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Appeal No. UKEAT/0145/10/ZT

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 14 July 2010

Before

THE HONOURABLE MR JUSTICE KEITH

MR M CLANCY

MRS D PALMER

MRS A WATKINS (APPELLANT)

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JEANETTE CROUCH T/A TEMPLE BIRD SOLICITORS (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant MR CHRISTOPHER BRYDEN (of Counsel)
Instructed by:
Messrs Shoosmiths Solicitors
Quantum House
Basing View
Basingstoke
Hampshire
RG21 4EX

For the Respondent MS GRACE CULLEN (of Counsel)
Instructed by:
Messrs Heringtons Solicitors
39 Gildredge Road
Eastbourne
East Sussex
BN21 4RY

UNFAIR DISMISSAL – Reasonableness of dismissal

REDUNDANCY - Fairness

Unfair dismissal – selection criteria for redundancy – whether criteria fair and whether employer applied those criteria fairly.

1. The Claimant, Mrs Angela Watkins, was employed by the Respondent, Mrs Jeanette Crouch (as she now is since she has recently married), who is a solicitor in private practice and who practices as a sole practitioner under the style Temple Bird. Mrs Watkins' employment with the practice commenced on 1st December 2003, and she worked in the practice as a conveyancing secretary. She was dismissed on 19 September 2008 for redundancy. She complained to an Employment Tribunal of unfair dismissal, her case being that she had been unfairly selected for redundancy. Her claim was dismissed, and she now appeals against the dismissal of her claim.

1. Mrs Crouch's practice is a small high street practice. The recession had an adverse impact on the firm's conveyancing work. It is not disputed that there was a need to reduce the size of the workforce, and the Tribunal found that the firm had decided to make four of its employees redundant. Two would be administrative support staff, one would be a trainee solicitor and one would be a fee earner in the conveyancing department.

1. The Tribunal found that the selection criteria which the firm proposed to use were made known to its workforce. Those criteria were fee-earning ability, client-facing skills, knowledge of the firm's administrative procedures, availability for suitable work following any re-organisation and adaptability. Each employee was given a mark of 0 to 5 against each criterion with 0 indicating the fact that that criterion was not applicable. None of these findings by the Tribunal are challenged, nor is the Tribunal's finding that the firm's objective was to retain employees with the right skills in a contracting business and to secure a healthy foundation for future growth. That, of course, is the objective in any redundancy exercise.

1. Mrs Watkins was originally included in the pool for fee earners in the conveyancing department because she may have had some experience equivalent to that of a trainee licensed conveyancer. The Tribunal found that had she remained in that pool, she would not have avoided her selection for redundancy. Thinking that she would have a better chance of avoiding redundancy if she was included in a different pool, she asked to be taken out of the pool of fee earners in the conveyancing department. The firm agreed, and Mrs Watkins was included instead in the post of administrative support staff. There were eight employees in that pool, once Mrs Watkins was included in it. One of them was the firm's receptionist, Susan Woodhouse. Miss Woodhouse had been with the firm for 6 years, and the Tribunal found that she had a detailed knowledge of the firm's clients, of its procedures and processes and of what the Tribunal described as "other business contacts who dealt with the firm."

1. When it came to how Mrs Watkins had scored against each of the five criteria, the Tribunal found that she had scored 10 out of a possible 25. The Tribunal did not say what any of the other employees had scored – whether those who had been made redundant or those who had not – save that it referred to another secretary, Susan Stanton, who it said had scored higher than Mrs Watkins. It said that the two employees who were eventually to be selected for redundancy from the pool of administrative support staff – Mrs Watkins and Mrs Harvey – had the two lowest scores.

1. Part of Mrs Watkins' case in the Employment Tribunal was that before the process had begun, the firm had decided to select her for redundancy, and she was therefore marked in such a way as to achieve that result. The Tribunal rejected that criticism of the firm, and there is no appeal against that finding. But Mrs Watkins' case also was that Ms Stanton and Miss Woodhouse had both received preferential treatment, though that preferential treatment had taken different forms. She claimed that Ms Stanton had scored higher than her because Mrs Crouch and the office manager, Peter Carroll, who did the scoring together, were unfairly influenced in their assessment of Ms Stanton by what the Tribunal described as "her intelligent application to work and her potential as an employee in the business and the business needs in the months ahead". The Tribunal did not reject Mrs Watkins' suggestion in its entirety because it found that the firm's assessment of Ms Stanton had been motivated by an albeit genuine desire to retain an employee who had great potential. However, how the Tribunal dealt with Ms Stanton is not a ground of appeal. The appeal focuses on how the Tribunal dealt with Miss Woodhouse.

1. The firm's original stance had been that Mrs Watkins and Mrs Harvey had been the two lowest scorers. However, documents which Mrs Watkins says were leaked to her were produced to the Tribunal, and they revealed that Miss Woodhouse had scored only 8.5 out of a possible 25. That was when the firm sought to justify her retention on the ground that she was too valuable an employee to lose. Mrs Watkins' case was that when it was discovered that Miss Woodhouse had herself been one of the two lowest scorers in the pool of administrative support staff, Miss Woodhouse was taken out of that pool so that she would not be made redundant. The consequence was that Mrs Watkins had one of the two lowest scores of the employees remaining in the pool. Surprisingly, the Tribunal did not say what Miss Woodhouse had scored, but the Tribunal found in paragraph 18 of its decision that Miss Woodhouse had not been taken out of the pool of administrative support staff, and that she had been scored along with the others in the pool. The Tribunal went on to say, though, that the firm could not afford to lose a very knowledgeable receptionist like Miss Woodhouse, which was the reason why she was retained.

1. Three things emerge from all that. First, Miss Woodhouse scored less than Mrs Watkins but was nevertheless kept on. Secondly, she was kept on because factors other than the scores were taken into consideration. Thirdly, whether she was taken out of the pool is not that relevant because either she was taken out of the pool so that she would not be competing with others in the pool, or she remained in the pool but was treated exceptionally despite her score because she was regarded as such an asset to the firm.

1. In the light of those findings, we turn to the Tribunal's conclusions. The Tribunal said, in paragraph 22 of its decision, that it

"… must not substitute its own view for that of the employer and thus effectively exercise judgement as to who should have been dismissed or offered employment. Our consideration is to focus in broad terms as to whether the agreed criteria are fair (the parties agree that they are) and that they were fairly applied. We are not required to undertake a detailed scrutiny of the scores in order to find some flaw in the selection."

We agree. There is no challenge to what the Tribunal said in paragraph 22, though we wonder how fair the criteria really were, bearing in mind that a number of them – and here we are talking about the five criteria which it is common ground the employees were notified about – called for a subjective judgment to be made, whereas objectivity is the hallmark of fair selection criteria.

1. The Tribunal then said, in paragraph 23 of its decision, that the case advanced on behalf of Mrs Watkins was that

"… the whole process was a sham and that removing Susan Woodhouse from the pool without giving [Mrs Watkins] a chance to make representations about it was grossly unfair because in doing so it left [Mrs Watkins] and Mrs Harvey with the two lowest scores. Whilst it may well be the case that another employer might have chosen to inform those affected of their business decision to treat the receptionist role as unique, but [sic] this does not without more make the process either a sham or any less sincere."

That passage rather belittles Mrs Watkins' case. The case advanced on her behalf was not just a complaint that she was not told that Miss Woodhouse was to be treated exceptionally. Her case was that Miss Woodhouse should not have been treated exceptionally at all. If Miss Woodhouse had remained in the pool, she had been treated exceptionally by having factors other than her scores taken into consideration, and that would have been unfair. If she had been moved out of the pool, she had been treated exceptionally in that way, because it meant that her scores would not be compared with those of Mrs Watkins, and that would have been unfair as well.

1. The Tribunal's conclusion appears in the next passage. In paragraph 24 of its decision, the Tribunal said:

"The tribunal conclude that the agreed criteria were fairly and objectively applied over a carefully considered process which involved proper consultation and consideration at all stages."

The core criticism of the Tribunal is that it failed to deal with the points that the agreed criteria were not fairly applied, because on the Tribunal's own findings factors other than the agreed criteria and the scores which they produced were taken into consideration in Ms Stanton's case, but more significantly in Miss Woodhouse's case. Nowhere in the decision of the Tribunal is there any analysis of whether it was fair for the firm to use factors other than the scores which the employees achieved in deciding which employees should be made redundant. Nor did the Tribunal deal with the case advanced on behalf of Mrs Watkins that the firm had changed the selection criteria when it realised that if selection for redundancy was to be based on the scores each employee achieved against each criterion, Miss Woodhouse would have had to go. Nor did the Tribunal deal with the suggestion that having used different criteria to justify the retention of Miss Woodhouse, the firm then sought to conceal what it had done by pretending that Miss Woodhouse had not scored any less than Mrs Watkins.

1. The last point is particularly important because in correspondence prior to the hearing, the firm had said that Miss Woodhouse had indeed scored more than Mrs Watkins on the footing that Miss Woodhouse had not been a fee earner, and so in order to compare like with like, it was necessary to exclude the two marks which Mrs Watkins had scored for her fee-earning capacity. Therefore, Miss Woodhouse's mark of 8.5 compared favourably with Mrs Watkins' revised mark of 8. Interestingly, though, that was not advanced as part of the firm's case in the Tribunal even though Mrs Crouch had referred to that argument in her witness statement.

1. We do not think that there is any answer to the criticisms made on behalf of Mrs Watkins that the Tribunal failed to address any of these issues.

1. By the time Miss Woodhouse's scores had been disclosed to Mrs Watkins' legal team, the firm's case in the Tribunal was that how employees scored against the five criteria was not to be decisive about who was to be selected for redundancy. The firm's case was that all employees – the whole of the workforce in fact – had been informed from the very outset that the scores which they would be marked as having achieved against each criterion would represent only one part of the decision-making process, and that other factors would be taken into account including the requirements of the business, the skills of the employees and the resources which would be needed to carry out the firm's work.

1. Ms Grace Cullen for the firm acknowledged that the reference to the resources which would be needed to carry out the firm's work added nothing to the skills of the employees, and she acknowledged that the skills of the employees could have been included, in part at least, amongst the five criteria against which each of the employees would have been scored. The requirements of the business were intended to enable the firm to retain an employee if it was thought that for any particular reason the firm needed to retain that employee. Accordingly, the firm's case was that it was open to it to retain Miss Woodhouse, even though she had scored less than Mrs Watkins because she was regarded as an asset to the firm whose particular skills the firm could not do without.

1. Mrs Watkins' case was that the firm's staff had not been informed that factors other than how employees scored against the selection criteria would be taken into account. Her case was that that was only decided when the firm realised that it would otherwise have had to select Miss Woodhouse for redundancy. That was when it informed staff for the first time that the scoring was only one part of the decision-making process. Mrs Watkins was informed of that when she got a letter telling her what her scores were, and she assumed that that was when the other members of staff were informed of that as well. Once again, the Tribunal did not deal in its decision with any of that. Although it dealt in paragraph 23 of its decision with Mrs Watkins' complaint that she did not have an opportunity to make representations about Miss Woodhouse's removal from the pool of administrative support staff, the Tribunal did not deal with the more serious complaint that the workforce had been kept in the dark that the scoring against the selection criteria was not to be decisive and that other factors were to be taken into account. Nor did it deal with the firm's case that that was something which the firm had made clear from the start. Nor incidentally did it deal with whether the additional factors which the firm took into account were themselves sufficiently objective to be taken into account, though it may be that that was not a point expressly made on Mr Watkins' behalf.

1. In short, the Tribunal in our judgment did not address in its decision in any meaningful way the case which was advanced on Mrs Watkins' behalf. For that reason, the Tribunal's decision in its current form cannot stand. What should we do now? Mr Chris Bryden for Mrs Watkins has argued that we should substitute for the finding of the Tribunal a finding that Mrs Watkins had been unfairly dismissed on the basis that the Tribunal's decision was perverse. We do not think that we can do that. The argument cannot be advanced on the basis of the findings of fact which the Tribunal made because the primary ground of appeal is that the findings of fact were incomplete. The argument can only be advanced on the basis that putting the firm's case at its highest, no Tribunal could reasonably have come to the conclusion which the Tribunal reached.

1. We do not think that it is possible to say that. If the Tribunal had found that the firm had made it clear to its workforce that the scoring would not be decisive, but that it would be subject to the firm's right to retain a particular member of staff whatever his or her score if the firm thought that that was what the future of the firm's practice required, and if the firm's assessment of the value of Miss Woodhouse was such that the Tribunal could not say that that assessment was flawed, it may be that the Tribunal could justifiably have come to the conclusion that the selection of Mrs Watkins for redundancy would not have been unfair. But we say "it may be" because there are strong arguments for saying three things. First, so subjective a criterion, namely the overall requirements of the business, might well be said not to satisfy the requirement for selection criteria to be sufficiently objective so as to eliminate, if at all possible, decisions being made on a basis which cannot withstand close scrutiny. Secondly, the requirements of the business could be said to be no more than a statement of the obvious – a statement that the objective of any redundancy exercise is to retain those employees who are best equipped to enable the company, whether a small or large one, to trade profitably in the future. Thirdly and perhaps most importantly of all, if the overall requirements of the business are to be taken into account in deciding whether members of staff should be made redundant, it could be said that that is a factor which should have been reflected in the selection criteria themselves which were to apply to all members of the workforce, and on which all members of the workforce should have been scored.

1. Since, therefore, we are not in a position to substitute for the finding of the Tribunal a finding that Mrs Watkins was unfairly dismissed, we have considered whether we should simply request the Tribunal to deal with the issues which its decision did not address, but we have in the end decided that the decision is too incomplete for that to be an exercise worth undertaking. Apart from anything else, the Tribunal may be tempted, albeit completely unconsciously, to deal with those issues in such a way as does not affect its ultimate conclusion about the fairness of Mrs Watkins' dismissal. We have therefore concluded that Mrs Watkins' claim should be decided by a different Tribunal. Accordingly, the appeal must be allowed, the decision of the Tribunal dismissing Mrs Watkins' claim of unfair dismissal must be set aside, and that claim will be remitted for rehearing by a differently constituted tribunal.