In Capita Hartshead Ltd v Byard, the Employment Appeal Tribunal has upheld a tribunal's decision that a dismissal following selection for redundancy from a pool of one was unfair.
The Claimant was an actuary and no longer had enough work for a full-time role as many of the pension schemes she worked on had either been wound up or the clients had been lost. Although there were three other actuaries, the Claimant was put into a redundancy selection pool of one. Her employers stated this was because there was not enough work to sustain four actuaries and, given the personal nature of the work done by each actuary for specific pension schemes, there was a risk of losing clients if the pension schemes were transferred between actuaries. Given that the Claimant was the only actuary who had lost work, her employers believed it was appropriate for her to be regarded as a pool of one. Additionally, it was said that team morale of the other actuaries that she worked alongside would be affected if they were to be told that they were in a pool of people at risk of redundancy particularly where their billings/portfolios had barely diminished compared to those of the Claimant.
The Claimant was subsequently made redundant and lodged an unfair dismissal claim, arguing that her dismissal was unfair on the grounds that all four actuaries should have been included in the pool.
The Tribunal found that the Claimant had been unfairly dismissed. In particular, the Tribunal did not accept the employer’s view of the risk that it would lose business if an actuary to a particular pension scheme was to be changed, because this risk was "slight". There was an evidential basis for this as the Tribunal noted that the employer had accepted a number of cases where the scheme actuary had been changed without the losing the client. The Tribunal therefore concluded that the employer had not genuinely applied his mind to the issue of who should be in the pool for consideration for redundancy. The Tribunal also held that the other actuaries did similar work and the performance of the Claimant was not criticised but was praised, and concluded that it had been unfair not to include the other actuaries in the selection pool.
The employers appealed, arguing that the Tribunal failed to comply with the decision of the Employment Appeal Tribunal in Taymech v Ryan (1994) that:
"The question of how the pool should be defined is primarily a matter for the employer to determine. It would be difficult for the employee to challenge it where the employer has genuinely applied his mind [to] the problem"
and had instead substituted a decision of its own.
The EAT disagreed.
The EAT took the opportunity to summarise the established legal principles for determining whether a redundancy dismissal is fair, in circumstances where the issue is whether an employer has selected a correct pool of candidates for redundancy:
- It is not the function of the Tribunal to decide whether they would have thought it fairer to act in some other way: the question is whether the dismissal lay within the range of conduct which a reasonable employer could have adopted.
- This "range of reasonable responses" test is applicable to the selection of the pool from which the redundancies were to be drawn.
- The question of how the pool should be defined is primarily a matter for the employer to determine. It would be "difficult" for the employee to challenge it where the employer has "genuinely applied" his mind to the problem.
- The Tribunal is entitled, if not obliged, to consider with care and scrutinise carefully the reasoning of the employer to determine if he has "genuinely applied" his mind to the issue of who should be in the pool for consideration for redundancy.
- If the employer has genuinely applied his mind to the issue of who should be in the pool for consideration for redundancy, then it will be difficult, but not impossible, for an employee to challenge it.
The EAT held that the Employment Tribunal in this case adopted precisely this approach by scrutinising the pool selected by the employer and concluding that it had acted unfairly in not including the other actuaries in the selection pool.
The EAT specifically rejected the argument that the principle that "how the pool should be defined is primarily a matter for the employer to determine" meant that tribunals are precluded from holding that a decision by an employer is so flawed that the employee selected has been unfairly dismissed. The EAT held that this principle only applies where the employer has "genuinely applied" its mind to the problem of selecting the pool, which the employer in this case had not, and even if the employer had done so its decision would have been "difficult" but not "impossible" to challenge.