July 5, 2012

In the case of Capita Hartshead Ltd v Byard, Capita employed a team of four actuaries, one of whom was Mrs Byard.

Through no fault of her own, the company lost a number of clients that Mrs Byard worked for and, after failing to obtain new work for her, it decided to make her redundant. It chose not to include the other actuaries in the selection pool on the basis that it was Mrs Byard’s work that had reduced, because it felt that there was a risk of losing clients if it transferred work from one actuary to another and because it considered that team morale would be undermined if the other actuaries were put at risk of redundancy.

The Tribunal and the EAT upheld Mrs Byard’s claim for unfair dismissal on the grounds that the company had acted unreasonably in not including the other actuaries in the selection pool. The EAT accepted that the employer’s decision as to who should be included in the pool will be difficult to challenge provided that it genuinely applied its mind to the issue. However, in this case, it was found that the company had not done so in light of the fact that all the actuaries did similar work, the fact that Mrs Byard’s performance had been praised and (despite Capita’s evidence to the contrary) the finding that there was only a slim risk that the company would lose business if it were to move clients from one actuary to another.

In contrast, in the case of Halpin v Sandpiper Books Ltd, the EAT upheld a decision that it was not unfair for an employer to use a selection pool of just one employee in circumstances where the employee was employed in a unique position which was disappearing. The fact his skills may have been interchangeable with those of other employees did not mean that the company had acted unfairly by excluding them from the pool of selection.

These two cases highlight the dilemma that employers often face in redundancy situations. Do you have a larger pool in order to minimise the risk of unfair dismissal liability? Or do you restrict the size of the pool in order to avoid unsettling other employees unnecessarily? The answer can often be a close judgment call. But it is fair to conclude that the decision is likely to be subjected to more detailed scrutiny if the pool is restricted to only one employee.

Redundancy – suitable alternative employment

Samsung Electronics (UK) Ltd v Monte-D’Cruz

In another recent redundancy case, the EAT has confirmed that it is acceptable for an employer to use subjective criteria when deciding whether an employee who is at risk of redundancy should be appointed to an alternative position.

Mr Monte-D’Cruz was employed by Samsung as one of four senior managers who reported to the head of its Print Division. Following a reorganization of the division, Mr Monte-D’Cruz was informed that his job was at risk of redundancy and he was given the opportunity to apply for a number of new roles that would be created as a result of the reorganization. He applied for two of these positions but was unsuccessful. The company subsequently appointed an external candidate to one of the roles. Mr Monte-D’Cruz claimed unfair dismissal.

The Tribunal initially upheld his claim on the grounds that the consultation was inadequate and because the company had failed to use sufficiently objective criteria to assess his suitability for the alternative roles. However, this decision was overturned by the EAT on appeal. In doing so, it held that, although the initial selection for redundancy should be based on objective criteria, the company was not under an obligation to use objective criteria in the context of an interview for alternative employment. In other words, the managers conducting the interview were entitled to use their own judgment as to which candidate would be best for the new job.

Although this is an encouraging decision for employers, it does not necessarily mean that it will be fair for an employer to reject a potentially redundant employee’s application for a suitable alternative role simply because it thinks that an external candidate is better. One of the important features of the Samsung case was that the company decided that the positions on offer did not amount to suitable alternative employment because Mr Monte-D’Cruz was not good enough for either job. If it had decided that he was good enough, but just not as good as the successful candidate, the outcome of the case would probably have been very different. 

Misconduct – when to involve the police 

Crawford and another v Suffolk Mental Health Partnership NHS Trust

The Court of Appeal has recently confirmed that, where a misconduct dismissal is likely to result in the loss of an individual’s career in their chosen profession, the employer will be under an even greater duty to ensure that the investigation and disciplinary process is conducted fairly.

Mrs Crawford and Mr Preston were employed as hospital nurses by an NHS Trust. They were accused by a colleague of tying a patient with dementia to a chair with a sheet. After an initial investigatory meeting, they were suspended pending further investigations. A week later the Trust referred the matter to the police and, in the meantime, put its own internal investigation on hold. The police subsequently confirmed that it did not intend to take any further action. The Trust recommenced the disciplinary process and, following an investigation and disciplinary hearing, the nurses were dismissed for assault, negligence and professional misconduct. They brought claims for unfair dismissal.

The Court of Appeal upheld the tribunal’s decision that the dismissals were unfair on procedural grounds. In particular, it was unfair that the nurses had not been given the opportunity to comment on or challenge some of the evidence on which the manager who conducted the disciplinary hearing had relied. In view of the fact that the ability of the nurses to pursue their chosen careers was at stake, the Court of Appeal agreed that the employer must take particular care to conduct a fair and thorough investigation and disciplinary procedure.

One of the judges in the Court of Appeal also commented that he found it “little short of astonishing” that the Trust considered it appropriate to refer the matter to the police. He observed that employers should only involve the police after very careful consideration and where they have a genuine and reasonable belief that they employee may have committed a criminal offence. He also stressed that any decision to suspend should not be a “knee jerk reaction” otherwise it might breach the duty of trust and confidence.

The message is clear: the more serious the allegations, the more important it will be to follow a fair disciplinary process. And do not call in the police unless you genuinely believe that there are reasonable grounds to believe that the employee’s conduct was criminal.

Employment Law Reform

Changes taking effect in April 2012

The first batch of the coalition government’s employment law reforms are due to take effect in April. Of most practical importance to employers is the increase in the period of employment to qualify for unfair dismissal protection from 1 year to 2 years. This change will apply to all employees whose employment commences on or after 6 April 2012. The qualifying period for anyone whose employment started prior to 6 April 2012 will remain at 1 year.There will also be a number changes to the employment tribunal rules for claims issued on or after 6 April 2012.

The main changes are as follows:-

• In the interests of saving time, witnesses will not normally be required to read their witness statements when giving evidence at tribunal hearings. Instead, the tribunal members will just read the statements to themselves.
• Tribunals will have the discretion to order a party to a tribunal case to pay the costs incurred by a witness in attending the tribunal to give evidence.
• In an effort to bolster the process for weeding out weak claims, the limit on “deposit orders” will be increased from £500 to £1,000 (a deposit order can be made if a tribunal or judge considers that a claim has little reasonable prospect of success – it means that the party concerned can only proceed with the claim if they pay the deposit).
• The limit on the costs that can be ordered by a tribunal will increase from £10k to £20k.

March 2012