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Appeal against a decision that the claimant, who worked a 2 year fixed term contract whilst another employee was on secondment, was entitled to a redundancy payment on termination of the contract. Appeal allowed and ruling that the claimant had not been made redundant was substituted.
The claimant worked a 2 year fixed term contract whilst another employee was on secondment. This fixed term contract followed a period of 3 years during which she worked for the respondent on a permanent contract. Her contract was terminated when her colleague returned. The respondent informed her that she was not entitled to a redundancy payment because she had not worked the required number of years. The claimant took her claim for redundancy to the ET and won. The respondent, although accepting that the claimant had indeed completed the requisite qualifying period because the previous 3 years should be taken into account, denied that she was entitled to a redundancy payment because she was not redundant; the work which she had been carrying out whilst her colleague was on secondment was still required and the reason for her dismissal was not redundancy but that that colleague had returned from secondment to resume that work. The ET disagreed, placing the onus to rebut the presumption in favour of redundancy on the respondent, which they did not do. The respondent appealed.
The EAT allowed the appeal. The EJ had not asked herself the right question, namely whether or not the reason for the termination of the claimant’s employment fell within the statutory definition of redundancy. The requirement for the post had not ceased or diminished, one employee was required to carry out the work before the claimant was dismissed and one was required after she was dismissed. There was, manifestly, no question of it being able to be concluded that the claimant was dismissed by reason of redundancy. It was plainly proved that the reason for the dismissal was not redundancy and there was, accordingly, no place for the application of the statutory presumption.
Appeal No. UKEATS/0019/12/BI
EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF
At the Tribunal
On 21 June 2012
THE HONOURABLE LADY SMITH
GREATER GLASGOW HEALTH BOARD (APPELLANT)
MISS MEGAN LAMONT (RESPONDENT)
For the Appellant
MR I TRUSCOTT (One of Her Majesty's Counsel)
NHS Scotland Central Legal Office
For the Respondent
MR M LAMONT (Solicitor)
16 Miller Road
UNFAIR DISMISSAL – Reason for dismissal including substantial other reason
REDUNDANCY – Definition
Redundancy. Whether dismissal at termination of fixed term contract to cover another employee who had returned from secondment was by reason of redundancy. FTC immediately followed on previous open ended employment.
THE HONOURABLE LADY SMITH
1. Megan Lamont sought and was awarded a contractual redundancy payment when she was dismissed by Greater Glasgow Health Board at the end of a two year fixed term contract. This is her employer's appeal from that judgment which was that of an Employment Tribunal sitting at Glasgow (Employment Judge F Jane Garvie) registered on 23 January 2012.
2. I will, for convenience, continue referring to parties as Claimant and Respondent.
3. The Claimant was represented by Mr Lamont, solicitor, before the Tribunal and before me. The Respondents were represented by Mr Macleod, solicitor, before the Tribunal and by Mr Truscott QC before me.
4. No evidence was led. Parties agreed a document setting out certain facts, the essential features of which were as follows.
5. The Claimant was employed by the Respondent as an administrator at Killearn Resource Centre from 30 January 2006, at an initial salary of £12,985 per annum. In 2009, another employee (Alison Hamilton) was due to go on secondment for two years. Her post was that of Junior Doctor Monitoring and Liaison Officer. The Claimant was interviewed and on 3 August 2009, the Respondent wrote to her in the following terms:
"POST: JUNIOR DOCTOR MONITORING & LIAISON OFFICER – MEDICAL STAFFING BASE: STOBHILL HOSPITAL
Further to your interview in connection with the above post, I am now pleased to confirm your start date of 07 September 2009. This is a Temporary/Fixed Term contract for 2 years. Your contract will end 06 September 2011.
Please find attached two copies of your Variation to Contract. I would be pleased if you could sign both copies, retain one copy for your records and return one copy marked for my attention to Recruitment Service at the above address.
As you are an existing employee of NHS Greater Glasgow and Clyde, prior to commencement of your new post you should ensure that both your current and new line manager completes appropriate documentation for payroll purposes.
I would like to take this opportunity to wish you every success in your new post."
6. The 'Variation to Contract' referred to included the following terms:
"VARIATION TO CONTRACT
Further to your recent interview, I am pleased to confirm your appointment to the post of Junior Doctor Monitoring & Liaison Officer – Medical Staffing with effect from 07 September 2009. As of this date the following variations will apply to your contract of employment: As you are currently on staff you will only need a change form which should be completed by your manager or personnel team. ……This is a Temporary/Fixed Term contract for 2 years. Your contract will end 06 September 2011.
JOB TITLE/GRADE: Junior Doctor Monitoring & Liaison Officer – Medical Staffing
DEPARTMENT/DIRECTORATE: Medical Staffing
SERVICE: Human Resources – acute
SALARY SCALE: £20,710 £26,839 (You will be placed on this new salary scale on the appropriate point in accordance with NHS Conditions of Service…."
7. The Claimant accepted and signed that variation to her contract of employment and worked under and in terms of it until 6 September 2011 when it was terminated by the Respondent, Ms Hamilton having returned from her secondment on 31 August 2011. By letter dated 14 June 2011, she had been warned that her contract was due to expire at that date. A meeting took place between the Claimant and a manager from the Medical Staffing Department on 21 June and by letter dated 22 June 2011, the Claimant was advised that the termination of her contract on 6 September 2011 was confirmed. She was also advised that she did not qualify for redeployment as it was only available to permanent staff. The letter also advised her:
"…your contract is for no more than 2 years and as a result you do not qualify for redundancy."
8. Given that the Claimant had continuous employment that dated back to 2006 for the two year 'qualifying period' requirements of s.155 of the Employment Rights Act 1996, that last statement was wrong in law. In the claim before the Tribunal, the Respondent did not, however, at any time, suggest that the Claimant had not completed the requisite qualifying period. Their opposition was, rather, as averred in their form ET3, that the Claimant was not entitled to a redundancy payment because she was not redundant; the work which she had been carrying out whilst her colleague was on secondment was still required and the reason for her dismissal was not redundancy but that that colleague had returned from secondment to resume that work.
9. On the facts found by the Tribunal, there is no suggestion that the work of Junior Doctor Monitoring & Liaison Officer –Medical Staffing was ever anything other than a job for a single employee. I would add that, in the course of the hearing before me, Mr Lamont confirmed that the Claimant's position was not that that job was a two person job. It was accepted that it was 'single employee' role.
10. The Respondent accepted that the Claimant had been dismissed. Dismissal was not in issue between the parties.
The Tribunal's Judgment and Reasons
11. For reasons that are not, given that dismissal was not an issue, entirely clear, the Employment Judge begins her deliberations by considering the statutory definition of dismissal for redundancy purposes (s.136 of the 1996 Act) and para 402 of Harvey – Industrial Relations Div E on that subject. She then refers to s. 95(1)(b) of the 1996 Act for the statutory definition of dismissal for unfair dismissal purposes, which was not relevant to this case.
12. Next, the Employment Judge considers an authority to which she was not referred by parties, namely Pfaffinger v City of Liverpool Community College; Muller v Amersham & Wycombe College  ICR 1421 and she quotes the conclusions reached by Mummery J, including his conclusions on the issue of constructive dismissal. Again, whilst Pfaffinger is relevant to this case to the extent that it underlined the need to appreciate that termination of a fixed term contract does not, of itself, amount to dismissal by redundancy – there needs to be evidence which shows that the statutory definition of redundancy is met – that part of the discussion in it which relates to unfair dismissal claims is of no assistance.
13. In the course of his submissions to the effect that there was no redundancy situation, Mr McLeod had, as noted by the Employment Judge referred to the dismissal being not by reason of redundancy but for 'some other substantial reason', that reason being the end of Ms Hamilton's secondment and her return to her old job. Because Mr McLeod used the term 'some other substantial reason' – more properly apt in the context of an unfair dismissal claim (see: s.98(1)(b) of the 1996 Act) - and because this was not a claim for unfair dismissal, the Employment Judge rejected any question of the concept of some other substantial reason being relevant. At paragraph 79 she says:
"79. In this case, no evidence has been given by the parties as explained above. I am invited to hold that there is no entitlement to a redundancy payment because it is asserted that there was no redundancy situation. Rather, the respondent submits that there was some other substantial reason for the claimant's dismissal. However, no complaint of unfair dismissal is brought by the claimant so I am not persuaded that it is open to the Tribunal to take into consideration the argument that the claimant's dismissal was for some other substantial reason which is the statutory reference at section 98(1)."
14. Having thereby despatched the 'SOSR' label, the Employment Judge does not refer anywhere thereafter to the substance of the reasons on which Mr McLeod had relied. What follows is something else.
15. The Employment Judge turns to the statutory presumption in s.163(2) of the 1996 Act and states:
"80. …..in this case in the absence of evidence from the parties and, in particular, the respondent, I am not persuaded that the respondent has rebutted that presumption."
16. She then refers to the contractual documentation that was exchanged in August 2009, observes that there was no indication that the Claimant's 'existing employment' was being terminated and refers to the statement at the end of the letter of 22 June 2011 (to which I refer above) as being a "discrepancy". She adds, at paragraph 85, that:
"85. It is not possible for the Tribunal to make findings about this apparent discrepancy in the absence of an explanation from the respondent for their assertion that the claimant is not entitled to a redundancy payment where it appears there was no break in the continuity of her employment with the respondent."
17. She thus focuses on an issue which was not an issue between parties, namely whether or not the Claimant had the requisite continuity of employment to qualify for a redundancy payment. She then concludes that the presumption in s.163(2) had not been rebutted:
"87. In all the circumstances, I have concluded that the presumption set out in Section 163(2) of the 1996 Act that an employee who has been dismissed by her employer shall, unless the contrary has been proved, be presumed to have been dismissed by reason of redundancy has not been rebutted. As indicated above, the representatives accepted that there is a dismissal in law where, as here, a fixed term contract is not renewed."
18. Under and in terms of section 136(1)(b) of the 1996 Act, where a fixed term contract comes to an end and redundancy is in issue, the expiry of that contract is to be taken to be a dismissal.
19. Section 139 of the 1996 Act provides:
"139 (1) For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to –
(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."
20. Section 163 of the 1996 Act provides:
"163(1) Any question arising under this Part as to –
(a) the right of an employee to a redundancy payment, or
(b) the amount of a redundancy payment
shall be referred to and determined by an Employment Tribunal.
(2) For the purposes of any such reference, an employee who has been dismissed by his employer shall, unless the contrary is proved, be presumed to have been so dismissed by reason of redundancy."
21. Accordingly, where an issue arises as to whether a dismissed employee is entitled to a redundancy payment, an Employment Tribunal requires to consider whether it has been established that the one of the sets of circumstances described in s.139(1) of the 1996 Act applied. In the absence of evidence to the contrary, it will be assumed that the dismissal was by reason of redundancy but there is no onus on the employer. The Tribunal must decide the issue on the basis of the facts found, both those arising from all the evidence before them (whoever leads it) and from anything that is agreed between parties. As stated by the authors of Harvey, at para 630 of Div F:
"Onus of Proof
It will normally be the employer who leads evidence tending to refute redundancy, but there is no formal onus of proof on him. The tribunal will decide in the light of all the evidence whether the presumption has been rebutted – and that evidence may be adduced by the employer or some third party (eg BIS) or even by the employee himself."
22. An interesting example of the operation of the presumption is the case of Willcox and another v Hastings and another  IRLR 298 where the business of sole trader which employed two men (essentially a 'three person' business) was sold to a couple both of whom intended to work in the business. The business remained a three person business. The couple wished to employ their son. They, accordingly, dismissed both of the former employees. There was, plainly, a redundancy situation because there was a reduction in the need to have employees carry out work but it was impossible to tell which of the two men was dismissed for that reason and which of them was dismissed because of the new owners' son being employed. Each dismissed employee was entitled to have his case considered separately. At paragraph 10, the Master of the Rolls (Sir John Donaldson) said:
"…The message I get from paragraph 7 is quite simply this. Two people were dismissed. Two people had to be dismissed because there was a reduction in the requirements of the business to the extent of one employee, and another employee had to make way for the proprietor's son. That is uncontroverted. They then go on to say, 'There is no way in which we can decide which reason operated in respect of which employee. W e are simply left with two employees leaving the service of the employer and two reasons, each of which could have been the cause of the departure of one such employee. In those circumstances, we just do not know. Maybe both operated on each other. We just do not know.'"
23. In those circumstances, it was confirmed by the Court of Appeal that the presumption applied. In neither case could it be said that the facts showed that the individual dismissal was by reason of the son being employed.
24. I have already referred to the case of Pfaffinger. I would only add a reference to a section in the judgment of Mummery J at p.151C where, when explaining that it was not enough, for redundancy, to show that a fixed term contract had expired, he relied on Court of Appeal authority, saying:
"It was held by the Court of Appeal in Nottinghamshire County Council v Lee  ICR 635 that, in interpreting equivalent provisions in earlier legislation (the Redundancy Payments Act 1965), it was necessary to ask, in the case of a fixed term contract which expired and had not been renewed: "Why was not the employee's contract renewed?" If the answer was, in the case of a teacher, that there was no more work for him to do and the requirements of the school or college for teachers or lecturers had diminished and were expected to be diminished, there was a dismissal for redundancy."
25. Thus, since, in Mrs Pfaffinger's case, the reason why her fixed term contract was not immediately renewed was that there was a reduction in the employers' need for part time lecturers as at that date, she was dismissed by reason of redundancy.
26. The Notice of Appeal is succinctly stated:
"a. The employment tribunal erred in law in concluding that the claimant was entitled to a redundancy payment because it was likely that the reason for the claimant's dismissal was redundancy. However, on the basis of the facts which were established, the reason was not redundancy. The claimant's contract to replace another employee who was on secondment ended because the secondment ended.
b. The employment tribunal erred in law in placing the onus to rebut the presumption in favour of redundancy on the respondent. Had the Tribunal correctly understood that there was no formal onus on the respondent, they would have found that the presumption had been displaced by the fact of the secondment coming to an end.
c. The employment tribunal erred in law in awarding a contractual redundancy payment in circumstances where the claimant did not establish that the contractual provisions mirrored the statutory provisions, for example, that they contained a presumption in favour of redundancy. Even if the contractual provisions operated in the same way as the statutory procedures, there was no entitlement under the contractual scheme because there was no redundancy."
Submissions for the Respondent
27. Mr Truscott submissions addressed all three parts of the Notice of Appeal but focused on parts a and b.
28. The main theme of his submissions was that the Employment Judge never asked herself the right question namely whether or not the reason for the termination of the Claimant's employment fell within the statutory definition of redundancy. She knew what the reason was; parties were agreed that her contract came to an end because she was employed to cover for the period of Ms Hamilton's secondment; Ms Hamilton had returned from that secondment, it having come to an end. However, she had closed her mind to the reason. That seemed to be because the Claimant's claim was not one of unfair dismissal. That, however, did not mean that the agreed facts about the reason for her dismissal fell to be ignored.
29. Mr Truscott submitted that the point at which the Employment Judge fell into error was at paragraph 79. Having, correctly, observed that this was not an unfair dismissal claim, all thought of the underlying reasons for the Claimant's dismissal disappeared. It was not at all apparent why she turned to consider the contractual documents and the letter of 22 June 2011; there was no issue about continuity of employment.
30. Had the Employment Judge considered the relevant facts, she would have realised that there was no evidence of any reduced need for employees and the test for redundancy was, accordingly, not met.
31. Regarding the presumption, the Employment Judge had approached matters on the basis that there was an onus on the Respondent, which there was not. The statutory presumption could be displaced by evidence from any source and was displaced in this case by the agreed facts.
32. Finally, having turned to consider the presumption, the Employment Judge failed to ask herself whether any such presumption was a term of the parties' contract. The claim being a contractual one, she ought to have done so and her failure was a further indication of her having adopted a wholly erroneous approach to the case. He did not, however, press this argument.
33. Mr Truscott moved that the appeal should be upheld and a finding substituted that the Claimant was not redundant.
34. In the course of his submissions, Mr Truscott referred briefly to the list of authorities, being Pfaffinger, para 630 of Harvey Div E and those cases which were referred to by parties before the tribunal: Teachers' Pensions Agency v Hill  ICR 435, Terry v East Sussex County Council  ICR 436, Fay v North Yorkshire County Council  ICR 133, Willcox and BBC v Farnworth  IRLR 298.
Submissions for the Claimant
35. Mr Lamont said that he did not understand the Employment Judge to have said that there was an onus on the employer; she had only referred to them not having rebutted the presumption. He thought she was being 'more neutral'.
36. He said that he had sympathy for the Employment Judge. The Respondent had said that the dismissal was for some other substantial reason but if it was not that what was it? The answer was that it was the end of a fixed term contract.
37. The Employment Judge's reference to there being a discrepancy was understandable. The BBC case was in point. There, the employer had needed fewer of a particular kind of employee and that was exactly the situation here. Mr Lamont did not explain how that submission could be reconciled with his confirmation that the claimant accepted that the job in this case was only ever a single employee job. Mr Lamont also relied on the references in BBC to HHJ Peter Clark QC's judgment in the case of Safeway Stores v Burrell  ICR 523 at 529 where he said:
"Free of authority we understand the statutory framework ….to involve a three-stage process: (a) was the employee dismissed? If so (2) had the requirements of the employer's business for employees to carry out work of a particular kind diminished, or were they expected to cease or diminish? If so, (3) was the dismissal of the employee…….caused wholly or mainly by the state of affairs identified at stage 32 above?"
38. He submitted that in this case there was a reduction in the need for employees brought about by the end of the fixed term contract. The Claimant became spare. There was an extra employee. There was nothing for her to do. He could find no authority which showed that return of one employee from a secondment brought the contract of another employee to an end. The termination of a fixed term contract was to be taken to be by reason of redundancy unless the contrary was proved. He thought that the Employment Judge had provided a comprehensive and thoughtful decision and it should stand.
Discussion and Decision
39. I am readily persuaded that the Employment Judge fell into error. By way of preliminary, I observe that she did not need to ask herself whether the Claimant was dismissed or whether she had the requisite qualifying service for a redundancy payment - there was no issue between parties as to those matters – but she nonetheless did so. It was, perhaps, the start of her setting the wrong course for herself.
40. The issue the Employment Judge had to consider was whether or not the dismissal was by reason of redundancy. To determine that issue she required to ask whether or not the reason fell within the statutory definition of redundancy or not. No questions of onus arose – as her repeated reference to the Respondent's failure to rebut the presumption suggests. Nor did it matter where the evidence about the reasons came from. It did not need to come from witnesses led by the Respondent. If, on the agreed facts, the reason for the dismissal was not redundancy, as defined by s.139 of the 1996 Act, that was an end of matters.
41. However, nowhere in her judgment does the Employment Judge address that question. Her reasoning appears confused and it goes astray in two particular respects. First, because Mr McLeod had, in his submissions, labelled the agreed reason as 'some other substantial reason' but this was not an unfair dismissal claim, she seems to think that she could not thereafter, have any regard to the substance of that reason. Secondly, because the Respondent had not explained what she saw as a discrepancy between them on the one hand not seeking to terminate the Claimant's 2006 contract but thereafter advising her in their letter of 22 June 2011 that she did not have enough service to qualify for a redundancy payment, she concluded that they had not rebutted the s163(2) presumption. Her reasoning is clearly erroneous in both respects. First, she ought not to have discarded all consideration of the substance of the reasons for the Claimant's dismissal just because it was not necessary to consider whether she had been dismissed for a potentially fair 'some other substantial reason'. They remained as facts which were highly relevant to the issue which she required (though did not) consider. Secondly, her concerns about 'discrepancy' are misplaced. Parties were not at issue over the qualifying period; there was nothing for the Respondent to explain given that they were not saying that she had not been in sufficient continuous employment. Nor, I would add, was lack of continuity of employment advanced in that letter as a reason for her dismissal. The Respondent had, however, explained why the Claimant was dismissed – in the agreed facts – but, perhaps because of her being distracted by these unnecessary and irrelevant considerations, she lost sight of that.
42. The facts were that the Claimant was employed on a fixed term contract the purpose of which was to provide cover while another employee was on a two year secondment. The statutory benefit to the Claimant of having the whole of her period of employment with the Respondent – including the period when she was working on the contract which began in 2006 - treated as a continuous period for the purposes of s.155 does not mean that the fact that she was, at the relevant time, on a fixed term contract which had come to an end falls to be ignored. It was in fact highly relevant given the context which was that what was anticipated when that fixed term contract commenced, namely that Ms Hamilton would return after two years, secondment at an end and looking to resume her old job, came to pass. The job in question was only ever a single employee job and it was confirmed by Mr Lamont that the Claimant accepted that that was the case. There was , accordingly, no basis in the facts on which it could be said that the Respondent's requirement for employees to carry out work as Junior Doctor Monitoring & Liaison Officer – Medical Staffing had ceased or diminished or was expected to cease or diminish. One employee was required to carry out that work before the Claimant was dismissed and one employee was required to carry out that work after she was dismissed. There was, manifestly, no question of it being able to be concluded that the Claimant was dismissed by reason of redundancy. It was plainly proved that the reason for the dismissal was not redundancy and there was, accordingly, no place for the application of the statutory presumption.
43. In these circumstances, I will pronounce an order upholding the appeal and substituting for the judgment of the Employment Tribunal a judgment that the Claimant was not dismissed by reason of redundancy.
1 Where, in Mrs Pfaffinger's case, it was held that there was redundancy because when her fixed term contract came to an end (which meant that she was dismissed) her employer's need for employees to do work of the kind for which she had been employed during her fixed term contract – part time lecturing - had ceased or diminished, it being vacation and there being no students to whom to give such lectures.