Glasgow City Council v Deans & Ors EATS/0061/05
EAT advocates balancing exercise when considering fairness in business reorganisation ‘SOSR’ cases
Facts: D and others worked for GCC as centre supervisors within the cultural and leisure services department. Following a service review which was published in an ‘Action Plan’ document, it was decided that the existing staffing structure had to change. The cost of non-contractual overtime and the need to achieve greater flexibility in moving staff between venues were identified as concerns. Following many meetings between GCC and the relevant unions, it was decided that 96 posts, including the centre supervisors, would be deleted and 131 new posts would be created. D and others were invited to apply for new jobs. They were offered posts of culture and leisure attendants in the new structure, which commanded a lesser salary than they had earned from their previous posts. GCC maintained the new positions would be broadly similar to their original posts. The claimants disagreed. They declined the offers. They were dismissed and claimed unfair dismissal. GCC claimed it had dismissed for ‘some other substantial reason of a kind such as to justify the dismissal of an employee’ (SOSR), a potentially fair reason for dismissal under the Employment Rights Act 1996. In the alternative, GCC alleged the dismissals were for redundancy. The employment tribunal accepted the dismissals were by reason of SOSR but did not consider that dismissals for that reason were fair. In its decision, it identified various disadvantages to the claimants in the new arrangements and voiced various criticisms of GCC. GCC appealed.
Decision: The EAT reiterated that, having concluded that the business reorganisation dismissals were by reason of SOSR, next the tribunal had to consider whether the decision to dismiss the claimants was fair. Referring to a previous judgment of the EAT in Catamaran Cruisers Ltd v Williams [1994] IRLR 386, it noted that this requires a balancing act to take into account the interests of both employee and employer. It noted that it had been said in that case that just because it is reasonable for an employee to refuse to accept a new contract offered in the course of a business reorganisation, it does not follow that it is unreasonable for the employer to dismiss him upon refusal. The EAT reiterated the importance of taking into account the benefits of the reorganisation to the employer’s business also at the ‘fairness’ stage. The EAT held that the tribunal had made an error of law because it had not done this. For example, the employment tribunal had not mentioned in its reasoning the advantages to GCC of the implementation of the Action Plan. Furthermore, the tribunal had imposed too high a test on GCC, by asking whether or not it was under ‘real pressure’ to carry out the reorganisation. There is no authority for the proposition that it is unfair to dismiss an employee due to a business reorganisation unless the employer was under ‘real pressure’ to carry it out. The EAT allowed the appeal and remitted the question of whether the dismissals were fair to a fresh employment tribunal.
Comment: The EAT’s decision in Glasgow City Council v Deans & Ors is a useful reminder of the correct test for fairness where the employer has shown that a dismissal because of a business reorganisation is a potentially fair by reason of SOSR. Analysing the fairness or otherwise of the dismissal involves a balancing exercise between both employer and employee. This case highlights that an employment tribunal will fall into error if it focuses solely on the interests of the employee.
Mohmed v West Coast Trains Ltd EAT/0682/05
EAT issues first judgment on religious discrimination
Facts: M is a Muslim of Indian origin. His religious beliefs require him to have a beard of at least one fist’s length (approximately 4 inches). His employer, WCT, requires beards to be neatly trimmed and smart. M was asked to trim his beard, he refused, but the issue was resolved by the end of September/early October 2003. M was dismissed in February 2004 for lack of enthusiasm. He believed he was dismissed because of his beard and appearance. M complained to an employment tribunal that his dismissal was, amongst other things, an act of direct and indirect religious discrimination, contrary to the Employment Equality (Religion or Belief) Regulations 2003 (the Regulations).
The tribunal dismissed his claims under the Regulations. It found he had failed to adduce sufficient facts from which a ‘prima facie case’ of discrimination could be inferred (in other words, he had failed to prove facts from which the tribunal could conclude, in the absence of an adequate explanation from WCT, that it had discriminated against M on grounds of his religion or belief).
M appealed to the EAT with respect to the tribunal’s rejection of his claim of direct religious discrimination. He argued that the tribunal had incorrectly applied the burden of proof provisions, to which the EAT and Court of Appeal respectively provided guidance in Barton v Investec [2003] ILR 332 and in Igen Ltd v Wong & Ors [2005] EWCA Civ 142. In Igen, the Court of Appeal held that these require the tribunal to go through a two-stage process when determining direct discrimination claims. The first stage requires the claimant to prove facts from which the tribunal could conclude, in the absence of an adequate explanation, that the respondent has committed an unlawful act of discrimination.
On appeal, M argued that the tribunal had fallen into error by taking into account facts put forward by WCT at stage 1. He also submitted that more weight should have been given to WCT’s delay in responding to a statutory questionnaire he had sent.
Decision: The EAT dismissed M’s appeal. It held that under Stage 1 of the Igen test, ‘facts’ means not only those matters which the claimant asserts as facts, but also material findings of fact made by the tribunal on the basis of evidence led by the respondent. Whilst it is for the claimant to prove ‘facts’, he or she only does so where the ‘fact’ in question is either admitted or evidence led by the respondent on that point is rejected. If the claimant’s evidence is rejected, he or she has not proved that particular fact. Furthermore, it held that those facts must be viewed in the overall factual matrix as found by the employment tribunal.
In this case, the tribunal had found the following on the basis of evidence led by WCT: (1) the issue of M’s beard did not arise after September/October 2003 (the Regulations only came into force in December 2003); (2) WCT applied a uniform standard across the workforce; (3) that uniform policy covered beards and WCT permitted beards provided they were neatly trimmed and smart; (4) this was exemplified by a male Sikh employee who, in accordance with the tenets of his religion, neither cut nor trimmed his beard but kept it tidy and was therefore able to comply with WCT uniform standards.
The EAT held that on these findings, the tribunal had been entitled to conclude that no inference of less favourable treatment could be drawn. It had not, therefore, been necessary to move on to stage 2 of the Igen test.
Comment: Mohmed v West Coast Trains Ltd is the first appellate decision on the Regulations since they came into force in December 2003. It provides a useful illustration of an individual falling at the first hurdle by failing to prove facts from which the tribunal could conclude, in the absence of an adequate explanation, that the respondent has committed an unlawful act of discrimination. The stance taken by the EAT here, in relation to the evidence which can be taken into account at stage 1 of the Igen test, also reflects that taken by the EAT in a recent race discrimination case, Laing v Manchester City Council [2006] EAT 0128/06.
On a separate note, the EAT accepted that, whilst not appropriate in this case, adverse inferences can be drawn from a failure to answer a statutory questionnaire promptly. Member companies in receipt of a statutory questionnaire should contact their Association promptly for advice and assistance in responding.
Regulations clarify that HR1 must be submitted prior to notice of dismissal to employees
Readers may recall the ECJ’s decision in Junk v Kuhnel [2005] IRLR 310, which we reported in February 2005 Checklist. One aspect of that decision centred around the timing of the employer’s notification to the national authorities of collective redundancies.
The existing rule on notification is contained in the Trade Union and Labour Relations (Consolidation) Act 1992. It currently states that the HR1 has to be submitted 30 or, where 100 or more employees are to go, 90 days before the first dismissal actually takes effect. The Collective Redundancies (Amendment) Regulations 2006 (Regulations), which will come into force on 1 October 2006, give effect to the decision in Junk. The Regulations will clarify that the Secretary of State must be notified of proposed collective redundancies before notice of dismissal is given to any of the relevant employees.
EAT gives guidance on correct questions to ask where it is unclear whether there has been a resignation or dismissal
In Liverpool Community College v Bogart EAT/0234/06, the EAT has given a useful summary of the correct approach to take where an employee has given notice to terminate his employment, but then argues that he withdrew that notice before it was accepted by the employer. The EAT remitted the issue to a different tribunal to be decided, but in so doing gave some short guidance as to the correct questions to ask, and the order in which they should be posed: (1) did the employee resign?; (2) can the employee avail himself of any exception to the rule that a notice, once given, cannot be withdrawn unilaterally?; (3) if it was not unilaterally withdrawn, was his withdrawal of resignation agreed?; (4) if he was dismissed, in the sense that he did not resign or that he did successfully withdraw that resignation and/or withdrawal of his resignation was agreed, was he fairly dismissed?