Practical Law

In Green v London Borough of Barking & Dagenham UKEAT/0157/16, the EAT held there should be no modification to the application of section 98(4) of the Employment Rights Act 1996 (ERA 1996), which tests the fairness of the dismissal, in the case of redundancy where existing employees must compete for a reduced number of new roles within the same organisation.

Facts

The claimant was one of three employees in a team performing broadly similar roles at the same level. In October 2012, the respondent proposed a restructure of the team. This involved the deletion of the three posts and the creation of two posts for which the existing three jobholders would compete by way of a written test and interview. As the lowest scoring candidate, the claimant was not offered a new role and was selected for redundancy. The claimant appealed against her redundancy, but the respondent refused to hear her appeal on the basis that it was not a redundancy selection but an assimilation process and as such there was no right of appeal on that issue.

The claimant claimed unfair dismissal on the basis that the recruitment process was unfair. Her principal complaint was that one of the other candidates had prior knowledge of the subject matter of the written test. Amongst other matters, she also complained that, in rejecting her appeal, the respondent had not properly considered this point.

An employment tribunal (ET) held that its assessment of fairness related not to why the claimant had been selected for redundancy, but why she had not been appointed to one of the remaining positions. Accordingly, it did not need to apply the guidance in Williams v Compair Maxam [1982] IRLR 83 that redundancy selection criteria should be capable of objective assessment. Instead, the ET followed the test set out by the EAT in Morgan v Welsh Rugby Union [2011] IRLR 376, which held that it was reasonable to hold a competitive interview process and appoint the best candidate for the job, even if that was judged subjectively.

On appeal the EAT held that the ET had wrongly elevated Morgan to a rule of law and had adopted an overly narrow approach to section 98(4) of the ERA 1996, failing to demonstrate that it had reviewed each stage of the respondent’s decision-making process. The case was remitted to a fresh ET for a rehearing.

Points of interest arising from the EAT’s decision:

• There is a subtle difference between, on the one hand, appointing employees to newly created roles and, on the other hand, selecting which employees should remain when the number of existing roles has been reduced. Morgan is authority that, where new roles are created, an employer potentially has more scope to use subjective selection criteria and consider future suitability when selecting the right person for the new job. In contrast, when selecting which employees should remain in a simple reduction in numbers case (with no substantive changes to role content), employers are usually expected to follow a more objective selection process. Nevertheless, in both cases, the EAT reminds us that the “touchstone” would be the reasonable responses test under section 98(4) of the ERA 1996. The EAT stressed that Morgan directs the ET back to section 98(4); it does not provide a means of “short circuiting” the reasonableness test.
• Employers must act within the range of reasonable responses open to a reasonable employer at each stage of the redundancy process. The EAT stressed that the ET in this case should have scrutinised and reviewed the employer’s decision and the process followed at each stage to decide whether they fell within the range of reasonable responses.
• Interestingly, while the ET had misapplied Morgan, the EAT commented that this was not to say that the respondent had not been entitled to carry out its selection process in the way that it did: a forward-looking exercise.

Public sector considerations

The ET observed that the type of selection process adopted by the respondent (written tests and interview) “seems to be the model for the majority of local government reorganisations.” The same could be said of other areas of the public sector including, for example, the NHS. There are a number of reasons why this is the case, including unreliability in existing records (either because they do not exist or because they have been completed to different standards).

In Green, the ET treated the positions as new roles but the EAT observed that it was hard to see that they were truly new. Notwithstanding this, the EAT stated that the respondent might have been entitled to proceed as it did (an issue to be decided on remission to the ET). This is despite the orthodoxy that, in a simple reduction in numbers case, employers are usually expected to use more classic selection criteria (past appraisals, disciplinary records and so on).

Green therefore provides some support to this common model of redundancy selection in the public sector. Nevertheless, practitioners must not lose sight of the key section 98(4) test. Applying that test, the application of a competency bar (again, not uncommon in the public sector) might be found to be unfair (Cumbria Partnership NHS Foundation Trust v Steel UKEAT/0635/11). In addition, an ET might find as unfair an entirely forward-looking selection process (Mental Health Care (UK) Ltd v Biluan and another UKEAT/0248/12, a case which concerned a simple reduction in numbers redundancy process).