Mitchells of Lancaster (Brewers) Ltd v Tattersall
Mitchells of Lancaster (Mitchells) is a brewer and owner of public houses. Mr Tattersall was employed as its property manager from 1998 until his dismissal in October 2010. Mr Tattersall was part of Mitchells' senior management team (SMT) of five people. In 2010, Mitchells' trading position deteriorated and the directors began to consider whether or not redundancies could be made at SMT level.
At a board meeting, the directors discussed the five SMT roles and concluded that cutting the property manager role would have the least detrimental effect on the business as it was not a revenue-generating role. The directors considered the skills of all five SMT members and concluded that the other four had skills that offered the potential for revenue generation.
A week later, Mr Tattersall was warned that he was at risk of redundancy. He attended consultation meetings and was given notice of dismissal, which he appealed against unsuccessfully. Mr Tattersall brought an unfair dismissal claim.
The tribunal held that dismissal was for the potentially fair reason of redundancy. However, the tribunal concluded that dismissal was unfair. The pool for selection included all five members of the SMT and the selection criteria were unacceptable because they were entirely subjective and based on the views of the directors rather than being objective selection criteria.
However, the tribunal said that there was a one in five chance that Mr Tattersall would have been selected for redundancy anyway, so compensation was reduced by a factor of 20%.
Mr Tattersall appealed to the Employment Appeal Tribunal (EAT). The EAT disagreed that the selection criteria were unacceptable. The EAT said that, just because criteria of the sort applied were matters of judgment, did not mean that they cannot be assessed in a dispassionate or objective way.
However, the EAT said that the tribunal was entitled to conclude that the procedure adopted was not fair. There was no process that involved Mitchells considering, or Mr Tattersall being given the opportunity to persuade Mitchells, that any SMT role other than his should be selected for redundancy. Once Mr Tattersall was put at risk of redundancy, Mitchells never gave fair and open consideration to whether or not another SMT role should be selected.
Finally, the EAT concluded that the 20% reduction in compensation could not stand. There must have been a significantly greater likelihood of Mr Tattersall being selected for redundancy than any of the other SMT members and the case was remitted to the tribunal to determine what the appropriate reduction should be.
This case is to some extent dependent on its facts. The EAT made reference to the fact that the employer was a small company in financial difficulties, and that the five employees in the pool were in senior management positions. In most cases, it will still be preferable for selection criteria to be objective.
However, in some cases, and in particular with skilled or senior roles, an employer may wish to take into account more subjective criteria to ensure that the business retains people with the skills and qualities needed to take the business forward. This case is support for the proposition that this approach will not necessarily be fatal to the fairness of the dismissal.
However, the case also demonstrates, even if the selection criteria applied to a pool points overwhelmingly to one individual being selected for redundancy, this does not mean that alternatives should not be considered as part of the consultation process.
Kate Hodgkiss, employment partner, DLA Piper
Practical guidance from XpertHR on redundancy selection
- Podcast: Myths around redundancy We discuss some popular employment law myths around redundancy, including those relating to: offering an employee who has been made redundant future vacancies that arise shortly after his or her dismissal and making an employee who is pregnant or on maternity leave redundant.
- Packman t/a Packman Lucas Associates v Fauchon EAT/0017/12 The EAT has affirmed the employment tribunal's decision that an employee, who was dismissed because of the employer's downturn in work and consequent reduction in the hours to be worked, was dismissed by reason of redundancy, even though there was no reduction in the employees required.
- Welch v Taxi Owners Association (Grangemouth) Ltd EATS/0001/12 In holding that an employer did not fundamentally breach an employee's contract by failing to make her redundant, the EAT has suggested that a redundancy situation will not arise where there is only a diminution in an employer's need for particular work to be carried out, rather than a reduction in the number of employees required to do that work.