McCrory v Powerscreen International Dist... [2010] NIIT 05102

THE INDUSTRIAL TRIBUNALS

CASE REF: 5102/09

CLAIMANT: Declan McCrory

RESPONDENT: Powerscreen International Distribution Ltd

DECISION

The unanimous decision of the tribunal is that the claimant was unfairly dismissed and is entitled to compensation in the sum of £ 9,222.04

Constitution of Tribunal:

Chairman: Mrs Ó Murray

Members: Ms F Graham

Mr D Walls

Appearances:

The claimant was represented by Ms N Fee, Barrister-at-Law, instructed by Hoffman Patterson Solicitors.

The respondent was represented by Mr P Bloch, Barrister-at-Law, of the Engineering Employers Federation.

The Claim

1. The claimant’s claim was for unfair dismissal in that he alleged that his job was not redundant and he was unfairly selected for redundancy following an unfair process.

The Issues

2. The issues for the tribunal were as follows:

2.1 Was redundancy the reason for the dismissal and was dismissal fair in all the circumstances;

2.2 was there a redundancy situation which affected the claimant and if so, was the claimant fairly selected for redundancy following a fair process;

2.3 did the statutory dismissal procedures apply and, if so, were they followed;

2.4 if the claimant was unfairly dismissed what compensation is payable.

Sources of Evidence

3. For the respondent the tribunal heard evidence from Mr G Cardwell, Operation’s Director, Mr D Power General Manager at the time, and Mr G McCaul HR Manager. The tribunal also heard evidence from the claimant. The tribunal had eight bundles of documents submitted by the respondent together with four bundles of documents submitted by the claimant running in total to approximately 500 pages. This came about because a large number of the pages in the bundles were completely illegible and additional documentation was produced at the outset and during the hearing. Significant time was wasted in the hearing because of the parties’ lack of an agreed bundle, the lack of legible copies and the late production of documentation.

Findings of Fact

4. The tribunal observed carefully the demeanour of the witnesses and took account of the oral evidence and documentation to which it was referred in evidence. The tribunal found the evidence of Mr Cardwell and Mr McCaul in particular to be contradictory in several respects. As a consequence the tribunal accepted the claimant’s evidence on contested matters and particularly on his suitability for other posts. The tribunal found the following facts proven on a balance of probabilities:

4.1 The claimant was employed by the respondent from 20 June 2005 until 3 December 2008 when he was dismissed. At the time of his dismissal the claimant was employed as a Maintenance Facilities and Health and Safety Manager reporting to Gary Cardwell who was the Operations Director and the claimant earned £42,000 gross per annum before he was dismissed.

4.2 Mr Cardwell was appointed as Operations Director in June 2008. The claimant had been interviewed for the same job at that stage but was unsuccessful.

4.3 The claimant had had no problems with his previous manager and the respondent had had no issues in relation to the claimant’s performance in his post prior to the appointment of Mr Cardwell as Operations Director.

4.4 In July/August 2008 Mr Cardwell initiated the first stage of the disciplinary process in relation to the alleged performance issues on the claimant’s part. A disciplinary meeting took place, following a formal invitation to the claimant to attend, and the process resulted in a recorded verbal warning given to the claimant on 21 October 2008. This was the culmination of a series of strongly worded emails from Mr Cardwell to the claimant regarding alleged performance issues. The recorded verbal warning cited “serious performance issues” and the claimant appealed against the warning. The claimant’s appeal was unsuccessful following a meeting on 6 November in that regard and the letter of outcome relating to that appeal was sent to the claimant on 17 November 2008.

4.5 During the same period (when the claimant received the recorded verbal warning) the respondent initiated redundancy consultation processes by sending a general notice to all employees on 17 October 2008 in relation to possible impending redundancy.

4.6 On 24 October 2008 there was a meeting convened by Mr Cardwell with all employees and Mr Cardwell confirmed to the claimant that the health and safety function (a key part of the claimant’s area of responsibility) was outside the remit of redundancies.

4.7 On 24 October 2008 in accordance with legislative requirements governing collective redundancy exercises, a HR1 was issued notifying the Department of Employment and Learning of the respondent’s intention to make 20 or more staff redundant. A group consultation meeting was held on 4 November 2008 when it was confirmed that the health and safety function was excluded from the remit of the redundancy process. Consultation meetings took place with staff on 6, 10 and 14 November 2008.

4.8 On 18 November 2008 the claimant attended a meeting with all managers including Mr Cardwell, Mr McCaul from HR and Damien Power the General Manager. The meeting was to discuss the selection criteria to be applied for the impending redundancies. The claimant was told to complete matrix scores for his staff and was told not to do so for the health and safety staff as they were excluded from the redundancy process.

4.9 The claimant prepared matrix scores for 26 out of the 29 staff reporting to him and on 20 November 2008 submitted the matrix scoring of his staff to Mr McCaul. The three staff not made subject to the matrix scoring by the claimant were the health and safety staff excluded from the process.

4.10 The following day, namely 21 November 2008, the claimant received an “at risk” letter. The at risk letter was handed to the claimant by Mr McCaul on that day, a Friday, and he was told that a meeting to discuss the matter was arranged for the following Tuesday 25 November 2008. The claimant was severely shocked by this development which was wholly unexpected by him.

4.11 On 25 November a meeting took place between the claimant, Gary Cardwell and Gary McCaul and the claimant was told that he was being made redundant. During the meeting he was offered two other posts namely firstly, a forklift driver post, which was unsuitable because he did not hold a forklift driver licence and, secondly, a post in the stores. Both posts would have involved a dramatic reduction in income and a drastic reduction in status from manager to shop-floor worker. The claimant rejected the two posts offered.

4.12 On 20 November 2008 the claimant lodged a grievance against the verbal warning which he had received on the 21 October 2008 and which he had previously unsuccessfully appealed. The claimant did this as he connected his selection for redundancy with his problems with Mr Cardwell in relation to the alleged performance issues.

4.13 On 3 December 2008 the claimant was dismissed on grounds of redundancy. The claimant was the only manager made redundant during this first wave of redundancies.

4.14 The claimant appealed against his dismissal, a meeting was held in that regard on 6 January 2009 and a letter issued on 20 February 2009 to the claimant advising that the outcome of the appeal was that the dismissal was confirmed.

4.15 The claimant met with Mr Power and Mrs Braden of HR on 19 December 2008 in relation to the grievance he had raised and the outcome was communicated on 20 February 2009. The grievance was not upheld.

4.16 The respondent’s redundancy procedure states:

“It is recognised that business or economic circumstances may arise which leave the company with no alternative but to declare a redundancy situation. Where employees are made redundant the prime consideration shall be to protect the employment of as many people as possible consistent with maintaining a full efficient operation. Selection will therefore be based upon retaining key employees required to maintain an efficient operation, or alternatively, last in first out. It remains part of the company’s discretion to use either selection method.”

4.17 The tribunal accepts the respondent’s evidence, which was uncontested by the claimant, that there was a huge reduction in work due to the global recession and that this led to a need for a substantial reduction in costs, including a reduction in manpower. The tribunal finds that such a huge downturn in work led to need to reduce costs and as a consequence there was a need to reduce managerial capacity and its allied cost. The tribunal therefore accepts that a managerial role needed to be made redundant.

4.18 There were ten managerial staff including the claimant who reported to the Operations Director. Of those staff, seven managers (including three Production Area Managers) were comparable to the claimant in terms of salary. The other two managers (including one Production Area Manager) received substantially less salary than the claimant. Mr Cardwell conceded that all but one of the managers reporting to him were of comparable seniority to the claimant. Of those who reported to Mr Cardwell some managers had been recruited or promoted after the claimant was recruited or promoted to that level.

4.19 The company’s evidence was that the decision to make the claimant redundant was purely cost-driven due to a need to save £60,000. The respondent’s case was that the claimant was chosen because he was termed a “sole contributor” and was therefore not apt to be included in a pool for selection. As he was in a “pool of one” the selection criteria were not applicable. However, Gary Cardwell’s evidence was that he had actually considered, but discounted, other managers for redundancy in his directorate. This evidence fatally undermined the respondent’s argument that the claimant was a sole contributor. Mr Cardwell clearly considered the claimant as against other managers and yet decided to choose the claimant. There were no records of this assessment and comparison process. In contrast to the claimant’s position, no at risk letters were sent to the other managers nor were there meetings with those other managers to discuss possible redundancy.

4.20 Mr Cardwell alleged that in assessing whether or not the claimant should be the person to be identified as redundant when compared to other managers, he took into account problems that there were with the claimant and he cited “lack of flexibility” and “behavioural” problems. This evidence from Mr Cardwell contradicted his other evidence and the evidence of the other witnesses for the respondent that the claimant was a good worker and there were no problems with him. Mr Cardwell had referred to the claimant as “a passenger” and this suggests to the tribunal that Mr Cardwell was unhappy with the claimant for some reason.

4.21 After the claimant left, his duties were divided out amongst the remaining managers who reported to Mr Cardwell and they performed those duties in addition to their own duties. The claimant’s case, which the tribunal accepts, was that he could have done the work of a Production Area Manager together with some of his old duties as he had transferable skills as a manager. There was no evidence that the Production Area Managers were professionally qualified in a particular discipline nor was there any evidence that they were particularly key workers in comparison to the claimant. Indeed the evidence pointed to the claimant’s duties being core duties given that the respondent accepted that the need for those duties to be carried out did not diminish or cease due to the downturn in work but that they had to be carried out at the same level albeit spread over a number of managers.

4.22 As regards Mr Power it was clear that he was not going to interfere with the decision made by Mr Cardwell. Mr McCaul of HR made it clear that he had no hand in the decision to make the claimant redundant. Mr Cardwell confirmed that he alone made the decision to make the claimant redundant one week before the meeting with him.

The Law

Unfair Dismissal

5.1 The law on unfair dismissal is set out in the Employment Rights (Northern Ireland) Order 1996 as amended (referred to below as the “ERO”). The right not to be unfairly dismissed is set out at Article 126 of the ERO and at Article 130 are listed the potentially fair reasons for dismissal, one of which is redundancy. It is for the employer to show that the dismissal was for one of the potentially fair reasons and it is for the tribunal to determine whether the dismissal was fair in all circumstances.

5.2 Redundancy is defined at Article 174 of ERO as follows:

“174.— (1) For the purposes of this Order an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to –

(a) the fact that his employer has ceased or intends to cease-

(i) to carry on the business for the purposes of which the employee was employed by him, or

(ii) to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business-

(i) for employees to carry out work of a particular kind, or

(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer.

Have ceased or diminished or are expected to cease or diminish.”

5.3 The statutory disciplinary and dismissal procedures are set out in the Employment (Northern Ireland) Order 2003 and in the Employment (NI) Order 2003 (Dispute Resolution) Regulations (NI) 2004 (referred to below as the Dispute Resolution Regulations). At Regulation 4(1)(b) it is stated that the statutory dismissal procedures do not apply where: “the dismissal is one of a number of dismissals in respect of which the duty in Article 216 of the Order of 1996 (duty of employer to consult representatives when proposing to dismiss as redundant a certain number of employees) applies”.

5.4 Article 216 of the ERO states that the duty of an employer to consult representatives of employees applies where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.

5.5 The parties referred the tribunal to the relevant paragraphs in Harvey’s Industrial Relations and Employment Law and made reference to the cases elucidating the general principles in this area in oral and written submissions. The tribunal took account of both parties’ submissions, both oral and written. The claimant’s representative specifically referred the tribunal to the case of Shawkat v Nottingham City Hospital Trust 2001 IRLR 55.

5.6 The Shawkat case is a decision of the Court of Appeal and concerned a consultant thoracic surgeon who refused to submit to a reorganisation which would have involved him in carrying out different specialised medical work. The employer made Dr Shawkat redundant. The court found that the mere fact of reorganisation is not conclusive of redundancy: it is rather a question of fact for the tribunal as to whether or not a reorganisation results in a redundancy situation because work of a particular kind has ceased or diminished. As this is a question of fact for the tribunal we do not find the Shawkat decision to be helpful in this case given that it involved specialist surgeons. We have found the claimant to have been a manager at a certain level with transferable skills and we have found that the need for workers at managerial level in the Operations Directorate had diminished.

5.7 Redundancy is a potentially fair reason for dismissal and it is for the tribunal to consider whether the respondent acted reasonably or unreasonably in treating redundancy as a reason for the dismissal of the claimant.

5.8 The decision of the Northern Ireland Court of Appeal in Robinson v Carrickfergus Borough Council [1983] IRLR 122 approved the approach of the EAT in the case of Williams v Compair Maxim [1982] EAT and established the following principles to be applied in a fair redundancy process:

(i) there should be fair warning and consultation;

(ii) there should be fair selection which involves identifying the correct pool of employees and applying objective transparent selection criteria to that pool;

(iii) suitable alternative employment should be actively considered and offered by the employer and the employer should consider “bumping” which means making another employee redundant and slotting the claimant into that place;

(iv) fair consultation involves providing adequate information and time for the employee to respond to a proposed redundancy so the employee is in a position to suggest alternatives.

Conclusions

6. Applying the law to the facts found, the tribunal reached the following conclusions.

6.1 The tribunal accepts that there was a need for some managerial reduction given the huge downturn in work. The tribunal rejects the claimant’s contention that, because his work was redistributed his work did not disappear and therefore he could not be said to have been part of a redundancy process. There was a need to reduce a manager in the Operations Directorate and a reorganisation of duties can be a valid way to achieve one redundant post. The Shawkat case does not help the claimant’s argument in this regard given the tribunal’s finding of fact that there was a need for a managerial reduction. The need for managerial work had therefore diminished and a redundancy situation therefore existed. The essential point however, is that most, if not all, managers in the Operation’s Directorate should have been in a pool. The tribunal can see no valid reason why the claimant was singled out given that he was a manager with transferable skills and there were other comparable managers who could and should have been in a pool with him for selection.

6.2 The respondent made the case that they had no problem with the claimant’s work and that his performance played no part in the decision to make him redundant as this decision was purely cost-driven. As regards the recorded verbal warning the respondents were at pains to say that this was a minor matter. However it is clear on the documentation that it was more than minor. The language used was very strong and in the recorded verbal warning it is termed a “serious performance issue”. This followed strongly-worded emails in 2008 from Mr Cardwell to the claimant outlining alleged problems with the claimant’s performance. In the tribunal’s view this inherently contradictory evidence detracted from the credibility of the respondents’ witnesses generally. The tribunal does not accept that cost was the only factor in choosing the claimant for redundancy but rather the major factor in our view was Mr Cardwell’s animus against the claimant which was based on his apparent view of the claimant as a manager.

6.3 The claimant was clearly not a sole contributor as alleged by the respondent. He has transferable skills which could have been deployed in other areas within the Operations Directorate. Specifically he could have carried out Production Area Manager duties. His duties did not go away and were redistributed. The matrix assessment system should have been applied to the claimant and he should have been put into a readily identifiable pool with other comparable or more junior managers who reported to Mr Cardwell.

6.4 The respondent did not follow good practice in choosing the claimant for redundancy having placed him in a pool of one and it also did not follow its own procedures. On the respondent’s own redundancy process LIFO would have applied and if that had been applied the tribunal is in no doubt that one or more of those managers would have been made redundant before the claimant. Some of the managers in the pool that should have been used, were Production Area Managers. The claimant’s evidence, which we accept, was that he was capable of doing a Production Area Manager post together with some of his own duties. The lack of flexibility and behavioural issues taken into account by Mr Cardwell could have been factored into a transparent scoring system involving all the managers in the pool.

6.5 Two working days was not enough warning to give the claimant of the meeting in relation to redundancy. It was a complete shock to the claimant that he received the at risk letter. It is not for the employee to ask for more time to consider the matter and ask for such a meeting to be postponed. It is for the employer to ensure that adequate notice is given to an employee given that it is universally accepted that the threat of redundancy can come as a huge shock to an employee. The lack of notice was all the more of a shock because the claimant had been told that health and safety function (a key part of his work) was not included in the process. The claimant had been going to management meetings and doing matrix assessments on his own staff. Despite this there was no hint whatsoever that the claimant or any other manager might be included in the redundancy process. The tribunal’s conclusion is that this lack of notice lends weight to the argument that Mr Cardwell wanted to get rid of the claimant and used the redundancy process to get rid of someone he regarded as a problem. The lack of proper notice amounted to a flaw in the consultation process and we draw the inference that the redundancy had irrevocably been decided upon and we conclude that the consultation was effectively a sham.

6.6 The emails by Mr Cardwell to the claimant in relation to the alleged performance issues did not use the wording of a professional manager and displayed an animus to the claimant which went on for some time before the claimant was made redundant.

6.7 Mr Cardwell’s evidence was that he made the role redundant and it was up to HR to determine who actually went. We regard this evidence as disingenuous and contrary to the evidence from Mr McCaul and Mr Power as it was clear that no one but Mr Cardwell made the decision and it was he who earmarked the claimant to be made redundant.

6.8 The alternative employment offered was not suitable alternative employment and this was conceded by the respondent during the hearing. It is the tribunal’s view that the alternatives proposed to the claimant were grossly insulting to him. They appear to have been offered as no more than a fig leaf to cover the complete lack of any transparent or credible process in relation to the selection of the claimant for redundancy.

6.9 It is clear that Mr Cardwell was the sole decision maker in relation to the claimant’s redundancy. Mr McCaul of HR did not have an influence on this decision at all and the tribunal finds this surprising. It is for HR to ensure that managers follow company procedures and the principles of good practice which are enshrined in the LRA Code of Practice on redundancies. HR should have an overview which individual managers often do not have in a big organisation and HR should ensure that policies are applied consistently across groups of workers. The fact that the matrix assessment process was applied to so many other staff but was not being applied to the Claimant and he was not being considered with other managers should have raised an alarm with Mr McCaul. As it was, he seems to have rubber-stamped the decision made by Mr Cardwell.

6.10 Mr McCaul alleged that there were four sole contributors in Mr Cardwell’s team. Although the issue of the claimant being a sole contributor was one of the major points in the respondent’s case, at no stage before Mr McCaul gave evidence did the respondents make the case that there were other sole contributors in the company. We do not accept that the claimant’s work was such that he could be termed a sole contributor.

6.11 The respondent’s redundancy policy ran to one short paragraph but even then their own policy was not followed. There were no objective criteria outlined in the policy, other than LIFO. The use of a matrix was not referred to in the policy. The tribunal is surprised that such a big company had such a scanty policy. Given the paucity of detail in the policy we would have expected the respondent to have formulated an agreed policy for use in this redundancy process. In particular we would have expected some clarity in relation to the sole contributor concept, so that the process was transparent as, in the event, the procedure applied to the clamant deviated from the stated policy. The enormous downturn in business experienced by the respondent and the resulting hiatus did not absolve them of their duty to follow basic, fair and transparent selection procedures consistently in respect of all workers. The purpose of having such procedures is precisely to avoid individual managers using a redundancy process to get rid of people they simply do not like.

6.12 The basic elements in a fair redundancy process are set out in Robinson v Carrickfergus Borough Council [1983] IRLR 122 and essentially the principles involved are as follows:

“ the employer will seek to give as much warning as possible; will seek to ensure the selection is made fairly in accordance with agreed and established criteria and; will seek to see whether instead of a dismissing an employee he could offer him alternative employment. The court must be satisfied that the decision has been made fairly and not on the basis of a personal whim”..

6.13 In our view the respondent in this case failed on each of those principles. The selection of the claimant for redundancy smacked of personal whim on the part of Mr Cardwell who appeared determined to get rid of the claimant because of some animus towards him. If the performance issues raised by Mr Cardwell had had such merit they could have been used to mark down the claimant in the course of a proper process where his record could have been compared to others’. No proper process was followed and the inference we draw is that Mr Cardwell’s intention was to get rid of the claimant specifically and he regarded the redundancy in his division as a golden opportunity to do so.

6.14 As we have found as a fact that a managerial redundancy existed and as we have found as a fact that more than 20 employees were to be made redundant, the collective redundancy provisions apply. Given that the collective redundancy provisions apply the statutory dismissal procedure does not apply. We therefore reject the claimant’s arguments in relation to any breach of the statutory procedure as they are irrelevant to this case.

6.15 We find that the reason the claimant was dismissed was because of redundancy. The claimant was however, unfairly selected for redundancy and was made redundant following an unfair process and his dismissal was therefore unfair in the circumstances. The claimant was therefore unfairly dismissed and is entitled to compensation.

Compensation

7. As regards the claim for a bonus the claimant accepted that no bonus was paid in December 2008. The uncontested evidence of the respondent was that no bonus was paid to anyone in 2009 due to the downturn in work. We therefore award no compensation for loss of bonus as no bonus would have been paid to the claimant if he had remained in the company.

8. Given that the statutory dismissal procedures do not apply in this case the statutory uplift does not apply.

9. The calculation of compensation set out below is based on agreed figures and dates with the exception of the basic award which was miscalculated by the parties:

9.1 Basic Award

Number of year’s continuous employment - 3

Age at dismissal - 46

Statutory maximum week’s pay - £350

3 X 1.5 X £350 = £1,575

Less redundancy payment from Powerscreen - £1,485

Total Basic Award = £ 90

9.2 Compensatory Award

Unemployed 3/12/08 to 10/01/09

5 weeks X £584.96 = £ 2,924.80

Diminution in earnings 10/01/09 to 29/05/09

19 weeks X £271.96 = £ 5,167.24

Diminution in earnings 29/05/09 to 30/09/09

12 weeks X £20 = £ 240.00

Ongoing diminution in earnings from 30/09/09

£20 per week X approximately 6 months = £ 500.00

Loss of statutory industrial rights = £ 300.00

Total Compensatory Award = £ 9132.04

Add Basic Award = £ 90.00

TOTAL COMPENSATION = £ 9,222.04

Interest

10. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

Chairman:

Date and place of hearing: 30 September 2009, 1-2 October 2009, 10 November 2009, 21 December 2009, Belfast.

Date decision recorded in register and issued to parties:

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You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> McCrory v Powerscreen International Dist... [2010] NIIT 05102_09IT (21 January 2010) URL: http://www.bailii.org/nie/cases/NIIT/2010/05102_09IT.html Cite as: [2010] NIIT 05102_09IT, [2010] NIIT 5102_9IT

Industrial Tribunals Northern Ireland Decisions