Capita Hartshead Ltd v Byard UKEAT/0445/11/RN

Appeal against a ruling that the claimant’s dismissal was unfair because she was selected for redundancy from a pool comprising only the claimant. Appeal dismissed.

The claimant was selected for redundancy but was the only person in the selection pool. The ET ruled that this was unfair because 1) there were other employees who could have been included in the pool; and 2) that it "took a lot of value away from the resultant consultation period activated by the claimant being told that she was at risk of redundancy but in a pool of one". They reduced her compensation by one third to take account of the chance she would not have received it. The respondent appealed.

The EAT dismissed the appeal on the basis that the ET was entitled to scrutinise the decision in the light of s98(4) of the ERA. The statement of Mummery J in the case of Taymech v Ryan [1994] EAT/663/94 that "the question of how the pool should be defined is primarily a matter for the employer to determine" did not mean that the Employment Tribunal was precluded from holding that a decision by an employer was flawed.

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Appeal No. UKEAT/0445/11/RN

EMPLOYMENT APPEAL TRIBUNAL

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

At the Tribunal

On 31 January 2012

Judgment handed down on 20 February 2012

Before

THE HONOURABLE MR JUSTICE SILBER, MR T MOTTURE, MR H SINGH

CAPITA HARTSHEAD LTD (APPELLANT)

MS C BYARD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant MR PAUL WILSON (of Counsel)

Instructed by: Irwin Mitchell LLP Solicitors 2, Wellington Place Leeds LS1 4BZ

For the Respondent MISS EBONY ALLEYNE (of Counsel)

Instructed by: Messrs Lyons Davidson Solicitors Victoria House 51 Victoria Street Bristol BS1 6AD

**SUMMARY**

UNFAIR DISMISSAL – Reasonableness of dismissal

Redundancy- selection of pool from which person to be selected for dismissal.

Does the statement of Mummery J in the case of Taymech v Ryan* [1994] EAT/663/94 that "the question of how the pool should be defined is primarily a matter for the employer to determine*" mean that the Employment Tribunal is precluded from holding that a decision by an employer is flawed so that the employee selected by the employer has been unfairly dismissed?

No and the Employment Tribunal was entitled to scrutinise the decision in the light of section 98(4) of the ERA.

Its decision in this case cannot be criticised.

Principles to be applied by Employment Tribunals in cases challenging decisions of employers on selecting the pool from which employees are to be dismissed for redundancy (Paragraph 31).

**THE HONOURABLE MR JUSTICE SILBER****Introduction**
  1. By a decision dated 18 May 2011, an Employment Tribunal sitting in London upheld by a majority decision the claim of Ms Christine Byard ("the Claimant") for unfair dismissal against her former employers Capita Hartshead Limited ("the Respondent"). The unanimous decision of the Employment Tribunal was that the reason for the Claimant's dismissal was redundancy and it then held by a majority that:-

(a) The decision of the Respondent to limit the size of the pool from whom the candidate for redundancy would be selected would comprise solely the Claimant was unfair as there were other actuaries who could have been included in the pool. An additional reason for regarding the pool of one as being unfair was that it "took a lot of value away from the resultant consultation period activated by the claimant being told that she was at risk of redundancy but in a pool of one" [68];

(b) There was no evidence on which the Employment Tribunal could have decided that the Respondent "could reasonably have concluded in the light of the circumstances known to them at the time of dismissal that adopting a fair selection procedure and entailing a pool of three or more actuaries would have been utterly useless and that the dismissal of the claimant would almost certainly have followed" [71]; and

(c) The Claimant was therefore unfairly dismissed. Her compensation had to reduce by one-third to take account of the chance that she would not have received it and so she was awarded £66,200.

  1. The Respondent appeals against the finding of unfair dismissal and in particular conclusions (a) and (b). As we will explain, the thrust of the Respondent's case is that the Employment Tribunal erred because first the Respondent was entitled to limit the pool of those to be selected to be made redundant to the Claimant and second it substituted its own view of what would be a fair pool for selection for that of the respondent employer.
**The facts found by the Employment Tribunal**
  1. The relevant facts as found by the Employment Tribunal were that:-

(a) The Claimant who is an Actuary started work with Aspen (Actuaries & Pension Consultants) PLC on 20 November 2010. Her contract of employment was transferred to the Respondent in September 2007 and she worked for them until her dismissal on 11 December 2009;

(b) The Claimant's line manager before and after the transfer of her employment to the Respondent was Mr Malcolm Pearce, another Actuary, who sits on the Senior Executive Board of the Respondent. The Claimant and Mr Pearce operated in Ludgate House, 245 Blackfriars Road London SE1 together with two other actuaries Mr Eran Winkler and Mr David Spreckley;

(c) The 2009 client list of the Respondent showed that Mr Winkler advised on assets worth some £117 million and Mr Spreckley's portfolio covered assets worth in the region of £42 million, while the Claimant and Mr Pearce advised on funds worth £73 million and £41 million respectively;

(d) In about May 2009, it became apparent that the number of clients for whom the Claimant acted as Scheme Actuary was likely to diminish and she was only going to be left with three or four clients whose pension assets totalled some £6 million. Mr Winkler acquired as a client in March 2009 the Royal College of Physicians ("RCP") Pension Fund worth £10 million in asset value while Mr Spreckley acquired in May and June 2009 two other clients who increased the assets under his remit by some £2 million. In 2009, Mr Pearce lost one of his clients which led to a reduction in the assets of the funds on which he was advising by £1 million. About 75% of the Claimant's chargeable work would be clients within her Scheme Actuary portfolio, although she did some other consultancy work;

(e) The Claimant did not attribute the reduction in the number of the Claimant's clients to any misfeasance or lack of performance on her part and the Respondent at the hearing "has gone out of its way to praise the technical ability that she demonstrated in her job and to acknowledge that she was a good and conscientious worker" [8];

(f) When the Respondent pitched for work from a prospective client, one or other of the Respondent's Actuaries might have been proposed by the Respondent to be the Scheme Actuary, but if the proposed Actuary did not suit a particular client, the Respondent was then prepared to substitute another actuary as the proposed Scheme Actuary. The client could vary their choice from time to time and a Scheme Actuary could be replaced because, for example of his or her long-term absence;

(g) In July 2008, the Respondents made a proposal to the RCP which resulted in the Claimant and a Mr Cosgrove being involved in the presentation. Although Mr Cosgrove told the Claimant that he thought that she had struck up a good rapport with the Pensions Manager representing RCP, this was not borne out in the report made by the Pensions Manager of the RCP to Mr Pearce because the RCP did not consider that the Claimant had the right communication skills with which to impress the Trustees of his Pension Fund. RCP made it clear that the appointment of the Respondent for business was dependent upon the Respondent putting forward Mr Winkler as the Scheme Actuary instead of the Claimant; When the Pension Manager indicated that Mr Winkler should be the Scheme Actuary, Mr Pearce had remonstrated explaining the merits of the Claimant but he was told that they wanted "someone with more clout" [17];

(h) Attempts were made by the Respondents to obtain new work for the Claimant with one potential client going into administration and another placing its work elsewhere while two existing pension schemes administered by the Claimant with funds amounting to £37 million were put out to tender in early 2009 but the Respondent was not successful in retaining them;

(i) In May 2009, it became clear to Mr Pearce that the diminution in the Claimant's work meant that she did not have enough work to fill a full-time role. In addition, in one of the Respondent's other offices another actuary reporting to Mr Donaldson was also short of work. In consequence Mr Donaldson and Mr Pearce discussed the possibility of redundancy including issues of what role should be put at risk of redundancy and how wide the pool of roles at risk, Mr Pearce had previous experience of redundancy exercise in 2007 in which all posts in a team not involving actuaries in which a team of four had been reduced to two. He considered that the bulk of the work that had diminished was identifiable with the Claimant and not to any other Scheme Actuary;

(j) Mr Pearce decided to seek advice from the Respondent's Human Resources team and he was advised that "in the circumstances a pool of one was feasible and responsible. It was therefore considered that one appropriate approach would be for the Respondent to explain to the individual concerned what the situation was and suggest to them that if that individual wanted to avoid a redundancy situation (which might involve that person's role being placed in a pool of one) the company would consider entering into a compromise agreement giving an additional month's salary on top of any notice period despite what we believed and still believe was a reasonable approach for the business to take in the circumstances" [26];

(k) On 26 August 2009, Mr Pearce accompanied by Ms Budd from Human Resources met the Claimant but there was a dispute as to what was said with no contemporaneous notes. While the Claimant asserts that she was told that she was at risk of redundancy and that she would be in a pool of one, Mr Pearce contends that he told the Claimant that she was likely to be at risk of redundancy and in those circumstances, she would be in a pool of one. At the meeting, the Claimant made two suggestions of alternative work and one was to work within the Respondent's technical department in which the Respondent did not have an actuarial resource. Mr Pearce rejected this situation on the grounds that the salary commanded by the Claimant as an Actuary made her too expensive for such a role. The second suggestion was that the Claimant might be seconded to the Pensions Regulator who would then meet the Claimant's salary costs and Mr Pearce agreed to look at this possibility but later it was discovered that the Pension Regulator did not wish to pursue this;

(l) On 31 August 2009, the Claimant e-mailed Mr Pearce asking why she was in a pool of one and Mr Pearce indicated on 1 September 2009 as they were due to have a meeting that afternoon, he hoped to be able to explain the situation then. Indeed at that meeting, Mr Pearce and Ms Budd attempted to explain to the Claimant that as at 1 September 2009, she was not then at risk of redundancy but that should she become at risk of redundancy, she would be in a pool of one was because the Scheme Actuary appointments were personal because the Pensions Act 1995 required pension funds to appoint a named Scheme Actuary, and that in the case of the Claimant, her schemes had either been wound up or the clients lost. The Claimant explained that other Actuaries had previously taken over as Scheme Actuaries from other internal Actuaries but Mr Pearce explained that other Scheme Actuaries were not over burdened with appointments. There was also discussion about the compromises open to the Claimant;

(m) At a further meeting on 9 October 2009 between the Claimant and Mr Pearce, she was offered two options of a redundancy or a compromise agreement and her answer to whether she should accept the compromise agreement was required by 16 October 2009; On 16 October 2009 the Claimant had a meeting with Mr Pearce and gave him two letters. The first letter rejected the compromise proposal and asserted that any dismissal by reason of redundancy would be unfair as the Respondent was being unreasonable in putting her in a pool of one and the immediate rejection of her suggested proposed transfer to the technical department was inconsistent with a proper consultation process. She also asserted that the Respondents had steered work away from her over the years, denied her training opportunities and the decision to dismiss was a foregone conclusion. The second letter invited the Respondents to make a fresh proposal;

(n) On 19 October 2009, a further meeting took place between the Claimant and Mr Pearce in which the Claimant asserted that she would like an amicable parting and she explained that she had no reason to leave the Respondent unless they made it worth her while. On 20 October 2009 there was a meeting between Mr Pearce, Ms Bud and the Claimant in which Mr Pearce told the Claimant that she was in a selection pool of one as appointments as a Scheme Actuary was made on a personal basis as well as on a company basis. The Claimant said that she had rejected the compromise agreement to which Mr Pearce said they intended to carry out a consultation over a twenty day period. Details of internal vacancies with the Respondent's company and the wider Capita group and the Claimant was invited to send her CV which would be put on HR portal so that the Human Resources and other parts of the group would know that she was looking for alternative work;

(o) On 20 October 2009 there was a consultation meeting in which the Claimant was given a letter confirming that she was at risk of redundancy and details of the consultation process as well as a redeployment pack, an assessment of her redundancy payment. Mr Pearce confirmed that she was in a pool of one with no one else being considered. The Claimant's evidence was that he considered her possible redundancy to be a foregone conclusion;

(p) On 26 October 2009 the Claimant sent to Mr Pearce an email confirming that she would be accompanied at the next meeting and that she did not consider it appropriate to discuss her letter of 16 October 2009 in which she had said from comments made in appraisal interviews and the general atmosphere and ethos, it seemed that Mr Pearce considered her profile did not fit and that this was a form of gender and race discrimination. The Claimant indicated that this was a separate grievance;

(q) On 29 October 2009 the Claimant attended a second consultation meeting where she was accompanied by Mr Goundry who was another employee of the Respondent who had resigned. At the meeting the parties reiterated their position with the Claimant disagreeing with the decision to put her in a pool of one and that she should have been in a pool of four. Mr Pearce explained that there was not enough work to sustain four actuaries and that there was a risk of losing clients. He said that if clients were transferred between actuaries there was a risk of losing clients if they were transferred between actuaries but the Claimant disagreed with this;

(r) On 9 November 2009 a third consultation meeting took place and the Claimant reported on progress she had made on chasing up alternative internal vacancies and Mr Pearce said that he had emailed Mr Donaldson at the other office to see if any suitable vacancies were there but he had been told that Mr Donaldson's actuaries were under-employed. On 9 November the Claimant put forward five proposals by email to Mr Pearce which he rejected on 11 November 2009;

(s) On 12 November 2009 there was a further consultation meeting, which Mr Pearce confirmed would conclude the consultation period. Later on that day, he rejected one proposal that the Claimant had made in the course of consultation; and

(t) On 13 November 2009 a letter of dismissal was sent to the Claimant terminating her employment with effect from 11 December 2009 on grounds of redundancy. The Claimant appealed against the decision to dismiss her. Mr Turnbull heard her appeal at noon on 26 November 2009, and on 1 December 2009, she heard that her appeal had been rejected.

**The approach of the Employment Tribunal**
  1. Having decided that that redundancy was the reason for the Claimant's dismissal, the Employment Tribunal then proceeded to consider whether the dismissal of the Appellant was unfair in the light of section 98(4) of the Employment Rights Act 1996, which provides that:-

"..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."

  1. The Employment Tribunal explained that this issue raised the difficult question of who should have formed the pool out of which the Respondent was to select the employee to be dismissed. The Respondent justified the decision that the pool should comprise just the Claimant on the basis first that the Claimant's clientele had reduced; second that work done by Scheme Actuaries involved a personal appointment by the Trustees of the particular nominated Actuary to be appointed by the Trustees as a Scheme Actuary; and third as it was only the Claimant's work which had reduced, it was better and more appropriate for the Claimant to be regarded in a pool of one.
  1. Additionally, it was said that team morale of the other Actuaries that she worked alongside would be affected if they were to be told that they were in a pool of people at risk of redundancy as they might protest at that, because Scheme Actuary appointments were personal, a redundancy situation did not exist for them because their billings/portfolios had barely diminished compared to those of the Claimant [59].
  1. The Employment Tribunal then pointed out that Mummery J in the case of Taymech v Ryan [1994] EAT/663/94 had stated that:-

"There is no legal requirement that a pool should be limited to employees doing the same or similar work. The question of how the pool should be defined is primarily a matter for the employer to determine. It would be difficult for the employee to challenge it where the employer has genuinely applied his mind [to] the problem".

  1. The Employment Tribunal regarded this statement as an "implicit warning" [61] that they should be careful not to criticise the Claimant's dismissal on the basis of their view as to how the pool should have been constituted. The Employment Tribunal considered that this warning was appropriate where the pool defined is bigger than the number of employees to be made redundant, but that when the number in the pool is the same as the number of employees to be made redundant, that warning becomes less apposite.
  1. The Employment Tribunal acknowledged that the choice by any employer that the pool of possible candidates for redundancy should only contain one employee saves the employer from having to make a selection of the persons or persons to be made redundant and also that "a tribunal is therefore deprived of reviewing the selection" [62].
  1. The Employment Tribunal then stated that:-

"63. The majority of us find that the decision to limit the size of the pool to the Claimant when there were other Actuaries who could have been included in the pool was unfair. It effectively was selecting the claimant to be dismissed on the reason that her client list had diminished for reasons that the respondents were careful not to associate with her performance".

  1. The majority of the Employment Tribunal regarded the risk of clients being disenchanted with the Respondent if the Scheme Actuary was changed as "slight" [64]. The Employment Tribunal had noted that Mr Pearce knew that there were cases where there was no damage to the client relationship resulting from an enforced change of Scheme Actuary and "he would have been aware that such cases did not support his assessment of the risk being run by the respondent in [dismissing a Scheme Actuary other than the claimant and then being able to transfer that business to another Scheme Actuary]" [66]. That conclusion and the other conclusion that the risk of losing clients in that situation was "slight" cannot be, and indeed has not been challenged because it was a finding of fact open to the majority and, as we will explain, it constitutes a serious obstacle for the Respondent to overcome if the appeal is to be allowed. The majority in finding that the dismissal was unfair were conscious that they might be seen to be substituting their view for that of the Respondent employer but they were entitled to do so because they unlike the employer considered that the risk of client moving their business away from the Respondent if the Scheme Actuary changed was "slight" and that there were cases where in those circumstances, the client had remained with the Respondent.
  1. The Employment Tribunal said that in order to defend his decision that the Claimant should be in a pool by herself, Mr Pearce:-

"succumbed to the temptation of presenting the alternative choice of a pool of more than one as entailing extra and unnecessary upheaval"[66].

  1. The majority of the Employment Tribunal also said that it had:-

"..an additional reason for regarding the pool of one as being unfair: it took a lot of the value away from the resultant consultation period activated by the Claimant being told that she was at risk of redundancy but in a pool of one. With a larger pool, the claimant could make representations concerning the choice of the person to be made redundant: not so with a pool of one the decision as to the person to be made redundant was already implicit in the identity of the one individual in the pool" [68].

  1. The conclusion of the majority of the Employment Tribunal was:-

"69. In the circumstances of this case, all four members of the Holborn office were doing similar work. All of them were Scheme Actuaries. It is apparent that Mr Pearce with responsibility for some 200 employees had an additional aspect of his job where there was scope, even where he to be excluded, for a selection to be made between three Scheme Actuaries who did not have the added element to the job that Mr Pearce had."

**The grounds of appeal**
  1. The Appellant contends that the Employment Tribunal erred in law because:-

(a) It failed to follow the comments of Mummery J in Taymech (which was set out in paragraph 7 above) that "the question of how the pool should be defined is primary a matter for the employer to determine" and by holding instead that the principle in that case was less apposite when the number in the pool is the same as the number to be made redundant;

(b) It directed itself that where the number of candidates in the pool for redundancy is the same to be made redundant, or where there is a pool of one, that this deprives the Tribunal of assessing the reasonableness of that selection and is accordingly unfair;

(c) It failed to consider whether a hypothetical reasonable employer in the same circumstances as the Appellant could have concluded that there was a significant risk that if there was a pool consisting of three or four Actuaries based at Ludgate House that the Appellant would lose clients and instead substitute its judgement for that of the Appellant by finding that the risk was slight;

(d) It failed to direct itself as to whether a hypothetical reasonable employer in the same circumstance as the Appellant could have chosen to proceed by way of a pool of one and instead substituted its own view as to what would have constituted a fair pool for selection or that of the employer; and

(e) It made a decision which was perverse.

  1. Each of these grounds is strongly resisted and ground (e) was quite properly not pursued in the oral submissions as it was bound to fail if the other grounds failed. The threshold for proving perversity is very high as it has to be shown that there is "an overwhelming case" that the Employment Tribunal reached a decision which no reasonable tribunal on a proper application of the evidence of the law, would have reached (see Yeboah v Crofton. In this case, as we will explain in paragraph 38 (e) below, the Respondent's case fails to reach this threshold.
**Discussion**
  1. There has been much disagreement between Mr Wilson, counsel for the Claimant and Ms Alleyne, counsel for the Respondent concerning the appropriate test to be applied in determining the circumstances in which an Employment Tribunal can challenge the decision of an employer relating to how the pool of those to be considered for redundancy should be selected.
  1. At the heart of the appeal is the contention of the Respondent the Employment Tribunal failed to comply with so-called "the implicit warning" of Mummery J which we quoted in paragraph 7 ("the question of how the pool should be defined is primarily a matter for the employer to determine") and instead it substituted a decision of its own. The starting point for considering the approach to this issue is the fundamental and the only statutory principle contained in section 98(4) of the Employment Rights Act 1996, which we have set out at paragraph 4 above.
  1. It must be stressed that this is the only statutory rule relevant in claims for unfair dismissal based on the selection of the pool from whom the employees who will be dismissed for redundancy will be selected. All the relevant authorities are solely concerned with applying this principle.
  1. The Courts have laid down four important decided principles, which show the correct approach of the Employment Tribunal and this Appeal Tribunal to this statutory test. First, it is settled law that:-

"it is not the function of the [Employment] 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"

(per Browne-Wilkinson J in Williams v Compair Maxam Limited [1982] IRLR 83 [18].

  1. Second, this principle applies to the approach to be adopted by an Employment Tribunal to the manner of the selection of a pool from which employees are to be considered for redundancy. Thus Judge Reid QC explained when giving the judgment in this Appeal Tribunal in Hendy Banks City Print Limited v Fairbrother and Others (UKEAT/0691/04/TM) when he said in a passage which echoes the approach of Lord McDonald MC sitting in this Appeal Tribunal in Green v Fraser [1985] IRLR 55. that:-

"[9]...the courts were recognising that the reasonable response test was applicable to the selection of the pool from which the redundancies were to be drawn."

  1. Third, the Employment Tribunal in determining how they perform their task of applying the statutory test is not bound by any rigid rules. Eveleigh LJ explained in Thomas & Betts Manufacturing Ltd v Harding [1980] IRLR 255 in relation to a contention that there was a rule as to which employees should be selected for consideration for redundancy that:-

"9. …I myself deprecate that attempts that are made in these industrial relations cases to spell out a point of law developed upon precedent to create rules that have to be applied by the … Tribunal in considering the straightforward question of fact which is provided for in [the predecessor of section 98(4) of the ERA] … That is the approach to the question that was required by the … Tribunal, and that is the approach the Tribunal adopted. As I say, the attempt to erect rules of law in cases of this kind is to be deprecated..."

  1. Fourth, the Employment Tribunal is an industrial jury and it is important to bear in mind the following general remarks of Lord Denning MR in Hollister v National Farmers' Union [1979] ICR 542 at 552, 553:

"In these cases Parliament has expressly left the determination of all questions of fact to the [employment] tribunals themselves ….It is not right that points of fact should be dressed up as points of law so as to encourage appeals. It is not right to go through the reasoning of these tribunals with a toothcomb to see if some error can be found here or there – to see if one can find some little cryptic sentence."

  1. It is appropriate at this stage to recall that the approach of appellate bodies, such as this Appeal Tribunal, to decisions of the Employment Tribunals is that in the words of Donaldson LJ in Union of Construction, Allied Trades and Technicians v Brain [1981] ICR 542:-

"It would be a thousand pities if these reasons began to be subjected to a detailed analysis and appeals were to be brought upon any such analysis. This, to my mind, is to misuse the purpose for which reasons are given."

  1. Turning to this case, the Employment Tribunal considered that there were two stages that had to be considered after it has been decided that it had been necessary to dismiss one or more employees because of redundancy. The first stage is to determine who should be in that pool of employees who are being considered as candidates for redundancy. The second stage is to decide which of the employees in the pool will in fact be dismissed for redundancy. It is common ground that this approach is correct and that this appeal is simply dealing with the way in which the Respondent approached the first stage. Also it is not relevant for this Appeal Tribunal to decide how it would have reached its conclusions.
  1. Turning to the statement of Mummery J in the Taymech case, it is important to bear in mind two matters. The first is that it only applies where the employer has (with our emphasis added) "genuinely applied his mind to the problem of selecting the pool from which the person to be selected for redundancy". As we will explain from paragraph 28 below, this approach has been held by Mummery J and others to mean that the Employment Tribunal has an obligation to scrutinise whether the employer has applied the statutory requirement when selecting the pool of employees from whom the employer will select who is to be made redundant.
  1. The second matter is where the employer has genuinely applied his mind to the selection of the pool, then his decision will be "difficult" but not impossible to challenge. Many of the able submissions of the Respondent seemed to ignore both these aspects of Mummery J's comment.
  1. As we have explained in paragraph 26 above, the Employment Tribunal has duty to scrutinise the way in which an employer selected the pool. The Taymech case shows that is precisely what Mummery J did when he proceeded to add after the passage quoted in paragraph 7 that:-

"This is a case where the Tribunal concluded that the employers had not even applied their mind to the question of a pool consisting of people doing similar administrative jobs…The Tribunal was entitled to come to the conclusion that they did about the other work done by Mrs Ryan and that this is a case where the employers should have applied their minds to the creation of a pool for the purpose of deciding who to select for redundancy. As they did not go through that process they have not made a fair selection for the purposes of section 57(3) and therefore the Tribunal were entitled to come to the conclusion that this was not a case of unfair selection for redundancy."

  1. This Appeal Tribunal has adopted the same scrutiny and factual investigation in other cases. In British Steel PLC (Seamless Tubes) v Robertson and Another [EAT/601/94] the employer excluded a group of craftsman described as "multi-skilled" and who had recently been trained in all the various skills required by the company but who had short service. The redundancies were actually made from a pool of long-serving mechanical maintenance engineers and electrical engineers on the basis of "last in, first out". The Tribunal decided that the multi-skill craftsmen should have been included in the pool for selection as they could undertake the work of those in the selected pool. The Tribunal said that it could be fair in certain circumstances to exempt a group of engineers for redundancy, but in the present case it was unreasonable for the employer to have done so given that both groups did similar work. This Appeal Tribunal upheld this finding.
  1. Similarly, in the case of Lomond Motors Limited v Clark (UKEATS/0019/09/BI) Lady Smith sitting in this Appeal Tribunal in Edinburgh noted that the Employment Tribunal had considered that there should be a pool of three people but this was regarded as incorrect by this Appeal Tribunal because one of the people did not have the requisite experience to cover one particular site (see paragraph 35).
  1. Pulling the threads together, the applicable principles where the issue in an unfair dismissal claim is whether an employer has selected a correct pool of candidates who are candidates for redundancy are that

(a) "It is not the function of the [Employment] 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" (per Browne-Wilkinson J in Williams v Compair Maxam Limited [1982] IRLR 83 [18];

(b) "[9]...the courts were recognising that the reasonable response test was applicable to the selection of the pool from which the redundancies were to be drawn" (per Judge Reid QC in Hendy Banks City Print Limited v Fairbrother and Others (UKEAT/0691/04/TM);

(c) "There is no legal requirement that a pool should be limited to employees doing the same or similar work. The question of how the pool should be defined is primarily a matter for the employer to determine. It would be difficult for the employee to challenge it where the employer has genuinely applied his mind [to] the problem" (per Mummery J in Taymech v Ryan [1994] EAT/663/94);

(d) The Employment Tribunal is entitled, if not obliged, to consider with care and scrutinise carefully the reasoning of the employer to determine if he has "genuinely applied" his mind to the issue of who should be in the pool for consideration for redundancy; and that

(e) Even if the employer has genuinely applied his mind to the issue of who should be in the pool for consideration for redundancy, then it will be difficult, but not impossible, for an employee to challenge it.

  1. The majority of the Employment Tribunal in this case adopted precisely this approach by scrutinising the pool selected by the Respondent from whom the candidate for redundancy would be selected. As we have explained the majority of the Employment Tribunal did not accept Mr Pearce's view of the risk that the Respondent would lose business if a Scheme Actuary was to be changed, because a majority of the Employment Tribunal found that this risk was "slight"[64]. There was an evidential basis for this as the Employment Tribunal noted that "Mr Pearce had accepted a number of cases where the Scheme Actuary had been changed without the Respondent losing the client" [60]. This conclusion meant that the majority of the Employment Tribunal concluded that the Respondent had not genuinely applied his mind to the issue of who should be in the pool for consideration for redundancy.
  1. This was after all the approach of the Employment Tribunal in the Taymech case, which led Mummery J to his decision that there was no arguable point of the proposed appeal. In other words, the majority of the Employment Tribunal was acting consistently with the statutory duty as set out in section 98(4) of the ERA and with the approach set out in Williams and Hendy Banks (supra) in deciding that the Respondent acted unfairly in not including other Scheme Actuaries in the pool out of which the person to be selected for redundancy was to be chosen.
  1. The majority of the Employment Tribunal justified this decision on the grounds that first the other Scheme Actuaries did similar work; second the performance of the Claimant was not criticised but was praised; and third the chance of the Respondent losing business if Scheme Actuaries were changed was "slight" [64] on the basis that "Mr Pearce accepted a number of cases where the Scheme Actuary had been changed without the Respondent losing the client" [60]. In our view, there is nothing wrong with this approach which accords with the correct test and indeed answers many of the grounds of appeal.
  1. In reaching this conclusion, we have not overlooked the grounds of appeal which criticised the Employment Tribunal for:-

"directing themselves that, where the number of candidates in the pool for redundancy is the same as the number to be made redundant or where there is a pool of one, that this deprives the Tribunal of assessing the reasonableness of that selection and is accordingly unfair".

  1. This is not what the majority said because they held that the dismissal was unfair because of the factors, which we have set out in paragraphs 32 to 34 above. The majority then added that there was (with our emphasis added): -

"An additional reason for regarding the pool of one as unfair; it took a lot of the value away from the resultant consultation period." [68]

  1. It is clear that as this was an "additional reason", the majority would have held the dismissal to be unfair even if this reason was flawed. So criticism of this "additional reason" does not assist the Respondent as the main reason cannot be successfully challenged as an error of law. We have been unable to find anything in the reasoning of the majority, which shows or even indicates that limiting the pool to one automatically made the dismissal unfair.
  1. As to the grounds of appeal, which we set out in paragraph 15, we have concluded that there is no merit in:-

(a) Ground (a) as the Employment Tribunal did follow the comments of Mummery J for the reasons we have set out in paragraphs 26 to 34 above;

(b) Ground (b) as the Employment Tribunal did not approach the case in this way as explained in paragraphs 35 to 37 above but applied the correct tests;

(c) Ground (c) as the Employment Tribunal was entitled in the light of the applicable legal principles set out in paragraphs 26 and 27 above to conclude in the light of its statutory duty that the risk of the Respondent losing clients if the Scheme Actuary was changed was "slight" after having considered the evidence as we have explained in paragraph 11 above;

(d) Ground (d) as the Employment Tribunal was entitled to scrutinise the Respondent's reasoning and to hold as it did in this case that it was flawed; and

(e) Ground (e) (perversity) as the Employment Tribunal was entitled as the industrial jury to scrutinise the reasoning of the Respondent and decide it was flawed because there was evidence that the Scheme Actuaries "were doing similar work" [69] and that the prospect of the Respondent losing clients if business was transferred from one Scheme Actuary was "slight" on the basis that "Mr Pearce accepted a number of cases where the Scheme Actuary had been changed without the Respondent losing the client" [60]. The Respondent's case on this issue falls a long way short of reaching the threshold that there is "an overwhelming case" that the Employment Tribunal reached a decision which no reasonable tribunal on a proper application of the evidence of the law, would have reached (see Yeboah v Crofton.

**Conclusion**
  1. Notwithstanding Mr Wilson's careful submissions, this appeal must be dismissed.

Published: 23/02/2012 18:22

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