Corche v O' Kane Poultry Group [2011] NIIT 02331

THE INDUSTRIAL TRIBUNALS

CASE REF: 2331/10

CLAIMANT: Radu Corche

RESPONDENT: O’Kane Poultry Group

DECISION

The decision of the tribunal, by a majority, is that the claimant was unfairly dismissed, that a Polkey deduction of 100% applies and no compensation is therefore payable.

Constitution of Tribunal:

Chairman: Mrs Ó Murray

Members: Mr R Gourley

Mr J Smyth

Appearances:

The claimant was represented by Mr J O’Neill of Thompsons McClure Solicitors.

The respondent was represented by Miss R Best, Barrister-at-Law, instructed by
Mills Selig Solicitors.

The Claim

1. The claimant’s claim was for unfair dismissal in that he was unfairly selected for redundancy following a flawed redundancy process.

2. The claimant’s case for unfair selection for redundancy may be summarised as follows:-

(1) The criteria were agreed with the trade union but the removal of two of the criteria were not formally agreed with the trade union.

(2) The scoring system was not transparent and the criteria were largely subjective making the consultation with the claimant as an individual all the more important.

(3) Individual consultation with the claimant was inadequate in that the scoring was not explained properly and the claimant therefore had no meaningful opportunity to challenge the scores.

The Issues

3. The issues therefore for the tribunal were as follows:

(1) Did lack of formal agreement by the trade union to the removal of two of the agreed criteria render the redundancy process involving the claimant unfair?

(2) Was the individual consultation with the claimant inadequate in that he had no proper chance to challenge the scores and his selection for redundancy?

(3) Was the claimant’s dismissal for redundancy contrary to natural justice in that he was dismissed without being given any information about the case against him to enable him to challenge it.

(4) Does Article 130A of ERO apply in that any breach of procedure did not make a difference and the dismissal was therefore fair?

(5) If the dismissal was unfair does a Polkey reduction apply in that if the flaws in procedure had not occurred, there was a chance that the claimant would have been dismissed in any event?

Sources of Evidence

4. The tribunal heard evidence from Mrs Norma Donaldson of HR, Mr Patrick Dallat the manager on the selection panel who scored the claimant, Mr Paul Johnston the Finance Director who dealt with the appeal. The claimant gave evidence on his own behalf and the tribunal also heard from the trade union Regional Officer Mr Billy Gallagher and from the claimant’s trade union representative Miss Laura Graham. The tribunal considered the claim and response forms and the documentation to which it was referred during the hearing.

The Law

5. The law on unfair dismissal is set out in the Employment Rights (Northern Ireland) Order 1996 as amended (referred to below as “ERO”). The right not to be unfairly dismissed is set out at Article 126 of the ERO and at Article 130 are listed the potentially fair reasons for dismissal, one of which is redundancy. It is for the employer to show that the dismissal was for one of the potentially fair reasons.

6. Redundancy is defined at Article 174 of ERO. Redundancy is a potentially fair reason for dismissal and it is for the tribunal to consider, as an industrial jury, whether the respondent acted reasonably or unreasonably in treating redundancy as a reason for the dismissal of the claimant.

7. Harvey on Industrial Relations and Employment Law sets out the principles derived from the case law in Division D1 at paragraphs 1651 to 1800.

8. In their written submissions, both sides referred to the principles derived from several decisions not all of which were relevant to the evidence which actually unfolded before us. The relevant principles derived from the key cases are as follows.

9. In the case of Williams v Compair Maxam Limited 1982 IRLR 83 the EAT gave guidance to tribunals on determining the question of whether or not a redundancy dismissal was fair. The principles set out in that case are as follows:

“1. The employer will seek to give as much warning as possible of impending redundancies so as to enable the union and employees who may be affected to take early steps to inform themselves of the relevant facts, consider possible alternative solutions and, if necessary, find alternative employment in the undertaking or elsewhere.

2. The employer will consult the union as to the best means by which the desired management result can be achieved fairly and with as little hardship to the employees as possible. In particular, the employer will seek to agree with the union the criteria to be applied in selecting the employees to be made redundant. When a selection has been made, the employer will consider with the union whether the selection has been made in accordance with those criteria.

3. Whether or not an agreement as to the criteria to be adopted has been agreed with the union, the employer will seek to establish criteria for selection which so far as possible do not depend solely upon the opinion of the person making the selection but can be objectively checked against such things as attendance record, efficiency at the job, experience, or length of service.

4. The employer will seek to ensure that the selection is made fairly in accordance with these criteria and will consider any representations the union may make as to such selection.

5. The employer will seek to see whether instead of dismissing an employee he could offer him alternative employment.

…

The basic approach is that, in the unfortunate circumstances that necessarily attend redundancies, as much as is reasonably possible should be done to mitigate the impact on the work force and to satisfy them that the selection has been made fairly and not on the basis of personal whim.”

10. The Northern Ireland Court of Appeal in the case of Robinson v Carrickfergus Borough Council 1983 IRLR 122 approved these guidelines.

11. The tribunal must not substitute its own view for that of the employer but must ask itself whether the selection made was one that a reasonable employer, acting reasonably, could have made. (BL Cars v Lewis 1983 IRLR 58 and Drake International Systems Limited t/a Drake Ports Distribution Services v Colin O’Hare EAT).

12. The Court of Appeal in the case of British Aerospace PLC v Green 1995 IRLR 437 indicated that the tribunal should not approach its task by conducting a minute examination of the selection process. Waite LJ stated as follows:

“Employment Law recognises, pragmatically, that an over-minute investigation of the selection process by the tribunal members may run the risk of defeating the purpose which the tribunals were called into being to discharge, namely a swift, informal disposition of disputes arising from redundancy in the workplace. So in general the employer who sets up a system of selection which can reasonably be described as fair and applies it without any overt signs of conduct which mars its fairness will have done all that the law requires of him.”

13. The employer is under an obligation to consult with individuals at risk of redundancy before the decision is made. The case law on individual consultation is discussed in Harvey at paragraphs 1704 to 1708. As Harvey states: “Consultation is one of the basic tenets of good industrial relations practice”. A line of appellate authorities emphasise the importance of consultation. Harvey at paragraph 1707 summarises the state of the law as outlined in the EAT decision of Mugford v Midland Bank [1997] IRLR 208. The key point relevant to this case is as follows:

“It will be a question of fact and degree for the tribunal to consider whether consultation with the individual and/or his union was so inadequate as to render the dismissal unfair. A lack of consultation in any particular respect will not automatically lead to that result. The overall picture must be viewed by the tribunal up to the date of termination to ascertain whether the employer has or has not acted reasonably in dismissing the employee on the grounds of redundancy. “

14. At paragraph 1708 of Harvey is quoted the guidance on consultation given by Glidewell LJ in the case of R v British Coal Corporation and Secretary of State for Trade and Industry ex p Price 1994 IRLR 72 at paragraph 24:

“Fair consultation means:

(a) consultation when the proposals are still at a formative stage;

(b) adequate information on which to respond;

(c) adequate time in which to respond;

(d) conscientious consideration by an authority of the response to consultation.”

15. The respondent referred the tribunal to the case of Alexander v Bridgen Enterprises Limited 2006 IRLR 422 (EAT). That case concerned the level of information to be provided at Step 2 of the statutory dismissal procedure. The SDP lays down minimum standards for an employer and non-compliance with those standards renders the dismissal automatically unfair. However, compliance with the SDP does not necessarily mean that a dismissal is fair: the tribunal must still assess the fairness or otherwise of the dismissal under ERO applying the principles developed in the case law. The Alexander case was therefore of limited assistance to the tribunal in this case as the SDP did not apply in this case.

16. The case of Polkey v Dayton Services Limited [1987] 3 all ER 974HL is a case where the House of Lords made it clear that, if a dismissal is procedurally defective (in that a procedure was not followed or was inadequately executed) then that dismissal is unfair but the tribunal has a discretion to reduce any compensatory award by any percentage up to 100% to reflect the chance that following the procedures correctly or adequately would have affected the outcome.

17. Article 130A of ERO states as follows:

“(2) Subject to paragraph (1), failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of Article 130(4)(A) as by itself making the employer’s action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure”.

18. This is known as the “Polkey reversal” provision which allows a tribunal to find a dismissal fair if failure to follow a procedure (other than the SDP where it applies) made no difference to the outcome in that the employee would have been dismissed anyway even if the procedure had been followed.

19. Article 157 of ERO outlines the duty of the employee to mitigate his loss. The burden is on the employer to show that the employee failed to mitigate his loss.

20. The claimant’s side referred us in detail to the case of Pinewood Repro Limited (t/a Countyprint) v Page EAT/0028/10/SM in that case, the EAT upheld a decision that the claimant was unfairly dismissed due to the employer’s failure to conduct adequate or effective consultation as no adequate explanation was given to him for his lower scores. The respondent in that case did not explain how the scores for the claimant had been arrived at but simply stated that they were reasonable and appropriate. In that case, therefore, the absence of an explanation for the scores meant that the claimant was not able to put forward the valid challenge which he put forward to the tribunal. The EAT specifically referred to the guidance of the Divisional Court in the Price case (see above) on the purpose and importance of consultation. In summary the Pinewood case indicates the importance of providing enough information to enable an employee to challenge meaningfully the basis of the scoring especially when scores are close.

21. In the Pinewood case there was no evidence that the claimant would have been dismissed in any event especially due to the nature of the challenge that he was unable to mount due to the lack of information at the consultation meeting.

22. The tribunal had regard in general to the Labour Relations Agency document entitled Advice on Handling Redundancy as this outlines good practice in redundancy procedures.

Findings of Fact and Conclusions

Introduction

23. The tribunal considered all the evidence both oral and documentary and reached the following findings of fact on a balance of probabilities. The tribunal considered the submissions of both sides, the legislation, case law and the LRA Code and reached the following conclusions having applied the law to facts found.

24. Both sides had an opportunity to present evidence in relation to a potential Polkey reduction and were given the opportunity to make detailed submissions on this issue.

25. Both sides presented written submissions and supplemented them by oral submissions. The tribunal took account of the written and oral submissions of both sides in reaching its decision.

26. As the written submissions of Mr O’Neill appeared to attack the actual criteria, it was clarified orally in submissions that the claimant’s case did not involve an attack on the criteria which had been agreed by the trade union: rather the attack by the claimant was on the lack of transparency of the scoring which led to an inadequate opportunity for him to challenge them and have a meaningful consultation on them.

Unanimous Conclusions

27. The following are the facts and conclusions unanimously agreed by the tribunal.

28. The claimant was employed from 25 July 2006 until 2 July 2010 when he was dismissed on grounds of redundancy. At the time of his dismissal the claimant was a Section Manager in the respondent’s factory which dealt with processing poultry products.

29. It was agreed by the claimant’s side that a redundancy situation pertained at the relevant time, that it was a collective redundancy situation and that the statutory dismissal procedures therefore did not apply.

30. Employees were first alerted to the possibility of redundancies in November 2009 and the consultation and redundancy process lasted from that date to August 2010. As part of the collective redundancy consultation process, 7 redundancy criteria were agreed in February 2010 with the BAFWU trade union following numerous discussions and meetings. The criteria were posted on the notice board in the factory and were applied in the first wave of redundancies.

31. When it came to the second wave of redundancies involving managers at the claimant’s level, the respondent’s managers implementing the redundancy process realised that they would have difficulty producing reliable records in relation to 2 of the 7 criteria (namely attendance and timekeeping) as not all managers in the pool used the clocking-in system.

32. The respondent’s managers immediately brought to trade union attention, the difficulty with two of their criteria because of incomplete records and their fear about treating people within the pool inconsistently. At no stage during the contact with trade union officials was an objection raised to removing the two criteria in question. Indeed at hearing Mr Gallagher, of the trade union, candidly accepted that he was not making the case that the criteria should not have been removed: rather his point was that there was no formal agreement with the trade union to remove them.

33. We accept that the respondent had compelling reasons to amend the criteria when it became apparent that using them with this group would lead to unfairness. We do not find the lack of formal agreement with the trade union to be a flaw in the process. The deletion of the two objective criteria meant that the remaining criteria were largely subjective. We do not regard it as a defect in the procedure that this was the case. However the subjectivity of the criteria relied upon meant that the duty to consult was all the more onerous on the employer in this case.

34. The remaining 5 criteria which were applied to this pool of employees were as follows: job performance (which was broken into eight competencies each of which was scored separately); general flexibility; skill; disciplinary record; flexibility commitment for future peak workload.

35. It was part of the claimant’s case that the respondent should have used the monthly review forms which scored the claimant on a monthly basis in relation to eligibility for bonus. We accept the respondent’s case on this which was that the forms were not resorted to because not all members of the pool for redundancy were subject to that system and using the forms for the claimant would therefore have led to inconsistency.

36. On 28 June 2010, the managers in the pool, including the claimant, were called to a management briefing session where they were informed that the second wave of redundancies would involve their level of management.

37. A panel comprising Mr Lyttle a manager, Mr Dallat as a line manager and Mr P McAllister as another line manager was convened in order to score each member of the pool. Mrs Donaldson of HR also attended and her main role was to facilitate the discussions of the managers who had personal experience of the individuals in the pool.

38. The process adopted was as follows: Mr Dallat used the criteria and the competencies provided by HR in order to score the individuals, of whom he had personal knowledge, under each criterion. The other two members of the panel then challenged him on the scoring and asked him to justify each of the scores by reference to the criteria and the competencies. The same process was adopted in relation to the managers of whom the other managers had personal knowledge. This process took almost two days to arrive at scores for all 34 people in the pool.

39. The claimant was in a group of four out of the pool of 34, earmarked for redundancy due to their scores. In the claimant’s case if he had received one more mark, the chances were that he would not have been at risk of redundancy.

40. A letter dated 30 June 2010 was sent to the claimant advising him that he was at risk of redundancy and indicating his scores under each of the criteria. The letter arranged a consultation meeting for the following day.

41. On 1 July 2010 the claimant attended the meeting with Mrs Donaldson and Mr Dallat and was accompanied by his trade union representative Miss Graham.

42. There was a lot of debate at hearing in relation to the content of the meeting of I July 2010. The respondent’s note of the meeting and the trade union representative’s note of the meeting were produced at hearing and both sets of notes largely reflected each other. Both sides before us agreed that the notes were not a verbatim record and agreed that there was some other discussion at the meeting which was not reflected in the notes. The contention between the parties related to the amount of the extra discussion at the meeting.

43. Our focus on this meeting was in relation to the content of the extra discussion rather than the amount of it. It was clear from the evidence of Mr Dallat that he did not allude to the negative examples which he had in mind when scoring the claimant. Instead Mr Dallat chose to dwell on the positive aspects of the claimant’s performance and explained that his scores were not higher because others had done better than him. No specific examples where given to the claimant of where he fell short compared to others even though Mr Dallat had specific examples (drawn from his own experience) in his mind, when arriving at the scores. The claimant therefore had a very limited opportunity to challenge the scores in that he had nothing specific, in terms of examples, to comment upon.

44. We are satisfied from the evidence of Mrs Donaldson and Mr Dallat that the panel approached their task in a genuine and honest way. There was no suggestion of any ulterior or nefarious motive on the part of the panel to target the claimant for redundancy.

45. In this case, the evidence before us was that Mr Dallat relied on his own personal knowledge of individual examples where the claimant did not do as well as other people and where Mr Dallat had to intervene on several occasions to rectify problems that the claimant should have dealt with. If these had been outlined to the claimant during the meeting, the only evidence before us as to what the claimant would have answered to those point was that they were mostly not his fault and he did not accept them.

46. Given that these were examples from the manager’s own knowledge we regard it as highly unlikely that the manager would have changed his mind if faced with this challenge. Mr Dallat’s evidence was clear that the claimant as manager of the particular department was responsible for the specific issues which arose and it therefore counted against the claimant in Mr Dallat’s estimation, that he had not done more to rectify problems that had arisen.

47. By letter of 2 July 2010 the claimant was informed that he was dismissed for redundancy.

48. In submissions the claimant’s side alleged that the redundancy exercise was carried out with undue haste as the claimant was advised that he might be made redundant on 30 June 2010 and was dismissed by 2 July 2010. The claimant was accompanied throughout by his trade union official and the respondent’s evidence was that if meetings had not suited they would have rearranged them. At no point was any protest raised by the claimant’s side in relation to the timing of the meetings. We do not regard the process as unduly hasty in the circumstances.

49. The respondent offered alternative employment which was refused by the claimant. In identifying and offering this post the respondent complied with its duty to seek alternative employment. In this case the respondent pointed to the claimant’s refusal of the offer of a job on the nightshift as evidence of his failure to mitigate his loss. As we have found below, we do not need to consider the issue of failure to mitigate loss.

50. By letter of 5 July 2010, the claimant exercised his right of appeal and the appeal was dealt with by Mr Johnston. The main ground of appeal related to the scoring by the panel.

51. Mr Johnston’s approach was to deal with the claimant’s concerns independently of the panel which did the scoring. In some of the other appeals dealt with by him, Mr Johnston had changed scores following his own assessment. We are satisfied that Mr Johnston approached his task in a conscientious way.

52. At the appeal meeting on 20 July 2010 the claimant outlined his concerns with the aid of his trade union representative. Following that meeting Mr Johnston sought out 4 other managers (other than Mr Dallat) with knowledge of the claimant’s work, took notes of meetings with them and arrived at his own view of what the claimant should receive in scores under the various criteria. The consistent picture which emerged from Mr Johnston’s investigations was that the claimant needed to be “pushed” by his line managers. Mr Johnston’s conclusion was that the panel’s scores should not be changed and the redundancy was confirmed.

53. When the claimant queried his score on “General Flexibility”, Mr Johnston stated that this was an excellent score which was higher than most others’. However, this was not actually the case as the majority of the pool scored higher than the claimant.

54. Mr Johnston was criticised that he did not go back to the claimant following his discussions with managers. We accept Mr Johnston’s evidence that he would have done so if there had been a great disparity but did not do so with the claimant because the manager’s comments and his own scoring reflected the panel’s original scoring.

55. The appeal process was attacked by the claimant’s representative on the basis that one of the four managers spoken to was Ms AB who had originally been in the pool earmarked for redundancy with the claimant. The claimant’s case was that it was not appropriate to speak to this manager because it was in her interests to say negative things about the claimant given that, if the claimant was reinstated, it might have an adverse affect on her.

56. We do not regard the fact that Mr Johnston spoke to Ms AB as a defect in the process where he also spoke to three other managers and formed a clear picture on the basis of all the information which was gathered. We do not regard the comments made by Ms AB as particularly damning of the claimant as alleged and we note that the claimant in evidence to us did not deny the specific point made by Ms AB which was negative and give no indication that Ms AB had any ulterior motive. We also do not accept that Ms AB displayed anti-union views as alleged during the hearing before us.

Conclusions of the Majority

57. In the Price case the court outlines the four elements of fair consultation one of which is “adequate information on which to respond” the respondent failed to comply with that key part of fair consultation by failing to give the claimant adequate information on which to respond when in the meeting with Mr Dallat.

58. The authorities are clear that the more heavily the respondent relies on subjective criteria the greater the onus on the respondent to consult fully with the employee. In this case the key criteria which had the capacity to make a difference to whether or not an employee was kept on, were subjective in the main. There was therefore a heavy burden on the employer to consult meaningfully with the employee.

59. One of the main purposes of the meeting was to consult with the claimant as an individual to enable him to challenge the scores and to suggest alternatives to redundancy if appropriate. It is difficult to see how an employee can make any meaningful challenge if he is given no information on the basis of the score but is simply referred to the fact that he is a good manager and did not do as well as others in general. For this reason the majority regards the lack of information given at the meeting to be a flaw in the process.

60. The majority accepts Mr Dallat’s evidence that his motivation for failing to give information on the reasoning behind the scores, was to dwell on the positive. Whilst this was a laudable aim it was misguided in these circumstances where consultation is at the heart of the process and where lack of proper consultation strikes at the very heart of the fairness of the process.

61. Mr Dallat was well-meaning in his approach in that he did not want to be demeaning or condescending but his reluctance to identify deficiencies in the claimant’s performance meant that the claimant did not have an opportunity to challenge the basis of the scoring.

62. The majority can envisage circumstances where inadequate consultation such as that which occurred in this case could have a decisive effect on the outcome for an individual employee especially where scoring is close. For example, if the manager performing the scoring relies on a specific adverse incident reported to him by another employee, the individual at risk of redundancy would then have the opportunity to say whether or not the incident was true or whether that other employee had some malign intent. In this case however it is difficult to see how any challenge by the claimant, in the terms outlined at hearing to the tribunal, would have had an effect because Mr Dallat was relying on his own personal knowledge of the claimant’s work.

63. The scores under “General Flexibility” displayed the biggest range of scores in the pool. Mr Johnston’s response to the claimant was incorrect in that the claimant’s score was actually lower than most others’. The claimant therefore had the erroneous impression that he scored comparatively well. This underlined the difficulty the claimant had in mounting a meaningful challenge as he did not know the reasons behind the scoring. The majority members are not saying that Mr Johnston should have necessarily conducted a more extensive enquiry, but the fact is that the approach on appeal did not cure the defective consultation at the lower level as the claimant remained in ignorance of the reasons being the scoring.

64. However, in this case, as we have found above, even if the specific examples had been given to the claimant, we do not believe that it would have made a difference to the outcome. The majority therefore assesses a Polkey reduction in the sum of 100% as, on the evidence before us, it is the majority view that, despite the unfairness, the claimant would have been dismissed in any event.

65. The lack of consultation is not a mere technical breach or procedural mishap which would render the dismissal fair under Article 130A. The distinction between a defect of procedure and a defect of substance is very difficult to pin down and for this reason we have found this case to be very finally balanced. The majority is persuaded however that the consultation part of the redundancy process is so fundamental to its fairness, that the failure to consult amounted to substantive unfairness in this case and that Article 130A does not therefore come into play.

66. In summary therefore the decision of the majority is that the claimant was unfairly dismissed but the Polkey reduction of 100% means that no compensation is payable. The redundancy paid is offset against the basic award making the basic award amount to zero.

Conclusions of the Minority

67. The tribunal members diverged on the adequacy of the individual consultation afforded to the claimant. As stated at paragraph 13 above it is a question of fact and degree as to whether the consultation was so inadequate as to render the dismissal unfair.

68. All the members of the tribunal found this to be a very finely balanced case on the facts.

69. The method of consultation adopted by Mr Dallat was not flawed. In practice, consultation is a two-way process and it was incumbent on the claimant and his trade union representatives to be proactive in challenging the scores by raising issues in the claimant’s favour.

70. The process adopted by Mr Johnston, when he conducted his own assessment of the claimant under each criterion by reference to discussions with other workers, led to the same conclusion as Mr Dallat and thus vindicated the initial decision by Mr Dallat.

71. The minority view is that individual redundancy consultation is not akin to an appraisal process and it would be unduly onerous on an employer to conduct a lengthy, detailed series of discussions on specific criteria when in the midst of a redundancy process.

72. It is not for the tribunal to step into the respondent’s shoes and minutely examine the conduct of the process. In line with the principle outlined in the Green case at paragraph 12 above, the minority finds that the application of the system of selection did not have overt signs which marred its fairness.

73. At the time of the outcome of the appeal the claimant’s dismissal was therefore fair.

Summary

74. By a majority the tribunal finds that the claimant was unfairly dismissed, a Polkey deduction of 100% applies and no compensation is therefore payable.

Chairman:

Date and place of hearing: 10-12 May 2011, Belfast.

Date decision recorded in register and issued to parties:

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Industrial Tribunals Northern Ireland Decisions