the same number of employees were required to carry out the same work is not sufficient in our view to meet the statutory definition.”

 

14.         It is not entirely clear to us what the Tribunal were there finding.  On the face of it, it might be that the Tribunal was saying that there had been neither a reduction in the number of employees nor any reduction in the work done, i.e. the hours of work performed.  It seems to us, however, in the context of the other facts of this case that what the Tribunal probably meant was that in each week during which an employee worked he would perform as many hours of work and as much work as he had done previously.  Thus we think that, probably, the case was considering a factual situation in which because of a downturn in business the business required a reduction from 52 weeks’ work in the year to 42 weeks’ in the case of each employee.

 

15.         The Judgment considered a number of authorities.  It did not evaluate precisely what it made of those authorities save for two.  At paragraph 14 it set out the decision of this court in Burrell and noted that the passage it quoted had been cited by approval by the House of Lords in Murray .  The passage to which the Appeal Tribunal drew attention was one that occurs at page 530 of Burrell.  We should set it out in full:

 

“Reduction in the work

From time to time the mistake is made of focussing on a diminution in the work to be done, not the employees who do it.  One example will suffice.  In Carry All Motors Ltd v Pennington [1980] ICR 806 the applicant before the Industrial Tribunal, employed as a transport clerk, was dismissed by his employers following their decision that his depot was overstaffed; they concluded that the work of the transport manager and transport clerk could be carried out by one employee only.  The transport manager was retained and the applicant dismissed.

On the applicant’s complaint of unfair dismissal the employer relied on redundancy as the reason for dismissal.  An Industrial Tribunal held that requirements of the business for employees to carry out particular work had not ceased or diminished.  The same work remained.  Accordingly, there was no redundancy but simply a reorganisation.  The dismissal was unfair.

On appeal the Employment Appeal Tribunal reversed the Industrial Tribunal’s findings.  It held that the question was not whether the requirement for particular work had diminished, but whether the requirement for employees to do that work had diminished.  Since one employee was now doing the work formerly done by two the statutory test for redundancy had been satisfied.  In reaching that conclusion the Appeal Tribunal followed and applied the approach of the National Industrial Relations Court in Sutton v Revlon Overseas Corporation [1973] IRLR 173.”

 

16.         And, noted the Appeal Tribunal in Aylward, Judge Peter Clark concluded at the end of that paragraph:

 

“It is necessary to look at the overall requirement for employees to do work of a particular kind, not at the amount of work to be done”

 

adding that there had been approval by the House of Lords (at paragraph 5) of the Judgment of Judge Peter Clark generally.  Lord Irvine, Lord Chancellor, said that he needed to say no more than that he entirely agreed with his admirably clear reasoning and conclusions.  That was, as we see it, a reference to the essential reasoning of the case, as to which we do not regard the particular reference to reduction in the work as being a necessary element.  However, we note the endorsement given generally to the quality of Judge Peter Clark’s Judgment.

 

17.         Basing itself thus upon the remarks, albeit obiter, in Burrell, the Appeal Tribunal in Aylward said this:

 

“15. Having reviewed the authorities we are in no doubt that the Tribunal decision in this case was correct, focussing as it did on the requirement for employees to do work of a particular kind rather than the amount of work to be done.  The requirement for employees at this hotel had not altered.  The number working there was to be the same before and after reorganisation.  What occurred was a business reorganisation which involved a change in the terms and conditions, and particularly the number of days that were to be worked by the same number of employees; a variation to the terms and conditions of their employment.

16. In so far as the earlier authorities are in conflict, we follow the clear guidance in [Murray] approving Judge Peter Clark’s review in [Burrell].  We have no doubts that the Industrial Tribunal in paragraph 33 adopted the right definition and the right approach namely that a reduction in the number of weeks which the same number of employees was required to carry out work did not satisfy the statutory definition.  We would accordingly dismiss this appeal.”

 

18.         The decision thus reached is to the effect, therefore, that where there is a reduction in the work done by a workforce but no change numerically to the members of that workforce, then any dismissal by reason of a downturn in work, and consequent reduction in the hours during which that work is to be performed is not, and cannot be, a true redundancy.  It focuses critically upon the view, which it took to be expressed in Burrell, that the quantity of work performed was not the proper focus when coming to apply the words of section 139 of the ERA.

 

19.         We must put those cases in proper context, both historically and in respect of what those cases were actually deciding.  First, we note that Harvey was entirely right to refer to Hanson.  That was a decision of the Divisional Court in which, despite the workforce remaining the same in terms of headcount, a reduction in the work required from each for remuneration was thought to be redundancy if a dismissal by reason of the reduction in work available to each employee was redundancy. 

 

20.         In Johnson v Nottinghamshire Combined Police Authority [1974] ICR 170 the Court of Appeal considered the case of two women clerks.  They had worked a shift from 9.30am to 5.30pm per day.  A decision was taken for good business reasons by the employing Police Authority to alter the pattern of hours to a shift system.  The women would not accept that change to their terms and conditions of employment and were accordingly dismissed.  The dismissal was held not to be attributable to redundancy because there had been no change in the kind of work nor had there been any change in the employees doing the work; the same number of employees did the same number of hours even though those hours were now patterned differently across the week.

 

21.         The Judgment of Denning MR, as he then was, however, is principally concerned with the issue in the case as to what “work of a particular kind” meant.  The decision was that it did not mean work done during particular hours; it was related to the actual task being done.  In the course of his Judgment Denning MR said this (176H‑177B):

 

“Typical of redundancy situations are these.  There may a recession in trade so that not so many men are needed.  There may be a change in the kind of work done, as from wood to fibre glass, so that woodworkers are no longer needed: see Hindle v Percival Boats Ltd [1969] 1 WLR 174.  The business may be no longer profitable so that the employer has to cut down somewhere.  Or he may be overstaffed.  The employer may meet such a situation by dispensing with the services of some of the men: or alternatively he may lower the wages: or put men on part time.  If he does it by making a change in the terms and conditions of employment, it is due to a redundancy situation.  Those who lose or leave their work in consequence are entitled to redundancy payments.”

 

22.         His reference here to an employer meeting a situation of low profitability by lowering wages or putting men on part time exactly covers the position in this case, where we understand the Tribunal to have accepted that the employee here was to have fewer days of work per week because of the downturn in business and, as it happens, because a new software tool now required less work of a post‑holder occupying her post.  The observations are expressed as principles (see page 177C) and may therefore be ratio – although, as it seems to us, they are more probably to be regarded as obiter – remarks.  Nonetheless, they were remarks with which Cairns LJ associated himself with the words “I agree”, as did Stephenson LJ (179F).  In Aylward we note that particular passage was not cited by the Tribunal, although other passages from Johnson plainly were.  There is no discussion directly, therefore, of whether those specific observations had been considered at all in Burrell or by Murray.

 

23.         In Lesney Products and Co Ltd v Nolan and Ors [1977] ICR 235 Denning MR, again, had again to consider a case in which there had been an alteration of the patterns of work.  On this occasion, the alteration in the pattern of work had led to a reduction in the wages being offered to the employees concerned.  The employer’s factory produced toys.  It had three‑shift working.  There was a downturn in business.  The night shift was ended, and the night‑shift workers were dismissed.  The day shift was reorganised.  Of the machine setters who worked the previous shifts, nine refused to work to the new shift pattern; six of those claimed redundancy payments.  The evidence before the Tribunal was that the amount of work coming into the factory for the day shift to perform had not altered, thus the number of employees engaged to do the work remained the same, and the amount of work remained the same; what had altered was the pattern of the hours.

 

24.         Denning MR recognised (see page 238D‑F) that the relevant principles had been stated in Johnson.  He stated those principles as being that an employer was entitled to reorganise his business so as to improve its efficiency and in so doing to propose to his staff a change in their terms and conditions of employment, and to dispense with their services if they did not agree.  Such a change, he said:

 

“[…] does not automatically give the staff a right to redundancy payments; it only does so if the change in the terms and conditions is due to a redundancy situation.”

 

25.         In Lesney he commented:

 

“While I adhere to what I there said, I think the phrase ‘a redundancy situation’ may be misleading.  It is shorthand, and it is better always to check it by the statutory words.  The dismissal must be attributable to ‘the fact that the requirements of that business for employees to carry out work of a particular kind […] have ceased or diminished’ […].”

 

He went on, however, to note that, the night shift having been done away with for want of work, the night‑shift workers were entitled to redundancy payments. 

 

26.         It is important to note that the Lesney case was only about the day‑shift workers and was approached by the members of the Court of Appeal upon the basis that the downturn in work had been entirely dealt with by the removal of the night shift.  There was not therefore a falling off of work that affected the day shift; see in particular the Judgment of Shaw LJ, page 240D‑F.

 

27.         There is nothing in Lesney, as it seems to us, that helps to determine the correctness of the central point in Mr Watson’s argument that there cannot be a redundancy if the same number of employees are performing work, even if the work is less in amount or extent.  In both Lesney and Johnson, the actual decisions were reached where there was no difference in the hours worked viewed in total and there was no difference in the number of employees; it was the same employees doing the same work in the same amounts.  In such a situation one can well understand how it could not be said that there had been a cessation or diminution of the requirements of the business for employees to carry out work of the particular kind concerned.

 

28.         The case of Burrell was concerned with a rather different factual situation.  Mr Burrell had been a petrol station manager.  The employer, Safeway, decided to reorganise the management structure.  Under that structure the post that Mr Burrell had been occupying disappeared and a new post was created.  He decided not to apply for it because the salary was lower.  Accordingly, it was agreed that he would cease employment with Safeway and would receive a redundancy payment and pay in lieu of notice.  He subsequently presented a complaint of unfair dismissal, in which he alleged that there had been no true redundancy because the new position was exactly the same as the job he had occupied.  The employer resisted upon the ground that his dismissal was by reason of redundancy because his position as a manager had ceased to exist or alternatively was for some other substantial reason, namely reorganisation.

 

29.         There was a division of opinion in the Industrial Tribunal.  The majority thought that the Tribunal should look at the work that the applicant was required to do and actually did in order to decide whether the job had or had not disappeared.  That approach had been labelled the “function” approach.  The Chairman, in a minority, considered that the correct approach was what was known as the “contract test”, which required that in order to establish redundancy it had to be shown that there was a diminishing need for the kind of work that the applicant could be required to perform under his contract of employment.  The Employment Appeal Tribunal considered that neither approach was correct; the majority had erred, as had the minority.  The correct approach was to ask the three questions essentially posed by the terms of section 139(1)(b): first, was the employee dismissed; secondly, if so, had the requirements of the employer’s business for employees to carry out work of a particular kind ceased or diminished, or were they expected to do so; and if so, thirdly, was the dismissal caused wholly or mainly by that state of affairs?  The issue at stage two in the Burrell case had to be answered by a focus on the employer’s requirements for employees generally to carry out work of a particular kind as opposed to the requirement for the applicant to carry out work of a particular kind.  The terms of the applicant’s contract of employment were thus irrelevant.  It will be seen, therefore, that the question of whether a simple headcount was all that was necessary was not the issue to which this Tribunal was addressing its attention in Burrell.

 

30.         Murray was determined by the House of Lords in the light of the conflict that there had been between the different “function” and “contract” approaches taken in the courts below.  The significance of the case is rightly identified by Harvey (E848) as being that it rejected the heresy that the expression “work of a particular kind” in section 139 meant the work for which the employee was contractually employed; that is, the work as defined by the contract of employment.  It is therefore to that aspect of Burrell that the endorsement of the House of Lords particularly applies.

 

31.         The aspect relevant to the question before us and to the decision in the case of Aylward is referred to at paragraph 29 of Burrell.  We have already quoted the relevant passage, which correctly, in our view, identifies that it would have been wrong for a Tribunal to say (as did the Tribunal at first instance in Carry All Motors Ltd v Pennington [1980] ICR 806) that there had been no redundancy because the work required to be done by the employer had not ceased or diminished in a situation in which the employer had determined that he needed a smaller number of employees to perform the work.  When Carry All Motors came to the Employment Appeal Tribunal, it was rightly overturned.

 

32.         The passage therefore in which HHJ Peter Clark dealt with reduction in work was not, as we see it, designed to argue that unless there is a reduction in the number of employees there can be no redundancy; rather, he was saying that an exclusive focus on the diminution in work would be wrong.  This must be right.  As we have already observed, section 139 contains more words than merely that the requirements of the business to carry out work of a particular kind have ceased or diminished.  If the words “for employees” had been omitted from section 139(1)(b)(i), then the decision in Carry All Motors could be understood, but they are not; they are present.  We understand the Appeal Tribunal’s focus in Burrell to be based upon applying the statute fully and properly.  That must include, as we see it, giving full force to the words “for employees”, but it also, as it seems to us, means giving full force to the words “to carry out work of a particular kind” as well.  We cannot properly apply the statute without taking what, for want of a better word, might be described as an holistic view of it.  It looks at two variables that are linked: the employees, and the work.

 

33.         Thus, essentially, there may be situations, as Denning MR recognised in Johnson, in which the needs of the employer’s business are for fewer employees to do the same amount of work.  If employees are dismissed for that reason, they are dismissed by reason of redundancy.  But if the amount of work available for the same number of employees is reduced, then, again, as it seems to us, a dismissal of an employee caused wholly or mainly for that reason is also a redundancy.  If there is, as in Johnson and Lesney, just as much work for just as many employees, then a dismissal arising out of the situation said to give rise to that would not be for redundancy, because there would be no reduction in the requirements of the business for employees to carry out work of a particular kind.  The change to a workforce that may produce a situation such as we have described may arise out of increased efficiency, or decreased production for whatever reason, or a combination of the two; mechanisation, new systems of work, reorganisation, or increased productivity per head may create a need to reduce the workforce.  A change to the amount of work because of a shortfall in orders, for instance, might lead to a change in the need for employees to carry out work of that particular kind.

 

34.         We see no reason artificially to introduce into the statute words that do not appear or to eliminate words that do appear, and it seems to us that the argument of Mr Watson would seek to emphasise only “employees” as if the words “to carry out work of a particular kind” did not appear in section 139(1)(b)(i).  But they do.  The situation that this Tribunal was examining in Burrell, both factually and legally, was a different situation from that which comes before us.  It did not, therefore, in our view justify the decision to which this Tribunal came in the Aylward case.  The reasoning, in paragraph 14 of that decision, begins by adopting the words from Burrell, “From time to time the mistake is made of focusing on a diminution in the work to be done, not the employees who do it”.  Although the example, we think, makes clear what is meant and is entirely consistent with our reading of the statute, the error, as it seems, respectfully, to us, in the analysis of the Appeal Tribunal here was to take the words as having a wider impact than they did.  HHJ Peter Clark was making clear that it would be a mistake to focus only upon part of the requirement of the subsection – that is, work of a particular kind – and not to give full weight to the whole of the provision.

 

35.         For our part, we consider that the observations of Harvey at paragraphs 911‑913 are in essence well founded.  We cannot think, however, that the decision in Aylward can be explained upon the basis of the opening three sentences in paragraph 911.  We are also concerned about the repeated reference to “redundancy situation”.  However, the example given in the middle of that paragraph demonstrates what would be an unfortunate consequence of Mr Watson’s argument and the decision in Aylward if it amounts to a correct interpretation of the meaning of the statute.  Care has to be taken, as we have observed, not to interpret the statute so as to secure a preferred result by reference to what intuitively may be a “redundancy situation”, but we consider that, approached as we have approached it - statute first, applying the words but missing out none - the decision of the Tribunal, though briefly expressed, was correct in the result.

 

36.         We note in passing that at section 135 of the 1996 Act the draughtsman of the statute thought that a redundancy payment would not only be payable in event of dismissal by reason of redundancy but where there was eligibility for a redundancy payment by reason of being laid off or kept on short time.  It is unnecessary to explore in detail the situations in which that will be so, but the point is that it was plainly anticipated by the draughtsman that the expression “redundancy” would be applicable in situations where there was no difference to the number in the workforce but merely to the hours that they were working.  The cases of Johnson and Lesney are decided as they were because the hours and the employees were both no different; this situation is one in which on the facts the hours that the business required to be worked were fewer, and therefore this case sits within the definition of redundancy just as those cases did not.

 

Conclusion

37.         For those reasons, we feel unable to follow the reasoning in Aylward, despite its persuasive effect.  Applying the usual rules of precedent we cannot depart easily from a court of equivalent jurisdiction, but we are entitled to do so and for the reasons we have given we dismiss this appeal.  We should not, however, finish without paying tribute to the argument of Mr Watson. 

 

38.         Two further observations.  First, the Tribunal was bound to follow applicable authority, that of Aylward, and should have done so whilst setting out its reasons for disagreement with that decision.  A text book is not of equivalent authority, however correct it may later be held to be.

 

39.         Finally, this observation: that the lay members in particular of this Tribunal are glad that the result of the appeal is as it is, not least because from an industrial background one would approach the question of hours and number of employees by adopting an FTE (a full‑time equivalent) approach.  Essentially, as the extract from Harvey suggests, the full‑time equivalent workforce in that example is cut from two to one, even though the number of employees actually working remains the same.  There is a real reduction in headcount, measured by FTE.  It is therefore, they consider, entirely consistent with actual industrial approach that the statute should have the interpretation which we think in law properly belongs to it; the consequences of another interpretation would, as it seems to them, have significant adverse effects upon the employment market.

 

40.         For those reasons, the appeal is dismissed.


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