Redundancy is a potentially fair reason for dismissal but may be found to be unfair, for example if a particular employee was unfairly selected for redundancy. Where the decision to make someone redundant follows the reasonable application of a fair selection process, the decision will not normally be open to question.
In Lomond Motors Ltd. v Clark, the Employment Appeal Tribunal (EAT) has confirmed that employers have a considerable measure of flexibility when determining the selection pool for redundancy.
Lomond Motors Ltd. (LML) originally operated as a car dealership from two sites, one in Glasgow and one in Ayr. Mr Clark was contracted to work as a branch accountant at the Glasgow premises ‘or such other address as the company may establish premises at’. LML later acquired two further sites, one in Edinburgh and one in Stirling, and established a subsidiary company, Lomond Motors East Ltd. (LML East). Mr Clark was asked to work as the branch accountant at the Stirling site but remained an employee of LML. The Edinburgh branch had its own accountant. Another employee was the branch accountant responsible for the sites at Glasgow and Ayr. When Mr Clark transferred to Stirling, it was acknowledged that the woman responsible for the Glasgow and Ayr branches did not have the experience necessary to perform the role at Stirling.
Following a subsequent review of the structure of both companies, the Group Financial Controller decided that it would be better to have just one accountant covering the Edinburgh and Stirling branches as this worked well in the case of Glasgow and Ayr. The selection pool for redundancy consisted of Mr Clark and the Edinburgh branch accountant and Mr Clark was selected for redundancy. He claimed unfair dismissal on the basis that the selection pool should have included all three branch accountants.
The Employment Tribunal (ET) found that the employer’s decision to limit the size of the selection pool for redundancy to two fell outside the band of reasonable responses in such circumstances and upheld Mr Clark’s claim. In the ET’s view, he was not employed by LML East, had not worked in Stirling very long, the jobs of the three accountants could be regarded as interchangeable and Mr Clark’s contract of employment contained a mobility clause.
On appeal, the EAT overturned the ET’s decision. The facts plainly pointed to the reasonableness of the decision to restrict the pool to the branch accountants at Stirling and Edinburgh. Whatever the formalities of his contract were, Mr Clark performed work for LML East. The two LML East branches formed a separate work centre and it was this operation that had a surplus accountant. By the time he was dismissed, Mr Clark had in fact worked for LML East for over a year. The ET’s finding that the jobs of all three accountants were interchangeable was undermined by its earlier finding that the branch accountant for Glasgow and Ayr did not have the experience necessary to work at the Stirling branch. Nor was the mobility clause in Mr Clark’s contract relevant in the circumstances. When considering the reasonableness of the determination of a selection pool for redundancy, it is a matter of examining the actual position at the time of redundancy.
In the EAT’s view, the ET had fallen into error and substituted its own view for that of the reasonable employer. Previous case law shows that different people can quite legitimately have different views as to what is or is not a fair response to a particular situation and this affords employers a broad measure of flexibility in determining the selection pool for redundancy. Merely identifying factors an employer has not taken into account does not of itself justify the conclusion that a decision is unreasonable. Any such finding must be based on a ‘sound rationale’.
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Lomond Motors Ltd. v Clark.