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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Slingsby v Griffith Smith Solicitors [2008] UKEAT 0619_07_0508 (5 August 2008) URL: https://www.bailii.org/uk/cases/UKEAT/2008/0619_07_0508.html Cite as: [2008] UKEAT 0619_07_0508, [2008] UKEAT 619_7_508 |
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At the Tribunal | |
Before
HIS HONOUR JUDGE McMULLEN QC
MRS C BAELZ
DR K MOHANTY JP
APPELLANT | |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
For the Appellant | MR D MATOVU (of Counsel) Instructed by: Messrs. Martin Searle Solicitors 9 Marlborough Place Brighton BN1 1UB |
For the Respondent | MR P GREEN (of Counsel) Instructed by: Messrs Griffith Smith Solicitors 47 Old Steyne Brighton East Sussex BN1 1NW |
SUMMARY
UNFAIR DISMISSAL
Reason for dismissal including substantial other reason
Reasonableness of dismissal
PRACTICE AND PROCEDURE
Delay in ET judgment
The Employment Tribunal found in favour of the Claimant on his claims of unfair dismissal and awarded compensation with 25% uplift. On the Claimant's appeal to set aside the Judgment and remit for a fresh hearing, the Employment Tribunal's Judgment was affirmed. There was no culpable delay in the proceedings.
HIS HONOUR JUDGE McMULLEN QC
Introduction
The issues
The judgment
"1. The Claimant's holiday pay claim has been settled and is dismissed on withdrawal by the Claimant.
2. It has been conceded by the Respondent that the dismissal of the Claimant was automatically unfair under Section 98A of the Employment Rights Act 1996.
3. The dismissal of the Claimant by the Respondent was procedurally unfair under Section 98 of the 1996 act.
4. Following a correct procedure would have made no difference to the decision to dismiss the Claimant other than to delay the effective date of termination of employment by twelve weeks.
5. The redundancy payment paid to the Claimant has satisfied the basic award.
6. The compensatory award to the Claimant is twelve weeks pay with an additional £250.00 to compensate the Claimant for loss of statutory industrial rights.
7. The total compensatory award excluding the basic award is increased by 25% under Section 31(3) of the Employment Act 2002 as a result of the Respondent's failure to fully comply with the Dispute Resolution Regulations.
8. The parties are invited to settle the calculation of remedy between themselves. In default of agreement, the Tribunal will list the case for the purposes of calculating the sum payable to the Claimant."
The legislation
"45. … in determining whether the dismissal is fair or unfair, it is for the employer to show the reason for dismissal. It must be one of the potentially valid reasons specified in Section 98 of the Employment Rights Act 1996. Under Section 139 of the 1996 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 the fact that the requirements of the business for employees to carry out work of a particular kind or for employees to carry out work of a particular kind in the place where the employee was employed by the employer have ceased or diminished or expected to cease or diminish.
46. A company reorganisation may involve job losses which also satisfies the statutory definition of redundancy. Clearly if there is a reduction in the volume of work and a diminution in the need for employees, there can be a redundancy situation. This sometimes occurs when an employer reorganises the business so that it is operated on more efficient* lines whereby fewer employees are needed to do the work. The current test of redundancy places the emphasis on causation. The question for the Tribunals is, was there a redundancy situation and if so, was the employee's dismissal on account of that redundancy situation?
…
49. It is not open to an Employment Tribunal to question the commercial decision of an employer to effect redundancies provided the decision is made in good faith. We are satisfied that there was a genuine redundancy situation and that the decision to reduce costs by effecting redundancies, was a decision made in good faith by the Respondent. We are unanimously of the view that the reason for the Claimant's dismissal was redundancy which is a potentially fair reason.
50. Once the employer has shown the reason for dismissal, it is then for the Tribunal to determine whether the employer acted reasonably or unreasonably in dismissing for that reason. That question needs to be determined in accordance with equity and the substantial merits of the case and the circumstances to be taken into account include the size and administrative resources of the employer's undertaking.
51. We take as our starting point, the words of Section 98(4) of the 1996 Act. We realise that we must assess the reasonableness of the employer's action. We recognise and apply the test that there is a band of reasonable responses to consider in which one employer might reasonably take one view and be acting fairly and another quite reasonably another view and still be acting fairly.
52. In judging the reasonableness of an employer's conduct, a Tribunal must not substitute its decision to as to what the right course of action for that of the employer. The function of the Tribunal is to determine whether, in the particular circumstances of each case, the decision to dismiss fell within the band of reasonable responses, which a reasonable employer might have adopted.
53. In a redundancy situation, the factors which a reasonable employer might be expected to consider, include whether , any selection criteria were objectively chosen and fairly applied, whether employees were warned and consulted about the redundancy, if appropriate, whether the Union 's views were sought and whether any alternative work was available. These are guidelines and not rules of law so that a dismissal in breach of any one of them will not necessarily be unreasonable. In order for a dismissal to be reasonable, the selection criteria must be objective and must not merely reflect the personal opinion of the selector.
54. It is reasonable for an employer to attempt to retain a workforce balanced in terms of ability. Thus an individual's skill and knowledge are reasonable considerations providing they are assessed objectively. The precise choice of factors and their relative weight will be determined according to the current and future needs of the business.
55. When faced with a task of selecting employees for redundancy, it is common practice for employers to decide upon a number of different criteria according to which the employees in the pool for selection should be assessed. Where an employee complains of unfair selection, all the employer has to prove is that the method of selection was fair in general terms and that it was reasonably applied to the employee concerned.
56. Unless there are special circumstances which render consultation impossible, or unnecessary, a fair employer will consult with the employee before dismissal. The purpose of consultation is two fold. Firstly, it gives the employer fair opportunity to explain any factors which may have led to his selection for dismissal and of which the employee* may not be aware. By consulting with the employee, the employer may find that the needs of the business can be met in some other way than by dismissal and if not, what other steps the employer can take to mitigate the blow to the employee.
57. Secondly, consultation gives the employer the opportunity of considering other possible vacancies within the organisation which the employer might have assumed would have been totally unacceptable to the employee concerned. The question of what constitutes a fair and proper consultation in each individual case, is a question of fact for the Tribunal.
…
64. An employee informed that he is to be made redundant needs time to recover from the shock of the initial announcement, enabling him to collect his thoughts and then to take an active part in the consultation process. During the process of consultation, an employee will very often need to take legal expert employment advice and this can take time.
65. A fair employer will allow an employee adequate time in which to respond to a redundancy proposal and the employer must then spend time in considering any counter proposals. …"
*Note the word "sufficient" is corrected to "efficient" in paragraph 46, and the word "employer" in paragraph 56, line 5 is corrected to "employee", all by agreement.
What is in dispute is the application of those correct self-directions.
The facts
"9. From about 2000, in common with other firms of Solicitors, the Respondent began to experience a reduction in the profitability of litigation work including personal injury work. Government reforms had reduced the number of eligible applicants for Legal Aid Funding and other reforms encourages the parties to explore other means of settling disputes instead of resorting to law. Solicitors were also facing competition from specialist claims organisations.
10. This meant that personal injury work generally had become less profitable. In contrast, public funding for clinical negligence was still available. In addition, by virtue of the size of the claims, higher fees were usually generated for the solicitors involved in such work. The firm did not hold a Legal Aid Franchise for clinical negligence work and the Claimant was not a member of the Clinical Negligence Panel. As a result, the firm was prevented from undertaking legally aided clinical negligence work."
As a response, with the encouragement of the firm, the Claimant procured the services of Mr Warren Moore, pursuant to a decision made in February 2004, and he joined the firm in October 2004. His unique selling proposition was that he had a clinical negligence ticket, for the purposes of the Legal Services Commission, and so the firm could be awarded a clinical negligence franchise. The logic of this was apparent to the firm immediately, because small personal injury cases can be conducted by lower paid and less experienced employees in the firm, whereas larger scale injuries such as those occurring in clinical negligence could be conducted by the senior members at higher fees, and would generate more profit for the firm.
"29. After the meetings with the Claimant and Mr Warren, Mr Fry and Mr Smith met that same day to consider their decision. They went through the redundancy criteria in the redundancy policy and then looked at how the criteria were met by the Claimant and Mr Moore. They decided to select the Claimant for redundancy instead of Mr Moore. The Claimant did not have clinical negligence accreditation.
30. They decided that if they had made Mr Moore redundant, then his good work over four months in setting up the Legal Services Franchise and obtaining the DAS Legal Expenses Panel Membership for clinical negligence work would have been lost. They regarded Mr Moore as enthusiastic with business and marketing skills which the Claimant lacked, together with the ability and potential to generate substantial fees. In his last year with his previous firm Mr Moore had generated fees of £412,000.00. During the same period, the Claimant had generated fees of £62,000.00 for the Respondent.
31. They took into account the difference in their lengths of service and they felt they knew the Claimant's strengths and weaknesses. They considered whether there were alternative positions for the Claimant within the firm. They considered two areas of work. The Claimant had been undertaking contentious probate work but there were too few files to make this a viable option. The family department had a balanced team of three fee earners. The workload could not sustain another fee earner and the Claimant had not worked in the matrimonial department since it was sent up in 1997."
As a result, a letter was sent to the Claimant. He attended a meeting on 3 March 2005. He was given an explanation that the decision had been reached by Mr Fry and Mr Smith. He was given three months' notice, which ended on 2 June 2005. He was informed of his right to appeal, but chose not to do so.
"47. In evidence, the Claimant conceded that, in his words, there were too many chiefs and not enough Indians and that within injury work, there was too much low paying minor injury work and too few major claims. Thanks to the Claimant, the Respondent was able to recruit Mr Moore, enabling the firm to become one of the very few in the area to be accredited to do profitable Legal Aid clinical negligence work. If the Respondent had lost the services of Mr Moore, they lost their Legal Aid Franchise and the prospect of undertaking profitable clinical negligence work.
48. The Claimant conceded in cross-examination that the level of his fees was often a source of real concern. The accounts at the end of the financial year, 31st January 2005, disclosed dramatic reductions in the level of costs in the civil litigation department. The department had three partners and was running at a loss. The Respondent's business decision was to reduce the number of partners from three to two.
58. Although he Claimant is not an employment specialist, he has been a solicitor for almost twenty years and for sixteen years held a senior position in the firm, as a litigation solicitor. He saw the accounts and received a profit share. He knew that poor fee earning performance in any area of the work would invite a response from the equity partners who were the proprietors of the business. It is clear to us from the evidence that the realities of the situation that he found himself in, were very apparent to the Claimant and to his credit, these were properly acknowledged by him during cross-examination.
59. The Claimant was head of the personal injury department and was acutely aware of the reduction in the profitability of personal injury work, as a result of the removal of Legal Aid and how this was likely to impact on fees in future. Despite encouragement the Claimant had been unable to gain qualification within the area of profitable clinical negligence work.
60. To his credit, the Claimant introduced Mr Moore to the firm. Mr Moore brought with him, his considerable experience of clinical negligence work enabling the Respondent to acquire the sought after Legal Aid Accreditation and Panel Membership. In cross-examination, the Claimant acknowledged that the low level of his fees had been a source of real concern for the Respondent acknowledging that in the financial year ending 31st January 2005, his fees were abysmal.
61. During cross-examination, the Claimant was asked to explain why he had used the phrase in documentation, that he had introduced Mr Moore "despite obvious risks to my position". The Claimant said that Mr Moore had shown himself capable of producing £400,000.00 costs for his previous firm. When asked what was meant by "obvious risks", the Claimant said that he would be done out of a job because someone new, better qualified and with a good performance record, was joining the firm, there was a risk that he would lose out to him.
62. From the moment that the Claimant could see that the Respondent was obliged by market forces to chose between the Claimant and Mr Moore, in the Claimant's own words, it was a hone horse race. Mr Moore had skills, qualifications and fee earning capacity which, to his credit, the Claimant conceded, he did not possess. From his responses throughout the redundancy process, the Claimant could see that when he was compared with Mr Moore, his selection for redundancy was inevitable. This did not mean that the selection exercise was bogus.
63. We have genuine concerns in assessing whether the3 Respondent properly consulted the Claimant. The period of consultation commenced on 24th February 2005. The decision to select the Claimant was made after a meeting with him on 1st March 2005. The Claimant had been with the firm for some sixteen years and held a senior position as a Partner and Head of the Civil Litigation Personal Injury Department.
…
65. … Because of the truncated consultation period in this case, it is our unanimous decision that the dismissal of the Claimant was unfair under Section 98(4) of the 1996 Act.
66. Consideration of what might have happened, had a fair procedure been employed, is relevant to the assessment of compensation. We have asked ourselves if longer consultation with the Claimant prior to his selection for redundancy would have made any difference to the decision to dismiss and we have unanimously come to the conclusion that it would not, save to delay his departure by the period during which proper consultation would have taken place.
67. In our unanimous view, that is a period of twelve weeks. We make no basic award, this already having been paid to the Claimant in the form of redundancy payment. We make a compensatory award consisting of twelve weeks pay and £250.00 compensation for loss of statutory industrial rights. The total compensatory ward will be increased by 25% to reflect the failure of the Respondent to follow Step 1 of the Dispute Resolution Procedure."
The Claimant's case
The Respondent's case
The legal principles
"39. It is at the second step that the employer must inform the employee of the basis for the ground or grounds given in the statement. This information need not be reduced into writing; it can be given orally. The basis for the grounds are simply the matters which have led the employer to contemplate dismissing for the stated ground or grounds. In the classic case of alleged misconduct this will mean putting the case against the employee; the detailed evidence need not be provided for compliance with this procedure, but the employee must be given sufficient detail of the case against him to enable him properly to put his side of the story. The fundamental elements of fairness must be met.
41. We reject Mr Barnett's submission that the only information to be given is that identifying why the decision to effect redundancies has been taken. That is too restrictive an approach and would undermine the protection which the procedures are intended to give to employees. In our judgement, the reference in step two to "the basis for including in the statement…. the ground or grounds given in it" requires that an explanation is given as to why the employer is contemplating dismissing that particular employee. It is, after all, the contemplated dismissal of the specific employee which is in issue and may lead to tribunal proceedings, not just the decision that certain jobs will have to go. In a redundancy context, that will involve providing information as to both why the employer considers that there is, to put it colloquially, a redundancy situation and also why the employee is being selected. The latter is, in practice, likely to be far more important to an employee than the former. In general, employees will not individually be in a position to make any cogent observations about an employer's conclusion that redundancy is necessary, although sometimes the information provided may raise a question as to whether redundancy is the genuine reason for the dismissal. But more pertinently, the employee will want to make representations about his own selection and, of course, he will be in the best position to make observations about that.
43. More usually, however, a matrix approach is adopted to selection, as in this case. Various factors are identified and the relevant pool of employees is assessed under each of them. When that system is adopted, the basis of the selection- the reason why this particular employee has been selected- rests upon that assessment. We think that it is clearly necessary that the employer, in order to comply with step two, should in advance of the meeting notify the employee of the selection criteria. Without that information, it is impossible for the employee to give any sensible response to the proposed decision at all.
45. In our judgment neither of these submissions is correct. We see the force of Mr Barnett's submission that once given the selection criteria, the employee is in a position at least to address some arguments to the employer as to the justification for selecting him. But we –and in particular two very experienced lay members- are of the view that this is not enough to enable the informed response which essential procedural safeguards should allow. In our judgment in order to comply with the statutory provisions an employer should provide to the employee not only the basic selection criteria which have been used, but also the employee's own assessment. That will give the employee an opportunity to make representations not only about whether the criteria are justified and appropriate but also, more importantly, whether the marking given to him in respect of any particular criterion is arguably unjust, and why. It may be that he can correct some obvious factual error, such as being attributed with a disciplinary record he does not have, or what appears to be a rogue mark on one of the criterion, apparently wholly out of line with his work performance. His response will be difficult to formulate, and very much in a vacuum, without this information."
Conclusions
New points on appeal
Perversity
Reasons
The reason for the dismissal
Selection
Consultation
The statutory procedure
Delay