SUMMARY
REDUNDANCY – Definition
A contention that where an employee was dismissed in consequence
of a downturn of business, and the introduction of new accounting software,
both of which caused a lessening of the requirement of the employer for
employees to do book‑keeping work (in this case an employee, since only
one did that work) there was no dismissal by reason of redundancy, because the EAT
decision of Aylward required a reduction in headcount as a
necessary factor, was rejected. Aylward would not be followed,
since it was inconsistent with previous Court of Appeal observations, and had
erroneously relied upon a misunderstanding of observations of
HHJ Peter Clark in Safeway v Burrell.
THE HONOURABLE MR
JUSTICE LANGSTAFF (PRESIDENT)
Introduction
1.
This is an appeal against a decision of an Employment Tribunal sitting
at London South, which on 31 August 2011 determined that the various
claims made by the Claimant should be dismissed save for her claim that she had
been dismissed by reason of redundancy. The Tribunal determined that she was
entitled to a redundancy payment of £11,210. Reasons for that decision were
delivered on 17 October 2011. It is against that decision that the
employer appeals to this Tribunal.
Background
2.
The background to the decision was this. The Claimant was employed to
provide largely book‑keeping services by her employer. There was a
downturn in business which placed economic pressure upon the employer.
Secondly, the employer introduced an accountancy software package known as the
Sage system, which in itself also reduced the number of hours for which it was
necessary that a book‑keeper should work. Accordingly, the employer had
a need for fewer hours to be worked providing book‑keeping services than
had been worked previously. The employer sought to persuade the Claimant to
reduce her hours significantly per week. The Claimant refused to agree.
Because her contract entitled her to work the hours she was doing and the
employer no longer needed her to work those hours, the employer gave her notice
of dismissal, to take effect from 5 October 2010, which it duly did.
3.
The question arising from that background was whether the dismissal for
those reasons was a dismissal by reason of redundancy. The Tribunal answered
it in one short, and somewhat condensed, paragraph as follows:
“It was common ground that Mrs Fauchon was dismissed. In
dispute was the reason for her dismissal. The Tribunal find that the employer
has demonstrated and shown to the Tribunal that the reason was redundancy. The
downturn in the business meant that there was a diminished need for book‑keeping.
Since Mrs Fauchon did not agree to a significant reduction in her hours
the reason for her dismissal was redundancy (see Harvey on Industrial
Relations and Employment Law, paras E908-912, whose views on the dubiety of
Aylward [and Ors v Glamorgan Holiday Home Ltd UKEAT/0167/02] are
respectfully shared and endorsed).”
4.
The reference to Aylward is a reference to an otherwise
unreported case determined at this Tribunal by a panel chaired by
HHJ Ansell on 5 February 2003. It has formed the bedrock of
this appeal to us as it has been presented by Mr Watson. The paragraph in
Harvey to which the Tribunal had referred begins at paragraph 908
by identifying that a recession in the trade or business is a classic example
of a redundancy situation. Typically, a recession will mean that the business
requires fewer employees and the workforce will be trimmed. It observes that
in one reported case, however, there was held to be a redundancy situation
where an employer really needed fewer employees collectively but nevertheless
needed to retain every individual in the group. That was a reference to Hanson v Wood
[1967] 3 KIR 23 1, a decision of the Divisional Court. The Tribunal in that
case did not regard a reduction in hours in consequence of a downturn in
business as entitling employees laid off in consequence to a redundancy
payment. A Divisional Court allowed an appeal and remitted that case to the
Tribunal, directing that unless the employer was by contract allowed
unilaterally to vary the hours there was a constructive dismissal, and if there
was a dismissal, then it was clearly by reason of redundancy, because the
requirements of the business were for less work to be provided by each
employee. Having set out that case, one from a very long time ago in
industrial terms but which considered statutory provisions that are reflected
in the same wording as they are found today in section 139 of the Employment Rights Act 1996
(ERA), Harvey went on to add this (we quote in full):
“910. A later case gives pause for thought. In [Aylward]
the employer needed to reduce costs, and so proposed new terms and conditions
of employment. The principal proposal was that the hotel should close every
January and February during its slack period and that employees should not be
paid during those two months. Most employees accepted the change; some did
not. Those who did not were dismissed but replaced. There was therefore no
reduction in the number of employees, merely a reduction in the hours worked.
The EAT apparently held that because there had been no reduction in the number
of employees required, therefore there could be no redundancy situation.
911. But, with respect, that cannot be right as a general
proposition. It may be that on the facts of the particular case there was no
reduction in the overall amount of work required by the business because
nothing much happened in the slack period anyway. If so, the decision is
unexceptionable. But it cannot be true to say that reduced demand alone can
never constitute a redundancy situation. Suppose an employer employs two
employees but demand for his product falls by 50 per cent. It cannot
be right to say that there is a redundancy situation if he sacks one employee
but there is no redundancy situation if he puts them both on half time. The
truth is that there is a redundancy situation in either event but a claim to a
redundancy payment does not arise unless or until there is a dismissal
by reason of the redundancy situation. […] It is true therefore that a
reduction in hours does not per se give rise to a claim for a redundancy
payment, because a reduction in hours does not as such constitute a dismissal.
If, however, the reduction of hours is achieved by way of dismissal, actual,
constructive or otherwise, then the dismissal is by reason of redundancy, if
and in so far as the reduction in hours demonstrates that overall the business
now requires less work from its workforce. […] The EAT in Aylward
apparently considered various authorities for the proposition that there can be
a redundancy situation if the business requires fewer employees but where the
overall output remains the same, and took them to mean that there can be no
redundancy situation unless the business requires fewer employees. In
particular, the EAT in Aylward relied heavily on the Judgment in Safeway Stores PLC v Burrell
[1997] IRLR 200 EAT, but the point being made in [Burrell] was that the
language of the act makes it necessary to investigate the requirements of the
business for employees in general and not its requirement for the Claimant
employee in particular; see especially paragraph 57 of the Judgment.
The case is no authority for the proposition that reduced demand alone cannot
constitute a redundancy situation; Aylward is therefore respectfully
doubted.”
5.
The Tribunal therefore took the bold step of not following a decision of
this Tribunal that, it might be thought, was in point, and did so upon the
basis of what had been written by way of criticism in Harvey, which,
albeit a leading text, is a textbook and is not legal authority. The issue for
us on this appeal centrally posed in his submissions by Mr Watson is
whether the Tribunal was right in law so to do; that is, whether the
requirements of statute are such that there needs to be a reduction in the
number of employees, either actual or anticipated, before a dismissal for that
reason can be regarded as a redundancy. He argues that here the decision was
contrary to Aylward and Aylward was appropriate
authority. Aylward, he submits, adopts as a critical part of its
reasoning the case of Burrell, a decision of this Tribunal made
by HHJ Peter Clark and members, which was not only approved of but
ringingly endorsed by the House of Lords in Murray and Anor v Foyle Meats Ltd
[1999] IRLR 562. The “headcount” had to reduce before there could be a
redundancy.
6.
The submissions to the contrary are to the effect that, wherever there
is a diminution in work and a consequent lessening of the requirement for an
employee to work the hours the employee has previously been working, then if
the employee is dismissed by reason of that reduction in work, there will be a
“redundancy situation”; that means that the dismissal, if it is caused wholly
or mainly by the redundancy situation, is one within section 139 of the
ERA. The submission is to the effect that Aylward must be
wrongly decided.
Discussion
7.
Mr Watson’s argument that reduction in headcount was essential did not
represent a principle he would apply to each and every situation. Mr Watson
anticipated that if the hours had been so reduced as, for instance, to change
work performed over the course of a year such that it was to be performed only
for a month during the year, that that would be a redundancy situation and
dismissals by reason of that change would be for redundancy even if employee
numbers were not reduced. He maintained that by contrast a change of slight
effect such as losing an hour’s work per week would not, if there was a
dismissal for that reason, be correctly regarded as redundancy. He was unable,
however, to help us with any distinction in principle between the two
situations.
8.
We think that the matter is to be approached as a matter of principle
starting with the statute rather than by way of seeking extreme examples. When
considering any question that arises under the statutory jurisdiction of an
Employment Tribunal, the place to begin must always be in the statutory
wording. Here, section 139, headed “Redundancy”, provides, so far as
material:
“(1) For the purposes of this Act an employee who is dismissed
shall be taken to be dismissed by reason of redundancy if the dismissal is
wholly or mainly attributable to—
[…] (b) the fact that the requirements of that business—
(i) for employees to carry out work
of a particular kind […]
have ceased or diminished or are expected to cease or diminish.”
9.
Some observations; first, the whole wording of the section must be taken
into account. The section is concerned with dismissal; it is not concerned
with identifying a “redundancy situation”, which, though it can be a useful
label, can sometimes be a misleading misnomer. Any question of whether a
dismissal is by reason of redundancy must be approached by looking to see
whether what has happened fits the words of the statute and not by asking
intuitively if the situation created is a “redundancy situation” and then
torturing the words of the statute so as to fit the result that might be
suggested by that phrase. The phrase “wholly or mainly attributable to”
applies a causation test. There thus has to be a dismissal that will be as
defined by section 95 of the ERA 1996, and in this case Mr Watson was
constrained to accept during the course of his submissions that
section 95(1)(a) applied: that the Claimant was dismissed by her employer
because the contract under which she was employed had been terminated by the
employer.
10.
Thus it was common ground that there was a dismissal; the question is
whether it is wholly or mainly attributable – that is, caused by – the state of
affairs set out in subsection (1)(b). That makes reference to the requirements
of the business; that is, the business for the purposes of which the employee
was employed by the employer (see section 139(1)(a)(i)). So the first
focus has to be upon what the business needs. The needs are for employees –
although that is in the plural, it is common ground before us that it does not
preclude one employee being made redundant, or for a redundancy simply
affecting one employee only, as where the job of an employee who is the only
person performing work of a particular kind disappears.
11.
The need, however, is not just a need for employees in a vacuum: it is
associated with work. The sub‑clause does not cease after “employees”. The
requirements of the business for employees are linked by the statute to those
employees carrying out work of a particular kind. The reference is to work of
a particular kind and not, for instance, to work of a particular duration;
but the relevant clause continues “have ceased or diminished”; that is, the
requirements of the business have ceased or diminished. Thus, if the business
need for work of a particular kind has diminished – that is, less work of that
sort needs to be done – there will be a redundancy situation, bearing in mind
the need to give value to each word in the statutory section. Mr Watson
would argue that it is an error to focus only upon the requirements of the
business that work of a particular kind should be carried out without including
the reference to the need for employees to carry it out.
12.
With those observations, we turn to the central case of Aylward.
Aylward was a case in which a hotel had opened for 52 weeks of
the year. It did not trade profitably during January and February. The
business needed, therefore, to reduce costs. It proposed to do so, so as to
avoid insolvency, by trading only from March to December. To do so, most of
the staff would need to be employed only for 42 weeks of the year rather than
the 52 weeks for which they had previously been engaged. At paragraph 7
of the decision of the Appeal Tribunal it is noted that the case was presented
on the basis that the staffing levels had not changed, but that what had
changed was that the staff were not required to work a full 52 weeks in a year;
they were no longer working during January and February and being paid for
those months.
13.
The Tribunal at first instance came to the conclusion that there was no
redundancy situation. It did so in these terms:
“We find first that there was no redundancy situation and that
the statutory definition of redundancy is not met. The dismissals were not
wholly or mainly attributable to the fact that the requirements of the respondent’s
business for employees to carry out work of a particular kind ceased or
diminished. There was no diminution in the respondent’s needs for employees to
carry out the work for which the applicants were employed. The respondent
wished to retain them. When they left, they were all replaced. A reduction in
the number of weeks for which the same number of employees were required to
carry out the same work is not sufficient in our view to meet the statutory
definition.”
14.
It is not entirely clear to us what the Tribunal were there finding. On
the face of it, it might be that the Tribunal was saying that there had been
neither a reduction in the number of employees nor any reduction in the work
done, i.e. the hours of work performed. It seems to us, however, in the
context of the other facts of this case that what the Tribunal probably meant
was that in each week during which an employee worked he would perform as many
hours of work and as much work as he had done previously. Thus we think that,
probably, the case was considering a factual situation in which because of a
downturn in business the business required a reduction from 52 weeks’ work in
the year to 42 weeks’ in the case of each employee.
15.
The Judgment considered a number of authorities. It did not evaluate
precisely what it made of those authorities save for two. At paragraph 14
it set out the decision of this court in Burrell and noted that
the passage it quoted had been cited by approval by the House of Lords in Murray . The passage to which the Appeal Tribunal drew attention was one
that occurs at page 530 of Burrell. We should set it out in
full:
“Reduction in the work
From time to time the mistake is made of focussing on a
diminution in the work to be done, not the employees who do it. One example
will suffice. In Carry All Motors Ltd v Pennington
[1980] ICR 806 the applicant before the Industrial Tribunal, employed as a
transport clerk, was dismissed by his employers following their decision that
his depot was overstaffed; they concluded that the work of the transport
manager and transport clerk could be carried out by one employee only. The
transport manager was retained and the applicant dismissed.
On the applicant’s complaint of unfair dismissal the employer
relied on redundancy as the reason for dismissal. An Industrial Tribunal held
that requirements of the business for employees to carry out particular work
had not ceased or diminished. The same work remained. Accordingly, there was
no redundancy but simply a reorganisation. The dismissal was unfair.
On appeal the Employment Appeal Tribunal reversed the Industrial
Tribunal’s findings. It held that the question was not whether the requirement
for particular work had diminished, but whether the requirement for employees
to do that work had diminished. Since one employee was now doing the work
formerly done by two the statutory test for redundancy had been satisfied. In
reaching that conclusion the Appeal Tribunal followed and applied the approach
of the National Industrial Relations Court in Sutton v Revlon Overseas
Corporation [1973] IRLR 173.”
16.
And, noted the Appeal Tribunal in Aylward,
Judge Peter Clark concluded at the end of that paragraph:
“It is necessary to look at the overall requirement for
employees to do work of a particular kind, not at the amount of work to be done”
adding that there had been approval by the House of Lords (at
paragraph 5) of the Judgment of Judge Peter Clark generally. Lord
Irvine, Lord Chancellor, said that he needed to say no more than that he
entirely agreed with his admirably clear reasoning and conclusions. That was,
as we see it, a reference to the essential reasoning of the case, as to which
we do not regard the particular reference to reduction in the work as being a
necessary element. However, we note the endorsement given generally to the
quality of Judge Peter Clark’s Judgment.
17.
Basing itself thus upon the remarks, albeit obiter, in Burrell,
the Appeal Tribunal in Aylward said this:
“15. Having reviewed the authorities we are in no doubt that the
Tribunal decision in this case was correct, focussing as it did on the
requirement for employees to do work of a particular kind rather than the
amount of work to be done. The requirement for employees at this hotel had not
altered. The number working there was to be the same before and after
reorganisation. What occurred was a business reorganisation which involved a
change in the terms and conditions, and particularly the number of days that
were to be worked by the same number of employees; a variation to the terms and
conditions of their employment.
16. In so far as the earlier authorities are in conflict, we
follow the clear guidance in [Murray] approving
Judge Peter Clark’s review in [Burrell]. We have no doubts
that the Industrial Tribunal in paragraph 33 adopted the right definition
and the right approach namely that a reduction in the number of weeks which the
same number of employees was required to carry out work did not satisfy the
statutory definition. We would accordingly dismiss this appeal.”
18.
The decision thus reached is to the effect, therefore, that where there
is a reduction in the work done by a workforce but no change numerically to the
members of that workforce, then any dismissal by reason of a downturn in work,
and consequent reduction in the hours during which that work is to be performed
is not, and cannot be, a true redundancy. It focuses critically upon the view,
which it took to be expressed in Burrell, that the quantity of
work performed was not the proper focus when coming to apply the words of
section 139 of the ERA.
19.
We must put those cases in proper context, both historically and in
respect of what those cases were actually deciding. First, we note that Harvey was entirely right to refer to Hanson. That was a decision of
the Divisional Court in which, despite the workforce remaining the same in
terms of headcount, a reduction in the work required from each for remuneration
was thought to be redundancy if a dismissal by reason of the reduction in work
available to each employee was redundancy.
20.
In Johnson v Nottinghamshire Combined Police Authority
[1974] ICR 170 the Court of Appeal considered the case of two women clerks.
They had worked a shift from 9.30am to 5.30pm per day. A decision was taken
for good business reasons by the employing Police Authority to alter the
pattern of hours to a shift system. The women would not accept that change to
their terms and conditions of employment and were accordingly dismissed. The
dismissal was held not to be attributable to redundancy because there had been
no change in the kind of work nor had there been any change in the employees
doing the work; the same number of employees did the same number of hours even
though those hours were now patterned differently across the week.
21.
The Judgment of Denning MR, as he then was, however, is principally
concerned with the issue in the case as to what “work of a particular kind”
meant. The decision was that it did not mean work done during particular
hours; it was related to the actual task being done. In the course of his
Judgment Denning MR said this (176H‑177B):
“Typical of redundancy situations are these. There may a recession
in trade so that not so many men are needed. There may be a change in the kind
of work done, as from wood to fibre glass, so that woodworkers are no longer
needed: see Hindle v Percival Boats Ltd [1969] 1 WLR
174. The business may be no longer profitable so that the employer has to cut
down somewhere. Or he may be overstaffed. The employer may meet such a
situation by dispensing with the services of some of the men: or alternatively
he may lower the wages: or put men on part time. If he does it by making a
change in the terms and conditions of employment, it is due to a redundancy
situation. Those who lose or leave their work in consequence are entitled to
redundancy payments.”
22.
His reference here to an employer meeting a situation of low profitability
by lowering wages or putting men on part time exactly covers the position in
this case, where we understand the Tribunal to have accepted that the employee
here was to have fewer days of work per week because of the downturn in
business and, as it happens, because a new software tool now required less work
of a post‑holder occupying her post. The observations are expressed as
principles (see page 177C) and may therefore be ratio – although, as it
seems to us, they are more probably to be regarded as obiter – remarks.
Nonetheless, they were remarks with which Cairns LJ associated himself
with the words “I agree”, as did Stephenson LJ (179F). In Aylward
we note that particular passage was not cited by the Tribunal, although other
passages from Johnson plainly were. There is no discussion
directly, therefore, of whether those specific observations had been considered
at all in Burrell or by Murray.
23.
In Lesney Products and Co Ltd v Nolan and Ors
[1977] ICR 235 Denning MR, again, had again to consider a case in which
there had been an alteration of the patterns of work. On this occasion, the
alteration in the pattern of work had led to a reduction in the wages being
offered to the employees concerned. The employer’s factory produced toys. It
had three‑shift working. There was a downturn in business. The night
shift was ended, and the night‑shift workers were dismissed. The day
shift was reorganised. Of the machine setters who worked the previous shifts,
nine refused to work to the new shift pattern; six of those claimed redundancy
payments. The evidence before the Tribunal was that the amount of work coming
into the factory for the day shift to perform had not altered, thus the number
of employees engaged to do the work remained the same, and the amount of work
remained the same; what had altered was the pattern of the hours.
24.
Denning MR recognised (see page 238D‑F) that the
relevant principles had been stated in Johnson. He stated those
principles as being that an employer was entitled to reorganise his business so
as to improve its efficiency and in so doing to propose to his staff a change
in their terms and conditions of employment, and to dispense with their
services if they did not agree. Such a change, he said:
“[…] does not automatically give the staff a right to redundancy
payments; it only does so if the change in the terms and conditions is due to a
redundancy situation.”
25.
In Lesney he commented:
“While I adhere to what I there said, I think the phrase ‘a
redundancy situation’ may be misleading. It is shorthand, and it is better
always to check it by the statutory words. The dismissal must be attributable
to ‘the fact that the requirements of that business for employees to carry out
work of a particular kind […] have ceased or diminished’ […].”
He went on, however, to note that, the night shift having been
done away with for want of work, the night‑shift workers were entitled to
redundancy payments.
26.
It is important to note that the Lesney case was only
about the day‑shift workers and was approached by the members of the
Court of Appeal upon the basis that the downturn in work had been entirely
dealt with by the removal of the night shift. There was not therefore a
falling off of work that affected the day shift; see in particular the Judgment
of Shaw LJ, page 240D‑F.
27.
There is nothing in Lesney, as it seems to us, that helps
to determine the correctness of the central point in Mr Watson’s argument
that there cannot be a redundancy if the same number of employees are
performing work, even if the work is less in amount or extent. In both Lesney
and Johnson, the actual decisions were reached where there was no
difference in the hours worked viewed in total and there was no difference in
the number of employees; it was the same employees doing the same work in the
same amounts. In such a situation one can well understand how it could not be
said that there had been a cessation or diminution of the requirements of the
business for employees to carry out work of the particular kind concerned.
28.
The case of Burrell was concerned with a rather different
factual situation. Mr Burrell had been a petrol station manager. The
employer, Safeway, decided to reorganise the management structure. Under that
structure the post that Mr Burrell had been occupying disappeared and a
new post was created. He decided not to apply for it because the salary was
lower. Accordingly, it was agreed that he would cease employment with Safeway
and would receive a redundancy payment and pay in lieu of notice. He subsequently
presented a complaint of unfair dismissal, in which he alleged that there had
been no true redundancy because the new position was exactly the same as the
job he had occupied. The employer resisted upon the ground that his dismissal
was by reason of redundancy because his position as a manager had ceased to
exist or alternatively was for some other substantial reason, namely
reorganisation.
29.
There was a division of opinion in the Industrial Tribunal. The
majority thought that the Tribunal should look at the work that the applicant
was required to do and actually did in order to decide whether the job had or
had not disappeared. That approach had been labelled the “function” approach.
The Chairman, in a minority, considered that the correct approach was what was
known as the “contract test”, which required that in order to establish
redundancy it had to be shown that there was a diminishing need for the kind of
work that the applicant could be required to perform under his contract of
employment. The Employment Appeal Tribunal considered that neither approach
was correct; the majority had erred, as had the minority. The correct approach
was to ask the three questions essentially posed by the terms of
section 139(1)(b): first, was the employee dismissed; secondly, if so, had
the requirements of the employer’s business for employees to carry out work of
a particular kind ceased or diminished, or were they expected to do so; and if
so, thirdly, was the dismissal caused wholly or mainly by that state of
affairs? The issue at stage two in the Burrell case had to be
answered by a focus on the employer’s requirements for employees generally to
carry out work of a particular kind as opposed to the requirement for the
applicant to carry out work of a particular kind. The terms of the applicant’s
contract of employment were thus irrelevant. It will be seen, therefore, that
the question of whether a simple headcount was all that was necessary was not
the issue to which this Tribunal was addressing its attention in Burrell.
30.
Murray was determined by the House of Lords in the light
of the conflict that there had been between the different “function” and
“contract” approaches taken in the courts below. The significance of the case
is rightly identified by Harvey (E848) as being that it rejected the
heresy that the expression “work of a particular kind” in section 139
meant the work for which the employee was contractually employed; that is, the
work as defined by the contract of employment. It is therefore to that aspect
of Burrell that the endorsement of the House of Lords
particularly applies.
31.
The aspect relevant to the question before us and to the decision in the
case of Aylward is referred to at paragraph 29 of Burrell.
We have already quoted the relevant passage, which correctly, in our view,
identifies that it would have been wrong for a Tribunal to say (as did the
Tribunal at first instance in Carry All Motors Ltd v Pennington
[1980] ICR 806) that there had been no redundancy because the work required to
be done by the employer had not ceased or diminished in a situation in which
the employer had determined that he needed a smaller number of employees to
perform the work. When Carry All Motors came to the Employment
Appeal Tribunal, it was rightly overturned.
32.
The passage therefore in which HHJ Peter Clark dealt with reduction
in work was not, as we see it, designed to argue that unless there is a
reduction in the number of employees there can be no redundancy; rather, he was
saying that an exclusive focus on the diminution in work would be wrong. This
must be right. As we have already observed, section 139 contains more
words than merely that the requirements of the business to carry out work of a
particular kind have ceased or diminished. If the words “for employees” had
been omitted from section 139(1)(b)(i), then the decision in Carry
All Motors could be understood, but they are not; they are present. We
understand the Appeal Tribunal’s focus in Burrell to be based
upon applying the statute fully and properly. That must include, as we see it,
giving full force to the words “for employees”, but it also, as it seems to us,
means giving full force to the words “to carry out work of a particular kind”
as well. We cannot properly apply the statute without taking what, for want of
a better word, might be described as an holistic view of it. It looks at two
variables that are linked: the employees, and the work.
33.
Thus, essentially, there may be situations, as Denning MR
recognised in Johnson, in which the needs of the employer’s
business are for fewer employees to do the same amount of work. If employees
are dismissed for that reason, they are dismissed by reason of redundancy. But
if the amount of work available for the same number of employees is reduced,
then, again, as it seems to us, a dismissal of an employee caused wholly or
mainly for that reason is also a redundancy. If there is, as in Johnson
and Lesney, just as much work for just as many employees, then a
dismissal arising out of the situation said to give rise to that would not be
for redundancy, because there would be no reduction in the requirements of the
business for employees to carry out work of a particular kind. The change to a
workforce that may produce a situation such as we have described may arise out
of increased efficiency, or decreased production for whatever reason, or a
combination of the two; mechanisation, new systems of work, reorganisation, or increased
productivity per head may create a need to reduce the workforce. A change to
the amount of work because of a shortfall in orders, for instance, might lead
to a change in the need for employees to carry out work of that particular
kind.
34.
We see no reason artificially to introduce into the statute words that
do not appear or to eliminate words that do appear, and it seems to us that the
argument of Mr Watson would seek to emphasise only “employees” as if the
words “to carry out work of a particular kind” did not appear in
section 139(1)(b)(i). But they do. The situation that this Tribunal was
examining in Burrell, both factually and legally, was a different
situation from that which comes before us. It did not, therefore, in our view
justify the decision to which this Tribunal came in the Aylward
case. The reasoning, in paragraph 14 of that decision, begins by adopting
the words from Burrell, “From time to time the mistake is made of
focusing on a diminution in the work to be done, not the employees who do it”.
Although the example, we think, makes clear what is meant and is entirely
consistent with our reading of the statute, the error, as it seems,
respectfully, to us, in the analysis of the Appeal Tribunal here was to take
the words as having a wider impact than they did. HHJ Peter Clark was
making clear that it would be a mistake to focus only upon part of the
requirement of the subsection – that is, work of a particular kind – and not to
give full weight to the whole of the provision.
35.
For our part, we consider that the observations of Harvey at
paragraphs 911‑913 are in essence well founded. We cannot think,
however, that the decision in Aylward can be explained upon the
basis of the opening three sentences in paragraph 911. We are also concerned
about the repeated reference to “redundancy situation”. However, the example
given in the middle of that paragraph demonstrates what would be an unfortunate
consequence of Mr Watson’s argument and the decision in Aylward
if it amounts to a correct interpretation of the meaning of the statute. Care
has to be taken, as we have observed, not to interpret the statute so as to
secure a preferred result by reference to what intuitively may be a “redundancy
situation”, but we consider that, approached as we have approached it - statute
first, applying the words but missing out none - the decision of the Tribunal,
though briefly expressed, was correct in the result.
36.
We note in passing that at section 135 of the 1996 Act the
draughtsman of the statute thought that a redundancy payment would not only be
payable in event of dismissal by reason of redundancy but where there was
eligibility for a redundancy payment by reason of being laid off or kept on
short time. It is unnecessary to explore in detail the situations in which
that will be so, but the point is that it was plainly anticipated by the
draughtsman that the expression “redundancy” would be applicable in situations
where there was no difference to the number in the workforce but merely to the
hours that they were working. The cases of Johnson and Lesney
are decided as they were because the hours and the employees were both no
different; this situation is one in which on the facts the hours that the
business required to be worked were fewer, and therefore this case sits within
the definition of redundancy just as those cases did not.
Conclusion
37.
For those reasons, we feel unable to follow the reasoning in Aylward,
despite its persuasive effect. Applying the usual rules of precedent we cannot
depart easily from a court of equivalent jurisdiction, but we are entitled to
do so and for the reasons we have given we dismiss this appeal. We should not,
however, finish without paying tribute to the argument of Mr Watson.
38.
Two further observations. First, the Tribunal was bound to follow
applicable authority, that of Aylward, and should have done so
whilst setting out its reasons for disagreement with that decision. A text
book is not of equivalent authority, however correct it may later be held to
be.
39.
Finally, this observation: that the lay members in particular of this
Tribunal are glad that the result of the appeal is as it is, not least because
from an industrial background one would approach the question of hours and
number of employees by adopting an FTE (a full‑time equivalent)
approach. Essentially, as the extract from Harvey suggests, the full‑time
equivalent workforce in that example is cut from two to one, even though the
number of employees actually working remains the same. There is a real
reduction in headcount, measured by FTE. It is therefore, they consider, entirely
consistent with actual industrial approach that the statute should have the
interpretation which we think in law properly belongs to it; the consequences
of another interpretation would, as it seems to them, have significant adverse
effects upon the employment market.
40.
For those reasons, the appeal is dismissed.
