Arkley v Sea Fish Industry Authority EAT 15 April 2010

Mr Arkley worked for the Sea Fish Industry Authority since 1985. His contract stated that staff in the event of a redundancy situation with not less than 5 years’ service who were aged 50 or more and members of the Authority’s pension scheme were entitled to pension benefits enhanced by not more than 10 additional years. In past redundancy situations the Authority had offered employees to whom the policy applied 10 years’ enhanced service. This would result in a clawback from the lump sum, however, under the pension scheme on retirement. Employees were therefore offered an alternative option of 6 2/3 years’ enhancement which meant a smaller pension but a full lump sum.

When Mr Arkley was made redundant at age 51 the issue arose as to how his pension benefits should be calculated. As new regulations came into effect in July 2008 that pension funds could no longer operate the clawback system to reduce the lump sum, he asked for his 10 year enhancement and a full lump sum payable on retirement.

The Authority decided it could not afford to give him the 10 year enhancement and offered him an enhancement of 6 2/3 years. This was not acceptable to him and he brought a claim for breach of contract. The majority of the tribunal dismissed his claim but the tribunal chairman considered that the use of the word “entitled” meant he should have been offered the 10 year option and he upheld his breach of contract claim. He appealed to the EAT who agreed. It held that any reasonable person would have concluded that the redundant staff in his position would be offered 10 years’ enhancement. The policy was expressed in mandatory terms. The Authority could have sought to vary the contractual terms by consent to reduce the 10 year enhancement following the introduction of the new regulations in 2008 but it did not do so. When Mr Arkley was made redundant therefore he had a reasonable expectation he would be offered the full enhancement. The Authority’s unilateral withdrawal of that option amounted to a breach of contract.

Key point: If a similar contractual right is not consensually varied so employees have a reasonable explanation that it remains in place it will be difficult for an employer to later avoid liability simply on the ground of affordability.

  • Selection for alternative role

Hurdus v Ltd UKEAT/0377/10

Mr Hurdus was a senior recruiter. Amazon carried out a redundancy exercise and he was selected for redundancy. He expressed an interest in a vacant position of labour manager which was occupied by another employee on a 6 month fixed term contract. Mr Hurdus and the other employee were interviewed for the post and the other employee was selected. Mr Hurdus was made redundant and brought proceedings for unfair dismissal. His case was successful before the tribunal but Amazon appealed. The Employment Appeal Tribunal allowed the appeal. It was not the function of the tribunal to engage in an over minute investigation of the employer’s selection process. The question was whether Amazon had taken reasonable steps to find alternative employment for Mr Hurdus so that he could retain his employment. The labour manager job had been effectively promised to the other employee if her fixed term employment went well. That did not render his redundancy unfair. If there had been a vacant post for which he was suitable but he had not been considered for it, then the employer would have acted unreasonably in that context. It is for an employer to adopt a fair selection procedure, not the employment tribunal. The decision was reversed and Mr Hurdus’ dismissal was held to be fair.

Morgan v The Welsh Rugby Union UKEAT/0314/10

Mr Morgan’s post was made redundant during a business reorganisation. He and 3 other potentially redundant employees applied for a new post created as a result of the reorganisation. The panel conducting the interviews for this new post considered that Mr Morgan was capable of doing the job but decided to appoint another candidate who impressed them more during the interview. Mr Morgan brought a claim for unfair dismissal arguing that his experience and qualifications were better than the successful candidate and that his dismissal was therefore unfair. The tribunal disagreed and he appealed. The EAT dismissed his appeal even though the interview panel did not adhere to the job description and the format of the interview was substantially different between the candidates.

It held that the selection for employees for redundancy should be based on objective criteria but this did not extend to deciding which potentially redundant employee should be appointed to the alternative vacancy. An employer is entitled to undertake a competitive interview process and appoint the candidate it considers to be best for the job even if this is a subjective view.

Key point: In looking at who should fill a new role or vacancy it is right and proper for the employer to choose that person who has the best skills set and experience for the role and yet not be at risk from a consequential unfair dismissal claim, if the interviewing process is subjective and fair.

  • After TUPE transfer

First Scottish Searching Services Ltd v McDine EAT/S/0051/10

The employer was in the business of property title searching. In September 2009 they acquired the business of two other search companies. This involved a TUPE transfer of the claimants who were employed as searchers. Prior to the transfer their employer had warned that they were likely to effect redundancies after the transfer. There had been redundancies in 2008. It was accepted there was a genuine redundancy situation and the exercise undertaken in 2009 utilised the same scoring matrix as had been used in 2008. Mr McDine and others complained the selection process was unfair and biased as it had been specifically designed to discriminate against staff who had transferred and they claimed their dismissals were unfair.

The tribunal made no criticism of the pools but found that there was a risk of unfairness in there being no system for moderating two sets of scores for the two groups of employees, namely those who has transferred and those who had not.

The tribunal did not explain what the panel had in mind by moderation. The search company appealed. The EAT found that the employees had been scored by managers who knew them and their work. As to the difference in the appraisal systems it was difficult to see why that mattered. The dismissals were not unfair. There was no evidence of bad faith in order to favour the non transferring employees.

Key point: The effect on the employees’ scores of their lengths of service was substantial and no moderation would have altered this.