1. In giving this judgment, we refer to the parties as the Claimant and the Respondent as they were below.

1. This is an appeal by the Respondent against a judgment of the London (South) Employment Tribunal, chaired by Employment Judge Houghton sitting with members; the reserved judgment and Reasons being sent to the parties on 9 October 2013. The representation before us was as it was before the Tribunal.

1. The claims before the Tribunal were of unfair dismissal and race discrimination. The Employment Tribunal held that the Claimant had been unfairly dismissed and that his claim of race discrimination in respect of his dismissal was well-founded but that his complaints of race discrimination unrelated to his dismissal were not and/or that the Tribunal had no jurisdiction to consider them.

1. The Respondent appeals against the findings of unfair dismissal and race discrimination. There was no cross-appeal on the dismissal of the remaining race discrimination claims.

1. The Respondent is a housing association providing housing and associated services to socially and financially deprived people within the Greater London and Essex areas. The Claimant was employed by the Respondent as a Regional Development Manager from 4 September 2006 until the termination of his employment on 31 September 2009.

1. The Claimant describes himself as a black man of Yoruba ethnic origin, Nigerian national origin, and British nationality. He is a graduate with an MBA in Construction and Real Estate and has pursued a career in housing development since 1990.

1. The structure of the Respondent included two distinct elements: New Business and Regeneration and the Delivery department. Across those departments were five Regional Development Managers: two Regional Development Managers, Delivery - the Claimant and Ms Jacqueline Onyeka - and three Regional Development Managers, New Business - Miss Angela Hayward, Miss Clare Adams, and a Mr Mike Fawcett.

1. Due to the economic downturn, in 2009, the Respondent concluded that it needed to embark upon a restructure, which led to a reduction in the number of the Regional Development Managers. The initial notification of the restructure was communicated as follows:

"There will now be four Regional Development Manager posts within the Department. There are currently five post holders. Therefore all Regional Development Managers will be required to apply for the new posts. ...

Following the application and selection process, the Assistant Director (New Business and Regeneration) and Head of Development will review how the balance of work would be distributed within their teams. Clearly there is an overall loss of two posts. Our priority is offer redeployment wherever this is possible and to minimise any loss of employment. Individual discussions will be held with whichever post holders this affects."

1. At that stage, the Respondent was seeing the Regional Development Manager positions as interchangeable across Delivery and New Business.

1. It subsequently became apparent that the restructure would in fact lead only to a reduction in the number of Regional Development Manager, New Business, posts from three to two. The number of Regional Development Managers, Delivery, would remain at two as before.

1. The Employment Tribunal record that, on 15 June 2009, the Respondent:

"...for the first time introduced the idea, notwithstanding its earlier stance that the delivery and new business roles were 'interchangeable', that if only two people wished to be considered for the new business manager post there would be no need for formal applications and selection but instead that the two candidates would be 'assimilated' into the positions."

1. The Respondent at that time set out the options as follows:

"Dependent on responses, there will be two options:

(a)

Where there are an equal number of preferences for those jobs available, there will not be a need for team members to be interviewed. For example, there are two New Business Manager posts. If only two people wish to be considered for these, then they will not have to formally apply for the posts, but will be assimilated into these:

(b)

Where there are more preferences than posts available, then all staff who have registered a preference will need to apply for the post/s."

1. Should a selection process have to be undertaken, the Respondent's stated intention at that time was to include (i) an interview (ii) a work based task and (iii) in the case of the Regional Development Managers, psychometric testing.

1. As the process unfolded, the Claimant raised his concerns about the pooling of the Regional Manager positions in this way: specifically that the Delivery Regional Manager roles had been pooled together with the New Business Regional Manager roles, although the reduction in posts under the restructure had arisen only amongst the latter. He met with the Respondent's Head of Human Resources, Mr Hart, who (the Tribunal found) did not fully understood the distinctions between the two roles, but had seen that the salary and person specifications were identical and that the job descriptions were almost identical. On the basis of what he had seen, Mr Hart had advised that the two distinct Regional Development Manager roles should be combined for redundancy selection purposes.

1. The Employment Tribunal found that the Respondent's approach in the redundancy process underwent further change:

"The rationale now appears to have moved on from the similarity of the job and person descriptions to the need for individuals with 'interchangeable skills and experiences' required by the Respondent's working practices."

1. The next communication to staff referred to by the Tribunal read as follows:

"There was a query as to why it is that two of the posts to be deleted are in the New Business Team, but that...all New Business Managers/RDMS and Project Managers/RDMs need to apply for the remaining posts across the department. This decision was made after consultation with HR. Within the department we have people with interchangeable skills and experiences, and our working practices require this to be the case. It was therefore considered most appropriate that all staff in the above posts should be given equal opportunities to apply for the available posts, as stated in the consultation document. "

1. After receiving these communications, the Claimant wrote in, stating:

"As previously discussed, it is my intention to remain in my current role (Regional Development Manager in Delivery)."

1. As it transpired, there were only two stated preferences for the two New Business posts, Miss Hayward and Miss Adams, who were already carrying out those roles in the old structure. That being so, on 30 June 2009 the Respondent wrote, stating that, as there had only been two expression of preference for those posts, the individuals in question had been assimilated into the jobs. The third New Business post-holder, Mr Fawcett had not expressed a preference to remain in that position, but had instead expressed a preference for one of the two Delivery posts, as had the Claimant and Ms Onyeka, the two existing post-holders. That being so, the Respondent stated:

"Jacqueline, Adey and Mike have expressed a preference for the Delivery Posts. As such, and in accordance with [the previous communications], Jacqueline, Adey and Mike would need to apply for the posts, and be subject to a selection process."

1. The Claimant expressed his disquiet as to this announcement and there was some exchange with the Respondent regarding the process. Nonetheless, the selection process continued for the Regional Development Manager, Delivery, positions.

1. It is important to note that, at paragraphs 30-35 of its primary findings of fact, the Employment Tribunal expressed grave disquiet about various stages in the selection exercise. In particular, as to the written exercise element, where the Respondent could not satisfactorily explain why it had departed from its own model answers. As to the interview element, there appeared a higher number of negative comments alongside the Claimant's name, which were not satisfactorily explained by the Respondent. In contrast, there were apparently helpful questions noted alongside Mr Fawcett's name, which again were not satisfactorily explained.

1. As the Employment Tribunal summarised:

"...our attention was drawn to sufficient anomalies which the Respondent was unable satisfactorily to explain (even after Ms Wood was recalled to give evidence) to raise serious questions in the minds of all three members of this Tribunal as to the rigour, transparency and objectivity of the marking process notwithstanding the Respondent's protestation that it had set out to conduct as transparent, open and simple a procedure as possible."

1. Moreover the Employment Tribunal noted:

"...without informing or consulting with the candidates in advance, the application forms were in fact not taken into account in the assessment process and no psychometric testing was proceeded with..."

1. At the conclusion of the scoring exercise, the Claimant was awarded 38.5, Miss Onyeka 44, and Mr Fawcett 52.

1. On 13 August 2009, the Respondent wrote to the Claimant informing him that he was to be dismissed by reason of redundancy. The Claimant appealed against that decision but was unsuccessful. The Tribunal did not find that the criticisms that it had made of the decision to dismiss had been rectified by anything that took place on the appeal.

1. As the Employment Tribunal recorded, on the question of the claim of unfair dismissal, the issues for the Tribunal were (1) whether the Claimant was dismissed by reason of redundancy and (2) if so, whether the Respondent had acted reasonably or unreasonably in treating that as a sufficient reason for dismissal. On the race discrimination claim, relevantly, the issue was whether the Claimant's dismissal was tainted by racial considerations and was accordingly on racial grounds.

1. Having made its primary findings of fact, the Employment Tribunal addressed itself as to the relevant legislative provisions, referring to section 98 of theEmployment Rights Act 1996 , and to sections 1, 3 and 4 of the Race Relations Act 1976.

1. It first considered the unfair dismissal claim. Although harbouring suspicions as to the genuineness of the professed need to make just one individual redundant, the Tribunal - particularly given the concession of a redundancy situation on the part of the Claimant - accepted that redundancy was the reason for the Claimant's dismissal.

1. It then went on to consider whether the Respondent had acted reasonably or unreasonably in treating the reason shown as a sufficient reason for dismissal. The Employment Tribunal first concluded, at paragraph 56, as follows:

"No reasonable employer would, as this Respondent did, decide to 'pool' all five jobs so as to include the delivery posts where no redundancies had arisen, only effectively to reverse that decision by 'assimilating' the two candidates into the new business positions when for some reason Mr Fawcett omitted to apply for the job he was actually doing. Either the pool consisted of the five posts or it did not. The Respondent's actions effectively gave it the best of both worlds. ... By assimilating the two applicants into the new business roles and thereby removing them from the process they retained positions although they may both have scored lower than the Claimant in the recruitment exercise. Having set out with the view that (notwithstanding the Respondent's vacillation on the issue) the posts were sufficiently similar to justify including them in the same pool, no reasonable employer would then have removed a part of that pool simply because the posts in one element of that 'pool' could be filled. Because they were removed from the process we will never know what scores they might have achieved or the extent of the injustice which may have been done to the Claimant as a result."

1. The Tribunal did not, however, stop there. It went on to make further findings as to why the process was unfair. Those are set out at paragraphs 57-59. In particular, the Employment Tribunal concluded that the Respondent acted unfairly in changing the criteria as the process unfolded, "...the phrase 'making it up as they went along' springs to mind.". The Tribunal also considered that other aspects of the process were unfair, in particular: the involvement of one manager throughout, the lack of knowledge on the part of Human Resources, the unexplained scoring exercise, the unreasonable conduct of the appeal and so on. For all these reasons, the Employment Tribunal concluded the dismissal was unfair.

1. As for the race discrimination claim, having held against the Claimant on the non-dismissal aspects of the complaint, the Employment Tribunal concluded that the various matters it found to be unfair in terms of the redundancy exercise, shifted the burden of proof to the Respondent and that the Respondent had singularly failed to discharge that burden. Accordingly the Claimant's complaint, that his dismissal was tainted by race discrimination, was found to be well-founded.

1. This matter was initially set down for a preliminary hearing, heard by Slade J, who permitted the appeal to go forward for full hearing only on the pool for redundancy point, all other grounds being dismissed. There was a subsequent review of the directions given at the preliminary hearing, with the Respondent seeking that the full appeal should be heard by an EAT Judge, sitting with lay members. Considering that application, Slade J reminded herself of the point that had been permitted to proceed to full hearing:

"The employment tribunal erred in law in its finding of unfair dismissal in finding, as it did in paragraph 56 of its judgment, that no reasonable employer would have decided to pool the roles at risk of redundancy and then separate the particular jobs available. The Respondent was entitled to design the redundancy scheme as it did."

1. Having identified the issue for the full hearing, Slade J allowed the application, and this appeal has thus been considered by a full EAT panel with input from lay members selected for their relevant specialist experience.

1. For the Respondent Ms White identifies points of common ground relevant to the question that the Employment Tribunal had to determine. At paragraph 7 of her skeleton argument she says this:

"It was not disputed that there was a single job description for the new RDM posts (and the old job descriptions had been almost identical). It was not disputed that the posts were equivalent in salary, person specification, necessary skills and experience. ...Conversely, it was not disputed that there had been a historic split between the two sub-departments or that they had been separately managed. ...It was not disputed that the split was to be maintained after the reorganisation. ... It will be obvious that there is a difference between the more creative work to initiate and create a new development, contrasted with the no less important work of bring such development successfully and thoroughly to completion. ...It was not disputed that [the Claimant] was entirely able to apply for both Delivery and [New Business and Regeneration] posts. The fact that he did not shows that he recognised the distinction between them."

1. She contends that the Employment Tribunal demonstrated a misunderstanding of the nature of the exercise it had to undertake at an early stage when, at paragraph 54, it stated:

"The Tribunal...finds on balance that the redundancy was the reason for the Claimant's dismissal, notwithstanding the fact that the diminution in the Respondent's needs for employees fell outside the role being carried out by the Claimant."

1. Turning to the issue of the pool for selection, Ms White submits that, where an employer has genuinely applied its mind to the creation of the pool, it should not normally be subject to such criticism: see Taymech Ltd v Ryan UKEAT/0663/94 and [Fulcrum Pharma (Europe) Ltd v Bonessera ]()UKEAT/0198/10. She says that this point is so fundamental that it infects the whole judgment on both unfair dismissal and race discrimination complaints. Recognition of the error of law on the part of the Employment Tribunal would require the whole matter to be re-assessed afresh.

1. To make good her point, that the Tribunal erred in its approach to the identification of the pool, Ms White observes that it is entirely normal for an employer to draw the pool for selection widely to encompass equivalent employees but to allow for some choice as to the roles on the part of the employees concerned and only then to carry out some form of selection process if those expressing a preference for a particular role exceeded the number of available positions. She says that the Tribunal's conclusion in this case was either a substitution or such as to meet the high test for perversity identified in Yeboah v Crofton [2002] IRLR 634.

1. For the Claimant, Mr Elesinnla effectively relies on the reason given by the Employment Tribunal, submitting that we should read the judgment benevolently and, stepping back, as a whole. Doing so, it was apparent that the Tribunal's conclusion that the dismissal was unfair was unarguably correct. The appeal had only been allowed to proceed in respect of the limited question of the pool for selection, but it was apparent that the Employment Tribunal's findings, both on the question of unfair dismissal and race discrimination, went much further. Those findings had to stand, whatever the EAT's conclusion on the Tribunal's approach to the identification of the pool.

1. The relevant legislative provisions are set out at section 139(1) of the Employment Rights Act 1996 and section 98(2) and (4) of that Act.

1. On identifying redundancy as a reason for dismissal, guidance has been laid down in a number of cases, most notably in Murray & Anr v Foyle Meats [1999] ICR 827, where Lord Irvine identified the two questions that needed to be addressed, as follows:

"The first is whether one or other of various states of economic affairs exists. In this case, the relevant one is whether the requirements of the business for employees to carry out work of a particular kind have diminished. The second question is whether the dismissal is attributable, wholly or mainly, to that state of affairs. This is a question of causation."

1. On the issue of the pool for selection, in Taymech v Ryan, the then EAT President, Mummery J, stated:

"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. We also find it helpful to have regard to the unreported judgment of this court, Silber J presiding, in [Capita Hartshead Ltd v Byard]() UKEAT/0445/11 (20 February 2012, unreported), which provides a helpful summary of the principles to be derived from the case-law on the question of the selection of pool for redundancy purposes in an unfair dismissal claim. In particular, we noted, at (d) and (e) of that list, as follows:

"(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. Given the limited basis on which this appeal was permitted to proceed, there was an issue before us as to how far any finding in the Respondent's favour could go. That is an issue which troubled us and to which we return, having first considered the point that was allowed to proceed to full hearing.

1. Turning to the Tribunal's judgment, it is apparent that the Employment Tribunal had a number of concerns about what took place in this case. It started by expressing a disquiet that there may not have even been a redundancy dismissal in any event. That disquiet may have arisen from its failure to have express regard to section 139(1) Employment Rights Act and the guidance in Murray v Foyle Meats. That said, the way in which the Claimant's case was presented enabled the Tribunal to avoid making any error in this regard: notwithstanding its disquiet, it accepted there was a redundancy situation. A relevant economic state of affairs existed, and the Claimant's dismissal was attributable to that. He was dismissed by reason of redundancy.

1. The Tribunal's disquiet continued, however, into its consideration as to the fairness or otherwise of the selection process.

1. The first step was the selection of the pool. As has been pointed out elsewhere: see Thomas & Betts Manufacturing Co Ltd v Harding [1980] IRLR 255, where the issue is whether the selection for redundancy was automatically unfair for section 105 Employment Rights Act purposes, the focus is expressly on employees holding "positions similar to that held by the employee". That can be contrasted with section 98(4), which makes no such reference. Hence the observation in Taymech that there is no legal requirement, for normal unfair dismissal purposes, that redundancy selection should be limited to the same class of employees as the complainant. Had the Employment Tribunal suggested that there was, there would have been an error law on that basis. If, for example, the first sentence at paragraph 56 had simply read "No reasonable employer would, as this Respondent did, decided to pool all five jobs so as to include the Delivery posts when no redundancies had arisen", that would have been obviously susceptible to challenge.

1. Here, however, as the continuation of that opening sentence, at paragraph 56, makes clear, the Employment Tribunal disquiet arose from the initial identification of the pool as being all five Regional Development Manager positions and the subsequent separation out of the roles in that pool to create a second pool for selection.

1. It is at this stage that the Respondent argues that the Tribunal failed to avoid falling into error. The Respondent observes that the second stage of the exercise was simply part of the selection process from the pool that had been narrowed down the voluntary expressions of interest on the part of the employees concerned. Ms White submits that, from the Respondent's perspective, this was an entirely normal process for an employer to put into play. It was certainly within the range of reasonable responses of an employer in these circumstances.

1. We agree. Guided particularly by the contribution of the lay members of this EAT, we consider that the process followed by this Respondent was within the range of reasonable responses of an employer in these circumstances. Allowing for the fact that an Employment Tribunal must scrutinise whether or not the employer has genuinely applied its mind to the problem before it - and allowing that in some (less common) circumstances it may be possible for an employee to challenge the choice of pool - here the scrutiny undertaken by the Employment Tribunal demonstrated that the Respondent had genuinely turned its mind to the problem before it and it had reached a conclusion as to the identification of the pool which was open to it.

1. We recognise the areas of concern that the Employment Tribunal had in the present case. In particular, its concern that the Claimant might have been prejudiced by going into the process blind as to the preferences of his colleagues; a point partly acknowledged by the Respondent itself. The answer to that concern, however, is that there will always be an element of difficulty for employees where there is a potential for employee choice in a redundancy selection exercise. If, for example, those within the pool had been invited to apply for posts that were distributed geographically across the country, they might make certain assumptions about where their colleagues would wish to be based, arising from where they lived or worked already. They might, however, be wrong, and thus face having to go through a competitive assessment which they had not anticipated. Such situations are, in the experience of the lay members of this EAT, not unusual and not outside the range of reasonable responses.

1. The second problem that concerned the Employment Tribunal was that what the Respondent allowed to take place could be seen as counter to its arguments for including all five managers in the pool in the first place.

1. The Respondent's case was, however, that this something it had genuinely grappled with and it had made a decision as to what would be appropriate in its circumstances. Whether the Employment Tribunal would have done the same was not the question.

1. We agree. The Respondent took the view that all five post holders should be in the pool because they had interchangeable skills, something which was going to become all the more important after the restructure. Having identified that the post holders would have interchangeable skills, the Respondent also recognised there were still going to be different jobs - Delivery and New Business - and that the individuals concerned should have the right to express an interest as to which they would prefer. The Respondent was recognising that all five employees were competent to do either job. It was therefore appropriate to put them all in the same pool. At the same time, it was also appropriate to allow the employees to express an interest as between the posts. Had all expressed interest in both posts, the Respondent would have had to carry out a selection process in respect of all five employees for both positions. It was because only two employees expressed an interest in the two New Business roles that meant that the Respondent did not have to undertake this exercise. There was no evidence, however, that it would not have done so if so required.

1. In our judgment, the Employment Tribunal allowed its concerns to lead it into a position where it overstepped the mark and substituted its view for that of the Respondent. It had been right to test and scrutinise the Respondent's thinking. It was wrong to then substitute its own view as to what would have been the appropriate course.

1. The issue then for us is, where does this go? Having found that the Employment Tribunal erred in law on this point, does that mean that the entirety of the judgment on unfair dismissal and race discrimination must fall once we have said that the Tribunal erred in its approach to the identification of the pool?

1. As we have set out above, the Employment Tribunal did not stop in its consideration of the questions before it with its criticism of the identification of the pool. It then went on to look and make primary findings of fact as to what the Respondent did next. In so doing, it made a number of findings adverse to the Respondent. Regardless of its finding at paragraph 56 as to the identification of the pool, it concluded that this dismissal was unfair and, as far as the race discrimination complaint was concerned, that the burden shifted, not simply on the identification of the pool point, and that the Respondent had failed to provide explanations in respect of those other points.

1. If the Employment Tribunal had expressly put those findings in the alternative - i.e. if it had said "If we are wrong about the identification of the pool, we go on to make the following findings as to what this Respondent did next" - we take the view that this appeal would probably not have been allowed to proceed to a full hearing. It would have been plain, on the face of the Tribunal's judgment, that those secondary findings stood in any event. The Respondent contends that as the Tribunal did not undertake that exercise, everything stands or falls with the finding on the pool for selection. It says that it is impossible to disaggregate the findings. One can see that, for example, on the finding on race discrimination, the Tribunal returns to the issue of the identification of the pool when criticising the Respondent at paragraphs 69 and 70.

1. We, however, agree with the submissions put to us on behalf of the Claimant. If we look at the findings of fact on the question of the selection process, i.e. after the criticisms of the identification of the pool for selection, the findings made at paragraphs 33 and following are both detailed and damning of the Respondent. Standing back, we find that those criticisms stand regardless of the Tribunal's error in relation to the identification of the pool. Looking at the "Conclusions" section, even if we disregarded paragraph 56, it is plain that the conclusions set out at paragraphs 57 to 59 would have led this Employment Tribunal to have found this dismissal to have been unfair in any event. Those are findings not susceptible to challenge on this appeal.

1. Similarly, as regards the race discrimination conclusions, we note the Tribunal's express reference back to the findings as to the steps taken subsequent to the identification of the pool:

"...the incomprehensible and anomalous assessment and scoring arrangements and the unexplained changes to selection criteria..."

Those findings still stand and, taken alone, would have shifted the burden to the Respondent; such burden as it was unable to discharge. In our judgment, the Employment Tribunal's finding on race discrimination also still stands.

1. On that basis, having agreed with the Respondent that the Employment Tribunal's judgment on liability disclosed an error of law, we do not allow this appeal, because we conclude that that does not disturb the final judgment made on either race discrimination or unfair dismissal at the liability.

1. That said, it may be that the conclusion we have reached would in some way impact on the judgment on remedy. That was not a matter before us and we express no view about it. We think it would be a matter for the parties, if they felt that our conclusions might have such impact, to apply for a review out of time to the Employment Tribunal. That is not something we can take any further forward or seek to express any view about at all on this appeal.