Glasgow City Council v Deans, Mulrine and McClenaghan, EAT, 16 August 2006

Business reorganisations

BACKGROUND

Mr Deans, Mr Mulrine and Mr McClenaghan worked as centre supervisors in the leisure services department. In November 2000, the council published an ‘Action Plan for Change’, which recommended reorganising the staff structure to deliver services more effectively. It meant that 96 posts (including centre supervisors) would be ‘deleted’ and 131 new posts created. The three employees applied for the new posts of community facility officer but were unsuccessful. They then rejected the council’s offer of a four-week trial period in the less well-paid posts of culture and leisure attendant. In December 2002, the council terminated their employment on the grounds of redundancy, and they subsequently brought successful unfair dismissal claims. The tribunal found the dismissals were for a potentially fair, some other substantial reason, rather than redundancy, in that the reorganisation meant council services could be delivered more effectively. However, the council had not acted reasonably as it had not considered reducing the number of new attendant posts so that the three could maintain their existing terms of employment or ‘red circling’ to protect their earnings. The council appealed.

DECISION

The Employment Appeal Tribunal (EAT) allowed the appeal. In reaching its decision, the tribunal had failed to adopt the appropriate balancing exercise to consider the benefits to the council of the reorganisation, as well as the consequences for staff. The tribunal had heard ample evidence regarding the reasons for the changes, but had failed to properly analyse the facts for the purposes of the fairness test. The tribunal’s decision was also flawed as it failed to adopt the ‘reasonable employer’ approach and had substituted its own view. The EAT remitted the matter to a new tribunal.

COMMENT When considering the fairness of dismissals following business reorganisations, tribunals should look at matters from both parties’ perspectives, taking into account the advantages to the employer and the disadvantages to the staff. Nevertheless, employers will not be required to establish an onerous level of commercial advantage of the business reorganisation or prove that it is vital to the survival of the business.

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